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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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18 Craftsman Road
East Windsor, Connecticut 06088

TRANSACTION PROPOSED—YOUR VOTE IS VERY IMPORTANT

[    •    ], 2014

Dear Stockholders,

        You are cordially invited to attend a special meeting of stockholders, referred to as the Special Meeting, of STR Holdings, Inc., referred to as the Company, to be held on [    •    ], 2014 at [    •    ], local time, at the Hartford/Windsor Marriott Airport Hotel, located at 28 Day Hill Road, Windsor, Connecticut 06095.

        Our Board of Directors has approved a stock purchase agreement, referred to as the Purchase Agreement, pursuant to which the Company will issue and sell to Zhen Fa New Energy (U.S.) Co., Ltd., referred to as the Purchaser, 27,632,130 shares of its common stock, referred to as the Purchased Shares, for an aggregate purchase price of $21,663,590. At the Special Meeting, you will be asked to vote on proposals to approve: (i) the issuance of the Purchased Shares to the Purchaser, referred to as the Share Issuance; (ii) an amendment to the certificate of incorporation of the Company to effect a reverse stock split of our common stock at any time prior to 90 days following the closing of the Share Issuance, referred to as the Closing, at a specific ratio to be determined by the Board of Directors in its sole discretion within the range of one-for-two to one-for-five, inclusive, referred to as the Reverse Stock Split Charter Amendment; (iii) on an advisory, non-binding basis, the compensation that may be paid or become payable to the Company's named executive officers in connection with the transactions contemplated by the Purchase Agreement, collectively referred to as the Transaction, and the agreements and understandings pursuant to which such compensation may be paid or become payable; and (iv) adjournments or postponements of the Special Meeting, if necessary, to permit further solicitation of proxies in favor of the foregoing proposals.

        In connection with, and as a condition to, the Closing, the Company will declare a special dividend, referred to as the Special Dividend, to be paid to all stockholders of the Company, other than the Purchaser, in an amount equal to $0.85 per share of common stock. Of this amount, approximately $0.82 per share will be funded from the gross proceeds of the Share Issuance, and the balance, approximately $0.03 per share, or an aggregate of approximately $900,000, together with the expenses of the Transaction, will be funded from our working capital. Based on the number of shares of our common stock outstanding on [    •    ], the last practicable trading date prior to the mailing of this proxy statement, the aggregate amount of the Special Dividend would be approximately $22.6 million. Pursuant to the terms of the Purchase Agreement, the Purchaser has voluntarily waived any right as a stockholder to participate in the Special Dividend.

        If the Closing occurs, the Purchased Shares will represent approximately 51% of the outstanding common stock of the Company immediately after the Closing. Shares of our common stock held by Company stockholders immediately prior to the Closing will represent approximately 49% of the outstanding common stock of the Company immediately after the Closing.

        Following the Closing and payment of the Special Dividend, our stockholders, other than the Purchaser, will have received a dividend of $0.85 per share and retained a 49% interest in the shares of our common stock. This result was structured to treat all stockholders equally based upon the number of shares they hold, and to be the economic equivalent of the Purchaser acquiring 51% of our outstanding shares of common stock from all of our stockholders at a valuation of $1.60 per share, with an additional dividend to stockholders of the Company, other than the Purchaser, of approximately $0.03 per share. Assuming no significant change to the number of shares of our outstanding common

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stock, at the Closing (i) the Purchaser would have paid approximately $21.7 million for its 51% interest in the Company, (ii) our stockholders, other than the Purchaser, will be entitled to receive their pro rata portion of aggregate payments of approximately $22.6 million representing the Special Dividend, (iii) the Company would have retained no proceeds from the Share Issuance, and (iv) our stockholders, other than the Purchaser, would have retained a 49% interest in the shares of our common stock. The effective value of the $1.60 per share purchase price represents a 23% premium to the average closing price of our common stock of $1.30 per share for the ten-day period ended August 8, 2014, the last trading day prior to our execution of the Purchase Agreement.

        The purpose of the Reverse Stock Split Charter Amendment is to maintain the per share market price of our common stock following the consummation of the Share Issuance and payment of the Special Dividend. As a result of these transactions, the number of shares of outstanding common stock will increase from approximately 26.5 million to approximately 54.2 million. The Company will use the entire proceeds of the Share Issuance together with the Company's working capital to fund the Special Dividend and expenses of the transaction. The Company therefore expects the per share trading price of its common stock to decrease following the Share Issuance and payment of the Special Dividend.

        Our common stock is currently listed on the New York Stock Exchange, referred to as the NYSE. The continued listing requirements of the NYSE require, among other things, that the average closing price of the common stock for any 30 consecutive trading day period not fall below $1.00 per share. The Board of Directors intends to effect a reverse stock split if it believes that a decrease in the number of shares outstanding is likely to improve the trading price of the common stock and improve the likelihood that the Company will be allowed to maintain its listing on the NYSE following the consummation of the Share Issuance and payment of the Special Dividend.

        The Board of Directors believes that the Transaction will significantly benefit the Company's stockholders. The Board of Directors unanimously recommends that you vote "FOR" the Share Issuance proposal, "FOR" the Reverse Stock Split Charter Amendment, "FOR" the proposal to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to our named executive officers in connection with the Transaction, and the agreements and understandings pursuant to which such compensation may be paid or become payable and "FOR" the proposal to approve adjournments or postponements of the Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of the foregoing proposals.

        Approval of the Share Issuance proposal is a condition to the Closing. In connection with and as a condition to the Closing, the Board of Directors will declare the Special Dividend to all of the Company's stockholders, other than the Purchaser. If the Closing does not occur, the Board of Directors does not intend to declare the Special Dividend.

        Your vote is very important. Please vote by completing, signing and dating the enclosed proxy card(s) for the Special Meeting and mailing the proxy card(s) to us, whether or not you plan to attend the Special Meeting. If you sign, date and mail your proxy card without indicating how you want to vote, your proxy will be counted as a vote FOR each of the proposals presented at the Special Meeting. In addition, you may vote by proxy by calling the toll-free telephone number or by using the Internet as described in the instructions included with the enclosed proxy card(s). If you do not return your card, vote by telephone or by using the internet, or if you do not specifically instruct your broker how to vote any shares held for you in "street name," your shares will not be voted at the Special Meeting.

        This document is a proxy statement by the Company for its use in soliciting proxies for the Special Meeting. This document answers questions about the Transaction and the Special Meeting and includes a summary description of the Transaction, the Purchase Agreement and the other agreements entered into in connection therewith. We urge you to review this entire document carefully. In particular, you should also consider the matters discussed under "Risk Factors" beginning on page 24.

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        Thank you for your cooperation and continued support.

        This proxy statement is dated [    •    ], 2014 and is first being mailed, along with the attached proxy card, to our stockholders on or about [    •    ], 2014.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Share Issuance or the other transactions contemplated by the Purchase Agreement or described in this proxy statement, nor have any of them approved or disapproved the Share Issuance in connection with the Transaction, or determined if this proxy statement is accurate or complete. Any representation to the contrary is a criminal offense.

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18 Craftsman Road
East Windsor, Connecticut 06088

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [    •    ], 2014

[    •    ], 2014
To the Stockholders of STR Holdings, Inc.:

         NOTICE IS HEREBY GIVEN that a special meeting, referred to as the Special Meeting, of stockholders of STR Holdings, Inc., referred to as the Company, will be held on [    •    ], 2014, at [    •    ], local time, at the Hartford/Windsor Marriott Airport Hotel, located at 28 Day Hill Road, Windsor, Connecticut 06095, for the following purposes:

         1.    Share Issuance.    A proposal to issue shares of the Company's common stock in connection with the transactions contemplated by the Stock Purchase Agreement dated as of August 11, 2014, referred to as the Purchase Agreement, a copy of which is attached as Annex A hereto, by and between the Company and Zhen Fa New Energy (U.S.) Co., Ltd., referred to as the Share Issuance;

         2.    Amendment to the Certificate of Incorporation.    A proposal to approve an amendment to the Company's certificate of incorporation, a copy of which is attached as Annex B hereto, to effect a reverse stock split of the Company's common stock at any time prior to 90 days following the closing of the Share Issuance, referred to as the Closing, at a specific ratio to be determined by the Board of Directors in its sole discretion within the range of one-for-two to one-for-five, inclusive referred to as the Reverse Stock Split Charter Amendment;

         3.    Advisory Vote on Potential Payments Under Compensation Arrangements.    To consider and vote on a proposal to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to the Company's named executive officers in connection with the transactions contemplated by the Purchase Agreement, collectively referred to as the Transaction, and the agreements and understandings pursuant to which compensation may be paid or become payable, as described in the section entitled "The Transaction—Interests of Company Executive Officers and Directors in the Transaction—Potential Change in Control Payments to Named Executive Officers" beginning on page 60; and 

         4.    Adjournment.    A proposal to approve adjournments or postponements of the Special Meeting, if necessary, to permit further solicitation of proxies in favor of the foregoing proposals.

         The Company's Board of Directors has unanimously approved the Purchase Agreement, the Share Issuance and the other transactions contemplated by the Purchase Agreement, and determined that the Purchase Agreement, the Share Issuance and the other transactions contemplated by the Purchase Agreement are fair to, and in the best interests of, the Company and its stockholders. The Board of Directors unanimously recommends that stockholders vote "FOR" the Share Issuance proposal, FOR the Reverse Stock Split Charter Amendment proposal, "FOR" the proposal to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to the Company's named executive officers in connection with the Transaction, and the agreements and understandings pursuant to which compensation may be paid or become payable, and "FOR" the proposal to approve adjournments or postponements of the Special Meeting, if necessary, to permit further solicitation of proxies in favor of the foregoing proposals.

         Approval of the Share Issuance proposal is a condition to the Closing. In connection with and as a condition to the Closing, the Board of Directors will declare a special dividend of $0.85 per share, referred to as the Special Dividend, to all of the Company's stockholders other than Zhen Fa New Energy (U.S.) Co., Ltd. If the Closing does not occur, the Board of Directors does not intend to declare the Special Dividend.

         If you held shares of our common stock at the close of business on [    •    ], 2014, you are entitled to notice of and to vote at the Special Meeting or any adjournments or postponements of the Special Meeting. Your attention is directed to the proxy statement accompanying this notice for a more complete statement regarding the matters proposed to be acted upon at the Special Meeting.

         PLEASE VOTE AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO VOTE YOUR PROXY ARE FOUND ON THE ENCLOSED PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND THE SPECIAL MEETING

        The following questions and answers address briefly some questions you may have regarding the special meeting of stockholders and the proposed transaction. These questions and answers may not address all questions that may be important to you as a stockholder. Please refer to the more detailed information contained elsewhere in this proxy statement, as well as the additional documents referred to or incorporated by reference in this proxy statement, including the stock purchase agreement, a copy of which is attached as Annex A.

Q:

Why am I receiving this document?

A:

STR Holdings, Inc., referred to as "the Company," "we," "our" or 'us," or "our Company," has entered into a stock purchase agreement, referred to as the Purchase Agreement, with Zhen Fa New Energy (U.S.) Co., Ltd., referred to as Purchaser, pursuant to which the Company will issue and sell 27,632,130 shares of its common stock, par value $0.01 per share, referred to as the Purchased Shares, to the Purchaser, referred to as the Share Issuance. As a result of being listed for trading on The New York Stock Exchange, referred to as the NYSE, issuances of our common stock are subject to the rules of the NYSE set forth in the Listed Company Manual. Under Rule 312.03 of the NYSE Listed Company Manual, we must seek stockholder approval with respect to issuances of our common stock when (i) the shares to be issued are equal to, or in excess of, 20% of the number of shares of our common stock outstanding before the issuance or (ii) if an issuance will result in a change of control of the issuer. Because completion of the Share Issuance would require us to issue approximately 51% of our total outstanding shares after giving effect to the Share Issuance, which would also result in a change in control, we are asking you to approve the Share Issuance as well as the other proposals described in this proxy statement. We are holding a special meeting of stockholders, referred to as the Special Meeting, in order to obtain stockholder approval of the Share Issuance and the other proposals described in this proxy statement.

In addition, you are being asked to vote on proposals to approve: (i) an amendment to our certificate of incorporation, a copy of which is attached as Annex B hereto, to effect a reverse stock split of our common stock at any time prior to 90 days following the closing of the Share Issuance, referred to as the Closing, at a specific ratio to be determined by the Board of Directors, in its sole discretion, within the range of one-for-two to one-for-five, inclusive, referred to as the Reverse Stock Split Charter Amendment, (ii) on an advisory, non-binding basis, the compensation that may be paid or become payable to the Company's named executive officers in connection with the transactions contemplated by the Purchase Agreement, collectively referred to as the Transaction, and the agreements and understandings pursuant to which such compensation may be paid or become payable, referred to as the Potential Payments Under Compensation Arrangements and (iii) adjournments or postponements of the Special Meeting, if necessary, to permit further solicitation of proxies in favor of the foregoing proposals.

Q:

What are the proposals on which I am being asked to vote?

A:

You are being asked to vote on the following proposals: (i) to approve the Share Issuance, (ii) to approve the Reverse Stock Split Charter Amendment, (iii) to approve, on an advisory, non-binding basis, the Potential Payments Under Compensation Arrangements and (iv) to approve adjournments or postponements of the Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of the foregoing proposals.

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Q.

Does the Company's Board of Directors recommend voting in favor of the proposals?

A.

Yes. After careful consideration, our Board of Directors has unanimously determined that the Purchase Agreement and the Transaction are in the best interests of the Company and its stockholders. As a result, our Board of Directors unanimously recommends that you vote "FOR" the Share Issuance proposal, "FOR" the Reverse Stock Split Charter Amendment proposal, "FOR" approval, on an advisory, non-binding basis, of the Potential Payments Under Compensation Arrangements and "FOR" the proposal to approve adjournments or postponements of the Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of the foregoing proposals.

Q.

What vote is required to approve the proposals?

A.

The Share Issuance proposal must be approved by the affirmative vote of a majority of the total votes cast on the proposal. The Reverse Stock Split Charter Amendment proposal must be approved by the affirmative vote of a majority of outstanding shares of our common stock entitled to vote thereon. In order to approve the Potential Payments Under Compensation Arrangements proposal, the affirmative vote of the majority of the shares of our common stock present in person or represented by proxy at the Special Meeting and entitled to vote on the proposal must be obtained. The proposal to adjourn or postpone the Special Meeting, including for the purpose of soliciting additional proxies, must be approved by the affirmative vote of the majority of shares of our common stock present in person or represented by proxy at the Special Meeting and entitled to vote on the proposal, regardless of whether a quorum is present.

The vote on the Reverse Stock Split Charter Amendment and the advisory, non-binding vote on the Potential Payments Under Compensation Arrangements are votes separate and apart from the votes to approve the Share Issuance. Accordingly, you may vote to approve the Reverse Stock Split Charter Amendment and/or the Potential Payments Under Compensation Arrangements and vote not to approve the Share Issuance and vice versa. In addition, because the vote on Potential Payments Under Compensation Arrangements is advisory in nature only, it will not be binding on the Company.

Q.

Would Company stockholders receive any of the proceeds of the Share Issuance if the Closing occurs?

A.

