Exhibit 10.37


 


TRANSITION SERVICES AGREEMENT


 


This TRANSITION SERVICES AGREEMENT (this “Agreement”)
effective as of January 1, 2008, is entered into by and between AIR PRODUCTS AND CHEMICALS, INC., a Delaware corporation (“Air
Products”), and KMG CHEMICALS, INC., a Delaware
corporation (“KMG”).


 


BACKGROUND


 


A.                                      Air Products
and KMG are parties to an Asset Purchase Agreement dated as of October 19,
2007 (the “Purchase Agreement”), pursuant to which KMG is acquiring the
Transferred Assets, as are more fully described therein.  Parent has assigned all of its rights under
the Purchase Agreement to its wholly-owned subsidiary, KMG Electronic Chemicals, Inc.


 


B.                                        KMG wishes Air
Products to supply certain administrative and other services to KMG (or its
affiliates) pursuant to the terms of this Agreement during the periods referred
to herein to facilitate an orderly transition of the Transferred Assets to KMG.


 


C.                                        Air Products is
willing to provide those services requested by KMG (or its affiliates) through
employees of Air Products or its affiliates, all in accordance with the terms
and provisions set forth in this Agreement.


 


D.                                       Capitalized
terms used herein but not otherwise defined shall have the meanings assigned to
them in the Purchase Agreement.


 


NOW, THEREFORE, Air Products
and KMG, in consideration of the mutual covenants set forth below and for good
and valuable consideration, the sufficiency of which is hereby acknowledged,
and intending to be legally bound, do hereby agree as follows:


 


TERMS


 


1.                                          Furnishing and
Cancellation of Services. In exchange for good and valuable
consideration, including the consideration payable by KMG to Air Products set
forth in Schedule A hereto, Air Products will furnish to KMG (or KMG’s
affiliates) from Air Products’ staff (as appropriate), or cause certain of its
affiliates to furnish to KMG (or KMG’s affiliates) from the staffs of Air
Products’ affiliates (as appropriate), such services specifically identified in
and in accordance with Schedule A (the “Services”), as and when KMG (or KMG’s
affiliates) shall from time to time reasonably request and are from time to
time available to Air Products from its staff, or the staffs of its affiliates.
 In addition, the parties hereto agree
that they will further define and delineate the scope of such Services in more
detail than what was originally set forth in Schedule A, as appropriate.  KMG agrees to purchase the Services in
accordance with the terms of this Agreement. 
KMG may cancel any of the Services at any time on thirty (30) days
prior written notice.


 


2.                                          Personnel
Providing Services.  The
selection of the personnel who will furnish 


 

















 


the Services shall be made by Air Products in its
sole discretion.  All personnel providing
Services and the supervisors of such personnel will be granted access to KMG’s
sites as reasonably necessary or appropriate for them to fulfill their
obligations hereunder; provided however, that no person shall be required to
remain at a site if conditions at such site present a hazard to such person’s
health or safety.  In no event shall Air
Products or its affiliates be required to hire additional individuals or to
retain any specific individual in its employ to provide Services hereunder.  The Services shall be performed to the same
standard of care as if they were being performed for Air Products and by
individuals possessing the same qualifications as Air Products would require if
such Services were being performed for Air Products prior to the Closing.


 


3.                                     Fees for
Services. The fees or basis for the fees for the Services
are set forth in Schedule A. Air Products shall invoice KMG monthly for all
Services as to which a fee applies, and KMG shall pay each such invoice within
fifteen (15) days of the date of such invoice. 
Any invoice that is not so paid will accrue interest from the sixteenth
(16th) day after the invoice date until the date of payment at a
rate equal to one and three fourths percent (1 3⁄4%) over the published prime
lending rate from time to time in effect at The Chase Manhattan Bank in New York,
New York, U.S.A.


 


4.                                     Additional
Services. If KMG or KMG’s affiliates reasonably determine
that additional transition services of the type previously provided by Air
Products to the Business are necessary to complete the transition, Air Products
agrees to provide such services to KMG (or KMG’s affiliates).  If any additional services will be added to
this Agreement (“Additional Services”), representatives of Air Products
and KMG (or KMG’s affiliates) will meet in good faith to discuss, negotiate and
agree upon the terms and conditions (including cost) upon which such Additional
Services will be provided.  Any such
Additional Services mutually agreed to and the fees thereof shall be effective
as of the date of execution of an amendment to this Agreement by duly
authorized representatives of the parties hereto.


 


5.                                     Term and
Termination of Agreement.  This
Agreement shall commence on and as of the date hereof and shall terminate on
the close of business on the date which is twelve (12) months after the Closing
Date or such other date (with respect to any particular Service) in accordance
with the requirements of Schedule A, unless sooner terminated in accordance
with any other express provision of this Agreement or by written agreement of
the parties.


