Document:

Exhibit
10.2

 

STR
Holdings, Inc.

2008 Equity Incentive Plan

 

Article 1.               Establishment &
Purpose

 

1.1  Establishment.  STR Holdings, Inc., a Delaware
corporation (hereinafter referred to as the “Company”), establishes the
2008 Equity Incentive Plan (hereinafter referred to as the “Plan”) as
set forth in this document.

 

1.2  Purpose of the Plan.  The purpose of this Plan is to attract,
retain and motivate officers and employees of, consultants to, and non-employee
directors providing services to the Company and its Subsidiaries and
Affiliates, and to promote the success of the Company’s business by providing
them with appropriate incentives and rewards either through a proprietary
interest in the long-term success of the Company or compensation based on
fulfilling their performance goals.

 

Article 2.               Definitions

 

Whenever capitalized in the Plan, the following
terms shall have the meanings set forth below.

 

2.1          “Affiliate” means any
entity that the Company, either directly or indirectly, is in common control
with, is controlled by or controls or any entity in which the Company has a
substantial direct or indirect equity interest, as determined by the Board.

 

2.2          “Award” means any
Option, Stock Appreciation Right, Restricted Stock, Dividend Equivalent or
Other Stock-Based Award that is granted under the Plan.

 

2.3          “Award Agreement” means either (a) a
written agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award granted under this Plan, or (b) a
written statement issued by the Company to a Participant describing the terms
and provisions of the actual grant of such Award.

 

2.4          “Beneficial Owner” or “Beneficial Ownership” shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.

 

2.5          “Board” means the
Board of Directors of the Company.

 

2.6          “Change of Control” means the
occurrence of any of the following events with respect to the Company, (i) any
consolidation or merger with or into any other corporation, partnership,
limited liability company or other entity in which the holders of capital stock
of the Company immediately prior to such merger or consolidation no longer
beneficially own, directly or indirectly, a majority of the outstanding capital
stock or equity interest of the surviving corporation, partnership, limited
liability company or other entity immediately after such merger or
consolidation, (ii) the sale or transfer of the capital stock of the
Company in which the holders of capital stock of the Company immediately prior
to such sale or transfer no longer beneficially own, directly or indirectly, a
majority of the outstanding capital stock or equity interest of the Company
immediately after such sale or transfer, (iii) a sale or transfer of all
or substantially all of the assets of the Company, or (iv) the license of
all or substantially all of the assets of the Company where such license is
substantially equivalent to a sale or transfer of all or substantially all of
the assets of the Company.

 

 

2.7          “Code” means the U.S.
Internal Revenue Code of 1986, as amended from time to time.

 

2.8          “Committee” means the
Board, or any committee designated by the Board to administer this Plan.

 

2.9          “Company” means STR
Holdings, Inc., a Delaware corporation, and any successor thereto.

 

2.10        “Consultant” means any
person (other than an Employee or a Director) who is engaged by the Company, a
Subsidiary or an Affiliate to render consulting or advisory services to the
Company or such Subsidiary or Affiliate.

 

2.11        “Director” means a member
of the Board who is not an Employee.

 

2.12        “Dividend Equivalent” means any
right to a dividend equivalent granted from time to time under Article 6
of the Plan.

 

2.13        “Effective Date” means the date
set forth in Section 14.14.

 

2.14        “Employee” means an
officer or other employee of the Company, its Subsidiaries or an Affiliate,
including a member of the Board who is such an employee.

 

2.15        “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.

 

2.16        “Fair Market Value” means, as of
any date of determination (i)  if the Shares are listed on any established
stock exchange or a national market system, its fair market value shall be the
closing sales price for a share of such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; (ii) 
if the Shares are regularly quoted by a recognized securities dealer but
selling prices are not reported, its fair market value shall be the mean
between the high bid and low asked prices for a Share on the last market
trading day prior to the day of determination; or (iii) in the absence of
an established market for the Shares, the fair market value thereof shall be
determined in good faith by the Board through a reasonable application of a
reasonable valuation method.

 

2.17        “Incentive Stock Option” means an Option
intended to meet the requirements of an incentive stock option as defined in Section 422
of the Code and designated as an Incentive Stock Option.

 

2.18        “Nonqualified Stock Option” means an
Option that is not an Incentive Stock Option.

 

2.19        “Other Stock-Based Award” means any right
granted under Article 10 of the Plan.

 

2.20        “Option” means any
stock option granted form time to time under Article 6 of the Plan.

 

2.21        “Option Price” means the
purchase price per Share subject to an Option, as determined pursuant to Section 6.2
of the Plan.

 

2.22        “Participant” means any
eligible person as set forth in Section 4.1 to whom an Award is granted.

 

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2.23        “Plan” means the STR
Holdings, Inc. Equity Incentive Plan.

 

2.24        “Restricted Stock” means any
Award granted under Article 8.

 

2.25        “Restriction Period” means the
period during which Restricted Stock awarded under Article 8 of the Plan
is subject to forfeiture.

