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Exhibit 10.34
AGI, INC.
TRANSITION SERVICES AGREEMENT
- This Transition Services Agreement (the "Agreement"), dated as of March 25,
1996 is entered into by and between AG Associates, Inc. ("AGA"), AG
Associates (Israel) Ltd. ("AG Israel") and AGI, Inc. ("AGI").
- The parties hereto have agreed to enter this Agreement in connection with
the closing of the transactions contemplated by the Agreement (the
"Investment Agreement"), dated February 27, 1995, among the parties hereto
and Clal Electronics Industries Ltd. (the "Closing").
- The parties agreed that AGA will provide to AGI, for the time period and
consideration described below, certain of the services that have been
provided for the "CVD Activities" (as defined in the Investment Agreement)
prior to the Closing, in order to ensure the continued and uninterrupted
operation of the CVD Activities under AGI, following the Closing.
- Therefore, the parties hereto agree as follows.
1. SERVICES TO BE PROVIDED BY AGA. AGA will provide the following services to
AGI.
1.1 Human Resources Services. Those services generally described in
Schedule 1(a) hereto and incorporated herein by reference, and
related support, training, maintenance, information and reports.
With respect to the following matters, it is provided as follows.
New Hires; Terminations. AGI will make all decisions regarding
hiring, promotions and termination of its own employees. However,
AGA will provide employment services to AGI including administrative
aid in recruiting, interview scheduling and preparation of
employment offers. Any disputes between AGI and any of its
employees, former employee or other service providers with respect
to their employment by AGI will be administered by, and the
responsibility of, AGI.
Separation of Employment Records. AGI's employees shall be carried
on AGI payroll records and not those of AGA. However, upon receipt
by AGA from AGI of amounts needed to cover AGI's payroll from time
to time, AGA will, through its own bank account, make payroll
payments to AGI employees and on AGI's behalf. AGI will be listed on
AGA's payroll files as a separate organization. Each AGI employee or
other service provider will have a personnel file separate from
those of AGA employees.
Benefits. Although they may be administered by AGA, employment
benefits will be provided under separate plans for AGA and AGI
employees, wherever possible.
Notice to Employees. Each employee of AGI is to be informed in
writing by AGI at the time of hiring that, although employment
services are being provided by AGA as a service to AGI, such
employee is an employee of AGI, which will be solely responsible for
any compensation or other payments that may be due to such employee.
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1.2 Operational Services. Those services generally described in Schedule
1(b) hereto and incorporated herein by reference, and related
training, support, maintenance, information and reports, including,
without limitation, the following.
Telephone and Facsimile. Although AGA may, at the written request of
AGI, administer and manage payment for same, AGI will obtain and
maintain its own telephone and facsimile numbers.
Segregation of Assets; Grant of Security Interest and Guarantee. AGI
and AG Israel generally will purchase their own inventory, raw
materials and other assets under their own purchase orders. However,
if acceptable to AGA on a case by case basis, AGA may at the request
of AGI or AG Israel purchase inventory, raw materials or other
assets on the requesting party's behalf and sell such assets to the
requesting party at AGA's cost, including shipping, taxes and other
ordinary procurement expenses. Any inventory or other assets
purchased by AGA under this Agreement will be purchased at the
request of AGI or AG Israel and in the name of AGA, will upon
receipt and physical designation by AGA as the requesting party's
property and will become the property of requesting party, which
will then have an obligation to pay therefor. To secure payment of
the purchase price of any inventory or assets purchased by AGA for
the benefit of AGI under this paragraph, AGI hereby grants AGA a
security interest in any and all inventory and other assets so
purchased and to be so purchased. AGI will sign any UCC financing
statement reasonably requested by AGA to perfect its security
interest in such inventory and assets. Inventory may be sold to
customers of AGI free and clear of AGA's security interest if sold
in the ordinary course of business as permitted by California law.
AGI hereby unconditionally guaranties, and does hereby become surety
for, the punctual payment to AGA of any amounts owed to AGA by AG
Israel, and AG Israel hereby unconditionally guaranties, and does
hereby become surety for, the punctual payment to AGA of any amounts
owed to AGA by AGI, all under the immediately preceding paragraph in
this Section 1.2, when such payments are due, whether by reason of
acceleration or otherwise and whether the obligation for payment is
now existing or hereafter arising (the "Obligations"). The
Obligations of each guarantor are absolute, unconditional and
continuing whether or not this Agreement expires or is terminated.
Each guarantor hereby consents that, from time to time, without
notice to, or further consent of such guarantor, the performance or
observance of any provision of any Obligation may be waived by AGA,
or the time of performance thereof extended or accelerated or may be
renewed in whole or in part or otherwise amended, changed, released
or compromised, all without affecting the liability of such
guarantor hereunder. Each guarantor hereby waives notice of
acceptance of this guaranty, presentment, demand, protest, notice of
protest and notice of dishonor of any Obligation guaranteed hereby.
