Exhibit 10.6
EXECUTION COPY
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“ Agreement ”), dated as of June 15, 2007,
is made by and between SPECIALIZED TECHNOLOGY RESOURCES, INC., a
Delaware corporation (together with any successor thereto, the
“ Company ”), and ROBERT S. YORGENSEN, of
Enfield, Connecticut (the “ Executive
”).
Recitals
A.
The Company desires to engage the
Executive to perform services under the terms hereof and the
Executive desires to be employed by the Company.
B.
The Company desires to be assured
that the unique and expert services of the Executive will be
substantially available to the Company, and that the Executive is
willing and able to render such services on the terms hereinafter
set forth.
C.
The Company desires to be assured
that the confidential information and goodwill of the Company will
be preserved for the exclusive benefit of the Company.
Terms
In consideration of such employment
and the respective agreements of the parties set forth below, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1.
Certain
Definitions
(a)
“ Annual Base Salary
” shall have the meaning set forth in
Section 3(a).
(b)
“ Board ” shall
mean the Board of Managers of Parent.
(c)
“ Bonus Compensation
” shall have the meaning set forth in
Section 3(b).
(d)
The Company shall have “
Cause ” to terminate the Executive’s employment
hereunder upon: (i) the Executive’s breach of
Section 2(c) (other than any such failure resulting from
the Executive’s Disability), which is not remedied within 30
days after receipt by the Executive of written notice from the
Company specifying such failure in reasonable detail; (ii) the
Executive’s failure or refusal to follow the reasonable
instructions of the Board or the board of directors of any
Subsidiary of the Company, which failure or refusal is not cured
within 30 days following written notice; (iii) the
Executive’s conviction of a felony or of a misdemeanor if
such misdemeanor involves moral turpitude or misrepresentation,
including a plea of guilty or nolo contendere ;
(iv) the Executive’s unlawful use (including being under
the influence) or possession of illegal drugs on the
Company’s or any of its Subsidiaries’ premises;
(v) the Executive’s commission of any act of fraud,
embezzlement, misappropriation of funds, material
misrepresentation, breach of fiduciary duty or other act of
dishonesty detrimental to the Company or any of its Subsidiaries;
or (vi) the Executive’s intentional wrongful act or
gross negligence that has a material detrimental effect on the
Company or its Subsidiaries.
(e)
“ Sale of the Company
” means either (i) a sale of more than 50% of the assets
of the Company or the Parent (ii) a sale or other transfer of
more than 50% of the
Company’s then outstanding stock or the
Parent’s outstanding Units (as defined in the LLC Agreement)
in a single transaction to persons or entities who are not
stockholders or unitholders at the time of the sale. For
purposes of determining whether a sale of more than 50% of the
Company’s or Parent’s assets has occurred, the change
of ownership rules set forth in Treas. Reg. §
1.409A-3(i)(5)(vii) shall apply. For purposes of
determining whether any person or entity is a stockholder or a
unitholder at the time of sale of more than 50% of the stock of the
Company or Units of the Parent, the attribution of ownership
rules set forth in Treas. Reg. §
1.409A-3(i)(5)(iii) shall apply. For purposes of
determining whether a sale or other transfer of more than 50% of
the outstanding stock of the Company or Units of the Parent has
occurred, the change in corporate ownership rules set forth in
Treas. Reg. § 1.409A-3(i)(5)(v), shall apply.
Notwithstanding the foregoing, neither of the events in clauses
(i) or (ii) herein shall be deemed a “Sale of the
Company” unless such event is a “change in the
ownership or event control of the corporation, or in the ownership
of a substantial portion of the assets of the corporation” as
defined in and for purposes of Section 409A of the Code and
the regulations thereunder.
(f)
“ Company ” shall
have the meaning set forth in the preamble hereto.
(g)
“ Date of Termination
” shall mean (i) if the Executive’s employment is
terminated by his death, the date of his death; (ii) if the
Executive’s employment is terminated due to his Disability,
the date determined pursuant to Section 4(a)(ii);
(iii) if the Executive’s employment is terminated
pursuant to Section 4(a)(iii)-(vi) either the date
indicated in the Notice of Termination or the date specified by the
Company pursuant to Section 4(b), whichever is earlier; or
(iv) if the Executive’s employment is terminated
pursuant to Section 4(a)(vii) the date on which the Term
expires.