 

2.26        “Service” means service
as an Employee, Director or Consultant.

 

2.27        “Share” means a share
of common stock of the Company, par value
$[      ] per share, or such other class or kind
of shares or other securities resulting from the application of Section 12.1
hereof.

 

2.28        “Stock Appreciation Right” means any
right granted under Article 7.

 

2.29        “Subsidiary” means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company (or any parent of the Company) if each of the
corporations, other than the last corporation in each unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

 

2.30        “Ten Percent Stockholder” means a person
who on any given date owns, either directly or indirectly (taking into account
the attribution rules contained in Section 424(d) of the Code),
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or a Subsidiary or Affiliate.

 

Article 3.               Administration

 

3.1          Authority of the Committee.  The Plan shall be administered by the
Committee, which shall have full power to interpret and administer the Plan and
full authority to select the Directors, Employees and Consultants to whom
Awards will be granted and determine the type and amount of Awards to be
granted to each such Director, Employee or Consultant, the terms and conditions
of Awards granted under the Plan and the terms of Award Agreements to be
entered into with Participants.  Without limiting the generality of the foregoing,
the Committee may, in its sole discretion, clarify, construe or resolve any
ambiguity in, or interpret any provision of, any provision of the Plan or any
Award Agreement, accelerate or waive vesting of Awards and exercisability of
Awards, extend the term or period of exercisability of any Awards, modify the
purchase price under any Award, or waive any terms or conditions applicable to
any Award; provided that no action taken by the Committee shall adversely
affect in any material respect the rights granted to any Participant under any
outstanding Awards without the Participant’s written consent (other than
pursuant to Article 11 or Article 12 hereof).  Awards may, in the discretion of the
Committee, be made under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or its affiliates or a
company acquired by the Company or with which the Company combines.  The Committee shall have full and
exclusive discretionary power to adopt rules, forms, instruments, and
guidelines for administering the Plan as the Committee deems necessary or
proper.  All actions taken and all
interpretations and determinations made by the Committee or by the Board (or
any other committee or sub-committee thereof), as applicable, shall be final
and binding upon the Participants, the Company, and all other interested
individuals.

 

3.2          Delegation.  The Committee may delegate to one or more of
its members, one or more officers of the Company or any of its Subsidiaries,
and one or more agents or advisors such administrative duties or powers as it
may deem advisable.

 

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Article 4.               Eligibility
and Participation

 

4.1          Eligibility.  Participants will consist of such Employees,
Consultants, and Directors as the Committee in its sole discretion determines
and whom the Committee may designate from time to time to receive awards under
the Plan.  Designation of a Participant
in any year shall not require the Committee to designate such person to receive
an award in any other year or, once designated, to receive the same type or
amount of award as granted to the Participant in any other year.

 

4.2          Types of Award.  Awards under the Plan may be granted in any
one or a combination of:  (a) Options,
(b) Stock Appreciation Rights, (c) Restricted Stock, (d) Dividend
Equivalents and (e) Other Stock-Based Awards.  Awards granted under the Plan shall be
evidenced by Award Agreements (which need not be identical) that provide
additional terms and conditions associated with such Awards, as determined by
the Committee in its sole discretion; provided, however, that in the event of any conflict between the
provisions of the Plan and any such Award Agreement, the provisions of the Plan
shall prevail.

 

Article 5.               Shares
Subject to the Plan and Maximum Awards

 

5.1          Number of Shares Available for
Awards.

 

(a)           General.  Subject to adjustment as
provided in Section 5.1(b) and Article 12, the maximum number of
Shares available for issuance to Participants pursuant to Awards under the Plan
shall be [          ]
Shares.  The Shares available for
issuance under the Plan may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares. The number of Shares available for granting
Incentive Stock Options under the Plan shall not exceed
[          ] Shares, subject
to adjustments provided in Article 12 hereof and subject to the provisions
of Sections 422 or 424 of the Code or any successor provisions.  Any Shares delivered to the Company as part
or full payment for the purchase price of an Award granted under this Plan or,
to the extent the Committee determines that the availability of Incentive Stock
Options under the Plan will not be compromised, to satisfy the Company’s
withholding obligation with respect to an Award granted under this Plan, shall
again be available for Awards under the Plan. 
The maximum number of Shares that can be granted to any one Participant,
in any calendar year, shall not exceed [          ]
Shares.

 

(b)           Additional Shares.  In the event that any outstanding Award
expires, is forfeited, cancelled or otherwise terminated without consideration
(i.e., Shares or cash) therefor, the Shares subject to such Award, to the
extent of any such forfeiture, cancellation, expiration, termination or
settlement for cash, shall again be available for Awards under the Plan. If the
Committee authorizes the assumption under this Plan, in connection with any
merger, consolidation, acquisition of property or stock, or reorganization, of
awards granted under another plan, such assumption shall not reduce the maximum
number of Shares available for issuance under this Plan.