Whenever possible, AGA, AG Israel and AGI will segregate from AGA's
other assets any inventory or assets purchased for, or owned by, AGI
or XX Xxxxxx and shall clearly xxxx such assets as dedicated to, or
owned by, AGI or XX Xxxxxx, as the case may be.
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Facilities. The sublease of office facilities by AGI that are leased
or owned by AGA will be the subject of a separate real property
sublease between AGA and AGI (the "Sublease"). Whenever possible,
the workplace of AGI employees will be separated from the workplace
of AGA employees and signage will be employed to identify those
areas used by AGI sufficient to put to those visiting with each
party on notice that AGA and AGI are separate businesses.
Patents. Title to, and payment for, patents and patent applications
shall be governed by the terms of the Agreement, when applicable.
Although AGA may aid AGI in the preparation and filing of certain
patents or patent applications not covered by the Agreement, such
assets will be applied for in the name of AGI and paid for by AGI as
incurred or as specified in Section 2 below.
1.3 Financial and Control Systems. Those services generally described in
Schedule 1(c) hereto and incorporated herein by reference and
related support, maintenance, training, information and reports,
except as set forth below.
Separate Records. The books and records of AGI will be separate from
those of AGA.
Collection Services and Accounts Payable. AGI will pay all AGI
accounts payable and other expenses incurred in connection with the
activities described in Schedule 1(c) from its own bank accounts and
shall collect its own accounts receivable. However, AGA shall
provide accounts payable services for AGI, consisting of such
services as preparing purchase orders and administering the payment
by AGI of invoices. AGA may also, at the request of AGI and in AGA's
discretion, collect any AGI accounts receivable and may pay any AGI
accounts payable and other expenses incurred in connection with the
activities described in Schedule 1(c). Such payments and
collections, if any, shall be netted and subject to offset as
described in Section 2 below.
Other Financial and Control Systems. Any other matters listed on
Schedule 1(c) will consist of AGA's administrative services only and
will not require AGA to make any payments on AGI's behalf for
reimbursement of expenses, benefits, xxxxx cash, credit cards or the
like, unless expressly described in this Agreement. Such payments
will be made directly from AGI's own bank accounts.
1.4 Additional Services. Any additional services that may be agreed to
in writing by AGI and AGA and which are not explicitly and
unambiguously referred to in this Agreement will be provided by AGA
for a fee to be mutually agreed upon between AGA and AGI.
2. CONSIDERATION.
2.1 Payments. In exchange for the services provided under Schedules
1(a), 1(b) and 1(c), AGI shall pay to AGA the incremental direct
costs and out-of-pocket expenses, derived directly from the
provision of those services. No AGA overhead allocations will be
charged to AGI. Payment will be made after presentation of AGA's
invoice therefor, net 30. Interest per annum on any amount overdue
will accrue at a floating rate equal to prime applicable to, and
reported by, AGA's bank from time to time.
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2.2 Offset. Any amounts due from AGA to AGI, or visa versa, may be
offset from time to time at the discretion of either party exercised
in writing delivered to the other party.
2.3 Indemnification. For purposes of this Section 2.3, the entity(ies)
to be indemnified in a particular instance described in this Section
shall be referred to collectively as the "Indemnified Person or
Persons" with respect to such instance and entity(ies) that are
obligated to provide such indemnification shall be referred to in
such instance as the "Indemnifing Person or Persons"). AGI and AG
Israel hereby agree to indemnify AGA of and from any claim, demand
or action of any third person (i.e. other than the parties hereto)
and any cost, expense, loss, damage, settlement or other charge of
any kind or nature that AGA may incur, or with which AGA may be
charged, as a result of such third party claim, demand or action,
which was a consequence of providing services and other assets to
AGI in accordance with this Agreement; provided that AGA shall not
be entitled to indemnification under this Section 2.3 as a result of
AGA's gross negligence or willful misconduct. Likewise AGA hereby
agrees to indemnify each of AGI and AG Israel of and from any claim,
demand or action of any third person (i.e. other than the parties
hereto) and the resulting cost, expense, loss, damage, settlement or
other charge of any kind or nature that such Indemnified Person may
incur, or with which any such Indemnified Person may be charged, as
a result of such third party claim, demand or action, which was a
consequence of the gross negligence or willful misconduct of AGA in
providing services and assets to AGI in accordance with this
Agreement. With respect to any claim for indemnity hereunder
resulting from a third party claim, demand or action, the
Indemnified Persons who are the subject of such claim, demand or
action shall, after receipt of notice of the commencement of any
action or the presentation or other assertion of any claim or demand
which could result in any indemnification claim or demand pursuant
to this Section 2.3, give prompt written notice thereof to the
Indemnifying Persons (although failure to give prompt notice shall
not mitigate the indemnification obligations hereunder unless and to
the extent the Indemnifying Parties are prejudiced by such failure
or delay).