(h)
“ Disability ”
shall mean any physical or mental illness, injury or infirmity
which prevents the Executive from performing the Executive’s
job functions for a period of (i) one hundred twenty
consecutive calendar days or (ii) an aggregate of one hundred
eighty calendar days out of any consecutive twelve month
period. Any determination of disability shall be made by the
Board in consultation with a qualified physician or physicians
selected by the Board and reasonably acceptable to the
Executive. The failure of the Executive to submit to a
reasonable examination by such physician or physicians shall act as
an estoppel to any objection by the Executive to the determination
of disability by the Board.
(i)
“ Effective Date
” shall have the meaning set forth in
Section 2(b).
(j)
“ Executive ”
shall have the meaning set forth in the preamble hereto.
(k)
The Executive shall have “
Good Reason ” to resign his employment upon the
occurrence (without the Executive’s prior written consent) of
any of the following: (A) a material diminution in the
nature or scope of the Executive’s responsibilities, duties
or authority in his capacity as President of the STR Solar business
of the Company, without regard to any other responsibilities,
duties or authority the Executive may have had or performed for the
Company at any time; (B) the Company’s material breach
of this Agreement; (C) any change in the Executive’s
reporting relationship so that he no longer reports to the Chief
Executive Officer; (D) a relocation of the Executive’s
place of employment to a location more than thirty miles by road
from Enfield, Connecticut; or (E) any decrease in the
Executive’s Annual Base Salary, target bonus percentage as
set forth in Section 3(a), or benefit plans, programs and
arrangements as in effect from time to time (other than a general
reduction in base salary, target bonus percentages or benefit
plans, programs and arrangements that affects all members of senior
management
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equally); provided, however , that the
Executive may not resign his employment for Good Reason
unless: (x) the Executive provided the Company with at
least 30 days prior written notice of his intent to resign for Good
Reason (which notice must be provided within 45 days following
(i) the occurrence of the event(s) purported to
constitute Good Reason, or (ii) if the Executive could not
reasonably have known of the occurrence of any of such events, the
date on which the Executive had actual knowledge of the occurrence
of any of such events); and (y) the Company has not remedied
the alleged occurrence(s) within the 30-day period following
its receipt of such notice from the Executive.
(l)
“ Notice of Termination
” shall have the meaning set forth in
Section 4(b).
(m)
“ Parent ” means
STR Holdings LLC, a Delaware limited liability company.
(n)
“ Term ” shall
have the meaning set forth in Section 2(b).
2.
Employment
(a)
In General
. The Company shall employ the
Executive and the Executive shall enter the employ of the Company,
for the period set forth in Section 2(b), in the position set
forth in Section 2(c), and upon the other terms and conditions
herein provided.
(b)
Term of Employment
. The initial term of
employment under this Agreement (the “ Initial Term
”) shall be for the period beginning on June 15, 2007
(the “ Effective Date ”) and ending on the third
anniversary thereof, unless earlier terminated as provided in
Section 4. The employment term hereunder shall
automatically be extended for successive one-year periods (“
Extension Terms ” and, collectively with the Initial
Term, the “ Term ”) unless either party gives
written notice of non-extension to the other no later than 60 days
prior to the expiration of the then applicable Term.
(c)
Position and Duties
. The Executive shall serve as
President of the STR Solar business of the Company, with
responsibilities, duties and authority customary for such position,
subject to direction by the Chief Executive Officer. The
Executive shall report to the Chief Executive Officer. The
Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company and its
subsidiaries. The Executive agrees to observe and comply with
the Company’s rules and policies as adopted by the
Company from time to time. During the Term, it shall not be a
violation of this Agreement for the Executive to (i) serve on
industry trade, civic or charitable boards or committees;
(ii) deliver lectures or fulfill speaking engagements; or
(iii) manage personal investments (which shall include
(x) investments by the Executive of his personal assets in any
business which does not compete directly or indirectly with the
Company, in such form or manner as will not require any services on
the part of the Executive in the operation of such business and
(y) the purchase by the Executive of a total of up to 1% of
the regularly traded securities of any entity, whether or not it
competes with the Company), as long as, in the reasonable judgment
of the Chief Executive Officer of the Company, such activities do
not and will not interfere with the performance of the
Executive’s duties and responsibilities as an employee of the
Company. The Executive shall perform his duties hereunder at
the Company’s corporate headquarters in Enfield, Connecticut
and shall travel as necessary or as reasonably requested by the
Chief Executive Officer of the Company.