If the Closing occurs, then the Purchaser will pay to the Company an aggregate purchase price of $21,663,590, referred to as the Purchase Price, less any amounts previously paid to us. Although the Company's stockholders will not receive any of the proceeds of the Share Issuance directly from the Purchaser, in connection with, and as a condition to, the Closing, the Company will declare a special dividend of $0.85 per share (approximately $22.6 million in the aggregate), referred to as the Special Dividend, to each stockholder, other than the Purchaser, which will be substantially funded from such proceeds. If the Closing does not occur, the Board of Directors does not intend to declare the Special Dividend.

Q:

What would happen to my common stock if the Closing occurs and the Reverse Stock Split Charter Amendment is approved?

A:

If the Closing occurs, your shares of common stock would continue to remain outstanding, and no change would occur to your shares, although our existing stockholders would experience dilution in their ownership percentage as a result of the Share Issuance. As a result of this dilution, our stockholders as of immediately prior to the Closing would own approximately 49% of the total outstanding shares of our common stock and the Purchaser would own approximately 51% of the total outstanding shares of our common stock following the Closing. After the date of the Closing, referred to as the Closing Date, your shares of common stock would continue to represent an

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ownership interest in the Company. In connection with, and as a condition to the Closing, the Company will declare the Special Dividend to each stockholder, other than the Purchaser.

Additionally, if the Reverse Stock Split Charter Amendment is approved by our stockholders and the Board of Directors determines to effectuate a reverse stock split, then all outstanding shares of common stock on the date of the reverse stock split will automatically be converted into a smaller number of shares, at the ratio selected by the Board of Directors, as more fully described herein. The ratio will be within a range of one-for-two and one-for-five, inclusive.

Q.

What will happen if the Share Issuance proposal is not approved by the Company's stockholders?

A.

If our stockholders fail to approve the Share Issuance proposal, the Transaction, including the Share Issuance, cannot be completed. In such circumstance, each of the Company and the Purchaser will have the right to terminate the Purchase Agreement. If the Purchase Agreement were to be terminated by the Company or the Purchaser in such instance, the Company would be obligated to reimburse the Purchaser for up to $500,000 of its expenses. However, the Company will not be responsible for any expenses of the Purchaser if (i) Zhenfa Energy Co. Ltd., has not received the required Chinese government approvals on or before the date of the Special Meeting, or (ii) the required Chinese government approvals have been denied.

Further, subject to certain conditions, if the Purchase Agreement is terminated in such circumstances and the Company enters into an acquisition transaction (as defined herein) within 12 months of termination of the Purchase Agreement, the Company will be obligated to pay up to an $860,000 fee to the Purchaser (which amount includes any expenses of the Purchaser that the Company may be required to pay pursuant to the terms of the Purchase Agreement).

In connection with and as a condition to the Closing, the Board of Directors will declare the Special Dividend to all of the Company's stockholders, other than the Purchaser. If the Closing does not occur, the Board of Directors does not intend to declare the Special Dividend.

Q.

What will happen if the NYSE does not approve the listing of the Purchased Shares?

A.

In connection with the Share Issuance, the Company will file with the NYSE an application to list the Purchased Shares on the NYSE. If the NYSE determines not to approve such application, our common stock could be subject to delisting based upon, among other things, the minimum bid price and market capitalization requirements. The Purchase Agreement requires us to use commercially reasonable efforts to remain in compliance with the NYSE's continued listing standards. If, after using commercially reasonable efforts, we are unable to remain in compliance with the NYSE's continued listing standards, the Company must use commercially reasonable efforts to cause our common stock to become listed or quoted on another national securities exchange. Although we will use commercially reasonable efforts to list our shares on an alternative exchange if necessary, we cannot assure you that we will be able to meet the listing requirements of an alternative exchange.

Q.

Is there a termination fee potentially payable under the Purchase Agreement?

A.

Yes. Under certain circumstances, the Company may be required to pay the Purchaser a termination fee of $860,000 if the Purchase Agreement is terminated. For more information, see "The Purchase Agreement—Termination of the Purchase Agreement; Termination Fees" on page 92.

Q.

Are there risks associated with the Transaction?

A.

Yes. The material risks associated with the Transaction that are known to us are discussed in the section entitled "Risk Factors" beginning on page 24.

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Q.

What are the anticipated United States federal income tax consequences to our stockholders of the Share Issuance, the Special Dividend and the Reverse Stock Split Charter Amendment?

A.

The Share Issuance.    The Company anticipates that there will be no gain or loss recognized by Company stockholders with respect to the Share Issuance.

The Special Dividend.    The Company expects that the Special Dividend will be treated as a distribution made by a corporation to a shareholder with respect to its stock under the United States Internal Revenue Code of 1986, as amended referred to as the Code, and therefore, such distribution will be treated as a taxable dividend to the extent of the Company's current and accumulated earnings and profits, with any amount in excess of a stockholder's share of earnings and profits treated first, as a non-taxable return of capital to the extent of the Company stockholder's basis in such stockholder's Company stock, and, thereafter, as gain from the sale or exchange of such stockholder's Company stock. Such gain, if any, will be long-term capital gain if a Company stockholder has held the Company stock upon which such distribution is paid for more than one year. Based on the Company's preliminary analysis of the Company's current and accumulated earnings and profits, it is anticipated that the Special Dividend will be treated as a taxable dividend.

The taxable dividends and long-term capital gains of individual Company stockholders generally qualify for favorable United States federal income tax rates (currently a maximum 20% rate, plus a 3.8% surtax on net investment income for certain taxpayers), if certain holding period requirements are met. The taxable dividends of corporate Company stockholders generally are eligible for a dividends received deduction if certain holding period requirements are met. The Special Dividend may be considered an "extraordinary dividend" under the Code; Company stockholders are urged to consult their tax advisors with respect to the possible impact of "extraordinary dividend" characterization.

Company stockholders may be subject to backup withholding and information reporting with respect to the Special Dividend; the Company may require Company stockholders to furnish appropriate tax documentation (including but not limited to IRS Form W-9) and such other documentation as the Company determines to be necessary to comply with its withholding and reporting requirements.

The Reverse Stock Split Charter Amendment.    If the Reverse Stock Split Charter Amendment is approved, the Company may authorize a reverse stock split. Although the Company may determine not to effect the reverse stock split, the following summary assumes that a reverse stock split does take place. The Company anticipates that, other than in respect of the cash payments for fractional Company shares discussed below, no gain or loss would be recognized by Company stockholders upon the exchange of pre-reverse stock split Company stock for post-reverse stock split Company stock. A Company stockholder's aggregate tax basis in the post-reverse stock split Company stock would be the same as the aggregate tax basis of the pre-reverse stock split Company stock exchanged in the reverse stock split, reduced by any amount allocable to a fractional Company share for which cash is received. A Company stockholder's holding period in the post-reverse stock split Company stock would include the period during which such Company stockholder held the pre-reverse stock split Company stock exchanged in the reverse stock split. The receipt of cash by a Company stockholder instead of a fractional Company share generally would result in taxable gain or loss with respect to the fractional Company share equal to the difference, if any, between such Company stockholder's tax basis in the fractional share deemed sold and the amount of the cash paid for such fractional Company share. Such gain or loss, if any, would be long-term capital gain if a Company stockholder has held the Company fractional share for more than one year.

Company stockholders may be subject to backup withholding and information reporting with respect to any distribution of cash in lieu of fractional shares; the Company may require Company

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stockholders to furnish appropriate tax documentation (including but not limited to IRS Form W-9) and such other documentation as the Company determines to be necessary to comply with its withholding and reporting requirements.

The foregoing is a summary only and generally applies only to certain United States persons. Company stockholders are referred to "The Transaction—Certain United States Federal Income Tax Consequences" beginning on page 68 and "The Reverse Stock Split Charter Amendment—Certain United States Federal Income Tax Consequences" beginning on page 102 for more information. In addition, Company stockholders are urged to consult their own tax advisors to determine the particular federal, state, local and foreign tax consequences to them in light of their particular circumstances.

Q.

Will the Purchased Shares be registered under the Securities Act of 1933, as amended?

A.

No. The Company and the Purchaser intend that the Purchased Shares will be securities exempt from registration under the Securities Act of 1933, as amended, referred to as the Securities Act, by reason of Section 4(a)(2) of the Securities Act. In connection with, and as a condition to, the Closing, the Company and the Purchaser will enter into a registration rights agreement pursuant to which the Purchaser will have the right, subject to the terms and conditions of such registration rights agreement, to demand that the Purchased Shares be registered by the Company.

Q.

When does the Company expect to complete the Share Issuance?

A.

Assuming that (i) we obtain the required approval of our stockholders, (ii) all applicable regulatory approvals are obtained and (iii) the other closing conditions set forth in the Purchase Agreement have been satisfied or waived, we believe that the Closing will occur in the fourth calendar quarter of 2014. Because the Share Issuance is subject to a number of conditions, some of which are beyond our control, the exact timing of the Closing Date cannot be predicted.

Q.

Will there be any change to the Board of Directors after the Closing?

A.

Yes. Upon the Closing, the size of the Board of Directors of the Company will be set at seven members. Following the Closing, subject to certain conditions, the Board of Directors will be comprised of (i) four directors nominated by the Purchaser (two of whom shall be independent), (ii) two directors who are independent directors of the Company as of the date of the Purchase Agreement and (iii) the President and Chief Executive Officer of the Company. For more information, see "The Transaction—Corporate Governance after the Closing—Board Composition" beginning on page 66.

Q.

What will happen if Company stockholders do not approve the Potential Payments Under Compensation Arrangements proposal?

A.

Approval of the Potential Payments Under Compensation Arrangements is not a condition to the completion of the Share Issuance or the Transaction. The vote with respect to the Potential Payments Under Compensation Arrangements is an advisory vote and will not be binding on the Company. Therefore, if the other requisite stockholder approvals are obtained and the Share Issuance is completed, the amounts payable under the Potential Payments Under Compensation Arrangements will still be paid to the Company's named executive officers as long as any other conditions applicable thereto occur.

Q.

Why am I being asked to approve the Reverse Stock Split Charter Amendment proposal?

A.

The Company is seeking approval to amend its certificate of incorporation to effect a reverse stock split of our common stock at any time prior to 90 days after the date of the Closing, at a specific

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ratio to be determined by the Board of Directors in its sole discretion within the range of one-for-two to one-for-five, inclusive.

The purpose of the Reverse Stock Split Charter Amendment is to maintain the per share market price of our common stock following the consummation of the Share Issuance and payment of the Special Dividend. As a result of the Transaction, which includes the payment of the Special Dividend, the number of shares of outstanding common stock will increase from approximately 26.5 million to approximately 54.2 million. We will use the entire proceeds of the Share Issuance together with our working capital to fund the Special Dividend and expenses of the Transaction. We therefore expect the per share trading price of our common stock to decrease following the Transaction, including the payment of the Special Dividend.

Our common stock is currently listed on the NYSE. The continued listing requirements of the NYSE require, among other things, that the average closing price of the common stock for any 30 consecutive trading day period not fall below $1.00 per share. In addition to specific listing and maintenance standards, the NYSE has broad discretionary authority over the initial and continued listing of securities, which such exchange could exercise with respect to the listing of our common stock. The Board of Directors intends to effect a reverse stock split if it believes that a decrease in the number of shares outstanding is likely to improve the trading price of the common stock and improve the likelihood that the Company will be allowed to maintain its listing on the NYSE following the Closing and Reverse Stock Split Charter Amendment. For more information, see "The Reverse Stock Split Charter Amendment—Reasons for the Reverse Stock Split Charter Amendment" beginning on page 95.

Even if the market price of our common stock continues at a level that allows us to comply with the minimum bid price requirement of the NYSE continued listing standards, we cannot assure you that we will be able to comply with the market capitalization or other continued listing standards that we are required to meet in order to maintain a listing of our common stock on the NYSE. Our failure to meet these requirements may result in our common stock being delisted from such exchange, irrespective of our compliance with the applicable minimum bid price requirement.

Q.

Is the Closing contingent upon the Company's stockholders approving the Reverse Stock Split Charter Amendment?

A.

No. Although our Board of Directors believes that the Reverse Stock Split Charter Amendment is important to, among other things, maintain the per share market price of our common stock following the consummation of the Share Issuance and payment of the Special Dividend, the consummation of the Share Issuance is not contingent upon the approval by our stockholders of the Reverse Stock Split Charter Amendment.

Q:

When and where is the Special Meeting?

A:

The Special Meeting will take place on [    •    ], 2014 at [    •    ], local time, at the Hartford/Windsor Marriott Airport Hotel located at 28 Day Hill Road, Windsor, Connecticut 06095.

Q:

Who can vote and attend the Special Meeting?

A:

All of our common stockholders of record as of the close of business on [    •    ], 2014, the record date for the Special Meeting, are entitled to receive notice of and attend the Special Meeting or any adjournments or postponements of the Special Meeting. Each share of our common stock entitles you to one vote on each matter properly brought before the Special Meeting.

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Q:

How do I cast my vote if I am a record holder?

A:

If you are a common stockholder of record on the record date, you may vote in person at the Special Meeting, or by submitting your proxy by mail, telephone or Internet. If you wish to mail your proxy, you can submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed, postage-paid envelope. If you wish to submit your proxy by telephone or Internet, you may do so by following the instructions on your proxy card.

Q:

If my shares are held in "street name" by my broker, will my broker vote my shares for me?

A:

No. If you hold your shares of common stock in "street name" through a broker, bank or other nominee, your broker, bank or other nominee will not vote your shares unless you provide instructions on how to vote. You must obtain a proxy form from your broker, bank or other nominee that is the record holder of your shares and provide the record holder of your shares with instructions on how to vote your shares in accordance with the voting directions provided by your broker, bank or nominee.

Q:

What if I abstain from voting or do not instruct my broker how to vote my shares?

A:

Shares held by a Company stockholder who indicates on an executed proxy card that he or she wishes to abstain from voting will count toward determining whether a quorum is present and will be counted as votes cast and have the same effect as a vote "AGAINST" the Share Issuance proposal, the advisory, non-binding proposal on the Potential Payments Under Compensation Arrangements, the Reverse Stock Split Charter Amendment proposal, and the proposal to permit the proxies to adjourn or postpone the Special Meeting.

A broker "non-vote" occurs when a broker or other nominee holding shares for a beneficial owner signs and returns a proxy with respect to shares of common stock held in a fiduciary capacity (typically referred to as being held in "street name") but does not vote on a particular matter because the nominee does not have the discretionary voting power with respect to that matter and has not received instructions from the beneficial owner. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote such shares on routine matters but not on non-routine matters. The proposals that Company stockholders are being asked to vote on at the Special Meeting are not considered routine matters and accordingly, brokers or other nominees may not vote without instructions. See "The Special Meeting" beginning on page 106.

If a broker non-vote occurs, the broker non-vote will count for purposes of determining a quorum. A broker non-vote is not a vote cast. The broker non-vote will not affect the outcome of the votes on the Share Issuance proposal or the advisory, non-binding proposal on the Potential Payments Under Compensation Arrangements. A broker non-vote will have the same effect as a vote "AGAINST" the Reverse Stock Split Charter Amendment proposal and will not be counted in the tabulation of the results of the proposal to permit the proxies to adjourn or postpone the Special Meeting.

Q:

How will proxy holders vote my shares?

