Document:

Exhibit
10.2

 

STR
Holdings, Inc.

2009
Equity Incentive Plan

 

Article 1.               Establishment &
Purpose

 

1.1  Establishment.  STR Holdings, Inc., a Delaware
corporation (hereinafter referred to as the “Company”), establishes the
2009 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 4,750,000 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 4,750,000
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 2,000,000
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                           , 2009.
 

STR
HOLDINGS, INC.

 

 

	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

12Exhibit 10.23

 

RESTRICTED COMMON STOCK AGREEMENT

FOR OFFICERS HOLDING C, D AND E UNITS

 

RESTRICTED COMMON STOCK
AGREEMENT (this “Agreement”)
made as of
[                              ]
(the “Effective
Date”), by and between STR Holdings, Inc., a Delaware corporation
(the “Company”),
and
[                    ]
(the “Holder”).

 

WHEREAS, STR Holdings LLC (“Old LLC”) entered into
that certain Incentive Unit Grant Agreement with the Holder dated as of
[            ] (the
“Grant Agreement”), whereby Old LLC granted incentive units of Old LLC to the
Holder;

 

WHEREAS, on the date hereof, Old LLC will enter into
a corporate reorganization, whereby the unitholders of Old LLC will become
unitholders of STR Holdings (New) LLC (“New LLC”);

 

WHEREAS, pursuant to that certain Plan of Conversion
by New LLC, dated as of
[            ] (the
“Plan of Conversion”), New LLC filed with the Secretary of State of the State
of Delaware a certificate of conversion converting New LLC into the Company and
automatically converting the membership interests of New LLC into shares of
common stock, par value $0.01 per share (“Common Stock”), of the Company;

 

WHEREAS, due to the conversion of New LLC into the
Company, any unvested incentive units of Old LLC granted pursuant to the Grant
Agreement and converted in the corporate reorganization into unvested incentive
units of New LLC shall be converted from unvested incentive units of New LLC
into Restricted Shares (as defined below) subject to the terms and conditions
herein;

 

WHEREAS, in consideration of the mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged;
and

 

WHEREAS, certain capitalized terms used herein are
defined in Section 6 hereof.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.             Restricted Shares.  Subject to the terms and conditions of this
Agreement and pursuant to the Plan of Conversion, the Company hereby issues to
the Holder [        ] shares of Common
Stock (the “Restricted Shares”), of which
[        ] shares of Restricted Shares
shall be Time Vesting Restricted Shares (as defined below) and
[        ] shares of Restricted Shares
shall be Performance Vesting Restricted Shares (as defined below).

 

2.             Holder Representations and Warranties.

 

(a)           As an inducement to the Company to issue the Restricted
Shares to the Holder and as a condition thereto, the Holder represents,
acknowledges and agrees (as applicable) that this Agreement constitutes the
legal, valid and binding obligation of the Holder, enforceable against the
Holder in accordance with its terms, except to the extent the enforceability
thereof may be limited by bankruptcy laws, insolvency laws, moratorium laws or
other laws affecting creditors’ rights generally or by general equitable
principles, and the execution, delivery and performance of this Agreement by
the Holder does not and will not conflict with, violate or cause a breach of
any agreement, contract or instrument to which the Holder is a party or any
judgment, order or decree to which the Holder is subject.

 

 

(b)           In addition, the Holder represents, acknowledges and
agrees (as applicable) that:

 

(i)         (x) the
Restricted Shares have not been registered under the Securities Act, (y) the
Restricted Shares are restricted securities under the Securities Act and (z) the
Restricted Shares may not be resold or transferred unless they are first
registered under the Securities Act or unless an exemption from such
registration is available;

 

(ii)        the
Holder hereby makes the representations and warranties set forth in Exhibit A
hereto; and

 

(iii)       the
Company may, but shall not be obligated to, register or qualify the issuance,
or the resale, of any of the Restricted Shares under the Securities Act or any
other applicable law.

 

3.             Vesting of Shares.

 

(a)           All Restricted Shares shall initially be unvested and
shall be subject to forfeiture to the Company pursuant to this Agreement.  At such time as a Restricted Share vests in
accordance with this Section 3, it shall no longer be a Restricted Share
and shall not be subject to forfeiture.

 

(b)           Time Vesting. 
[      ]
of the Restricted Shares shall vest based on the passage of time (“Time
Vesting Restricted Shares”).