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3.
Compensation and Related
Matters
(a)
Annual Base Salary
. During the Term, the
Executive shall receive a base salary at a rate of $235,000.00 per
annum, which shall be paid in accordance with the customary payroll
practices of the Company, subject to increase as determined by the
Board in its sole discretion (the “ Annual Base Salary
”). The Executive’s Annual Base Salary will be
reviewed annually by the Board and the Board may, in its sole
discretion, increase the Annual Base Salary considering the
Executive’s performance and that of the Company.
(b)
Bonus Compensation
.
(i)
In addition to the Annual Base
Salary, for each fiscal year, or portion thereof, during the Term,
the Executive shall be eligible to participate in the
Company’s management incentive plan (or any successor
incentive plan adopted by the Board) pursuant to which Executive
may be paid a target amount of 40% of his Annual Base Salary except
as the parties may have agreed otherwise in writing. The
Executive’s bonus will be based upon performance measured
against mutually agreed upon goals to be established as soon as
practicable after the date hereof. In the discretion of
management, Executive shall be eligible to receive incentive units
pursuant to the terms of the Amended and Restated Limited Liability
Company Agreement of STR Holdings LLC (the “ LLC
Agreement ”).
(ii)
In accordance with Section 2.9
of the Amended and Restated Merger Agreement, dated June 15,
2007, by and among the Company, STR Holdings LLC and STR
Acquisition, Inc. (the “ Merger Agreement
”) and in consideration of the Executive’s desire to
“rollover” options exercisable for (A) 12,500
shares of the Company at an exercise price of $3.25 per share and
(B) 2,500 shares of the Company at an exercise price of $0.50
per share for options of an equivalent value in the Surviving
Corporation (as defined in the Merger Agreement), which rollover
could not be accommodated due to structural restrictions, the
Company shall pay the Executive a bonus equal to the lesser of
(A) the sum of (1) an amount equal to the product of
(i) 12,500 and (ii) the excess of the Per Share Merger
Consideration (as defined in the Merger Agreement) over $3.25 and
(2) an amount equal to the product of (i) 2,500 and
(ii) the excess of the Per Share Merger Consideration over
$0.50 (the “ Aggregate Spread ”) and
(B) and the “fair market value” of that number of
Class A Units of STR Holdings, LLC equal to the quotient
achieved by dividing the Aggregate Spread by $10.00 (the “
Bonus Amount ”). For purposes hereof “fair
market value” shall mean Repurchase Fair Market Value as set
forth in the Amended and Restated Limited Liability Company
Agreement of STR Holdings, LLC, as it may be further amended and
restated. The Bonus Amount shall be calculated on the Payment
Date (as defined below).
(iii)
Upon the earlier to occur of
December 31, 2015, a Sale of the Company or termination of the
Executive’s employment for any reason (in each case, the
“ Payment Date ”), the Bonus Amount shall be
distributed to the Executive and paid in a lump sum, without
interest, as soon as administratively possible but not later than
60 days following such Payment Date.
(iv)
The Executive may from time to time
designate one or more persons (who may be any one or more members
of such person’s family or other persons, administrators,
trusts, foundations or other entities) as his or her beneficiary
under the Bonus Account. Such designation shall be made on a
form prescribed by the Company.
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(c)
Benefits . The Executive shall be entitled to
participate in employee benefit plans, programs and arrangements of
the Company now (or, to the extent determined by the Board,
hereafter) in effect which are applicable to the senior management
of the Company.
(d)
Vacation . During the Term, the Executive shall be
entitled to four weeks paid vacation each calendar year. Any
vacation shall be taken at the reasonable and mutual convenience of
the Company and the Executive.
(e)
Expenses . The Company shall promptly reimburse the
Executive for all reasonable travel and other business expenses
incurred by him in the performance of his duties to the Company in
accordance with the Company’s applicable expense
reimbursement policies and procedures.
4.
Termination
. The Executive’s
employment hereunder may be terminated by the Company or the
Executive, as applicable, without any breach of this Agreement only
under the following circumstances:
(a)
Circumstances
(i)
Death . The Executive’s employment
hereunder shall terminate upon his death.