(i) The Indemnifying Party or Parties shall be entitled to
participate in the defense of any such claim, demand or
action. The Indemnifying Party or Parties may also, to the
extent that it or they may desire, assume the defense thereof
with its or their own counsel, unless the Indemnified Party
reasonably objects to such assumption on the grounds that
representation of all entities by the same counsel would be
prohibited under any rule of professional conduct applicable
to such counsel, then the Indemnified Party or Parties may
participate in their own defense with counsel of its or their
own choosing at the cost of the Indemnifying Party or Parties.
Except as specified in the preceding sentence, an Indemnifying
Party or Parties that assumes the defense of a claim, demand
or action shall not be liable to the Indemnified Party or
Parties for any fees of other counsel or any other expenses,
in each case, incurred by such Indemnified Party or Parties in
connection with the defense thereof.
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(ii) The Indemnifying Party or Parties shall be authorized, without
the consent of the Indemnified Party being required, to settle
or compromise any such claim, demand or action, provided that
such settlement or compromise includes an unconditional
release of the Indemnified Parties from all liability arising
out of such claim, demand or action. An Indemnifying Party or
Parties shall not be liable for any compromise or settlement
of any such claim, demand or action effected by the
Indemnified Party or Parties without the Indemnifying Party's
or Parties' written consent.
(iii) The parties agree to cooperate to the fullest extent possible
in connection with any claim, demand or action for which
indemnification is or may be sought under this Agreement.
3. TERM AND TERMINATION.
3.1 Term. The term of this Agreement shall begin on June 1, 1995, and
shall continue until terminated by AGI or AGA as described in
Section 3.2 below.
3.2 Termination. Either AGI or AGA may cancel any or all service or
services provided pursuant to this Agreement on 90 days prior notice
to the other party. However, this Agreement, and/or any service
provided for in this Agreement, may be terminated immediately upon
notice duly given by either AGI or AGA to the other in the event of a
default by AGA, or either AGI or AG Israel, respectively, under this
Agreement. Failure of the other party to perform as required by this
Agreement, including, without limitation, the failure to pay any
amount when due, will deemed to constitute such a default. Failure of
any party to declare a default under this Agreement, or to take any
other action to be taken in event of default of the other, will not
be deemed a waiver of such default. The terms of this Agreement may
only be waived in writing signed by the party to be charged.
3.3 Effect of Termination. Cancellation of any particular service
pursuant to this Section 3 shall not affect the remaining services,
if any. Expiration or termination of this Agreement shall not affect
the indemnification obligations set forth in Section 2 hereof, which
shall survive such expiration or termination and shall apply to cover
advancement of expenses or other monetary obligations incurred by AGA
on behalf of AGI that are described in this Agreement whether arising
before or after such expiration or termination.
4. MANAGING THE AGREEMENT.
4.1 Status Report. AGI will distribute to AGA a monthly status report
regarding the services actually received, any changes required and
implementation problems, if any.
4.2 Conflicts. Significant conflicts between the parties regarding the
implementation of this Agreement, or any portion of it, will be
submitted to AGA's and AG Israel's Chief
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Financial Officers (each, a "CFO") for resolution. If such persons
do not resolve such conflict within 60 days after submission, either
of such CFOs may refer the matter to AG Israel's General Manager and
to AGA's Chairman of the Board for resolution. If such persons do
not resolve such conflict within 30 days after such submission, the
matter shall be submitted, at the election of any party by notice
given to the other parties, to binding arbitration before one
arbitrator in Santa Clara, California, under the rules of the
American Arbitration Association. The decision of the arbitrator, of
the Chief Financial Officers or of the General Manager and Chairman
of the Board, as the case may be, will be final and binding.