 

(i)         Vesting
Schedule.  Subject to Section 3(b)(ii) and
to the Holder’s continued employment with the Company on each vesting date, the
Time Vesting Restricted Shares shall vest in equal 1/[   ] installments as of the last day of each of
the [   ] calendar months following the
Effective Date, which for the sake of clarity means [         ].

 

(ii)        Acceleration
upon Change of Control.  Upon the
occurrence of a Change of Control, all then unvested Time Vesting Restricted
Shares shall immediately vest in full, subject to Section 3(b)(iii).

 

(iii)       Termination.

 

Upon the termination of the Holder’s employment or for any reason, all
unvested Time Vesting Restricted Shares shall be forfeited.

 

(c)           Performance
Vesting. 
[      ] of the Restricted Shares shall
vest based on the Company attaining the following performance criteria (“Performance
Vesting Restricted Shares”).

 

(i)         Vesting
Schedule.  Subject to Section 3(c)(ii) and
to the Holder’s continued employment with the Company on each vesting date, the
Performance Vesting Restricted Shares shall vest in three (3) equal
installments following the three successive Fiscal Years, beginning with the
Fiscal Year ending on December 31, 2009 (for the 2009 Fiscal Year) if the
Equity Valuation, measured as of the end of such Fiscal Year, is no less than
the Performance Target for such Fiscal Year. 
If the Performance Target for any of the first two Fiscal Years referred
to above is not attained, the Yearly Amount for the previous unvested Fiscal
Year which is not then vested (or, if the Yearly Amount for the previous Fiscal
Year has vested, then the Yearly Amount for the prior unvested Fiscal Year)
shall become vested and exercisable at the end of the first Fiscal Year
thereafter in which the Equity Valuation for such Fiscal Year is no less than
the Performance Target for such Fiscal Year. 
For purposes of illustration of the previous sentence, if 

 

2

 

the Performance Target is not achieved for the 2009 and 2010 Fiscal
Years but is achieved for the 2011 Fiscal Year, in 2011, the Yearly Amounts for
both 2010 and 2011 would become vested.

 

(ii)        Acceleration
upon Change of Control.  Upon the
occurrence of a Change of Control, all then unvested Performance Vesting
Restricted Shares shall immediately vest in full, so long as the Holder is
employed with the Company on the date of the Change of Control.

 

(iii)       Termination.  Upon the termination of employment of the
Holder for any reason, the unvested Performance Vesting Restricted Shares shall
be forfeited.

 

4.             Legend.

 

(a)           Each certificate representing Restricted Shares shall bear
each of the following legends.

 

“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT
SUCH REGISTRATION IS NOT REQUIRED.”

 

“THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXCHANGED UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OR
EXCHANGE COMPLIES WITH THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT AND
THE RESTRICTED COMMON STOCK AGREEMENT, EACH AS AMENDED FROM TIME TO TIME,
BETWEEN OR AMONG THE COMPANY AND THE INVESTORS PARTY THERETO.  IN ADDITION TO RESTRICTIONS ON TRANSFER, THE
RESTRICTED COMMON STOCK AGREEMENT PROVIDES FOR THE VESTING OF THE SHARES
ACCORDING TO THE SPECIFIC PROVISIONS OF THE RESTRICTED COMMON STOCK AGREEMENT.  COPIES OF THE REGISTRATION RIGHTS AGREEMENT
AND THE RESTRICTED COMMON STOCK AGREEMENT ARE ON FILE WITH THE COMPANY.”

 

(b)           The certificates shall also bear any legend required by
any applicable state securities law.

 

(c)           The certificates shall be deposited by the Holder,
together with a stock power endorsed in blank, with the Company, to be held in
escrow during any restriction period.

 

5.             Restrictions on Transfer and Conversion.

 

(a)           The Company and the Holder acknowledge and agree that the
Restricted Shares are subject to and restricted by this Agreement.  Once vested, the Restricted Shares shall no
longer be restricted by the terms of this Agreement but shall be subject to the
restrictions set forth in the Registration Rights Agreement and the Securities
Act.

 

(b)           The Restricted Shares shall only be transferable to
Permitted Transferees of the Holder.  Any
attempt to Transfer any of the Restricted Shares to Persons other than
Permitted Transferees 

 

3

 

of the Holder shall be null
and void and have no force or effect, and the Company shall not, and shall
cause any transfer agent not to, give any effect in such entity’s share records
to such attempted Transfer.