(ii)
Disability
. If the Executive incurs a
Disability, the Company may give the Executive written notice of
its intention to terminate the Executive’s employment.
In that event, the Executive’s employment with the Company
shall terminate effective on the later of the 30th day after
receipt of such notice by the Executive or the date specified in
such notice, provided that within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of his duties.
(iii)
Termination for Cause
. The Company may terminate
the Executive’s employment for Cause.
(iv)
Termination without
Cause . The Company
may terminate the Executive’s employment without
Cause.
(v)
Resignation for Good
Reason . The
Executive may resign his employment for Good Reason.
(vi)
Resignation without Good
Reason . The
Executive may resign his employment without Good Reason.
(vii)
Non-renewal
. Either party may notify the
other of his or its intent not to renew this Agreement at least 60
days prior to the expiration of the Term, which shall be treated as
a termination without Cause if such notice is given by the Company
and the Company does not concurrently waive the Executive’s
obligations under Section 2 of the Agreement Not to Compete,
or a resignation without Good Reason if such notice is given by the
Executive.
(b)
Notice of Termination
. Any termination of the
Executive’s employment by the Company or by the Executive
under this Section 4 (other than termination pursuant
to
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paragraph (a)(i)) shall be communicated by a
written notice to the other party hereto indicating (i) the
specific termination provision in this Agreement relied upon,
(ii) except with respect to a termination pursuant to
Section 4(a)(iv) or 4(a)(vi), setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated, and (iii) specifying a Date of Termination
which, if submitted by the Executive (or, in the case of a
termination described in Section 4(a)(ii), by the Company),
shall be at least 30 days following the receipt of such notice (a
“ Notice of Termination ”); provided,
however , that a Notice of Termination delivered by the Company
pursuant to Section 4(a)(ii) shall not be required to
specify a Date of Termination, in which case the Date of
Termination shall be determined pursuant to Section 4(a)(ii);
and provided, further , that in the event that the Executive
delivers a Notice of Termination to the Company, the Company may,
in its sole discretion, change the Date of Termination to any date
that occurs following the date of Company’s receipt of such
Notice of Termination (even if such date is prior to the date
specified in such Notice of Termination). A Notice of
Termination submitted by the Company may provide for a Date of
Termination on the date the Executive receives the Notice of
Termination, or any date thereafter elected by the Company in its
sole discretion. The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Cause or Good Reason shall not
waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive’s or the
Company’s rights hereunder.
5.
Company Obligations Upon
Termination of Employment
(a)
In General
. Upon a termination of the
Executive’s employment for any reason, the Executive (or the
Executive’s estate) shall be entitled to receive in a lump
sum within 20 business days following the Executive’s
termination: the sum of the Executive’s Annual Base
Salary through the Date of Termination; and any expenses owed to
the Executive under Section 3(e). The Executive shall
also be entitled to any accrued vacation pay owed to the Executive
pursuant to Section 3(d); any amount arising from the
Executive’s participation in, or benefits under, any employee
benefit plans, programs or arrangements under
Section 3(c) (including without limitation, any
disability or life insurance benefit plans, programs or
arrangements), which amounts shall be payable in accordance with
the terms and conditions of such employee benefit plans, programs
or arrangements; and any benefits that may be due the Executive
under the LLC Agreement or incentive unit agreements between the
Executive and the Company.
(b)
Termination without Cause or for
Good Reason . If
the Executive’s employment shall be terminated by the Company
without Cause or by the Executive for Good Reason (but not by
reason of the Executive’s death, Disability, termination by
the Company for Cause or termination by the Executive without Good
Reason), then, in addition to the payments and benefits described
in Section 5(a) (including benefits under stock option
agreements), the Company shall:
(i)
Continue to pay to the Executive, in
accordance with the Company’s regular payroll practice
following the Date of Termination, the Executive’s Annual
Base Salary, and continue the Executive’s participation in
the Company’s health, life insurance and retirement plans
through twelve months from the Date of Termination; provided
that each payment is intended to constitute a separate payment
within the meaning of Code Section 409A and the regulations
thereunder; provided , further that in the event that
Executive is determined by the Company to be a “specified
employee” (as
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defined in Code
Section 409A(2)(B) and determined in accordance with Code
416(i) (without regard to paragraph (5) thereof)) of the
Company at a time when
