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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Tower Semiconductor Ltd.
- --------------------------------------------------------------------------------
(Name of Issuer)
Ordinary Shares, NIS 1.00 Per Share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
M87915100
- --------------------------------------------------------------------------------
(CUSIP Number)
Bradley A. Perkins
Vice President and General Counsel
Alliance Semiconductor Corporation
2575 Auugustine Drive
Santa Clara, California 95054
(408) 855-4900
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 26, 2001
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[_].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 11 Pages)
- ----------
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
(SC13D-07/99)
CUSIP No.M87915100 13D Page 2 of 11 Pages
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
Alliance Semiconductor Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
IRS I. D. # 77-0057842
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
WC
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
2(d) OR 2(e)
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF 1,559,931 (1)
SHARES _________________________________________________________________
8 SHARED VOTING POWER
BENEFICIALLY
12,486,311 (with respect to certain matters as set forth
OWNED BY in the Consolidated Shareholders Agreement, dated as of
January 18, 2001, filed as Exhibit 4 to this Schedule 13D)
_________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON _________________________________________________________________
10 SHARED DISPOSITIVE POWER
WITH
12,486,311 (with respect to certain matters as set forth
in the Consolidated Shareholders Agreement, dated as of
January 18, 2001, filed as Exhibit 4 to this Schedule 13D)
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,486,311 (2)
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
64.1% (based on the number of shares of Issuer Ordinary Shares outstanding
as of January 18, 2001 as represented by the Issuer)
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) Represents shares held of record by Alliance Semiconductor Corporation
("Alliance") or purchasable by Alliance within sixty (60) days of the date
hereof. Such shares are subject to certain voting and disposition restrictions
and obligations as described more fully in footnote (2) and Item 4 below.
(2) 12,486,311 shares of Tower Semiconductor Ltd. ("Issuer") ordinary shares are
subject to a Consolidated Shareholders Agreement ("Consolidated Shareholders
Agreement") dated as of January 18, 2001 by and among Alliance and certain
shareholders of Issuer (discussed in item 4 below). The Consolidated
Shareholders Agreement provides that each party thereto agrees to vote all
shares of Issuer held by it in a particular manner, with respect to certain
matters, and that each party thereto agrees to be subject to certain
restrictions on the disposition of such party's Issuer shares. Neither the
filing of this Schedule 13D nor any of its contents shall be deemed to
constitute an admission by Alliance that it is the beneficial owner of any of
the shares of Issuer covered by the Consolidated Shareholders Agreement, other
than the shares held of record by Alliance, for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Act"), or for any other
purpose, and such beneficial ownership is expressly disclaimed. The reporting
person expressly disclaims (i) the existence of any group and (ii) beneficial
ownership with respect to any shares other than the shares owned of record by
such reporting person. See item 5. Based on the number of ordinary shares of
Issuer outstanding as of January 18, 2001(as represented by Issuer on January
28, 2001), the number of ordinary shares of Issuer covered by the Shareholders
Agreement represents approximately 64.1% of the outstanding Issuer ordinary
shares.
CUSIP No.M87915100 13D Page 3 of 11 Pages
________________________________________________________________________________
Item 1. Security and Issuer.
This is an amendment to a Form 13D which was filed in error on January 28, 2001
by Alliance Semiconductor Corporation ("Alliance"). The Form 13D was incorrectly
filed to Alliance's EDGAR Central Index Key ("CIK" - 0000913293) instead of
Tower's CIK (000092887). Additionally, a number of changes are included to this
amended Form 13D. Please disredard the filing by Alliance on January 28, 2001.
Feel free to contact the Alliance with any questions.
This statement on Schedule 13D relates to the ordinary shares, par value NIS
1.00 per share ("Issuer Shares"), of Tower Semiconductor Ltd., an Israeli
corporation. The principal executive offices of the Issuer are located at P.O.
Box 619, Migdal Haemek, Israel 23105.
________________________________________________________________________________
Item 2. Identity and Background.
(a)-(c), (f) The name of the person filing this statement is Alliance
Semiconductor Corporation, a Delaware corporation. The address of the principal
office and principal business of Alliance is 2527 Augustine Drive, Santa Clara,
CA 95054. Alliance is a leading worldwide supplier of high performance memory
and memory intensive logic products. Alliance's product lines include Static
Random Access Memory (SRAM), Dynamic Random Access Memory (DRAM), Flash memory
and embedded memory and logic products. Alliance designs, develops and markets
its products to the networking, telecommunication, instrumentation, consumer and
computing markets. Alliance manufactures its products through independent
manufacturing facilities, using advanced CMOS process technologies with line
widths as narrow as 0.18um. Set forth in Schedule A is the name and present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment is conducted,
of each of Alliance's directors and executive officers, as of the date hereof.
The information contained in Schedule A is incorporated herein in its entirety
by reference.
To the best knowledge of Alliance, set forth in Schedule B is the name and
present principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment is
conducted, of the directors and executive officers, as of the date hereof, of
each corporation which, along with Alliance, may be deemed to constitute a
"group" within the meaning of Section 13(d)(3) of the Act, although neither the
fact of this filing nor anything contained herein shall be deemed to be an
admission by SanDisk that a group exists. The information contained in Schedule
B is incorporated herein in its entirety by reference.
The Israel Corporation ("TIC") is an Israeli corporation and is one of Israel`s
major holding companies. TIC's principal executive office is located at
Millennium Tower, 23rd and 24th Floors, 23 Aranha Street, Tel-Aviv, 61070.
SanDisk Corporation, Inc. ("SanDisk") is a Delaware corporation that designs,
manufactures and markets flash memory storage products that are used in a wide
variety of electronic systems. SanDisk's principal office is located at 140
Caspian Court, Sunnyvale, CA 94089.
Macronix International Co., Ltd. ("Macronix) is a Taiwanese corporation that is
a provider of customer/application drive non-volatile memory requiring
state-of-the-art technology. Macronix's principal executive office is located at
6F, No. 196, Sec 2, Cheng Kuo North Road, Taipei, Taiwan, R.O.C.
(d) - (e) During the past five years, neither Alliance nor, to Alliance's
knowledge, TIC, SanDisk, Macronix, or any person named in Schedule A or B to
this Statement, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
such person was or is subject to a judgment, decree or final order enjoining
future violations of or prohibiting or mandating activity subject to Federal or
State securities laws or finding any violation with respect to such laws.
(f) Not applicable.
CUSIP No.M87915100 13D Page 4 of 11 Pages
________________________________________________________________________________
Item 3. Source and Amount of Funds or Other Consideration.
Effective January 26, 2001, Issuer satisfied the closing conditions of the share
purchase agreements (as described below) it entered into with each of Alliance,
TIC, SanDisk and Macronix (each a "Shareholder" and collectively the
"Shareholders"), pursuant to which the Shareholders purchased an aggregate of
3,629,873 Issuer Shares. On January 26, 2001, Alliance transferred $20 million
of its working capital to purchase 866,551 Issuer Shares and pre-paid wafer
credits in the amount of $8,786,827 from Issuer in a private transaction. On
July 4, 2000, SanDisk into a share purchase agreement with Tower to purchasee
866,551 Issuer Shares in a private transaction for an aggregate purchase price
of $20 million in cash. Macronix entered into a share purchase agreement with
Issuer to purchase 866,551 Issuer Shares in a private transaction for an
aggregate purchase price of $20 million. On December 12, 2000, TIC entered into
a share purchase agreement with Issuer to purchase 1,030,220 Issuer. Alliance
has no knowledge as to the source of funds used by SanDisk, TIC or Macronix to
purchase such shares.
________________________________________________________________________________
Item 4. Purpose of Transaction.
(a), (d) Alliance entered into two joinder sgreement ("Alliance / Tower Joinder
Agreement" and "Alliance / TIC Joinder Agreement"), both dated as of August 29,
2000, by and between Alliance, Issuer, and TIC, to to join a Purchase Agreement
between Issuer and SanDisk ("Purchase Agreement") dated July 4, 2000, for
Alliance to make a $20 million strategic investment in Issuer, and thereby
acquire 866,551 Issuer Shares. The Alliance / Tower Joinder Agreement and
Alliance / TIC Joinder Agreement also allowed Alliance to join Issuer and
SanDisk in the Additional Purchase Obligation Agreement ("Additional Purchase
Agreement") dated July 4, 2000, and Alliance entered into the Registration
Rights Agreement ("Registration Rights Agreement") dated January 18, 2001 by and
between Issuer, Alliance, SanDisk, TIC, Macronix and QuickLogic Corporation. On
January 18, 2001, Alliance entered into the Consolidated Shareholders Agreement
("Consolidated Shareholders Agreement") by and among Alliance, SanDisk, TIC and
Macronix, such Consolidated Agreement superseding the prior Shareholders
Agreement. The foregoing summary of the Purchase Agreement, Alliance / Tower
Joinder Agreement and Alliance / TIC Joinder Agreement are qualified in their
entirety by reference to the Purchase Agreement and Purchase Agreement included
as Exhibits 1, 5 and 6 to this Schedule 13D and incorporated herein in its
entirety by reference. To the best of Alliance's knowledge, SanDisk and Macronix
each entered into a share purchase agreement with Issuer in substantially the
same form and upon substantially the same terms as the Alliance Purchase
Agreement.
Under the terms of Section 2 of and upon execution of the The Alliance / Tower
Joinder Agreement and Alliance / TIC Joinder Agreement, Issuer will deliver to
Alliance warrants that must be exercised by Alliance within thirty (30) days of
the occurrence of the events specified in Section 5 thereof for the purchase, in
the aggregate, of up to 1,833,450 additional Issuer Shares at an exercise price
of $30, as adjusted pursuant to Section 4 thereof. As of the date that is sixty
(60) days from the date hereof, the number of Issuer Shares Alliance is
obligated to purchase under such warrants is 733,380 shares. The foregoing
summary of the Additional Purchase Agreement, Alliance / Tower Joinder Agreement
and Alliance / TIC Joinder Agreement are qualified in their entirety by
reference to the Additional Purchase Agreement included as Exhibit 2 this
Schedule 13D and incorporated herein in its entirety by reference. To the best
of Alliance's knowledge, TIC, SanDisk and Macronix each entered into a share
purchase agreement in substantially the same form and upon substantially the
same terms as the Alliance Additional Purchase Agreement.
Under the terms of the Registration Rights Agreement by and between Alliance,
TIC, SanDisk, Macronix and QuickLogic, each of Alliance, TIC, Sandisk, Macronix
and QuickLogic has demand and piggy-back registration rights with respect to
Issuer Shares purchased by it pursuant to the Stock Purchase Agreement and the
Additional Purchase Agreement. The foregoing summary of the Registration Rights
Agreement is qualified in its entirety by reference to the Registration Rights
Agreement included as Exhibit 3 to this Schedule 13D and incorporated herein in
its entirety by reference.
CUSIP No.M87915100 13D Page 5 of 11 Pages
Under the terms of the Consolidated Shareholders Agreement, the Shareholders
have agreed to vote (or cause to be voted) at general meetings of shareholders
all of their respective Issuer Shares, in the manner set forth in Section 2
thereof, (i) for the election to the board of directors of Issuer ("Board") of
(a) nominees designated by each Shareholder to the Board, (b) nominees
recommended by the Board, (c) a member of management of Issuer, and (d) such
other directors as agreed to by Shareholders; (ii) for the election of a TIC
nominee, who will be one of the nominees in clause (i)(a) above, as chairman of
the Board; (iii) for any other resolution which is necessary in order to
facilitate the elections specified in clauses (i) through (iii) of this
paragraph; and (iv) against the election of any other person to the Board. In
addition, pursuant to Section 3, and subject to certain exceptions as set forth
therein, each Shareholder has agreed to certain restrictions on its ability to
transfer Issuer Shares for three years, and has agreed to retain a minimum
number of Issuer Shares for a period of five years. Furthermore, pursuant to
Section 4, each Shareholder has a right of first offer with respect to any
Issuer Shares any Shareholder proposes to transfer. Moreover, subject to the
provisions of Section 3, the proposed transfer of any Shareholder of Issuer
Shares to certain specified parties is subject to a right of first refusal, as
provided in Section 5. Finally, to the extent the right of first refusal with
respect to the proposed transfer of Issuer Shares pursuant to Section 4 or
Section 5, as described above, is not fully exercised, each Shareholder shall
have a right of co-sale as provided in Section 6. The foregoing summary of the
Consolidated Shareholders Agreement is qualified in its entirety by reference to
the Consolidated Shareholders Agreement included as Exhibit 4 to this Schedule
13D and incorporated herein in its entirety by reference.
(j) To Alliance's knowledge, other than described above, none.
________________________________________________________________________________
Item 5. Interest in Securities of the Issuer.
(a)-(b) As a result of the Consolidated Shareholder Agreement, each Shareholder
may be deemed to be the beneficial owner of at least 12,486,311 Issuer Shares.
Such shares constitute approximately 64.1% of the outstanding shares of Issuer
Shares, based on the capitalization of the Issuer as of January 18, 2001 as
represented to Alliance by the Issuer and calculated in accordance with Rule
13d-3(d)(i). Such beneficial ownership is based on the ownership, as represented
to SanDisk by the Issuer, by each of Alliance, SanDisk and Macronix of 866,551
Issuer Shares, and of TIC of 6,698,380 Issuer Shares, and a mandatory obligation
of each of Alliance, SanDisk and Macronix to purchase an additional aggregate of
733,380 Issuer Shares, and of TIC to purchase an additional 1,108,138 Issuer
Shares within the next sixty (60) days of the date hereof.
Alliance may be deemed to have the shared power to vote and dispose of the
Issuer Shares held by it and the other Shareholders pursuant to the Consolidated
Shareholders Agreement with respect to those matters described in Item 4 above.
However, Alliance (i) is not entitled to any rights as a shareholder of Tower as
to the Issuer Shares covered by the Consolidated Shareholders Agreement and
which are not held of record by Alliance or subject to a mandatory obligation of
SanDisk to purchase such shares within sixty (60) days of the date hereof and
(ii) disclaims beneficial ownership of the Issuer Shares which are covered by
the Consolidated Shareholders Agreement and which are not held of record by
Alliance or subject to a mandatory obligation of Alliance to purchase such
shares.
To Alliance's knowledge, no shares of Issuer Shares are beneficially owned by
any of the persons named in Schedule A or Schedule B.
(c) Neither Alliance nor, to Alliance's knowledge, any person named in Schedule
A or Schedule B, has effected any transaction in the Issuer Shares during the
past 60 days.
(d) Not applicable.
(e) Not applicable.
CUSIP No.M87915100 13D Page 6 of 11 Pages
________________________________________________________________________________
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Other than the Purchase Agreement, Additional Purchase Agreement, the
Registration Rights Agreement, the Consolidated Shareholders Agreement, the
Shareholders Agreement, the Alliance / Tower Joinder Agreement, and the Alliance
/ TIC Joinder Agreement described above (and incorporated herein in its entirety
by reference), to the knowledge of Alliance, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any person with respect to
any securities of the Issuer, including but not limited to transfer or voting of
any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
________________________________________________________________________________
Item 7. Material to be Filed as Exhibits.
The following documents are filed as exhibits:
1. Share Purchase Agreement, dated as of July 4, 2000, by and between SanDisk
Corporation and Tower Semiconductor Ltd.
2. Additional Purchase Obligation Agreement, dated as of July 4, 2000, by and
between SanDisk Corporation and Tower Semiconductor Ltd.
3. Registration Rights Agreement, dated as of January 18, 2001, by and between
SanDisk Corporation, The Israel Corporation, Alliance Semiconductor Ltd.,
Macronix International Co., Ltd. and QuickLogic Corporation.
4. Consolidated Shareholders Agreement, dated as of January 18, 2001 by and
among SanDisk Corporation, The Israel Corporation, Alliance Semiconductor Ltd.
and Macronix International Co., Ltd.
5. Alliance / Tower Joinder Agreement, dated August 29, 2000, by and between
Alliance Semiconductor Corporation and Tower Semiconductor.
6. Alliance / TIC Joinder Agreement, dated August 29, 2000, by and between
Alliance Semiconductor Corporation and The Israel Corporation.
________________________________________________________________________________
CUSIP No.M87915100 13D Page 7 of 11 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
1/29/01
----------------------------------------
(Date)
/s/ Bradley A. Perkins
----------------------------------------
(Signature)
Bradley A. Perkins
Vice President, General Counsel
and Secretary
----------------------------------------
(Name/Title)
Attention. Intentional misstatements or omissions of fact constitute federal
criminal violations (see 18 U.S.C. 1001).
CUSIP No.M87915100 13D Page 8 of 11 Pages
Schedule A
----------
DIRECTORS AND EXECUTIVE OFFICERS OF
SANDISK CORPORATION
Present Principal Occupation
Including Name of Employer (if other than SanDisk Corporation)
Address of Employer
Executive Officers of Alliance Semiconductor Corporation:
- --------------------------------------------------------
(name) (title) (address)
N. Damodar Reddy Chairman, President and c/o Alliance Semiconductor
Chief Executive Officer 2575 Augustine Drive
Director Santa Clara, CA 95054
C.N. Reddy Executive Vice President, c/o Alliance Semiconductor
Investments 2575 Augustine Drive
Director Santa Clara, CA 95054
David Eichler Vice President, Finance and c/o Alliance Semiconductor
Administration and 2575 Augustine Drive
Chief Financial Officer Santa Clara, CA 95054
Bradley Perkins Vice President and General Counsel c/o Alliance Semiconductor
Secreatry 2575 Augustine Drive
Santa Clara, CA 95054
Ritu Shrivastava Vice President, Technology c/o Alliance Semiconductor
Development 2575 Augustine Drive
Santa Clara, CA 95054
Outside Directors of Alliance Semiconductor Corporation:
- --------------------------------------------------------
John B. Minnis President, Milpitas Materials Company, CA
Sanford L. Kane President, Kane Concepts Incorporated, CA
CUSIP No.M87915100 13D Page 9 of 11 Pages
Schedule B
----------
DIRECTORS AND EXECUTIVE OFFICERS
Present Principal Occupation
Including Name of Employer
Address of Employer
Executive Officers of SanDisk Corporation:
- ------------------------------------------
(name) (title) (address)
Dr. Eli Harari President, Chief Executive Officer c/o SanDisk Corporation
and Director 140 Caspian Court
Sunnyvale, CA 94089
Frank Calderoni Chief Financial Officer, c/o SanDisk Corporation
Senior Vice President, Finance 140 Caspian Court
and Administration Sunnyvale, CA 94089
Ralph Hudson Senior Vice President, c/o SanDisk Corporation
Worldwide Operations Sunnyvale, CA 94089
Sanjay Mehrotra Senior Vice President, c/o SanDisk Corporation
Engineering 140 Caspian Court
Sunnyvale, CA 94089
Nelson Chan Senior Vice President, c/o SanDisk Corporation
Marketing 140 Caspian Court
Sunnyvale, CA 94089
Jocelyn Scarborough Vice President, c/o SanDisk Corporation
Human Resources 140 Caspian Court
Sunnyvale, CA 94089
Outside Directors of SanDisk Corporation:
- -----------------------------------------
Irwin Federman General Partner, U.S. Venture Partners, Menlo Park, CA
William V. Campbell Entrepreneur, Mountain View, CA
Catherine P. Lego General Partner, The Photonics Fund, Woodside, CA
Dr. James D. Meindl Professor, Georgia Institute of Technology in Atlanta, GA
Alan F. Shugart President, Chairman and CEO, Al Shugart International,
Santa, Cruz, CA
CUSIP No.M87915100 13D Page 10 of 11 Pages
Executive Officers of The Israel Corporation Ltd.:
- --------------------------------------------------
(name) (title) (address)
Yossi Rosen President and Chief Executive c/o Israel Corporation Ltd.
Officer Millenium Tower
23 Aranha Street
Tel Aviv, Israel 61070
Udi Hillman Executive Vice President and c/o Israel Corporation Ltd.
Chief Financial Officer Millenium Tower
23 Aranha Street
Tel Aviv, Israel 61070
Noga Yatziv, Adv. Company Secretary c/o Israel Corporation Ltd.
Millenium Tower
23 Aranha Street
Tel Aviv, Israel 61070
Outside Directors of The Israel Corporation Ltd.:
- -------------------------------------------------
Idan Ofer Entrepreneur, Israel
Ehud Angel Managing Director. Ofer (Ships Holdings) Ltd., Israel
Prof. Avishay Braverman President, Ben-Gurion University of the Negev, Israel
Dan Goldstein CEO and Chairman of the Board, Formula Systems (1985)
Ltd., Israel
Zvi Itskovitch First Executive Vice President, Member of Management
and Head of Domestic Subsidiaries Division, Bank
Leumi le-Israel B.M., Israel
Irit Izakson Entrepreneur, Israel
Ari Levy Chief Financial Officer, Ofer Brothers, Israel
Amnon Lion Managing Director, Zodiac Maritime Agencies Ltd.,
Israel
Doron Ofer Managing Director, Ofer Brothers Properties (1975)
Ltd., Israel
Zvi Zamir Entrepreneur, Israel
Executive Officers of Macronix International Co., Ltd.:
- -------------------------------------------------------
(name) (title) (address)
Miin Wu President and Chief Executive c/o Macronix International
Officer 6F, No. 196, Sec 2,
Cheng Kuo North Road, Taipei,
Taiwan, R.O.C.
Outside Directors of Macronix International Co., Ltd.:
- ------------------------------------------------------
No Information
CUSIP No.M87915100 13D Page 11 of 11 Pages
EXHIBIT INDEX
Exhibit
Number Description of Document
- ------- -----------------------
1. Share Purchase Agreement, dated as of July 4, 2000, by and
between SanDisk Corporation and Tower Semiconductor Ltd.
2. Additional Purchase Obligation Agreement, dated as of July 4,
2000, by and between SanDisk Corporation and Tower Semiconductor
Ltd.
3. Registration Rights Agreement, dated as of January 18, 2001, by
and between SanDisk Corporation, The Israel Corporation, Alliance
Semiconductor Ltd., Macronix International Co., Ltd. and
QuickLogic Corporation.
4. Consolidated Shareholders Agreement, dated as of January 18, 2001
by and among SanDisk Corporation, The Israel Corporation,
Alliance Semiconductor Ltd. and Macronix International Co., Ltd.
5. Alliance / Tower Joiner Agreement, dated August 29, 2000, by
and between Alliance Semiconductor Corporation and Tower
Semiconductor.
5. Alliance / TIC Joinder Agreement, dated August 29, 2000, by and
between Alliance Semiconductor Corporation and The Israel
Corporation.
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement") is made as of July 4, 2000, by
SanDisk Corporation, a Delaware corporation ("Buyer"), and Tower Semiconductor
Ltd., an Israeli corporation (the "Company").
RECITALS
The Company desires to sell, and Buyer desires to purchase, an interest in
the Company through the acquisition of 866,551 ordinary shares, par value
NIS1.00 each (the "Shares") of the Company and through the issuance and delivery
of Addtional Purchase Obligations for the purchase by Buyer of additional
Ordinary Shares of the Company, on the terms and subject to the conditions set
forth in this Agreement and in the Addtional Purchase Obligation Agreement in
the form of Exhibit B hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Additional Financings" - as defined in Section 3.5.
"Additional Financing Plan" - a detailed written plan, approved by the
Board and detailing, among other things, the significant financial terms
and timetable under which the Company will obtain the financings listed in
Section 7.6 hereto, all as set forth in Section 10 to the Business Plan.
"Ancillary Agreements" - as defined in Section 3.2.4.
"Applicable Contract"- any Contract (a) under which the Company or any
Subsidiary has or may acquire any rights, (b) under which the Company or
any Subsidiary has or may become subject to any obligation or liability,
or (c) by which the Company or any Subsidiary or any of the assets owned
or used by them is or may become bound.
"Assets" - as defined in Section 3.6.
"Balance Sheet"- as defined in Section 3.4.2.
"Business Plan" means the Business Plan, dated July 4, 2000, of the
Company with respect to the proposed construction, deployment and
operation by the Company of Fab 2.
"Buyer"- as defined in the first paragraph of this Agreement.
"Closing"- as defined in Section 2.3.
"Closing Date"- the date and time as of which the Closing actually takes
place.
"Company"- as defined in the first paragraph of this Agreement.
"Consent"- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"- all of the transactions contemplated by this
Agreement, the Transaction Documents and the Ancillary Agreements.
"Contract"- any agreement, contract, obligation, promise, or undertaking
whether oral or written that is legally binding.
"Damages"- as defined in Section 10.2.
"Encumbrance"- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income, or exercise of any other
attribute of ownership.
"Escrow Agreement"- as defined in Section 2.4.
"Escrow Agent"- as defined in the Escrow Agreement.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended,
and any rules or regulations issued pursuant to that Act or any successor
law.
"Excluded Securities" means Ordinary Shares or options to purchase
Ordinary Shares issued to bona fide employees, directors or consultants of
the Company or any Subsidiary thereof.
"Fab 2" - The Company's new Fab project to be constructed in Migdal Haemek
in Israel, all as further set forth in the Business Plan.
"Facilities"- any real property, leaseholds, or other interests currently
owned or operated by the Company and any buildings, plants, structures, or
equipment currently owned or operated by the Company.
"GAAP"- generally accepted Israel accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
"Governmental Authorization"- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
"Governmental Body"- any U.S. or Israeli federal, state, local, municipal
or other government, governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official or
entity and any court or other tribunal), or body exercising or entitled to
exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
"Intellectual Property Assets" - as defined in Section 3.20.
"Interim Balance Sheet"- as defined in Section 3.4.2.
"Investment Center" - the Investment Center of the Ministry of Trade and
Commerce of the Israeli Government.
"Knowledge" or "knowledge"- a person will be deemed to have "Knowledge" or
"knowledge" of a particular fact or other matter if any individual who is
serving as a Named Director or Officer has, or at any time had, knowledge
of such fact or other matter.
"Legal Requirement"- any U.S. or Israeli federal, state, local, municipal
or administrative or other order, constitution, law, ordinance, principle
of common law, regulation, statute, or treaty.
"Named Officers and Directors"- as defined in Section 3.3.2.
"OCS" - as defined in Section 3.21.
"Order"- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"- an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day
operations of such Person; and
(c) Such action is similar in nature and magnitude to actions
customarily taken in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business
as such Person.
"Ordinary Shares" - the ordinary shares of the Company, par value NIS1.00
per share.
"Organizational Documents"- (a) the memorandum of association, articles of
association, certificate of incorporation and/or the bylaws of a
corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership
agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and
(e) any amendment to any of the foregoing.
"Person"- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, labor union, or
other entity or Governmental Body.
"Proceeding"- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Representative"- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of
such Person, including legal counsel, accountants, and financial advisors.
"Schedule" means a schedule comprising part of the disclosure schedule
delivered by the Company to Buyer concurrently with the execution and
delivery of this Agreement.
"Securities Act"- the U.S. Securities Act of 1933 as amended, and
regulations and rules issued pursuant to that Act or any successor law.
"Shares"- as defined in the Recitals of this Agreement.
"Steering Committee" - a committee to be formed immediately upon the
signing of this Agreement and dissolved upon the Closing and comprised of
three members including one representative of each of the Buyer, TIC and
the Company, none of whom needs to be a member of the Board. The Steering
Committee shall oversee the development, assessment and implementation,
and, if applicable, any modification of the Business Plan as specified in
Sections 5.6.5 of this Agreement. The Steering Committee shall not be
deemed to be a committee of the Board and its members shall not have a
fiduciary duty to the Company. The Steering Committee shall consider, in
making decisions pursuant to Sections 5.6.5 and 7.3 hereunder, (a) the
construction schedule of Fab 2 as set forth in the Business Plan and any
changes thereto, (b) the Additional Financing Plan as set forth in the
Business Plan and any failure to comply with the schedule for such
financings or changes to the Additional Financing Plan, (c) any
significant increase in the cost of Fab 2 beyond that set forth in the
Business Plan and (d) the production capacity schedule of Fab 2 as set
forth in the Business Plan and any changes thereto.
"Subsidiary"- any corporation or other Person of which securities or other
interests having the power to elect a majority of that corporation's or
other Person's board of directors or similar governing body, or otherwise
having the power to direct the business and policies of that corporation
or other Person (other than securities or other interests having such
power only upon the happening of a contingency that has not occurred) are
held by the Company or one or more of its Subsidiaries.
