Document:

Exhibit
10.1

 

INDEMNITY
AGREEMENT

 

This
Indemnity Agreement (“Agreement”) is made as of November 6,
2009 by and between STR Holdings, Inc. a Delaware corporation (the “Company”),
and [          ] (“Indemnitee”).

 

RECITALS

 

WHEREAS,
highly competent persons have become more reluctant to serve publicly-held
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of
their service to and activities on behalf of the corporation.

 

WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that,
in order to attract and retain qualified individuals, the Company will maintain
on an ongoing basis, at its sole expense, liability insurance to protect
persons serving the Company and its subsidiaries from certain liabilities.  The Certificate of Incorporation (the “Charter”)
of the Company and the Bylaws (the “Bylaws”) of the Company provide for
indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to
indemnification pursuant to the Delaware General Corporation Law (“DGCL”).  The Charter, Bylaws and the DGCL expressly
provide that the indemnification provisions set forth therein are not
exclusive, and thereby contemplate that contracts may be entered into between
the Company and members of the board of directors, officers and other persons
with respect to indemnification.

 

WHEREAS,
the uncertainties relating to such insurance and to indemnification have
increased the difficulty of attracting and retaining such persons.

 

WHEREAS,
the Board has determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the Company’s
stockholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future.

 

WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the
fullest extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified.

 

WHEREAS,
this Agreement is a supplement to and in furtherance of the Charter and Bylaws
and any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder.

 

NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:

 

 

1.             Services to the Company.  Indemnitee will serve as a director and/or
officer of the Company or Enterprise for so long as Indemnitee is duly elected
or appointed or until Indemnitee tenders his resignation or is terminated.

 

2.             Definitions.  For purposes of this Agreement, the following
terms shall have the following meanings:

 

(a)           “Corporate
Status” describes the status of a person who is or was a director, officer,
trustee, partner, managing member, fiduciary, employee or agent of the Company
or of any other Enterprise which such person is or was serving at the request
of the Company.

 

(b)           “Disinterested
Director” shall mean a director of the Company who is not and was not a party
to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)           “Enterprise”
shall mean the Company, any Subsidiary of the Company and any other
corporation, limited liability company, partnership, limited partnership,
limited liability partnership, joint venture, trust, employee benefit plan or
other Enterprise of which Indemnitee is or was serving at the request of the
Company as a director, officer, employee, trustee, partner, managing member,
fiduciary, employee or agent.

 

(d)           “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(e)           “Expenses”
shall include attorneys’ fees and costs, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing
to be a witness in, or otherwise participating in, a Proceeding.  Expenses also shall include Expenses incurred
in connection with any appeal resulting from any Proceeding, including without
limitation, the premium, security for, and other costs relating to any cost
bond, supersedeas bond, or other appeal bond or its equivalent.

 

(f)            “Independent
Counsel” shall mean a law firm, or a member of a law firm, that is experienced
in matters of corporation law and neither presently is, nor in the past five
years has been, retained to represent:  (i) the
Company or Indemnitee in any matter material to either such party (other than
with respect to matters concerning the Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements), or (ii) any
other party to the Proceeding giving rise to a claim for indemnification
hereunder.  Notwithstanding the
foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee’s rights under this Agreement.

 

(g)           “Person”
shall have the meaning as set forth in Sections 13(d) and 14(d) of
the Exchange Act; provided, however, that Person shall exclude (i) the
Company, (ii) any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, and (iii) 

 

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any corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.

 

(h)           The
term “Proceeding” shall include any threatened, pending or completed action,
suit, claim, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative or investigative nature, in which Indemnitee
was, is or will be involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of any
action taken by him or of any inaction on his part while acting as director or
officer of the Company, or by reason of the fact that he is or was serving at
the request of the Company as a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent of any other Enterprise, in each
case whether or not serving in such capacity at the time any liability or
expense is incurred for which indemnification, reimbursement, or advancement of
expenses can be provided under this Agreement.

 

(i)            “Subsidiary”
shall mean, in respect of any Person, any corporation, association, limited
liability company, partnership or other business entity of which more than 50%
of the total voting power of shares of capital stock or other interests (including
partnership or membership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one
or more Subsidiaries of such Person.

