SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Tower Semiconductor Ltd.
(Exact Name of Registrant as Specified in Its Charter)
Israel
(State or Other Jurisdiction of Incorporation or Organization)
Not Applicable
(I.R.S. Employer Identification No.)
Ramat Gavriel Industrial Park
Migdal Haemek, Israel 23105
(Address of Principal Executive Offices)
Employee Share Option Plan 2003/1
(Full Title of Plan)
Tower Semiconductor USA
4300 Stevens Creek Blvd., Suite 175
San Jose, California 95129
Tel: 408-551-6500
Facsimile: 408-551-6509
(Name, address and telephone number of agent for service)
Copies of all Correspondence to:
DAVID H. SCHAPIRO, ESQ. SHELDON KRAUSE, ESQ.
Yigal Arnon & Co. Ehrenreich Eilenberg & Krause LLP
1 Azrieli Center 11 East 44th Street
Tel Aviv, 67021 Israel New York, NY 10017
Tel: 972-3-608-7855 Tel: 212-986-9700
CALCULATION OF REGISTRATION FEE
- -------------------------------- --------------------- ------------- ---------------------- ----------------
Title of Securities to be Amount to be Proposed Proposed Maximum Amount of
Registered Registered Maximum Aggregate Offering Registration
- -------------------------- ---------------- Offering Price(1) Fee
Price Per --------------- ------------------
Share(1)
--------------
- -------------------------------- --------------------- ------------- ---------------------- ----------------
Ordinary Shares, par 2,780,420 (2)(3) $3.965 $ 11,025,217 $891.94
value NIS 1.00 per share
("Ordinary Shares")
- -------------------------------- --------------------- ------------- ---------------------- ----------------
1
(1) Calculated solely for the purpose of determining the registration fee
based upon the assumed offering prices of the shares determined
pursuant to Rule 457(h) under the Securities Act of 1933, based upon
the weighted average offering price per share of the options granted
and available for grant under Registrant's Employee Share Option Plan
2003/1. With respect to the 1,043,000 shares purchasable upon exercise
of outstanding options granted to date under such Plan , the Proposed
Maximum Offering Price Per Share is $2.983, the exercise price per
share of such options. With respect to the 1,0737,420 shares that may
be issued pursuant to options which may be granted in the future
pursuant to such Plan, the Proposed Maximum Offering Price Per Share is
$4.555, which represents the average of the high and low sales prices
of the Ordinary Shares as quoted through the Nasdaq National Market on
August 5, 2003.
(2) Represents shares that may be issued pursuant to which may be granted
pursuant to the Registrant's Employee Share Option Plan 2003/1.
(3) This Registration Statement also registers an indeterminate number of
Ordinary Shares which may become issuable pursuant to the anti-dilution
provisions of the plans and options to which this Registration
Statement relates.
2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
EXPLANATORY NOTE
As permitted by the rules of the Securities and Exchange Commission,
this Registration Statement omits the information specified in Part I of Form
S-8.
THE COMPANY HAS RECEIVED FROM THE SECURITIES AUTHORITY OF THE STATE OF ISRAEL AN
EXEMPTION PURSUANT TO THE RELEVANT PREVAILING LAWS OF THE STATE OF ISRAEL, WITH
RESPECT TO OFFERING OF THE SECURITIES DESCRIBED IN THIS PROSPECTUS TO THE
EMPLOYEES OF THE COMPANY.
3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") by the Registrant, Tower Semiconductor Ltd., a
company organized under the laws of the State of Israel (the "Company"),
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are incorporated by reference in this registration statement:
o Annual Report on Form 20-F for the year ended December 31, 2002 (filed
on April 14, 2003).
o Report on Form 6-K dated December 2002 (filed on January 7, 2003).
o Report on Form 6-K dated February 2003 (filed on February 25, 2003).
o Report on Form 6-K dated March 2003 (filed on March 4, 2003).
o Report on Form 6-K dated March 2003 No. 2 (filed on March 11, 2003).
o Report on Form 6-K dated April 2003 (filed on May 2, 2003).
o Report on Form 6-K dated May 2003 (filed on May 6, 2003).
o Report on Form 6-K dated May 2003 No. 2 (filed on May 22, 2003).
o Report on Form 6-K dated July 2003 (filed on July 23, 2003).
o Report on Form 6-K dated August 2003 (filed on August 12, 2003).