 

(c)           The Holder acknowledges that the transfer restrictions
contained in this Agreement are reasonable and in the best interests of the
Company.  The Holder understands that
this  Agreement contains forfeiture
provisions in respect of the Restricted Shares in favor of the Company or its
designee upon the Holder’s termination of employment.

 

6.             Definitions.

 

The following terms shall have the meanings ascribed
below:

 

“Affiliate” of any Person means any Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with such Person.

 

“Cause” means “cause” as defined in the Holder’s
employment agreement with the Company or any of its subsidiaries.

 

“Change of Control” means:

 

(i)            the
sale (in one transaction or a series of transactions) of all or substantially
all of the assets of the Company to a third party other than any of the
Existing Stockholders or any of their respective Affiliates;

 

(ii)           a
sale or issuance (in one transaction or a series of transactions) of any
securities resulting in more than 50% of the voting power of the Company being
held by a “person” or “group” (as such terms are used in the Exchange Act) that
does not include any of the Existing Stockholders or any of their respective
Affiliates;

 

(iii)          a
merger or consolidation of the Company with or into another Person if following
such merger or consolidation, more than 50% of the voting power of the Company
is held by a “person” or “group” (as such terms are used in the Exchange Act)
that does not include any of the Existing Stockholders or any of their respective
Affiliates; or

 

(iv)          the
sale or Transfer by the DLJMB Stockholders to a prospective purchaser (other
than a Permitted Transferee) of fifty percent (50%) or more of their original
beneficial ownership of the Company.

 

“Control” and “Controlled” mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

 

“Consolidated EBITDA” means Consolidated EBITDA as
defined pursuant to that certain Credit Agreement, dated as of June 15,
2007, by and between the Company, STR Acquisition, Inc. the Lenders (as
defined therein) and Credit Suisse, Cayman Islands Branch, as it may be amended
or restated from time to time.

 

“Consolidated Net Debt” means (i) any
Indebtedness of the Company and its subsidiaries minus (ii) the Company’s
and its subsidiaries’ cash on hand and in banks, and any liquid investments
readily convertible to cash, excluding any cash held in escrow or otherwise
restricted.

 

4

 

“DLJMB Stockholders” means DLJ Merchant Banking
Partners IV, L.P., DLJMB Offshore Partners IV, L.P., DLJ Merchant Banking
Partners IV (Pacific), L.P. and MBP IV Plan Investors, L.P., DLJ Merchant
Banking Partners IV (Co-Investments), L.P., together with any Permitted
Transferees thereof.

 

“Equity Valuation” means, with respect to a
particular Fiscal Year, (i) the product of (A) ten (10) and (B) the
Consolidated EBITDA for such Fiscal Year, less (ii) Consolidated Net Debt
as of the end of such Fiscal Year.

 

“Exchange Act” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

 

“Existing Stockholders” means each of the
Stockholders other than the Management Stockholders.

 

“Fiscal Year” means the twelve month period ending
on the last day of each calendar year.

 

“Good Reason” means “good reason” as defined in the
Holder’s employment agreement with the Company or any of its subsidiaries.

 

“Indebtedness” means, without duplication, the sum
of:  (i) all principal and accrued
(but unpaid) interest owing by the Company and its subsidiaries for debt for
borrowed money owed to any third party (specifically excluding intercompany
debt between the Company and any of its subsidiaries and any subsidiary of the
Company and another subsidiary of the Company); plus (ii) all obligations
of the Company and its subsidiaries under leases that have been recorded as
capital leases under GAAP; plus (iii) indebtedness of any person other
than the Company or any of its subsidiaries that is guaranteed by the Company
or any of its subsidiaries.

 

“Initial Public Offering” means the underwritten
initial public offering of Common Stock of the Company pursuant to an effective
registration statement filed under the Securities Act.

 

“Management Stockholder” means any Stockholder who
is an employee of the Company or any of its subsidiaries.  In no event shall any DLJMB Stockholder be
deemed to be a Management Stockholder.

 

“Other Stockholder” means each of the Stockholders
other than the DLJMB Stockholders, the Management Stockholders and the Whitney
Stockholders.

 

“Performance Target” means the Equity Valuation
target for each Fiscal Year as set forth on Schedule I hereto with respect to
Performance Vesting Restricted Shares.