 

(j)            References
to “fines” shall include any excise tax assessed with respect to any employee
benefit plan; references to “serving at the request of the Company” shall
include any service as a director, officer, trustee, partner, managing member,
fiduciary, employee or agent of the Company or which imposes duties on, or
involves services by, such director, officer, trustee, partner, managing
member, fiduciary, employee or agent with respect to an employee benefit plan,
its participants or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner “not opposed to the best interests of the Company” as such terms are
referred to in this Agreement and used in the DGCL.

 

3.             Indemnity in Third-Party Proceedings.  The Company shall indemnify and hold harmless
Indemnitee in accordance with the provisions of this Section 3 if
Indemnitee is made, or is threatened to be made, a party to or a participant in
(as a witness or otherwise) any Proceeding, other than a Proceeding by or in
the right of the Company to procure a judgment in its favor.  Pursuant to this Section 3,
Indemnitee shall be indemnified against all Expenses, judgments, liabilities,
fines, penalties and amounts paid in settlement (including, without limitation,
all interest, assessments and other charges paid or payable in connection with
or in respect of any of the foregoing) (collectively, “Losses”) actually
and reasonably incurred by Indemnitee or on his or her behalf in connection
with such Proceeding or any action, discovery event, claim, issue or matter
therein or related thereto, if Indemnitee acted in good faith, for a purpose
which he reasonably believed to be in or not opposed to the best interests of
the Company and, in the case of a criminal Proceeding, in addition, had no reasonable
cause to believe that his or her conduct was unlawful.

 

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4.             Indemnity in Proceedings by or in the Right of the
Company.  The Company shall
indemnify and hold harmless Indemnitee in accordance with the provisions of
this Section 4 if Indemnitee was, is, or is threatened to be made,
a party to or a participant (as a witness or otherwise) in any Proceeding by or
in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 4,
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection with such Proceeding or any
claim, issue or matter therein, if Indemnitee acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company.  No indemnification for
Expenses shall be made under this Section 4 in respect of any
claim, issue or matter as to which Indemnitee shall have been finally adjudged
by a court in a non-appealable decision to be liable to the Company, unless and
only to the extent that any court in which the Proceeding was brought or the
Delaware Court (as defined below) shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnification.

 

5.             Indemnification for Expenses of a Party Who is Wholly
or Partly Successful.  Notwithstanding
any other provisions of this Agreement, to the extent that Indemnitee is a
party to (or a participant in) and is successful, on the merits or otherwise,
in any Proceeding or in defense of any claim, issue or matter therein, in whole
or in part, the Company shall indemnify and hold harmless Indemnitee against all
Expenses actually and reasonably incurred by him in connection therewith.  If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify and hold harmless Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with
each successfully resolved claim, issue or matter.  If the Indemnitee is not wholly successful in
such Proceeding, the Company also shall indemnify and hold harmless Indemnitee
against all Expenses reasonably incurred in connection with a claim, issue or
matter related to any claim, issue, or matter on which the Indemnitee was
successful.  For purposes of this Section 5
and without limitation, the termination of any claim, issue or matter in such a
Proceeding by withdrawal or dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.

 

6.             Indemnification For Expenses of a Witness.  Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his or her Corporate
Status, a witness in any Proceeding to which Indemnitee is not a party, he
shall be indemnified and held harmless against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.

 

7.             Additional Indemnification.

 

(a)           Notwithstanding
any limitation in Sections 3, 4 or 5 hereof, the Company
shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee
is made, or is threatened to be made, a party to any Proceeding (including a
Proceeding by or in the right of the Company to procure a judgment in its
favor) against all Losses actually and reasonably incurred by Indemnitee in
connection with the Proceeding.  No
indemnification shall be made under this Section 7(a) on
account of Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty
of loyalty to the Company or its stockholders or is an act or omission not in
good faith or which involves intentional misconduct or a knowing violation of
the law.

 

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(b)           For
purposes of Section 7(a) hereof, the meaning of the phrase “to
the fullest extent permitted by law” shall include, but not be limited to:

 

i.              to the fullest extent authorized or
permitted by the provisions of the DGCL as in effect as of the date of this
Agreement that authorize or contemplate indemnification by agreement; and

 

ii.             to
the fullest extent authorized or permitted by any amendments to or replacements
of the DGCL adopted after the date of this Agreement that increase the extent
to which a corporation may indemnify its officers and directors.

