Document:

Exhibit 10.18

 

EXECUTION COPY

 

ADVISORY SERVICES AND MONITORING AGREEMENT

 

This Advisory Services and Monitoring Agreement
(this “Agreement”) is entered into as of June 15, 2007, by and
among Specialized Technology Resources, Inc. (the “Company”), DLJ
Merchant Banking, Inc. (“DLJMB”), Westwind STR Advisors, LLC (“Stone”)
and Dennis L. Jilot (“Jilot”) (DLJMB, Stone and Jilot each an “Advisor”
and, collectively, the “Advisors”)

 

WHEREAS, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of June 15, 2007, by and among the Company, STR
Holdings LLC (as successor to STR Holdings, Inc.) (“Holdings”) and STR
Acquisition, Inc., a wholly-owned subsidiary of Holdings (“Mergerco”),
Mergerco merged with and into the Company with the Company being the surviving
entity (the “Merger”);

 

WHEREAS, in connection with the Merger, Stone and Jilot
have provided to Holdings advice and analysis, including assistance with due
diligence and other investigatory matters related to the Company;

 

WHEREAS, the Advisors are specially skilled in corporate
finance, strategic corporate planning, and other management skills and advisory
and business monitoring services;

 

WHEREAS, Holdings, the Company and subsidiaries of the Company
(collectively, the “Company Group”) will require such skills and
services from the Advisors in connection with their business operations and
execution of their strategic plan; and

 

WHEREAS, the Advisors are willing to provide such skills
and services to the Company and the other members of the Company Group and the
Company desires to retain the Advisors with respect to the services described
herein.

 

NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:

 

1.                                      Appointment.

 

(a)                                  The Company hereby
appoints the Advisors, or their respective designees, on a non-exclusive basis,
as its advisors with respect to the following services to the extent
appropriate and requested by the Company or any member of the Company
Group:  (i) assisting the Company or
any member of the Company Group in analyzing its operations and historical
performance; (ii) assisting the Company or any member of the Company Group
in analyzing future prospects; (iii) assisting the Company or any member
of the Company Group with respect to future proposals for tender offers,
acquisitions, sales, mergers, financings, exchange offers, recapitalizations,
restructurings or other similar transactions that may be consummated during the
term of this Agreement; and (iv) providing financial and business
monitoring services, including with respect to assisting the Company or any
member of the Company Group in preparing a strategic plan.

 

(b)                                 The Advisors do
not make any representations or warranties, express or implied, in respect of
the services to be provided by the Advisors or their designee hereunder.  In no event shall the Advisors or their respective
affiliates be liable to any member of the Company

 

 

or any of their respective
affiliates for any act, alleged act, omission or alleged omission that does not
constitute gross negligence or willful misconduct of the Advisors or their
designees as determined by a final, non-appealable determination of a court of
competent jurisdiction.

 

(c)                                  The Advisors
shall devote such time and efforts to the performance of services contemplated
hereby as the Advisors reasonably deem necessary or appropriate; provided,
however, that no minimum number of hours is required to be devoted by the
Advisors on a weekly, monthly, annual or other basis.  The Company acknowledges that the Advisors’
services are not exclusive to the Company or any other members of the Company
Group and that the Advisors may render similar services to other persons and
entities.

 

2.                                      Term
and Termination.

 

(a)                                  This Agreement
shall continue in full force and effect for a term of seven (7) years.  This Agreement shall automatically renew on
each anniversary of the date hereof, and, in connection with each renewal, the
term of this Agreement shall be seven (7) years from the date of such
renewal.

 

(b)                                 This Agreement (i) may
be terminated by the Advisors at any time prior to the consummation of an
initial public offering (“IPO”), (ii) shall terminate automatically
upon the consummation of an IPO, and (iii) shall terminate automatically
upon the consummation of a Change of Control (as defined in the Amended and
Restated Limited Liability Company Agreement of Holdings, dated June 15,
2007, as may be amended from time to time (the “LLC Agreement”)).  In the event that this Agreement is
automatically terminated pursuant to clause (ii) above, the Company agrees
to pay the Advisors, at the time of such termination, a cash lump sum
termination fee (the “Termination Fee”) equal to the net present value
of the amount of the aggregate Monitoring Fee (as defined below in Section 3(a))
that otherwise would have been payable from the Company to the Advisors from
the date of the termination until the expiration date in effect immediately
prior to the termination, calculated using a discount rate equal to the ten
year treasury rate on the date of the termination.

 

(c)                                  No termination
of the Advisors’ engagement hereunder shall affect any of the Company’s
obligations under this Agreement, including, without limitation, the Company’s
indemnity obligations as set forth herein.

 

(d)                                 In the event
that Jilot ceases to serve on Holdings’ board of directors his right to any and
all payments under this Agreement shall terminate.  In the event that Stone ceases to serve on
Holdings’ board of directors, his right to any and all payments under this
Agreement shall terminate.

 

(e)                                  The terms and
provisions of Sections  1(b), 2, 4, and 5
shall survive any termination of this Agreement.

 

3.                                      Payment
of Fees.

 

(a)                                  In
consideration of the advisory services provided by Stone and Jilot in
connection with the Merger, the Company shall pay Stone a fee in the amount of
$164,482 and Jilot a fee in the amount of $98,492.