A:

If you properly submit a proxy prior to the Special Meeting, your shares of common stock will be voted as you direct. If you submit a proxy but no direction is otherwise made, your shares of common stock will be voted "FOR" the Share Issuance proposal, "FOR" the Reverse Stock Split Charter Amendment proposal, "FOR" the advisory, non-binding proposal on the Potential Payments Under Compensation Arrangements, and "FOR" the approval of any adjournments or postponements of the Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of the foregoing proposals.

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Q:

Can I change my vote after I have mailed my proxy card?

A:

Yes. If you own shares of our common stock as a record holder, you may revoke a previously granted proxy at any time before it is exercised by filing with our Corporate Secretary a notice of revocation or a duly executed proxy bearing a later date or voting again by telephone or Internet or by attending the meeting and voting in person. Attendance at the meeting will not, in itself, constitute revocation of a previously granted proxy. If you have instructed your broker, bank or nominee to vote your shares, the above described options for changing your vote do not apply and instead you should follow the instructions received from your broker, bank or other nominee to change your vote.

Q:

Where can I find more information about the Company?

A:

We file certain information with the Securities and Exchange Commission, referred to as the SEC. You may read and copy this information at the SEC's public reference facilities. You may call the SEC at 1-800-SEC-0330 for information about these facilities. This information is also available at the Internet site the SEC maintains at www.sec.gov and on our website at www.strsolar.com. Information contained on our website is not part of, or incorporated in, this proxy statement. You can also request copies of these documents from us. See "Where You Can Find More Information" on page 114.

Q:

Who will solicit and pay the cost of soliciting proxies?

A:

We will bear the cost of soliciting proxies for the Special Meeting. Our Board of Directors is soliciting your proxy on our behalf. Our officers, directors and employees may solicit proxies by telephone, facsimile, mail or Internet or in person. They will not be paid any additional cash amounts for soliciting proxies. We have retained Georgeson, Inc. to assist us in the solicitation of proxies, and will pay approximately $15,000, plus reimbursement of out-of-pocket expenses, to Georgeson, Inc. for its services. We will also request that banking institutions, brokerage firms, custodians, nominees, fiduciaries and other like parties forward the solicitation materials to the beneficial owners of shares of common stock held of record by such person, and we will, upon request of such record holders, reimburse forwarding charges and out-of-pocket expenses.

Q:

Who can help answer my other questions?

A:

If you have more questions about the Special Meeting or the Transaction, you should contact our proxy solicitation agent, Georgeson, Inc., as follows:

480 Washington Boulevard—26th Floor
Jersey City, New Jersey 07310
(888) 877-5373

If you hold our shares of common stock through a broker, bank or other nominee, you should also call your broker, bank or other nominee for additional information.

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SUMMARY

        This summary highlights only selected information from this proxy statement that we believe is important to you in deciding how to vote on the proposals described in this proxy statement. It does not contain all of the information that may be important to you. We urge you to read carefully the entire proxy statement and the other documents to which this proxy statement refers you in order to fully understand the proposed transaction. See "Where You Can Find More Information" beginning on page 114. Each item in this summary refers to the page of this proxy statement on which that subject is discussed in more detail.

The Companies

STR Holdings, Inc. (page 73)
18 Craftsman Street
East Windsor, Connecticut 06088
(860) 763-7014

        STR Holdings, Inc., which we refer to as "we," "us," "our," "the Company," "our Company" or "STR," is a Delaware corporation. The Company and its subsidiaries are providers of encapsulants to the photovoltaic module industry. We commenced operations in 1944 as a plastics and industrial materials research and development company. Based upon our expertise in polymer science, we evolved into a global provider of encapsulants to the solar industry. Encapsulant is a critical component used to protect and hold solar modules together.

        We were the first to develop ethylene-vinyl acetate based encapsulants for use in commercial solar module manufacturing. Over time we have expanded our solar encapsulant business, by investing in research and development and global production capacity.

        As of and for the six months ended June 30, 2014, the Company had total assets of $94.1 million, net sales of $20.6 million, total liabilities of $14.4 million, and total stockholders' equity of $79.6 million. Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol "STRI."

Zhen Fa New Energy (U.S.) Co., Ltd. and Affiliates (page 73)
2422 W. Remington Place
Chandler, Arizona 85286

Zhenfa Energy Group Co. Ltd. (page 73)
27th Floor, No. 1 Building
12 North Qingfeng
Yubei District
Chongqing
China
+86-510-82706662

        Zhen Fa New Energy (U.S.) Co., Ltd., referred to as the Purchaser, is a Nevada entity with its principal place of business in Arizona, which was formed in 2013 as part of the Zhenfa Group's (as defined below) expansion of its engineering, procurement, and construction business globally. While the Purchaser has been researching potential solar projects in the United States in which to invest, it has not completed any investments or begun any projects in the United States to date. The Purchaser is an indirect wholly owned subsidiary of Jiangsu Zhenfa Holding Group Co., Ltd., formerly known as Jiangsu Zhenfa Investment and Development Co., Ltd., referred to as Jiangsu Zhenfa, which is 98%-owned by its Chairman, Zha Zhengfa, who is a Chinese national. Jiangsu Zhenfa and its subsidiaries are not controlled by any Chinese governmental entity. Jiangsu Zhenfa is the parent company of approximately 60 entities, mostly within China and including subsidiaries in North America,

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Australia, Japan, Singapore, Turkey, Zimbabwe and Dubai, referred to collectively as the Zhenfa Group.

        Zhenfa Energy Group Co. Ltd., referred to as Zhenfa Energy, is a leading solar systems integrator, engineering, procurement, and construction company and solar power station owner-operator within China. At the end of 2013, the Zhenfa Group had developed and installed approximately two gigawatts of solar power in China, including unique utility scale solar projects in which solar arrays are constructed and utilized in conjunction with fisheries in intertidal zones and agricultural projects in desertification areas. The Zhenfa Group holds Chinese patents in a self-adaptive sun tracking system for solar arrays that increases the efficiency of solar projects by up to 25% over fixed tracking systems, and in 2013 won a bid to construct a 13 megawatt ground mounted solar project in Canberra, Australia. Zhenfa Energy has commenced the initial phase of that project, but construction has yet to begin.

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The Transaction

        The stock purchase agreement, dated as of August 11, 2014, by and between the Company and the Purchaser, which is referred to as the Purchase Agreement, and any exhibits thereto are included as Annex A to this proxy statement. We encourage you to carefully read the Purchase Agreement in its entirety because it is the principal legal agreement that governs the proposed transaction.

The Share Issuance and Related Transactions (page 33)

        Subject to the terms and conditions of the Purchase Agreement, at the effective time of the sale of common stock to the Purchaser as contemplated by the Purchase Agreement, referred to as the Closing, the Company will issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, an aggregate of 27,632,130 shares of the Company's authorized but unissued common stock, referred to as the Purchased Shares, for an aggregate purchase price of $21,663,590, or $0.784 per share, referred to as the Purchase Price. The sale of the Purchased Shares to the Purchaser for payment of the Purchase Price is referred to as the Share Issuance.

        In connection with the execution of the Purchase Agreement, the Purchaser paid to the Company a deposit of $3,200,000, referred to as the Deposit. Prior to entering into the Purchase Agreement, the Purchaser previously paid to the Company $200,000 in connection with the continued negotiation of the Purchase Agreement, referred to as the Prior Payment. Upon the Closing, the Deposit and the Prior Payment will be credited against the Purchase Price. Subject to certain conditions discussed herein, the Deposit and Prior Payment are refundable to the Purchaser if the Closing does not occur.

Special Dividend (page 33)

        In connection with, and as a condition to, the Closing, the Company shall declare a special dividend, referred to as the Special Dividend, to be paid to all stockholders of the Company, other than the Purchaser, in an amount equal to $0.85 per share of common stock. Of this amount, approximately $0.82 share will be funded from the gross proceeds of the Share Issuance, and the balance, approximately $0.03 a share, or an aggregate of approximately $900,000, together with the expenses of the Transaction, will be funded by the Company's working capital. Based on the number of shares of our common stock outstanding on [    •    ], the last practicable trading date prior to the mailing of this proxy statement, the aggregate amount of the Special Dividend would be approximately $[    •    ]. Pursuant to the terms of the Purchase Agreement, the Purchaser has voluntarily waived any right as a stockholder to participate in the Special Dividend.

        In connection with and as a condition to the Closing, the Board of Directors will declare the Special Dividend to all of the Company's stockholders, other than the Purchaser. If the Closing does not occur, the Board of Directors does not intend to declare the Special Dividend.

Ownership of the Company After the Closing (page 34)

        The Purchased Shares will represent approximately 51% of the outstanding common stock of the Company immediately after the Closing. Shares of common stock held by Company stockholders immediately prior to the Closing will represent approximately 49% of the outstanding common stock of the Company immediately after the Closing.

Effective Value of the Transaction (page 34)

        Following the Closing and payment of the Special Dividend, our stockholders, other than the Purchaser, will have received a dividend of $0.85 per share and retained a 49% interest in the Company. This result was structured to treat all stockholders equally based upon the number of shares they hold, and to be the economic equivalent of the Purchaser acquiring 51% of our outstanding shares

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of common stock from all of our stockholders at a valuation of $1.60 per share, with an additional dividend to our stockholders, other than the Purchaser, of approximately $0.03 per share. Assuming no significant change to the number of shares of our outstanding common stock, at the Closing (i) the Purchaser would have paid approximately $21.7 million for its 51% interest in the Company, (ii) our stockholders, other than the Purchaser, will be entitled to receive their pro rata portion of aggregate payments of approximately $22.6 million representing the Special Dividend, (iii) the Company would have retained no proceeds from the Share Issuance, and (iv) our stockholders, other than the Purchaser, would have retained a 49% interest in the Company. The effective value of the $1.60 per share purchase price represents a 23% premium to the average closing price of our common stock of $1.30 per share for the ten-day period ended August 8, 2014, the last trading day prior to our execution of the Purchase Agreement.

Use of Proceeds (page 34)

        We expect to receive net proceeds from the offering of approximately $19.2 million, after deducting estimated expenses payable by us. The Company, and not the Company's stockholders, will receive all of the net proceeds from the Share Issuance. We expect to use all of the proceeds to fund a substantial portion of the Special Dividend, with the remainder to be funded from our working capital.

Board Recommendation (page 106)

        Our Board of Directors has determined that the Share Issuance and the transactions contemplated by the Purchase Agreement, collectively referred to as the Transaction, is advisable and in the best interests of the Company and its stockholders. In addition, the Board of Directors has determined that the approval of an amendment to the Company's certificate of incorporation, to effect a reverse stock split of our common stock at any time prior to 90 days following the Closing, at a specific ratio to be determined by the Board of Directors in its sole discretion within the range of one-for-two to one-for-five, inclusive, referred to as the Reverse Stock Split Charter Amendment, is in the best interests of the Company and its stockholders. The Board of Directors recommends that the Company stockholders vote:

•

"FOR" the Share Issuance;



•

"FOR" the Reverse Stock Split Charter Amendment;



•

"FOR" the proposal to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to our named executive officers in connection with the Transaction, and the agreements and understandings pursuant to which such compensation may be paid or become payable, referred to as the Potential Payments Under Compensation Arrangements; and



•

"FOR" the adjournment or postponement of the Special Meeting, if necessary, to permit further solicitation of proxies in favor of the foregoing proposals.

        For additional information see "The Special Meeting—Board Recommendation" beginning on page 106.

        In making its recommendations, the Board of Directors considered those matters set forth under the heading "The Transaction—The Company's Reasons for the Transaction and the Recommendation of the Company's Board of Directors Relating to the Share Issuance" beginning on page 42 and "The Reverse Stock Split Charter Amendment—Reasons for the Reverse Stock Split Charter Amendment" beginning on page 95.

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Opinion of the Company's Financial Advisor (page 47)

        In connection with the proposed Transaction, our Board of Directors received the written opinion, dated August 11, 2014, of the Company's financial advisor, Greentech Capital Advisors Securities, LLC, referred to as GCA, as to the fairness, from a financial point of view and as of the date of such opinion, of the Share Issuance and Special Dividend to the holders of the Company's common stock. The full text of the written opinion of GCA is attached as Annex C to this proxy statement and is incorporated herein by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by GCA in rendering its opinion. We encourage you to read the entire opinion carefully and in its entirety. GCA's opinion is directed to the Board of Directors (in its capacity as such) and addresses only the fairness of the Share Issuance and Special Dividend from a financial point of view to the holders of the Company's common stock pursuant to the Purchase Agreement, as of August 11, 2014. It does not address any other aspects of the Transaction. The opinion, the summary thereof and any related analyses set forth in this proxy statement are not intended to be, and do not constitute, a recommendation to the Board of Directors or to any holder of the Company's common stock or any other party as to how to act or vote at the Special Meeting. The summary of the opinion of GCA included herein is qualified in its entirety by reference to the full text of the opinion.

Interests of Company Executive Officers and Directors in the Transaction (page 60)

        In considering the Board of Directors' recommendations to vote in favor of the Share Issuance, the Reverse Stock Split Charter Amendment, and the Potential Payments Under Compensation Arrangements proposal, you should be aware that the Company's executive officers and directors might have interests in the Transaction that may be different from, or in addition to, the interests of the Company's stockholders generally. The Board of Directors was aware of these interests and considered them, among other matters, when it approved the Purchase Agreement and the Transaction.

No Appraisal Rights (page 70)

        The Company's stockholders are not entitled to appraisal rights in connection with the Transaction.

Accounting Treatment (page 70)

        The Share Issuance will be accounted for by an increase in cash and corresponding increase in common stock and additional paid-in capital. Direct costs associated with the stock issuance will reduce additional paid-in capital. The Special Dividend will be accounted for as an increase to accumulated deficit. Direct costs associated with the Special Dividend will be expensed as incurred to reduce earnings and increase accumulated deficit.

Regulatory and Other Approvals Required for the Transaction (page 71)

        Under the Purchase Agreement, each of the Company and the Purchaser has agreed to cooperate fully and use its commercially reasonable efforts to take all actions and to do all things necessary, proper or advisable to consummate and make effective the Transaction, including promptly making all material filings and notices required by any federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, regulation, statute or treaty necessary for consummation of the Transaction.

        A condition to the Company's and the Purchaser's respective obligations to consummate the Share Issuance is that the parties shall have received notice from The Committee on Foreign Investment in the United States, referred to as CFIUS, that there are no unresolved national security concerns with respect to the Transaction. The Company and the Purchaser have decided that it is in their mutual best interest to submit a joint voluntary notice to CFIUS and obtain CFIUS clearance for the Transaction.

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The Company cannot provide assurances that there will not be an issue in the CFIUS process, that the parties will avoid an investigation subsequent to CFIUS's 30-day review of the joint voluntary notice, or that CFIUS will ultimately clear the transaction, with or without imposing mitigation or conditions. A condition to the Company's and the Purchaser's respective obligations to consummate the Transaction is that the parties shall have received notice from CFIUS that there are no unresolved national security concerns with respect to the Transaction.

        Additionally, a condition to the Company's obligation to consummate the Share Issuance is that Zhenfa Energy shall have received certain approvals of the Chinese government required to perform its obligations under the Purchase Agreement and the other agreements entered into in connection with the Transaction and to consummate the Transaction.