o The description of the Company's Ordinary Shares which is contained in
its Registration Statement on Form 8-A declared effective on October
25, 1994.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all shares offered hereby have
been sold or which deregisters all then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
4
The Israeli Companies Law, or the Companies Law, provides that a
company may include in its articles of association provisions allowing it to:
1. partially or fully exempt, in advance, an office holder of the company
from his responsibility for damages caused by the breach of his duty of
care to the company;
2. enter into a contract to insure the liability of an office holder of
the company by reason of acts or omissions committed in his capacity as
an office holder of the company with respect to the following:
(a) the breach of his duty of care to the company or any other person;
(b) the breach of his fiduciary duty to the company to the extent he acted
in good faith and had a reasonable basis to believe that the act or
omission would not prejudice the interests of the company; and
(c) monetary liabilities or obligations which may be imposed upon him in
favor of other persons;
3. indemnify an office holder of the company for:
(a) monetary liabilities or obligations imposed upon him in favor of other
persons pursuant to a court judgment, including a compromise judgment
or an arbitrator's decision approved by a court, by reason of acts or
omissions of such person in his capacity as an office holder of the
company; and
(b) reasonable litigation expenses, including attorney's fees, actually
incurred by such office holder or imposed upon him by a court, in an
action, suit or proceeding brought against him by or on behalf of the
company or by other persons, or in connection with a criminal action
from which he was acquitted, or in connection with a criminal action
which does not require criminal intent in which he was convicted, in
each case by reason of acts or omissions of such person in his capacity
as an office holder.
The Companies Law provides that a company's articles of association may
provide for indemnification of an office holder post-factum and may also provide
that a company may undertake to indemnify an office holder in advance, provided
such undertaking is limited to types of occurrences, which, in the opinion of
the company's board of directors, are, at the time of the undertaking,
foreseeable and to an amount the board of directors has determined is reasonable
in the circumstances.
The Companies Law provides that a company may not indemnify or exempt
the liabilities of an office holder or enter into an insurance contract which
would provide coverage for the liability of an office holder with respect to the
following:
o a breach of his fiduciary duty, except to the extent described above;
o a breach of his duty of care, if such breach was done intentionally,
recklessly or with disregard of the circumstances of the breach or its
consequences;
o an act or omission done with the intent to unlawfully realize personal
gain; or
o a fine or monetary settlement imposed upon him.
5
Under the Companies Law, the term "office holder" includes a director,
managing director, general manager, chief executive officer, executive vice
president, vice president, other managers directly subordinate to the managing
director and any other person fulfilling or assuming any such position or
responsibility without regard to such person's title.
The grant of an exemption, an undertaking to indemnify or
indemnification of, and procurement of insurance coverage for, an office holder
of a company requires, pursuant to the Companies Law, the approval of the
company's audit committee and board of directors, and, in certain circumstances,
including if the office holder is a director, the approval of the company's
shareholders.
Our Articles of Association have been amended to allow for
indemnification of, and procurement of insurance coverage for our officers and
directors to the maximum extent provided for by the Companies Law.
We have entered into an insurance contract for directors and officers
and have procured indemnification insurance for our office holders to the extent
permitted by our Articles of Association. We have approved the indemnification
of our office holders up to 25% of our then current fully paid up equity (in
addition to any amounts paid under an insurance coverage) with respect to each
case of indemnification (including all matters connected therewith), by
authorizing and empowering us to enter into Exemption and Indemnification
Agreements with our office holders. We have never had the occasion to indemnify
any of our office holders.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable
ITEM 8. EXHIBITS.
4.1............. Memorandum of the Registrant (incorporated by reference to exhibit
3.1 to the Registrant's Registration Statement on Form S-1,
33-83126)
4.2............. Articles of Association of the Registrant (incorporated by
reference to exhibit 1.1 to the Registrant's Report on Form 20-F
for the year ended December 31, 2000)
4.3............. Employee Share Option Plan 2003/1 (with form of grant letter to
Israeli employees)
4.4............. Form of Grant Letter to U.S. Employees
5.1............. Opinion of Yigal Arnon & Co.
23.1............ Consent of Yigal Arnon & Co. (included in the opinion filed as
Exhibit 5.1)
23.2............ Consent of Brightman Almagor & Co.
24.1........... Power of Attorney (included on signature page)
6
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs
(a)(1)(i) and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d)
of the Securities and Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
7
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
8
SIGNATURES
Pursuant to the requirements of Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8, and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Migdal Haemek, Israel, on the ___th day of August, 2003.
Tower Semiconductor Ltd.