 

“Permitted Transferees” means (i) in the case
of any DLJMB Stockholder, (A) any other DLJMB Stockholder, (B), any actual
or prospective shareholder, member or general or limited partner of any DLJMB Stockholder
(a “DLJMB Partner”), and any corporation, partnership, limited liability
company, or other entity that is an Affiliate of any DLJMB Partner
(collectively, “DLJMB Affiliates”), (C) any managing director, general
partner, director, limited partner, officer or employee of any DLJMB
Stockholder or any DLJMB Affiliate, or any spouse, lineal descendant, sibling,
parent, heir, executor, administrator, testamentary trustee, legatee or
beneficiary of any of the foregoing persons described in this clause (C) (collectively,
“DLJMB Associates”) or (D) any trust the beneficiaries of which, or any
corporation, limited liability company or partnership the stockholders, members
or general or limited 

 

5

 

partners of which, include
only such DLJMB Stockholders, DLJMB Affiliates, DLJMB Associates, their spouses
or other lineal descendants;

 

(ii)           in
the case of any Other Stockholder, (A) any entity that is an Affiliate of
such Other Stockholder, (B) any actual or prospective shareholder, member
or general or limited partner of any such Other Stockholder, and any
corporation, partnership, limited liability company, or other entity that is an
Affiliate of any such Other Stockholder, (C) any spouse, lineal
descendant, sibling, parent, heir, executor, administrator, testamentary
trustee, legatee or beneficiary of such Other Stockholder, or (D) a trust
that is for the exclusive benefit of such Other Stockholder or its Permitted
Transferees under clause (B) above;

 

(iii)          in
the case of any Whitney Stockholders, any other Whitney Stockholder; and

 

(iv)          in
the case of any Management Stockholder, (A) any spouse, lineal descendant,
sibling, parent, heir, executor, administrator, testamentary trustee, legatee
or beneficiary of the Holder, (B) a trust that is for the exclusive
benefit of the Holder or the transferees listed in (A) above or (C) a
limited liability company or corporation, all of the outstanding capital stock
or membership interests of which is of record and beneficially owned by the
Holder or any of those Persons in clause (A) above.

 

“Person” means any individual or any general
partnership, limited partnership, limited liability company, corporation, joint
venture, trust, business trust, cooperative, association or other entity and,
where the context so permits, the legal representatives, successors in interest
and permitted assigns of such Person.

 

“Registration Rights Agreement” means the
Registration Rights Agreement, dated as of [                    ],
among the Company and certain stockholders of the Company, as amended, modified
or supplemented from time to time.

 

“Restricted Share Permitted Transferees” means (i) any
spouse, lineal descendant, sibling, parent, heir, executor, administrator,
testamentary trustee, legatee or beneficiary of the Holder, (ii) a trust
that is for the exclusive benefit of the Holder or its Restricted Share
Permitted Transferees under clause (i) above or (iii) a limited
liability company or corporation, all of the outstanding capital stock or
membership interests of which is of record and beneficially owned by the Holder
or any of those Persons in clause (i) above.

 

“Securities Act” means the Securities Act of 1933, as amended, or
any successor federal law then in force.

 

“Stockholder” means each Person who held Common
Stock of the Company prior to the Initial Public Offering together with any
Permitted Transferees thereof, so long as such Person or Permitted Transferee
thereof holds such Common Stock.

 

“Transfer” means the sale, transfer, assignment, pledge or other
disposal (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law) of any Restricted Shares.

 

“Whitney Stockholder” means Prairie Fire Trust,
Michael R. Stone, Michael R. Stone 2008 GRAT, MRS Trust, Harrington Sound, LLC
and Paul Vigano.

 

“Yearly Amount” means the number of Performance
Vesting Restricted Shares divided by three (3).

 

6

 

7.             General Provisions.

 

(a)           Notices.  Any
notification required by the terms of this Agreement shall be given in writing
and shall be deemed effective upon personal delivery or within three (3) days
of deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid.  A
notice shall be addressed to the Company at its principal executive office and
to the Holder at the address that he or she most recently provided to the
Company.

 

(b)           Survival of Representations, Warranties and Agreements.  All representations, warranties and
agreements contained herein shall survive indefinitely, including following
termination of this Agreement or of the Holder’s employment with the Company.

 

(c)           Entire Agreement. 
This Agreement and the Registration Rights Agreement shall constitute
the entire contract between the parties hereto with regard to the subject
matter hereof.  They supersede any other
agreements, representations or understandings (whether oral or written and
whether express or implied) which relate to the subject matter hereof.

 

(d)           Waiver.  No
waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition whether of like or
different nature.