 


6.                                     Force Majeure.


 


                                              (a)                               Air Products
will be excused from performing hereunder and will not be liable in damages or
otherwise when and to the extent its performance is delayed or prevented by any
circumstance beyond its reasonable control and not due to its negligence (a “Force
Majeure”), including, without limitation, the following:  fires; floods; earthquakes; storms; unusual
weather conditions; explosions; accidents; breakdowns of machinery or
equipment; inability to obtain equipment, fuel or other materials; lack of
transportation or distribution facilities; labor shortages, slowdowns, strikes,
lockouts or other disputes; riots or other civil disturbances; or voluntary or
involuntary compliance with any law, order, regulation, official recommendation
or request of any governmental authority.


 

















 


                                              (b)                              If the
performance of any obligation hereunder is sought to be excused by reason of a
Force Majeure, Air Products shall promptly notify KMG in writing of the Force
Majeure, the anticipated extent of the delayed or prevented performance and the
steps it will take to remedy the situation. 
Air Products shall use commercially reasonable efforts to cure or remedy
such cause of non-performance in a timely manner; provided
however, that it shall not be required to make any concession or
grant any demand or request to settle any strike or other labor dispute.  In no event will Air Products be obligated to
procure individuals from other sources to enable it to perform its obligations
hereunder.


 


7.                                     Limitation of
Liability; Indemnity.


 


                                              (a)                               Determination
of the suitability of any Services furnished hereunder for the use contemplated
by KMG is the sole responsibility of KMG, and Air Products will have no
responsibility in connection therewith. 
KMG assumes all risk and liability for loss, damage or injury to persons
or property arising out of such Services however used, and Air Products shall
in no event be liable to KMG or those claiming by, through or under KMG
(including employees, agents, customers, subtenants, contractors and other
invitees) for any damage, including, without limitation, personal or property
damage, suffered by any of them, directly or indirectly, as a result of any
Services provided hereunder, regardless of whether due or alleged to be due to
the negligence of Air Products, except for damages to the extent such damage is
occasioned by Air Products’ gross negligence or willful misconduct.  Notwithstanding the foregoing, Air Products
shall indemnify KMG for any and all losses arising from or related to any damage
caused by Air Products’ gross negligence or willful misconduct.


 


                                              (b)                              AIR
PRODUCTS SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO KMG FOR ANY
INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND, INCLUDING,
WITHOUT LIMITATION, BUSINESS INTERRUPTION LOSSES OR THIRD-PARTY CLAIMS, WHETHER
CAUSED BY BREACH OF THIS AGREEMENT, NEGLIGENCE OR OTHERWISE.


 


                                              (c)                               KMG shall
indemnify Air Products and its affiliates and their respective officers,
directors, employees and agents (each an “Air Products Indemnitee”) against all
costs, judgments, claims, liabilities, damages, losses, penalties and expenses
(collectively “Damages”) suffered by any of them that pertain to the
performance of the Services (whether or not allegedly arising out of
negligence, tort, strict liability or otherwise), regardless of whether such
Damages are caused in whole or in part by the negligence of the Air Products
Indemnitee, or in connection with the defense of any action based on such
activities, including reasonable attorneys’ fees and expenses of investigation
(which fees and expenses shall be paid as incurred); provided
however, that such indemnity shall not apply for the benefit of an
Air Products Indemnitee if it is ultimately found through settlement or by
final, non-appealable order that such Air Products Indemnitee’s actions
constituted gross negligence or willful misconduct.  This indemnification shall apply
notwithstanding any limitations arising out of workers’ compensation or other
like statutes.


 


                                              (d)                              The provisions
of this Section 7 shall survive expiration, termination or 


 

















 


cancellation of this Agreement and shall be
enforceable to the fullest extent permitted by law or in equity.


 


8.                                  Dispute
Resolution.


 


(a)                               As to any
controversy, claim or dispute between the parties arising out of or in
connection with the interpretation or performance of this Agreement, the
parties shall first negotiate in good faith to resolve such dispute.  If the parties are unable to resolve the dispute
to their mutual satisfaction within thirty (30) days after one party gives
written notice to such effect to the other, then either party may submit the
dispute to arbitration for final settlement, which arbitration shall be
conducted in accordance with the following procedures:


 


                                                                                           (i)                                     The arbitration
shall be held in accordance with the then-current CPR Rules for
Non-Administered Arbitration, by a single arbitrator to be selected by the CPR
International Institute for Conflict Prevention & Resolution (“CPR”)
from the CPR Panel of Neutrals.  The
arbitrator shall be qualified by education, experience and training to decide
the issues to be arbitrated.  The arbitration
shall be held in Houston, Texas, U.S.A.,  and shall be
conducted in the English language.  The
decision of the arbitrator shall be final, binding and conclusive upon the
parties.


 


                                                                                           (ii)                                  The arbitrator,
in its sole discretion, may order the taking of such evidence as it determines
is necessary to resolve the dispute.


 


                                                                                           (iii)                               Any arbitration
award rendered in accordance with this Section 8 shall be enforceable by a
party in any court having jurisdiction over the party against whom the award
has been rendered or at the place where assets of the party against whom the
awarded has been rendered are located.