"Tax Return"- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any
Legal Requirement relating to any Tax.
"TIC"- The Israel Corporation Ltd.
"Threatened"- a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if either (a) any demand or statement
has been made in writing or any notice has been given in writing or any
other event has occurred or any other circumstance exists, that actually
leads any Named Officer and Director to believe that such a claim, will be
filed or otherwise pursued in the future or (b) any demand or statement
has been made orally or any notice has been given orally to the effect
that such a claim, Proceeding, dispute, action or other matter will be
asserted, commenced, taken or otherwise pursued in the future.
"Transaction Documents" - collectively, the Foundry Agreement, the
Addtional Purchase Obligation Agreement, the Escrow Agreement (all as
defined in Section 2.4), the Shareholders Agreement and the Registration
Rights Agreement (as defined in Section 2.5.1.5.).
"Wafer Partner" - a wafer manufacturer that either invests in the equity
of the Company and enters into an agreement with the Company providing for
a wafer order right or that enters into a wafer manufacturing agreement
with the Company on a "take or pay" basis or on a "pre-payment" basis, in
each case in accordance with the provisions of Sections 7.6(ii) and 7.7
hereof.
"Additional Purchase Obligations" - Conditional obligations to purchase
Ordinary Shares of the Company issued under the Additional Purchase
Obligation Agreement.
Additional Defined Terms
6K Reports Section Material Adverse Section
3.4.1 Effect 3.1.1
Additional Incentive Section Offered Securities Section
Plans 1.14 11.8.1
Additional Purchase Patents Section
Obligation Agreement Section 3.20.1
2.4
Additional Purchase Project Committee Section
Obligation Shares Section 11.4
2.4
Additional Wafer Pro Rata Share Section
Partner Financing Section 11.8.1
Date 7.6
Annual Report Section Purchase Price Section
3.4.1 2.2
Articles Section2.5Registration Right Section
Agreement 2.5.1.5
Board Section Rights in Mask Section
2.4 Works 3.10.1
Copyrights Section SEC Section
3.20.1 3.4.1
Debt Financing Term Section Shareholders Section
Sheet 5.6.4 Agreement 2.5.1.5
Environmental Study Section SEC Documents Section
3.5.1 3.4.1
Executed Steering Committee Section
Transaction Section 5.10
Documents 3.2.1
Grants Section Taxes
3.2.1
Indemnified Persons Section Toshiba Agreement Section
10.2 3.2.3
Foundry Agreement Section Wafer Commitments Section
2.4 7.7
Marks Section3.2Wafer Partner Section
Differential 7.6
2. SALE AND TRANSFER OF SHARES; PURCHASE PRICE; CLOSINGS
2.1. DELIVERY. Subject to the terms and conditions of this Agreement, at
the Closing, the Company shall issue to the Buyer the Shares,
validly authorized, duly issued, fully paid and nonassesable
entitled to all rights and privileges assigned to such Shares in
this Agreement and in the Articles and free of any Encumbrances
(other than arising solely by or through actions of Buyer), in
consideration for the release of the Purchase Price (as defined
below) from the Escrow Agent to the Company.
2.2. PURCHASE PRICE. The per share purchase price will be $23.08 (all
references herein to "$" are to United States dollars) representing
an aggregate purchase price (the "Purchase Price") for the Shares of
$20,000,000. Within 14 days of the execution of this Agreement, the
Purchase Price will be deposited in escrow pursuant to the terms and
conditions of the Escrow Agreement with an escrow agent to be
appointed by the parties. At the Closing, subject to the fulfillment
or waiver of all closing conditions hereto, the Purchase Price will
be released from escrow to the Company all in accordance with the
terms and conditions of this Agreement and the Escrow Agreement and
all interest accrued with respect to the Purchase Price during the
escrow period will be released to the Company.
2.3. CLOSING. The closing provided for in this Agreement (the " Closing")
will take place at the offices of Meitar, Liquornik, Geva & Co. at
16 Abba Hillel Silver Road, Ramat Gan, 52506, Israel at 10:00 a.m.
(local time) on the date that is seven days following satisfaction
of all the conditions specified in Sections 7 and 8, unless the
parties otherwise agree, provided that the Closing may not, in any
event, take place after January 31, 2001, unless the parties
otherwise agree. In the event that the Closing fails to take place
by January 31, 2001, or such later date as the parties may agree, or
otherwise terminates pursuant to section 9.1, then all interest
accrued with respect to the Purchase Price and the Purchase Price
shall be retained by Buyer.
2.4. OTHER AGREEMENTS; COMPANY'S RESOLUTIONS. Concurrently with the
execution of this Agreement, (a) the parties hereto are executing
and entering into the Foundry Agreement in the form of Exhibit A
hereto (the "Foundry Agreement") and the Addtional Purchase
Obligation Agreement in the form of Exhibit B hereto (the "Addtional
Purchase Obligation Agreement"), each of which shall provide that
they shall only be effective upon the Closing, (b) the Company is
delivering to the Buyer certified resolutions of the Company's board
of directors (the "Board") authorizing and approving the execution,
delivery and performance of the Transaction Documents and the
consummation of the Contemplated Transactions, including without
limitation, the issuance of the Shares to the Buyer and all shares
issuable upon exercise of the Addtional Purchase Obligations under
the Addtional Purchase Obligation Agreement (the "Addtional Purchase
Obligation Shares") (subject, in relation to the issuance of the
Shares and the Addtional Purchase Obligation Shares, to Company
shareholder approval pursuant to a general meeting of the Company)
and (c) the Company is delivering to the Buyer a certificate dated
the date hereof signed by the co-Chief Executive Officer of the
Company identified in Schedule 7.15 to the effect set forth in
Section 7.15. The parties shall enter into the Escrow Agreement in
the form of Exhibit C hereto (the "Escrow Agreement") within 14 days
of the date hereof. Buyer and TIC will execute and enter into the
Shareholders Agreement in the form of Exhibit D hereto (the
"Shareholders Agreement") within 14 days of the date hereof.
2.5. CLOSING OBLIGATIONS. At the Closing:
-------------------
2.5.1. The Company will deliver to Buyer:
2.5.1.1. Certified copies of resolutions of the Company's
shareholders relating to, among other things, an
increase in the Company's registered share capital and
the issuance of the Shares and the Addtional Purchase
Obligation Shares, and the Board authorizing and
approving the Ancillary Agreements and the
transactions contemplated therein;
2.5.1.2. Certified copies of the Company's Articles of Association (the
"Articles") as amended through the Closing Date;
2.5.1.3. A certificate duly executed by two executive officers of the
Company in the form set forth in Schedule 2.5.1.3,
dated as of the date of the Closing;
2.5.1.4. The opinion of Yigal Arnon & Co., counsel to the Company, in the
form reasonably satisfactory to Buyer and its
counsel to be attached hereto as Schedule 2.5.1.4,
dated as of the date of the Closing;
2.5.1.5. Executed copies of the Registration Rights Agreement
substantially in the form of Exhibit E hereto (the
"Registration Rights Agreement"), which shall provide
an equal number of Demand Rights (as defined in such
agreement) to Buyer and TIC.
2.5.1.6. Validly executed certificates representing the Shares,
issued in the name of the Buyer and a certificate of
the secretary of the Company confirming that the
Shares were registered in the share register of the
Company in the name of Buyer;
2.5.1.7. Copies of documents evidencing all Consents and approvals required
under Section 7.3 hereof;
2.5.1.8. Copies of all the Ancillary Agreements duly executed and delivered
and in accordance with Section 7 hereof;
2.5.1.9. The written consent of the OCS and the Investment Center to the
execution of this Agreement and the issuance of the
Shares to the Buyer.
2.5.1.10. The certificate required to be delivered under Section 7.15 hereof.
2.5.2. Buyer will deliver to the Company:
2.5.2.1. A copy of a letter from Buyer to the Escrow Agent irrevocably
authorizing the release of the Purchase Price to the
account of the Company pursuant to the terms of the
Escrow Agreement;
2.5.2.2. A certificate duly executed by two executive officers
of Buyer in the form set forth in Schedule 2.5.2.2,
dated as of the date of the Closing.
2.5.2.3. Executed copies of the Shareholders Agreement and the Registration
Rights Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as of the date hereof
and as of the Closing and as otherwise provided in the Addtional Purchase
Obligation Agreement as follows:
3.1. ORGANIZATION AND GOOD STANDING
3.1.1. The Company and each Subsidiary is a corporation duly organized,
validly existing, and in good standing under the laws of
its jurisdiction of incorporation, with full corporate
power and authority to conduct its business as it is now
being conducted and as currently approved by the Board to
be conducted in the future and to own or use its properties
and assets. The Company has all requisite corporate power
to perform all its obligations under Applicable Contracts
including, but not limited to, the Ancillary Agreements,
subject, with respect to the issuance of the Shares and the
Addtional Purchase Obligation Shares, to receipt of the
shareholder resolutions referred to in Section 2.5.1.1. The
Company and each Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used
by it, or the nature of the activities conducted by it or
proposed to be conducted by it, requires such
qualification, unless such non-qualifications would not
have a material adverse affect on the business, financial
conditions, assets, operations and prospects of the
Company and its Subsidiaries taken as a whole (a "Material
Adverse Effect"). Schedule 3.1 contains a complete and
accurate list for the Company and each Subsidiary of its
name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and
its capitalization, including (i) in connection with each
Subsidiary, the identity of each shareholder and the number
of shares held by such shareholder, and (ii) in connection
with the Company, the identity of each shareholder who to
the knowledge of the Company holds more than 5% of the
issued and outstanding share capital of the Company and the
number of shares of the Company held by each such
shareholders. Also enclosed in Schedule 3.1 is a copy of
the list of shareholders maintained by the Company's
transfer agent as of a date within 5 days prior to the date
hereof.
3.1.2. The Company has delivered to Buyer copies of (i) the
Organizational Documents of the Company and each Subsidiary,
as currently in effect, and (ii) minutes of all meetings of
the directors and shareholders of the Company and each
Subsidiary held since January 1, 1995 and all resolutions
passed by the directors or shareholders since January 1,
1995.
3.2. AUTHORITY; NO CONFLICT; CONSENTS AND APPROVALS
3.2.1. Each of this Agreement, the Addtional Purchase Obligation
Agreement, the Addtional Purchase Obligations, the Escrow
Agreement and the Foundry Agreement (the "Executed
Transaction Documents") has been duly authorized, executed
and delivered by the Company (subject, with respect to the
increase in the Company's registered share capital and
issuance of the Shares and the Addtional Purchase
Obligation Shares, to receipt of shareholder approval by
Closing) and, assuming the due execution and delivery
hereof and thereof by Buyer, constitutes the legal, valid,
and binding obligation of the Company, enforceable against
the Company in accordance with its terms. Upon the
execution and delivery by the Company of the Transaction
Documents and the other Ancillary Agreements (where
applicable), and assuming the due execution and delivery
thereof by the other parties thereto, the Transaction
Documents and the other Ancillary Agreements (where
applicable) will constitute the legal, valid, and binding
obligations of the Company, enforceable against the Company
in accordance with their respective terms. The Company has
the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and the
Transaction Documents and the other Ancillary Agreements
(where applicable) and to perform its obligations under
this Agreement, the Transaction Documents and the other
Ancillary Agreements (where applicable) (subject, with
respect to the issuance of the Shares and the Addtional
Purchase Obligation Shares, to receipt of Company
shareholder approval by Closing) and has taken all
corporate action necessary to consummate the transactions
contemplated hereby and thereby and to perform its
obligations hereunder and thereunder.
3.2.2. Except as set forth in Schedule 3.2, neither the execution
and delivery of this Agreement, any of the Transaction
Documents or any of the other Ancillary Documents nor the
consummation or performance of any of the foregoing is or
will, directly or indirectly (with or without notice or lapse
of time):
3.2.2.1. contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of the
Company or any Subsidiary, or (B) any resolution
adopted by the board of directors or the
shareholders of the Company or any Subsidiary; or
3.2.2.2. contravene, conflict with, or result in a violation of, or give any
Governmental Body or other Person the right to
challenge or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to
which the Company or any Subsidiary, or any of the
assets owned or used by the Company or any
Subsidiary, may be subject, the breach of or default
under which could have a Material Adverse Effect or
could materially adversely affect the consummation
of the Contemplated Transactions; or
3.2.2.3. contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel,
terminate or modify any Governmental Authorization
that is held by the Company or any Subsidiary or
that otherwise relates to the business of, or any of
the assets owned or used by, the Company or any
Subsidiary, the effect of which would have a
Material Adverse Effect or materially adversely
affect the consummation of the Contemplated
Transactions; or
3.2.2.4. contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to
declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Applicable
Contract, the effect of which could have a Material
Adverse Effect or materially adversely affect the
consummation of the Contemplated Transactions; or
3.2.2.5. result in the imposition or creation of any
Encumbrance upon or with respect to any of the Asset
owned or used by the Company or any Subsidiary, the
effect of which could have a Material Adverse Effect
or materially adversely affect the consummation of the
Contemplated Transactions.
3.2.3. Except as set forth in Schedule 3.2.3, no notice to, filing with or
Consent from any Person or Governmental Body is or will be
required to be made or obtained in connection with the
execution and delivery of (i) this Agreement, (ii) the
Transaction Documents, (iii) the Technology License
Agreement, effective April 7, 2000 between the Company and
Toshiba Corporation (the "Toshiba Agreement") and (iv) the
Additional Incentive Plans (as defined in Section 7.14) or
the consummation or performance of any of the transactions
contemplated hereby or thereby.
3.2.4. To the best knowledge of the Company and based on the Company's
investigation as of the date hereof, except as set forth in
Section 5.2 to the Business Plan and Schedule 3.2.3, no
notice to, filing with or Consent from any Person or
Governmental Body is or will be required to be made or
obtained in connection with (a) the construction,
deployment and operation of Fab 2 in accordance with the
Business Plan, (b) the implementation of the Additional
Financing Plan (as defined), provided that the
representation made in this clause (b) is given to the
actual Knowledge of the Company on the date hereof in
respect of equity financings to be provided by Wafer
Partners, and (c) the execution, delivery and performance
of the agreements entered into or to be entered into by the
Company in connection therewith (such agreements, together
with the agreements referred to in clauses (i)-(iv) of
Section 3.2.3, the "Ancillary Agreements"), other than, in
respect of each of the foregoing clauses, notices, filings
or Consents, the failure of which to be made or obtained
would not, individually or in the aggregate have a material
adverse affect on the construction and operation of Fab 2.
3.3. CAPITALIZATION; ISSUANCE OF SHARES; OFFICERS AND DIRECTORS.
----------------------------------------------------------
3.3.1. The authorized share capital of the Company, immediately prior to
the Closing, including the proposed increase in share
capital referred to in Section 2.4, will consist of
70,000,000 Ordinary Shares, of which 12,207,007 shares are
issued and outstanding and 1,784,804 are reserved for
issuance of outstanding options to employees, officers and
directors and 1,615,500 are reserved for future grants of
options to employees, officers and directors. All of the
outstanding Ordinary Shares have been duly authorized and
validly issued and are fully paid and nonassessable.
Schedule 3.3 sets forth the list of the Company's
shareholders of record as maintained by the transfer agent
and a list of all the options outstanding, the vesting
schedules of such options and the exercise prices thereof.
Except as set forth in Schedule 3.3, there are no Contracts
relating to the issuance, or to the Knowledge of the
Company, sale, transfer, or Encumbrance (other than arising
solely by or through actions of Buyer) of any equity
securities or securities convertible or exchangeable into
equity securities of the Company. When the Shares shall
have been issued and delivered to Buyer as part of the
Closing, such Shares will: (i) have been duly authorized
for issuance by the Company's Board, (ii) upon delivery of
the consideration therefor in accordance with the terms of
this Agreement and the Escrow Agreement, be duly and
validly issued, fully paid and nonassessable and (iii) be
free and clear of any Encumbrances, and not the subject of
any preemptive or other participation rights.
3.3.2. The Company's and its Subsidiaries current officers and
directors are those persons whose names are set forth in
Schedule 3.3.2 (the "Named Officers and Directors").
3.3.3. Neither the Company nor any Subsidiary has any agreement,
obligation or commitment with respect to the election of
any Person to the Company's Board and/or any Subsidiary's
board of directors and to the actual knowledge of the
Company, there is no voting agreement or other arrangement
among the Company's shareholders or the Subsidiaries'
shareholders, and there are no agreements or arrangements
between any Person which affects or relates to the voting
or giving written consents with respect to the Company's or
any Subsidiaries' securities including with respect to the
nomination of a director and/or officer of the Company
and/or the Subsidiary.
3.3.4. There are no agreements, commitments and understandings,
whether written or oral, with respect to any compensation to
be provided by the Company and/or the Subsidiary to any of
the Named Officers and Directors, and, to the best knowledge
of the Company, to be provided by any third party to any of
the Named Officers and Directors, except as set forth in
Schedule 3.3.4.
3.3.5. Except as set forth in Schedule 3.3.5 (a) and in the Registration
Rights Agreement to be entered into hereunder, the Company
is not under any obligation to register for trading on any
securities exchange any of its currently outstanding
securities or any of its securities which may hereafter be
issued. Since its incorporation there has been no
declaration or payment by the Company of dividends, or any
distribution by the Company of any assets of any kind to
any of its shareholders in redemption of or as the purchase
price for any of the Company's securities except as set
forth in Schedule 3.3.5 (b).
3.4. SEC DOCUMENTS; FINANCIAL STATEMENTS
3.4.1. The Company has furnished to Buyer copies of the Company's Annual
Report on Form 20-F for the year ended December 31, 1999
(the "Annual Report") as filed with the U.S. Securities and
Exchange Commission ("SEC") on March 20, 2000. The Company
represents and warrants to Buyer that: (i) the Annual
Report has been duly filed with the SEC, and when filed was
in compliance in all material respects with the
requirements of the Exchange Act and the rules and
regulations of the SEC applicable to such Annual Report;
and (ii) the Annual Report was complete and correct in all
material respects as of its date and, as of its date, did
not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. The Company has provided the Buyer with a copy
of each document submitted to the SEC on Form 6-K since
January 1, 1999 (the "6K Reports" and together with the
Annual Report, the "SEC Documents"). The Company represents
and warrants to Buyer that: (i) the 6K Reports have been
duly submitted to the SEC, and when submitted were in
compliance in all material respects with the requirements
of the Exchange Act and the rules and regulations of the
SEC applicable to such 6K Reports; and (ii) the 6K Reports
were complete and correct in all material respects as of
their respective dates and, as of such dates, did not
contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. The Company represents that it has filed all
the reports that the Company was required to file with the
SEC since January 1, 1998, according to the requirements of
the Exchange Act.
3.4.2. The Company has delivered to Buyer: (a) audited consolidated
balance sheets of the Company as at December 31 in each of
the years 1998 through 1999 (the December 31, 1999 balance
sheet being hereinafter referred to as the "Balance Sheet")
and the related audited consolidated statements of income,
changes in shareholders' equity, and cash flow for each of
the fiscal years then ended, together with the report
thereon of Brightman Almagor, independent certified public
accountants, and (b) an unaudited consolidated balance
sheet of the Company as at March 31, 2000 (the "Interim
Balance Sheet") and the related unaudited consolidated
statements of income, changes in shareholders' equity, and
cash flow for the three months then ended, including in
each case the notes thereto. Such financial statements and
notes fairly present the financial condition and the
results of operations, changes in shareholders' equity, and
cash flow of the Company as at the respective dates of and
for the periods referred to in such financial statements,
all in accordance with GAAP, subject, in the case of
interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or
in the aggregate, be materially adverse); the financial
statements referred to in this Section 3.4.2 reflect the
consistent application of such accounting principles
throughout the periods involved.
3.5. BUSINESS PLAN; ADDITIONAL FINANCING PLAN
True and correct copies of the Business Plan and of the
Environmental Study submitted to the District Zoning Authority (the
"Environmental Study") are attached hereto as Schedule 3.5. The
Company has conducted reasonable research and surveys in preparing
the Business Plan and the Environmental Study and consulted with
reputable experts in the field as is reasonably appropriate in these
circumstances. The Company believes that the opinions, assumptions
and timetables contained in the Business Plan (including both the
alternate case assumptions and the base assumptions, as defined
therein, and without giving effect to any risk factors included
therein) and in the Environmental Study are reasonable. The
financial, business and other projections set out in the Business
Plan (including both the alternate case assumptions and the base
assumptions, as defined therein, and without giving effect to any
risk factors included therein) have been reasonably prepared with
due diligence, care and consideration. To the Company's knowledge,
each of the Business Plan and the Environmental Study is complete
and correct in all material respects and does not contain any untrue
statement of material fact. To the best of the Company's knowledge,
after conducting reasonable research and surveys as is reasonably
appropriate in these circumstances and after consulting with
reputable experts in the field, the financings contemplated in
Section 7.6 hereto (the "Additional Financings") together with the
Purchase Price and the proceeds to be paid to the Company upon
exercise of the Addtional Purchase Obligations, will be sufficient
to complete the construction, deployment and operation of Fab 2 in
accordance with the Business Plan according to the base scenario
under which management of the Company currently contemplates
implementing the Business Plan. There are no other facts or matters
of which the Company is aware which could render any such opinions,
assumptions, timetables or projections materially misleading;
provided, however, that no assurance can be or is given that any of
the forecast projections will be attained or that the assumptions
contained therein will not change.
3.6. TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth in Schedule
3.6, the Company and its Subsidiaries have good and marketable
title, free and clear of all Encumbrances (other than Encumbrances
for current Taxes not yet due and minor Encumbrances, if any, which
in the aggregate do not materially detract from the value of the
Assets (as hereinafter defined) or materially impair the conduct of
business of the Company as currently conducted and as currently
approved by the Board to be conducted in the future), to all of the
assets, real property, interests in real property, rights,
franchises, patents, trademarks, copyrights, mask works, trademarks,
trade names, licenses and properties tangible or intangible, real or
personal, wherever located which are used in the conduct of the
business conducted and as currently approved by the Board to be
conducted in the future by the Company (the "Assets"), other than
property that is leased or licensed. Except as set forth in Schedule
3.6, the Company has valid and enforceable leases or licenses, as
the case may be, with respect to the Assets consisting of property
that is leased or licensed, under which there exists no default,
event of default or event which, with notice or lapse of time or
both, would constitute a default, except for such defaults which
could not have a Material Adverse Effect. Except as set forth on
Schedule 3.6, with respect to real property owned or leased by the
Company or any Subsidiary, there are not any rights of way, building
use restrictions exceptions, variances, reservations, or limitations
of any nature which materially impair or could reasonably be
expected to materially impair the business of the Company as
conducted and as currently approved by the Board to be conducted in
the future, other than such which would not have a Material Adverse
Effect. All buildings, plants, and structures owned or leased by the
Company or any Subsidiary do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person in
a material manner.
3.7. CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants,
structures, and equipment of the Company and its Subsidiaries are
structurally sound, are in good operating condition and repair, and
are adequate for the uses to which they are being put, and none of
such buildings, plants, structures, or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. Except as set forth
in Schedule 3.7, the building, plants, structures and equipment of
the Company and its Subsidiaries are sufficient for the continued
conduct of the Company's businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8. CUSTOMERS AND SUPPLIERS. Since January 1, 2000, there has not been any
------------------------
adverse change in the business relationship of the Company with
any material customer or material supplier of the Company.
3.9. INVENTORY. Inventories of raw materials, work in progress and finished
---------
goods of the Company and its Subsidiaries are in good condition
and of a quality useable and saleable in the Ordinary Course of
Business or have had appropriate financial reserves established.
3.10. NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule 3.10,
neither the Company nor any Subsidiary has any liabilities or
obligations of any nature (whether absolute, accrued, contingent or
otherwise) except for liabilities or obligations reflected or
reserved against in the Balance Sheet or the Interim Balance Sheet
and current liabilities incurred in the Ordinary Course of Business
since the respective dates thereof.
3.11. TAXES
3.11.1. The Company and each Subsidiary has filed or caused to be filed (on
a timely basis since January 1, 1994) all Tax Returns that
are or were required to be filed by or with respect to it,
pursuant to applicable Legal Requirements. The Company and
each Subsidiary has paid, or made provision for the payment
of, all Taxes that have or may have become due pursuant to
those Tax Returns or otherwise, or pursuant to any
assessment received by the Company, except such Taxes, if
any, as are listed in Schedule 3.11 and are being contested
in good faith and as to which adequate reserves (determined
in accordance with GAAP) have been provided in the Balance
Sheet and the Interim Balance Sheet.
3.11.2. Except as set forth in Schedule 3.11.2, the relevant state tax
authorities have audited all such Tax Returns or such Tax
Returns are closed by the applicable statute of limitations
for all taxable years through December 31, 1999. All
deficiencies proposed as a result of such audits have been
paid, reserved against, settled, or, as described in
Schedule 3.11, are being contested in good faith by
appropriate proceedings. Except as described in
Schedule 3.11, neither the Company nor any Subsidiary has
given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by
any other Person) of any statute of limitations relating to
the payment of Taxes of the Company or for which the
Company may be liable.
3.11.3. All Taxes that the Company and any Subsidiary is or was
required by Legal Requirements to withhold or collect have
been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Body or other
Person.
3.11.4. All Tax Returns filed by (or that include on a consolidated
basis) the Company and any Subsidiary are true, correct, and
complete in all material respects. There is no tax sharing
agreement that will require any payment by the Company after
the date of this Agreement.
3.12. NO MATERIAL ADVERSE CHANGE. Except as set forth in Schedule 3.12,
since the date of the Balance Sheet, there has not been any material
adverse change in the business, operations, properties, assets or
condition of the Company (financial or other), including in the
prospects of the construction, deployment and operation of Fab 2 in
accordance with the Business Plan, and no event or development has
occurred or circumstance exists that may result in such a material
adverse change.
3.13. EMPLOYEE BENEFITS; LABOR
3.13.1. Except as set forth in Schedule 3.13.1, neither the Company nor any
Subsidiary is a member of any employers union or a party to
any collective bargaining contract, collective labor
agreement or other contract or arrangement with a labor
union, trade union or other organization or body involving
any of its employees, or is otherwise required (under any
legal requirement, including under any profit sharing,
bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any
employees of the Company or any of its Subsidiaries, except
for the respective personal employment agreements) to
provide benefits or working conditions beyond the minimum
benefits and working conditions required by law. Neither
the Company nor any Subsidiary has recognized or received a
demand for recognition from any collective bargaining
representative with respect to any of its employees. Except
as set forth in Schedule 3.13.1, neither the Company nor
any Subsidiary are subject to, and no employee of the
Company or any Subsidiary benefits from, any extension
order (TZAVEI HARCHAVA) or any arrangement or custom with
respect to employment or termination thereof. All of the
Company's and the Subsidiaries' employees are "at will"
employees and neither the Company nor any Subsidiary has
any obligation to employ any employee for a specified
period.
3.13.2. Except as set forth in Schedule 3.13.2, there are no claims
or complaints that are pending or that have been threatened
against the Company or any Subsidiary by any person who is or
has been an employee or director of the Company or any
Subsidiary, that may, individually or in the aggregate, have
a Material Adverse Effect.
3.13.3. Since January 1, 1995, (i) there has been no labor strike,
slowdown or stoppage pending or threatened against or
affecting the Company or any Subsidiary and (ii) there has
been no material dispute between the Company or any
Subsidiary and any group of its employees which was not
resolved.
3.13.4. Except as set forth in Schedule 3.13.4, the Company's and its
Subsidiaries' obligations to provide severance pay to its
employees are fully funded or have been properly provided
for in the Financial Statements in accordance with GAAP
including, by contribution to appropriate insurance funds.
All other liabilities of the Company or any Subsidiary
(absolute or contingent) relating to their employees were
properly accrued in the Financial Statements in accordance
with GAAP.
3.13.5. All amounts that the Company or any Subsidiary is legally or
contractually required either (i) to deduct from its
employees' salaries or to transfer to such employees'
pension or provident, life insurance, manager insurance,
incapacity insurance, continuing education fund or other
similar fund or (ii) to withhold from their employees'
salaries and pay to any Governmental Entity as required by
Israeli Legal Requirements relating to any tax or any other
compulsory payment have, in each case, been duly deducted,
transferred, withheld and paid.