 

(e)           Successors and Assigns.  The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and upon the Holder, the Holder’s assigns and the legal
representatives, heirs and legatees of the Holder’s estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to be joined herein and be bound by the terms hereof.

 

(f)            Choice of Law; Jurisdiction; Waiver of Jury Trial.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF DELAWARE WITHOUT
REGARD TO CONFLICTS OF LAWS.

 

SUBJECT TO THE TERMS OF THIS AGREEMENT, THE PARTIES AGREE THAT ANY AND
ALL ACTIONS ARISING UNDER OR IN RESPECT OF THIS AGREEMENT SHALL BE LITIGATED IN
THE FEDERAL OR STATE COURTS IN DELAWARE. 
BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY IRREVOCABLY
SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS FOR ITSELF, HIMSELF, OR
HERSELF AND IN RESPECT OF ITS, HIS OR HER PROPERTY WITH RESPECT TO SUCH
ACTION.  EACH PARTY AGREES THAT VENUE
WOULD BE PROPER IN ANY OF SUCH COURTS, AND HEREBY WAIVES ANY OBJECTION THAT ANY
SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH
ACTION.

 

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT.

 

(g)           Amendment. 
The Board of Directors of the Company, or the Compensation Committee
thereof, may amend or alter this Agreement and the Restricted Shares issued
hereunder at any time; provided that, no such amendment or alteration shall be
made without the consent of the Holder if such action would materially diminish
any of the rights of the Holder under this Agreement or with respect to the
Restricted Shares.

 

7

 

(h)           Employment Rights. 
Neither this Agreement nor any of its provisions is intended to confer
or should be construed as conferring any rights on the Holder to continued
employment with the Company or any rights of employment for a fixed term.  No contract of employment, express or
implied, is created hereby and nothing contained herein shall be construed as
creating a joint venture, partnership, agency or other enterprise between the
parties.

 

(i)            No Waiver; Modifications in Writing.  No waiver of or consent to any departure from
any provision of this Agreement shall be effective unless signed in writing by
the party entitled to the benefit thereof; provided, however, that the Company
may amend, modify or terminate the terms of the Restricted Shares in accordance
with the terms in the Company’s Certificate of Incorporation.

 

(j)            Severability. The provisions of this Agreement are severable
and if any one or more provisions are determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.

 

(k)           Signature in Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

8

 

IN WITNESS WHEREOF, the parties hereto have executed
this Restricted Common Stock Agreement as of the date first written above.

 

 

	
   

  	
  STR HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLDER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                            ]

  

 

9

 

EXHIBIT A

 

Investment Representations and Warranties

 

The Holder hereby represents
and warrants to the Company that:

 

1.             The Restricted Shares received by
him will be held by him for investment only for his own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof in violation of applicable U.S. federal or state or foreign securities
laws.  The Holder has no current
intention of selling, granting participation in or otherwise distributing the
Restricted Shares in violation of applicable U.S. federal or state or foreign
securities laws.  The Holder does not have
any contract, undertaking, agreement or arrangement with any person or entity
to sell, transfer or grant participation to such person or entity, or to any
third person or entity, with respect to any of the Restricted Shares, in each
case, in violation of applicable U.S. federal or state or foreign securities
laws.

 

2.             The Holder understands
that the Restricted Shares have not been registered under the Securities Act or
any applicable U.S. federal, state or foreign securities laws, and that the
Restricted Shares are being issued in reliance on an exemption from
registration, which exemption depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of the Holder’s
representations as expressed herein.

 

3.             The Holder has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of his owning the Restricted Shares.  The Holder is a
sophisticated investor, has relied upon independent investigations made by the Holder and, to the
extent believed by the Holder to be appropriate, the Holder’s
representatives, including the Holder’s own
professional, tax and other advisors, and is making an independent decision to
invest in the Restricted Shares.  The Holder has been
furnished with such documents, materials and information that the Holder deems
necessary or appropriate concerning the terms and conditions of the
transactions contemplated by the Agreement and the Holder’s holding of
the Restricted Shares and for evaluating an investment in the Company, and the Holder has read
carefully such documents, materials and information and understands and has
evaluated the types of risks involved with holding the Restricted Shares.  The Holder has not relied
upon any representations or other information (whether oral or written) from
the Company or its stockholders, directors, officers or affiliates, or from any
other person or entity, in connection with his investment in the Restricted
Shares.  The Holder acknowledges
that the Company has not given any assurances with respect to the tax
consequences of the ownership and disposition of the Restricted Shares.