Voting Agreements (page 85)

        On August 11, 2014, the Purchaser entered into voting agreements with the officers and directors of the Company, as well as certain significant stockholders of the Company, pursuant to which such officers, directors and significant stockholders, among other things and subject to the terms and conditions thereof, agreed to vote in favor of the approval of all proposals submitted by the Company in connection with the Transaction and against any alternative business combination transaction. As of [    •    ], 2014, the last practicable trading date prior to the mailing of this proxy statement, the directors, officers and significant securityholders subject to the voting agreements beneficially owned, in the aggregate, [    •    ] shares of common stock, which represented approximately [    •    ]% of the issued and outstanding shares of common stock on such date.

Registration Rights Agreement (page 86)

        In connection with, and as a condition to, the Closing, the Company and the Purchaser will enter into a registration rights agreement that will, among other things, require the Company to register the Purchased Shares and certain other shares of our common stock held by the Purchaser (and, to the extent they meet certain criteria, any permitted transferees).

Sales Service Agreement (page 87)

        On August 11, 2014, Specialized Technology Resources, Inc., a subsidiary of the Company, and Zhenfa Energy entered into a sales service agreement. Pursuant to the terms of the agreement, Zhenfa Energy and its affiliates agreed to assist Specialized Technology Resources, Inc. and its affiliates in the marketing, sales, and distribution of its encapsulant and related products to Chinese solar module manufacturers, as well as the manufacture of those products in China. The agreement will become automatically effective, without any further action by either party, on the Closing Date. If the Closing does not occur, the agreement shall be void ab initio and have no force and effect.

Guarantee Agreement (page 88)

        On August 11, 2014, Zhenfa Energy entered into a guarantee agreement in favor of the Company, referred to as the Guarantee Agreement. Subject to the receipt of certain Chinese government approvals, Zhenfa Energy has agreed to guarantee, absolutely and unconditionally, to the fullest extent permitted under applicable law, all of the obligations of the Purchaser under and pursuant to the terms of the Purchase Agreement, including, but not limited to, payment of the Purchase Price and performance of all the covenants and agreements of the Purchaser set forth in the Purchase Agreement, including all covenants and agreements relating to the corporate governance of the Company and the election of directors. Zhenfa Energy's obligations under the Guarantee Agreement are significantly limited prior to receiving approval of the Transaction from certain Chinese governmental authorities or if such approval is waived by the Company or denied.

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Conditions to Completion of the Share Issuance (page 90)

        Each party's obligation to effect the Share Issuance are subject to the satisfaction or waiver of mutual conditions, including the following:

•

receipt of stockholder approval of the Share Issuance;



•

the absence of any law, injunction, judgment or ruling prohibiting the consummation of the Transaction or making the consummation of the Transaction illegal;



•

receipt of notice from CFIUS that there are no unresolved national security concerns with respect to the Transaction;



•

the parties shall have performed and complied in all material respects with all covenants, agreements and conditions set forth in the Purchase Agreement required to be performed prior to or on the Closing Date, except, in the case of the Company, for such failures which have not had or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect;



•

the entry into any agreements contemplated by the Purchase Agreement that are applicable to such party;



•

receipt of an officer certificate(s) with regard to satisfaction of certain conditions and other matters; and



•

declaration by the Company of the Special Dividend.

        There are also additional closing conditions specific to the Company and the Purchaser.

Termination of the Purchase Agreement (page 91)

        The Purchase Agreement may be terminated any time before the Closing by the written consent of the Company and the Purchaser.

        The Purchase Agreement may also be terminated prior to the Closing by either the Company or the Purchaser if:

•

the Closing has not occurred (other than because of the failure of a party seeking to terminate the Purchase Agreement to comply with its obligations under the Purchase Agreement) by January 31, 2015 (which date may be extended by the mutual agreement of the parties and is referred to as the Termination Date);



•

a court of competent jurisdiction or other governmental body issues a final and nonappealable law or order, or takes any other action having the effect of permanently restraining, enjoining or otherwise prohibiting the Transaction;



•

the existence of a legal requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of a governmental body that makes consummation of the Transaction illegal or otherwise prohibits or prevents the consummation of the Transaction;



•

the Company's stockholders fail to give the necessary approvals to approve the Share Issuance at the Special Meeting or any adjournments or postponements thereof; or



•

there is a material inaccuracy in, or the Company or the Purchaser materially breaches or fails to perform or comply with any of their respective warranties, covenants, obligations or any other provision of the Purchase Agreement, and such material inaccuracy, breach or failure to perform or comply would result in the failure to satisfy one or more condition of the Purchase

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Agreement and such cannot be cured or has not been cured after 30 days written notice of such material inaccuracy, breach or failure to perform or comply from the other party.

        The Purchase Agreement may also be terminated prior to the Closing by the Purchaser under any of the following circumstances, collectively referred to as a Company Termination:

•

the Board of Directors fails to recommend that the stockholders approve the Share Issuance and any other proposals required to be submitted by the Company;



•

the Board of Directors makes a change in its recommendation to approve the Share Issuance and any other proposals required to be submitted by the Company;



•

the Board of Directors approves, endorses or recommends any other acquisition proposal (as defined herein);



•

the Company fails to include in the proxy statement sent to the Company's stockholders the recommendation of the Board of Directors to approve the Share Issuance and any other proposals required to be submitted by the Company; or



•

the Company or any of its representatives materially violates or breaches its non-solicitation and board recommendation covenants.

        The Purchase Agreement may also be terminated prior to the Closing by the Company under any of the following circumstances, collectively referred to as a Purchaser Termination:

•

a material breach of any provision of the Guarantee Agreement has been committed by Zhenfa Energy, and such breach has not been waived by the Company and cannot be cured or has not been cured after 30 days written notice of such material breach from the Company;



•

the required Chinese government approvals have been (i) denied or (ii) not obtained by the later of January 15, 2015 or the date that is one business day prior to the date of the Special Meeting; or



•

the Board of Directors determines to enter into a definitive agreement providing for the implementation of a superior proposal and the Company enters into such definitive agreement and pays a termination fee of $860,000 to Purchaser concurrently with such termination.

Termination Fees (page 92)

        The Company has agreed to pay the Purchaser a termination fee of $860,000 (such amount to be reduced by the amount of any expenses of the Purchaser reimbursed by the Company as described below) if the Purchase Agreement is terminated by:

•

the Purchaser pursuant to a Company Termination;



•

the Company, in order to accept and enter into a definitive agreement providing for the implementation of a superior proposal, and the Company enters into such definitive agreement;



•

the Purchaser, if the Closing has not occurred prior to January 31, 2015 and (i) on or before the date of such termination an acquisition proposal has been publicly announced or disclosed and (ii) a definitive agreement relating to the acquisition proposal is entered into by the Company or an acquisition transaction is consummated within 12 months of terminating the Purchase Agreement; or



•

the Company or the Purchaser, if the Company's stockholders have failed to give the necessary approvals at the Special Meeting or any adjournments or postponements thereof and (i) on or before the date of such Special Meeting an acquisition proposal has been publicly announced or disclosed and (ii) a definitive agreement relating to the acquisition proposal is entered into by the Company or an acquisition transaction is consummated within 12 months of terminating the Purchase Agreement.

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        The Company's sole and exclusive remedy in the event the Purchase Agreement is terminated by the Company following a material inaccuracy, breach or failure to perform or comply by the Purchaser of any of its warranties, covenants, obligations or any other provision of the Purchase Agreement that has not been waived by the Company or cured by the Purchaser is the right to retain the Deposit, together with accrued interest thereon, and the Prior Payment.

Expenses (page 93)

        All costs and expenses incurred in connection with the Purchase Agreement and the Transaction will be paid by the party incurring such expense, whether or not the Transaction is consummated.

        Notwithstanding the foregoing, the Company is required to reimburse the Purchaser for its fees and expenses up to $500,000 in the aggregate if the Purchase Agreement is terminated by (i) the Purchaser, following a material inaccuracy, breach or failure to perform or comply by the Company of any of its warranties, covenants, obligations or any other provision of the Purchase Agreement that has not been waived by the Purchaser or cured by the Company or (ii) the Company or the Purchaser, if the Company's stockholders fail to give the necessary approvals at the Special Meeting or any adjournments or postponements thereof. However, the Company will not be responsible for any expenses of the Purchaser if (x) Zhenfa Energy has not received the required Chinese government approvals on or before the date of the Special Meeting or (y) the required Chinese government approvals have been denied.

Indemnification of Purchaser (page 84)

        All covenants, agreements, representations and warranties made by the parties in the Purchase Agreement will survive for a period of 12 months following the Closing Date.

        From and after the Closing Date, and subject to the terms, conditions and limitations set forth in the Purchase Agreement, the Company will indemnify, hold harmless and defend the Purchaser and its officers, directors and affiliates against any adverse consequences (as defined herein) resulting from or arising out of a breach of the Company's representation or warranties (as of the date made or as of the Closing Date, as applicable) or covenants contained in the Purchase Agreement. The Company will not, however, be liable for any adverse consequences unless and until the aggregate amount of adverse consequences exceed $1.0 million. In this case, the Purchaser and its officers, directors and affiliates will be entitled to indemnification for all losses incurred by them that are in excess of this amount, subject to a limit on our maximum aggregate liability of $4.0 million. The indemnification discussed herein is the sole and exclusive remedy of the Purchaser and its officers, directors and affiliates, other than for claims for or based on willful material misconduct or intentional fraud by the Company.

Corporate Governance after the Closing (page 84)

        Board Composition.    Following the Closing, the size of the Board of Directors of the Company will be set at seven members. Subject in each case to all fiduciary duties of the Board of Directors, the Board of Directors following the Closing will be comprised of: (i) four directors who will have been designated by the Purchaser and are reasonably acceptable to the Board of Directors, referred to as the Purchaser Directors, at least two of whom will be independent, as defined under applicable NYSE listing standards, and shall be eligible and qualified to serve on the Audit Committee of the Board of Directors and the Compensation Committee of the Board of Directors, as determined in accordance with the rules and regulations of the SEC and applicable NYSE listing standards, (ii) one director who, as of the Closing, is also the President or Chief Executive Officer of the Company, referred to as the CEO Director, and (iii) two directors who are independent directors of the Company as of the date of the Purchase Agreement, referred to as the Continuing Directors.

        As of the date hereof, Robert S. Yorgensen, as the current President and Chief Executive Officer of the Company, shall serve on the Board of Directors following the Closing as the CEO Director. The

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Board of Directors is currently in the process of determining which current members of the Board of Directors shall be designated to serve on the Board of Directors following the Closing as the Continuing Directors.

        As of the date hereof, the Purchaser has provided the Board of Directors with its proposed nominees to serve as Purchaser Directors. Such nominees are subject to the reasonable approval of the Board of Directors and the Board of Directors is currently in the process of reviewing the nominees qualifications. Once the Purchaser's nominees have been approved by the Board of Directors, the Company will provide its stockholders with any information with regard to such nominees as required pursuant to applicable SEC rules and regulations.

        Board Committees.    Through the 2017 Annual Meeting, the Board of Directors will have four standing committees: (i) an Audit Committee, (ii) a Nominating and Corporate Governance Committee, (iii) a Compensation Committee and (iv) a newly established Special Committee of Continuing Directors. Any other committee established by the Board of Directors following the Closing will be comprised of at least one Continuing Director.

        Each of the Audit Committee and the Nominating and Corporate Governance Committee shall be comprised of three members, one of whom will be a Continuing Director, and two of whom shall be independent Purchaser Directors. The Compensation Committee will be comprised of two members, at least one of whom shall be a Continuing Director and one of whom shall be an independent Purchaser Director. In the event there are not a sufficient number of independent Purchaser Directors or Continuing Directors to effect the composition of the committees described herein, the Board of Directors will exercise its discretion to make the appropriate appointments. A Continuing Director will be appointed as the chair of all standing committees.

        As noted above, following the Closing a new Special Committee of Continuing Directors will be established by the Board of Directors. This committee will be comprised of the Continuing Directors. The Special Committee of Continuing Directors will have the authority to, among other things, enforce all matters under the Purchase Agreement and other agreements ancillary thereto, including, but not limited to, the Sales Service Agreement and Registration Rights Agreement (each as defined herein). The Special Committee of Continuing Directors will also have the power to select and appoint a cooperation committee under the Sales Service Agreement. Additionally, until the 2017 Annual Meeting, any transaction, arrangement or contract between the Company and the Purchaser and their respective affiliates and related parties, and any amendment, modification or waiver thereto, including the Purchase Agreement, the Sales Service Agreement and the Registration Rights Agreement, shall require the approval of the Special Committee of Continuing Directors.

        Executive Officers and Key Technical Personnel.    It is anticipated that the executive officers of the Company prior to the Closing shall remain the executive officers of the Company following the Closing. Unless otherwise consented to by the Purchaser and the Special Committee of Continuing Directors, from the Closing through the 2017 Annual Meeting, the Company will use its commercially reasonable efforts to continue the employment and services of its current executive officers and key technical personnel in their respective current positions.

        Additional Corporate Governance Considerations.    Unless otherwise consented to by the Purchaser and the Special Committee of Continuing Directors, from the Closing through the 2017 Annual Meeting, the Company will:

•

use commercially reasonable efforts to remain in compliance with NYSE continued listing standards; provided, however, that if the Company is unable to remain in compliance with such standards, the Company will use commercially reasonable efforts to cause its common stock to be listed or quoted on another national securities exchange reasonably acceptable to the Purchaser;

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•

continue to file all reports with the SEC under Sections 13 and/or 15(d) of the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act, even if the Company is not subject to such reporting requirements;



•

continue to carry on its business as a manufacturer of solar panel encapsulant products in the ordinary course consistent with past practice; and



•

use commercially reasonable effort to preserve substantially intact its present business organization.

Headquarters (page 70)

        After the Closing, the Company will continue to have its headquarters, principal executive offices and research and development laboratory in Connecticut.

Stock Ownership of Directors and Executive Officers (page 107)

        On [    •    ], 2014, the record date set by the Board of Directors for the Special Meeting, the directors and executive officers of the Company and their affiliates beneficially owned and were entitled to vote [    •    ] shares of our common stock, or approximately [    •    ]% of the shares of our common stock outstanding on that date.

The Special Meeting

The Special Meeting (page 106)

        The Special Meeting will be held on [    •    ], 2014 at [    •    ], local time, at the Hartford/Windsor Marriott Airport Hotel, located at 28 Day Hill Road, Windsor, Connecticut 06095.

Purpose of the Special Meeting (page 106)

        At the Special Meeting, our stockholders will be asked to approve:

•

the Share Issuance proposal;



•

the Reverse Stock Split Charter Amendment proposal;



•

the Potential Payments Under Compensation Arrangement proposal; and



•

a proposal to adjourn or postpone the Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of the foregoing proposals.

Record Date; Shares Entitled to Vote (page 106)

        The Company has fixed the close of business on [    •    ], 2014 as the record date, referred to as the record date, for determining the Company stockholders entitled to receive notice of and to vote at the Special Meeting. Only holders of record of our common stock on the record date are entitled to receive notice of and vote at the Special Meeting, and any adjournment or postponement thereof.

        Each share of our common stock is entitled to one vote on each matter brought before the Special Meeting. On the record date, there were [    •    ] shares of our common stock issued and outstanding.