 

Article 6.               Stock
Options

 

6.1          Grant of Options.  The Committee is hereby authorized to grant
Options to Participants.  Each Option shall
permit a Participant to purchase from the Company a stated number of Shares at
an Option Price established by the Committee, subject to the terms and
conditions described in this Article 6 

 

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and to such additional terms and conditions, as
established by the Committee, in its sole discretion, that are consistent with
the provisions of the Plan.  Options
shall be designated as either Incentive Stock Options or Nonqualified Stock
Options, provided that Options granted to Directors and Consultants shall be
Nonqualified Stock Options.  An Option
granted as an Incentive Stock Option shall, to the extent it fails to qualify
as an Incentive Stock Option, be treated as a Nonqualified Stock Option.  Neither the Committee nor the Company or any
of its Affiliates shall be liable to any Participant or to any other person if
it is determined that an Option intended to be an Incentive Stock Option does
not qualify as an Incentive Stock Option. 
Options shall be evidenced by Award Agreements which shall state the
number of Shares covered by such Option. 
Such agreements shall conform to the requirements of the Plan, and may
contain such other provisions, as the Committee shall deem advisable.

 

6.2          Terms of Option Grant.  The Option Price shall be
determined by the Committee at the time of grant, but shall not be less than
100% of the Fair Market Value of a Share on the date of grant.  In the case of any Incentive Stock Option
granted to a Ten Percent Stockholder, the Option Price shall not be less than
110% of the Fair Market Value of a Share on the date of grant.

 

6.3          Option Term.  The term of each Option
shall be determined by the Committee at the time of grant and shall be stated
in the Award Agreement, but in no event shall such term be greater than ten
years (or, in the case on an Incentive Stock Option granted to a Ten Percent
Stockholder, five years).

 

6.4          Time of Exercise.  Options granted under this Article 6
shall be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which terms and
restrictions need not be the same for each grant or for each Participant.

 

6.5          Method of Exercise.  Except as otherwise provided in the Plan or
in an Award Agreement, an Option may be exercised for all, or from time to time
any part, of the Shares for which it is then exercisable.  For purposes of this Article 6, the
exercise date of an Option shall be the later of the date a notice of exercise
is received by the Company and, if applicable, the date payment is received by
the Company pursuant to clauses (i), (ii), (iii), (iv), or (v) in the
following sentence. The aggregate Option Price for the Shares as to which an
Option is exercised shall be paid to the Company in full at the time of
exercise at the election of the Participant (i) in cash or its equivalent
(e.g., by cashier’s check), (ii) to the extent permitted by the Committee,
in Shares having a Fair Market Value equal to the aggregate Option Price for
the Shares being purchased and satisfying such other requirements as may be
imposed by the Committee, (iii) partly in cash and, to the extent
permitted by the Committee, partly in such Shares, (iv) by reducing the
number of Shares otherwise deliverable upon the exercise of the Option by the
number of Shares having a Fair Market Value equal to the Option Price, or (v) if
there is a public market for the Shares at such time, subject to such
requirements as may be imposed by the Committee, through the delivery of irrevocable
instructions to a broker to sell Shares obtained upon the exercise of the
Option and to deliver promptly to the Company an amount out of the proceeds of
such sale equal to the aggregate Option Price for the Shares being purchased.  The Committee may prescribe any other method
of payment that it determines to be consistent with applicable law and the
purpose of the Plan.

 

6.6          Limitations on Incentive Stock
Options.  Incentive Stock Options may be
granted only to employees of the Company or of a “parent corporation” or “subsidiary
corporation” (as such terms are defined in Section 424 of the Code) at the
date of grant.  The aggregate Fair Market
Value (generally determined as of the time the Option is granted) of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year (under all plans of the Company
and of any parent corporation or subsidiary corporation) shall not exceed one
hundred thousand dollars ($100,000).  For
purposes of the preceding sentence, Incentive Stock Options will be taken into
account generally in the order in which they are granted.  No Incentive Stock Option may be exercised
later than ten (10) years after the date it is granted.  Each provision of the Plan and each Award 

 

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Agreement relating to an Incentive Stock Option
shall be construed so that each Incentive Stock Option shall be an incentive
stock option as defined in Section 422 of the Code, and any provisions of
the Award Agreement thereof that cannot be so construed shall be disregarded.

 

Article 7.               Stock
Appreciation Rights

 

7.1          Grant of Stock Appreciation
Rights.  The Committee is hereby
authorized to grant Stock Appreciation Rights to Participants, including a
grant of Stock Appreciation Rights in tandem with any Option at the same time
such Option is granted (a “Tandem SAR”). 
Stock Appreciation Rights shall be evidenced by Award Agreements that
shall conform to the requirements of the Plan and may contain such other
provisions, as the Committee shall deem advisable.  Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation Right granted under the Plan
shall confer on the holder thereof a right to receive, upon exercise thereof,
the excess of (a) the Fair Market Value of a specified number of Shares on
the date of exercise over (b) the grant price of the right as specified by
the Committee on the date of the grant.  Such
payment may be in the form of cash, Shares, other property or any combination
thereof, as the Committee shall determine in its sole discretion.