 

4.             The Holder understands
that no U.S. federal or state or foreign agency has passed upon the Restricted
Shares or upon the Company, or upon the accuracy, validity or completeness of
any documentation provided to the Holder in connection
with the transactions contemplated by the Agreement, nor has any such agency
made any finding or determination as to holding the Restricted Shares.

 

5.             The Holder understands
that there are substantial restrictions on the transferability of the
Restricted Shares and that on the date of the Agreement and for an indefinite
period thereafter there will be no public market for the Restricted Shares and,
accordingly, it may not be possible for the Holder to liquidate
his investment in case of emergency, if at all. 
In addition, the Holder understands that the
Agreement contains substantial restrictions on the 

 

A-1

 

transferability of the
Restricted Shares and provide that, in the event that the conditions relating
to the transfer of any Restricted Shares in such document have not been
satisfied, the holder shall not transfer any such Restricted Shares, and unless
otherwise specified the Company will not recognize the transfer of any such
Restricted Shares on its books and records or issue any share certificates
representing any such Restricted Shares, and any purported transfer not in
accordance with the terms of the Agreement shall be void.  As such, Holder understands
that: a restrictive legend or legends in a form to be set forth in the
Agreement will be placed on the certificates representing the Restricted
Shares; a notation will be made in the appropriate records of the Company
indicating that each of the Restricted Shares are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer instructions
will be issued to such transfer agent with respect to the Restricted Shares;
and the Holder will sell, transfer or otherwise dispose of the
Restricted Shares only in a manner consistent with the Holder’s
representations set forth herein and then only in accordance with the
Agreement.

 

6.             The Holder understands
that (i) the Restricted Shares may not be sold, transferred or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom, (ii) the Restricted Shares have not been registered under the
Securities Act; (iii) the Restricted Shares must be held indefinitely and
he must continue to bear the economic risk of holding the Restricted Shares
unless such shares are subsequently registered under the Securities Act or an
exemption from such registration is available; (iv) the Holder is prepared to
bear the economic risk of holding the Restricted Shares for an indefinite
period of time; (v) it is not anticipated that there will be any public
market for the Restricted Shares; (vi) the Restricted Shares are
characterized as “restricted securities” under the U.S. federal securities
laws; and (vii) the Restricted Shares may not be sold, transferred or
otherwise disposed of except in compliance with federal, state and local law.

 

7.             The Holder understands
that an investment in the Restricted Shares is not recommended for investors
who have any need for a current return on this investment or who cannot bear
the risk of losing their entire investment. 
In that regard, the Holder understands that his
holding the Restricted Shares involves a high degree of risk of loss.  The Holder acknowledges
that: (i) he has adequate means of providing for his current needs and
possible personal contingencies and has no need for liquidity in this
investment; (ii) his commitment to investments which are not readily
marketable is not disproportionate to his net worth; and (iii) his holding
the Restricted Shares will not cause his overall financial commitments to
become excessive.

 

8.             The Holder is/is not
(circle one) an “accredited investor,” as such term is defined in Rule 501
of the Securities Act.

 

 

SCHEDULE
I

 

Restricted
Stock Performance Target Calculation

 

	
   

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Adjusted
  EBITDA

  	
   

  	
  $

  	
  66.6

  	
   

  	
  $

  	
  82.3

  	
   

  	
  $

  	
  103.5

  	
   

  
	
  EV
  / EBITDA Multiple

  	
   

  	
  10.0

  	
  x

  	
  10.0

  	
  x

  	
  10.0

  	
  x

  
	
  Enterprise
  Value

  	
   

  	
  $

  	
  665.6

  	
   

  	
  $

  	
  823.1

  	
   

  	
  $

  	
  1,034.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less:
  Net Debt on Balance Sheet

  	
   

  	
  (235.9

  	
  )

  	
  (225.9

  	
  )

  	
  (206.4

  	
  )

  
	
  Value
  of Common Equity

  	
   

  	
  $

  	
  429.8

  	
   

  	
  $

  	
  597.3

  	
   

  	
  $

  	
  828.1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance
  Threshold

  	
   

  	
  85.0

  	
  %

  	
  85.0

  	
  %

  	
  85.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance Target

  	
   

  	
  $

  	
  365.3

  	
   

  	
  $

  	
  507.7

  	
   

  	
  $

  	
  703.8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}]]