Quorum Requirement (page 106)

        Under Delaware law and the Company's bylaws, a quorum of our stockholders at the Special Meeting is necessary to transact business. The presence of holders representing a majority of the shares of our common stock issued and outstanding on the record date entitled to vote at the Special Meeting will constitute a quorum for the transaction of business at the Special Meeting.

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        All of the shares of our common stock represented in person or by proxy at the Special Meeting, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum at the Special Meeting.

Votes Required to Approve the Proposals (page 107)

        The Company's proposals require different percentages of votes in order to approve them:

•

In order to approve the Share Issuance proposal, the affirmative vote of the majority of total votes cast on the proposal must be obtained.



•

In order to approve the Reverse Stock Split Charter Amendment proposal, the affirmative vote of the majority of outstanding shares of our common stock entitled to vote on the proposal must be obtained.



•

In order to approve the Potential Payments Under Compensation Arrangements proposal, the affirmative vote of the majority of the shares of our common stock present in person or represented by proxy at the Special Meeting and entitled to vote on the proposal must be obtained.



•

In order to approve the proposal to permit the proxies to adjourn or postpone the Special Meeting, including for the purpose of soliciting additional proxies, the affirmative vote of the majority of shares of our common stock present in person or represented by proxy at the Special Meeting and entitled to vote on the proposal must be obtained, regardless of whether a quorum is present.

        The votes on the Potential Payments Under Compensation Arrangements and the Reverse Stock Split Charter Amendment proposals are votes separate and apart from the vote to approve the Share Issuance. Because the vote on Potential Payments Under Compensation Arrangements is advisory in nature only, it will not be binding on the Company. The approval of the Share Issuance proposal is a condition to the Closing. In connection with and as a condition to the Closing, the Board of Directors will declare the Special Dividend to all of our stockholders, other than the Purchaser. If the Closing does not occur, the Board of Directors does not intend to declare the Special Dividend.

Failure to Vote; Abstentions and Broker Non-Votes (page 108)

        Subject to the foregoing, no vote will be cast on any proposal at the Special Meeting on behalf of any stockholder of record who does not cast a vote on such matter. However, if the stockholder properly submits a proxy prior to the Special Meeting, his or her shares of common stock will be voted as he or she directs. If he or she submits a proxy but no direction is otherwise made, the shares of common stock will be voted "FOR" the Share Issuance proposal, "FOR" the Reverse Stock Split Charter Amendment proposal, "FOR" the advisory, non-binding proposal on the Potential Payments Under Compensation Arrangements, and "FOR" the approval of any adjournments or postponements of the Special Meeting, if necessary, for the purpose of soliciting additional proxies in favor of the foregoing proposals.

        Shares held by a stockholder who indicates on an executed proxy card that he or she wishes to abstain from voting will count toward determining whether a quorum is present and will be counted as votes cast and have the same effect as a vote "AGAINST" the Share Issuance proposal, the advisory, non-binding proposal on the Potential Payments Under Compensation Arrangements, the Reverse Stock Split Charter Amendment proposal, and the proposal to permit the proxies to adjourn or postpone the Special Meeting.

        If a broker non-vote occurs, the broker non-vote will count for purposes of determining a quorum. A broker non-vote is not a vote cast. The broker non-vote will not affect the outcome of the votes on the Share Issuance proposal and the advisory, non-binding proposal on the Potential Payments Under Compensation Arrangements. A broker non-vote will have the same effect as a vote "AGAINST" the Reverse Stock Split Charter Amendment proposal and will not be counted in the tabulation of the results of the proposal to permit the proxies to adjourn or postpone the Special Meeting.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        The following table sets forth certain of our historical consolidated financial data for the dates and for the periods indicated. The consolidated financial data as of and for the years ended December 31, 2013, 2012, 2011, 2010 and 2009 is derived from our audited consolidated financial statements. The selected balance sheet data as of December 31, 2013 and 2012 are derived from our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 which is incorporated by reference into this proxy statement. The selected balance sheet data as of December 31, 2011, 2010 and 2009 are derived from our audited financial statements not included in this proxy statement. The consolidated financial information as of and for the six months ended June 30, 2014 and 2013, is derived from our unaudited condensed consolidated financial statements which are included in our Quarterly Reports on Form 10-Q for the six months ended June 30, 2014 and 2013 which are incorporated by reference into this proxy statement and which, in our opinion, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair statement of our financial position and results of operations for such periods. Interim results for the six months ended June 30, 2014 are not necessarily indicative of results for the remainder of the fiscal year or for any future period.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and our capitalization as of June 30, 2014 on an:

•

actual basis; and



•

as adjusted basis giving effect to the sale of $21.7 million shares of our common stock to the Purchaser at a price per share of $0.784, after deducting estimated offering expenses paid by us of approximately $2.5 million, and after giving effect to the Special Dividend of an aggregate of approximately $22.6 million.

        You should read this table in conjunction with the information contained in "The Transaction—Use of Proceeds," "Selected Historical Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, as well as the consolidated financial statements and the notes thereto included thereto.

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RISK FACTORS

        In addition to the other information included in this proxy statement, including the matters addressed in "Cautionary Statement Regarding Forward-Looking Statements" on page 32, you should carefully consider the following risk factors in determining how to vote at the Special Meeting. In addition, you should read and consider the risk factors associated with the businesses of the Company because these risk factors may affect the operations and financial results of the Company. These risk factors may be found under Part I, Item 1A, "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2013, which is on file with the SEC, and which is incorporated by reference into this proxy statement.

Risks Related to the Transaction

Failure to complete the Transaction could negatively impact our stock price, business, financial condition, results of operations or prospects.

        The Share Issuance is subject to the satisfaction or waiver of certain closing conditions summarized in the section in this proxy statement entitled "The Purchase Agreement—Conditions to Completion of the Share Issuance" and set forth in the Purchase Agreement attached to and included in this proxy statement as Annex A. We cannot assure you that each of the conditions will be satisfied. If the conditions are not satisfied or waived in a timely manner and the Transaction is delayed, we may lose some or all of the intended or perceived benefits of the Transaction, which could cause our stock price to decline and harm our business. Furthermore, even if each of the conditions is satisfied, we cannot assure you that the Closing will occur because the Company is not entitled to seek specific performance to enforce the Purchaser's obligations under the Purchase Agreement. Our sole and exclusive remedy in the event the Purchase Agreement is terminated by us following a material inaccuracy, breach or failure to perform or comply by the Purchaser of any of its warranties, covenants, obligations or any other provision of the Purchase Agreement that has not been waived by us or cured by the Purchaser is the right to retain the Deposit, together with accrued interest thereon, and the Prior Payment. In addition, in certain circumstances, each party may terminate the Purchase Agreement.

        If the Transaction, including the Share Issuance, is delayed or not completed (including in the case where the Purchase Agreement is terminated), our ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Transaction, we will be subject to a number of risks, including the following:

•

we expect to incur continuing losses during the pendency of the Transaction;



•

we may be required to pay the Purchaser a termination fee if the Share Issuance is terminated under certain circumstances;



•

we will be required to pay certain costs relating to the Transaction, including substantial legal and accounting fees, whether or not the Transaction is completed;



•

our stock price may decline;



•

under the Purchase Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Share Issuance that may affect our ability to execute certain of our business strategies;



•

our business and prospects in China and elsewhere may suffer due to adverse publicity regarding our inability to complete the Transaction and the potential negative perceptions that may result from a failure to establish a relationship with the Zhenfa Group, given its relationships with many top-tier Chinese module manufacturers; and

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•

matters relating to the Transaction may require substantial commitments of time and resources by our management, which could otherwise have been devoted to other opportunities that may have been beneficial to us.

        We also could be subject to litigation related to any failure to complete the Transaction or related to any enforcement proceeding commenced against us to perform our obligations under the Purchase Agreement. If the Transaction is not completed, these risks may materialize and may adversely affect our stock price, business, financial condition, results of operations or prospects.

The Closing is subject to the receipt of consents, approvals and clearances from regulatory authorities that could delay the Closing or impose conditions that could have a material adverse effect on us or that could cause abandonment of the Transaction.

        A condition to our and the Purchaser's respective obligations to consummate the Share Issuance is that the parties shall have received notice from The Committee on Foreign Investment in the United States, referred to as CFIUS, that there are no unresolved national security concerns with respect to the Transaction. Additionally, a condition to our obligation to consummate the Share Issuance is that Zhenfa Energy shall have received certain required approvals of the Chinese government necessary for Zhenfa Energy to perform its obligations under the Guarantee Agreement, including its guarantee of the Purchaser's obligation to pay the remaining Purchase Price due on the Share Issuance. We cannot provide assurances regarding the resolution of any regulatory review process. Any relevant regulatory body may refuse its approval or may seek to make its approval subject to compliance by us with unanticipated or onerous conditions, or otherwise cause the termination of the Transaction.

Should we fail to complete the Transaction, one of the strategic alternatives that our Board of Directors could pursue is the dissolution and liquidation of our Company.

        We incurred net losses from continuing operations of $18.3 million, $211.6 million and $39.4 million for the years ended December 31, 2013, 2012 and 2011, respectively, and net losses of $6.3 million for the six months ended June 30, 2014. Moreover, we expect to incur additional losses during the pendency of the Transaction. If we are not successful in completing the Transaction, including the Share Issuance, we may decide to wind down or cease all of our operations. We also may seek stockholder approval of a plan of liquidation and dissolution. If our Board of Directors and stockholders were to approve a plan of liquidation and dissolution, the assets available to distribute to our stockholders are likely to be adversely affected by our expected continuing losses during the pendency of the Transaction and the substantial costs we will have incurred in connection with the Transaction.

Estimates as to the future value of the Company are inherently uncertain. You should not rely on such estimates without considering all of the information contained in this proxy statement.

        Any estimates as to the future value of the Company, including estimates regarding the price at which our common stock will trade following the Share Issuance and the Special Dividend, are inherently uncertain. The future value of the Company will depend upon, among other factors, the Company's ability to achieve projected revenue and earnings expectations and to realize the other anticipated benefits described in this proxy statement, all of which are subject to the risks and uncertainties described in this proxy statement, including these risk factors. Accordingly, you should not rely upon any estimates as to the future value of the Company, or the price at which our common stock will trade following the Transaction, whether made before or after the date of this proxy statement by the Company's or the Purchaser's respective management or affiliates or others, without considering all of the information contained in this proxy statement.

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The Purchase Agreement contains certain indemnification obligations that could result in substantial liabilities if the Company is required to indemnify the Purchaser.

        Pursuant to the Purchase Agreement all covenants, agreements, representations and warranties made by the parties in the Purchase Agreement will survive for a period of 12 months following the Closing Date. From and after the Closing Date, and subject to the terms, conditions and limitations set forth in the Purchase Agreement, the Company will indemnify, hold harmless and defend the Purchaser and its officers, directors and affiliates, referred to collectively as the Purchaser Indemnified Parties, against any adverse consequences resulting from or arising out of a breach of the Company's representation or warranties (as of the date made or as of the Closing Date, as applicable) or covenants contained in the Purchase Agreement. Other than instances of willful material misconduct or fraud, the Company will not, however, be liable for any adverse consequences unless and until the aggregate amount of adverse consequences exceed $1.0 million. In this case, the Purchaser Indemnified Parties will be entitled to indemnification for all losses incurred by them that are in excess of this amount, subject to a limit on our maximum aggregate liability of $4.0 million. If any material indemnification obligations are triggered pursuant to the Purchase Agreement, the Company's financial condition could be materially and adversely affected. For more information see "The Purchase Agreement—Indemnification of Purchaser" beginning on page 84.

If the Closing occurs, Zhenfa Energy, as the parent company of the Purchaser, will beneficially own a controlling interest in our common stock as a result of the Share Issuance and control our Board of Directors. As a result, it will be able to exert significant influence over us, and Zhenfa Energy's interests may conflict with the interests of our other stockholders.

        As a result of the Share Issuance, the Purchaser, a wholly owned indirect subsidiary of Zhenfa Energy, will control 51% of the voting power of our common stock, and will be able to, subject to certain conditions set forth in the Purchase Agreement, control or exert substantial influence over us, including the election of our directors and most matters requiring board or stockholder approval, including business strategies, mergers, business combinations, acquisitions or dispositions of significant assets, issuances of common stock, incurrence of debt or other financing and the payment of dividends. The existence of a controlling stockholder may have the effect of making it difficult for a third party to seek, or may discourage or delay a third party from seeking, to acquire a majority of our outstanding common stock, which could adversely affect the market price of our stock. Zhenfa Energy will maintain its separate business operations following the Closing. As a result, Zhenfa Energy's interests may not always be consistent with the interests of our other stockholders. To the extent that conflicts of interest may arise among us, Zhenfa Energy and its affiliates, those conflicts may be resolved in a manner adverse to our other stockholders.

We may fail to realize some or all of the anticipated benefits of the proposed Transaction, which may adversely affect the value of our common stock.

        The success of the Transaction will depend, in part, on our ability to realize the anticipated benefits from our strategic alliance with Zhenfa Energy contemplated by the Transaction, including the benefits anticipated from Zhenfa Energy's assistance to us under the Sales Service Agreement in marketing and selling our products to China-based solar module manufacturers and in otherwise conducting business in China. We have not previously conducted business with Zhenfa Energy, and we cannot assure that we will be able to cooperate effectively under the Sales Service Agreement or otherwise. Overall coordination with the Zhenfa Group may also be a complex and time-consuming process. Such coordination may be further complicated by geographical, language and cultural differences. Even with proper planning and timely coordination, we cannot assure that we can achieve any anticipated benefits of the Transaction on a timely basis, if at all, or that we will otherwise be successful in expanding our business in China. Failure to achieve the expected benefits from the

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Transaction could result in continuing substantial net losses and adversely affect the value of our common stock.

Our international operations, including those in China, expose us to additional operational challenges.

        We are subject to a number of additional risks and expenses due to our international operations, including our operations in China. Any of these risks or expenses could harm our operating results and expected benefits from the Transaction. These risks and expenses include:

•

difficulties in developing staffing and simultaneously managing operations in multiple locations as a result of, among other things, distance, language and cultural differences;



•

protectionist laws and business practices that favor local companies;



•

difficulties in securing, servicing and increasing sales to foreign customers;



•

difficulties in enforcing contracts and in the collection of trade accounts receivable;



•

difficulties and expenses related to implementing internal controls over financial reporting and disclosure controls and procedures;



•

possible adverse tax consequences;



•

the inability to obtain required regulatory approvals;



•

governmental currency controls;



•

multiple, conflicting and changing government laws and regulations;



•

potential noncompliance with the Foreign Corrupt Practices Act, as amended;



•

operation in parts of the world where strict compliance with anti-bribery laws may conflict with local customs and practices;



•

political and economic changes and disruptions, export/import controls and tariff regulations;



•

the inability to effectively obtain or enforce intellectual property rights and otherwise protect against clone or "knock off" products.

Our China operations are subject to national, regional and local regulations. The regulatory environment in China is evolving, and officials in the Chinese government exercise broad discretion in deciding how to interpret and apply regulations. It is possible that the Chinese government's current or future interpretation and application of existing or new regulations will negatively impact our China operations, result in regulatory investigations or lead to fines or penalties.