3.13.6. The Company and each Subsidiary is in compliance in all
material respects with all applicable Legal Requirements and
contracts relating to employment, employment practices,
wages, bonuses and other compensation matters and terms and
conditions of employment.
3.13.7. Schedule 3.13.7 sets forth true and complete details of
payment by the Company or any of its Subsidiaries since
January 1, 2000 of any bonuses, salaries or other
compensation to any shareholder or Named Director or Officer
(except in the Ordinary Course of Business) or entry into any
employment, severance, or similar Contract with any Named
Director or Officer.
3.14. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
3.14.1. Except as set forth in Schedule 3.14 (i) the Company and its
Subsidiaries are, and at all times since January 1, 1997
have been, in full compliance with each Legal Requirement
that is or was applicable to them or to the conduct or
operation of their business or the ownership or use of any
of their assets, except for such non-compliance which would
not have a Material Adverse Effect and (ii) neither the
Company nor any of its Subsidiaries have received, at any
time since January 1, 1997, any notice or other
communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual,
alleged, possible, or potential violation of, or failure to
comply with, any Legal Requirement except for such notices
and communications which could not have a Material Adverse
Effect.
3.14.2. The Company and each Subsidiary has all Governmental Authorizations
necessary to permit the Company and its Subsidiaries to
lawfully conduct and operate their business as currently
conducted and as approved by the Board to be conducted in
the future, except for such authorizations, the failure to
possess which would not have a Material Adverse Effect.
The Company and its Subsidiaries are and have been in full
compliance with all of the terms and requirements of each
Governmental Authorization that is held by the Company and
its Subsidiaries or that otherwise relates to the business
of the Company and its Subsidiaries as presently conducted
and as approved by the Board to be conducted in the future,
or to any of the assets owned or used by the Company and
its Subsidiaries, except for such non-compliance which
would not have a Material Adverse Effect. Each
Governmental Authorization referred to in the foregoing
sentence is valid and in full force and effect. No event
has occurred or circumstance exists that may constitute or
result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any such
Governmental Authorization or result directly or indirectly
in the revocation, withdrawal, suspension, non-renewal,
cancellation, or termination of, or any modification to,
any such Governmental Authorization and no notice has been
received by the Company or any Subsidiary with respect to
the foregoing, other than those events, circumstances or
notices which would not have a Material Adverse Effect. To
the best knowledge of the Company, the Company and its
Subsidiaries can obtain all such renewals and Governmental
Authorizations on a timely basis as needed for their
respective operations and business, other than those the
failure of which to be obtained could not have a Material
Adverse Effect.
3.15. LEGAL PROCEEDINGS; ORDERS. Except as set forth in Schedule 3.15,
there is no pending Proceeding (i) that has been commenced by or
against the Company or that otherwise relates to or may affect the
business of, or any of the assets owned or used by, the Company or
any Subsidiary in a material manner; or (ii) that challenges, or
that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions.
3.15.1. In addition, (A) no such Proceeding has been Threatened, and
(B) no event has occurred or circumstance exists that may
give rise to or serve as a basis for the commencement of any
such Proceeding.
3.15.2. Except as set forth in Schedule 3.15, (i) there is no Order to
which the Company or any of its Subsidiaries, or any of the
assets owned or used by the Company or any of its
Subsidiaries, is subject; and (ii) the Company or any of
its Subsidiaries are not subject to any Order that relates
to its business as presently conducted or as approved by
the Board to be conducted, or any of the assets owned or
used by, the Company or any of its Subsidiaries.
3.15.3. Except as set forth in Schedule 3.15, the Company and all its
Subsidiaries are, and at all times have been, in full
compliance with all of the terms and requirements of each
Order to which it, or any of the assets owned or used by it,
is or has been subject, other than any non-compliance which
would not have a Material Adverse Effect
3.16. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Schedule 3.16, since the date of the Balance Sheet, the Company and
all its Subsidiaries have conducted their businesses only in the
Ordinary Course of Business and there has not been any:
3.16.1. entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer,
sales representative, joint venture, credit, or similar
agreement, or (ii) any Contract or transaction involving a
total remaining commitment by or to the Company or any of its
Subsidiaries of at least $2,000,000; or
3.16.2. sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or
property of the Company or any of its Subsidiaries for at
least $2,000,000 or mortgage, pledge, or imposition of any
lien or other encumbrance on any material asset or property
of the Company or any of its Subsidiaries, including the
sale, lease, or other disposition of any of the
Intellectual Property Assets except in the Ordinary Course
of Business; or
3.16.3. cancellation or waiver of any claims or rights with a value to the
Company or any of its Subsidiaries in excess of
$2,000,000; or
3.16.4. material change in the accounting methods used by the Company or
any of its Subsidiaries; or
3.16.5. agreement, whether oral or written, by the Company or any of its
Subsidiaries to do any of the foregoing.
3.17. CONTRACTS; NO DEFAULTS
3.17.1. Except as set forth in Schedule 3.17.1 and except for
agreements, instruments, arrangements and contracts which are
exhibits to the SEC Documents, as of the date of this
Agreement, there is no Applicable Contract that:
3.17.1.1. involves performance of services or delivery of goods or materials
by or to the Company or any of its Subsidiaries of
an amount or value in excess of $1,000,000; or
3.17.1.2. was not entered into in the Ordinary Course of Business and that
involves expenditures or receipts of the Company or
any of its Subsidiaries in excess of $2,000,000; or
3.17.1.3. affects the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or
personal property (except personal property leases and
installment and conditional sales agreements having a
value per item or aggregate payments of less than
$500,000 and with terms of less than one year); or
3.17.1.4. relates to patents, trademarks, copyrights, or other intellectual
property, except for standard agreements with
current or former employees, consultants, or
contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property
Assets; or
3.17.1.5. constitutes a collective bargaining agreement or other commitment
to or with any labor union or other employee
representative of a group of employees; or
3.17.1.6. involves a sharing of profits, losses, costs, or liabilities by the
Company or any of its Subsidiaries with any other
Person; or
3.17.1.7. contains covenants that in any way purport to restrict the business
activity of the Company or any of its Subsidiaries
or limit the freedom of the Company or any of its
Subsidiaries to engage in any line of business or to
compete with any Person; or
3.17.1.8. provides for payments to or by any Person based on sales,
purchases, or profits, other than direct payments
for goods; or
3.17.1.9. constitutes a currently effective and outstanding power of
attorney; or
3.17.1.10. was entered into other than in the Ordinary Course of Business and
that contains or provides for an express undertaking
by the Company or any of its Subsidiaries to be
responsible for consequential damages; or
3.17.1.11. is for capital expenditures of the Company or any of its
Subsidiaries in excess of $1,000,000; or
3.17.1.12. represents a written warranty, guaranty, and or other
similar undertaking with respect to contractual
performance extended by the Company or any of its
Subsidiaries other than in the Ordinary Course of
Business.
3.17.2. Each Contract identified in Schedule 3.17.1 is in full force and
effect in all respects and is valid and enforceable in
accordance with its terms. No event has occurred or
circumstance exists that (with or without notice or lapse
of time) may materially contravene, conflict with, or
result in a material violation or breach of, or give the
Company or any other Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any
Contract listed on Schedule 3.17.1,
3.17.3. Except as set forth in Schedule 3.17.3, there are no
renegotiations of any material amounts paid or payable to the
Company or any of its Subsidiaries under current or completed
Contracts listed on Schedule 3.17.1 with any Person and no
such Person has made written demand for such renegotiations.
3.18. INSURANCE. The properties, assets, employees, business and
operations of the Company and its Subsidiaries are insured by
policies which are in full force and effect against such risks,
casualties and contingencies and of such types and amounts as are
reasonable and customary for the size and scope of the Company's and
its Subsidiaries business as now conducted and as approved to be
conducted by the Board in the future. All premiums due and payable
for insurance policies held by the Company have been duly paid; and,
except as listed in Schedule 3.18, such policies or extensions,
renewals or replacements thereof (on comparable terms to the extent
available) in such amounts will be outstanding and in full force and
effect without interruption until the Closing Date. The Company or
any of its Subsidiaries have not received any notice from any
insurer, agent or broker with respect to any pending or threatened
terminations or increases in premiums other than increases
contemplated by existing policies, and the consummation of the
transactions contemplated by this Agreement and the Transaction
Documents will not result in the termination of any such policy, or
cause a material increase in any premiums thereunder, pursuant to
the express terms of such policy.
3.19. ENVIRONMENTAL MATTERS. Except for (i) matters disclosed in the SEC
---------------------
Documents or (ii) matters disclosed in Schedule 3.19:
3.19.1. The Company and its Subsidiaries are in material compliance with
all applicable Environmental Laws and Environmental
Permits. Neither the Company or any of its Subsidiaries has
received any written communication from a Governmental Body
or Person that alleges that the Company is not in
compliance with or has liability under any applicable
Environmental Law, nor does the Company or any of its
Subsidiaries have a basis to expect any such actual or
Threatened communication. On the date of this Agreement,
there are no circumstances or conditions that may prevent
or interfere with compliance in the future with
Environmental Laws and Environmental Permits in effect as
of the date of this Agreement. The Company and its
Subsidiaries have all Environmental Permits required under
applicable Environmental Laws to operate the business of
the Company as presently conducted and as approved by the
Board to be conducted in the future, except as would not
have a Material Adverse Effect.
3.19.2. There is no Environmental Claim pending or, to the best of
the Company's knowledge, Threatened against the Company or
its Subsidiaries or against any Person whose liability for
such an Environmental Claim the Company or its Subsidiaries
have or may have retained or assumed whether contractually or
by operation of law.
3.19.3. To the best of the Company's knowledge, there are no Materials of
Environmental Concern present in or at the facilities of
the Company or any of its Subsidiaries or at any
geologically or hydrological adjoining property, including
any Materials of Environmental Concern contained in
barrels, above or underground storage tanks, landfills,
land deposits, dumps, equipment (whether moveable or fixed)
or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other
part of the facilities of the Company or any of its
Subsidiaries or such adjoining property, or incorporated
into any structure therein or thereon.
3.19.4. The Company has delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Company pertaining
to Materials of Environmental Concern in, on, or under the
facilities of the Company or any of its Subsidiaries, or
concerning compliance by the Company, or any other Person
for whose conduct it is or may be held responsible, with
Environmental Laws.
3.19.5. As used herein, the following terms shall have the meaning set
forth below:
"Environmental Claim" means any claim, action, cause of
action, administrative proceeding, investigation or notice by
any Person alleging potential liability (including, without
limitation, potential liability for investigative costs,
cleanup costs, governmental response costs, natural resources
damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence,
or release into the environment, of any Materials of
Environmental Concern at any location, whether or not owned
by the Company or its Subsidiaries or (b) circumstances or
conditions forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Laws" means all U.S. and Israeli laws,
regulations, ordinances, codes, rules, orders, decrees,
directives and standards relating to pollution or protection
of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land
surface, subsurface strata), including, without limitation,
laws, regulations, ordinances, codes, rules, orders, decrees,
directives and standards relating to the manufacture,
processing, distribution, use, treatment, storage, transport,
planning and building or handling of Materials of
Environmental Concern.
"Environmental Permits" means permits, licenses,
authorizations and registrations required pursuant to the
Environmental Laws.
"Materials of Environmental Concern" means any hazardous
chemicals, pollutants, contaminants, hazardous wastes, toxic
substances, hazardous substances, as defined under applicable
Environmental Laws or any other substance defined or
regulated pursuant to Environmental Laws, including, without
limitation, fluoride, asbestos, PCBs, petroleum or petroleum
derived substances.
"Release" means any spilling, leaking, pumping, pouring,
emitting, discharging, injecting, escaping, leaching, dumping
or disposing into the environment, including, without
limitation, the abandonment or discarding of barrels,
containers and other closed receptacles containing Materials
of Environmental Concern.
3.20. INTELLECTUAL PROPERTY
3.20.1. Intellectual Property Assets- The term "Intellectual Property
Assets" means all such rights set forth in Sections
3.20.1.1 - 3.20.1.4, and all know-how, trade secrets,
confidential information, customer lists, software,
technical information, data, process technology, plans,
drawings, and blue prints (collectively, "Trade Secrets");
owned, used or licensed by the Company or its Subsidiaries
as licensee or licensor which are, in each case, used in or
are necessary for the conduct of the Company's and its
Subsidiaries' respective businesses as now conducted and as
approved by the Board to be conducted, including, without
limitation, the operation of Fab-2 in accordance with the
Business Plan. Schedule 3.20.1 sets forth a list of the
Intellectual Property Rights, other than Trade Secrets and
unregistered Copyrights:
3.20.1.1. trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
3.20.1.2. all patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "Patents"); and
3.20.1.3. all copyrights in both published works and unpublished works
(collectively, "Copyrights").
3.20.2. Agreements- Schedule 3.20.2 contains a complete and accurate list
and summary description, including any royalties paid or
received by the Company or its Subsidiaries, of all
Contracts relating to the Intellectual Property Assets to
which the Company or its Subsidiaries is a party or by
which the Company or its Subsidiaries are bound, except for
any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs
with a value of less than $5,000,000 under which the
Company or any of its Subsidiaries is the licensee. There
are no outstanding or Threatened disputes or disagreements
with respect to any such agreement.
3.20.3. Know-How Necessary for the Business
3.20.3.1. To the Company's best Knowledge, the Intellectual
Property Assets are all those necessary for the
operation of the Company's and its Subsidiaries'
business as it is currently conducted and as is
approved by the Board to be conducted, including,
without limitation, in connection with the operation
of Fab-2 in acordance with the Business Plan, except
as would not have a Material Adverse Effect. Except as
set forth in Schedule 3.20.3, the Company is the owner
of all right, title, and interest in and to each of
the Intellectual Property Assets, to the Company's
best Knowledge, free and clear of all, Encumbrances,
equities, and other adverse claims, and has the right
to use without payment to a third party all of the
Intellectual Property Assets, except as would not have
a Material Adverse Effect.
3.20.3.2. Except as set forth in Schedule 3.20.3.2, all former
and current employees of the Company and all other
Persons having access to any Intellectual Property
Asset have executed written Contracts with the Company
and its Subsidiaries respectively, that assign to the
Company and its Subsidiaries, respectively, all rights
to Intellectual Property Asset including any
inventions, improvements, discoveries, or information
relating to the business of the Company. To the
Company's Knowledge, no employee of the Company and
its Subsidiaries has entered into any Contract which
requires the employee to transfer, assign or disclose
information concerning his work for the Company and
its Subsidiaries to anyone other than the Company and
its Subsidiaries.
3.20.4. Patents; Trademarks; Copyrights; Mask Works
3.20.4.1. Schedule 3.20.1 contains a complete and accurate list
and summary description of all Patents, Trademarks and
registered Copyrights. The Company owns all right,
title, and interest in and to each of the Patents,
Trademarks and Copyrights, free and clear of all
liens, security interests, charges, encumbrances,
entities, and other adverse claims.
3.20.4.2. Except as set forth in Schedule 3.20.4.2, all of the
(i) issued Patents, (ii) Marks that have been
registered with any trademark office and (iii)
registered Copyrights are (with respect to issued
Patents relating to wafer fabrication technology, to
the best Knowledge of the Company) currently in
compliance with formal legal requirements, are valid
and enforceable, and are not subject to any
maintenance fees or taxes.
3.20.4.3. No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition
proceeding. To the best of the Company's knowledge,
there is no potentially interfering patent or patent
application or trademark or trademark application of
any third party. No Mark has been or is now involved
in any opposition, invalidation, or cancellation and
no such action is Threatened with the respect to any
of the Marks.
3.20.4.4. No Patent, Mark or Copyright is (with respect to
issued Patents relating to wafer fabrication
technology, to the best knowledge of the Company)
infringed or, to the best of the Company's knowledge,
has been challenged or threatened in any way. To the
best knowledge of the Company, none of the products
manufactured and sold, nor any process or know-how
used, by the Company infringes or is alleged to
infringe any patent or other proprietary right of any
other Person; to the best knowledge of the Company,
none of the Marks used by the Company or any of its
Subsidiaries infringes or is alleged to infringe any
trade name, trademark, or service mark of any third
party; and to the best knowledge of the Company, none
of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of
any third party or is a derivative work based on the
work of a third party.
3.20.5. Trade Secrets
3.20.5.1. With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate,
and sufficient in detail and content to identify and
explain it and to allow its full and proper use
without reliance on the knowledge or memory of any
individual.
3.20.5.2. The Company and its Subsidiaries have taken all
reasonable precautions to protect the secrecy,
confidentiality, and value of its Trade Secrets to the
extent that the maintenance of any such Trade Secret
as a legally protectible trade secret under applicable
law is material to the Company.
3.20.5.3. The Company and its Subsidiaries have good title and
an absolute (but not necessarily exclusive) right to
use the Trade Secrets to the extent that the
maintenance of any such Trade Secret as a legally
protectible trade secret under applicable law is
material to the Company. The Trade Secrets, the
maintenance of any of which as a legally protectible
trade secret under applicable law are material to the
Company, are not part of the public knowledge or
literature, and, to the Company's Knowledge, have not
been used, divulged, or appropriated either for the
benefit of any Person or to the detriment of the
Company or its Subsidiaries. No Trade Secret, the
maintenance of which as a legally protectible trade
secret under applicable law is material to the
Company, is subject to any adverse claim or has been
challenged or threatened in any way.
3.21. GRANTS, INCENTIVES AND SUBSIDIES. Schedule 3.21 provides a correct
and complete list of the aggregate amount of pending and outstanding
grants from each Governmental Body of the State of Israel, or from
any other Governmental Body, to the Company or any Subsidiary, net
of royalties paid, and any tax incentive or subsidy granted to the
Company or any Subsidiary, including the material terms and benefit
periods thereof (collectively, "Grants") including, without
limitation, (i) Approved Enterprise Status from the Israeli
Investment Center; and (ii) Grants from the Office of the Chief
Scientist of the Israel Ministry of Industry and Trade ("OCS"). The
Company has made available to Buyer, prior to the date hereof,
correct and complete copies of all letters of approval, and
supplements thereto, granted to the Company or any Subsidiary
relating to Approved Enterprise Status from the Investment Center
and Grants under from the OCS. Except for undertakings set forth in
such letters of approval and undertakings under applicable laws and
regulations, there are no material undertakings of the Company or
any Subsidiary given in connection with the Grants. The Company and
each of Subsidiary are in compliance, in all material respects, with
the terms and conditions of such Grants and, except as disclosed in
Schedule 3.21, have duly fulfilled, in all material respects, all
the undertakings relating thereto. The Company's application to the
Israeli Investment Center with respect to Fab-2 was submitted on May
17, 2000 and was previously provided to Buyer (the "Investment
Center Application"). To the extent that there are changes to the
assumptions contained in the Investment Center Application as
submitted, they are reflected in the Business Plan. The Investment
Center Application complies as to form with all Legal Requirements.
3.22. DISCLOSURE
3.22.1. No representation or warranty of the Company in this
Agreement and no statement in the Schedules omits to state a
material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were
made, not misleading.
3.22.2. No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary
to make the statements therein or in this Agreement, in light
of the circumstances in which they were made, not misleading.
3.23. RELATIONSHIPS WITH RELATED PERSONS. Except as described on Schedule
3.23 or in the SEC Documents, and except for any employment and
consulting contracts listed on Schedule 3.23, there are no loans,
guarantees, contracts, transactions, understandings or other
arrangements of any nature outstanding between or among the Company
or any of its Subsidiaries, on the one hand, and any shareholder, or
any current or former director, officer or controlling person of the
Company or any of their respective Affiliates, on the other hand.
Except as set forth on Schedule 3.23 or in the SEC Documents, since
the date of the Annual Report, no event has occurred that would be
required to be reported by Company pursuant to Item 13 of Form 20-F
promulgated by the SEC under the Exchange Act .
3.24. BROKERS OR FINDERS. The Company and its agents have incurred no
------------------
obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in
connection with the Contemplated Transactions.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company as of the date hereof and as
of the Closing and except as otherwise provided in the Addtional Purchase
Obligation Agreement as follows:
4.1. ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware with full corporate power and authority to
conduct its business as it is now being conducted and as currently
proposed to be conducted, to own or use the properties and assets
that it purports to own or use, and to perform all its obligations
under the Transaction Documents.
4.2. AUTHORITY; NO CONFLICT
4.2.1. This Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the
Transaction Documents, and assuming the due execution and
delivery thereof by the other parties thereto, the
Transaction Documents will constitute the legal, valid, and
binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the
absolute and unrestricted right, power, and authority to
execute and deliver this Agreement and the Transaction
Documents and to perform its obligations under this
Agreement and the Transaction Documents.
4.2.2. Except as set forth in Schedule 4.2, neither the execution
and delivery of this Agreement by Buyer nor the consummation
or performance of any of the Contemplated Transactions by
Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions
pursuant to:
4.2.2.1. any provision of Buyer's Organizational Documents;
4.2.2.2. any resolution adopted by the board of directors or the
stockholders of Buyer;
4.2.2.3. any Legal Requirement or Order to which Buyer may be subject; or
4.2.2.4. any Contract to which Buyer is a party or by which Buyer may be
bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be
required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3. INVESTMENT INTENT; NO REGISTRATION
4.3.1. Buyer is acquiring the Shares for its own account and not with a
view to their distribution within the meaning of Section
2(11) of the Securities Act. Buyer has requisite knowledge
and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment
in the Company and is an accredited investor as defined
under Regulation D as promulgated by the United States
Securities and Exchange Commission; and
4.3.2. Buyer understands that none of the Shares have been registered
under the Securities Act, the Israeli Securities Law or the
laws of any jurisdiction, and agrees that the Shares may
not be sold, offered for sale, transferred, pledged,
hypothecated or otherwise disposed of except in compliance
with the Securities Act, Israeli Securities Law or any
applicable securities laws of any jurisdiction and the
terms of this Agreement. Buyer also acknowledges that the
Shares, upon issuance, will bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE OR OTHER JURISDICTION'S SECURITIES LAWS. THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
(SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF THE ACT.
4.4. CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
-------------------
commenced against Buyer and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To Buyer's
knowledge, no such Proceeding has been Threatened.
4.5. DUE DILIGENCE. Subject to compliance by the Company with Section
3.22 and provision to the Buyer of all materials and information
requested in its due diligence review of the Company and assuming
that all information and material provided to the Buyer in its due
diligence review was true and accurate and did not include any
material misstatement or omit to include any information requested
by Buyer, (a) the Buyer has had an opportunity to ask questions and
receive answers concerning the legal, financial and technical
condition of the Company and has had full access to such information
concerning the Company as the Buyer has requested and (b) the Buyer
hereby represents and warrants that the legal, technical and
financial due diligence of Buyer has been completed and that the
results of the Buyer's business, technical, legal and financial
review of the books, records, agreements and other legal documents
and business organization of the Company are satisfactory to the
Buyer. Notwithstanding the foregoing representations and warranties
of the Buyer, nothing in this Section 4.5 shall derogate from the
representations and warranties of the Company in Section 3 above.
4.6. BROKERS OR FINDERS. Buyer and its officers and agents have incurred no
-------------------
obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in
connection with the Contemplated Transactions.
5. COVENANTS OF THE COMPANY PRIOR TO CLOSING
5.1. ACCESS AND INVESTIGATION. Between the date of this Agreement and the
Closing Date, the Company will, and will cause its Representatives
to, (i) afford Buyer and its Representatives (collectively, "Buyer's
Advisors") full and free access to the Company's personnel,
properties, contracts, books and records, and other documents and
data, (ii) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and
data as Buyer may reasonably request, and (iii) furnish Buyer and
Buyer's Advisors with such additional financial, operating,
technical and other data and information as Buyer may reasonably
request. All information so provided to Buyer and its
representatives will be subject to the Non-Disclosure Agreement
dated April 4, 2000 between the parties (except for Section 6
thereof which shall expire upon signing of this Agreement).
5.2. OPERATION OF THE COMPANY'S BUSINESS. Between the date of this Agreement
------------------------------------
and the Closing Date, the Company will:
5.2.1. conduct its business only in the Ordinary Course of Business; and
5.2.2. use its best efforts to preserve intact the current business
organization of the Company and its Subsidiaries, keep
available the services of the current Named Officers,
employees, and agents of the Company and its Subsidiaries,
and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and
others having business relationships with the Company and
its Subsidiaries; and
5.2.3. otherwise report periodically to Buyer concerning the status of the
business, operations, finances and prospects of the Company
and its Subsidiaries; and
5.2.4. not (i) take or agree or commit to take any action other than in
the Ordinary Course of Business that would make any
representation or warranty of the Company hereunder
inaccurate in any respect at, or as of any time prior to,
the Closing Date, provided that no such action taken in the
Ordinary Course of Business that Buyer has not consented to
in writing shall be taken into account in consideration of
whether the conditions set forth in Section 7 below have
been complied with or (ii) omit or agree or commit to omit
to take any action within its control necessary to prevent
any such representation or warranty from being inaccurate
in any material respect at any such time.
5.3. NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement or as is consistent with the Ordinary Course of Business,
between the date of this Agreement and the Closing Date, the Company
will not, without the prior written consent of Buyer, take any
affirmative action, or fail to take any reasonable action within
their or its control, as a result of which any of the changes or
events listed in Section 3.16 is likely to occur.
5.4. CONSENTS; REQUIRED APPROVALS; CONSTRUCTION. The Company will, as
promptly as practicable after the date of this Agreement, take all
action required to obtain as promptly as practicable all necessary
Consents and agreements of, and to give all notices and make all
other filings with, any third parties, including Governmental
Bodies, necessary to authorize, approve or permit the consummation
of the transactions contemplated hereby, the Contemplated
Transactions and the transactions contemplated by the Ancillary
Agreements, including, without limitation, all Consents, approvals
and waivers referred to in Section 5.2 to the Business Plan and all
Consents, approvals and waivers referred to in Section 7.3 hereof
and the updated Business Plan referred to in Section 7.17 (which the
parties shall endeavor to complete within 60 days from the date
hereof). The Company will periodically update Buyer as to the
matters discussed in the preceding sentence. Between the date of
this Agreement and the Closing Date, the Company will (i) cooperate
with Buyer with respect to all filings that Buyer elects to make or
is required by Legal Requirements to make in connection with the
Contemplated Transactions, and (ii) cooperate with Buyer in
obtaining all consents identified in Schedule 4.2. In addition, the
Company will, as promptly as practicable after the date of this
Agreement, take all action required to select contractors and other
experts and enter into agreements with such parties and take other
necessary actions in order to facilitate the implementation of the
construction of Fab 2 in accordance with the time table set forth in
the Business Plan.
5.5. NOTIFICATION. Between the date of this Agreement and the Closing
Date, the Company will promptly notify Buyer in writing if the
Company becomes aware of any fact or condition that causes or
constitutes a material breach of any of the Company's
representations and warranties as of the date of this Agreement
(except that such representations and warranties specifically
qualified by materiality shall be read for purposes of this Section
5.5 so as not to require an additional degree of materiality), or if
the Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that could (except as expressly
contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such fact or
condition (except for such representations and warranties that are
expressly correct as of the date of this Agreement). Should any such
fact or condition require any change in the Schedules if the
Schedules were dated the date of the occurrence or discovery of any
such fact or condition, the Company will promptly deliver to Buyer a
supplement to the Schedules specifying such change. During the same
period, the Company will promptly notify Buyer of the occurrence of
any breach of any covenant of the Company in this Section 5 or of
the occurrence of any event that may make the satisfaction of the
conditions in Section 7 below impossible or unlikely.
5.6. FINANCINGS.
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5.6.1. Between the date of this Agreement and the Closing Date, the
Company will use its best efforts to achieve each of the
conditions set forth in Section 7.4 and 7.6 in relation to
the Additional Financings.
5.6.2. The Company shall provide to the Investment Center such other
information and data, in addition to the information and data
contained in the Investment Center Application, as reasonably
necessary in order to secure the approval of the grant
referred to in Section 7.4.