 

8.             Contribution in the Event of Joint Liability.

 

(a)           Whether
or not any of the indemnification and hold harmless rights provided in Sections
3, 4, 5 and 7 hereof are available in respect of
any Proceeding in which the Company is jointly liable with Indemnitee (or would
be if joined in such Proceeding), the Company shall pay, in the first instance,
the entire amount of any judgment or settlement of such Proceeding without
requiring Indemnitee to contribute to such payment, and the Company hereby
waives and relinquishes any right of contribution it may have against
Indemnitee.  The Company shall not enter
into any settlement of any Proceeding in which the Company is jointly liable
with Indemnitee (or would be if joined in such Proceeding) unless such
settlement provides for a full and final release of all claims asserted against
Indemnitee.

 

(b)           Without
diminishing or impairing the obligations of the Company set forth in the
preceding subparagraph, if, for any reason, Indemnitee shall elect or be
required to pay all or any portion of any judgment or settlement in any
Proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such Proceeding), the Company shall contribute to the amount of
Expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually incurred and paid or payable by Indemnitee in proportion to
the relative benefits received by the Company and all officers, directors or
employees of the Company other than Indemnitee who are jointly liable with
Indemnitee (or would be if joined in such Proceeding), on the one hand, and
Indemnitee, on the other hand, from the transaction from which such Proceeding
arose; provided, however, that the proportion determined on the basis of
relative benefit may, to the extent necessary to conform to law, be further
adjusted by reference to the relative fault of the Company and all officers,
directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such Proceeding), on the one
hand, and Indemnitee, on the other hand, in connection with the events that
resulted in such expenses, judgments, fines or amounts paid in settlement, as
well as any other equitable considerations. 
The relative fault of the Company and all officers, directors or employees
of the Company other than Indemnitee who are jointly liable with Indemnitee (or
would be if joined in such Proceeding), on the one hand, and Indemnitee, on the
other hand, shall be determined by reference to, among other things, the degree
to which their actions were motivated by intent to gain personal profit or
advantage, the degree to which their liability is primary or secondary, and the
degree to which their conduct is active or passive.

 

(c)           The
Company hereby agrees to fully indemnify and hold harmless Indemnitee from any
claims for contribution which may be brought by officers, directors or
employees of the Company other than Indemnitee who may be jointly liable with
Indemnitee.

 

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9.             Exclusions.  Notwithstanding
any provision in this Agreement, the Company shall not be obligated under this
Agreement to make any indemnity payment in connection with any claim made
against Indemnitee:

 

(a)           for
which payment actually has been received by or on behalf of Indemnitee under
any insurance policy or other indemnity provision, except with respect to any
excess beyond the amount actually received under any insurance policy or other
indemnity provision; or

 

(b)           for
an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of securities of the Company within the meaning of Section 16(b) of
the Exchange Act or similar provisions of state statutory law or common law;

 

(c)           except
as otherwise provided in Sections 14(d)-(e) hereof, in connection
with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by
Indemnitee against the Company or its directors, officers, employees or other
indemnitees, unless (i) the Board authorized the Proceeding (or any part
of any Proceeding) prior to its initiation or (ii) the Company provides
the indemnification, in its sole discretion, pursuant to the powers vested in
the Company under applicable law; or

 

(d)           to
the extent such payment would violate Section 402 of the Sarbanes-Oxley
Act of 2002.

 

10.           Advances of Expenses; Defense of Claim.

 

(a)           Notwithstanding
any provision of this Agreement to the contrary, the Company shall advance the
Expenses incurred by Indemnitee to the fullest extent permitted by law in
connection with any Proceeding within ten (10) business days after the
receipt by the Company of a statement or statements (including, at the request
of the Company, reasonable detail underlying the expenses for which payment is
requested) requesting such advances from time to time, whether prior to or
after final disposition of any Proceeding. 
Advances shall be unsecured, interest free and shall be made without
regard to Indemnitee’s ability to repay the Expenses and without regard to
Indemnitee’s ultimate entitlement to indemnification under the other provisions
of this Agreement.  Advances shall
include any and all reasonable Expenses incurred pursuing a Proceeding to
enforce this right of advancement, including Expenses incurred preparing and
forwarding statements to the Company to support the advances claimed.  The Indemnitee shall qualify for advances
solely upon the execution and delivery to the Company of an undertaking
providing that the Indemnitee undertakes to repay the advance to the extent
that it is ultimately determined that Indemnitee is not entitled to be
indemnified by the Company.  This Section 10(a) shall
not apply to any claim made by Indemnitee for which indemnity is excluded
pursuant to Section 9 hereof.

