EXHIBIT (C)(5)
AG ASSOCIATES, INC.
January 14, 1999
STEAG Electronic Systems GmbH
Xxxxxxxxxxxxxx Xxxxxxx 0-0
00000 Xxxxx
Xxxxxxx
Ladies and Gentlemen:
AG Associates, Inc., a California corporation ("we" or the "Company"),
is the record and beneficial owner of 4,289,500 Ordinary Shares, nominal value
NIS 0.01 per share (as such number of shares may be increased or decreased
pursuant to the following paragraph, the "Shares"), of AG Associates (Israel)
LTD., a corporation formed under the laws of the State of Israel ("AG Israel").
The Company and STEAG Electronic Systems GmbH, a German business entity ("you or
"STEAG"), are parties to that certain Agreement and Plan of Merger, dated as of
January 18, 1999 (the "Merger Agreement"), which contemplates, among other
things, the merger of one of your wholly owned subsidiaries with and into the
Company (the "Merger"). STEAG also has entered into an agreement with AG Israel
and its shareholders, dated as of January 18, 1999 (the "AG Israel Agreement"),
which contemplates the acquisition by STEAG of the Ordinary and Preferred Shares
of AG Israel that are not owned by the Company.
If (a) you shall have the right to purchase the Other AGI Shares, (b)
the Closing under the Merger Agreement does not occur and (c) the Merger
Agreement is terminated for any reason, then (a) you shall have the right to
purchase, and we shall be required to sell, all but not less than all of the
Shares for the aggregate purchase price of US$5,404,770.00 (the "Purchase
Price"), and (b) we shall have the right to sell to you, and you shall be
required to purchase, all but not less than all of the Shares at the Purchase
Price (in either case, the "Sale"), on the terms and subject to the conditions
set forth herein. If AG Israel causes the Shares to be subdivided or combined
into a greater or smaller number of shares, then the term "Shares" herein shall
refer to such subdivided or combined shares and the Purchase Price shall remain
the same.
You may assign your right and/or obligation to purchase the Shares to
any person, including any company or business entity, that you control or is
controlled by you or is under common control with you (your "affiliates"),
provided that you deliver to us written notice of such assignment prior to the
date of an Election Notice (as defined below).
If either you or we elect to effect the Sale (in either case, an
"Election"), such Election must be made by delivering written notice (an
"Election Notice") to Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx,
XX 00000 attention Xxxx Xxxxxxxx (the "Trustee") notifying the Trustee of our
desire to effect the Sale. We have deposited, or within one week of the signing
of this letter will deposit, the Shares with the Trustee, together with such
instruments, endorsed in blank, as may be
necessary in order to permit the Trustee to effect a sale of the Shares to you
pursuant to this letter without the necessity of our taking any further action.
An Election Notice shall be deemed effective upon receipt by the
Trustee. An Election must be made, if at all, on or prior to the date which is
thirty (30) days following the Effective Date (the "Expiration Date"). We agree
not to sell, pledge or otherwise transfer any of the Shares to any person other
than you or one of your affiliates prior to the Expiration Date, unless you
shall have given your prior written consent.
If an Election is made by you, the Election Notice you deliver to the
Trustee must be accompanied by the Purchase Price, in the form of a bank or
certified check or wire transfer. If an Election is made by us, you shall
deliver the Purchase Price, in the form of a bank or certified check or wire
transfer, to the Trustee within five (5) business days in Israel following the
date the Trustee informs you that our Election Notice has been received by the
Trustee.
The closing of the Sale (the "Closing") shall take place on the date
that is five (5) business days in Israel following the date the Purchase Price
is received by the Trustee, or on the earliest subsequent date upon which all
regulatory approvals, if any, shall have been obtained. At the Closing, the
Trustee shall deliver (a) share transfer deeds representing all of the Shares to
you together with such instruments and documents as you or your counsel believe
are necessary in order to convey full title to the Shares to you, and (b) the
Purchase Price to us.
In connection with the delivery of the Shares to the Trustee, and
again at such time, if ever, as they are sold to you, we represent and warrant
to you as follows:
(a) all of the Shares are duly authorized, validly issued, fully
paid and nonassessable Ordinary Shares of AG Israel;
(b) all of the Shares are owned by the Company free and clear of
all security interests, liens, claims, pledges, agreements, limitations in the
Company's voting rights, charges or other encumbrances of any nature whatsoever;
(c) this letter has been duly and validly executed and delivered
by us and assuming the due authorization, execution and delivery by you
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be subject to or limited by bankruptcy, insolvency, reorganization, or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors' rights generally, and except that the availability of equitable
remedies, including specific performance, may be subject to the discretion of
the court before which any proceeding therefor may be brought;
(d) the execution and delivery of this letter by us does not,
and the performance of the obligations outlined in this letter by the Company
will not, (i) conflict with or violate the Articles of Incorporation or Bylaws
of the Company, (ii) conflict with or violate any law relating to the Company,
or by which any of its properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair the Company's rights or alter
the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of any contract to which the Company is bound.
Our respective obligations under this letter shall be governed by the
laws of the State of California, and we agree to resolve any disputes under this
letter in a court located in California having subject matter jurisdiction over
such dispute.
If you agree to the matters set forth in this letter, including
without limitation the terms and conditions under which you or we can require
the Sale, please indicate such agreement by signing the enclosed photocopy of
this letter in the space indicated and returning such signed copy to us.
We each agree that the Trustee is acting as our joint agent for the
sole purpose of effecting the transfer of the Shares, and owes no fiduciary
duty to either one of us as a result of this letter.
Sincerely,
By: /s/ Xxxxx Xxx
-------------------------
Name: Xxxxx Xxx
Title: Chief Executive Officer
AG ASSOCIATES, INC.
Accepted and Agreed: The undersigned agrees to act as the
Trustee, as described above.
STEAG ELECTRONIC
SYSTEMS GMBH XXXXXXXX & XXXXXXXX LLP
By: /s/ Xxxx-Xxxxxxx Xxxx By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx-Xxxxxxx Xxxx Name: Xxxx X. Xxxxxxxx XXX
------------------------ --------------------
Title: Chief Financial Officer Title: General Partner
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By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
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Title: Officer with Statutory Authority
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