5.6.3. The proceeds from each of the equity financing sources referred to
in clauses (ii) and (iii) of Section 7.6 with respect to
Wafer Partners shall be obtained only from parties
acceptable to Buyer upon Buyer's prior approval. In
addition, in the event that the underlying agreements with
respect thereto contain any terms or conditions (including,
without limitation, (a) pricing terms and (b) other
economic terms taken as a whole) more favorable (the "Terms
of the Other Agreements") than those provided hereunder and
in the Transaction Agreements, the terms and conditions of
this Agreement and the Transaction Agreements, as the case
may be, shall be automatically amended, without further
action by the parties hereto and thereto, to provide such
terms and conditions that are at least equally favorable to
the Buyer as the Terms of the Other Agreements. The
Company shall not enter into any agreement with respect to
the equity financings referred to in clauses (ii) and (iii)
of Section 7.6 if any of such agreements contain provisions
that would impede the ability of the Company to effect the
terms of the preceding sentence.
5.6.4. The proceeds from each of the debt financing sources referred to in
clause (i) of Section 7.6 and the underlying agreements
with respect thereto shall be obtained only on terms and
conditions that are materially consistent with the terms
and conditions to be set forth in a term sheet or similar
agreement or document relating to such financing (a "Debt
Financing Term Sheet"). The Company shall consult with
Buyer in advance of execution of any Debt Financing Term
Sheet and shall enter into such Debt Financing Term Sheet
only upon the consent of Buyer which shall not be
unreasonably withheld. The terms and conditions of such
debt financing shall not be in conflict with the terms of
the Contemplated Transactions and shall be consistent with
the terms and conditions contained in the Additional
Financing Plan and the Business Plan. The Company shall
provide to the Buyer the transaction documents of each debt
financing (the "Debt Fnancing Documents") in the form
presented to the Board for its approval, at least 10
business days prior to the execution thereof, in order to
enable Buyer to review such documents and confirm that the
terms thereof are consistent with the Debt Financing Term
Sheet previously approved by Buyer. The Buyer shall
deliver to the Company its written approval or other
response to the Debt Financing Documents within 5 business
days from its receipt of the Debt Financing Documents;
Buyer's failure to provide its written response to the
Company within such period of time shall be deemed Buyer's
approval of the Debt Financing Documents.
5.6.5. Between the date of this Agreement and the Closing Date, the
Company shall not change or modify or agree to change or
modify any of the terms and conditions listed in the
Additional Financing Plan, the Business Plan or the
Investment Center Application without the prior written
unanimous approval of all members of the Steering
Committee if any such change, modification or agreement
would or would reasonably be expected to (a) change the
construction schedule of Fab 2 as set forth in the Business
Plan, (b) change the Additional Financing Plan as set forth
in the Business Plan or result in a failure to comply with
the schedule for the financings described therein, (c)
significantly increase the cost of Fab 2 beyond that set
forth in the Business Plan or (d) change the production
capacity schedule of Fab 2 as set forth in the Business
Plan. Any change, modification or agreement to change or
modify the Business Plan, the Additional Financing Plan or
the Investment Center Application which does not require
written unanimous approval of all members of the Steering
Committee pursuant to the preceding sentence shall require
written approval of a majority of the members of the
Steering Committee.
5.7. SHAREHOLDERS AGREEMENT. The Company will use its best efforts to
ensure that any entity purchasing equity securities or securities
exchangeable or convertible into equity securities comprising five
percent (5%) or more of the outstanding Ordinary Shares of the
Company pursuant to the Additional Financing Plan (other than
investors purchasing any such securities in connection with a public
offering conducted by the Company as part of the Additional
Financing) shall execute the Shareholders Agreement as a
counterparty or a similar agreement whose provisions, among other
things, provide for such entity to take such actions as may be
necessary to vote for the election of Buyer's, TIC's, and any other
entity's representative(s) to the Board, in accordance with the
terms of the Shareholders Agreement.
5.8. NO NEGOTIATION. Until the later of (i) such time, if any, as this
Agreement is terminated pursuant to Section 9, and (ii) the Closing
Date, the Company will not, and will cause its Representatives not
to, directly or indirectly solicit, initiate, or encourage any
inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of all or a substantial
portion of the business or assets, or any of the capital stock of
the Company (other than (i) in the Ordinary Course of Business; (ii)
in connection with issuances of stock options or shares upon the
exercise thereof under the Company's employee stock incentive plans
and (iii) in connection with issuances of equity securities in
accordance with Section 7.6 (ii) and (iii) below pursuant to the
Additional Financing Plan and in accordance therewith), or any
merger, consolidation, business combination, or similar transaction
involving the Company or any of its Subsidiaries pursuant to which
the shareholders of the Company immediately prior to such merger,
consolidation, business combination, or similar transaction do not
continue to hold a majority of the outstanding equity of the
continuing or resulting entity.
5.9. BOARD OF DIRECTORS. As long as Buyer has a representative on the
Board, each committee of the Board shall include at least one
representative of Buyer and, so long as TIC has a representative on
the Board, one representative of TIC. The Company will ensure that
the time period between each annual shareholders meeting shall not
exceed 15 months. The Board shall meet at least once in every three
months and notice of each Board meeting shall be provided in writing
in English to all Board members at least 10 days in advance. All
communications to the Directors will be provided in English. The
quorum for each meeting of the Board shall include at least one
representative of Buyer, so long as Buyer has at least two
representatives on the Board. Notwithstanding the preceding
sentence, in the event that quorum is not present at a meeting of
the Board solely because a representative of Buyer was not present
and such meeting is adjourned, the failure of a representative of
Buyer to be present at the adjourned meeting shall not constitute
lack of quorum. The Company acknowledges that the representatives of
Buyer on the Board may at any time participate or fail to
participate in any Board action concerning this Agreement if in
their view such action is appropriate under applicable law.
5.10. STEERING COMMITTEE. The Steering Committee shall be established
within fifteen days after the date hereof. The Steering Committee
will receive from the Company's management reports on the progress
on the Fab 2 project, the Business Plan and the approvals necessary
for commencement of construction and for the operation of Fab 2. The
Steering Committee shall meet at least once in every four weeks.
5.11. COMPANY SHAREHOLDERS MEETING. As soon as practicable after the date
hereof, the Company shall take all necessary action to call an
extraordinary general meeting of the Company's shareholders and
shall solicit proxies in order to obtain the approval of the
Company's shareholders to the issuance of the Shares and the
Addtional Purchase Obligation Shares to Buyer in accordance with all
aplicable laws, regulations and rules of any stock exchange and to
an amendment to the Articles which shall provide that the Chairman
of the Board shall be appointed by the Shareholders and to obtain
any other shareholder approval which is necessary in order to
execute, and consummate the transactions contemplated by, this
Agreement and the Transaction Documents.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1. APPROVALS OF GOVERNMENTAL BODIES. As promptly as practicable after
the date of this Agreement, Buyer will make all filings required by
Legal Requirements to be made by it to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing
Date, Buyer will cooperate with the Company with respect to all
filings that the Company is required by Legal Requirements to make
in connection with the Contemplated Transactions, and will cooperate
with the Company in obtaining all consents identified in Section 5.2
to the Business Plan.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION AT CLOSING
Buyer's obligation to take the actions required to be taken by Buyer at
the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Buyer, in
whole or in part, in its sole discretion):
7.1. ACCURACY OF REPRESENTATIONS. All of the Company's representations
and warranties in this Agreement and the Transaction Agreements
(considered collectively, without giving effect to any supplement to
the Schedules), and each of these representations and warranties
(considered individually) must have been accurate in all material
respects as of the date of this Agreement and must be accurate in
all material respects as of the Closing Date as if made on the
Closing Date (except to the extent such representations and
warranties are only given as of the date hereof), without giving
effect to any supplement to the Schedules, provided that any
inaccuracies in such representations and warranties will be
disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and are
not reasonably expected to result in, a Material Adverse Effect (it
being understood that any materiality qualifications contained in
such representations and warranties shall be disregarded for this
purpose).
7.2. COMPANY'S PERFORMANCE
7.2.1. All of the covenants and obligations that the Company is
required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and
complied with in all material respects.
7.2.2. Each of the Transaction Documents and the Ancillary
Agreements shall have been duly executed by the Company and
shall have been in full force and effect and no party to such
document (other than Buyer) shall be in a breach thereof. The
Shareholders Agreement shall have been executed by Buyer and
The Israel Corporation.
7.2.3. Each document required to be delivered by the Company pursuant to
Section 2.5.1 must have been delivered.
7.3. CONSENTS; APPROVALS; OTHER REQUIREMENTS. (i) Each of the Consents,
approvals or other requirements identified in Section 5.2 of the
Business Plan, shall have been duly obtained or satisfied (in
accordance with the schedule set forth therein), (ii) the Company
shall have entered into construction agreements with respect to the
supervising, management and implementation of the construction of
Fab 2 in accordance with the Business Plan in accordance with the
schedule contained therein, and (iii) the Business Plan, the
financial data and project cost included therein, the list of
necessary approvals and Consents included in Section 5.2 of the
Business Plan, the timetable for construction of Fab 2 and the
Financial Plan, all as set forth in the Business Plan attached to
this Agreement as amended from time to time with the unanimous or
majority consent, as the case may be, of the Steering Committee in
accordance with Section 5.6.5 hereof, shall continue to be true and
correct in all material respects. The condition included in this
Section 7.3 shall be deemed to be satisfied only if the Steering
Committee shall have unanimously decided, first, that all of the
conditions included in clauses (i) - (iii) have been satisfied and
second, to the extent that any of (i) - (iii) are not satisfied,
that construction of Fab 2 by the Company in accordance with the
Business Plan should properly commence. The Steering Committee shall
consider, in its decision of whether the conditions set forth in
this Section 7.3 have been met, the factors listed in Section 1
hereto under the definition of "Steering Committee."
7.4. INVESTMENT CENTER APPROVAL. The Company shall have obtained a final
Certificate of Approval from the Investment Center which shall be
comprised of the following factors (i) granting an "Approved
Enterprise" status to Fab 2 within the Grant Course under the Law
for the Encouragement of Capital Investments - 1959; (ii) providing
for governmental grants of at least $250,000,000, which shall
constitute at least 20% of the entire qualified project cost for the
construction, deployment and operation of Fab 2 in accordance with
the Business Plan as it exists on the date of this Agreement,
provided that in the event that such project cost changes after the
date of this Agreement in accordance with Section 5.6.5, the
aggregate of such grants provided for in the Certificate of Approval
shall equal at least 20% of the changed total project cost; (iii)
the maximum required percentage of capital investments in Fab 2
which is required to be financed by equity will be 30%; and (iii)
providing that the performance term under the Certificate of
Approval shall be at least 5 years from the Closing.
7.5. OCS APPROVAL. The Company has obtained the approval of the OCS with
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respect to the consummation of the Contemplated Transactions.
7.6. ADDITIONAL FINANCINGS. The Company shall have (i) entered into
binding definitive agreements in accordance with Section 5.6.4
providing for loans in an aggregate amount of at least $550,000,000
from reputable financial institutions solely for the purposes of the
construction of Fab 2, as described in Section 10.4 of the Financing
Plan, (ii) entered into binding definitive agreements providing for
at least $225,000,000 in wafer partner pre-payments or equity
financing from Wafer Partners (other than Buyer) obtained in
accordance with the terms of Section 5.6.3 and provided to the
Company by Wafer Partners pursuant to which all closing conditions
have been satisfied and at least 15% of the equity of each equity
investor has been transferred to or placed in escrow for the benefit
of the Company subject only to the closing of this Agreement and the
balance of such financing shall be forwarded automatically upon the
occurrence of specified milestones relating to the construction and
operation of Fab-2, which milestones are generally similar to the
milestones described in the Addtional Purchase Obligation Agreement,
(iii) in the event that the Company only satisfies the condition in
the preceding clause (ii) in relation to at least $150,000,000 of
the $225,000,000 referred to above (such difference being the "Wafer
Partner Differential"), entered into binding definitive agreements
providing for at least the Wafer Partner Differential through
non-Wafer Partner equity investors; provided, however, that the
Company shall be required no later than October 1, 2001 (the
"Additional Wafer Partner Financing Date") to enter into binding
definitive agreements with respect to the Wafer Partner Differential
from additional Wafer Partners as a condition to the exercise of
Addtional Purchase Obligations not exercised prior to such time
pursuant to the Addtional Purchase Obligation Agreement on the
Additional Wafer Partner Financing Date, pursuant to which
agreement(s) all closing conditions have been satisfied and at least
15% of the equity of each equity investor has been transferred to or
placed in escrow for the benefit of the Company and the balance of
such financing shall be forwarded automatically upon the occurrence
of specified milestones relating to the construction and operation
of Fab-2, which milestones are generally similar to the milestones
described in the Addtional Purchase Obligation Agreement and (iv)
provided to Buyer a commitment in writing to provide $100,000,000
from the Company's own cash resources, including, but not limited
to, proceeds from the exercise of employee stock options, existing
cash reserves, proceeds from sales of private equity securities,
royalties and sales; in the event that the Company shall close on
the basis of section (iii) above, at such time as the Wafer Partner
Differential shall have been raised by the Additional Wafer Partner
Financing Date , the Company's commitment to provide $100,000,000
under this clause (iv) shall be reduced by the Wafer Partner
Differential.
7.7. WAFER PARTNERS. The Company shall have entered into binding
agreements, either on a "take or pay" basis or a "pre-payment" basis
or, if the other party to any such agreement is making an equity
investment pursuant to Section 7.6(ii), providing a wafer order
right, for a term of at least 3 years ("Wafer Commitments")
providing for the sale of a minimum capacity in Fab 2 of at least
12,000 wafers per month if the Closing shall occur under Section 7.6
(ii) above or at least 8,000 wafers per month if the Closing shall
occur under Section 7.6 (iii) above, in which case the Company shall
have entered into Wafer Commitments providing that the aggregate
Wafer Commitments shall equal at least 12,000 wafers per month by
the Additional Wafer Partner Financing Date and such agreements
shall be in full force and effect.
7.8. TOSHIBA AGREEMENT. The Toshiba Agreement shall be in full force and
------------------
effect and shall not have been breached by any party thereto.
7.9. CERTIFICATES. In addition to the documents the Company is obligated
to deliver to Buyer under Section 2.5 and this Section 7, the
Company shall furnish Buyer with such other documents as Buyer may
reasonably request for the purpose of (i) evidencing the accuracy of
any of the Company's representations and warranties, (iii)
evidencing the performance by the Company of, or the compliance by
the Company with, any covenant or obligation required to be
performed or complied with by the Company, (iv) evidencing the
satisfaction of any condition referred to in this Section 7, or (v)
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
7.10. NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or Threatened by a third party against Buyer or
the Company, or against any Person affiliated with Buyer or the
Company, any Proceeding (a) involving any challenge to, or seeking
material damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of making
illegal, materially preventing, delaying, or otherwise interfering
with any of the Contemplated Transactions.
7.11. NO PROHIBITION. Neither the consummation nor the performance of any
of the Contemplated Transactions will, directly or indirectly (with
or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause the
Company, Buyer or any Person affiliated with the Company or Buyer to
suffer any material adverse consequence under, (a) any applicable
Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been published, introduced, or otherwise formally proposed
by or before any Governmental Body.
7.12. DIRECTORS. The Board of Directors of the Company shall have been
----------
reformed in accordance with the provisions of Section 2 of the
Shareholders Agreement.
7.13. NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
---------------------------
change in the business, financial condition, results of
operations, assets, operations or prospects of the Company.
7.14. INCENTIVE PLAN. The Company shall have adopted stock based incentive
plans (the "Additional Incentive Plans") reserving 1,500,000
Ordinary Shares or such other number as may be approved by the Board
for the purpose of the work force and human resources employed in
Fab 2, such plans being satisfactory to Buyer, and the Company shall
have submitted to Buyer a plan satisfactory to Buyer setting forth
the Company's efforts to recruit the required work force and human
resources for Fab 2.
7.15. CLOSING DISCLOSURE. There shall be no fact known to the co-Chief
Executive Officer of the Company identified in Schedule 7.15. that
has specific application to the Company or any of its Subsidiaries
(other than general economic or industry conditions) and that
materially adversely affects the assets, business, financial
condition, results of operations or prospects of the Company or any
of its Subsidiaries that has not been set forth in this Agreement or
the Schedules or the Business Plan (without giving effect to any
risk factors included therein).
7.16. SHAREHOLDER APPROVAL. Shareholders of the Company shall have approved
--------------------
the increase in registered share capital, the issuance of the
Shares hereunder, the issuance of the Shares and Addtional
Purchase Obligations under the Addtional Purchase Obligation
Agreement and the reconstitution of the Board.
7.17. UPDATED BUSINESS PLAN. Without derogating from sections 5.6 and 7.3,
Buyer and the Company shall have agreed to updates to the Business
Plan (which thereafter shall be deemed to be the Business Plan for
all purposes of this Agreement) which shall, among other things (a)
provide that water rights approvals satisfactory to the Steering
Committee in the manner set forth in Section 7.3 shall have been
obtained prior to Closing, (b) indicate that Seller provided the
relevant Governmental Authority with an environmental study which
had been prepared in 1995 and updated recently to reflect changes
from the date of the original survey, which survey shall be
acceptable to the relevant Governmental Authority and (c) include
wafer costs data as part of the financial plan assumptions as part
of the base case.
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION AT CLOSING
The Company's obligation to take the actions required to be taken by the
Company at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived
by the Company, in whole or in part, in its sole discretion):
8.1. ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of
these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this
Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
8.2. BUYER'S PERFORMANCE
8.2.1. All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually),
must have been performed and complied with in all material
respects.
8.2.2. Each of the Executed Transaction Documents shall have been
duly executed by the Buyer and shall have been in full force
and effect and no party to such document (other than the
Company) shall be in a breach thereof. Buyer must have
executed and delivered the each of the documents required to
be delivered by Buyer pursuant to Section 2.5.2.
8.3. ADDITIONAL DOCUMENTS
8.3.1. In addition to the documents required to be delivered in accordance
with Section 2.5.2 by Buyer, Buyer shall have furnished
such other documents as the Company may reasonably request
for the purpose of (i) evidencing the accuracy of any
representation or warranty of Buyer, (ii) evidencing the
performance by Buyer of, or the compliance by Buyer with,
any covenant or obligation required to be performed or
complied with by Buyer, (iii) evidencing the satisfaction
of any condition referred to in this Section 8, or
(iv) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.4. NO INJUNCTION. There must not be in effect any Legal Requirement or
any injunction or other Order that (i) prohibits the issuance and
sale of the Shares the Company to Buyer, and (ii) has been adopted
or issued, or has otherwise become effective, since the date of this
Agreement.
8.5. SHAREHOLDER APPROVAL. Shareholders of the Company shall have approved
--------------------
the increase in registered share capital, the issuance of the
Shares hereunder, the issuance of the Shares and Addtional
Purchase Obligations under the Addtional Purchase Obligation
Agreement and the reconstitution of the Board.
9. TERMINATION
9.1. TERMINATION EVENTS This Agreement may, by written notice given prior to
------------------
or at the Closing, be terminated:
9.1.1. by either Buyer or the Company if a material breach of any
provision of this Agreement has been committed by the other
party and such breach has not been waived;
9.1.2. (i) by Buyer if any of the conditions in Section 7 has not
been satisfied in all material respects by January 31, 2001
(unless extended by Buyer in its discretion), and Buyer has
not waived such condition on or before the Closing Date; or
(ii) by the Company, if any of the conditions in Section 8
has not been satisfied in all material respects by January
31, 2001; or
9.1.3. by mutual consent of Buyer and the Company.
9.2. EFFECT OF TERMINATION. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under
this Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 9.1, all further obligations of
the parties under this Agreement will terminate, except that the
obligations in Sections 12.1 and 12.3 will survive; provided,
however, that if this Agreement is terminated by a party because of
the breach of the Agreement by the other party or because one or
more of the conditions to the terminating party's obligations under
this Agreement is not satisfied as a result of the other party's
failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive
such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1. SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. All
representations, warranties, covenants, and obligations in this
Agreement and the Addtional Purchase Obligation Agreement, the
schedules, the supplements to the schedules, the certificate
delivered pursuant to Section 2.5.1.9, and any other certificate or
document delivered pursuant to this Agreement or the Addtional
Purchase Obligation Agreement will survive the Closing until the
expiration of six full months in which Fab 2 is fully operated at a
capacity of at least 8,000 wafers per month in compliance with the
Foundry Agreement, provided, that in the event that any of the
Addtional Purchase Obligations is not exercised, such survival shall
only be until the date that is nine months from the last date on
which Buyer could have been required to mandatorily exercise the
Addtional Purchase Obligation under the terms and conditions of the
Addtional Purchase Obligation Agreement (after giving effect to all
applicable grace periods and extensions under the Addtional Purchase
Obligation Agreement). The right to indemnification, payment of
Damages or other remedies based on such representations, warranties,
covenants, and obligations will not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of
being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation.
10.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE COMPANY. The Company
will indemnify and hold harmless Buyer and its Representatives,
controlling persons, and affiliates (collectively, the "Buyer
Indemnified Persons") for, and will pay to the Buyer Indemnified
Persons the amount of, any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a
third- party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
10.2.1. any breach of any representation or warranty made by the Company in
this Agreement or in any other Transaction Document
(without giving effect to any materiality qualification),
the Schedules, the supplements to the Schedules, or any
other certificate or document delivered by the Company
pursuant to this Agreement, provided, however, that the
determination of any breach of any representation or
warranty made by the Company with respect to information
contained in the Business Plan shall only be assessed when
considering the Business Plan in its entirety and to any
changes or modifications thereto which were made with
Buyer's approval, and that the Company shall not be liable
under this clause 10.2.1 for an amount of Damages exceeding
the aggregate proceeds actually provided by the Buyer to
the Company pursuant to this Agreement and the Addtional
Purchase Obligation Agreement, as the case may be, at the
time the Company becomes required to make payment pursuant
hereto; or
10.2.2. any breach by the Company of any covenant or obligation of the
Company in this Agreement; or
10.2.3. any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person
with the Company (or any Person acting on its behalf) in
connection with any of the Contemplated Transactions.
10.3. The remedies provided in Section 10.2 will be the exclusive source
of remedies that may be available to Buyer or the other Indemnified
Persons in relation to any financial or pecuniary damages which may
be available, however Buyer shall be free to pursue all other
equitable remedies available under applicable law, including without
limitation, any injunctive relief.
10.4. Notwithstanding anything to the contrary contained in Section 10.2,
the Buyer shall not be entitled to seek indemnification from the
Company under this Agreement with respect to any damages arising out
of or resulting from Section 10.2, until the aggregate amount of
such damages exceeds two hundred and fifty thousand US dollars
($250,000), and where such damages exceed two hundred and fifty
thousand US dollars ($250,000), the Buyer shall be entitled to
indemnification in full (including the amount of the two hundred and
fifty thousand US dollars ($250,000) referred to above).
10.5. INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless the Company, its Representatives,
controlling persons and affiliates (the "Company Indemnified
Persons") and will pay to the Company Indemnified Persons the amount
of any Damages arising, directly or indirectly, from or in
connection with (i) any breach of any representation or warranty
made by Buyer in this Agreement or in any certificate delivered by
Buyer pursuant to this Agreement, (ii) any breach by Buyer of any
covenant or obligation of Buyer in this Agreement, or (iii) any
claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged
to have been made by such Person with Buyer (or any Person acting on
its behalf) in connection with any of the Contemplated Transactions.
10.6. Procedure for Indemnification - Third Party Claims
10.6.1. Promptly after receipt by an indemnified party under Section 10.2
or 10.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to
be made against an indemnifying party under such Section,
give notice to the indemnifying party of the commencement
of such claim, but the failure to notify the indemnifying
party will not relieve the indemnifying party of any
liability that it may have to any indemnified party, except
to the extent that the indemnifying party demonstrates that
the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
10.6.2. If any Proceeding referred to in Section 10.6.1 is brought against
an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding,
the indemnifying party will, unless the claim involves
Taxes, be entitled to participate in such Proceeding and,
to the extent that it wishes (unless (i) the indemnifying
party is also a party to such Proceeding and the
indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to
the indemnified party of its financial capacity to defend
such Proceeding and provide indemnification with respect to
such Proceeding), to assume the defense of such Proceeding
with counsel reasonably satisfactory to the indemnified
party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of
such Proceeding, the indemnifying party will not, as long
as it diligently conducts such defense, be liable to the
indemnified party under this Section 10 for any fees of
other counsel or any other expenses with respect to the
defense of such Proceeding, in each case subsequently
incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the
defense of a Proceeding, (i) it will be conclusively
established for purposes of this Agreement that the claims
made in that Proceeding are within the scope of and subject
to indemnification; (ii) no compromise or settlement of
such claims may be effected by the indemnifying party
without the indemnified party's consent unless (A) there is
no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person
and no effect on any other claims that may be made against
the indemnified party, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of
such claims effected without its consent. If notice is
given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give
notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified
party.
10.6.3. Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle
such Proceeding, but the indemnifying party will not be
bound by any determination of a Proceeding so defended or
any compromise or settlement effected without its consent.
10.6.4. The Company hereby consents to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any
Buyer Indemnified Person for purposes of any claim that a
Buyer Indemnified Person may have under this Agreement with
respect to such Proceeding or the matters alleged therein,
and agree that process may be served on the Company with
respect to such a claim anywhere in the world.
10.7. PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is
sought. Any claim for indemnification which may be brought under
this Section 10 may be brought until 30 days after expiration of the
relevant survival period.
11. COVENANTS OF THE COMPANY SUBSEQUENT TO THE CLOSING DATE
-------------------------------------------------------
11.1. ADDITIONAL FINANCING. The Company shall comply with all terms,
---------------------
conditions, covenants and obligations of the Company under the
agreements entered into in connection with the Additional
Financings.
11.2. ANCILLARY AGREEMENTS. The Company shall comply with all terms,
conditions, covenants and obligation of the Company under the
Ancillary Agreements. The Company shall not change or modify or
agree to change or modify any of the terms and conditions of this
Agreement, the Transaction Documents and the Toshiba Agreement
without the prior written approval of Buyer (other than the Business
Plan pursuant to Section 11.3).
11.3. BUSINESS PLAN. The Company shall use the proceeds of this Agreement,
the Addtional Purchase Obligations and the Additional Financings
solely in order to finance the construction, deployment and
operation of Fab 2 in accordance with the Business Plan and the
timetable included therein. The Company shall not change or modify
or agree to change or modify the Business Plan and shall not deviate
materially from the Business Plan (whether or not it is changed)
without the prior written approval of Buyer (which shall not be
unreasonably withheld) if any such change, modification or agreement
would or reasonably be expected to (a) materially change the
construction schedule of Fab 2 as set forth in the Business Plan,
(b) significantly increase the cost of Fab 2 beyond that set forth
in the Business Plan or (c) materially change the production
capacity schedule of Fab 2 as set forth in the Business Plan. In
addition, the Company shall not change or modify or agree to change
or modify the Business Plan and shall not deviate materially from
the Business Plan (whether or not it is changed) if any such change,
modification or agreement would or reasonably be expected to
materially change the Additional Financing Plan as set forth in the
Business Plan or result in a material failure to comply with the
schedule for the financings described therein unless such change,
modification or agreement has been approved by the Company's Board,
provided, however that such approval shall not be deemed granted if
two or more members of the Board shall have voted against such
change, modification or agreement.
11.4. PROJECT COMMITTEE. As of the Closing and thereafter the Company
shall create a committee of its Board (the "Project Committee") to
oversee and bear managerial responsibility for the Fab 2 Project.
The Project Committee shall consist of four directors, including the
Chief Executive Officer of the Company then serving on the Board, a
representative of Buyer on the Board, so long as the Buyer is
entitled to appoint a memer of the Board, a representative of TIC,
so long as TIC is entitled to appoint a member to the Board, and one
statutory external director, so long as the Company is required to
appoint such an external director either to such committee or to the
Board pursuant to Applicable Law.
11.5. PROJECT PROGRESS REPORTS; LIAISON OFFICER. The Company shall, on a
monthly basis starting immediately subsequent to the date hereof,
and in any other date requested by Buyer, provide to Buyer with a
written report describing, in reasonable detail, the progress and
status of the Fab 2 and the Additional Financings. The Buyer may
appoint a liasion officer with respect to the Fab 2 project that
will be an employee or consultant of the Buyer and will be permitted
to obtain from the Company and its officers, directors consultants
and contractors, ongoing information with respect to the progress of
the project, will have free access to all relevant information and
documents and will be permitted to participated in intenal meetings
and discussions of the Company with respect to the progress of the
project. The Company will coordinate with the liasion officer any
requests in accordance with the foregoing and shall fully cooperate
with such officer.