 

(b)           The
Company will be entitled to participate in the Proceeding at its own cost and
expense.

 

(c)           In
the event the Company shall be obligated under this Section 10
hereof to pay the expenses of any Proceeding against Indemnitee, the Company,
if appropriate, shall be entitled to assume the defense of such Proceeding,
with counsel approved by Indemnitee, which 

 

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approval
shall not be unreasonably withheld, upon the delivery to Indemnitee of written
notice of its election so to do.  After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently paid or
incurred by Indemnitee with respect to the same Proceeding, provided that (a) Indemnitee
shall have the right to employ his counsel in any such Proceeding at Indemnitee’s
expense; and (b) if (1) the employment of counsel by Indemnitee has
been authorized by the Company, (2) (i) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company (or any other person or persons included in a joint defense) and
Indemnitee in the conduct of any such defense or (ii) representation by
such counsel retained by the Company would be precluded under the applicable
standards of professional conduct, or (3) the Company shall not, in fact,
have employed counsel to assume the defense of such Proceeding, then the fees and
expenses of Indemnitee’s counsel shall be at the expense of the Company.  The Company shall not be entitled to assume
the defense of any Proceeding brought by or on behalf of the Company or as to
which Indemnitee shall have reasonably made the conclusion provided for in (2) above.

 

11.           Procedure for Notification and Application for
Indemnification.

 

(a)           Indemnitee
agrees to notify promptly the Company in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.  The failure of Indemnitee to so notify the
Company shall not relieve the Company of any obligation which it may have to
the Indemnitee under this Agreement or otherwise unless the Company is
materially prejudiced by such failure.

 

(b)           Indemnitee
shall thereafter deliver to the Company a written application to indemnify and
hold harmless Indemnitee in accordance with this Agreement.  Such application(s) may be delivered
from time to time and at such time(s) as reasonably appropriate.  Following such a written application for
indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification
shall be determined according to Section 12(a) hereof.

 

12.           Procedure Upon Application for Indemnification.

 

(a)           Upon
written request by Indemnitee for indemnification pursuant to Section 11(b) hereof,
a determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case by one of the following
methods, which shall be at the election of Indemnitee:  (i) by a majority vote of the
Disinterested Directors, even though less than a quorum of the Board; (ii) by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee; or (iii) by the stockholders of the Company.  If it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10) business
days after such determination. 
Indemnitee shall reasonably cooperate with the person, persons or entity
making such determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination.  Any costs or expenses (including attorneys’
fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the
Company (irrespective of the 

 

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determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(b)           In
the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 12(a) hereof, the
Independent Counsel shall be selected as provided in this Section 12(b).  The Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board), and Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected.  If the Independent Counsel is selected by the
Board, the Company shall give written notice to Indemnitee advising him of the
identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company,
as the case may be, may, within ten (10) business days after such written
notice of selection shall have been received, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in Section 2 hereof, and the objection shall
set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the
person so selected shall act as Independent Counsel.  If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court of competent
jurisdiction has determined that such objection is without merit.  If, within twenty (20) business days after
submission by Indemnitee of a written request for indemnification pursuant to Section 11(b) hereof,
no Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition the Delaware Court (as defined below) for
resolution of any objection which shall have been made by the Company or
Indemnitee to the other’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Delaware Court,
and the person with respect to whom all objections are so resolved or the
person so appointed shall act as Independent Counsel under Section 12(a) hereof.  Upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 14(a) of this
Agreement, Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

 

(c)           The
Company agrees to pay the reasonable fees and expenses of Independent Counsel
and to fully indemnify and hold harmless such Independent Counsel against any
and all Expenses, claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto.

 

13.           Presumptions and Effect of Certain Proceedings.

 

(a)           Neither
the failure of the Company (including by its directors or Independent Counsel)
to have made a determination prior to the commencement of any action pursuant
to this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or Independent
Counsel) that Indemnitee has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that Indemnitee has not met
the applicable standard of conduct.