Zhenfa Energy's obligations under the Guarantee Agreement are significantly limited prior to receiving approval of the Transaction from certain Chinese governmental authorities.

        The Company entered into the Guarantee Agreement with Zhenfa Energy because the Purchaser is a United States-based subsidiary of Zhenfa Energy with limited assets. Due to its limited assets, the Purchaser will be dependent upon funds from Zhenfa Energy to pay the remaining Purchase Price. Under the Guarantee Agreement, and upon the receipt of the required Chinese government approvals, Zhenfa Energy has agreed to guarantee, absolutely and unconditionally, to the fullest extent permitted under applicable law, all of the obligations of the Purchaser under and pursuant to the terms of the Purchase Agreement, including the payment of the Purchase Price. Although the receipt of the required Chinese government approvals is a condition precedent to the Company's obligation to close, the Company has the option to waive this condition and consummate the transaction without the required Chinese government approvals. If Zhenfa Energy fails to obtain the required Chinese government approvals it is likely that the Purchaser will be unable to pay the Purchase Price and the

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Closing will not occur. If such approval is not obtained or is waived by the Company, our recourse against Zhenfa Energy and the Purchaser will be significantly limited. For more information, see "The Purchase Agreement—Guarantee Agreement" beginning on page 88.

We may have limited legal recourse under the laws of China if disputes arise under our agreements or relationship with Zhenfa Energy.

        The Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If disputes arise under our agreements or relationships with Zhenfa Energy, we face the risk that Zhenfa Energy may breach any of these agreements or otherwise engage in conduct relating to their relationship with us that could otherwise give rise to liability under U.S. law. The resolution of any matters involving Zhenfa Energy, including matters subject to international arbitration proceedings in London, England pursuant to the agreements we have delivered in connection with the Transaction, may be subject to the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the legal merits of a particular matter or dispute may influence their determination. Any rights we may have to specific performance, or to seek an injunction under Chinese law, in any of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations.

Our existing stockholders will experience dilution of their percentage ownership of our common stock.

        Pursuant to the Purchase Agreement and subject to our stockholders' approval, we would be issuing new shares of common stock to the Purchaser, which would represent approximately 51% of the total issued and outstanding common stock of the Company following the Closing. The issuance of these shares would cause our current stockholders to experience immediate and significant dilution in their percentage ownership of the Company's outstanding common stock.

The consideration for the Share Issuance is fixed and will not be adjusted in the event the value of our Company increases before the Share Issuance is completed.

        The Purchase Price is fixed and will not be adjusted in the event that the value of our Company increases before the Share Issuance is completed. If the value of our Company increases prior to the consummation of the Transaction, it is possible that the effective value of the Share Issuance will not be at a premium over market price as of the Closing.

Uncertainties associated with the Transaction or the ownership of the Company after the Closing may cause delays in customer orders or even the loss of customers, which could offset any benefits we may realize from the Transaction.

        In response to the announcement of the Transaction, or due to the diversion of management's attention, current and potential customers of the Company may delay or defer decisions concerning their use of products of the Company. To the extent that the Transaction creates uncertainty among those persons and organizations contemplating purchases such that one large customer, or a significant group of smaller customers, delays, defers or changes purchases in connection with the Transaction, our results of operations would be adversely affected. Further, we may make customer assurances to address our customers' uncertainty about the direction of the Company's product and related support offerings that may result in additional obligations of the Company.

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Some of our current directors and executive officers have interests in the Transaction that will differ from the interests of our stockholders, and these persons may have conflicts of interest in recommending to our stockholders that they approve the proposals to be voted upon at the Special Meeting.

        Some members of management and our Board of Directors have interests in the Transaction that differ from, or are in addition to, their interests as stockholders, including the continuing service of several of the Company's existing directors and executive officers following the Closing and the potential receipt of compensation following the Share Issuance if such executive officer is terminated under certain circumstances.

        These interests could cause management or members of the Board of Directors to have a conflict of interest in recommending approval of the proposals to be voted upon at the Special Meeting to our stockholders.

Our obligation to pay a termination fee under certain circumstances and the restrictions on our ability to solicit or engage in negotiations with respect to other acquisition proposals may discourage other transactions that may be favorable to our stockholders.

        Until the Share Issuance is completed or the Purchase Agreement is terminated, with limited exceptions, the Purchase Agreement prohibits us from entering into, soliciting or engaging in negotiations with respect to acquisition proposals or other business combinations with a party other than the Purchaser and its affiliates. We have agreed to pay the Purchaser a termination fee of $860,000 under certain specified circumstances, including in connection with a change in recommendation of the Board of Directors to our stockholders regarding the Share Issuance or certain other matters. These provisions could discourage other companies from proposing alternative transactions that may be more favorable to our stockholders than the Transaction.

The acquisition of control of our Company by Zhenfa Energy, a Chinese company, may expose us to greater regulatory scrutiny.

        At various times during recent years, the governments of the United States and China have had disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China could adversely affect our ability to successfully implement our Chinese strategy, the market price of our common stock and our ability to access the capital markets in United States. Also, as a result of recent controversies involving Chinese controlled companies, it is possible that such companies have come under increased scrutiny in the United States and other countries. If we become subject to enhanced regulatory review and oversight, responding to such review and oversight may be expensive and time consuming and may have a material adverse effect on our operations, even if we otherwise have complied with all legal and regulatory requirements.

We must continue to retain, motivate and recruit executives and other key employees, which may be difficult in light of uncertainty regarding the Transaction, including the Share Issuance, and failure to do so could negatively affect our operations.

        For the Transaction to be successful, we must continue to retain, motivate and recruit executives and other key employees prior to as well as after the Closing. Experienced executives are in high demand and competition for their talents can be intense. Employees may experience uncertainty about their future role with us until, or even after, strategies with regard to our operations and product development following the Closing are announced or executed. These potential distractions of the Transaction, including the Share Issuance, may adversely affect our ability to attract, motivate and retain executives and other key employees and keep them focused on applicable strategies and goals. A

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failure to retain and motivate executives and other key employees during the period prior to or after the Closing could have a material and adverse impact on our business and results of operations.

Certain of our directors and officers may be located outside of the United States.

        Following the Closing, and upon the appointment to the Board of Directors of the Purchaser's nominees, it is possible that certain of our directors and, over the course of time, officers, may not be United States citizens or may reside out of the United States. It may not be possible for our stockholders to effect service of process upon our directors within the United States, to bring action against our directors or to enforce against our directors court judgments based on the civil liabilities provisions of the federal securities laws of the United States. Further, it is unclear if extradition treaties now in effect between the United States and China (and, for the matter, any other country that one of our directors may be a citizen of or reside in) would permit effective enforcement against our directors, outside of the United States, of criminal penalties, under the United States Federal securities laws or otherwise. For more information, see "The Transaction—Corporate Governance After the Closing—Board Composition" beginning on page 66.

Risks Related to the Reverse Stock Split Charter Amendment

The Reverse Stock Split Charter Amendment may not increase our stock price over the long-term.

        The principal purpose of effecting a reverse stock split pursuant to the Reverse Stock Split Charter Amendment would be to maintain a per-share market price of our common stock above the minimum bid price requirement under the NYSE's continued listing standard. We cannot assure you, however, that a reverse stock split will accomplish this objective for any meaningful period of time, if at all. While it is expected that the reduction in the number of outstanding shares of common stock would proportionally increase the market price of our common stock, we cannot assure you that a reverse stock split will increase the market price of our common stock by a multiple of the reverse stock split ratio chosen by our Board of Directors in its sole discretion, or result in any permanent or sustained increase in the market price of our common stock, which is dependent upon many factors, including our business and financial performance, general market conditions, and prospects for future success.

If we are unable to comply with the continued listing standards of the NYSE, including the minimum bid requirements, and we are delisted from the NYSE, it may be more difficult for you to sell your shares.

        Our common stock is currently listed on the NYSE. In order to maintain this listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of stockholders' equity and a minimum number of public stockholders. In particular, the NYSE has the authority to delist our common stock if, during any period of 30 consecutive trading days, the average closing share price falls below $1.00 or the average market capitalization of our common stock falls below $50.0 million and, at the same time, total stockholders' equity is less than $50.0 million, and in either case we are unable to satisfy these standards within the time periods specified under NYSE regulations. Our total stockholder's equity was $79.6 million as of June 30, 2014. As a result of the Closing, we anticipate that our stockholder's equity will be reduced by approximately $3.4 million. Even if the market price of our common stock continues at a level that allows us to comply with the minimum bid price requirement, we cannot assure you that we will be able to comply with the market capitalization or other standards that we are required to meet in order to maintain a listing of our common stock on the NYSE, that the NYSE will interpret these requirements in the same manner we do, if we believe we meet the requirements, or that the NYSE will not change such requirements or add new requirements to include requirements we do not meet in the future. Our failure to meet these requirements may result in our common stock being delisted from such exchange, irrespective of our compliance with the applicable price requirement. In addition to specific listing and maintenance standards, the NYSE has broad discretionary authority over the initial and continued listing of

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securities, which such exchange could exercise with respect to the listing of our common stock. If we are delisted from the NYSE, our common stock may be considered a penny stock under the regulations of the SEC and would therefore be subject to rules that impose additional sales practice requirements on broker-dealers who sell our securities. The additional burdens imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our common stock, which could severely limit market liquidity of the common stock and any stockholder's ability to sell our securities in the secondary market. This lack of liquidity would also likely make it more difficult for us to raise capital in the future.

The Reverse Stock Split Charter Amendment may decrease the liquidity of the common stock.

        Although the Board of Directors believes that the anticipated increase in the market price of our common stock could encourage interest in our common stock and possibly promote greater liquidity for our stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after a reverse stock split is implemented, if applicable. A reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for our common stock. In addition, the reverse stock split may increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

Following the Reverse Stock Split Charter Amendment, the resulting market price of our common stock may not satisfy the investing requirements of certain institutional investors. Consequently, the trading liquidity of our common stock may not improve.

        We cannot assure you that the Reverse Stock Split Charter Amendment will result in a share price that will continue to attract investors, including institutional investors or that the market price of our common stock will satisfy the investing requirements of those investors. As a result, we may not be able to maintain or increase the trading liquidity of our common stock.

The Reverse Stock Split Charter Amendment may lead to a decrease in our overall market capitalization.

        Should the market price of our common stock decline after the Reverse Stock Split Charter Amendment is effected, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the Reverse Stock Split Charter Amendment, if applicable. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in our overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the Company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of our common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on our stock price due to the reduced number of shares outstanding after the reverse stock split.

If our common stock is delisted from the NYSE, we will use commercially reasonable efforts to list our shares of common stock on an alternative exchange. However, we cannot assure you that any application for listing on an alternative exchange will be accepted.

        If the reverse split fails to maintain a trading price for our common stock above $1.00 per share, or we otherwise fail to satisfy the continued listing requirements, or any other listing requirements that the NYSE may apply to us in its broad discretion, our shares of common stock may be delisted from the NYSE. Although we will use commercially reasonable efforts to list our shares on an alternative exchange, we cannot assure you that we will be able to meet any initial or continued listing requirements for an alternative exchange or that any listing application with an alternative exchange will be successful.

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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS

        This proxy statement contains certain forward-looking information about the Company that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this proxy statement or may be incorporated into this proxy statement by reference to other documents and may include statements for the periods prior to Closing and following the Closing. Representatives of the Company may also make forward-looking statements. Forward-looking statements are statements that are not historical facts. Words such as "expect," "believe," "will," "may," "anticipate," "plan," "estimate," "intend," "should," "can," "likely," "could" and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding the expected completion of the Share Issuance, market and growth opportunities and other anticipated benefits associated with the Transaction and other statements that are not historical fact.

        These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements including, but not limited to: the ability of the parties to consummate the Transaction in a timely manner or at all; satisfaction of the conditions precedent to the Closing, including the ability to secure any governmental or regulatory approvals in a timely manner or at all, and approval by the stockholders; the possibility of litigation (including related to the transaction itself); the possibility that competing offers may be made; operational challenges in achieving strategic objectives and executing our plans; the risk that markets do not evolve as anticipated; the potential impact of the general economic conditions; and other economic, business and/or competitive factors. The risks included are not exhaustive. Other factors that could adversely affect the Transaction and the Company's business and prospects are described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Form 10-K filed on March 13, 2014 and in subsequent periodic reports on Forms 10-K, 10-Q and 8-K, as well as in this proxy statement, each of which contain and identify other important factors that could cause actual results to differ materially from those contained in any projections or forward-looking statements. You are urged to carefully review and consider the disclosure found in the Company's filings which are available on http://www.sec.gov or http://www.strsolar.com. The Company undertakes no obligation to publicly update any forward-looking statement contained in this report, whether as a result of new information, future developments or otherwise, except as may be required by law.

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THE TRANSACTION

        The following discussion contains important information relating to the Transaction. You are urged to read this discussion together with the Purchase Agreement and the related documents attached as Annexes to this proxy statement before voting.

The Share Issuance and Related Transactions

        Subject to the terms and conditions of the stock purchase agreement between the Company and the Purchaser, referred to as the Purchase Agreement, at the effective time of sale of common stock to the Purchaser, referred to as the Closing, the Company will issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, an aggregate of 27,632,130 shares of the Company's authorized but unissued common stock, referred to as the Purchased Shares, for an aggregate purchase price of $21,663,590, or $0.784 per share, referred to as the Purchase Price. The sale of the Purchased Shares to the Purchaser for payment of the Purchase Price is referred to as the Share Issuance.

        In connection with the execution of the Purchase Agreement, the Purchaser paid to the Company a deposit of $3,200,000, referred to as the Deposit. Prior to entering into the Purchase Agreement, the Purchaser previously paid to the Company $200,000 in connection with the continued negotiation of the Purchase Agreement, referred to as the Prior Payment. Upon the Closing, the Deposit and the Prior Payment will be credited against the Purchase Price. Subject to certain conditions discussed herein, the Deposit and Prior Payment are refundable to the Purchaser if the Closing does not occur.

        Concurrently with the execution of the Purchase Agreement, Specialized Technology Resources, Inc., a subsidiary of the Company, entered into a sales service agreement, referred to as the Sales Service Agreement, with Zhenfa Energy whereby the Zhenfa Group has agreed, among other things, to assist the Company in a number of endeavors, including, without limitation, marketing and selling the Company's products in China, acquiring local raw materials, hiring and training personnel in China, and complying with Chinese law. The Sales Service Agreement becomes effective on the date of Closing, has an initial term of two years following the date of Closing and is automatically extended for one year periods unless terminated earlier. For more information regarding the Sales Service Agreement, see "The Purchase Agreement—Sales Service Agreement" on page 87.

        The payment of the Purchase Price, as well as all other obligations of the Purchaser in connection with the Transaction, will be guaranteed by Zhenfa Energy pursuant to the terms of a guarantee agreement, referred to as the Guarantee Agreement, between the Company and Zhenfa Energy. However, Zhenfa Energy's obligations under the Guarantee Agreement are significantly limited prior to receiving approval of the Transaction from certain Chinese governmental authorities or if such approval is waived by the Company or denied. For more information regarding the Guarantee Agreement, see "The Purchase Agreement—Guarantee Agreement" on page 88.