 

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(b)                                 In
consideration of the ongoing advisory services to be provided by the Advisors
to the Company and any other member of the Company Group, the Company will pay
to each Advisor (or any of their respective designees) its pro rata portion of an
annual advisory fee in an amount as set forth in (c) below (the “Monitoring
Fee”).  The Monitoring Fee shall be payable
quarterly in advance on the first business day of each calendar quarter (January 1,
April 1, July 1 and October 1) and shall continue through the
date of termination of this Agreement; provided, that, a pro-rata portion of
the Monitoring Fee shall be paid for the period from the date of the Merger
through June 30, 2007.  If this
Agreement is terminated pursuant to Section 2, any unearned portion
of the Monitoring Fee will be reimbursed to the Company by the Advisors.  The portion of the Monitoring Fee payable to
each Advisor shall be equal to the product of (i) the Monitoring Fee and (ii) such
Advisor’s Percentage Interest.  For these
purposes, the respective “Percentage Interests” of the Advisors shall be
as follows:  DLJMB - 84.525%; Stone – 9.679%;
and Jilot – 5.796%.

 

(c)                                  The initial
Monitoring Fee shall be $500,000.  From
time to time, the Company and DLJMB may agree to increase the Monitoring Fee; provided,
however, that each Advisor shall participate pro rata in any increase in
accordance with its Percentage Interest.

 

(d)                                 All payments
and reimbursements made pursuant to Sections 2, 3 and 4
will be paid by wire transfer of immediately available U.S. Dollars to an
account specified by the Advisor in writing to the Company.

 

4.                                      Expenses;
Indemnification.

 

(a)                                  Expenses.  In addition to the compensation to be paid
pursuant to Sections 2(c), 3(a) and 3(b) above,
promptly upon request by DLJMB from time to time, the Company shall reimburse DLJMB
(or its respective designees) for its reasonable out-of-pocket expenses
incurred in connection with the provision of services hereunder to the Company
or other member of the Company Group, including, without limitation, the
reasonable fees and disbursements of its legal counsel, if any, and of any
other advisors retained by DLJMB, in connection with the enforcement,
preservation or analysis of rights or taking of actions under this Agreement or
otherwise resulting from or arising out of this engagement.

 

(b)                                 Indemnification.  The Company shall indemnify and hold harmless
the Advisors, their affiliates, and their respective directors, officers,
controlling persons (within the meaning of Section 15 of the Securities
Act of 1933, as amended, or Section 20(a) of the Securities Exchange
Act of 1934, as amended), if any, agents and employees (the Advisors, their affiliates,
and such other specified persons being collectively referred to as “Indemnified
Persons,” and individually as an “Indemnified Person”) from and
against any and all claims, liabilities, losses, damages and expenses incurred
by any Indemnified Person (including those arising out of an Indemnified Person’s
negligence and reasonable fees and disbursements of the respective Indemnified
Person’s counsel) that (A) are related to or arise out of (i) actions
taken or omitted to be taken (including, without limitation, any untrue statements
made or any statements omitted to be made) by any member of the Company Group or
(ii) actions taken or omitted to be taken by an Indemnified Person with the
consent of any member of the Company Group or in conformity with the
instructions of any member of the Company Group or the actions or omissions of
the Company Group or (B) are otherwise related to or arise out of the
Advisors’ engagement, and will reimburse each Indemnified Person for all costs
and expenses, including, without limitation, reasonable fees and disbursements
of any Indemnified Person’s counsel, as

 

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they are incurred, in
connection with investigating, preparing for, defending or appealing any
action, formal or informal claim, investigation, inquiry or other proceeding,
whether or not in connection with pending or threatened litigation, caused by
or arising out of or in connection with the Advisors’ acting pursuant to the
Advisors’ engagement, whether or not any Indemnified Person is named as a party
thereto and whether or not any liability results therefrom.  The Company will not, however, be responsible
for any claims, liabilities, losses, damages or expenses pursuant to clause (B) of
the preceding sentence that have resulted primarily from either the Advisors’ bad
faith, gross negligence or willful misconduct. 
The Company also agrees that neither the Advisors nor any other
Indemnified Person shall have any liability to the Company or any member of the
Company Group for or in connection with such engagement except for any such
liability for claims, liabilities, losses, damages or expenses incurred by the
Company or any member of the Company Group that have resulted primarily from the
Advisors’ bad faith, gross negligence or willful misconduct.  The Company further agrees that it will not,
without the prior written consent of the Advisors, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential
party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of the Advisors and
each other Indemnified Person hereunder from all liability arising out of such
claim, action, suit or proceeding.  THE COMPANY HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE
APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED
FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE,
JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF THE ADVISORS OR ANY OTHER
INDEMNIFIED PERSON.

 

The foregoing right to indemnity shall be in
addition to any rights that the Advisors and/or any other Indemnified Person
may have at common law or otherwise and shall remain in full force and effect
following the completion or any termination of the engagement.

 

It is understood that, in connection with the
Advisors’ engagement, the Advisors may also be engaged to act for the Company
in one or more additional capacities, and that the terms of this engagement or
any such additional engagement(s) may be embodied in one or more separate
written agreements.  This indemnification
shall apply to the engagement specified in Section 1 hereof as well
as to any such additional engagement(s) (whether written or oral) and any
modification of said engagement or such additional engagement(s) and shall
remain in full force and effect following the completion or termination of said
engagement or such additional engagements.

 

5.                                      No
Exclusive Duty to the Company.  In recognition that (i) the Advisors
currently have, and will in the future have or will consider acquiring,
investments in numerous companies with respect to which the Advisors may serve
as an advisor, a director or in some other capacity, (ii) the Advisors may
have a myriad of duties to various investors and partners, (iii) the
Advisors (or one or more affiliates, associated investment funds or portfolio
companies) may engage in the same or similar activities or lines of business as
the Company and have an interest in the same areas of corporate opportunities, (iv) the
Company will derive certain benefits hereunder and (v) the Advisors, in
desiring and endeavoring fully to satisfy their duties, may confront
difficulties in determining the full scope of such duties in any particular
situation, the provisions of this Section 5 are set forth to
regulate, define and guide the conduct of certain

 

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affairs of the Company and
other members of the Company Group as they may involve the Advisors.

 

(a)                                  Notwithstanding
anything to the contrary contained herein, (i) the Advisors shall not be
required to devote all of their time and efforts to the Company, may have other
business interests and may engage in other activities in addition to those
relating to the Company and the Company Group, and such other business
interests or activities may be of any nature or description, and may be engaged
in independently or with others, and (ii) neither the Company nor the
Company Group shall have any right, by virtue of this Agreement or the Company
relationship created hereby, in or to such other ventures or activities of the
Advisors or any of their affiliates, or to the income or proceeds derived
therefrom, and the pursuit of such ventures, even if competitive with the
Company business, shall not be deemed wrongful or improper.

 

(b)                                 Neither the
Advisors nor any of their affiliates, shall be liable to the Company or any of their
affiliates for breach of any duty (contractual or otherwise) by reason of any
activities or omissions of the types referred to in Section 5(a) or
the Advisors’ or their affiliates’ participation therein.

 

6.                                      Amendments
and Waivers.  No
amendment or waiver of any term, provision or condition of this Agreement shall
be effective, unless in writing and executed by Advisors and the Company;
provided, that no such amendment will adversely affect any one Advisor
disproportionately to any other Advisor without the consent of that
Advisor.  No waiver on any one occasion
shall extend to or effect or be construed as a waiver of any right or remedy on
any future occasion.  No course of
dealing of any person nor any delay or omission in exercising any right or
remedy shall constitute an amendment of this Agreement or a waiver of any right
or remedy of any party hereto.

 

7.                                      Miscellaneous.

 

(a)                                  Choice
of Law.  This Agreement, and all
disputes, claims or causes of action that arise from or are in connection with
this Agreement, shall be governed by and construed in accordance with the
domestic substantive laws of the State of New York without giving effect to any
choice or conflict of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction.

 

(b)                                 Consent
to Jurisdiction.  Each of the
parties agrees that all actions, suits or proceedings arising out of or based
upon this Agreement or the subject matter hereof shall be brought and
maintained exclusively in the federal and state courts of the State of New
York.  Each of the parties hereto by
execution hereof (i) hereby irrevocably submits to the jurisdiction of the
federal and state courts in the State of New York for the purpose of any
action, suit or proceeding arising out of or based upon this Agreement or the
subject matter hereof and (ii) hereby waives to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that it is
immune from extraterritorial injunctive relief or other injunctive relief, that
its property is exempt or immune from attachment or execution, that any such
action, suit or proceeding may not be brought or maintained in one of the
above-named courts, that any such action, suit or proceeding brought or
maintained in one of the above-named courts should be dismissed on grounds of forum
non

 

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conveniens, should be
transferred to any court other than one of the above-named courts, should be
stayed by virtue of the pendency of any other action, suit or proceeding in any
court other than one of the above-named courts, or that this Agreement or the
subject matter hereof may not be enforced in or by any of the above-named
courts.  Each of the parties hereto
hereby consents to service of process in any such suit, action or proceeding in
any manner permitted by the laws of the State of New York, agrees that service
of process by registered or certified mail, return receipt requested, at the
address specified in or pursuant to Section 12 is reasonably
calculated to give actual notice and waives and agrees not to assert by way of
motion, as a defense or otherwise, in any such action, suit or proceeding any
claim that service of process made in accordance with Section 12
does not constitute good and sufficient service of process.  The provisions of this Section 7(b) shall
not restrict the ability of any party to enforce in any court any judgment
obtained in a federal or state court of the State of New York.

 

(c)                                  Waiver
of Jury Trial.  TO THE
EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT,
OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR
OTHERWISE.  Each of the parties hereto
acknowledges that it has been informed by each other party that the provisions
of this Section 7(c) constitute a material inducement upon
which such party is relying and will rely in entering into this Agreement and
the transactions contemplated hereby. 
Any of the parties hereto may file an original counterpart or a copy of
this Agreement with any court as written evidence of the consent of each of the
parties hereto to the waiver of its right to trial by jury.

 

(d)                                 Authority
to Enter Agreement.  Each party
to this Agreement has all requisite power and authority to enter into this
Agreement and the transactions contemplated hereby.  This Agreement has been duly and validly
authorized by all necessary action on the part of each party and when duly
executed and delivered by such party shall constitute a legal, valid and
binding agreement of such party, enforceable in accordance with its terms.

 

8.                                      Independent
Contractor.  The parties
agree and understand that the Advisors are and shall act as an independent
contractor of the Company in the performance of their duties hereunder.  The Advisors, in the performance of their duties
hereunder will not hold itself out as, employee, agent or partner of the Company.

 

9.                                      Information.  The Company shall (i) furnish and make
available to the Advisors, in a timely manner, annual, quarterly and monthly consolidated
financial statements, (ii) use reasonable efforts to cause its officers,
directors, managers and employees to afford the Advisors, during normal
business hours and upon reasonable notice, reasonable access and consultation rights
at all reasonable times, and (iii) afford the Advisors the opportunity to discuss
the Company’s affairs, finances and accounts with the Company’s officers from
time to time as it may reasonably request. 
The Company acknowledges and confirms that the Advisors (i) will
rely solely on such information and information that is available from public
sources in the performance of the services contemplated by this engagement
without assuming any responsibility for independent investigation or
verification thereof, (ii) will assume no

 

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responsibility for the
accuracy or completeness of such information or any other information regarding
the Company and (iii) will not make any appraisal of any assets of the Company.

 

10.                               Confidentiality.  No advice rendered by the Advisors, whether
formal or informal, may be disclosed, in whole or in part, or summarized,
excerpted from or otherwise referred to without the Advisors’ prior written
consent.  To the extent consistent with
legal requirements, all information given to one party of this Agreement (the “Recipient
Party”) by another party (the “Providing Party”), including, without
limitation, this Agreement, unless publicly available or otherwise available to
the Recipient Party without restriction or breach of any confidentiality
agreement, will be held by the Recipient Party in confidence and will not,
without the Providing Party’s prior approval, be disclosed to anyone other than
the Recipient’s agents and advisors who require such information to perform
services for the Providing Party as contemplated by this Agreement (and who
agree to use such information only in connection with such services) or used by
such person for any purpose other than those contemplated by this
Agreement.  Each party hereto shall be
responsible for violations of its respective agents and advisors of the
obligations set forth in this Section 10.  Notwithstanding anything to the contrary set
forth herein or in any other agreement to which the parties hereto are parties
or by which they are bound, the obligations of confidentiality contained herein
and therein, as they relate to the services to be provided hereunder, shall not
apply to the tax structure or tax treatment of the transactions subject to the
services to be provided hereunder, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the tax structure and tax treatment of
the transaction subject to the services to be provided hereunder and all
materials of any kind (including opinions or other tax analysis) that are
provided to such party relating to such tax treatment and tax structure; provided,
however, that such disclosure shall not include the name (or other
identifying information not relevant to the tax structure or tax treatment) of
any person and shall not include information for which nondisclosure is
reasonably necessary in order to comply with applicable securities laws.

 

11.                               Merger/Entire
Agreement.  This
Agreement and the other agreements referred to herein, contain the entire
understanding of the parties with respect to the specific subject matter hereof
and supersedes any prior communication or agreement with respect thereto.

 

12.                               Notice.  All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:

 

If to the Company, to:

 

Specialized Technology
Resources, Inc.

10 Water Street

Enfield, CT  06082-4899

Attn:  Barry A. Morris

Facsimile:  (860) 749-9158

 

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If to the Advisors, to:

 

DLJ Merchant Banking, Inc.

Eleven Madison Avenue, 16th
Floor

New York, New York  10010

Attn:  Susan C. Schnabel

Facsimile:  (310) 712-2734

 

Westwind STR Advisors, LLC

917 Tahoe Blvd, Suite 200

Incline Village, NV 89451

 

Dennis L. Jilot

10 Water Street

Enfield, CT  06082-4899

 

All such notices, requests, consents
and other communications shall be deemed to have been delivered (a) in the
case of personal delivery or delivery by telecopy, on the date of such
delivery, (b) in the case of dispatch by nationally-recognized overnight
courier, on the next business day following such dispatch and (c) in the
case of mailing, on the third business day after the posting thereof.

 

13.                               Severability.  If in any judicial or arbitral proceedings a
court or arbitrator shall refuse to enforce any provision of this Agreement,
then such unenforceable provision shall be deemed eliminated from this
Agreement for the purpose of such proceedings to the extent necessary to permit
the remaining provisions to be enforced. 
To the full extent, however, that the provisions of any applicable law
may be waived, they are hereby waived to the end that this Agreement be deemed
to be a valid and binding agreement enforceable in accordance with its terms,
and in the event that any provision hereof shall be found to be invalid or
unenforceable, such provision shall be construed by limiting it so as to be
valid and enforceable to the maximum extent consistent with and possible under
applicable law.

 

14.                               Counterparts.  This Agreement may be executed in any number
of counterparts and by each of the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which together shall constitute one and the same agreement.

 

15.                               Descriptive
Headings.  All
descriptive headings in this Agreement are inserted for convenience only and
shall be disregarded in construing or applying any provision of this Agreement.

 

16.                               Prevailing
Party.  If any legal action or other
proceedings is brought for a breach of this Agreement, the prevailing party
shall be entitled to recover its reasonable attorneys’ fees and other costs
incurred in bringing such action or proceeding, in addition to any other relief
to which such party may be entitled.

 

17.                               Non-Recourse.  No past, present or future director, officer,
employee, incorporator, member, partner, stockholder, affiliate, agent,
attorney or representative of the

 

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Advisors, any member of the
Company Group or any of their respective affiliates shall have any liability
for any obligations or liabilities of the Advisors, any member of the Company
Group or any of their respective affiliates under this Agreement or for any
claim based on, in respect of, or by reason of, the transactions or other
matters contemplated hereby. 

 

9

 

IN WITNESS WHEREOF, each of the parties has
caused this Agreement to be executed on its behalf by its duly authorized
officer or representative as of the date first above written.

 

	
   

  	
  SPECIALIZED TECHNOLOGY

  RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Barry A. Morris

  
	
   

  	
   

  	
  Title: Vice President and Secretary

  

 

 

SIGNATURE PAGE FOR
MONITORING AGREEMENT (DLJMB/STONE/JILOT)

 

 

	
   

  	
  DLJ MERCHANT BANKING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Kenneth Lohsen

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

SIGNATURE PAGE FOR
MONITORING AGREEMENT (DLJMB/STONE/JILOT)

 

 

	
   

  	
  WESTWIND STR ADVISORS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

SIGNATURE PAGE FOR
MONITORING AGREEMENT (DLJMB/STONE/JILOT)

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dennis L. Jilot

  

 

 

SIGNATURE PAGE FOR
MONITORING AGREEMENT (DLJMB/STONE/JILOT)Exhibit 10.19

 

EXECUTION
COPY

 

ADVISORY SERVICES AND MONITORING AGREEMENT

 

EVERGREEN CAPITAL PARTNERS, LLC

 

This Advisory Services and Monitoring Agreement
(this “Agreement”) is entered into as of June 15, 2007, by and among Specialized
Technology Resources, Inc. (the “Company”) and Evergreen Capital
Partners, LLC (“Evergreen”).

 

WHEREAS, pursuant
to an Amended and Restated Agreement and Plan of Merger, dated as of June 15,
2007, by and among the Company, STR Holdings LLC (as successor to STR Holdings,
Inc.) (“Holdings”) and STR Acquisition, Inc., a wholly-owned subsidiary
of Holdings (“Mergerco”), Mergerco merged with and into the Company with
the Company being the surviving entity (the “Merger”);

 

WHEREAS, in
connection with the Merger, Evergreen has provided to Holdings advice and
analysis, including assistance with due diligence and other investigatory
matters related to the Company; and

 

WHEREAS,
Evergreen is specially skilled in corporate finance, strategic corporate
planning, and other management skills and advisory and business monitoring
services;

 

WHEREAS, Holdings,
the Company and subsidiaries of the Company (collectively, the “Company
Group”) will require such advice and analysis from Evergreen in connection
with their business operations and execution of their strategic plan; and

 

WHEREAS, Evergreen
is willing to provide such advice and analysis to the Company and the other
members of the Company Group and the Company desires to retain Evergreen with
respect to the services described herein.

 

NOW, THEREFORE,
in consideration of the mutual covenants contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:

 

1.                                      Appointment.

 

(a)                                  The Company hereby appoints Evergreen, or its
respective designees, on a non-exclusive basis, as one of its advisors with
respect to the following services to the extent appropriate and requested by the
Company or any member of the Company Group: 
(i) assisting the Company or any member of the Company Group in
analyzing its operations and historical performance; (ii) assisting the Company
or any member of the Company Group in analyzing future prospects; (iii)
assisting the Company or any member of the Company Group with respect to future
proposals for tender offers, acquisitions, sales, mergers, financings, exchange
offers, recapitalizations, restructurings or other similar transactions that
may be consummated during the term of this Agreement; and (iv) providing
financial and business monitoring services, including with respect to assisting
the Company or any member of the Company Group in preparing a strategic plan.

 

(b)                                 Evergreen does not make any representations
or warranties, express or implied, in respect of the services to be provided by
Evergreen or its designee hereunder. In no event shall Evergreen or its respective
affiliates be liable to any member of the Company Group

 

 

or any of their respective affiliates for any act, alleged act,
omission or alleged omission that does not constitute gross negligence or
willful misconduct of Evergreen or its designees as determined by a final,
non-appealable determination of a court of competent jurisdiction.

 

(c)                                  Evergreen shall devote such time and efforts
to the performance of services contemplated hereby as Evergreen reasonably deems
necessary or appropriate; provided, however, that no minimum
number of hours is required to be devoted by Evergreen on a weekly, monthly,
annual or other basis. The Company acknowledges that Evergreen’s services are
not exclusive to the Company or any other members of the Company Group and that
Evergreen may render similar services to other persons and entities.

 

(d)                                 Upon the request of Holdings, Evergreen shall
appoint up to two (2) members to serve on the board of directors of Holdings. Neither
Evergreen nor its appointees shall be entitled to any additional compensation
with respect thereto.

 

2.                                      Term and Termination.

 

(a)                                  This Agreement shall continue in full force
and effect until terminated by either party upon thirty (30) days prior written
notice.

 

(b)                                 This Agreement shall automatically terminate
if, at any time after Evergreen initially appoints a member to serve on the
board of directors of Holdings, no members or executive officers of Evergreen
continue to serve on the board of directors of Holdings.

 

(c)                                  The terms and provisions of Sections  1(b),
2, 4, and 5 shall survive any termination of this
Agreement.

 

3.                                      Payment of Fees.

 

(a)                                  In consideration of the advisory services
provided by Evergreen in connection with the Merger, the Company shall pay
Evergreen a fee in the amount of $1,436,382.

 

(b)                                 In consideration of the ongoing advisory
services to be provided by Evergreen to the Company and any other member of the
Company Group, the Company will pay to Evergreen (or any of its respective
designees), an annual advisory fee in an amount equal to $150,000 as set forth
below (the “Monitoring Fee”). The Monitoring Fee shall be payable
quarterly in advance on the first business day of each calendar quarter
(January 1, April 1, July 1 and October 1) and shall continue through (but not
beyond) the date of termination of this Agreement; provided, that a portion of
the Monitoring Fee shall be paid for the period from the date of Merger through
June 30, 2007. If this Agreement is terminated pursuant to Section 2(a),
any unearned portion of the Monitoring Fee will be reimbursed to the Company by
Evergreen.

 

(c)                                  All payments and reimbursements made pursuant
to Sections 2, 3 and 4 will be paid by wire transfer of
immediately available U.S. Dollars to an account specified by the party to whom
such payment or reimbursement is owed in writing to the Company.

 

4.                                      Indemnification.
The Company shall indemnify and
hold harmless Evergreen, its affiliates, and its respective directors,
officers, controlling persons (within the meaning of Section 15 of the
Securities Act of 1933, as amended, or Section 20(a) of the

 

2

 

Securities Exchange Act of
1934, as amended), if any, agents and employees (Evergreen, its affiliates, and
such other specified persons being collectively referred to as “Indemnified
Persons,” and individually as an “Indemnified Person”) from and
against any and all claims, liabilities, losses, damages and expenses incurred
by any Indemnified Person (including those arising out of an Indemnified Person’s
negligence and reasonable fees and disbursements of the respective Indemnified
Person’s counsel) that (A) are related to or arise out of (i) actions
taken or omitted to be taken (including, without limitation, any untrue
statements made or any statements omitted to be made) by any member of the Company
Group or (ii) actions taken or omitted to be taken by an Indemnified
Person with the consent of any member of the Company Group or in conformity
with the instructions of any member of the Company Group or the actions or
omissions of the Company Group or (B) are otherwise related to or arise
out of Evergreen’s engagement, and will reimburse each Indemnified Person for
all costs and expenses, including, without limitation, reasonable fees and
disbursements of any Indemnified Person’s counsel, as they are incurred, in
connection with investigating, preparing for, defending or appealing any
action, formal or informal claim, investigation, inquiry or other proceeding,
whether or not in connection with pending or threatened litigation, caused by
or arising out of or in connection with Evergreen’s acting pursuant to Evergreen’s
engagement, whether or not any Indemnified Person is named as a party thereto
and whether or not any liability results therefrom. The Company will not,
however, be responsible for any claims, liabilities, losses, damages or
expenses pursuant to clause (B) of the preceding sentence that have resulted
primarily from either Evergreen’s bad faith, gross negligence or willful
misconduct. The Company also agrees that neither Evergreen nor any other
Indemnified Person shall have any liability to the Company or any member of the
Company Group for or in connection with such engagement except for any such
liability for claims, liabilities, losses, damages or expenses incurred by the
Company or any member of the Company Group that have resulted primarily from Evergreen’s
bad faith, gross negligence or willful misconduct. The Company further agrees
that it will not, without the prior written consent of Evergreen, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of
Evergreen and each other Indemnified Person hereunder from all liability
arising out of such claim, action, suit or proceeding. THE COMPANY
HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY
CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE
ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR
CONCURRENT ORDINARY NEGLIGENCE OF EVERGREEN OR ANY OTHER INDEMNIFIED PERSON.

 

The foregoing right to indemnity shall be in addition
to any rights that Evergreen and/or any other Indemnified Person may have at
common law or otherwise and shall remain in full force and effect following the
completion or any termination of the engagement.

 

It is understood that, in connection with the Evergreen’s
engagement, Evergreen may also be engaged to act for the Company in one or more
additional capacities, and that the terms of this engagement or any such
additional engagement(s) may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in Section
1 hereof as well as to any such additional engagement(s) (whether written
or oral) and any modification of said engagement or such additional
engagement(s) and shall remain in full

 

3

 

force and effect following
the completion or termination of said engagement or such additional
engagements.

 

5.                                      No Exclusive Duty to the Company. In recognition that (i) Evergreen currently
has, and will in the future have or will consider acquiring, investments in
numerous companies with respect to which Evergreen may serve as an advisor, a
director or in some other capacity, (ii) Evergreen may have a myriad of duties
to various investors and partners, (iii) Evergreen (or one or more affiliates,
associated investment funds or portfolio companies) may engage in the same or
similar activities or lines of business as the Company and have an interest in
the same areas of corporate opportunities, (iv) the Company will derive certain
benefits hereunder and (v) Evergreen, in desiring and endeavoring fully to
satisfy its duties, may confront difficulties in determining the full scope of
such duties in any particular situation, the provisions of this Section 5
are set forth to regulate, define and guide the conduct of certain affairs of
the Company and other members of the Company Group as they may involve Evergreen.

 

(a)                                  Notwithstanding anything to the contrary
contained herein, (i) Evergreen shall not be required to devote all of its time
and efforts to the Company, may have other business interests and may engage in
other activities in addition to those relating to the Company and the Company
Group, and such other business interests or activities may be of any nature or
description, and may be engaged in independently or with others, and (ii) neither
the Company nor the Company Group shall have any right, by virtue of this
Agreement or the Company relationship created hereby, in or to such other
ventures or activities of Evergreen or any of its affiliates, or to the income
or proceeds derived therefrom, and the pursuit of such ventures, even if
competitive with the Company business, shall not be deemed wrongful or
improper.

 

(b)                                 Neither Evergreen nor any of its affiliates,
shall be liable to the Company or any of its affiliates for breach of any duty
(contractual or otherwise) by reason of any activities or omissions of the
types referred to in Section 5(a) or Evergreen’s or its affiliates’
participation therein.

 

6.                                      Amendments and Waivers. No amendment or waiver of any term,
provision or condition of this Agreement shall be effective, unless in writing
and executed by Evergreen and the Company. No waiver on any one occasion shall
extend to or effect or be construed as a waiver of any right or remedy on any
future occasion. No course of dealing of any person nor any delay or omission
in exercising any right or remedy shall constitute an amendment of this
Agreement or a waiver of any right or remedy of any party hereto.

 

7.                                      Miscellaneous.

 

(a)                                  Choice of Law. This Agreement, and all disputes, claims or
causes of action that arise from or are in connection with this Agreement,
shall be governed by and construed in accordance with the domestic substantive
laws of the State of New York without giving effect to any choice or conflict
of law provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction.

 

(b)                                 Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or
the subject matter hereof shall be brought and maintained exclusively in the
federal and state courts of the State of New York. Each of the parties hereto
by execution hereof (i) hereby irrevocably submits to the jurisdiction of

 

4

 

the federal and state courts in the State of New York for the purpose
of any action, suit or proceeding arising out of or based upon this Agreement
or the subject matter hereof and (ii) hereby waives to the extent not
prohibited by applicable law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
it is immune from extraterritorial injunctive relief or other injunctive
relief, that its property is exempt or immune from attachment or execution,
that any such action, suit or proceeding may not be brought or maintained in
one of the above-named courts, that any such action, suit or proceeding brought
or maintained in one of the above-named courts should be dismissed on grounds
of forum  non  conveniens, should be transferred to any
court other than one of the above-named courts, should be stayed by virtue of
the pendency of any other action, suit or proceeding in any court other than
one of the above-named courts, or that this Agreement or the subject matter
hereof may not be enforced in or by any of the above-named courts. Each of the
parties hereto hereby consents to service of process in any such suit, action
or proceeding in any manner permitted by the laws of the State of New York,
agrees that service of process by registered or certified mail, return receipt
requested, at the address specified in or pursuant to Section 12 is
reasonably calculated to give actual notice and waives and agrees not to assert
by way of motion, as a defense or otherwise, in any such action, suit or
proceeding any claim that service of process made in accordance with Section
12 does not constitute good and sufficient service of process. The
provisions of this Section 7(b) shall not restrict the ability of any
party to enforce in any court any judgment obtained in a federal or state court
of the State of New York.

 

(c)                                  Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION,
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
SUBJECT HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND
WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties hereto
acknowledges that it has been informed by each other party that the provisions
of this Section 7(c) constitute a material inducement upon which such
party is relying and will rely in entering into this Agreement and the
transactions contemplated hereby. Any of the parties hereto may file an
original counterpart or a copy of this Agreement with any court as written
evidence of the consent of each of the parties hereto to the waiver of its
right to trial by jury.

 

(d)                                 Authority to Enter Agreement. Each party to this Agreement has all
requisite power and authority to enter into this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly authorized by all
necessary action on the part of each party and when duly executed and delivered
by such party shall constitute a legal, valid and binding agreement of such
party, enforceable in accordance with its terms.

 

8.                                      Independent Contractor. The parties agree and understand that Evergreen
is and shall act as an independent contractor of the Company in the performance
of their duties hereunder. Evergreen, in the performance of its duties
hereunder will not hold itself out as, employee, agent or partner of the Company.

 

9.                                      Information. The Company shall (i) furnish and make
available to Evergreen, in a timely manner, annual, quarterly and monthly consolidated
financial statements,

 

5

 

(ii) use reasonable efforts to cause its officers, directors, managers
and employees to afford Evergreen, during normal business hours and upon
reasonable notice, reasonable access and consultation rights at all reasonable
times, and (iii) afford Evergreen the opportunity to discuss the Company’s
affairs, finances and accounts with the Company’s officers from time to time as
it may reasonably request. The Company acknowledges and confirms that Evergreen
(i) will rely solely on such information and information that is available from
public sources in the performance of the services contemplated by this
engagement without assuming any responsibility for independent investigation or
verification thereof, (ii) will assume no responsibility for the accuracy or
completeness of such information or any other information regarding the Company
and (iii) will not make any appraisal of any assets of the Company.

 

10.                               Confidentiality. No advice rendered by Evergreen, whether
formal or informal, may be disclosed, in whole or in part, or summarized,
excerpted from or otherwise referred to without Evergreen’s prior written
consent. To the extent consistent with legal requirements, all information
given to one party of this Agreement (the “Recipient Party”) by another
party (the “Providing Party”), including, without limitation, this
Agreement, unless publicly available or otherwise available to the Recipient
Party without restriction or breach of any confidentiality agreement, will be
held by the Recipient Party in confidence and will not, without the Providing
Party’s prior approval, be disclosed to anyone other than the Recipient’s
agents and advisors who require such information to perform services for the
Providing Party as contemplated by this Agreement (and who agree to use such
information only in connection with such services) or used by such person for any
purpose other than those contemplated by this Agreement. Each party hereto
shall be responsible for violations of its respective agents and advisors of
the obligations set forth in this Section 10. Notwithstanding anything
to the contrary set forth herein or in any other agreement to which the parties
hereto are parties or by which they are bound, the obligations of
confidentiality contained herein and therein, as they relate to the services to
be provided hereunder, shall not apply to the tax structure or tax treatment of
the transactions subject to the services to be provided hereunder, and each
party hereto (and any employee, representative, or agent of any party hereto)
may disclose to any and all persons, without limitation of any kind, the tax structure
and tax treatment of the transaction subject to the services to be provided
hereunder and all materials of any kind (including opinions or other tax
analysis) that are provided to such party relating to such tax treatment and
tax structure; provided, however, that such disclosure shall not
include the name (or other identifying information not relevant to the tax
structure or tax treatment) of any person and shall not include information for
which nondisclosure is reasonably necessary in order to comply with applicable
securities laws.

 

11.                               Merger/Entire
Agreement. This Agreement and the other agreements referred to herein,
contain the entire understanding of the parties with respect to the specific
subject matter hereof and supersedes any prior communication or agreement with
respect thereto.

 

12.                               Notice.
All notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument delivered
in person or sent by telecopy, nationally-recognized overnight courier or first
class registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by such party to the other parties:

 

6

 

	
   

  	
  If to the Company, to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Specialized Technology Resources, Inc.

  	
   

  
	
   

  	
   

  	
  10 Water Street

  	
   

  
	
   

  	
   

  	
  Enfield, CT 06082-4899

  	
   

  
	
   

  	
   

  	
  Attn: Barry A. Morris

  	
   

  
	
   

  	
   

  	
  Facsimile: (860) 749-9158

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to Evergreen, to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Evergreen Capital Partners, LLC

  	
   

  
	
   

  	
   

  	
  30275 Oak Leaf Lane

  	
   

  
	
   

  	
   

  	
  Franklin, MI 48025

  	
   

  
	
   

  	
   

  	
  Attn:

  	
  John A. Janitz

  	
   

  
	
   

  	
   

  	
   

  	
  Dominick J. Schiano

  	
   

  

 

All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following
such dispatch and (c) in the case of mailing, on the third business day after
the posting thereof.

 

13.                               Severability.
If in any judicial or arbitral proceedings a court or arbitrator shall refuse
to enforce any provision of this Agreement, then such unenforceable provision
shall be deemed eliminated from this Agreement for the purpose of such
proceedings to the extent necessary to permit the remaining provisions to be
enforced. To the full extent, however, that the provisions of any applicable
law may be waived, they are hereby waived to the end that this Agreement be
deemed to be a valid and binding agreement enforceable in accordance with its
terms, and in the event that any provision hereof shall be found to be invalid
or unenforceable, such provision shall be construed by limiting it so as to be
valid and enforceable to the maximum extent consistent with and possible under
applicable law.

 

14.                               Counterparts. This Agreement may be executed in any
number of counterparts and by each of the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same agreement.

 

15.                               Descriptive Headings. All descriptive headings in this Agreement
are inserted for convenience only and shall be disregarded in construing or
applying any provision of this Agreement.

 

16.                               Prevailing Party. If any legal action or other proceedings is
brought for a breach of this Agreement, the prevailing party shall be entitled
to recover its reasonable attorneys’ fees and other costs incurred in bringing
such action or proceeding, in addition to any other relief to which such party
may be entitled.

 

17.                               Non-Recourse. No past, present or future director,
officer, employee, incorporator, member, partner, stockholder, affiliate,
agent, attorney or representative of

 

7

 

Evergreen, any member of the Company Group or any of their respective
affiliates shall have any liability for any obligations or liabilities of Evergreen,
any member of the Company Group or any of their respective affiliates under
this Agreement or for any claim based on, in respect of, or by reason of, the
transactions or other matters contemplated hereby.

 

8

 

IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its duly authorized officer or
representative as of the date first above written.

 

	
   

  	
  SPECIALIZED TECHNOLOGY 

  
	
   

  	
  RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Barry A. Morris

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial 

  
	
   

  	
   

  	
   

  	
  Officer

  

 

 

	
  EVERGREEN
  CAPITAL PARTNERS, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:
  Dominic J. Schiano

  	
   

  
	
   

  	
  Title:
  Managing Member

  	
   

  

 

SIGNATURE PAGE FOR
ADVISORY SERVICES AND MONITORING AGREEMENT (EVERGREEN)

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