 

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(b)           If
the person, persons or entity empowered or selected under Section 12
of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within thirty (30) days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be made in accordance
with Section 14; provided, however, that such thirty
(30) day period may be extended for a reasonable time if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto or for compliance with
applicable advance notice provisions or delivery of meeting materials in
connection with any stockholder or board meeting.

 

(c)           The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo  contendere
or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was not
unlawful.

 

14.           Remedies of Indemnitee.

 

(a)           In
the event that (i) a determination is made pursuant to Section 12
hereof that Indemnitee is not entitled to indemnification under this Agreement,
(ii) advancement of Expenses is not timely made pursuant to Section 10
of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 12(a) of this
Agreement within thirty (30) days after receipt by the Company of the request
for indemnification (as such time period may extended in accordance with Section 13(b)),
(iv) payment of indemnification is not made pursuant to Section 5,
6 or the last sentence of Section 12(a) hereof within
ten (10) business days after receipt by the Company of a written request
therefor, or (v) payment of indemnification pursuant to Section 3,
Section 4 or Section 7 hereof is not made within ten (10) business
days after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication by the
Delaware Court (as defined below) to such indemnification or advancement of
Expenses.  Alternatively, Indemnitee, at
his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association.  Except as set
forth herein, the provisions of Delaware law (without regard to its conflict of
laws rules) shall apply to any such arbitration.  The Company shall not oppose Indemnitee’s
right to seek any such adjudication or award in arbitration.

 

(b)           If
a determination shall have been made pursuant to Section 12(a) hereof
that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 14 shall be
conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination.  If
Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14,
Indemnitee shall not be required to reimburse the Company for any advances
pursuant to Section 10 hereof until a final determination is made
with respect to Indemnitee’s entitlement to indemnification (as to which all
rights of appeal have been exhausted or lapsed).

 

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(c)           If
a determination shall have been made pursuant to Section 12(a) hereof
that Indemnitee is entitled to indemnification, the Company shall be bound by
such determination in any judicial proceeding or arbitration commenced pursuant
to this Section 14, absent (i) a misstatement by Indemnitee of
a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law.

 

(d)           The
Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 14 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.

 

(e)           The
Company shall indemnify and hold harmless Indemnitee to the fullest extent
permitted by law against all Expenses and, if requested by Indemnitee, shall
(within ten (10) business days after the Company’s receipt of such written
request) advance such Expenses to Indemnitee, which are incurred by Indemnitee
in connection with any judicial proceeding or arbitration brought by Indemnitee
(i) to enforce his rights under, or to recover damages for breach of, this
Agreement or any other indemnification, advancement or contribution agreement
or provision of the Company’s Charter or Bylaws now or hereafter in effect; or (ii) for
recovery or advances under any insurance policy maintained by any person for
the benefit of Indemnitee, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance, contribution or
insurance recovery, as the case may be.

 

15.           Non-exclusivity; Survival of Rights; Subrogation.

 

(a)           The
rights of indemnification and to receive advancement of Expenses as provided by
this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Charter,
Bylaws, any agreement, a vote of stockholders of the Company or a resolution of
the Board, or otherwise.  No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to
such amendment, alteration or repeal.  To
the extent that a change in Delaware law, whether by statute or judicial
decision, permits greater indemnification or advancement of Expenses than would
be afforded currently under the Charter, Bylaws or this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits so afforded by such change. 
No right or remedy herein conferred is intended to be exclusive of any
other right or remedy, and every other right and remedy shall be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. 
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.

 

(b)           The
Company or its Subsidiaries shall be primarily liable for all indemnification,
reimbursements, advancements or similar payments (the “Indemnity Obligations”)
afforded to Indemnitee acting on behalf or at the request of the Company or any
of its Subsidiaries, whether the Indemnity Obligations are created by law,
organizational or constituent documents, contract (including this Agreement) or
otherwise. Notwithstanding the fact that such Indemnitee’s employer, other than
the Company (such persons, together with its and their heirs, successors and
assigns, the “Employer Parties”), may have concurrent liability to
Indemnitee with respect to the Indemnity Obligations, the Company hereby agrees
that in no event shall the Company or any of its Subsidiaries have any right or
claim against any of the Employer Parties for contribution or have rights of
subrogation against any Employer Parties through Indemnitee for any payment
made by the Company or any of its Subsidiaries with respect to any Indemnity
Obligation. In addition, the Company hereby agrees that in the event that any
Employer Parties pay or advance to Indemnitee any amount with respect to an
Indemnity Obligation, the Company will, or will cause its Subsidiaries to, as
applicable, promptly reimburse such Employer Parties for such payment or
advance upon request.