By: /S/CARMEL VERNIA
Carmel Vernia
Chairman of the Board of Directors and
Acting Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in their
respective capacities and on the respective dates indicated. Each person whose
signature appears below hereby authorizes Carmel Vernia with full power of
substitution, to execute in the name and on behalf of such person any amendment
or any post-effective amendment to this Registration Statement and to file the
same, with exhibits thereto, and other documents in connection therewith, making
such changes in this Registration Statement as the Registrant deems appropriate,
and appoints Carmel Vernia, with full power of substitution, attorney-in-fact to
sign any amendment and any post-effective amendment to this Registration
Statement and to file the same, with exhibits thereto, and other documents in
connection therewith.
/S/ CARMEL VERNIA
- --------------------------
Carmel Vernia, Chairman and Director and Acting Chief Executive Officer
August___, 2003
/S/ AMIR HAREL
- --------------------------
Amir Harel, Vice President and Chief Financial Officer (principal financial and
accounting officer)
August___, 2003
/S/ IDAN OFFER
- --------------------------
Idan Offer, Director
August ___, 2003
9
/S/ EHUD HILLMAN
- --------------------------
Ehud Hillman, Director
August ___, 2003
/S/ ELI HARARI
- --------------------------
Eli Harari, Director
August ___, 2003
/S/ MIIN WU
- --------------------------
Miin Wu, Director
August ___, 2003
/S/ N.D. REDDY
- --------------------------
N.D. Reddy, Director
August ___, 2003
/S/ ZEHAVA SIMON
- --------------------------
Zehava Simon, Director
August___, 2003
/S/ HANS ROHRER
- --------------------------
Hans Rohrer, Director
August_____, 2003
AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Tower Semiconductor USA
By: /S/ HAROLD BLOMQUIST
- ----------------------------------------
Harold Blomquist
Chief Executive Officer
10
EXHIBIT INDEX
Exhibit No. Exhibit Sequentially
Numbered Page
4.1 Memorandum of the Registrant (incorporated by
reference to exhibit 3.1 to the Registrant's
Registration Statement on Form S-1, 33-83126)
4.2 Articles of Association of the Registrant
(incorporated by reference to exhibit 1.1 to
the Registrant's Report on Form 20-F for the
year ended December 31, 2000)
4.3 Employee Share Option Plan 2003/1 (with form
of grant letter to Israeli employees)
4.4 Form of Grant Letter to U.S. Employees
5.1 Opinion of Yigal Arnon & Co.
23.1 Consent of Yigal Arnon & Co. (included in the
opinion filed as Exhibit 5.1)
23.2 Consent of Brightman Almagor & Co.
24.1 Power of Attorney (included on signature page)
Exhibit 4.3
TOWER SEMICONDUCTOR LTD.
EMPLOYEE SHARE OPTION PLAN 2003/1
A PLAN UNDER SECTION 102 OF THE INCOME TAX ORDINANCE AND
THE UNITED STATES INTERNAL REVENUE CODE OF 1986
1. NAME AND PURPOSE:
1.1 This plan, as amended from time to time, shall be known as the
Tower Semiconductor Limited Employee Share Option Plan 2003/1
(the "2003/1 Plan" or the "Plan").
1.2 The purpose and intent of the Plan is to provide incentives to
employees of Tower Semiconductor Ltd. (the "Company") and its
wholly-owned subsidiaries (each, a "Subsidiary") by providing
them with options ("Options") to purchase shares in the
Company, pursuant to a plan approved by the Board of Directors
of the Company (the "Board"). Options granted under this Plan
to Israeli residents will be made pursuant to the provisions
of Section 102 ("Section 102") of the Israeli Income Tax
Ordinance (New Version), 1961 as amended from time to time
and, most recently, by the Law Amending the Income Tax
Ordinance (Number 132) 2002 (as amended, the "Ordinance") and
the rules promulgated thereunder (the "Rules"). Options
granted under this Plan to United States residents will be
made pursuant to the United States Internal Revenue Code of
1986, as amended (the "Code").