5. GENERAL PROVISIONS.
5.1 Confidentiality. None of the parties will disclose to any third party
or use any part of the information exchanged among the parties or to
which a party is exposed to during the course of the fulfillment of
this Agreement that is disclosed in written, graphic, machine
readable or other tangible form by the disclosing party or that is
disclosed orally or visually by one party to another pursuant to this
Agreement (collectively, "Confidential Information"), without the
prior written consent of the disclosing party, except for the purpose
of fulfilling its obligations and exercising its rights under this
Agreement. Each receiving party will take all reasonable measures to
maintain the confidentiality of all Confidential Information of the
other parties in its possession or control, which will in no event be
less than the measures it uses to maintain the confidentiality of its
own information of similar importance. This Section 5(a) will not
apply to Confidential Information which:
(i) is now in the public domain, or subsequently enters the public
domain, without the fault of the receiving party,
(ii) is known by the receiving party at the time of receiving such
information,
(iii) is furnished by the disclosing party to third parties without
restriction on disclosure,
(iv) is subsequently rightfully furnished to the receiving party by
a third party without breach of an obligation with respect to
disclosure taken by such third party toward the disclosing
party, or
(v) is independently developed by the receiving party without use
of the Confidential Information of the disclosing party.
5.2 Independent Contractors. The parties to this Agreement are
independent contractors. There is no relationship of partnership,
joint venture, employment, franchise or agency among the parties.
None of the parties has the power to bind any of the others or to
incur obligations on the other's behalf without the other's prior
written consent.
5.3 Limitations. Regardless of AGA's obligation to provide licenses for
AutoCAD 13, ORCAD or provide any other asset, AGA will be released
from its obligation to do so with respect to any particular license
or asset to the extent the provision of the same
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would violate any contract with the owner of such asset (such as a
prohibition on assignment) or violate any laws, rules or regulations
of any governmental authority. This provision shall not derogate
from AGA's obligations under the Investment Agreement.
5.4 Notices. All notices provided for herein will be given in writing
and delivered personally, sent by confirmed facsimile transmission
or sent by registered mail, postage prepaid, in each case addressed
to the party to receive notice at its address set forth below or to
such other address as such party previously may have noticed to the
other pursuant to this Section 5.4.
5.5 Governing Law. This Agreement will be governed by, and interpreted
in accordance with, the laws of the State of California without
regard to the principles of conflicts of laws.
5.6 Entire Agreement. The terms and conditions contained in this
Agreement and in the Sublease, together, constitute the entire
agreement among the parties hereto concerning its subject matter and
supersede all previous or contemporaneous communications, whether
oral or written, among the parties with respect to such subject
matter.
5.7 Assignment. This Agreement may not be assigned without the prior
written consent of the other parties, which consent will not be
unreasonably withheld or delayed. This Agreement shall be binding
upon, and inure to the benefit of, the permitted successors and
assigns of the parties.
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AG ASSOCIATES, INC. AGI, INC.
By: By:
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Address: 0000 Xxxxxxx Xxxxx, Address: 0000 Xxxxxxx Xxxxx,
Xxxxx Xxxxx Santa Clara
California, 95134-2300 California, 95134-2300
Attention: Chief Financial Attention:
Officer --------------
Facsimile No: (000) 000-0000 Facsimile No:
----------------------
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AG ASSOCIATES (ISRAEL) LTD.
By:
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Address: Industrial Park at Ramat Xxxxxxx
X.X.X. 000, Xxxxxx XxXxxx 00000
Xxxxxx
Attention: President
Facsimile No: 06-440551
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SERVICES SCHEDULES
SCHEDULE 1(a) - HUMAN RESOURCES SERVICES
a. Recruiting
b. Benefits administration / payroll
c. Employee relations
d. Employee training
e. Travel
SCHEDULE 1(b) - OPERATIONAL SERVICES
Materials / Stock Room
a. Inventory tracking
b. Spare parts inventory maintenance
c. Shipping / receiving / QA
d. FED-EX services
e. Provide packaging materials
f. Order entry
g. Materials planning
h. Purchase of Heatpulse 610 parts
i. Office supplies
MIS
a. PC repair / maintenance
b. PC applications software
c. Phones, long distance charges
d. Voicemail
e. E-mail
f. MRP, shortage, custom MIS reports
g. Software license for AutoCAD 13, ORCAD
h. Training
Facilities (Borregas building)
a. Apps, lab / support areas
b. Facilities services (i.e., water, CDA, process gases, sensors / alarm, scrubber)
c. Janitorial services (including clean room xxxxx changes)
d. Safety (includes performing government regulations concerning safety and hazardous materials)
Marketing / Sales
x. XXXXXX costs (presentations, literature)
b. Trade Show support / representation
c. Patent applications
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SCHEDULE 1(b) - OPERATIONAL SERVICES (Continued)
Other
a. Receptionist
b. Machine shop services
c. Coffee, microwave
d. Mail services
SCHEDULE 1(c) - FINANCIAL AND CONTROL SYSTEMS
a. A / P
b. A / R
c. Payroll
d. Benefits
e. Expense report processing
x. Xxxxx cash, travel
g. Credit cards, travel insurance
h. Departmental expenses
i. Monthly / quarterly financial statements
j. Inventory Valuation
k. Property accounting
l. Legal entity requirements
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