 

(c)           In
the event of any payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of Indemnitee,
who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable
the Company to bring suit to enforce such rights.

 

10

 

(d)           The
Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder)
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement or otherwise.

 

(e)           The
Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee
who is or was serving at the request of the Company as a director, officer,
trustee, partner, managing member, fiduciary, employee or agent of any other
Enterprise shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of expenses from such Enterprise.

 

16.           Settlement.

 

(a)           Notwithstanding
anything in this Agreement to the contrary, the Company shall have no
obligation to indemnify Indemnitee under this Agreement for any amounts paid in
settlement of any Proceeding effected without the Company’s prior written
consent.

 

(b)           The
Company shall not, without the prior written consent of Indemnitee, consent to
the entry of any judgment against Indemnitee or enter into any settlement or
compromise which (1) includes an admission of fault of Indemnitee, any
non-monetary remedy affecting or obligation of Indemnitee, or monetary loss for
which Indemnitee is not wholly indemnified hereunder or (2) with respect
to any Proceeding with respect to which Indemnitee may be or is made a party,
witness or participant or may be or is otherwise entitled to seek
indemnification hereunder, does not include, as an unconditional term thereof,
the full release of Indemnitee from all liability in respect of such
Proceeding, which release shall be in form and substance reasonably
satisfactory to Indemnitee.  Neither the
Company nor Indemnitee shall unreasonably withhold its consent to any proposed
settlement under this Section 16.

 

17.           Insurance.

 

(a)           The
Company shall obtain and maintain a policy or policies of director’s and
officer’s liability insurance customary for similarly situated companies in a
sufficient amount as determined by the Board, with reputable insurance
companies providing the Indemnitee, other officers of the Company and members
of the Board with coverage for losses from wrongful acts, and to ensure the
Company’s performance of its indemnification obligations under this
Agreement.  In all policies of director
and officer liability insurance, Indemnitee shall be named as an insured in
such a manner as to provide Indemnitee at least the same rights and benefits as
are accorded to the most favorably insured of the Company’s officers and
directors.  Notwithstanding anything to
the contrary in this Agreement, the Company shall not indemnify the Indemnitee
to the extent the Indemnitee is actually reimbursed from the proceeds of
insurance, and in the event the Company makes any indemnification payments to
the Indemnitee and the Indemnitee is subsequently reimbursed from the proceeds
of insurance, the Indemnitee shall promptly refund such indemnification
payments to the Company to the extent of such insurance reimbursement.

 

18.           Duration of Agreement.  This Agreement shall continue until and
terminate upon the later of: (a) six (6) years after the date that
Indemnitee shall have ceased to serve as a director or officer of the Company
or as a director, officer, trustee, partner, managing member, 

 

11

 

fiduciary, employee or agent of any other corporation,
partnership, joint venture, trust, employee benefit plan or other Enterprise
which Indemnitee served at the request of the Company; or (b) one (1) year
after the final termination of any Proceeding (including any rights of appeal
thereto) then pending in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 14 hereof relating
thereto (including any rights of appeal of any Section 14
Proceeding).

 

19.           Severability.  If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section, paragraph or sentence of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby
and shall remain enforceable to the fullest extent permitted by law; (b) such
provision or provisions shall be deemed reformed to the extent necessary to
conform to applicable law and to give the maximum effect to the intent of the
parties hereto; and (c) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, each portion of any Section,
paragraph or sentence of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
thereby.

 

20.           Enforcement and Binding Effect.

 

(a)           The
Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director or officer of the Company, and the Company acknowledges
that Indemnitee is relying upon this Agreement in serving as a director or
officer of the Company.

 

(b)           This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof.

 

(c)           The
indemnification and advancement of expenses provided by, or granted pursuant to
this Agreement shall be binding upon and be enforceable by the parties hereto
and their respective successors and assigns (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), shall continue as
to an Indemnitee who has ceased to be a director, officer, employee or agent of
the Company or of any other Enterprise at the Company’s request, and shall
inure to the benefit of Indemnitee and his or her spouse, assigns, heirs,
devisees, executors and administrators and other legal representatives.