 


                                                                                           (iv)                              Unless the
decision of the arbitrator shall otherwise direct, the parties shall bear
equally the costs and expenses of the arbitration and each party shall bear its
own costs and expenses of its own counsel, advisors and experts.


 


                                                                                           (v)                                 Either party may apply the arbitrator seeking
injunctive relief until the arbitration award is rendered or the controversy is
otherwise resolved.  Either party also
may, without waiving any remedy under this Agreement, seek from any court
having jurisdiction any interim or provisional relief that is necessary to
protect the rights or property of that party, pending the appointment of the
arbitrator (or pending the arbitrator’s determination of the merits of the
controversy), including without limitation any injunctive or other equitable
relief.


 


                                              (b)                              The parties
shall continue to perform their obligations under this Agreement during the
arbitration proceedings, and no undisputed payment due hereunder shall be
withheld on account of such proceedings if the propriety of payment itself is
the subject of the arbitration.


 


9.                                  Remedies for
Default.


 


If a party:


 

















 


(i)                                  defaults in the
payment of any indebtedness hereunder to the other party and fails to remedy
such breach within ten (10) days of written notice of such default from
the non-defaulting party; or


 


(ii)                               commits a
breach of any other provision of this Agreement in any material respect and
fails to remedy such breach within ten (10) days of written notice of such
breach from the non-defaulting party (or such longer period if a cure not
capable of being completed within such ten 
(10) day period has been commenced and is being diligently
pursued); or


 


(iii)                            voluntarily
files, or involuntarily has filed against it (which filing is undismissed
within sixty (60) days of such involuntary filing), any bankruptcy,
receivership, insolvency or reorganization proceeding;


 


then in any such event the
other party will have the right, in addition to any other rights and remedies
it may have hereunder, to suspend deliveries or receipts hereunder or to
terminate this Agreement if such delay or default substantially impairs the
value of the entire Agreement to the non-defaulting party.


 


10.                               Miscellaneous.


 


(a)                                The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and the respective successors and permitted assigns.  Neither party may assign its rights or
obligations hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld, conditioned or delayed;
provided however, that Air Products may assign, in whole or in part, any of its
rights and/or obligations hereunder to any affiliate of Air Products without
KMG’s consent and KMG may assign, in whole or in part, any of its rights and/or
obligations hereunder to any affiliate of KMG without Air Products’ consent. No
assignment will release the assigning party from any of its obligations
hereunder unless the other party expressly agrees to such release in writing.


 


(b)                               This Agreement
shall be governed by and construed in accordance with the laws of the State of Texas
without regard to its principles of conflict of laws.


 


(c)                                This Agreement
contains the entire understanding of the parties with respect to the subject
matter hereof. No supplement, modification or amendment of the Agreement shall
be binding unless in writing and executed by KMG and Air Products.


 


(d)                               This Agreement
may be signed in any number of counterparts, each of which for all purposes
shall be deemed to be an original and all of which together shall constitute
the same agreement.


 


(e)                                The headings of
the Sections of this Agreement are inserted as a matter of convenience and for
reference purposes only, are of no binding effect, and in no respect define,
limit or describe the scope of this Agreement or the intent of any Section hereof.


 

















 


(f)                                  Nothing in this
Agreement, express or implied, is intended or shall be construed to confer upon
or give to any person, firm or corporation other than the parties hereto any
remedy or claim under or by reason of this Agreement or any term, covenant or
condition hereof, all of which shall be for the sole and exclusive benefit of
the parties hereto.


 


(g)                               All notices,
demands, requests and other communications required or permitted to be given
hereunder shall be deemed duly given on the date delivered by hand, mailed by
registered or certified mail, postage prepaid or sent by overnight courier and,
pending the designation of another address, addressed as follows:


 


If
to KMG:


 


KMG Chemicals, Inc.


10611 Harwin Drive, Suite 402


Houston, Texas 77036


Attention:
Roger C. Jackson


Facsimile: (713) 600-3150


 


with a copy to:


 


Haynes and Boone, LLP


1221 McKinney Street, Suite 2100


Houston, Texas 77002


Attention:  George G. Young III and William B. Nelson


Facsimile: (713) 236-5557


 


If
to Air Products:


 


                                                                                                Air Products
and Chemicals, Inc.


                                                                                                7201 Hamilton
Boulevard


                                                                                                Allentown,
Pennsylvania 18195-1501


                                                                                                Attention:  Corporate Secretary and General Counsel


                                                                                                Facsimile:
(610) 481-5765


 


with a copy to:


 


Corporate Secretary


 


                                                                                                (h)                                 The failure by
any party to exercise any of its rights hereunder or to enforce any of the
terms and conditions of this Agreement on any occasion shall not constitute or
be deemed a waiver of that party’s rights thereafter to exercise any rights
hereunder or to enforce each and every term and condition of this Agreement.


 


[signature page follows]


 

















 


IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.


 


	
   

  	
  KMG CHEMICALS, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  AIR PRODUCTS AND CHEMICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 


Signature Page to
Transition Services Agreement (from Air Products to KMG)


 

















 


Schedule to Transition Services Agreement