 

7.2          Terms of Stock Appreciation Right.  Subject to the terms of the Plan and any
applicable Award Agreement, the grant price (which shall not be less than 100% of
the Fair Market Value of a Share on the date of grant), term, methods of
exercise, methods of settlement, and any other terms and conditions of any
Stock Appreciation Right shall be as determined by the Committee.  The Committee may impose such other conditions
or restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.  Unless otherwise provided
in the Award Agreement, no Stock Appreciation Right shall have a term of more
than 10 years from the date of grant.

 

7.3          Tandem Stock Appreciation Rights
and Options.  A Tandem
SAR shall be exercisable only to the extent that the related Option is
exercisable and shall expire no later than the expiration of the related
Option.  Upon the exercise of all or a
portion of a Tandem SAR, a Participant shall be required to forfeit the right
to purchase an equivalent portion of the related Option (and, when a Share is
purchased under the related Option, the Participant shall be required to
forfeit an equivalent portion of the Stock Appreciation Right).

 

Article 8.               Restricted
Stock

 

8.1          Grant of Restricted Stock.  An Award of Restricted Stock
is a grant by the Company of a specified number of Shares to the Participant,
which Shares may be subject to forfeiture upon the occurrence of specified
events.  Participants shall be awarded
Restricted Stock in exchange for consideration not less than the minimum
consideration required by applicable law.  Restricted Stock shall be evidenced by
an Award Agreement, which shall conform to the requirements of the Plan and may
contain such other provisions, as the Committee shall deem advisable.

 

8.2          Terms of Restricted Stock Awards.  Each Award Agreement evidencing a Restricted
Stock grant shall specify the period(s) of restriction, the number of
Shares of Restricted Stock subject to the Award, the purchase price of such
Shares of Restricted Stock, the performance, employment or other conditions
(including the termination of a Participant’s Service whether due to death,
disability or other cause) under which the Restricted Stock may become vested
or may be forfeited to the Company and such other provisions as the Committee
shall determine.  Upon determination of
the number of Shares of Restricted Stock to be granted to the Participant and
payment of any purchase price, the Committee shall direct that a certificate or
certificates representing the number of Shares be issued to the Participant
with the Participant designated as the registered owner. The certificate(s) representing
such shares shall be legended as to sale, transfer, assignment, pledge or other
encumbrances during the Restriction Period and 

 

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deposited by the Participant, together with a stock
power endorsed in blank, with the Company, to be held in escrow during the
Restriction Period.  At the end of the
Restriction Period, the restrictions imposed hereunder shall lapse with respect
to the number of shares of Restricted Stock as determined by the Committee, and
the legend shall be removed and such number of Shares delivered to the
Participant (or, where appropriate, the Participant’s legal representative).

 

8.3          Voting and Dividend Rights.  Unless otherwise determined
by the Committee and set forth in a Participant’s Award Agreement, Participants
holding Restricted Stock granted hereunder shall have the right to exercise
voting rights with respect to the Restricted Stock and shall have the right to
receive dividends on such Restricted Stock.

 

8.4          Performance Goals.  The Committee may condition the grant of
Restricted Stock or the expiration of the Restriction Period upon the
Participant’s achievement of one or more performance goal(s) specified in
the Award Agreement. If the Participant fails to achieve the specified
performance goal(s), the Committee shall not grant the Restricted Stock to such
Participant or the Participant shall forfeit the Award of Restricted Stock to
the Company, as applicable, unless otherwise provided in the Participant’s
Award Agreement or the applicable stockholders agreement.

 

8.5          Section 83(b) Election.  If a Participant makes an
election pursuant to Section 83(b) of the Code concerning Restricted
Stock, the Participant shall be required to promptly file a copy of such
election with the Company.

 

Article 9.               Dividend
Equivalents

 

The Committee may grant
Dividend Equivalents to Participants based on the dividends declared on Shares
that are subject to any Award.  The grant
of Dividend Equivalents shall be treated as a separate Award.  Dividend Equivalents shall be credited to a notional account maintained by the Company, as
of dividend payment dates during the period between the date the Award is
granted and the date the Award is exercised, vested, expired, credited or
paid.  Such Dividend Equivalents shall be
converted to cash or Shares by such formula and at such time and subject to
such limitations as may be determined by the Committee.  As determined by the Committee, Dividend
Equivalents granted with respect to any Option or Stock Appreciation Right may
be payable regardless of whether such Option or Stock Appreciation Right is
subsequently exercised.