 

(d)           The
Company shall require and cause any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all, substantially all or a
substantial part, of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to the Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.

 

12

 

(e)           The
Company and Indemnitee agree herein that a monetary remedy for breach of this
Agreement, at some later date, may be inadequate, impracticable and difficult
of proof, and further agree that such breach may cause Indemnitee irreparable
harm.  Accordingly, the parties hereto
agree that Indemnitee may enforce this Agreement by seeking injunctive relief
and/or specific performance hereof, without any necessity of showing actual
damage or irreparable harm and that by seeking injunctive relief and/or
specific performance, Indemnitee shall not be precluded from seeking or
obtaining any other relief to which he may be entitled.  The Company and Indemnitee further agree that
Indemnitee shall be entitled to such specific performance and injunctive
relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions, without the necessity of posting bonds or other
undertaking in connection therewith.  The
Company acknowledges that in the absence of a waiver, a bond or undertaking may
be required of Indemnitee by any court of competent jurisdiction, and the
Company hereby waives any such requirement of such a bond or undertaking.

 

21.           Modification and Waiver.  No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
hereto.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions of this Agreement nor shall any waiver constitute a
continuing waiver.

 

22.           Notices. 
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) if
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (b) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:

 

(a)           If
to Indemnitee, at the address indicated on the signature page of this
Agreement, or such other address as Indemnitee shall provide in writing to the
Company.

 

(b)           If
to the Company to:

 

STR Holdings, Inc.

10 Water Street

Enfield, CT 06082

Attention:  Board of Directors

 

or to any other address as may have been furnished to Indemnitee in
writing by the Company.

 

23.           Contribution.  To the fullest extent permissible under
applicable law, if the indemnification provided for in this Agreement is
unavailable to Indemnitee in whole or in part for any reason whatsoever, the
Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes,
amounts paid or to be paid in settlement and/or for Expenses, in connection
with any claim relating to an indemnifiable event under this Agreement, in such
proportion as is deemed fair and reasonable in light of all of the
circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Company and Indemnitee as a result of the event(s) and/or
transaction(s) giving cause to such Proceeding; and (ii) the relative
fault of the Company (and its 

 

13

 

directors, officers, employees and agents) and
Indemnitee in connection with such event(s) and/or transaction(s).

 

24.           Applicable Law and Consent to Jurisdiction.  This Agreement and the legal
relations among the parties shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without regard to its
conflict of laws rules.  Except with
respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) hereof,
the Company and Indemnitee hereby irrevocably and unconditionally (i) agree
that any action or proceeding arising out of or in connection with this
Agreement shall be brought only in the Chancery Court of the State of Delaware
(the “Court”), and not in any other state or federal court in the United
States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Court for purposes of any action or
proceeding arising out of or in connection with this Agreement, (iii) waive
any objection to the laying of venue of any such action or proceeding in the
Court, and (iv) waive, and agree not to plead or to make, any claim that
any such action or proceeding brought in the Court has been brought in an
improper or inconvenient forum.

 

25.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party
against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.

 

26.           Miscellaneous.  Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate.  The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to constitute
part of this Agreement or to affect the construction thereof.

 

[Remainder of this
page intentionally left blank.]

 

14

 

	
  CONFIDENTIAL

  	
   

  	
   

  

 

 

IN WITNESS WHEREOF, the
parties have caused this Agreement to be signed as of the day and year first
above written.

 

 

	
  STR HOLDINGS, INC.

  	
   

  	
  INDEMNITEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
   

  	
  Address: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.

 

2

 

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.

 

3

 

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 

 

4

 

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 

 

5

 

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 

 

6

 

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).

 

7

 

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 

 

8

 

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 pursuant to a unanimous written consent of the Board of Directors of the Company dated the 6th day of November, 2009.
 

STR
HOLDINGS, INC.

 

 

	
  /s/
  Barry A. Morris

  	
   

  
	
  Name:

  	
  Barry
  A. Morris

  	
   

  
	
  Title:

  	
  Executive
  Vice President and Chief Financial Officer

  	
   

  

 

12

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