11.6. INFORMATION RIGHTS. As long as Buyer, together with its Affiliates,
holds at least 3% of the outstanding share capital of the Company,
the Company shall deliver to Buyer copies of each report filed or
furnished by the Company to the SEC, within no later than five days
after such report is filed or furnished to the SEC.
11.7. PRE-EMPTIVE RIGHTS.
-------------------
11.7.1. Until the later of such time as (a) the Series B-1 Addtional
Purchase Obligation shall have expired in accordance with
its terms and (b) Buyer shall have exercised the Series B-1
Addtional Purchase Obligation and thereafter shall no
longer own ten percent of the issued and outstanding share
capital of the Company, if the Company proposes to issue
any of its equity securities or securities convertible into
such equity securities (the "Offered Securities"), other
than Excluded Securities, then the Buyer shall have the
right, but not the obligation, to purchase a portion of
such Offered Securities, on the same terms and conditions
and for the same consideration as the Offered Securities
which are sold, equal to the percentage of the Company's
issued and outstanding share capital as is owned by the
Buyer on the date on which Buyer responds to the notice to
be provided under Section 11.7.2 (the "Pro Rata Share").
11.7.2. If the Company proposed to issue Offered Securities, it shall give
the Buyer written notice of its intention (the "Pre-emptive
Notice") and shall, in such notice, fully describe the
Offered Securities and any other relevant securities and
the terms and conditions and total consideration upon and
for which the Company proposes to issue them. Upon receipt
of such notice, the Buyer shall have 15 business days to
decide and notify the Company of its decision to purchase
Offered Securities in an amount not exceeding Buyer's then
current Pro Rata Share. If the Company fails to issue and
sell the Offered Securities or any portion of them within
90 days from the date of the Pre-emptive Notice upon terms
and conditions and for consideration that are no more
favorable to the purhasers of the Offered Securities than
specified in the Pre-emptive Notice, the Company shall not
thereafter issue or sell such Offered Securities without
again complying with the provisions of this Section 11.7.2.
12. GENERAL PROVISIONS
12.1. EXPENSES. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and
performance of this Agreement and the Contemplated Transactions,
including all fees and expenses of agents, representatives, counsel,
and accountants, provided that upon the Closing the Company shall
reimburse Buyer for its reasonable legal expenses in connection with
the negotiation and execution of this Agreement in an amount of up
to $30,000 plus VAT. The Company shall pay all stamp tax duties in
connection with the issuance of the Shares and any shares upon
exercise of the Addtional Purchase Obligations and otherwise in
connection with this Agreement.
12.2. PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, by mutual agreement by the parties, except as
required by applicable law or the regulations of the securities
exchange upon which the securities of either party are traded or
quoted. The Company and Buyer will consult with each other
concerning the means by which the Company's employees, customers,
and suppliers and others having dealings with the Company will be
informed of the Contemplated Transactions, and Buyer will have the
right to be present for any such communication.
12.3. CONFIDENTIALITY. From the date hereof, Buyer and the Company will
maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Buyer and the Company to maintain
in confidence, any written information stamped "confidential" when
originally furnished by another party in connection with this
Agreement or the Contemplated Transactions (including information
furnished prior to the date hereof), unless (a) such information is
already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available
through no fault of such party, (b) the use of such information is
necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such
information is required by Legal Requirements.
If the Contemplated Transactions are not consummated, each party
will return or destroy as much of such written information as the
other party may reasonably request.
12.4. NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have
been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other
parties):
Company:
Attention: Co-Chief Executive Officer
P.O. Box 619
Migdal Haemek 23105 Israel
Facsimile No.: 972-6-654-7788
with a copy to: Yigal Arnon & Co.
3 Daniel Frisch Street
Tel Aviv, Israel
Attention: David H. Schapiro, Adv.
Facsimile No.: 972-3-608-7714
Buyer:
Attention: President and CEO
SanDisk Corporation
140 Caspian Court
Sunnyvale, California 94089
Facsimile No.:(408) 542-0600
with a copy to: SanDisk Corporation
140 Caspian Court
Sunnyvale, California 94089
Attention: Vice President and General Counsel
Facsimile No.: (408) 548-0385
12.5. JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties solely in
the courts of the State of California, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party
anywhere in the world.
12.6. FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and
things, all as the other party may reasonably request for the
purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
12.7. WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will
operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege
will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part,
by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a
party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
12.8. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject
matter (including the term sheet between Buyer and the Company dated
March 15, 2000 and all drafts hereof and thereof) and constitutes
(along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be
charged with the amendment.
12.9. DISCLOSURE SCHEDULES
12.9.1. The disclosures in the Schedules, and those in any supplement
thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or
warranty in this Agreement.
12.9.2. In the event of any inconsistency between the statements in
the body of this Agreement and those in the Schedules (other
than an exception expressly set forth as such in the
Schedules with respect to a specifically identified
representation or warranty), the statements in the body of
this Agreement will control.
12.10. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
---------------------------------------------------
may assign any of its rights under this Agreement without the
prior consent of the other parties, except that Buyer may assign
any of its rights under this Agreement to any wholly owned
Subsidiary of Buyer or to any Subsidiary which is wholly owned
other than a nominal interest, so long as such ownership shall be
maintained. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement.
This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement
and their successors and assigns.
12.11. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent
not held invalid or unenforceable.
12.12. SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
-------------------------------
Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to
be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit
the preceding words or terms.
12.13. TIME OF ESSENCE. With regard to all dates and time periods set
----------------
forth or referred to in this Agreement, time is of the essence.
12.14. GOVERNING LAW. This Agreement will be governed by the laws of the
--------------
State of California without regard to conflicts of law principles.
12.15. COUNTERPARTS. This Agreement may be executed in one or more
-------------
counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
SanDisk Corporation: Tower Semiconductor Ltd.:
By: /S/ ELI HARARI By: /S/ YOAV NISSAN COHEN
----------------------- ----------------------
Chief Executive Officer Co-Chief Executive Officer
ADDITIONAL PURCHASE OBLIGATION AGREEMENT
ADDITIONAL PURCHASE OBLIGATION AGREEMENT, dated as of July 4, 2000, between
Tower Semiconductor Ltd., an Israeli corporation ("T"), and SanDisk Corporation,
a Delaware corporation ("S").
WHEREAS, T and S are parties to that certain Share Purchase Agreement
dated July 4, 2000, relating to the sale by T to S of 866,551 of T's Ordinary
Shares (the "Share Purchase Agreement") and parties to that certain Foundry
Agreement dated July 4, 2000, relating to the production of certain silicon
wafers by T for delivery to S; and
WHEREAS, as a condition to the closing of the sale of certain of T's
shares under the Share Purchase Agreement and the effectiveness of the Foundry
Agreement, T and S have each agreed to enter into this Agreement providing for
the issuance and delivery of conditional additional purchase obligations for the
purchase by S of Ordinary Shares of T, subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Additional Purchase Obligations and the
respective rights and obligations thereunder of T and S, T and S hereby agree as
follows:
1. DEFINITIONS
1.1. CERTAIN DEFINITIONS. As used in this Agreement, terms
--------------------
not defined herein shall have the meaning
ascribed to them in the Share Purchase
Agreement and the following terms shall have
the following respective meanings:
"A ADDITIONAL PURCHASE OBLIGATION CERTIFICATES" shall have the
meaning ascribed to it in Section 2.2.
"A ADDITIONAL PURCHASE OBLIGATIONS" shall have the meaning ascribed
to it in Section 2.1.
"ADDITIONAL PURCHASE OBLIGATION CERTIFICATES" shall have the meaning
ascribed to it in Section 2.2.
"ADDITIONAL PURCHASE OBLIGATIONS" shall have the meaning ascribed to
it in Section 2.1.
"B ADDITIONAL PURCHASE OBLIGATION
CERTIFICATES" shall have the meaning ascribed
to it in Section 2.2.
"B ADDITIONAL PURCHASE OBLIGATIONS" - shall have the meaning
ascribed to it in Section 2.1.
"EQUITY SECURITIES" means (a) Ordinary Shares and securities
convertible into, or exercisable or exchangeable for, Ordinary
Shares or rights or options to acquire Ordinary Shares or such other
securities, and (b) shares of any other class or series of capital
shares and securities convertible into, or exercisable or
exchangeable for, shares of such other class or series and rights or
options to acquire shares of such other class or series or such
other securities, in each case, excluding the Additional Purchase
Obligations.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the purchase price per Ordinary Share to be
paid upon the exercise of each Additional Purchase Obligation in
accordance with the terms hereof, which price shall initially be $30
per share, as each may be adjusted from time to time pursuant to
Section 4 hereof.
"EXPIRATION DATE" means the fifth anniversary of the date of this
Agreement subject to earlier termination of one or more of the
Additional Purchase Obligations pursuant to Section 5.1.
"EXERCISE NOTICE" - shall have the meaning ascribed to in Section
2.1.3.
"GRACE PERIOD" - shall have the meaning ascribed to it in Section
5.1.
"MANDATORY EXERCISE EVENT" shall have the meaning ascribed to it in
Section 5.1.
"MISSED EXERCISE" - shall have the meaning ascribed to it in
Section 5.1.
"NASDAQ" means the Nasdaq National Market.
"B ADDITIONAL PURCHASE OBLIGATION CERTIFICATES" shall have the
meaning ascribed to it in Section 2.2.
"B ADDITIONAL PURCHASE OBLIGATIONS" - shall have the meaning
ascribed to it in Section 2.1.
"ORDINARY SHARES" means the ordinary shares, par value NIS1.00 per
share of T and any other capital shares of T into which such
ordinary shares may be converted or reclassified or that may be
issued in respect of, in exchange for, or in substitution of, such
ordinary shares by reason of any share splits, shares dividends,
distributions, mergers, consolidations or other like events.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE PURCHASE AGREEMENT" - as defined in the recitals to this
Agreement.
"T" means T, an Israeli corporation, and its successors and assigns.
"UNDERLYING ORDINARY SHARES" means the Ordinary Shares issuable or
issued upon the exercise of the Additional Purchase Obligations.
2. ORIGINAL ISSUE OF ADDITIONAL PURCHASE OBLIGATIONS
2.1. THE ADDITIONAL PURCHASE OBLIGATIONS.
-----------------------------------
2.1.1. A ADDITIONAL PURCHASE OBLIGATIONS. On the basis
----------------------------------
of the representations, warranties and
agreements contained in this Agreement,
but subject to the terms and conditions
hereof, concurrently with the execution
of this Agreement, T shall issue and
deliver to S warrants mandatorily
exercisable under Section 5.1 hereof for
the purchase of up to an aggregate of
1,833,450 Ordinary Shares of T by S
subject to adjustment as set forth
herein (the "A Additional Purchase
Obligations").
2.1.2. B ADDITIONAL PURCHASE OBLIGATIONS. On the basis
----------------------------------
of the representations, warranties and
agreements contained in this Agreement,
but subject to the terms and conditions
hereof, concurrently with the execution
of this Agreement, T shall issue and
deliver to S Additional Purchase
Obligations for the purchase of up to an
aggregate of 2,700,000 Ordinary Shares
of T by S subject to adjustment as set
forth herein. Pursuant to the election
of S to exercise the B Additional
Purchase Obligations as provided in
Section 2.1.3 below, the B Additional
Purchase Obligations shall become
mandatorily exercisable under Section
5.1 hereof (the "B Additional Purchase
Obligations" and together with the A
Additional Purchase Obligations, the
"Additional Purchase Obligations").
2.1.3. B ADDITIONAL PURCHASE OBLIGATIONS EXERCISE
-------------------------------------------------
NOTICE. In the event that S elects to
---------
exercise the B Additional Purchase
Obligations, S is required to deliver to
T, no later than October 1, 2001(the
"Exercise Date") , a written notice (the
"Exercise Notice") of its election to
exercise the B Additional Purchase
Obligations under Section 5.1 hereof.
The Exercise Notice shall be accompanied
by a payment for such number of B
Additional Purchase Obligations as shall
have been exercised in the A Additional
Purchase Obligation series through the
Exercise Date. For instance, if by the
Exercise Date the A-1, A-2 and A-3
Additional Purchase Obligations shall
have been exercised, on the Exercise
Date S shall make a payment for the B-1,
B-2 and B-3 Additional Purchase
Obligations. For the avoidance of all
doubt, the B Additional Purchase
Obligations shall not become exercisable
until the delivery of the Election
Notice and failure to deliver the
Election Notice to T within the above
date shall cause the B Additional
Purchase Obligations to terminate and
become void.
2.2. FORM OF ADDITIONAL PURCHASE OBLIGATION CERTIFICATES. The A
Additional Purchase Obligations shall be designated in five series
(Series A1 - A5), each evidenced by an Additional Purchase
Obligation certificate in the form of EXHIBITS A1 - A5 attached
hereto (the "A Additional Purchase Obligation Certificates"). The B
Additional Purchase Obligations shall be designated in five series
(Series B1 - B5), each evidenced by an Additional Purchase
Obligation certificate in the form of EXHIBITS B1 - B5 attached
hereto (the "B Additional Purchase Obligation Certificates" and
together with the A Additional Purchase Obligation Certificates, the
"Additional Purchase Obligation Certificates"). Each A Additional
Purchase Obligation series shall contain Additional Purchase
Obligations to purchase up to an aggregate of 366,690 Ordinary
Shares of T. Each B1- to B-5 Additional Purchase Obligation series
shall contain Additional Purchase Obligations to purchase 540,000
Ordinary Shares of T. Each Additional Purchase Obligation
Certificate shall be dated the date hereof and shall bear the legend
set forth in Exhibit C, together with such other legends and
endorsements thereon as may be required to comply with any law or
with any rule or regulation pursuant thereto or with any rule or
regulation of any securities exchange on which the Ordinary Shares
may be listed, or to conform to customary usage.
3. EXERCISE PRICE; EXERCISE OF ADDITIONAL PURCHASE
OBLIGATIONS GENERALLY
3.1. PAYMENT OF EXERCISE PRICE. Each Additional Purchase Obligation
Certificate shall entitle the holder thereof, subject to the
provisions thereof and of this Agreement, to receive up to the
number of Ordinary Shares stated therein, subject to adjustment as
herein provided, upon payment of the Exercise Price for each of such
shares. The Exercise Price shall be payable by wire transfer of
immediately available funds to T in accordance with written wiring
instructions provided by T, or by such other means as may be
mutually agreed by the parties.
3.2. EXERCISE PERIODS OF A AND B ADDITIONAL PURCHASE
------------------------------------------------------
OBLIGATIONS
-----------
3.2.1. EXERCISE PERIOD OF A ADDITIONAL PURCHASE
-------------------------------------------------
OBLIGATIONS. Subject to the terms and
-----------
conditions set forth herein, the A
Additional Purchase Obligations shall be
exercisable at any time on or after the
Closing Date under the Share Purchase
Agreement and on or prior to the
Expiration Date.
3.2.2. EXERCISE PERIOD OF B ADDITIONAL PURCHASE
-------------------------------------------------
OBLIGATIONS. Subject to the terms and
-----------
conditions set forth herein, the B
Additional Purchase Obligations shall be
exercisable at any time after the
delivery of the Exercise Notice,
pursuant to Section 2.1.3, and on or
prior to the Expiration Date.
3.3. EXPIRATION OF ADDITIONAL PURCHASE OBLIGATIONS. The
------------------------------------------------
Additional Purchase Obligations shall terminate
and become void as of the close of business on
the Expiration Date.
3.4. EXERCISE GENERALLY. Subject to Section 5, in order to exercise an
Additional Purchase Obligation, S must surrender the Additional
Purchase Obligation Certificate evidencing such Additional Purchase
Obligation to T, with one of the forms on the reverse of or attached
to the Additional Purchase Obligation Certificate duly executed.
Subject to the terms of Section 5, each Additional Purchase
Obligation may be exercised in whole or in part, provided that no
Additional Purchase Obligation may be exercised for the purchase of
less than an aggregate of 100,000 Ordinary Shares. If fewer than all
of the Additional Purchase Obligations represented by an Additional
Purchase Obligation Certificate are surrendered, such Additional
Purchase Obligation Certificate shall be surrendered and a new
Additional Purchase Obligation Certificate substantially in the form
of the Additional Purchase Obligation Certificate surrendered for
partial exercise thereof providing for purchase by S of the number
of Ordinary Shares that were not exercised shall be executed by T
and issued to S.
Upon surrender of an Additional Purchase Obligation Certificate and
payment of the Exercise Price in conformity with the foregoing
provisions, T shall promptly issue to S appropriate evidence of
ownership of the Ordinary Shares or other securities or property to
which S is entitled, including share certificates in the name of S
and evidence of such Ordinary Shares having been registered in the
share register of T in the name of S. Such Shares shall bear the
same legend as set forth in Section 4.3.2 of the Share Purchase
Agreement.
4. ADJUSTMENTS
4.1. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF
------------------------------------------------------
ORDINARY SHARES
---------------
The (a) number and kind of shares purchasable upon the exercise of
Additional Purchase Obligations and (b) Exercise Price shall both be
subject to adjustment from time to time as follows:
4.1.1. STOCK DIVIDENDS, SHARE-SPLITS, COMBINATIONS,
-------------------------------------------------
etc. In case T shall hereafter (a) pay a
stock dividend or make a distribution
(whether in Ordinary Shares or capital
shares of any other class on its
Ordinary Shares), (b) subdivide its
outstanding Ordinary Shares, (c) combine
its outstanding Ordinary Shares into a
smaller number of shares, or (d) issue
by reclassification of its Ordinary
Shares any capital shares of T, the
Exercise Price in effect immediately
prior to such action (after giving
effect to all other adjustements under
this Section 4) shall be adjusted so
that, in relation to any Additional
Purchase Obligation thereafter
exercised, S shall be entitled to
receive the number of Ordinary Shares or
of other capital shares which S would
have owned immediately following such
action had such Additional Purchase
Obligation been exercised immediately
prior thereto. An adjustment made
pursuant to this paragraph shall become
effective immediately after the record
date in the case of a dividend and shall
become effective immediately after the
effective date in the case of a
subdivision, combination or
reclassification.
4.1.2. RECLASSIFICATION, COMBINATION, MERGERS, ETC. In
----------------------------------------------
case of any reclassification or change
of outstanding Ordinary Shares issuable
upon exercise of the Additional Purchase
Obligations (other than (i) as set forth
in paragraph 4.1.1 above, and (ii) a
change in par value, or from par value
to no par value, or from no par value to
par value or (iii) as a result of a
subdivision or combination), or in case
of any consolidation or merger of T with
or into another corporation (other than
a merger in which T is the continuing
corporation and which does not result in
any reclassification or change of the
then outstanding Ordinary Shares or
other capital shares issuable upon
exercise of the Additional Purchase
Obligations (other than a change in par
value, or from par value to no par
value, or from no par value to par value
or as a result of a subdivision or
combination), or in case of any sale or
conveyance to another corporation of the
property of T as an entirety or
substantially as an entirety, then, as a
condition of such reclassification,
change, consolidation, merger, sale or
conveyance, T or such a successor or
purchasing corporation, as the case may
be, shall forthwith make lawful and
adequate provision whereby S shall have
the right thereafter to receive on
exercise of such Additional Purchase
Obligation the kind and amount of shares
and other securities and property
receivable upon such reclassification,
change, consolidation, merger, sale or
conveyance by a holder of the number of
Ordinary Shares issuable upon exercise
of such Additional Purchase Obligation
immediately prior to such
reclassification, change, consolidation,
merger, sale or conveyance. Such
provisions shall include provision for
adjustments which shall be as nearly
equivalent as may be practicable to the
adjustments provided for in this Section
4. The above provisions of this
paragraph 4.1.2 shall similarly apply to
successive reclassification and changes
of Ordinary Shares and to successive
consolidations, mergers, sales or
conveyances.
4.1.3. DEFERRAL OF CERTAIN ADJUSTMENTS. No adjustment
--------------------------------
to the Exercise Price (including the
related adjustment to the number of
Ordinary Shares purchasable upon the
exercise of each Additional Purchase
Obligation) shall be required hereunder
unless such adjustment, together with
other adjustments carried forward as
provided below, would result in an
increase or decrease of at least one
percent of the Exercise Price, PROVIDED,
--------
HOWEVER, that any adjustments which by
-------
reason of this paragraph 4.1.3 are not
required to be made shall be carried
forward and taken into account in any
subsequent adjustment. No adjustment
need be made for a change in the par
value of the Ordinary Shares.
4.1.4. OTHER ADJUSTMENTS. In the event that at any
-------------------
time, as a result of an adjustment made
pursuant to this Section 4, S shall
become entitled to receive any
securities of T other than Ordinary
Shares thereafter the number of such
other securities so receivable upon
exercise of the Additional Purchase
Obligations and the Exercise Price
applicable to such exercise shall be
subject to adjustment from time to time
in a manner and on terms as nearly
equivalent as practicable to the
provisions with respect to the Ordinary
Shares contained in this Section 4.
4.2. NOTICE OF ADJUSTMENT. Whenever the number of Ordinary Shares or
other Equity Securities or property issuable upon the exercise of
each Additional Purchase Obligation or the Exercise Price is
adjusted, as herein provided, T shall promptly mail by first class
mail, postage prepaid, to S notice of such adjustment or adjustments
and shall deliver to S a certificate of T's chief financial officer
setting forth the number of Ordinary Shares or other Equity
Securities or property issuable upon the exercise of each Additional
Purchase Obligation or the Exercise Price after such adjustment,
setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such
adjustment was made.
4.3. STATEMENT ON ADDITIONAL PURCHASE OBLIGATIONS. Irrespective of any
adjustment in the number or kind of shares issuable upon the
exercise of the Additional Purchase Obligations or the Exercise
Price, Additional Purchase Obligations theretofore or thereafter
issued may continue to express the same number and kind of shares as
are stated in the Additional Purchase Obligations initially issuable
pursuant to this Agreement.
4.4. FRACTIONAL INTEREST. T shall not be required to issue fractional
Ordinary Shares upon the exercise of Additional Purchase
Obligations. If more than one Additional Purchase Obligation shall
be presented for exercise in full at the same time, the number of
full Ordinary Shares which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of Ordinary
Shares acquirable on exercise of the Additional Purchase Obligations
so presented. If any fraction of an Ordinary Share would, except for
the provisions of this section, be issuable on the exercise of any
Additional Purchase Obligation (or specified portion thereof), T
shall pay an amount in cash calculated by it to equal to the then
current market value per share multiplied by such fraction computed
to nearest whole cent. S, by its acceptance of the Additional
Purchase Obligation Certificates, expressly waive any and all rights
to receive any fraction of an Ordinary Share or a share certificate
representing a fraction of an Ordinary Share.
5. MANDATORY EXERCISE
5.1. MANDATORY EXERCISE EVENTS; TERMINATION OF Obligation. Subject to the
terms and conditions contained herein, S shall be obligated to
exercise each Additional Purchase Obligation within thirty days of
the following events (each a "Mandatory Exercise Event"):
5.1.1. In respect of the Series A-1 Additional Purchase
Obligation (and the B-1 Additional
Purchase Obligation if an Exercise
Notice was delivered prior to the date
the Series A-1 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs (or by the
CEO, in the event that at the relevant
time the Company shall employ only one
CEO) and the Chairman of the Board of T
certifying that the Board of Directors
of T has authorized commencement of
construction of Fab 2 at the site set
forth in the Business Plan, which
approval shall not occur prior to
obtaining all regulatory approvals
necessary for the construction start as
described in the Business Plan, provided
that such event must occur no later than
one month after the Closing under the
Share Purchase Agreement;
5.1.2. In respect of the Series A-2 Additional Purchase
Obligation and the Series B-2 Additional
Purchase Obligation (if an Exercise
Notice was delivered prior to the date
the Series A-2 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs or the CEO, as
the case may be, and the Chairman of the
Board of T certifying the commencement
of construction of the shell of the Fab
2 building in accordance with the
Business Plan provided that such event
must occur no later than three months
after the Closing under the Share
Purchase Agreement;
5.1.3. In respect of the Series A-3 Additional
Purchase Obligation and the Series B-3
Additional Purchase Obligation (if an
Exercise Notice was delivered prior to
the date the Series A-3 Additional
Purchase Obligation is mandatorily
exercisable), upon receipt of written
notice from T signed by the two Co-CEOs
or the CEO, as the case may be, and the
Chairman of the Board of T certifying
the completion of the construction of
the first phase of the cleanroom of
Fab 2 in accordance with the Business
Plan provided that such event must occur
no later than 12 months after the
Closing under the Share Purchase
Agreement;
5.1.4. In respect of the Series A-4 Additional Purchase
Obligation and the Series B-4 Additional
Purchase Obligation (if an Exercise
Notice was delivered prior to the date
the Series A-4 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs or the CEO, as
the case may be, and the Chairman of the
Board of T certifying the completion of
successful pilot production in Fab 2 in
accordance with the Business Plan
provided that such event must occur no
later than 18 months after the Closing
under the Share Purchase Agreement; and
5.1.5. In respect of the Series A-5 Additional Purchase
Obligation and the Series B-5 Additional
Purchase Obligation (if an Exercise
Notice was delivered prior to the date
the Series A-5 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs or the CEO, as
the case may be, and the Chairman of the
Board of T certifying that Fab 2 has
successfully produced wafers at the rate
of 5,000 per month for two full
consecutive months in accordance with
the Business Plan provided that such
event must occur no later than 22 months
after the Closing under the Share
Purchase Agreement.
Each of the Mandatory Exercise Events shall be deemed to have
occurred if the Mandatory Exercise Event occurs within seven and
one-half months from its original exercise date set forth above
(such seven and one-half month period, a "Grace Period"). In the
event that one of the Mandatory Exercise Events does not occur by
the last date set forth in the relevant clause of clauses 5.1.1 -
5.1.5, including during the corresponding Grace Period (a "Missed
Exercise"), then, if the subsequent Mandatory Exercise Event does
not occur by no later than the end of its corresponding Grace
Period, S shall not be obligated to effect the Missed Exercise and
any subsequent series of Additional Purchase Obligations and the
Additional Purchase Obligation relating to the Missed Exercise, to
the extent such Additional Purchase Obligations are unexercised,
shall automatically expire. However, if such subsequent Mandatory
Exercise Event does occur within the applicable Grace Period, then S
shall be obligated to exercise the Additional Purchase Obligation
related to that subsequent Mandatory Exercise Event and shall be
required to either effect the Missed Exercise within thirty days of
the occurrence of the relevant subsequent Mandatory Exercise Event
or the Additional Purchase Obligation relating to the Missed
Exercise shall expire.
In addition, and without limiting any other remedies available to T,
in the event that S fails to exercise an Additional Purchase
Obligation in connection with a Mandatory Exercise Event which it is
obligated to effect pursuant to this Section 5, any Additional
Purchase Obligations unexercised at such time shall automatically
expire
5.2. PERCENTAGE OWNERSHIP DELAY. Notwithstanding the
-----------------------------
provisions of Section 5.1, S may delay the
exercise of any Additional Purchase Obligation
if any such exercise would result in S owning
more than 19.9% of the outstanding share
capital of T.
5.3. OTHER CONDITIONS TO MANDATORY EXERCISE. In addition to the
conditions to Mandatory Exercise contained in Section 5.1, S's
obligation to effect a Mandatory Exercise shall be subject to
satisfaction of the following conditions (any of which may be waived
by S, in whole or in part, in S's discretion) in relation to each
Mandatory Exercise:
5.3.1. ACCURACY OF REPRESENTATIONS. All of T's
--------------------------------
representations and warranties in
Section 6.1(i) of this Agreement must
have been accurate in all material
respects (except that such
representations and warranties
specifically qualified by materiality
shall be read for purposes of this
Section so as not to require an
additional degree of materiality) as of
the date of this Agreement, and must be
accurate in all material respects as of
the date of the relevant Mandatory
Exercise, after giving effect, with
respect to the representations made in
Section 3.1 and 3.3 of the Share
Purchase Agreement, to the issuance of
Ordinary Shares contemplated by the
Business Plan and Additional Financing
Plan and without giving effect to any
supplement to the Schedules other than
supplements disclosing events and facts
not existing at the time of the Closing
and arising in the Ordinary Course of
Business.