 

Article 10.            Other
Stock-Based Awards

 

The Committee, in its sole discretion, may grant
Awards of Shares and Awards that are valued, in whole or in part, by reference
to, or are otherwise based on the Fair Market Value of, Shares (the “Other
Stock-Based Awards”).  Such Other
Stock-Based Awards shall be in such form, and dependent on such conditions, as
the Committee shall determine, including, without limitation, the right to
receive one or more Shares (or the equivalent cash value of such Shares) upon
the completion of a specified period of service, the occurrence of an event
and/or the attainment of performance objectives.  Other Stock-Based Awards may be granted alone
or in addition to any other Awards granted under the Plan.  Subject to the provisions of the Plan, the
Committee shall determine to whom and when Other Stock-Based Awards will be
made, the number of Shares to be awarded under (or otherwise related to) such
Other Stock-Based Awards; whether such Other Stock-Based Awards shall be
settled in cash, Shares or a combination of cash and Shares; and all other
terms and conditions of such Awards (including, without limitation, the vesting
provisions thereof and provisions ensuring that all Shares so awarded and
issued shall be fully paid and non-assessable).

 

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Article 11.            Compliance
with Section 409A of the Code

 

11.1        General.  To the extent that the Plan and/or Awards are
subject to Section 409A of the Code, the Committee may, in its sole
discretion and without a Participant’s prior consent, amend the Plan and/or
Awards, adopt policies and procedures, or take any other actions (including
amendments, policies, procedures and actions with retroactive effect) as are
necessary or appropriate to (a) exempt the Plan and/or any Award from the
application of Section 409A of the Code, (b) preserve the intended
tax treatment of any such Award, or (c) comply with the requirements of Section 409A
of the Code, Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the date of the grant (“Section 409A
Guidance”).  This Plan shall be
interpreted at all times in such a manner that the terms and provisions of the
Plan and Awards are exempt from or comply with Section 409A Guidance.

 

11.2        Timing of Payment.  All
Awards that would otherwise be subject to Section 409A of the Code shall
be paid or otherwise settled on or as soon as practicable after the applicable
vesting date and not later than the 15th day of the third month from the end of
(i) the Participant’s tax
year that includes the applicable payment or settlement date, or (ii) the
Company’s tax year that includes the applicable payment or settlement date,
whichever is later; provided, however, that the Committee reserves the right to delay
payment or specify a compliant payment date with respect to any such Award
under the circumstances set forth in Section 409A Guidance; provided, further, that
notwithstanding any contrary provision in the Plan or Award Agreement, any
payment(s) that are otherwise required to be made under the Plan to a “specified
employee” (as defined under Section 409A of the Code) as a result of his
or her separation from service (other than a payment that is not subject to Section 409A
of the Code) shall be delayed for the first six (6) months following such
separation from service (or, if earlier, the date of death of the specified
employee) and shall instead be paid (in a manner set forth in the Award
Agreement) on the payment date that immediately follows the end of such
six-month period or as soon as administratively practicable thereafter.

 

Article 12.            Adjustments

 

12.1        Adjustments in Capitalization.  In the event of any corporate event or
transaction (including, but not limited to, a change in the Shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, stock split,
reverse stock split, split up, spin-off, combination of Shares, exchange of
Shares, dividend in kind, extraordinary cash dividend, or other like change in
capital structure (other than normal cash dividends) to stockholders of the
Company, or any similar corporate event or transaction, the Committee, to
prevent dilution or enlargement of Participants’ rights under the Plan, shall
substitute or adjust, in its sole discretion, (a) the number and kind of
Shares or other securities that may be issued under the Plan, the number and
kind of Shares or other securities subject to outstanding Awards, and/or where
applicable, the exercise price, base value or purchase price applicable to such
Awards; (b) grant a right to receive one or more payments of securities,
cash and/or property (which right may be evidenced as an additional Award under
this Plan) in respect of any outstanding Award, or (c) provide for the
settlement of any outstanding Award (other than a Stock Option or Stock
Appreciation Right) in such securities, cash and/or other property as would
have been received had the Award been settled in full immediately prior to such
corporate event or transaction; provided, however, that in the case of an adjustment made in
accordance with (b) or (c) above, the right to any securities, cash
and/or property may be issued subject to the same vesting schedule as the
outstanding Award being adjusted; and provided, further, that any adjustment
pursuant to this Section 12.1 shall comply with Section 409A of the
Code, to the extent applicable.  Should
the vesting of any Award be conditioned upon the Company’s attainment of
performance conditions, the Board may make such adjustments to the terms and
conditions of such 

 

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Awards and the criteria therein to recognize unusual
and nonrecurring events affecting the Company or in response to changes in
applicable laws, regulations or accounting principles.