Special Dividend

        In connection with, and as a condition to, the Closing, the Company shall declare a special dividend, referred to as the Special Dividend, to be paid to all stockholders of the Company, other than the Purchaser, in an amount equal to $0.85 per share of common stock. Of this amount, approximately $0.82 per share will be funded from the gross proceeds of the Share Issuance, and the balance, approximately $0.03 per share, or an aggregate of approximately $900,000, together with the expenses of the Transaction, will be funded by the Company's working capital. Based on the number of shares of our common stock outstanding on [    •    ], the last practicable trading date prior to the mailing of this proxy statement, the aggregate amount of the Special Dividend would be approximately $22.6 million. Pursuant to the terms of the Purchase Agreement, the Purchaser has voluntarily waived any right as a stockholder to participate in the Special Dividend.

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        In connection with and as a condition to the Closing, the Board of Directors will declare the Special Dividend to all of the Company's stockholders, other than the Purchaser. If the Closing does not occur, the Board of Directors does not intend to declare the Special Dividend.

Ownership of the Company After the Closing

        As of [    •    ], the last practicable trading date prior to the mailing of this proxy statement, approximately [    •    ] million shares of common stock were outstanding and [    •    ] million shares of common stock were reserved for issuance upon the exercise of outstanding stock options and settlement of other existing Company equity-based awards. In accordance with the terms of the Purchase Agreement, at the Closing, the Company will issue 27,632,130 shares of our common stock to the Purchaser. The Purchased Shares will represent approximately 51% of the outstanding common stock of the Company immediately after the Closing. Shares of our common stock held by our stockholders immediately prior to the Closing will represent approximately 49% of the outstanding common stock of the Company immediately after the Closing.

Effective Value of the Transaction

        Following the Closing and payment of the Special Dividend, our stockholders, other than the Purchaser, will have received a dividend of $0.85 per share and retained a 49% interest in the Company. This result was structured to treat all stockholders equally based upon the number of shares they hold, and to be the economic equivalent of the Purchaser acquiring 51% of our outstanding shares of common stock from all of our stockholders at a valuation of $1.60 per share, with an additional dividend to our stockholders, other than the Purchaser, of approximately $0.03 per share. Assuming no significant change to the number of shares of our outstanding common stock, at the Closing (i) the Purchaser would have paid approximately $21.7 million for its 51% interest in the Company, (ii) our stockholders, other than the Purchaser, will be entitled to receive their pro rata portion of aggregate payments of approximately $22.6 million representing the Special Dividend, (iii) the Company would have retained no proceeds from the Share Issuance, and (iv) our stockholders, other than the Purchaser, would have retained a 49% interest in the Company. The effective value of the $1.60 per share purchase price represents a 23% premium to the average closing price of our common stock of $1.30 per share for the ten-day period ended August 8, 2014, the last trading day prior to our execution of the Purchase Agreement.

Use of Proceeds

        We expect to receive net proceeds from the offering of approximately $19.2 million, after deducting estimated expenses payable by us.

        The Company, and not the Company's stockholders, will receive all of the net proceeds of the Share Issuance. We expect to use all of the proceeds to a fund a substantial portion of the Special Dividend, with the remainder to be funded from our working capital.

Background of the Transaction

        Our sales and profitability have declined significantly since 2011 driven by (i) a rapid shift of solar module production from the United States and Europe to Asia, particularly China, (ii) the loss of First Solar, Inc., our then largest customer, (iii) financial distress of certain of our key customers, and (iv) intensified competition and steep price declines resulting from excess capacity throughout the solar manufacturing industry.

        During this period of time, we have been attempting to execute our core strategy, which consists of four areas of focus: (i) improve sales volumes, (ii) further reduce our cost structure, (iii) innovate new products and (iv) maintain adequate liquidity. We have attempted to improve our financial performance

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by focusing on cost-reductions, trying to increase our sales to Chinese module manufacturers and working to reduce the rate of decline of our cash balance from operating losses and capital investments. Despite having reduced expenses significantly through multiple reductions in our personnel and reductions in research and development expenditures, we continue to incur losses associated with our ongoing operations.

        Original Strategic Review.    In January 2013, our Board of Directors initiated a review of strategic alternatives. The objective of the review was to identify ways to maximize value for our stockholders given the significant challenges faced by our business. We retained two nationally recognized investment banks (one of such investment banks was Greentech Capital Advisors Securities LLC, referred to as GCA) and in August 2013 we retained a nationally recognized restructuring and consulting firm, referred to as the Restructuring Adviser, each as independent advisers to assist us with evaluating certain financial and operational aspects of various strategic alternatives. In March 2013, we formed a Strategic Transaction Committee of the Board of Directors, referred to as the Strategic Transaction Committee, to review, analyze and make recommendations to the Board of Directors regarding a possible sale of our business or other strategic transactions.

        At the direction of the Strategic Transaction Committee, GCA conducted a comprehensive "market test" to identify and evaluate potential purchasers of our business. The market test did not result in an offer to purchase our business on acceptable terms. The Strategic Transaction Committee, with the assistance of GCA, evaluated several other potential strategic alternatives including, among other things, acquisitions of Chinese solar encapsulant and backsheet manufacturers, acquisitions of other plastic sheet manufacturers with customers outside of the solar industry and mergers with companies serving other segments of the solar industry. Ultimately, the Board of Directors determined that there were no transactions identified to pursue on acceptable terms.

        In August 2013, following continued deterioration of our customer base outside of China and challenges with our rollout of new products within China, management recommended to the Board of Directors that we commence an orderly wind down of the encapsulant business and immediately seek to acquire a "downstream" solar installation business. Following management's recommendation, the Board of Directors retained the Restructuring Adviser to, among other things, assist management with developing a wind down plan for our encapsulant business, referred to as the Wind Down Plan, and directed the Strategic Transaction Committee to evaluate, with the assistance of GCA, potential acquisitions of, or mergers with, downstream solar installation businesses. The Strategic Transaction Committee did not identify any downstream solar installation businesses that met the Board of Directors' criteria and that were willing to enter into a transaction with us on acceptable terms.

        In October 2013, management presented a new operating plan to the Board of Directors referred to as the China Tolling Plan. The cornerstone of the China Tolling Plan was to use local Chinese companies to manufacture encapsulants for our Chinese customers rather than fully develop our own production facilities in China. The plan was also predicated on encouraging responses to our new product rollout from prospective customers in China. The key potential benefits of the China Tolling Plan were to reduce the capital expenditures and working capital investment that would otherwise be required to fully develop our own production facilities in China. A key assumption to the China Tolling Plan was that the Company would achieve significantly higher sales volumes in 2014, 2015 and 2016 compared to 2013 sales volumes.

        Following management's presentation of the China Tolling Plan, the Board of Directors asked GCA and the Restructuring Adviser to provide assessments of the China Tolling Plan and the Wind Down Plan. In connection with their analysis of the China Tolling Plan and the Wind Down Plan, GCA recommended to our Board of Directors that we wind down our encapsulant business and the Restructuring Adviser provided its analysis of the benefits and risks of both plans to the Board of Directors. In reaching their conclusions, both GCA and the Restructuring Adviser noted the substantial

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risks associated with executing the China Tolling Plan, management's recent history of missing forecasts and the substantial portion of the discounted cash flow value of the China Tolling Plan that came from existing cash. GCA and the Restructuring Adviser were retained to provide advice to the Board of Directors and the Strategic Transaction Committee in connection with their consideration of the various transactions described above.

        In November 2013, the Board of Directors reviewed the analysis and recommendation of GCA and the analysis of the Restructuring Adviser and considered, among other things, (i) the significant difference between the net present value per share of the China Tolling Plan and the Wind Down Plan, (ii) risks associated with the execution of the China Tolling Plan, (iii) evolving market conditions for solar encapsulants, (iv) our progress in executing the China Tolling Plan, (v) the potentially long period of time required before stockholders would receive distributions under the Wind Down Plan, (vi) that we had more cash than was likely to be required to execute the China Tolling Plan and (vii) that there were no actionable alternatives currently available or likely to become available in the near future to invest the excess cash at an attractive rate of return for our stockholders. After due consideration, the Board of Directors concluded that the China Tolling Plan in combination with the return of excess cash to stockholders through a so called modified "Dutch auction" tender offer was the best alternative currently available to maximize stockholder value.

        On January 31, 2014, we commenced the modified "Dutch auction" tender offer to repurchase, for cash, up to $30.0 million of shares of our common stock. On March 7, 2014, we closed on the tender offer and purchased a total of 15,611,958 shares at $1.54 per share for an aggregate purchase price of $24.0 million, excluding fees and expenses associated with the tender offer.

        In furtherance of the China Tolling Plan, on January 13, 2014, our indirect subsidiary, STR Solar (Hong Kong), Limited, entered into a Contract Manufacturing Agreement with ZheJiang FeiYu Photo-Electrical Science & Technology Co., Ltd., referred to as FeiYu, and Zhejiang Xiesheng Group Co., Ltd., the parent corporation of FeiYu. Pursuant to the Contract Manufacturing Agreement, we were to purchase certain solar encapsulant products manufactured by FeiYu to our specifications and supply FeiYu with all of the proprietary information and assistance necessary to manufacture the products. During the three months ended June 30, 2014, we modified our operation under the Contract Manufacturing Agreement to have FeiYu serve as a tolling manufacturer rather than as a contract manufacturer. As a result, we now procure and own raw material inventory and pay FeiYu for direct labor and certain logistical functions. After encountering some unexpected delays, FeiYu initiated production and commenced small shipments in the latter part of the first quarter of 2014 and began to ramp production during the second quarter of 2014.

        Although sales increased in the second quarter of 2014, we have not yet achieved the financial performance targets contemplated in the China Tolling Plan, as we continue to face significant challenges and costs in our current business. For example, certain Chinese customers require that we manufacture encapsulants in our own facility in China, and for these customers we are completing the renovation of a leased manufacturing facility in Suzhou, China. As a result, we have continued to assess strategic alternatives to maximize value for our stockholders, including a possible sale of all or part of our business, a pivot to another growth industry, mergers, acquisitions, the winding down of our encapsulant business, the returning of capital to our stockholders and other transactions outside the ordinary course of business.

        2014 Strategic Review.    In the first half of 2014, the Board of Directors continued to assess the progress of the China Tolling Plan. With a view toward preserving capital, the Board of Directors also considered winding down our encapsulant business and returning capital to our stockholders if our performance did not significantly improve or we were not able to otherwise present a more favorable strategic alternative.

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        In connection with these ongoing discussions, on or about April 25, 2014, Bryant R. Riley, a significant stockholder who was also then a director, presented a potential strategic transaction for the Company with a party controlled by Mr. Riley. We refer to this strategic party as Party A. Pursuant to the proposal, Party A would merge with the Company or one of its subsidiaries in a transaction in which the stockholders of Party A would receive a controlling interest in the Company and our stockholders would maintain a minority interest.

        On April 29, 2014, Robert S. Yorgensen, our President and Chief Executive Officer, while on a trip in China regarding the implementation of the China Tolling Plan, met with representatives of FeiYu and another strategic party in China with manufacturing capabilities, referred to as Party B. At the meeting, Party B expressed interest in discussing a potential transaction and/or strategic relationship with the Company to assist the Company and FeiYu in implementing its China Tolling Plan. As a result, we conducted preliminary due diligence on Party B and also informed Party B that any transaction or relationship would need to be expedited, given our ongoing losses and continuing challenges.

        On May 6, 2014, as a result of the conflict of interest regarding Mr. Riley and Party A, the Board of Directors formed a Special Committee of the Board of Directors, referred to as the Special Committee, excluding Mr. Riley, to consider the potential strategic transaction with Party A and any alternative strategic transactions.

        On May 7, 2014, Party A signed a confidentiality agreement with us in order to facilitate further discussions regarding a potential transaction and to allow for the exchange of non-public information.

        During the same week, Party B submitted preliminary indications of interest to the Company with respect to a number of strategic alternatives, including a license arrangement or joint venture to manufacture our products, and an investment in the Company.

        On May 13, 2014, the Board of Directors, other than Mr. Riley, along with representatives of GCA and our senior management team met with representatives of Party A and its financial advisers at our principal executive offices in East Windsor, Connecticut to further explore the possibility of pursuing a strategic transaction between the Company and Party A. At the meeting, Party A and its financial advisers provided us with a comprehensive presentation regarding Party A's business and prospects.

        On May 14, 2014, the Board of Directors held its regularly scheduled quarterly meeting. At the meeting, the Board of Directors discussed with members of management our continuing losses and strategic alternatives available to us, including a proposal to wind down our encapsulant business to preserve our cash for distribution to stockholders. At the conclusion of that meeting, the Board of Directors directed that any strategic alternatives needed to be expedited and formalized in order to be considered given our ongoing losses and continuing challenges.

        On May 20, 2014, the Special Committee retained Brown Rudnick LLP, referred to as Brown Rudnick, as legal counsel and GCA, as financial adviser, to assist with evaluating certain legal, financial and operational aspects of the various strategic alternatives presented to the Company.

        On May 21, 2014, representatives of Company management had a teleconference with GCA and Party A's financial advisers to discuss economic aspects of Party A's proposals, including the respective valuations of Party A and the Company.

        Also on May 21, 2014, we learned from our Chinese legal counsel, Martin Hu & Partners, of the potential interest of the Zhenfa Group in pursuing a strategic transaction with the Company. Martin Hu & Partners learned of the Zhenfa Group's interest after initiating contact with Dojane Capital, referred to as Dojane. Dojane is a financial adviser to the Zhenfa Group. Following this development, we requested that Martin Hu & Partners conduct preliminary due diligence on the Zhenfa Group.

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        On May 22, 2014, we received a written letter from Mr. Zha Zhengfa, the Chairman of the Zhenfa Group, further indicating his interest in pursuing a transaction with the Company. Following receipt of such communication, the Board of Directors met on May 22, 2014 and May 23, 2014. At these meetings, the Board of Directors further discussed the proposal to wind down our encapsulant business, and the recent strategic interest in the Company from the Zhenfa Group, Party A and Party B. No details of the alternative strategic interests were discussed in the presence of Mr. Riley given his interest in the ongoing discussions between the Company and Party A. The Board of Directors reiterated the importance that any strategic transaction proceed on an expedited basis given our ongoing losses and continuing challenges.

        On May 25, 2014, Mr. Yorgensen travelled to China to speak further with Party B and to meet with representatives of the Zhenfa Group regarding their initial indications of interest to pursue a strategic transaction.

        On May 26, 2014, Mr. Yorgensen met with Martin Hu & Partners in Shanghai, China to discuss the Zhenfa Group and Party B communications.

        On May 27, 2014, Mr. Yorgensen met with Chairman Zha and certain Zhenfa Group advisors in Wuxi, China where the Zhenfa Group signed a confidentiality agreement with us that contained certain standstill provisions. At the meeting, Zhenfa Energy indicated an interest in acquiring a significant portion of our outstanding common stock through a combination of the purchase of shares from us and a purchase of shares from existing significant stockholders in privately negotiated transactions, with the ultimate desire to obtain control of the Company through the election of a majority of our Board of Directors. In connection with those discussions, Mr. Yorgensen expressed that the purchase price, to be considered, would have to be at least $1.60 per share, which was a significant premium to the then market price of our common stock as quoted on the NYSE.