5.3.2. ADDITIONAL FINANCINGS. T shall have raised all
-----------------------
the funds under the Additional
Financings required thereunder to have
been raised or obtained either prior to
or simultaneously with the date of the
relevant Mandatory Exercise as described
in the Additional Financing Plan (each,
a "Target Date"), including those funds
required to have been raised by the
relevant Target Date under (i) the debt
or equity financing described in Section
10 of the Business Plan and (ii) under
the grant from the Investment Center, in
each case on terms and conditions which
do not significantly deviate from the
terms and conditions agreed upon in
accordance with Section 5.6 of the Share
Purchase Agreement, PROVIDED, HOWEVER,
that this condition shall be deemed to
have been not satisfied only if the
failure to raise such funds causes a
material change in the timetable or cost
of the Fab 2 project in relation to the
Business Plan as determined by S.
Notwithstanding the foregoing, the
conditions set forth in this Section
5.2.2 shall be deemed to have been met
if the funds which were not raised as of
the relevant Target Date are raised
within 90 days of such Target Date on
terms and conditions substantially
similar to the terms and conditions upon
which such funds were supposed to have
been raised in accordance with Section
5.6 of the of the Share Purchase
Agreement.
5.3.3. TRANSACTION DOCUMENTS; ANCILLARY AGREEMENTS.
-------------------------------------------------
Each of the Transaction Documents and
the Toshiba Agreement shall be in full
force and effect and shall not have been
materially breached by any party thereto.
5.3.4. CERTIFICATES. In addition to the documents T is
-------------
obligated to deliver to S under this
Section 5, T shall furnish S with such
other documents as T may reasonably
request for the purpose of (i)
evidencing the performance by T of, or
the compliance by T with, any covenant
or obligation required to be performed
or complied with by T in relation to the
relevant Mandatory Exercise and
(ii) evidencing the satisfaction of any
condition referred to in this Section 5.
5.3.5. NO PROCEEDINGS. Since the date of this
-----------------
Agreement, there must not have been
commenced by a third party against S or
T, or against any Person affiliated with
S or T, any Proceeding (a) involving any
challenge to, or seeking damages or
other relief in connection with, any of
the Contemplated Transactions, or (b)
that may have the effect of preventing,
delaying, making illegal, or otherwise
interfering with any of the Contemplated
Transactions.
5.3.6. BANKRUPTCY-RELATED EVENTS. None of the
-----------------------------
following events shall have occurred for
any reason whatsoever (and whether such
occurrence shall be voluntary or
involuntary, or come about or be
effected by operation of law, or
pursuant to or in compliance with any
judgement, decree or order of any court
or any order, rule or regulation of any
administrative or governmental body):
5.3.6.1. T shall be unable to pay its debts generally as
they become due; file a petition
to take advantage of any
insolvency statute; make an
assignment for the benefit of its
creditors; commence a proceeding
for the appointment of a
receiver, trustee, liquidator or
conservator of itself or of the
whole or any substantial part of
its property; file a petition or
answer seeking reorganization or
arrangement or similar relief
under applicable bankruptcy laws;
or
5.3.6.2. A court of competent jurisdiction shall have
entered an order, judgement or
decree appointing a custodian,
receiver, trustee, liquidator or
conservator of T or of the whole
or any substantial part of its
properties, or approve a petition
filed against T seeking
reorganization or arrangement or
similar relief under applicable
bankruptcy, or if, under the
provisions of any law for the
relief or aid of debtors, a court
of competent jurisdiction shall
assume custody or control of T or
of the whole or any substantial
part of its properties, or if
there was commenced against T any
proceeding or petition seeking
reorganization or arrangement or
similar relief under applicable
bankruptcy laws, or if T shall
have taken any action to indicate
its consent to or approval of
any such proceeding or petition,
and any one of which proceedings
shall not have been vacated or
abandoned within 30 days.
5.3.6.3. A default shall have occurred in any agreement
or instrument under or pursuant
to which any material
indebtedness of T shall have been
issued, created, assumed,
guaranteed or secured, and such
default shall continure for more
than the period of grace, if any,
therein specified, or if such
default shall permit the holder
of such indebtedness to
accelerate the maturity thereof,
provided, however, that the
condition contained in this
Section 5.3.6.3 shall not be
deemed to have been satisfied in
the event that a default in any
agreement or instrument under
which any indebtedness of T has
been issued could give rise to a
cross default provision in in any
agreement or instrument under or
pursuant to which any material
indebtedness of T shall have been
issued, created, assumed,
guaranteed or secured, or if the
cumulative effect of any or all
such defaults could be material
to the Company.
6. REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES OF T. (i) T hereby makes in favor of
S, as of the date hereof and as of the date of each exercise of each
Additional Purchase Obligation, each of the representations and
warranties made by the Company in Sections 3.1, 3.2, 3.3, 3.14.1(i),
the first two sentences of 3.14.2 and clause (ii) of the first
paragraph of 3.15 of the Share Purchase Agreement, provided that
references to "this Agreement" shall refer both to this Agreement
and the Share Purchase Agreement; references, directly or
indirectly, to the Escrow Agreement shall be ignored; references to
"Shares" and the "Closing" shall be deemed to be references to the
Ordinary Shares to be issued pursuant to the exercise of the
Additional Purchase Obligation; and references to the "Closing Date"
shall refer to the date that Ordinary Shares are actually issued and
delivered to S pursuant to the relevant exercise of an Additional
Purchase Obligation. Notwithstanding the foregoing, the
representation contained in the first two sentences of Section
3.14.2 shall be read to relate to Fab 2. In the event that it is
uncertain if a situation, event or fact that would otherwise be
included in the scope of such representation relates to Fab 2, the
matter shall be conclusively decided by the Project Committee.
6.2. REPRESENTATIONS AND WARRANTIES OF S. S hereby makes in favor of T,
as of the date hereof and as of the date of each exercise of an
Additional Purchase Obligation, the representations and warranties
made by S under Sections 4.1 - 4.5 of the Share Purchase Agreement,
provided that references to "this Agreement" shall refer both to
this Agreement and the Share Purchase Agreement, references to
Shares shall refer to the Additional Purchase Obligations and the
Ordinary Shares issuable upon the exercise thereof and references,
directly or indirectly, to the Escrow Agreement shall be ignored.
7. COVENANTS
7.1. RESERVATION OF SHARES. T will reserve for issuance such number of
Ordinary Shares as shall be sufficient for issuance and delivery
thereof upon exercise of all outstanding Additional Purchase
Obligations and will take any and all corporate action necessary to
validly and legally issue fully paid and nonassessable Ordinary
Shares.
7.2. CONSENTS; REQUIRED APPROVALS. T and S will each, as promptly as
practicable after the date of this Agreement, take all action
required of each of them, respectively, to obtain as promptly as
practicable all necessary Consents and agreements of, and to give
all notices and make all other filings with, any third parties,
including Governmental Bodies, necessary to authorize, approve or
permit the consummation of the transactions contemplated hereby, the
Contemplated Transactions and the transactions contemplated by the
Ancillary Agreements. Between the date of this Agreement and the
date of the last issuance of Ordinary Shares pursuant to an exercise
of a Additional Purchase Obligation, T will cooperate with S with
respect to all filings that S elects to make or is required by Legal
Requirements to make in connection with the performance of this
Agreement and the Additional Purchase Obligations and S will
likewise cooperate with T.
7.3. OPERATION OF T'S BUSINESS. Between the date of this Agreement and
the date of the last issuance of Ordinary Shares pursuant to a
Mandatory Exercise, T will not (i) take or agree or commit to take
any action that would make any representation or warranty of T
hereunder inaccurate in any respect at, or as of any time prior to,
the date of the last issuance of Ordinary Shares pursuant to a
Mandatory Exercise or (ii) omit or agree or commit to omit to take
any action necessary to prevent any such representation or warranty
from being inaccurate in any respect at any such time.
8. MISCELLANEOUS
8.1. PAYMENT OF TAXES. T will pay all taxes and other governmental
charges (other than on the net income of S) that may be imposed or
deliverable upon exercise of Additional Purchase Obligations and
issuance of Ordinary Shares with respect thereto. T will not be
required, however, to pay any tax or other charges which may be
payable in respect of any transfer involved in the issue of any
certificate for Ordinary Shares or other securities underlying the
Additional Purchase Obligations or payment of cash or other property
to any person other than the holder of an Additional Purchase
Obligation Certificate surrendered upon the exercise thereof.
8.2. MUTILATED, DESTROYED, LOST AND STOLEN ADDITIONAL PURCHASE OBLIGATION
CERTIFICATES. If (a) any mutilated Additional Purchase Obligation
Certificate is surrendered to T or (b) T receives evidence to its
satisfaction of the destruction, loss or theft of any Additional
Purchase Obligation Certificate, then, T shall execute and deliver,
in exchange for any such mutilated Additional Purchase Obligation
Certificate or in lieu of any such destroyed, lost or stolen
Additional Purchase Obligation Certificate, a new Additional
Purchase Obligation Certificate of like tenor and for a like
aggregate number of Additional Purchase Obligations.
Upon the issuance of any new Additional Purchase Obligation
Certificate under this Section 8.2, T may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and other expenses in connection
therewith and an appropriate indemnity with respect to losses
related thereto.
Every new Additional Purchase Obligation Certificate executed and
delivered pursuant to this Section 8.2 in lieu of any destroyed,
lost or stolen Additional Purchase Obligation Certificate shall
constitute an original contractual obligation of T, whether or not
the destroyed, lost or stolen Additional Purchase Obligation
Certificate shall be at any time enforceable by anyone, and shall be
entitled to the benefits of this Agreement equally and
proportionately with any and all other Additional Purchase
Obligation Certificates duly executed and delivered hereunder.
The provisions of this Section 8.2 are exclusive and shall prelude
(to the extent lawful) all other rights or remedies with respect to
the replacement of mutilated, destroyed, lost or stolen Additional
Purchase Obligation Certificates.
8.3. MISCELLANEOUS RIGHTS. The rights of S upon the occurrence of the
events set forth in this Agreement are cumulative. If more than one
such event shall occur and the periods following the occurrence of
such events and prior to the closing of the transactions that are
the subject of such events overlap, S may exercise such rights
arising therefrom as S may elect without any condition imposed upon
such exercise not contained in this Agreement.
8.4. NOTICES. Any notice, demand or delivery authorized by
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this Agreement shall be sufficiently given or
made when mailed if sent by first-class mail,
postage prepaid, addressed to the parties as
follows:
T:
Attention: Co-Chief Executive Officer
P.O. Box 619
Migdal Haemek 23105 Israel
Facsimile No.: 972-6-654-7788
with a copy to: Yigal Arnon & Co.
3 Daniel Frisch Street
Tel Aviv, Israel
Attention: David H. Schapiro, Adv.
Facsimile No.: 972-3-608-7714
S:
Attention: President and CEO
SanDisk Corporation
140 Caspian Court
Sunnyvale, California 94089
Facsimile No.:(408) 542-0600
with a copy to: SanDisk Corporation
140 Caspian Court
Sunnyvale, California 94089
Attention: Vice President and General
Counsel
Facsimile No.: (408) 548-0385or such
other address as shall have been
furnished to the party giving or making
such notice, demand or delivery.
8.5. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior
consent of the other parties, except that S may assign any of its
rights under this Agreement to any wholly owned Subsidiary of S or
to any Subsidiary which is wholly owned other than a nominal
interest, so long as such ownership shall be maintained. Subject to
the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to
in this Agreement will be construed to give any Person other than
the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to
this Agreement and their successors and assigns.
8.6. COUNTERPARTS. This Agreement may be executed in any
-------------
number of counterparts, each of which shall be
deemed an original, but all of which together
constitute one and the same instrument.
8.7. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject
matter (including the term sheet between S and T dated March 15,
2000 and all drafts hereof and thereof) and constitutes (along with
the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be
charged with the amendment.
8.8. TERMINATION. This Agreement (other than T's obligations with respect
to Additional Purchase Obligations previously exercised) and the
indemnification provisions relating hereto appearing in Sections 10
of the Share Purchase Agreement, shall terminate and be of no
further force and effect on the Expiration Date.
8.9. APPLICABLE LAW. This Agreement and each Additional
----------------
Purchase Obligation issued hereunder and all
rights arising hereunder shall be governed by
the law of the State of California, without
giving effect to the conflict of laws
provisions thereof.
8.10. HEADINGS. The descriptive headings of the several
---------
Sections of this Agreement are inserted for
convenience and shall not control or affect the
meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
Tower Semiconductor Ltd.
By: /S/ YOAV NISSAN COHEN
Name: Yoav Nissan Cohen
Title: Co-Chief Executive Officer
SanDisk Corporation
By: /S/ ELI HARARI
Name: Eli Harari
Title: Chief Executive Officer
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
January 18, 2001, by and between Tower Semiconductor Ltd., an Israeli
corporation (the "Company" or "T"), SanDisk Corporation, a Delaware corporation
("S"), Alliance Semiconductor Corp. a Delaware corporation ("Alliance"),
Macronix International Co., Ltd., a Taiwanese corporation (together with its
affiliates referred to as "Macronix"), QuickLogic Corporation, a Delaware
corporation ("QuickLogic") and The Israel Corporation Ltd., an Israeli
corporation ("TIC").
WHEREAS, the Company and S entered into a Share Purchase Agreement dated as
of July 4, 2000 (the "SPA") and an Additional Purchase Obligation Agreement
dated as of July 4, 2000 (the "Additional Purchase Obligation Agreement");
WHEREAS, the Company and Alliance entered into a Share Purchase Agreement
dated as of August 29, 2000 (the "Alliance SPA"), which includes certain
provisions of the Additional Purchase Obligation Agreement (the "Alliance
Additional Purchase Obligation Agreement");
WHEREAS, the Company and Macronix entered into a Share Purchase Agreement
dated as of December 12, 2000 (the "Macronix SPA"), which includes certain
provisions of the Additional Purchase Obligation Agreement (the "Macronix
Additional Purchase Obligation Agreement");
WHEREAS, the Company and QuickLogic entered into a Share Purchase Agreement
dated as of December 12, 2000 (the "QuickLogic SPA"), which includes certain
provisions of the Additional Purchase Obligation Agreement (the "QuickLogic
Additional Purchase Obligation Agreement");
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated in the SPA, the Alliance SPA, the Macronix SPA and the QuickLogic
SPA that the parties hereto execute and deliver this Agreement;
NOW THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement and intending to be legally bound, the
parties hereto hereby agree as follows:
1. DEFINITIONS
1.
2. For purposes of this Agreement:
3.
4. 1.1 The term "Holder" shall mean a member of the
Purchaser Group and/or TIC, as the case may be.
5.
6. 1.2 The term "Ordinary Shares" means the ordinary shares, par value
NIS1.00 each of the Company (as may be adjusted for any stock split,
stock combination, reclassification or any other recapitalization
event).
7.
8. 1.3 The term "Closing" means Closing as such term is
defined in the SPA.
9.
10. 1.4 The term "Purchaser Group" means S, Alliance, Macronix,
QuickLogic and any additional parties that enter into share purchase
agreements with T prior to the Closing and that close simultaneously
with the SPA or any successors thereto or permitted assignees
thereof.
11.
12. 1.5 The term "Registrable Securities" means the Purchaser Group
Registrable Securities and/or the TIC Registrable Securities, as the
case may be, and any securities issued as a dividend on or other
distribution with respect to, or in exchange for or replacement of
such secutities.
13.
14. 1.6 The term "Purchaser Group Registrable
Securities" means the Ordinary Shares (a)
purchased at the Closing under the SPA by S, (b)
purchased at the closing under the Alliance SPA
by Alliance, (c) purchased at the closing under
the Macronix SPA by Macronix, (d) purchased at
the closing under the QuickLogic SPA by
QuickLogic, (e) purchased by any additional
members of the Purchaser Group at the closing of
any additional share purchase agreements with T
that close simultaneously with the Closing of
the SPA, (f) purchased by S pursuant to the
Additional Purchase Obligation Agreement, (g)
purchased by Alliance pursuant to the Alliance
Additional Purchase Obligation Agreement, (h)
purchased by Macronix pursuant to the Macronix
Additional Purchase Obligation Agreement, (i)
purchased by QuickLogic pursuant to the
QuickLogic Additional Purchase Obligation
Agreement, (j) purchased by any additional
members of the Purchaser Group pursuant to an
additional purchase obligation agreement entered
into, prior to the Closing of the SPA, between T
and such additional members of the Purchaser
Group, (k) otherwise issued by the Company to S
pursuant to the terms of the SPA or the
Additional Purchase Obligation Agreement, (l)
otherwise issued by the Company to Alliance
pursuant to the terms of the Alliance SPA or the
Alliance Additional Purchase Obligation
Agreement, (m) otherwise issued by the Company
to Macronix pursuant to the terms of the
Macronix SPA or the Macronix Additional Purchase
Obligation Agreement, (n) otherwise issued by
the Company to QuickLogic pursuant to the terms
of the QuickLogic SPA or the QuickLogic
Additional Purchase Obligation Agreement, and
(o) otherwise issued by the Company to any
additional member of the Purchaser Group
pursuant to the terms of any additional share
purchase agreements with T that close
simultaneously with the Closing or any
additional purchase obligation agreement entered
into, prior to the Closing of the SPA, between T
and such additional members of the Purchaser
Group. As to any particular Registrable
Securities, such shares shall cease to be
Registrable Securities for purposes of this
Agreement when (i) a registration statement with
respect to the sale of such shares shall have
become effective under the Securities Act and
such shares shall have been disposed of under
such registration statement, (ii) such shares
shall have been otherwise transferred or
disposed of, and new certificates therefor not
bearing a legend restricting further transfer
shall have been delivered by the Company, and
subsequent transfer or disposition of them shall
not require their registration or qualification
under the Securities Act or any similar state
law then in force or (iii) such shares shall
have ceased to be outstanding.
15.
16. 1.7 The terms "register," "registered" and
"registration" refer to a registration effected
by preparing and filing a registration statement
or similar document in compliance with the
Securities Act, and the declaration or ordering
by the SEC of effectiveness of such registration
statement or document, or the equivalent under
the laws of another jurisdiction.
17.
18. 1.8 The term "Securities Act" means the United
States Securities Act of 1933, as amended.
19.
20. 1.9 The term "SEC" means the United States
Securities and Exchange Commission.
21.
22. 1.10 The term "TIC" means The Israel Corporation Ltd.
23.
24. 1.11 The term "TIC Registrable Securities" means the Ordinary Shares
held by TIC as of the date of the Closing. As to any particular TIC
Registrable Securities, such shares shall cease to be TIC Registrable
Securities for purposes of this Agreement when (i) a registration
statement with respect to the sale of such shares shall have become
effective under the Securities Act and such shares shall have been
disposed of under such registration statement, (ii) such shares shall
have been otherwise transferred or disposed of, and new certificates
therefor not bearing a legend restricting further transfer shall have
been delivered by the Company, and subsequent transfer or disposition
of them shall not require their registration or qualification under
the Securities Act or any similar state law then in force, (iii) such
shares shall have ceased to be outstanding, or (iv) such shares have
been sold pursuant to Rule 144 or Rule 144A under the Securities Act.
.
25.
26. 1.12 The term "Additional Purchase Obligation" means each of the
additional obligations to purchase Ordinary Shares of the Company
issued to S pursuant to the Additional Purchase Obligation Agreement,
the additional obligations to purchase Ordinary Shares of the Company
issued to Alliance pursuant to the Alliance Additional Purchase
Obligation Agreement, the additional obligations to purchase Ordinary
Shares of the Company issued to Macronix pursuant to the Macronix
Additional Purchase Obligation Agreement, the additional obligations
to purchase Ordinary Shares of the Company issued to QuickLogic
pursuant to the QuickLogic Additional Purchase Obligation Agreement
or any similar additional obligations to purchase Ordinary Shares of
the Company issued to any additional members of the Purchaser Group
pursuant to an additional purchase obligation agreement entered into,
prior to the Closing of the SPA, between T and such additional member
of the Purchaser Group.
2. DEMAND REGISTRATION
2.1 At any time following the third anniversary of the Closing (the
"Demand Period"), TIC and each of S, Alliance and Macronix, may
request in writing that all or part of their Registrable Securities
be registered under the Securities Act and/or listed so as to be
eligible for public trading on any securities exchange on which the
Ordinary Shares are otherwise traded (a "Demand"); provided, however,
the initiation of such a Demand may not be made by a Holder that
holds under 1,500,000 Ordinary Shares. In addition, at any time
during the Demand Period, members of the Purchaser Group holding a
majority of the Purchaser Group Registrable Securities may jointly
initiate an additional Demand. Notwithstanding the foregoing, in the
event that, pursuant to Section 5.3 of the Additional Purchase
Obligation Agreement, a member of the Purchaser Group that holds at
least 800,000 Ordinary Shares does not exercise any of its Additional
Purchase Obligations, the right of such member of the Purchaser Group
to initiate a Demand shall be accelerated to the tenth day after the
date upon which the event giving rise to the right of such member of
the Purchaser Group not to exercise the Additional Purchase
Obligation occurs. Upon receipt of a Demand of a member or members of
the Purchaser Group, the Company will promptly give written notice of
such Demand to TIC and to all other members of the Purchaser Group
and the Company shall effect the registration of all Registrable
Securities for which registration has been requested including
Registrable Securities which the Company has been requested to
register by TIC or members of the Purchaser Group by written request
given to the Company within 30 days after the giving of such written
notice by the Company. The Company shall use its best efforts to have
a Demand become effective by the 60th day after a member of the
Purchaser Group makes such Demand and, shall keep such Demand
effective until the distribution of such Registrable Securities
registered pursuant thereto is complete, if underwritten, or,
otherwise, for 180 days. Upon receipt of a Demand of TIC, the Company
will promptly give written notice of such Demand to all members of
the Purchaser Group and the Company shall effect the registration of
all Registrable Securities for which registration has been requested
including Registrable Securities which the Company has been requested
to register by members of the Purchaser Group by written request
given to the Company within 30 days after the giving of such written
notice by the Company. The Company shall use its best efforts to have
a Demand become effective by the 60th day after TIC makes such Demand
and, shall keep such Demand effective until the distribution of such
Registrable Securities registered pursuant thereto is complete, if
underwritten, or, otherwise, for 180 days.
2.2 In the event of a Demand by a member or members of the Purchaser
Group in which the registration of Registrable Securities is
underwritten and the managing underwriter of the offering advises the
members of the Purchaser Group and TIC in writing that marketing
factors require a limitation of the number of shares to be
underwritten, then there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation,
first shares which the Company may wish to register for its own
account or for the account of other shareholders of the Company, and
then shares held by TIC, and then shares held by the members of the
Purchaser Group on a pro rata basis to the number of shares that each
member of the Purchaser Group included in the Demand. In the event of
a Demand by TIC in which the registration of the Registrable
Securities is underwritten and the managing underwriter of the
offering advises TIC and the members of the Purchaser Group in
writing that marketing factors require a limitation of the number of
shares to be underwritten, then there shall be excluded from such
registration and underwriting to the extent necessary to satisfy such
limitation, first shares which the Company may wish to register for
its own account or for the account of other shareholders of the
Company, and then shares held by the members of the Purchaser Group
on a pro rata basis to the number of shares that each member of the
Purchaser Group included in the Demand, and then shares held by TIC.
In the event that, following a receipt of a request by the members of
the Purchaser Group and/or TIC, as the case may be, as detailed
above, the managing underwriter advises the Company that due to
marketing factors the shares requested to be registered for trading
could not be sold, and accordingly the Company does not effect a
registration statement, then such request by the members of the
Purchaser Group and/or TIC, as the case may be, shall not be
considered a Demand under this Section 2.
2.3 Any registration proceeding begun pursuant to Section 2.1 that is
subsequently withdrawn at the request of the members of the Purchaser
Group that initiated such registration proceeding and/or TIC, as the
case may be, shall count toward the quota of registration statements
which the members of the Purchaser Group and/or TIC, as the case may
be, have the right to Demand pursuant to Section 2.1; provided,
however, that such withdrawn registration shall not be so counted as
a Demand if such withdrawal is based upon (a) material adverse
information relating to the Company or its condition, business or
prospects which is different from that generally known to the
member(s) of the Purchaser Group that were to participate in such
registration proceeding, in the event of a Demand by a member or
members of the Purchaser Group and/or TIC, in the event of a Demand
by TIC, as the case may be, at the time of its request or (b) general
securities market conditions which are different from that generally
known to the member(s) of the Purchaser Group that were to
participate in such registration proceeding, in the event of a Demand
by a member or members of the Purchaser Group and/or TIC, in the
event of a Demand by TIC, as the case may be, at the time of its
request, provided, in connection with this clause (b), that the
member(s) of the Purchaser Group that were to participate in such
registration proceeding, in the event of a Demand by a member or
members of the Purchaser Group and/or TIC, in the event of a Demand
by TIC, as the case may be, reimburse the Company for its expenses
incurred in connection with effecting such withdrawn registration.
2.4 The Company may not cause any other registration of securities for
sale for its own account (other than a registration of securities to
be offered to employees, directors or consultants pursuant to a
benefit plan on Form S-8 or a registration in connection with a
merger, an exchange offer or any acquisition) to be initiated after a
registration requested pursuant to Section 2.1 and to become
effective less than 180 days after the effective date of the
registration requested pursuant to Section 2.1.
2.5 Notwithstanding the other provisions of this Section 2, in the event
that at any time during the Demand Period the Company shall receive
from a Holder, or a group of Holders, a written request that the
Company effect a registration on Form F-3 (or any equivalent or
successor form) with respect to Registrable Securities (the "F-3")
where the aggregate net proceeds from the sale of such Registrable
Securities equals at least three million United States Dollars
(US$3,000,000), the Company will within twenty (20) days after
receipt of any such request, file such registration and all such
qualifications and compliance as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion
of the Registrable Securities as are specified in such request, and
use its best efforts to have such registration on Form F-3 effective
by the 60th day after the Holder, or group of Holders, make such
request and keep such registration on Form F-3 effective until the
distribution is complete, if underwritten, or, otherwise, for 270
days; PROVIDED, HOWEVER, that the Company shall not be obligated to
file any such registration, qualification or compliance, pursuant to
this Section 2.5 if the Company has, within the 180 day period
preceding the date of such request, already effected one (1)
registration for a requesting Holder pursuant to this Section 2.5.
The Company undertakes that it will use its best efforts to continue
to comply with all necessary filings and other requirements so as to
maintain its qualification to use Form F-3.
2.6 The Company shall not be required to effect more than three (3)
registrations initiated by TIC under Section 2.1. The Company shall
not be required to effect more than one (1) registration initiated by
each of S, Alliance and Macronix under Section 2.1 and one (1)
additional registration jointly initiated by members of the Purchaser
Group holding a majority of the Purchaser Group Registrable
Securities under Section 2.1. Concurrent registrations in respect of
multiple exchanges shall be construed as a single registration for
the purposes of this Section 2.6.
2.7 The Company shall have the right to defer filing a registration
statement (a "Registration Deferral") under the Securities Act
pursuant to this Section 2 not more than once in any 12-month period
if (i) the Board of Directors of the Company shall determine that it
would be seriously detrimental to the Company to file such
registration statement at the date the filing would otherwise be
required under this Agreement, or (ii) the Board of Directors of the
Company determines in good faith that (A) the Company is in
possession of material, non-public information concerning an
acquisition, merger, recapitalization, consolidation, reorganization
or other material transaction by or of the Company or concerning
pending or threatened litigation and (B) disclosure of such
information would jeopardize any such transaction or litigation or
otherwise materially harm the Company.
2.8 A Registration Deferral shall end by the date that is 90 days from
the date of such determination by the Company (the "90th Day"), or,
in the case described in Section 2.7(ii) above, the earlier of the
90th Day and the date such material information is disclosed to the
public or ceases to be material, such transaction is completed or
abandoned or such litigation is settled or finally determined. In the
event a Registration Deferral is instituted, the members of the
Purchaser Group and/or TIC, as the case may be, shall be entitled to
withdraw such request. If such request is withdrawn, such
registration shall not count as one of the permitted registrations
under this Section 2. The Company shall promptly notify the members
of the Purchaser Group and/or TIC of the expiration or earlier
termination of any Registration Deferral.
3. INCIDENTAL REGISTRATION
3.1 If the Company at any time proposes to register (other than a
registration of securities to be offered to employees, directors or
consultants pursuant to a benefit plan on Form S-8 or a registration
in connection with a merger, an exchange offer or any acquisition)
any of its securities, it shall give notice to each Holder of such
intention at least thirty (30) days prior to filing such registration
statement. Upon the written request of any Holder within twenty (20)
days after receipt of any such notice, the Company shall include in
such registration all of the Registrable Securities indicated in such
request, so as to permit the disposition of the shares so registered.
3.2 Notwithstanding any other provision of this Section 3, in the event
that the Company is undertaking a registration of its securities
other than pursuant to a Demand under Section 2 of this Agreement and
the managing underwriter advises the Company in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then there shall be excluded from such registration and
underwriting, to the extent necessary to satisfy such limitation,
first shares held by any shareholders other than the Holders, then
shares held by the Holders pro rata to their respective shareholdings
in the Company, provided that in the event that a Holder does not
wish to include the full pro rata amount of shares it could include
in the relevant registration, then the remaining Holders shall have
the right to include in such registration an amount of shares equal
to their pro rata portion plus the amount of the other Holder's pro
rata portion that such Holder has chosen not to include; and then
shares which the Company may wish to register for its own account.
4. OBLIGATIONS OF THE COMPANY
1.
2. Whenever required under this Agreement to file a registration statement
with respect to the Registrable Securities, the Company shall:
3.
4. 4.1 Prepare and file with the SEC (or other relevant body) a
registration statement with respect to such Registrable Securities
and use its best efforts to cause such registration statement to
become effective.
5.
6. 4.2 Promptly prepare and file with the SEC (or other
relevant body) such amendments and supplements
to such registration statement and the
prospectus used in connection with such
registration statement as may be necessary to
comply with the provisions of the Securities Act
(or other relevant legislation) with respect to
the disposition of all securities covered by
such registration statement.
7.
8. 4.3 Furnish to the Holders such number of copies of
a prospectus, including a preliminary
prospectus, in conformity with the requirements
of the Securities Act (or other relevant
legislation), and such other documents as it may
reasonably request in order to facilitate the
disposition of Registrable Securities owned by
it.
9.
10. 4.4 Register and qualify the securities covered by
such registration statement under such other
securities or blue sky laws of such
jurisdictions as shall be reasonably requested
by the Holders, provided, however, that the
Company shall not be required to qualify to do
business as a foreign corporation or to file any
general consent to service of process in any
jurisdiction in which it has not already so
qualified or filed.
11.
12. 4.5 In the event of any underwritten public
offering, enter into and perform its obligations
under an underwriting agreement with usual and
customary terms that are generally satisfactory
to the managing underwriter of such offer. The
Holders shall also enter into and perform their
obligations under such an agreement (the terms
of which must be satisfactory to each Holder if
such Holder is to participate in such
offering).
13.
14. 4.6 Notify the Holders at any time when a prospectus
relating to a registration statement filed
pursuant hereto is required to be delivered
under the Securities Act or the happening of any
event as a result of which the prospectus
included in such registration statement, as then
in effect, includes an untrue statement of a
material fact or omits to state a material fact
required to be stated therein or necessary to
make the statements therein not misleading in
the light of the circumstances then existing, in
which event the Holders shall forthwith
discontinue disposition of its Registrable
Securities pursuant to such prospectus until it
is advised in writing by the Company that the
use of such prospectus may be resumed or until
such holder receives copies of any supplement or
amendment to such prospectus.
15.
16. 4.7 Cause all Registrable Securities registered
pursuant thereunder to be listed on each
securities exchange on which similar securities
issued by the Company are then listed.
17.
18. 4.8 Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities not later than the effective date of such
registration.
19.
20. 4.9 Afford the Holders and their representatives the
opportunity to make such examination of the
business affairs of the Company and its
subsidiaries as the Holders may reasonably deem
necessary to satisfy itself as to the accuracy
of the registration statement (subject to a
reasonable confidentiality undertaking on the
part of the Holders and their representatives).
21.
22. 4.10 Furnish, at the request of the Holders in connection with the
registration of Registrable Securities pursuant to this Agreement, on
the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders, and (ii) a letter, dated
such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the
Holders.
23.
24. 5. INFORMATION
25.
26. It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement that each Holder shall furnish
to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be required to effect the registration of their
Registrable Securities.
27.
28. 6. EXPENSES OF REGISTRATION
29.
30. All expenses incurred by the Company in connection with any registration
pursuant to this Agreement (other than underwriter's commissions and fees)
including without limitation all registration, filing and qualification
fees, printers' and accounting fees and fees and disbursements of counsel
for the Company and fees and disbursements of one counsel for the Holders,
shall be borne by the Company.
31.
32. 7. INDEMNIFICATION
33.
34. In the event any Ordinary Shares are included in a
registration statement in accordance herewith:
35.
36. 7.1 To the extent permitted by law, the Company will
indemnify and hold harmless the Holders, the
officers and directors of any Holder, any
underwriter (as defined in the Securities Act)
for any Holder and each person, if any, who
controls any Holder or underwriter within the
meaning of the Securities Act or the 1934 Act
against any losses, claims, damages, or
liabilities to which they may become subject
under the Securities Act, the Securities
Exchange Act or other United States federal or
state law or the securities laws of the State of
Israel, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof)
arise out of or are based upon any of the
following statements, omissions or violations
(collectively a "Violation"): (i) any untrue
statement of a material fact contained in such
registration statement, including any
preliminary prospectus or final prospectus
contained therein or any amendments or
supplements thereto; (ii) the omission to state
therein a material fact required to be stated
therein, or necessary to make the statements
therein not misleading in light of the
circumstances under which they were made, or
(iii) any violation by the Company of the
Securities Act, the Securities Exchange Act, any
state securities law or any rule or regulation
promulgated under the Securities Act, the
Securities Exchange Act or any state securities
law, or any of the securities laws of the State
of Israel or any rule or regulation thereunder;
and the Company will reimburse each such Holder,
officer or director, underwriter or controlling
person for any legal or other expenses
reasonably incurred by them in connection with
investigating or defending any such loss, claim,
damage, liability, or action; provided, however,
that the indemnity agreement contained in this
Section 7, shall not apply to amounts paid in
settlement of any such loss, claim, damage,
liability, or action if such settlement is
effected without the consent of the Company
(which consent shall not be unreasonably
withheld), nor shall the Company be liable to a
Holder, underwriter or controlling person in any
such case for any such loss, claim, damage,
liability, or action to the extent that it
arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with
written information furnished to the Company
expressly for use in connection with such
registration by a Holder, underwriter or
controlling person. Such indemnity shall remain
in full force and effect regardless of any
investigation made by or on behalf of a Holder,
the underwriter or any controlling person of a
Holder or the underwriter, and regardless of any
sale in connection with such offering by a
Holder.
37.
38. 7.2 To the extent permitted by law, each Holder will
indemnify and hold harmless the Company, each of
its directors, each of its officers who have
signed the registration statement, each person,
if any, who controls the Company within the
meaning of the Securities Act, any underwriter
(within the meaning of the Securities Act) for
the Company, any person who controls such
underwriter, and any other parties selling
securities in such registration statement or any
directors or officers or any persons controlling
such parties, against any losses, claims,
damages, or liabilities to which the Company or
any such director, officer, controlling person,
or underwriter or controlling person may become
subject under the Securities Act, the Securities
Exchange Act or other United States federal or
state law, or any of the securities laws of the
State of Israel, insofar as such losses, claims,
damages, liabilities (or actions in respect
hereto) arise out of or are based upon any
Violation, in each case to the extent (and only
to the extent) that such Violation occurs in
reliance upon and in conformity with written
information furnished to the Company by such
Holder expressly for use in connection with such
registration statement; and such Holder will
reimburse any legal or other expenses reasonably
incurred by the Company or any such director,
officer, controlling person, underwriter or
controlling person, in connection with
investigating or defending any such loss, claim,
damage, liability or action attributable to such
Violation or alleged Violation; provided,
however, that the indemnity agreement contained
in this Section 7 shall not apply to amounts
paid in settlement of any such loss, claim,
damage, liability or action if such settlement
is effected without the consent of such Holder,
which consent shall not be unreasonably
withheld. In no event shall the liability of a
Holder hereunder exceed the net proceeds from
the offering received by such Holder.
39.
40. 7.3 Promptly after receipt by an indemnified party
under this Section 7.3 of notice of the
commencement of any action (including any
governmental action), such indemnified party
will, if a claim in respect thereof is to be
made against any indemnifying party under this
Section 7, notify the indemnifying party in
writing of the commencement thereof and the
indemnifying party shall have the right to
participate in, and, to the extent the
indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however,
that an indemnified party shall have the right
to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party,
if representation of such indemnified party by
the counsel retained by the indemnifying party
would be inappropriate due to actual or
potential differing interests between such
indemnified party and any other party
represented by such counsel in such proceeding.
The failure to notify an indemnifying party
within a reasonable time of the commencement of
any such action, if prejudicial to its ability
to defend such action, shall relieve such
indemnifying party of any liability to the
indemnifying party under this Section 7, but the
omission to so notify the indemnifying party
will not relieve such indemnifying party of any
liability that it may have to any indemnified
party otherwise than under this Section 7.
41.
42.
8. CONTRIBUTION
43.
44. If for any reason the foregoing indemnity is unavailable, or is
insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages, liabilities or expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other from the registration or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, or
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and
the indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations; provided that in no event shall any amount paid
or due by a Holder pursuant to Sections 7 and 8 hereunder exceed the net
proceeds from the offering received by such Holder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
45.
46. 9. DESIGNATION OF UNDERWRITER
47.
48. 9.1 In the case of any registration effected
pursuant to Section 2.1, should the offering be
underwritten, the Company and the relevant
member of the Purchaser Group and/or TIC, as the
case may be, shall confer as to the selection of
a managing underwriter. Should they fail to
reach agreement, the selection shall be made by
the relevant member of the Purchaser Group
and/or TIC, as the case may be.
49.
50. 9.2 In the case of any registration initiated by the
Company, the Company shall have the right to
designate the managing underwriter in any
underwritten offering.
51.
52. 10. RULE 144 REPORTING
53.
54. With a view to making available the benefits of certain rules and
regulations of the SEC that may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to use
its best efforts to:
55.
56. 10.1 make and keep public information regarding the
Company available as those terms are understood
and defined in Rule 144 under the Securities
Act, at all times;
57.
58. 10.2 file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and
the Securities Exchange Act at any time after it has become subject
to such reporting requirements;
59.
60. 10.3 so long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon written request a written statement by the
Company as to its compliance with the reporting requirements of Rule
144, and of the Securities Act and the Securities Exchange Act, a
copy of the most recent annual or quarterly report of the Company,
and such other reports and documents so filed as such Holder may
reasonably request in availing itself of any rule or regulation of
the SEC allowing such Holder to sell any such securities without
registration.
61.
62.
11. ASSIGNMENT OF REGISTRATION RIGHTS
63.
64. A Holder may assign its rights and obligations under this Agreement to any
person or entity provided that such assignment may be made only in
connection with sale of at least 300,000 Ordinary Shares by a Holder to a
person or an entity and that the assignment relates only to those shares
transferred to such person or entity, and further provided that such
assignee agrees to be bound by the terms of this Agreement.
65.
66. 12. AMENDMENTS, WAIVERS, ETC.
67.
68. This Agreement may not be amended, waived or otherwise modified or
terminated except by an instrument in writing signed by the Company and a
Holder, if the amendment is to be effective against such Holder.
69.
70. 13. MARKET STAND-OFF AGREEMENT.
71.
72. Holders of Registrable Securities, if requested by the Company and the
underwriters of the Company's securities, shall enter into an agreement
(the "Market Stand-off Agreement") not to sell, sell any option, or
otherwise transfer or dispose of any Ordinary Shares or other securities
of the Company held by such holders during the 90-day period (or such
shorter period as is required by the underwriters) following the effective
date of a registration statement of the Company filed under the Securities
Act, provided that such restrictions shall not apply to Ordinary Shares or
other securities of the Company that are included in such registration
statement, and shall apply only to the first firmly underwritten
registered equity offering of the Company's securities occurring after the
third anniversary of the date of the this Agreement and no such holder
shall be obligated to enter into a Market Stand-off Agreement if any
officer, director or holder of 5% or more of the outstanding Ordinary
Shares of the Company is not subject to a Market Stand-off Agreement with
substantially similar terms. The underwriters in connection with such
registration statement are intended third party beneficiaries of this
provision.
73.
74. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the securities held by each
Holder (and the securities of every other person subject to the foregoing
restriction) until the end of such period.
75.
76. 14. COUNTERPART
77.
78. This Agreement may be executed in one or more
counterparts, all of which shall be considered one
and the same agreement. Each party need not sign the
same counterpart.
79.
80. 15. ENTIRE AGREEMENT
81.
82. This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, including the Registration
Rights Agreement, dated February 28, 1993, by and among the Company,
National Semiconductor (IC) Ltd., and Tower Semiconductor Holdings (1993)
Ltd.
83.
84. 16. GOVERNING LAW AND JURISDICTION
85.
86. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California regardless of the laws that might
otherwise govern under applicable principles of conflicts of law thereof.
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties solely in the courts of the State of California, and each of the
parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere
in the world.
87.
88. 17. ADDITIONAL PARTIES
89.
90. The parties hereto agree that by the execution of a joinder to this
Agreement, any additional parties that enter into share purchase
agreements with T prior to the Closing of the SPA and that close
simultaneously with the SPA may become parties to this Agreement and shall
be members of the Purchaser Group.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on its behalf by its officers thereunto duly authorized as of the date
first written above.
Tower Semiconductor Ltd.
By: /s/ Yoav Nissan-Cohen
----------------------
Name: Yoav Nissan-Cohen
Title: Co-CEO
SanDisk Corporation
By: /s/ Eli Harari
----------------------
Name: Eli Harari
Title: CEO
The Israel Corporation Ltd.
By: /s/ Yossi Rose
----------------------
Name: Yossi Rose
Title: President and CEO
Alliance Semiconductor Corp.
By: /s/ N. Damodar Reddy
----------------------
Name: N. Damodar Reddy
Title: President and CEO
Macronix International Co.,
Ltd., on behalf of itself and
its affiliates
By: /s/ Miin Wu
----------------------
Name: Miin Wu
Title: President
QuickLogic Corp.
By: /s/ E. Thomas Hart
----------------------
Name: E. Thomas Hart
Title: President and CEO
CONSOLIDATED SHAREHOLDERS AGREEMENT
BY AND AMONG
THE ISRAEL CORPORATION,
SANDISK CORPORATION, ALLIANCE SEMICONDUCTOR CORPORATION
AND
MACRONIX INTERNATIONAL CO., LTD.
AGREEMENT (the "Agreement"), dated as of January 18, 2001, by and among the
Israel Corporation ("TIC"), SanDisk Corporation ("SanDisk"), Alliance
Semiconductor Corporation ("Alliance"), and Macronix International Co., Ltd.
(togather with its affiliates referred to as "Macronix").
RECITALS
WHEREAS, SanDisk has entered into a share purchase agreement (the "SanDisk
Share Purchase Agreement") with Tower Semiconductor Ltd. (the "Company") dated
July 4, 2000; and
WHEREAS, Alliance has entered into a share purchase agreement with the
Company dated August 29, 2000 (the "Alliance Share Purchase Agreement"); and
WHEREAS Macronix has entered into a share purchase agreement with the
Company dated December 12, 2000 (the "Macronix Share Purchase Agreement"); and
WHEREAS TIC has entered into a share purchase agreement with the Company dated
December 12, 2000; and
WHEREAS on August 13, 2000, TIC and SanDisk entered into a shareholders
agreement (the "Shareholders Agreement"); and
WHEREAS on August 29, 2000, TIC and Alliance entered
into the Shareholders Agreement; and
WHEREAS Macronix, SanDisk, Alliance and TIC have agreed to enter into this
Agreement.
1. DEFINITIONS
The following terms will have the meaning ascribed to them in this paragraph
when used in this Agreement:
(1) "Agreement" - as defined prior to the Recitals of
this Agreement.
(2) "AFFILIATE" means any other person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person. For the purposes of
this definition, "person" shall mean any individual, partnership,
firm, corporation, association, trust, unincorporated organization or
other entity.
(3) "Alliance" - as defined prior to the Recitals of this
Agreement.
(4) "Company" - as defined in the Recitals of this
Agreement.
(5) "Macronix" - as defined prior to the Recitals of this
Agreement.
(6) "SanDisk" - as defined prior to the Recitals of this
Agreement.
(7) "SanDisk Share Purchase Agreement" - as defined in the Recitals of
this Agreement.
(8) "TIC" - as defined prior to the Recitals of this
Agreement.
(9) "Shares" - Ordinary Shares, par value NIS 1.00 per share, of the
Company duly authorized and issued by the Company.
(A) "Permitted Transferee" - any entity at least the
majority of the voting rights in which is held
by the transferring shareholder, provided that
(i) such entity is or becomes a party to this
Agreement and agrees in writing to be bound by
all the provisions of this Agreement, and (ii)
such transferring shareholder shall not be
relieved of its obligations hereunder.
(B) "Equity Securities" means any securities having
voting rights in the election of the Board of
Directors of the Company not contingent upon
default, or any securities evidencing an
ownership interest in the Company, or any
securities convertible into or exercisable for
any shares of the foregoing, or any agreement or
commitment to issue any of the foregoing.
(C) "SanDisk Share Purchase Agreement" shall have the meaning ascribed to
it in the recitals to this Agreement.
(D) "Shareholders" means SanDisk, TIC, Alliance, Macronix and all their
Permitted Transferees.
(E) "Major Holder" means any Shareholder holding at least 5% of the
Company's outstanding Equity Securities and which is a party to this
Agreement. For the purpose of this definition the holdings of a
Shareholder and all its Permitted Transferees shall be calculated
together.
(F) "Closing" as defined as the closing referred to in each of the share
purchase agreements entered into by the Company with each of SanDisk,
Alliance, Macronix and TIC.
2. BOARD OF DIRECTORS
3. Each Shareholder hereby agrees to
attend and vote (or cause to be voted)
at general meetings of shareholders of
the Company all of its Shares (i) to
vote for the election of the following
persons to the Board of Directors of
the Company and for any other
resolution which is necessary in order
to facilitate such election and (ii) to
vote against the election of any other
person to the Board of Directors of the
Company or against any resolution the
effect of which is to prevent or impede
such election, other than in accordance
with this Agreement:
4. From the Closing and thereafter:
(1) 1 nominee designated by SanDisk, provided that in the
event that, from the date on which
SanDisk exercises the Series A-3
Additional Purchase Obligations and
thereafter, SanDisk and its Permitted
Transferees hold together in the
aggregate less than 5% of the
outstanding Shares, then SanDisk shall
not be entitled to designate any
nominee, provided further that if
subsequently SanDisk and its Permitted
Transferees become together the
holders of 5% of the outstanding
Shares then SanDisk shall again be
entitled to designate a nominee.
(2) 1 nominee designated by Alliance, provided that in
the event that, from the date on which
Alliance exercises the Series A-3
Additional Purchase Obligations and
thereafter, Alliance and its Permitted
Transferees hold together in the
aggregate less than 5% of the
outstanding Shares, then Alliance
shall not be entitled to designate any
nominee, provided further that if
subsequently Alliance and its
Permitted Transferees become together
the holders of 5% of the outstanding
Shares then Alliance shall again be
entitled to designate a nominee.
(3) 1 nominee designated by Macronix, provided that in
the event that, from the date on which
Macronix exercises the Series A-3
Additional Purchase Obligations and
thereafter, Macronix and its Permitted
Transferees hold together in the
aggregate less than 5% of the
outstanding Shares, then Macronix
shall not be entitled to designate any
nominee, provided further that if
subsequently Macronix and its
Permitted Transferees become together
the holders of 5% of the outstanding
Shares then Macronix shall again be
entitled to designate a nominee.
(4) 2 nominees designated by TIC, provided that, (i) in
the event that TIC and its Permitted
Transferees hold together in the
aggregate less than 10% of the
outstanding shares, then TIC shall be
entitled to designate only one
nominee, provided further that if
subsequently TIC and its Permitted
Transferees become together the
holders of 10% of the outstanding
shares then TIC shall again be
entitled to designate two nominees and
(ii) in the event that TIC and its
Permitted Transferees hold together in
the aggregate less than 5% of the
outstanding shares, then TIC shall not
be entitled to designate any nominee,
provided further that if subsequently
TIC and its Permitted Transferees
become together the holders of 5% of
the outstanding shares then TIC shall
again be entitled to designate a
nominee.
(5) 2 External Directors (as defined in the Israeli
Companies Law - 1999 (the "Companies
Law")) recommended by the Board of
Directors of Tower, assuming the
Company is obliged under the Companies
Law to nominate External Directors.
(6) 1 other person who shall be a member of the Company's
management, including either of the
Company's co-CEOs, provided that it is
understood that the two co-CEOs may
alternate service on the Company's
Board of Directors at intervals to be
determined by the Board (excluding the
management director). In the event
that the two co-CEOs do rotate service
on the Board, the parties agree to
cause the CEO not serving to have
observer status.
(7) Such other directors as agreed upon between TIC and
SanDisk, Alliance and Macronix.
(8) A representative of TIC (who will be one of the nominees
under clause (d) above) as Chairman of the Board.
5. Each Shareholder further agrees
that in the event that any
party that is entitled to
nominate a director under this
Agreement decides to terminate
or replace such director, then
the Shareholders shall vote (or
cause to be voted) all of his
or its Shares to cause the
termination of office or the
replacement of such director,
in accordance with the decision
of the Shareholder who
nominated such director
pursuant to the provisions of
this Section 2.1, and cause, if
required, a general meeting of
shareholders of the Company to
be held for such purpose.
2.2 Each of TIC, SanDisk, Alliance and Macronix undertakes upon itself,
for as long as it is entitled to nominate a director to the Board of
Directors, as specified above, not to nominate to the Board of
Directors of the Company a director who is an employee or consultant
of the Company.
2.3 In the event that the number of nominees to the Board of Directors
which a party is entitled to nominate is decreased or terminated as
per Section 2.1 above, the respective Shareholder who nominated such
director agrees to lawfully cause such director to immediately resign
from the Board of Directors and in the absence of such resignation
within 24 hours of such decrease or termination, all the Shareholders
agree to take such action as is necessary to cause a general meeting
of shareholders of the Company to be assembled, and to vote all their
Shares in order to remove such director from the Board of Directors.
In each such case the number of members of the Board of Directors
shall decrease accordingly.
3. RESTRICTIONS ON TRANSFER OF EQUITY
---------------------------------------------
Securities.
3.1 From the date of this Agreement and until the end of three years from
the Closing (the "Initial Restricted Period") neither TIC, SanDisk,
Alliance, Macronix and any of their Permitted Transferees shall sell,
assign, transfer, pledge, hypothecate, or otherwise encumber or
dispose of in any way (hereinafter referred to as "Transfer"), all or
any part of or any interest in the Equity Securities now or hereafter
owned or held by such parties.
3.1.1Notwithstanding Section 3.1 hereof, during the Initial
Restricted Period each Major Holder and any of its Permitted
Transferees, to the extent it holds in excess of 2.7 million
Shares, may transfer up to an aggregate of 1,200,000 Shares in
excess of its holding of 2.7 million shares, subject to the
following restrictions: (a) any Transfer made other than in
accordance with clause (b) shall be effected only after
compliance with Sections 4, 5 and 6 hereof; and (b) any Transfer
made by a sale of Shares in the public markets pursuant to and
in accordance with Rule 144 under the Securities Act (a "Public
Sale") shall be effected only after the Shareholder offering to
effect the Public Sale shall have given the other Major Holders,
at least two business days prior to the proposed Public Sale,
written notice setting forth its intention to Transfer, the
number of Shares proposed to be Transferred and the manner of
disposition; the other Major Holders may, by written notice to
the Shareholder proposing to make the Public Sale served on such
Shareholder at least 12 hours prior to the Public Sale, exercise
a right of first refusal to purchase their respective pro rata
share of all or any part of the Shares proposed to be
Transferred in the Public Sale at a price per share equal to the
average closing price of the Shares in the seven trading days
preceding the date of the notice. Each Major Holder's pro rata
share of the Shares proposed to be Transferred in the Public
Sale shall be a fraction of the Shares proposed to be
Transferred in the Public Sale, of which the number of Shares
owned by such Major Holder on the date of the above written
notice shall be the numerator and the total number of Shares
held by all such Major Holders (excluding the Shareholder
offering to effect the Public Sale) on the date of the above
written notice shall be the denominator. Any Shares with respect
to which the other Major Holders have not exercised such right
of first refusal, may be Transferred in accordance with such
notice of Public Sale within a period of 45 days after the date
of the notice of Public Sale at such price per share as
determined by the Shareholder effecting such Public Sale.
3.1.2From the end of the Initial Restricted Period any Transfer by
any Major Holder and/or any of their Permitted Transferees may
only be made pursuant to the provisions of Sections 4, 5 and 6
below.
3.1.3In addition to the Major Holders' right to sell up to an
aggregate of 1,200,000 Shares pursuant to Section 3.1.1 , the
restrictions on the Major Holders' transfer of Equity Securities
pursuant to this Section 3 shall not apply to an amount of the
Company's share capital held by such Major Holder in excess of
5.4 million shares. In addition, in the event that for any
reason SanDisk does not exercise any series of Additional
Purchase Obligations by its prescribed exercise date, TIC's
restriction on the transfer of shares shall be decreased by an
equivalent amount of shares represented by such non-exercised
Additional Purchase Obligations.
3.2 From the end of the Initial Restricted Period and until the end of
five years from the Closing (the "Subsequent Restricted Period")
SanDisk, Alliance, Macronix and any of their Permitted Transferees
agree not to Transfer, the amount of Equity Securities exceeding the
product of (a) the cumulative number of quarters commencing with the
first day of the Subsequent Restricted Period multiplied by (b) 6%
(six percent) of the aggregate number of shares of the Company held
by such Shareholder and any of its Permitted Transferees on the last
day of the Initial Restricted Period ("the Committed Minimum
Shareholdings").
3.2.1From the end of the Initial Restricted Period and until the end
of the Subsequent Restricted Period, TIC shall not hold less
than 2,100,000 (two million one hundred thousand) Ordinary
Shares of the Company.
3.2.2 For the removal of doubt, any Equity Securities purchased by
TIC, SanDisk, Alliance and Macronix and any of their Permitted
Transferees, other than pursuant to the SanDisk Share Purchase
Agreement, the Alliance Share Purchase Agreement and the
Macronix Share Purchase Agreement, respectively, and the B-1 to
B-5 Additional Purchase Obligations pursuant to the Additional
Purchase Obligation Agreement entered into between SanDisk and
the Company shall not be included among the Committed Minimum
Shareholdings.
4 RIGHTS OF FIRST OFFER.
4.1 TRANSFER NOTICE. Subject to the provisions of Sections 3 and 5, if at
any time, any Shareholder proposes to Transfer Equity Securities (a
"Proposal"), then such Shareholder (a "Selling Shareholder") shall
give the Company and each of the Major Holders, a written notice (the
"Transfer Notice"), which Transfer Notice shall include (i) a
description of the Equity Securities to be transferred ("Offered
Shares") and (ii) the consideration and the material terms and
conditions upon which the Proposal is to be made. Notwithstanding the
foregoing, in the event that any Selling Shareholder proposes to
pledge Shares to a banking institution, such pledge shall be
permitted only if such Selling Shareholder effects the pledge subject
to the provisions of Section 4 hereof, furnishes to the other parties
hereto a written representation of the Selling Shareholder confirming
that, and evidence which is reasonably satisfactory to indicate that,
such pledge is subject to Section 4 and ensures that no voting rights
with respect to the Shares are granted to the banking institution.
4.2 MAJOR HOLDERS' OPTION. Each Major Holder shall have an option for a
period of thirty (30) days from its receipt of the Transfer Notice to
elect to purchase its respective pro rata share of the Offered
Shares, and in the event that any other Major Holder does not
exercise its right hereunder, its pro rata share of such Offered
Shares not purchased by the other Major Holders (the "Excess Offered
Shares"), at the same price and subject to the same terms and
conditions as described in the Transfer Notice. Each Major Holder may
exercise such purchase option and, thereby, purchase all or any
portion of its pro rata share of the Offered Shares, and in the event
that any Major Holder does not exercise its right hereunder, its pro
rata share of the Excess Offered Shares, by notifying the Selling
Shareholder and the Company in writing, before expiration of the
thirty (30) day period as to the number of Offered Shares and Excess
Offered Shares, if any, which it wishes to purchase (the "Purchase
Notice"). Failure to respond to the Transfer Notice (a) within the
applicable period will be considered a waiver of the right to
exercise the right set forth in this Section 4.2; and (b) within
forty-five (45) days after receipt of the Transfer Notice will be
considered a waiver of the right of co-sale set forth in Section 6.1
provided that the Transfer Notice clearly references such right of
co-sale. Each Major Holder's pro rata share of the Offered Shares, or
of the Excess Offered Shares, as the case may be, shall be a fraction
of the Offered Shares, or of the Excess Offered Shares, as the case
may be, of which the number of Shares owned by such Major Holder on
the date of the Transfer Notice shall be the numerator and the total
number of Shares held by all such Major Holders (excluding the
Selling Shareholder) on the date of the Transfer Notice shall be the
denominator.
4.3 If Major Holder(s) give the Selling Shareholder(s) Purchase Notice(s)
pursuant to Section 4.2 above with respect to all and not part of the
Offered Shares, then such Major Holder(s) shall purchase their
respective pro rata share of the Offered Shares, on the terms
aforementioned and then payment for the Offered Shares shall be by
check or wire transfer to a bank account to be designated by the
Selling Shareholder, against delivery of the Offered Shares to be
purchased at a place agreed upon between the parties and at the time
of the scheduled closing therefor, which shall be no later than forty
five (45) days after the Selling Shareholders' receipt of the
Purchase Notice.
4.4 If the Major Holder(s) do not give the Selling Shareholder(s)
Purchase Notice(s) pursuant to Section 4.2 above with respect to all
of the Offered Shares, then the Major Holder(s) shall not be entitled
to purchase the Offered Shares, and the Selling Shareholder, at the
expiration of the aforementioned thirty (30) day period, shall be
entitled to transfer all (but not less than all) of the Offered
Shares, provided, however, that in no event shall the Selling
Shareholder transfer any of the Offered Shares to any transferee on
terms more favorable to such transferee(s) than those stated in the
Transfer Notice, and provided further than any of the Offered Shares
not transferred within forty-five (45) days after the expiration of
such thirty (30) day period shall again be subject to the provisions
of this Section 4.
4.5 Each Major Holder shall be entitled to apportion Offered Shares to be
purchased among its Permitted Transferees, provided that such
Purchaser notifies the Selling Shareholder of such allocation.
5. RIGHT OF FIRST REFUSAL.
----------------------
5.1 Transfer Notice. Subject to the provisions of Section 3, if at any
time, any Shareholder proposes to Transfer Equity Securities to one
or more of the parties set forth in Annex A hereto or any of their
Affiliatespursuant to a proposed understanding with such third
parties (a "Limited Proposal"), then such Shareholder (a "Limited
Shareholder") shall give the Company and each of the Major Holders, a
written notice (the "Limited Transfer Notice"), with Limited Transfer
Notice shall include (i) a description of the Equity Securities to be
transferred ("Offered Limited Shares"), (ii) the identity of the
prospective transferees(s) and (iii) the consideration and the
material terms and conditions upon which the Limited Proposal is to
be made. The Limited Transfer Notice shall certify that the Limited
Shareholder has received a firm offer from prospective transferee(s)
and in good faith believes a binding agreement for the Transfer is
obtainable on the terms set forth in the Limited Transfer Notice. The
Limited Transfer Notice shall also include a copy of any written
proposal, term sheet or letter of intent or other agreement related
to the proposed sale. Notwithstanding the foregoing, (a) in the event
that a Shareholder is wholly merged with or is wholly acquired by any
company headquartered in Taiwan, ROC or any Affiliate of such company
headquartered in Taiwan, ROC, the provisions of this Section 5 shall
not apply and/or (b) in the event that any Limited Shareholder
proposes to pledge Shares to a banking institution, such pledge shall
be permitted only if such Selling Shareholder effects the pledge
subject to the provisions of Sections 4, 5 and 6 hereof, furnishes to
the other parties hereto a written representation of the Selling
Shareholder confirming that, and evidence which is reasonably
satisfactory to indicate that, such pledge is subject to Sections 4,
5 and 6 and ensures that no voting rights with respect to the Shares
are granted to the banking institution.
5.2 Major Holders' Option. Each Major Holder shall have an option for a
period of thirty (30) days from its receipt of the Limited Transfer
Notice to elect to purchase its respective pro rata share of the
Offered Limited Shares, and in the event that any other Major Holder
does not exercise its right hereunder, its pro rata share of such
Offered Limited Shares, and in the event that any other Major Holder
does not exercise its right hereunder, its pro rata share of such
Offered Limited Shares not purchased by the other Major Holders (the
"Excess Limited Offered Shares"), at the same price and subject to
the same terms and conditions as described in the Limited Transfer
Notice. Each Major Holder may exercise such purchase option and
thereby, purchase all or any portion of its pro rata share of the
Offered Limited Shares, and in the event that any Major Holder does
not exercise its right hereunder, its pro rata share of the Excess
Limited Offered Shares, by notifying the Limited Shareholder and the
Company in writing, before expiration of the thirty (30) day period
as to the number of Offered Shares and Excess Limited Offered Shares,
if any, which it wishes to purchase (the "Limited Purchase Notice").
Failure to respond to the Limited Transfer Notice within (a) the
applicable period will be considered a waiver of the right to
exercise the right set forth in this Section 5.2, and (b) within
forty-five (45) days after receipt of the Limited Transfer Notice
will be considered a Waiver of the right of co-sale set forth in
Section 6.1, provided that the Limited Transfer Notice clearly
references such right of co-sale. Each Major Holder's pro rata share
of the Offered Limited Shares, or of the Excess Limited Offered
Shares, as the case may be, shall be a fraction of the Offered
Limited Shares, or of the Excess Limited Offered shares, as the case
may be, of which the number of Shares owned by such Major Holder on
the date of the Transfer Limited Notice shall be the numerator and
the total number of Shares held by all such Major Holders (excluding
the Selling Shareholder) on the date of the Limited Transfer Notice
shall be the denominator.
5.3 If Major Holder(s) give the Limited Shareholder(s) Limited Purchase
Notice(s) pursuant to Section 5.2 above with respect to all and not
part of the Offered Limited Shares, then the Limited Shareholder
shall not effect the sale of shares to the third party transferee
rather to the Major Holder(s) exercising their right of first refusal
and then payment for the Offered Limited Shares shall be by check or
wire transfer to a bank account to be designated by the Limited
Shareholder, against delivery of the Offered Limited Shares to be
purchased at a place agreed upon between the parties and at the time
of the scheduled closing therefor, which shall be no later than
forty-five (45) days after the Limited Shareholders' receipt of the
Limited Purchase Notice.
5.4 If the Major Holder(s) do not give the Limited Shareholder(s) Limited
Transfer Notice(s) pursuant to Section 5.2 above with respect to all
of the Offered Limited Shares, then the Major Holder(s) shall not be
entitled to purchase the Offered Limited Shares, and the Limited
Shareholder, at the expiration of the aforementioned thirty (30) day
period, shall be entitled to transfer all (but not less than all) of
the Offered Limited Shares, provided, however, that in no event shall
the Limited Shareholder transfer any of the Offered Limited Shares to
any transferee on terms more favorable to such transferee(s) than
those stated in the Transfer Notice, and provided further than any of
the Offered Shares not transferred within forty-five (45) days after
the expiration of such thirty (30) day period shall again be subject
to the provisions of this Section 5.4.
5.5 Each Major Holder shall be entitled to apportion Offered Limited
Shares to be purchased among its Permitted Transferees, provided that
such Purchaser notifies the Limited Shareholder of such allocation.
6. Right of Co-Sale.
6.1 To the extent the Major Holders do not exercise their right of first
refusal in respect of all of the Offered Shares pursuant to Section 4
above or their right of first refusal in respect of all of the
Limited Offered Shares pursuant to Section 5 above (for purposes of
this Section 6, Offered Shares or Offered Limited Shares shall be
referred to as "Offered Shares"), then each Major Holder (a "Co-Sale
Holder" for purposes of this Section 6) shall be entitled to notify
the Selling Shareholder or the Limited Shareholder, as the case may
be (for purposes of this Section 6, a Selling Shareholder or a
Limited Shareholder shall be referred to as a "Selling Shareholder")
in writing and shall have the right to participate in the Disposition
pursuant to Section 4 above or the Limited Proposal pursuant to
Section 5 above on the same terms and conditions as specified in the
Transfer Notice or the Limited Transfer Notice, as the case may be
(for purposes of this Section 6, a Transfer Notice or a Limited
Transfer Notice shall be referred to as a "Transfer Notice"), subject
to the provisions of this Section 6. Such selling Co-Sale Holder's
notice to the Selling Shareholder shall indicate the number of shares
of Equity Securities the Co-Sale Holder wishes to sell under its
right to participate.
6.2 The respective co-sale rights of the Selling Shareholder and each
Co-Sale Holder shall be as follows: (A) the Selling Shareholder may
sell all or any part of that number of Offered Shares equal to the
product obtained by multiplying (i) the aggregate number of Offered
Shares by (ii) a fraction, the numerator of which is 200% of the
number of Shares owned by such Selling Shareholder on the date of the
Transfer Notice and the denominator of which is the total number of
Shares owned by all of the Co-Sale Holders (excluding the Selling
Shareholder) and 200% of the number of Shares owned by the Selling
Shareholder and (B) each Co-Sale Holder (excluding the Selling
Shareholder) may sell all or any part of that number of Offered
Shares equal to the product obtained by multiplying (i) the aggregate
number of Offered Shares by (ii) a fraction, the numerator of which
is the number of Shares owned by such Co-Sale Holder on the date of
the Transfer Notice and the denominator of which is the total number
of Shares owned by all of the Co-Sale Holders (excluding the Selling
Shareholder) and 200% of the number of Shares owned by the Selling
Shareholder on the date of the Transfer Notice (the "Co-Sale
Shares"). The number of Co-Sale Shares to be sold shall be rounded to
the nearest whole share, with one-half share or more being rounded
up.
6.3 Each Co-Sale Holder shall effect its participation in the sale by
promptly delivering to the Selling Shareholder for Transfer to the
prospective purchaser one or more transfer deeds, properly executed
for Transfer, which represent the number of Offered Shares which such
Co-Sale Holder elects to sell. The transfer deeds that the Co-Sale
Holder delivers to the Selling Shareholder as provided above shall be
transferred to the prospective purchaser upon consummation of the
sale of the Offered Shares pursuant to the terms and conditions
specified in the Transfer Notice, and the Selling Shareholder shall
concurrently therewith remit to such Co-Sale Holder that portion of
the net sale proceeds to which such Selling Holder is entitled by
reason of its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment or
otherwise refuses to purchase shares or other securities from a
Co-Sale Holder exercising its rights of co-sale hereunder, the
Selling Shareholder shall not sell to such prospective purchaser or
purchasers any Offered Shares unless and until, simultaneously with
such sale, the Selling Shareholder shall purchase such shares or
other securities from such Selling Holder for the same consideration
and on the same terms and conditions as the proposed transfer
described in the Transfer Notice.
6.4 NON-EXERCISE OF RIGHTS. To the extent that the Major Holders have not
exercised in full their rights to purchase all the Offered Shares
within the time periods specified in Sections 4.2 and 5.2, as the
case may be, the Selling Shareholder shall have a period of ninety
(90) days from the expiration of the 45 day period set forth in
Sections 4.2 and 5.2, as the case may be (the "Ninety Day Period") to
sell the Offered Shares and the Co-Sale Shares, if any, upon terms
and conditions (including the purchase price) no more favorable than
those specified in the Transfer Notice to the third-party
transferee(s) identified in the Transfer Notice. The third-party
transferee(s) shall, as a condition to such transfer, become a party
to Section 2 of this Agreement and become subject to all the
provisions included therein unless waived by Major Holders, holding
in the aggregate 75% of the aggregate number of shares of the Company
held at such time by all Major Holders. In the event that the Selling
Shareholder and the third-party transferee remain desirous of
consummating the sale or disposition of the Offered Shares and the
Co-Sale Shares, if any, yet due to a delay resulting from failure to
obtain third party approvals, the sale or disposition of the Offered
Shares and the Co-Sale Shares, if any, cannot be consummated within
the Ninety Day Period, the Ninety Day Period shall be extended by a
further period of up to ninety (90) days (the "Second Ninety
Period"). Notwithstanding the aforesaid in the previous sentence, in
the event that the Selling Shareholder does not consummate the sale
or disposition of the Offered Shares and the Co-Sale Shares, if any,
within the Ninety Day Period or the Second Ninety Day Period, as the
case may be, the Major Holders' first offer rights and first refusal
rights and the Co-Sale Holders' co-sale rights shall continue to be
applicable to any subsequent disposition of the Offered Shares by
such Selling Shareholder until such right lapses in accordance with
the terms of this Agreement.
6.5 SALE OF SHARES UNDER RULE 144. Notwithstanding the provisions of
Sections 4, 5 and 6, in the event of a Public Sale effected after the
expiration of the Initial Restricted Period, the Selling Shareholder
shall be permitted to effect the Public Sale subject to and in
accordance with Rule 144 (including, without limitation, the volume
limitations included therein), and such Public Sale shall not be
subject to the rights of first offer, first refusal and co-sale set
forth in Sections 4, 5 and 6.
6.6 LIMITATIONS TO RIGHTS OF FIRST OFFER, FIRST REFUSAL AND CO-SALE.
Notwithstanding the provisions of Sections 3, 4, 5 and 6 of this
Agreement, any Shareholder may sell or otherwise assign, with or
without consideration, Equity Securities to any Permitted Transferee,
provided, however, that any Permitted Transferee shall, prior to
receiving any such Equity Securities and as a condition to the
effectiveness of any such sale or assignation, become a party to this
Agreement and undertake to return such Equity Securities to its
transferor in the event that the Permitted Transferee ceases to be a
Permitted Transferee in relation to its transferor.
7. TERM AND TERMINATION
ThisAgreement shall be in effect from the date hereof and until the earlier
of (i) twelve (12) years from the Closing; or (ii) with respect to each of
SanDisk, Alliance and Macronix, upon the termination of their respective
share purchase agreement with the Company. In addition, this Agreement
shall not have any further force and effect to any party of this Agreement
from the date that such party holds less than 1,000,000 Ordinary Shares of
the Company. Section 5 shall terminate five years following the end of the
Restriction Period.
8. GENERAL PROVISIONS
8.1 EXPENSES. Each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and
performance of this Agreement, including all fees and expenses of
agents, representatives, counsel, and accountants.
8.2 CONFIDENTIALITY. The parties to this agreement will maintain in
confidence, and will cause the directors, officers, employees,
agents, and advisors to maintain in confidence, this Agreement and
any written information furnished by another party in connection with
this Agreement, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such
party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for
the consummation of this Agreement, or (c) the furnishing or use of
such information is required by any U.S., Israeli or other federal,
state, local or administrative order, law, ordinance, or regulation
or by the applicable rules of any stock exchange.
8.3 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have
been duly given when (a) delivered by hand (with written confirmation
of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return
receipt requested, or (c) when received by the addressee, if sent by
a recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth
below (or to such other addresses and telecopier numbers as a party
may designate by notice to the other parties):
SanDisk:
Attention: Frank A. Calderoni
Facsimile No.: (408) 542-0600
with a copy to: Charles Van Orden, Esq.
Attention: Vice President and General
Counsel
Facsimile No.: (408) 548-0385
TIC:
Attention: Udi Hillman
Facsimile No.: 972-3-695-3631
with a copy to: Zvi Ephrat, Adv.
6 Ramat Yam
Herzliya 46851
Facsimile No.: (972) 9-958-9594
Alliance:
Attention: David Eichler
Facsimile No.: (408) 855-4999
with a copy to: Alliance Semiconductor
Corporation
Attention: Bradley A. Perkins, Esq.
Facsimile No.: (408) 855-4981
Macronix:
Attention: CEO
Facsimile No.: 886-2-2716-925-
with a copy to: Macronix International Co.,
Ltd.
Attention: Stacey G. M. Lee, Esq.
Facsimile No.: 886-3-564-1561
8.4 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties solely in the
courts of the State of California, and each of the parties consents
to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the
world.
8.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and
things, all as the other party may reasonably request for the purpose
of carrying out the intent of this Agreement and the documents
referred to in this Agreement.
8.6 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or
the exercise of any other right, power, or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out
of this Agreement or the documents referred to in this Agreement can
be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand
as provided in this Agreement or the documents referred to in this
Agreement.
8.7 ENTIRE AGREEMENT. This Agreement supersedes all prior shareholders
agreements between the parties, including the Shareholders Agreement
between TIC and SanDisk dated August 13, 2000 and the Shareholders
Agreement between TIC and Alliance dated August 29, 2000 with respect
to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its
subject matter.
8.8 MODIFICATION. This Agreement may not be amended except by a written
agreement executed only by the parties hereto (or their Permitted
Transferees).
8.9 Adjustment. In each case in which this Agreement specifies a number
of Shares such number will be subject to the appropriate adjustment
in accordance with applicable law for any reorganization,
recapitalization, share split, share dividend and securities at any
time issued by the Company in exchange for such shares or in
connection with any distribution, merger, sale of assets,
consolidation or other action by the Company.
8.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party may
assign any of its rights under this Agreement, except for such
assignments made to Permitted Transferees along with the transfer of
Shares to such Permitted Transferees, without the prior consent of
the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed
to give any person or entity other than the parties to this Agreement
any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. Subject to the
above, this Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement
and their successors and assigns.
8.11 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not
held invalid or unenforceable.
8.12 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be
of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
8.13 TIME OF ESSENCE. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
8.14 GOVERNING LAW. Subject to such provisions of the Israeli Companies
Law which are applicable to this Agreement and which may not be
stipulated, this Agreement will be governed by the laws of the State
of California without regard to conflicts of law principles.
8.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
SanDisk Corporation
By: /s/ Eli Harari
----------------------
Name: Eli Harari
Title: CEO
The Israel Corporation Ltd.
By: /s/ Yossi Rose
----------------------
Name: Yossi Rose
Title: President and CEO
Alliance Semiconductor Corp.
By: /s/ N. Damodar Reddy
----------------------
Name: N. Damodar Reddy
Title: President and CEO
Macronix International Co.,
Ltd., on behalf of itself and
its affiliates
By: /s/ Miin Wu
----------------------
Name: Miin Wu
Title: President
SHARE PURCHASE AGREEMENT
BETWEEN
ALLIANCE SEMICONDUCTOR CORPORATION
AND
TOWER SEMICONDUCTOR
AGREEMENT (this "Agreement"), dated as of August 29, 2000, by and between
Alliance Semiconductor Corporation ("Alliance") and Tower Semiconductor Ltd.
("Company").
RECITALS
WHEREAS on July 4, 2000, SanDisk Corporation ("SanDisk") and the Company entered
into a Share Purchase Agreement in the form attached as Exhibit A hereto (the
"SPA") , an Additional Purchase Obligation Agreement in the form attached as
Exhibit B hereto (the "APOA), and agreed to enter into an Escrow Agreement and a
Registration Rights Agreement in substantially the same form as Exhibits C and E
to the SPA , all upon the terms and conditions detailed therein (collectively,
the "SD Transaction Agreements"); and
WHEREAS Alliance desires to purchase and the Company desires to issue and sell
to Alliance Ordinary Shares of the Company (the "Shares") pursuant to
substantially the same terms and conditions as set forth in the SD Transaction
Agreements.
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained, it is agreed as follows:
1. Capitalized terms used and not defined herein shall have the
meanings set forth in the SD Transaction Agreements.
2. Immediately effective upon the signing of this Agreement, (a) the terms and
conditions of the SD Transaction Agreements shall be binding on Alliance and
shall be incorporated by reference herein [(except for the Escrow Agreement
which shall be separately entered into in the form to be agreed upon by the
parties hereto)] and (b) Alliance shall be deemed a "Buyer" and/or "S" and/or
"Holder", as those terms are used therein. All references in the SD Transaction
Documents to the "date hereof' shall mean the date of this Agreement.
3. Notwithstanding the provisions of Section 2 and for the purposes of this
Agreement and Alliance's participation in the hereby contemplated transactions,
the parties hereto agree as follows:
3.1 The definition of "Shares" in the Recitals of the SPA shall reflect
that 666,667 Shares are being purchased by Alliance.
3.2 The term "Buyer" referenced in Section I of the SPA under the
definition of "Steering Committee" shall be limited to SanDisk or any
of its permitted assignees.
3.3 The "purchase price" for the Shares to be purchased by Alliance which
is referenced in Section 2.2 of the SPA shall be $30 per share
representing an aggregate purchase price of $20,000,000.
3.4 The following shall be added to the end of Section 2.4
of the SPA:
"Concurrently with the execution of the Agreement between Alliance
and the Company, TIC and Alliance will execute and enter into the
Agreement in the form of Exhibit D attached hereto."
3.5 The term "Buyer" referenced in the first sentence of Section 5.6.3 of
the SPA shall be limited to SanDisk or any of its permitted
assignees.
3.6 The term "Buyer" referenced in Section 5.6.4. of the
SPA shall be limited to SanDisk or any of its permitted
assignees.
3.7 In Section 5.7 of the SPA, the word "Alliance's, " shall be inserted
before the word "TIC's."
3.8 Satisfaction of the condition to Closing set forth in Section 7.3
shall be determined exclusively by SanDisk or its permitted
assignees.
3.9 The term "Buyer" referenced in Section 7.17 of the SPA shall be
limited to SanDisk or any of its permitted assignees.
3.10 The term "Buyer" referenced in Section 8, inclusive of all
subsections thereto, shall mean SanDisk and Alliance, separately and
not jointly, as the case may be. For the avoidance of all doubt, a
failure on the part of SanDisk or Alliance to satisfy any of the
conditions to closing thereto shall not entitle Tower to elect not to
close the SPA with the other party.
3.11 The terms "Buyer" and "Buyer Indemnified Persons" referenced in
Section 10, inclusive of all subsections thereto, shall mean SanDisk
and Alliance, separately and not jointly, as the case may be.
3.12 The term "Buyer" referenced in Section 11.2 of the SPA shall be
limited to SanDisk or any of its permitted assignees.
3.13 The term "Buyer" referenced in Section 11.3 of the SPA shall be
limited to SanDisk or any of its permitted assignees.
3.14 The term "Buyer" referenced in Section 11.4 of the SPA shall be
limited to SanDisk or any of its permitted assignees.
3.15 The term "Buyer" referenced in the second sentence of Section 11.5 of
the SPA shall be limited to SanDisk or any of its permitted
assignees.
3.16 The Company and SanDisk have amended Section 11.7 of the SPA, by a
Side Letter Agreement dated August 29, 2000, restricting certain of
the pre-emptive rights set forth therein, and Alliance hereby agrees
to be subject to the terms of this amendment.
3.17 The amount of "Shares" referenced in the Recitals of the APOA shall
be adjusted to reflect the transactions contemplated hereby.
3.18 The amount of "A Additional Purchase Obligations" referenced in
Section 2.1.1 of the APOA and which are to be issued and delivered to
Alliance pursuant to this Agreement shall be 1,833,335 Ordinary
Shares.
3.19 The "Exercise Price" for the Additional Purchase Obligations to be
purchased by Alliance pursuant to the APOA shall be $30 per
additional purchase obligation.
3.20 Sections 2.12, 2.1.3 and 3.2.2 of the APOA and all references to the
"B Additional Purchase Obligations" in the APOA shall not be
applicable to Alliance.
3.21 Each Series A Additional Purchase Obligation referenced in Section
2.2 of the APOA shall contain Additional Purchase Obligations to
purchase up to an aggregate of 366,667 Ordinary Shares of the
Company.
3.22 The final form of Registration Rights Agreement shall be revised to
reflect Alliance's participation in the transactions contemplated by
the Registration Rights Agreement on a pari passu basis with the
rights of SanDisk.
4. Additional addresses for notices to be sent pursuant to Sections 12.4 of the
SPA and 8.4 of the APOA, shall be as follows:
Alliance Semiconductor Corporation
2575 Augustine Drive
Santa Clara, California 95054
Attn: Bradley Perkins
Tel: (408) 855-4900
Fax: (408) 855-4999
5. Concurrent with the execution of this Agreement, the parties shall execute
and enter into the Foundry Agreement in the form of Exhibit C hereto.
6. Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that Alliance may assign any of its
rights under this Agreement to any wholly owned Subsidiary of Alliance or to any
Subsidiary which is wholly owned other than a nominal interest, so long as such
ownership shall be maintained. Additionally, should Alliance reorganize into
separate investment and manufacturing Companies, because of issues with the
United States Investment Company Act of 1940, Company will allow Alliance to
assign this Agreement, as well as the other agreements between the parties, to
the reorganized companies as necessary, as long as after such an assignment, the
Company will still be dealing with the same parties as it originally intended to
deal with. Subject to the two preceding sentences, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
7. This Agreement may be executed in one or more counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Alliance Semiconductor Corporation Tower Semiconductor Ltd.
By: /s/ N. Damodar Reddy By: /s/ Yoav Nissan-Cohen
N. Damodar Reddy Yoav Nissan-Cohen
President and CEO Title: Co-CEO
SHAREHOLDERS AGREEMENT
BETWEEN
ALLIANCE SEMICONDUCTOR CORPORATION
AND
THE ISRAEL CORPORATION
AGREEMENT (the "Agreement"), dated as of August 29, 2000, by and among Alliance
Semiconductor Corporation ("Alliance") and The Israel Corporation ("TIC").
RECITALS
WHEREAS Alliance has entered into an Agreement with Tower Semiconductor Ltd.
dated August 29, 2000, in the form attached hereto as Exhibit A; and
WHEREAS on August 13, 2000, TIC and SanDisk Corporation entered into a
shareholders agreement (the "Shareholders Agreement") in the form attached as
Exhibit B hereto; and
WHEREAS Alliance and TIC have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained, it is agreed as follows:
1. Capitalized terms used and not defined herein shall have the
meanings set forth in the Shareholders Agreement.
2. Immediately effective upon the signing of this Agreement, the terms and
conditions of the Shareholders Agreement as applicable to the term "Shareholder"
thereto shall be binding on Alliance and shall be incorporated by reference
herein.
3. Notwithstanding the provisions of Section 2 and for the
purposes of this Agreement, the parties hereto agree as follows:
a. In Section 1 (e) of the Shareholders Agreement (Definition of the term
"Shareholders"), the word "Alliance" shall be inserted before the words
"S, I".
b. One of the Wafer Partners referred to in section 2.1.1.
(e) shall be Alliance which shall be entitled to appoint 1
nominee as long as Alliance and its Permitted Transferees
hold at least 5% of the outstanding Shares.
c. Alliance undertakes upon itself for as long as it is entitled to
nominate a director to the Board of Directors, as specified above, not to
nominate to the Board of Directors of the Company a director who is an
employee or consultant of the Company.
d. The limitations set forth in section 3.1 shall apply to
Alliance and its Permitted Transferees.
Alliance shall be added to section 7.
The words "Share Purchase Agreement" appearing in section 8 shall be
replaced with the words "Agreement between Alliance and the Company dated
August 29, 2000.
Notices to be sent to Alliance pursuant to section 9.4 shall be to the
following address:
Alliance Semiconductor Corporation.
2575 Augustine Drive
Santa Clara, California 95054
Attn: Bradley Perkins
Tel: (408) 855-4900
Fax: (408) 855-4999
viii.The word "S" appearing twice in the second line of Section 9.9 shall
be replaced with the word "Alliance".
4. This Agreement may be executed in one or more counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Alliance Semiconductor Corporation The Israel Corporation
By: /s/ N. Damodar Reddy By: /s/ Yossi Rosen
N. Damodar Reddy Yossi Rosen
President and CEO Title: President and CEO