 

12.2        Change of Control.  Upon the occurrence of a Change of Control
after the Effective Date, unless otherwise specifically prohibited under
applicable laws or by the applicable rules and regulations of any
governing governmental agencies or national securities exchanges, or unless the
Committee shall determine otherwise in the Award Agreement, the Committee is
authorized (but not obligated) to make adjustments in the terms and conditions
of outstanding Awards, including without limitation the following (or any
combination thereof): (i) continuation or assumption of such outstanding
Awards under the Plan by the Company (if it is the surviving company or
corporation) or by the surviving company or corporation or its parent; (ii) substitution
by the surviving company or corporation or its parent of awards with
substantially the same terms for such outstanding Awards; (iii) accelerated
exercisability, vesting and/or lapse of restrictions under all then outstanding
Awards immediately prior to the occurrence of such event; (iv) upon
written notice, provided that any outstanding Awards must be exercised, to the
extent then exercisable, within fifteen days immediately prior to the scheduled
consummation of the event, or such other period as determined by the Committee
(in either case contingent upon the consummation of the event), and at the end
of such period, such Awards shall terminate to the extent not so exercised
within the relevant period; and (v) cancellation of all or any portion of
outstanding Awards for fair value (as determined in the sole discretion of the
Committee) which, in the case of Options and Stock Appreciation Rights, may
equal the excess, if any, of the value of the consideration to be paid in the
Change of Control transaction to holders of the same number of Shares subject
to such Options or Stock Appreciation Rights (or, if no such consideration is
paid, Fair Market Value of the Shares subject to such outstanding Awards or
portion thereof being canceled) over the aggregate Option Price or grant price,
as applicable, with respect to such Awards or portion thereof being canceled.

 

Article 13.            Duration,
Amendment, Modification, Suspension, and Termination

 

13.1        Duration of the Plan.  Unless sooner terminated as provided in Section 13.2, the Plan
shall terminate on the tenth (10th) anniversary of the Effective Date.

 

13.2        Amendment, Modification,
Suspension, and Termination of Plan.  The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof or any Award
(or Award Agreement) thereunder at any time; provided that, subject to Article 11,
no such amendment, alteration, suspension, discontinuation or termination shall
be made (i) without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement applicable to the Plan and (ii) without
the consent of the Participant, if such action would materially diminish any of
the rights of any Participant under any Award theretofore granted to such
Participant under the Plan; provided, however, the Committee may amend the Plan, any Award or any
Award Agreement in such manner as it deems necessary to comply with applicable
laws.

 

Article 14.            General
Provisions

 

14.1        No Right to Service. The granting of an Award under the Plan
shall impose no obligation on the Company, any Subsidiary or any Affiliate to
continue the Service of a Participant and shall not lessen or affect any right
that the Company, any Subsidiary or any Affiliate may have to terminate the
Service of such Participant. No Participant or other person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards. The terms and
conditions of Awards and the Committee’s determinations and interpretations
with respect thereto need not be the same with respect to each Participant
(whether or not such Participants are similarly situated).

 

9

 

14.2        Settlement of Awards; No
Fractional Shares.  Each Award Agreement shall establish the form
in which the Award shall be settled.  No
fractional Shares shall be issued or delivered pursuant to the Plan or any
Award.  The Committee shall determine
whether cash, Awards, other securities or other property shall be issued or
paid in lieu of fractional Shares or whether such fractional Shares or any
rights thereto shall be rounded, forfeited or otherwise eliminated.

 

14.3        Tax Withholding.  The Company shall have the power and the right to deduct or withhold,
or require a Participant to remit to the Company, the minimum statutory amount
to satisfy federal, state, and local taxes, domestic or foreign, required by
law or regulation to be withheld with respect to any taxable event arising as a
result of the Plan.  With respect to
required withholding, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares or by delivering Shares to the Company,
having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax that could be imposed on the transaction.

 

14.4        No Guarantees Regarding Tax
Treatment.  Participants (or their beneficiaries) shall
be responsible for all taxes with respect to any Awards under the Plan.  The Committee and the Company make no
guarantees to any person regarding the tax treatment of Awards or payments made
under the Plan.  Neither the Committee nor
the Company has any obligation to take any action to prevent the assessment of
any excise tax on any person with respect to any Award under Section 409A
of the Code or otherwise and none of the Company, any of its Subsidiaries or
Affiliates, or any of their employees or representatives shall have any
liability to a Participant with respect thereto.

 

14.5        Non-Transferability of
Awards.  Except as provided by the terms of any
applicable stockholders agreement or unless otherwise determined by the
Committee, an Award shall not be transferable or assignable by the Participant
except in the event of his death (subject to the applicable laws of descent and
distribution) and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate.  An
award exercisable after the death of a Participant may be exercised by the
legatees, personal representatives or distributees of the Participant. Any
permitted transfer of the Awards to heirs or legatees of the Participant shall
not be effective to bind the Company unless the Committee shall have been
furnished with written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions hereof.

 

14.6        Conditions and Restrictions on
Shares.  The Committee may impose such other
conditions or restrictions on any Shares received in connection with an Award
as it may deem advisable or desirable. 
These restrictions may include, but shall not be limited to, a
requirement that the Participant hold the Shares received for a specified
period of time or a requirement that a Participant represent and warrant in
writing that the Participant is acquiring the Shares for investment and without
any present intention to sell or distribute such Shares.  The certificates for Shares may include any
legend which the Committee deems appropriate to reflect any conditions and
restrictions applicable to such Shares.