        On May 28, 2014, Mr. Yorgensen traveled to Hangzhou, China to meet with representatives of FeiYu and Party B. Mr. Yorgensen informed Party B that any transaction or relationship with Party B would need to be expedited, given our ongoing losses and continuing challenges.

        Later that day, Mr. Yorgensen met with Martin Hu & Partners and a representative of Dojane, the Zhenfa Group's financial advisers, in Shanghai, China. At those meetings, the representative of Dojane indicated that representatives of the Zhenfa Group would be available to come to the United States to negotiate a non-binding letter of intent as soon as proper visas were obtained from the relevant authorities.

        On May 29, 2014, Mr. Yorgensen sent an email to the Board of Directors with an update on the Zhenfa Group discussions. That same day, Mr. Yorgensen met with Party B's financial advisers in Shanghai, China and reiterated the message relayed to Party B on May 28, 2014 in Hangzhou, China. Party B's financial advisers informed Mr. Yorgensen that Party B would not be in a position to pursue a strategic transaction with us on an expedited basis.

        On May 29, 2014, the Special Committee conducted a meeting with representatives of GCA and Brown Rudnick. At the meeting, GCA delivered a presentation regarding the strategic proposal from Party A, reviewed various proposed valuations of the Company and Party A, and compared the range of values represented by the strategic proposal with the proposal to immediately wind down our encapsulant business. Brown Rudnick also reviewed with the Special Committee the directors' fiduciary duties in the context of evaluating the potential transaction with Party A and other strategic alternatives. During these discussions, members of the Special Committee asked questions of management and representatives of GCA and Brown Rudnick. The meeting was then adjourned until May 31, 2014.

        On May 31, 2014, the Special Committee continued its meeting from May 29th. At the meeting, Mr. Yorgensen provided a report of his meetings in China and GCA delivered a presentation on the proposed Zhenfa transaction. The presentation included proposed alternative structures to effect a

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strategic transaction with the Zhenfa Group in a manner that would provide value equally to all Company stockholders in proportion to their stock ownership. Brown Rudnick also participated in these discussions and advised the Special Committee on legal and regulatory requirements of the proposed alternative structures and the directors' ongoing fiduciary duties. During these discussions, members of the Special Committee asked questions of management and representatives of GCA and Brown Rudnick.

        Following discussion, the Special Committee proposed a transaction with the Zhenfa Group that contemplated the sale to the Zhenfa Group of 51% of our common stock and the execution of a sales service agreement by the parties. As proposed, 5.0 million shares would be sold to the Zhenfa Group for $8.0 million, or $1.60 per share, immediately after the execution of a letter of intent for the transaction and the balance of the shares would be sold to the Zhenfa Group upon receipt of stockholder approval for $13.5 million, or $0.60 per share. The aggregate purchase price of the two sales would be approximately $21.5 million at a blended purchase price of $0.784 per share, valuing the Company at approximately $42.2 million. Consistent with our desire to return capital to stockholders, and to structure the transaction with the Zhenfa Group to be the equivalent of a purchase of shares from existing stockholders, the Special Committee further proposed that the net proceeds of the proposed sales, plus an additional amount of approximately $0.03 per share, would be distributed to our stockholders as a special dividend totaling $0.85 per share. The proposal also contemplated the Zhenfa Group establishing an escrow or letter of credit facility to fund the transaction and included the payment by the Zhenfa Group of $200,000 per week to maintain exclusivity for up to four weeks following an initial exclusivity period. The meeting was then adjourned until June 1, 2014.

        On June 1, 2014, the Special Committee continued its meeting from May 31st. At the meeting, the Special Committee again reviewed the proposed Party A transaction and proposed Zhenfa transaction with its advisors and prepared a report on its activities that would be delivered to the Board of Directors on June 2, 2014.

        On June 2, 2014, the Board of Directors met to discuss recent developments. Mr. Yorgensen again provided a report of his meetings in China and the Special Committee delivered a report on its recent activities. During these discussions, members of the Board of Directors asked questions of management and representatives of GCA and Brown Rudnick. At the meeting, Mr. Riley recused himself from the discussion of the proposed strategic transactions with Party A and with Zhenfa Energy, and the Board of Directors, other than Mr. Riley who was absent for these discussions, approved the delivery of a letter of intent to Party A.

        Following the meeting a letter of intent was sent to Party A and its financial adviser on June 2, 2014 for a proposed strategic transaction whereby we would merge with Party A and our stockholders would retain a minority interest in the surviving entity.

        On June 3, 2014, the Special Committee met to discuss a letter of intent for the Zhenfa Group based on the transaction structure proposed by the Special Committee at its meeting held on June 1, 2014. The Special Committee approved the delivery of this letter of intent and it was sent to the Zhenfa Group on June 3, 2014.

        On June 5, 2014, representatives of Company management and GCA had a teleconference with Party A and its financial advisers to discuss the proposed letter of intent delivered to Party A. Party A suggested a number of revisions to the proposed letter of intent, including alternative valuations for each of the Company and Party A.

        On June 8, 2014, the Special Committee met with management and representatives of GCA and Brown Rudnick to discuss the proposed revisions to the letter of intent from Party A and its advisers.

        On June 9, 2014, we received preliminary comments from Polsinelli PC, special United States legal counsel to the Zhenfa Group, referred to as Polsinelli, indicating acceptance of the general structure

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outlined in the letter of intent, including the aggregate purchase price, the special dividend, and the payment of an exclusivity fee.

        On June 11, 2014, the Special Committee met with management and representatives of GCA and Brown Rudnick to discuss the status of discussions with the Zhenfa Group and Party A. During these discussions, members of the Special Committee asked questions of management and representatives of GCA and Brown Rudnick.

        On June 13, 2014, the Special Committee met with management and representatives of GCA and Brown Rudnick to discuss recent developments. At the meeting, the Special Committee discussed the status of the discussions with Party A and the Special Committee's understanding that no further progress had been made. Following the meeting, certain members of the Special Committee reached out to Mr. Riley who confirmed that Party A was no longer interested in pursuing a strategic transaction with us. The Special Committee also discussed the status of the discussions with the Zhenfa Group and authorized the Company to proceed with those discussions.

        On June 16, 2014, Mr. Yorgensen received an email from the financial advisers of Party B requesting an update on the discussions with Party B. Mr. Yorgensen reported that there had been no changes in our position, and that we continued to remain open to discussing a strategic transaction on an expedited basis.

        On June 16, 2014, the Board of Directors met with management and representatives of GCA and Brown Rudnick to discuss recent developments. At the meeting, the Special Committee delivered a report on its recent activities. Mr. Riley also confirmed that Party A had terminated discussions with the Company regarding an alternative strategic transaction. Mr. Riley then confirmed that he had no further conflicting interests with the Company and its evaluation of strategic alternatives. Following such confirmation by Mr. Riley, the Board of Directors disbanded the Special Committee.

        From June 18 to June 20, 2014, a member of the Board of Directors and representatives of Company management, Brown Rudnick, GCA, the Zhenfa Group, Dojane and Polsinelli met in New York, New York to negotiate a non-binding letter of intent. At the conclusion of these negotiations, the parties confirmed the general financial terms of the transaction, including the aggregate purchase price and the subsequent payments by the Zhenfa Group in order to preserve deal exclusivity. However, the transaction structure changed in that the parties agreed to replace the initial $8 million share purchase with a cash deposit of $2.1 million upon the signing of a definitive agreement and the posting by Zhenfa Energy of a letter of credit to fund the purchase of the remaining shares at closing. During these negotiations the parties also discussed the sales service agreement contemplated by the letter of intent.

        On June 20, 2014, the Board of Directors met with management and representatives of GCA and Brown Rudnick to further discuss our strategic alternatives and the letter of intent with Zhenfa Energy. During these discussions, members of the Board of Directors asked questions of management and representatives of GCA and Brown Rudnick. After discussion, the Board of Directors approved the execution of the non-binding letter of intent with Zhenfa Energy. The parties then executed the revised Zhenfa Energy letter of intent.

        Shortly after execution of the Zhenfa Energy letter of intent, from June 23 to June 24, 2014, representatives from the Company's management, GCA, the Zhenfa Group, and Dojane met in person at our principal executive offices in East Windsor, Connecticut. During these meetings, the Zhenfa Group representatives conducted due diligence, toured our facilities and discussed opportunities for strategic cooperation with Company management.

        On June 21, 2014, pursuant to the confidentiality agreement dated May 27, 2014, we provided the Zhenfa Group and its representatives access to an electronic data room containing certain diligence information relating to the Company.

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        On June 27, 2014, Polsinelli delivered an initial draft of the Purchase Agreement. From June 27 to June 29, 2014, the Company reviewed the draft Purchase Agreement with the assistance of Brown Rudnick and GCA and prepared and delivered a response to Zhenfa Energy and its advisers. From late June to July 4, 2014, Polsinelli and Brown Rudnick exchanged multiple drafts of the Purchase Agreement and other transaction documentation.

        On July 1, 2014 we received a $200,000 exclusivity payment, referred to as the Prior Payment, from Zhenfa Energy pursuant to the terms of the executed Zhenfa Energy letter of intent.

        On July 10, 2014, Mr. Yorgensen received an email from representatives of the Zhenfa Group providing a status update on Zhenfa Energy's discussions with local Chinese regulatory authorities and a request to move away from the letter of credit facility requirement in the letter of intent. Due to these regulatory concerns and other open issues in the transaction documentation, the Zhenfa Group indicated that Zhenfa Energy would not make any further exclusivity payments to the Company under the letter of intent and allow the exclusivity period under the letter of intent to lapse.

        On July 11, 2014, the Board of Directors met with management and representatives of GCA and Brown Rudnick to discuss these developments and key open issues. During these discussions, members of the Board of Directors asked questions of management and the representatives of GCA and Brown Rudnick. The Board of Directors also discussed the recent correspondence from the Zhenfa Group regarding Chinese regulatory issues. At the conclusion of the meeting, the Board of Directors authorized and directed representatives of management to travel to China to further negotiate the transaction documentation. The Board of Directors emphasized the importance of deal certainty, a good faith cash deposit, and an expedited transaction timeline. The next day, Mr. Yorgensen sent an email to representatives of the Zhenfa Group requesting in-person negotiations in China. The Zhenfa Group promptly accepted this request.

        From July 17 to July 18, 2014, Mr. Yorgensen met with representatives of Zhenfa Energy and Dojane in Wuxi, China to discuss the major open issues, including deal certainty points and indemnification.

        On July 19, 2014, Mr. Yorgensen and certain representatives of the Zhenfa Group visited a solar power station owned and operated by Zhenfa Energy in Jinchang, China.

        From July 21 to July 25, 2014, Alan Forman, the Company's Senior Vice President and General Counsel, joined Mr. Yorgensen and representatives of the Zhenfa Group in Wuxi, China to negotiate the transaction documentation. During this time, representatives of Brown Rudnick (telephonically), GCA, Martin Hu & Partners, Polsinelli (telephonically) and Dojane participated in the discussions. As a result of these discussions, the parties agreed, among other things, to eliminate the letter of credit facility outlined in the letter of intent and instead increase the initial cash deposit from $2.1 million to $3.2 million. In order to accommodate certain Chinese regulatory issues, the parties also agreed that, rather than having Zhenfa Energy execute the Purchase Agreement, it would instead guarantee the Purchaser's obligations under the Purchase Agreement upon receipt of certain regulatory approvals. Other matters negotiated included, among other things, remedies, limitations on closing conditions, limitations on indemnification, and minority protections. During this period, Mr. Yorgensen periodically updated the Board of Directors regarding the status of discussions and Zhenfa Energy and its advisers continued to conduct their due diligence review with respect to the Company.

        From July 21 to August 10, 2014, Polsinelli and Brown Rudnick exchanged multiple drafts of the Purchase Agreement and other transaction documentation to reflect the parties' negotiations.

        On July 27, 2014, Mr. Yorgensen received an email from the financial advisers of Party B requesting an update on the discussions with Party B. Mr. Yorgensen reported that there had been no changes in our position, and that we continued to remain open to discussing an expedited strategic transaction.

        On July 28, 2014, the parties executed an amendment to the Zhenfa Energy letter of intent providing for the payment of an initial deposit by Zhenfa Energy, referred to as the Deposit.

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        On August 1, 2014, the Board of Directors met with management and representatives of GCA and Brown Rudnick to discuss the Zhenfa transaction developments and key open issues. At the meeting, the Board of Directors reviewed drafts of all transaction documents as well as due diligence conducted by the Company and our representatives. GCA also presented its analysis of the financial terms of the proposed Zhenfa Energy transaction and Brown Rudnick presented a summary of the transaction documentation. During these discussions, members of the Board of Directors asked questions of management and representatives of GCA and Brown Rudnick.

        Beginning on August 1, 2014 and up until the execution of final documentation, Polsinelli arranged for translation of the transaction documentation into Mandarin for review by representatives of Zhenfa Energy.

        On August 10, 2014, the Board of Directors met with management and representatives of GCA and Brown Rudnick to discuss the status of the Zhenfa transaction. At the meeting, the Board of Directors received updated drafts of all transaction documents and representatives of Brown Rudnick reviewed the directors' fiduciary duties and then described the terms of the revised transaction documents and the proposed transaction with the Zhenfa Group. GCA also presented its updated analysis of the financial terms of the proposed Zhenfa transaction and then delivered to the Board of Directors an oral opinion, which opinion was subsequently confirmed in writing, to the effect that, as of such date and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in the written opinion, the financial terms of the proposed Zhenfa transaction were fair from a financial point of view, to the Company. During these discussions, members of the Board of Directors asked questions of management and representatives of GCA and Brown Rudnick.

        After considering the proposed terms of the Zhenfa transaction, the views of management and the various presentations of its legal and financial advisers, and taking into consideration all relevant factors, including reasons not to proceed with the transaction and the opinion of GCA, the Board of Directors unanimously determined that, subject to the receipt of the fairness opinion, the transaction documents and the transactions with the Zhenfa Group contemplated thereby were advisable and fair to, and in the best interests of, our stockholders, and adopted and approved the transaction documents and the transactions contemplated thereby and recommended that our stockholders adopt the same.

        Following the Board of Directors meeting, on August 11, 2014, we entered into the Purchase Agreement with the Purchaser and received the wire transfer of the Deposit. The parties also executed certain other documents in furtherance of the transaction, including voting agreements with members of the Board of Directors and our senior management team. For more information regarding the Voting Agreements, please see "The Purchase Agreement—The Voting Agreements".

        On the morning of August 12, 2014, we issued a press release announcing the transaction with the Zhenfa Group.

The Company's Reasons for the Transaction and the Recommendation of the Company's Board of Directors Relating to the Share Issuance

        The Company's Board of Directors, acting with the advice and assistance of the Company's management and financial and legal advisors, carefully evaluated the Purchase Agreement and Transaction, including the Share Issuance. At a meeting on August 10, 2014, the Board of Directors unanimously resolved to approve the execution, delivery and performance by the Company of the Purchase Agreement and the consummation of the Transaction, including the Share Issuance, and to recommend to the Company's stockholders that they approve the Share Issuance.

        In reaching its recommendation, the Board of Directors consulted with the Company's management and its financial and legal advisors and considered a number of substantive factors, both positive and negative, and potential benefits and detriments of the Transaction. The Board of Directors

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believes that, taken as a whole, the following factors supported its decision to approve the proposed Transaction: