Exhibit 10.13
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