 

14.7        Shares Not Registered. 
Shares and Awards shall not be issued under the Plan unless the issuance
and delivery of such Shares and any Awards comply with (or are exempt from) all
applicable requirements of law, including (without limitation) the Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder,
State securities laws and regulations, and the regulations of any stock
exchange or other securities market on which the Company’s securities may then
be traded.  Except as set forth in an
Award Agreement, the Company shall not be obligated to file any registration
statement under any applicable securities laws to permit the purchase or
issuance of any Shares or any Awards under the Plan, and accordingly any
certificates for Shares or documents granting Awards may have an appropriate
legend or statement of applicable restrictions endorsed thereon.  If the Company deems it necessary to 

 

10

 

ensure that the issuance of securities under the
Plan is not required to be registered under any applicable securities laws,
each Participant to whom such security would be purchased or issued shall
deliver to the Company an agreement or certificate containing such
representations, warranties and covenants as the Company which satisfies such
requirements.

 

14.8        Rights as a Stockholder.  Except as otherwise provided herein or in the applicable Award
Agreement, a Participant shall have none of the rights of a stockholder with
respect to Shares covered by any Award until the Participant becomes the record
holder of such Shares.

 

14.9        Severability.  If any provision of the Plan or any Award is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction, or as to any person
or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to
such jurisdiction, person, or Award, and the remainder of the Plan and any such
Award shall remain in full force and effect.

 

14.10      Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or
to any investments that the Company or any of its Subsidiaries may make to aid
it in meeting its obligations under the Plan. 
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, beneficiary,
legal representative, or any other person. 
To the extent that any person acquires a right to receive payments from
the Company or any of its Subsidiaries under the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company or a
Subsidiary, as the case may be.  All
payments to be made hereunder shall be paid from the general funds of the
Company or a Subsidiary, as the case may be, and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts.  The Plan is not
subject to the U.S. Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

14.11      No Constraint on Corporate
Action.  Nothing in the Plan shall be construed to (a) limit,
impair, or otherwise affect the Company’s or its Subsidiary’s right or power to
make adjustments, reclassifications, reorganizations, or changes of its capital
or business structure, or to merge or consolidate, or dissolve, liquidate,
sell, or transfer all or any part of its business or assets, or (b) limit
the right or power of the Company or its Subsidiary to take any action which
such entity deems to be necessary or appropriate.

 

14.12      Successors.  All obligations of the Company under the Plan
with respect to Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business or assets of the Company.

 

14.13      Governing Law.  The Plan and each Award
Agreement shall be governed by the laws of the State of Delaware, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan to the substantive law of another
jurisdiction.

 

14.14      Effective Date. The Plan shall
be effective as of the date of adoption by the Board, which date is set forth
below (the “Effective Date”), provided that the Plan is approved by the
stockholders of the Company at an annual meeting or any special meeting of
stockholders of the Company within 12 months of the Effective Date, and such
approval of stockholders shall be a condition to the right of each Participant
to receive any Award hereunder.  Any
Award granted under the Plan prior to such approval of stockholders shall be
effective as of the date of grant, but no such Award may be exercised or
settled and 

 

11

 

no restrictions relating to any Award may lapse
prior to such stockholder approval, and if stockholders fail to approve the
Plan as specified hereunder, any such Award shall be cancelled.

 

*                              *                              *
 
This Plan was duly adopted and approved by the Board of Directors of the Company by resolution at a meeting held on the                             day of                           , 2008.
 

STR
HOLDINGS, INC.

 

 

	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

12Exhibit 4.2.1

 

SECOND SUPPLEMENTAL
INDENTURE

 

This Second Supplemental Indenture, dated as of October 16, 2008
(this “Second Supplemental Indenture”), is entered into among, Venoco, Inc.
(together with its successors and assigns, the “Company”), the Guarantors
(as defined in the Indenture) and U.S. Bank National Association, as
trustee (the “Trustee”) under the Indenture, dated as of December 20,
2004, by and among the Company, the Guarantors party thereto and the Trustee
(as supplemented, amended or otherwise modified, the “Indenture”),
relating to the Company’s 8.75% Senior Notes due 2011 (the “Notes”).

 

W I T N E S S
E T H:

 

WHEREAS, the Indenture was supplemented and amended by a Supplemental
Indenture, dated as of December 14, 2007, by and among the Company, the
Guarantors party thereto and the Trustee, to cure an ambiguity in the
definition of “Permitted Investment” (set forth in Section 1.1 of the
Indenture); and

 

WHEREAS, the Company desires to conform the language of the Indenture
to that contained in the Offering Memorandum to clarify that the Company may
issue preferred stock; and

 

WHEREAS, Section 3.3(a) of the Indenture provides that “[t]he
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, Guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, ‘incur’) any Indebtedness (including Acquired Debt),
neither the Company nor any Restricted Subsidiary will issue any Disqualified
Stock, and neither the Company nor any Guarantor shall issue any shares of Preferred
Stock; provided, however, that the Company and any
Guarantor may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock, if the Fixed Charge Coverage Ratio
for the Company’s most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness or such Disqualified Stock is issued would
have been at least 2.5 to 1.0, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or Disqualified Stock had been issued, as the
case may be, at the beginning of such four-quarter period.” (emphasis added);
and

 

WHEREAS, the offering memorandum dated December 15, 2004 (the “Offering
Memorandum”), relating to the Registered Exchange Offer of the Notes,
provides that “[t]he Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, ‘incur’) any
Indebtedness (including Acquired Debt), neither the Company nor any Guarantor
will issue any Disqualified Stock, and the Company will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock,
provided, however, that the Company and any Guarantor may incur Indebtedness
(including Acquired Debt) or issue Disqualified Stock, if the Fixed Charge
Coverage Ratio for the Company’s most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.5 to 1.0, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred or Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.”  (emphasis added); and

 

WHEREAS, pursuant to Section 9.1(4) of the Indenture, the
Trustee, the Guarantors and the Company are authorized to execute and deliver
this Second Supplemental Indenture to amend the Indenture, without the consent
of any Holder, to conform the Indenture to the Offering Memorandum;

 

 

NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company, the Guarantors and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.1         Defined
Terms.  As used in this Second
Supplemental Indenture, terms defined in the Indenture or in the preamble or
recital hereto are used herein as therein defined.  The words “herein,” “hereof” and “hereby” and
other words of similar import used in this Second Supplemental Indenture refer
to this Second Supplemental Indenture as a whole and not to any particular
section hereof.

 

ARTICLE II

 

Amendment

 

SECTION 2.1         Amendment.  Section 3.3 of the Indenture is hereby
amended by replacing the phrase “and neither the Company nor any Guarantor
shall issue any shares of Preferred Stock” in subsection (a) with the
phrase “and the Company will not permit any of its Restricted Subsidiaries to
issue any shares of Preferred Stock”.

 

ARTICLE III

 

Miscellaneous

 

SECTION 3.1         Notices.  All notices and other communications to the
Company, Trustee or any Holder shall be given as provided in the
Indenture.  The Company will mail to the
Holders the Notice required in Section 9.1 of the Indenture.

 

SECTION 3.2         Parties.  Nothing expressed or mentioned herein is
intended or shall be construed to give any Person, firm or corporation, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim
under or with respect to this Second Supplemental Indenture or the Indenture or
any provision herein or therein contained.

 

SECTION 3.3         Governing
Law.  This Second Supplemental
Indenture shall be governed by, and construed in accordance with, the laws of
the State of New York.

 

SECTION 3.4         Severability
Clause.  In case any provision in this
Second Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and such provision shall be ineffective
only to the extent of such invalidity, illegality or unenforceability.

 

SECTION 3.5         Ratification
of Indenture; Second Supplemental Indenture Part of Indenture.  Except as expressly amended hereby, the
Indenture is in all respects ratified and confirmed and all the terms, conditions
and provisions thereof shall remain in full force and effect.  This Second Supplemental Indenture shall form
a part of the Indenture for all purposes, and every Holder of Notes heretofore
or hereafter authenticated and delivered shall be bound by this Second
Supplemental Indenture.  The Trustee
makes no representation or warranty as to the validity or sufficiency of this
Second Supplemental Indenture.

 

2

 

SECTION 3.6         Counterparts.  The parties hereto may sign one or more
copies of this Second Supplemental Indenture in counterparts, all of which
together shall constitute one and the same agreement.

 

SECTION 3.7         Headings.  The headings of the Articles and the sections
in this Second Supplemental Indenture are for convenience of reference only and
shall not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.

 

IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the date first above written.

 

 

	
  VENOCO, INC.

  	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Timothy M. Marquez

  	
   

  	
  By: 

  	
  /s/ Seth
  Dodson

  
	
   

  	
  Name:
  Timothy M. Marquez

  	
   

  	
  Name: Seth
  Dodson

  
	
   

  	
  Title: Chief
  Executive Officer

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
  GUARANTORS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WHITTIER
  PIPELINE CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Timothy
  M. Marquez

  	
   

  	
   

  
	
  Name:  Timothy M. Marquez

  	
   

  	
   

  
	
  Title:  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TEXCAL
  ENERGY (LP) LLC

  	
   

  	
   

  
	
  By:

  	
  /s/ Timothy
  M. Marquez

  	
   

  	
   

  
	
  Name:  Timothy M. Marquez

  	
   

  	
   

  
	
  Title:  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TEXCAL
  ENERGY (GP) LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
     /s/
  Timothy M. Marquez

  	
   

  	
   

  
	
  Name:
  Timothy M. Marquez

  	
   

  	
   

  
	
  Title: Chief
  Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TEXCAL
  ENERGY SOUTH TEXAS L.P.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  TEXCAL
  ENERGY (GP) LLC,

  	
   

  	
   

  
	
   

  	
    as
  general partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/
  Timothy M. Marquez

  	
   

  	
   

  
	
  Name:
  Timothy M. Marquez

  	
   

  	
   

  
	
  Title: Chief
  Executive Officer

  	
   

  	
   

  
							

 

3

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