2. TYPES OF 102 OPTIONS AND SECTION 102 ELECTION:
Options granted pursuant to Section 102 shall be granted pursuant to
either (a) Section 102(b)(2) thereof as capital gains track options,
pursuant to which income resulting from the sale of shares derived from
such Options is taxed as a capital gain ("102 Capital Gains Track
Options"), or (b) Section 102(b)(1) thereof as ordinary income track
options, pursuant to which income resulting from the sale of shares
derived from such Options is taxed as ordinary income ("102 Ordinary
Income Track Options"; together with 102 Capital Gains Track Options,
"102 Trustee Options"). The Company may grant only one type of 102
Trustee Option at any given time pursuant to this Plan, and shall file
an election with the Israeli Tax Authorities regarding the type of 102
Trustee Option it chooses to grant (the "Election"). Once the Company
has filed such Election, it may change the type of 102 Trustee Option
that it chooses to grant only after the passage of at least 12 months
from the end of the calendar year in which the first grant was made in
accordance with the previous Election. The aforementioned election of
the Company will be approved by the Board.
3. TYPES OF OPTIONS GRANTED UNDER THE CODE:
Options granted to US residents under the Code shall be either an
Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code ("ISO"), or an Option not intended
to qualify as an ISO ("NSO").
4. SCOPE:
The total number of Options which can be granted under this Plan are
Options to purchase up to 2,780,420 Ordinary Shares of the Company
(nominal value NIS 1.00 per share), subject to adjustments as provided
in Section 13 below.
5. ADMINISTRATION:
5.1. The Plan will be administered by the Board of Directors of the
Company, taking into account the recommendations of the
Compensation and Options Committee (the "Committee"), a
sub-committee of the Board.
5.2. No member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or
any Option granted hereunder.
6. ELIGIBLE GRANTEES:
6.1. No option award under this Plan (an "Option Award") may be
granted to any person serving as a member of the Board, unless
such person is also an employee of the Company at the time of
the Option Award; and in such event, this person may only be
granted 102 Trustee Options. Subject to this limitation and
any restriction imposed by any applicable law, Options may be
granted to any employee of the Company or any Subsidiary
("Grantee"). The grant of an Option Award to a Grantee
hereunder, shall neither entitle such Grantee to participate,
nor disqualify him/her from participating, in any other grant
of Options pursuant to this Plan or any other share incentive
or share option plan of the Company or any Subsidiary.
6.2. Grants of ISO's shall be made only to employees eligible to
receive them under Section 422 of the Code. If (i) a Grantee
of ISO's at the time of the Option Award owns shares
representing more than 10% of the voting power of the Company
or its parent or a Subsidiary, (ii) the aggregate Fair Market
Value (as defined hereunder), as at the time of the grant, of
the shares underlying ISOs which first become exercisable
during any calendar year exceeds $100,000 (taking such Options
into account in the order in which they were granted) or (iii)
such Options otherwise fail to fully comply with the
requirements for ISO's under the Code, such Options shall be
treated as NSOs. Options designated as ISO's will be treated
as NSOs if a disposition of underlying shares exercisable
under the Option is made within two years from the date of the
granting of the Option or within one year after the exercise
of the Option.
7. TRUSTEE; REQUIRED HOLDING PERIODS:
7.1. Option Awards and/or shares in the Company which will be
issued upon the exercise of the Option Awards will be held in
trust by David H. Schapiro Legal Services (the "Trustee") in
accordance with Section 102 and the regulations, rules, orders
or procedures promulgated thereunder with respect to Israeli
residents,
2
and with respect to non-Israeli residents, the Trustee shall
hold such Options, and any shares issued upon the exercise of
any of such Options, in trust pursuant to the Company's
instructions from time to time and according to all applicable
law.
7.2. 102 Trustee Options and any shares received following exercise
of 102 Trustee Options shall be held by the Trustee for the
requisite period prescribed by the Ordinance and the Rules, or
such other period as may be required or unless otherwise
permitted by the Israeli Income Tax Authorities (the "Required
Holding Period").
Notwithstanding the aforesaid, an official guideline published
by the Israeli income tax authorities on March 11, 2003 with
respect to Section 102 of the Ordinance and the Rules (the
"Interpretation"), provides that the meaning of the
restriction on the sale of shares during the Required Holding
Period is that if a Grantee who is an Israeli resident sells
his/her shares during the Required Holding Period, the sale of
the shares will be taxed in accordance with the relevant
provisions of Section 102 of the Ordinance and the Rules
regarding a breach of the terms of the Required Holding
Period; Namely, a sale of shares during the Required Holding
Period will be taxed as regular employment income (and not at
the reduced capital gains tax rate, if applicable) and will be
subject to Israeli National Insurance and Health tax.
102 Trustee Options, shares issuable upon exercise of 102
Trustee Options or proceeds arising from the sale of such
shares may be released to an Israeli resident Grantee only in
compliance with the Ordinance, the Rules, and the terms and
conditions of the Trust Agreement entered into between the
Company and the Trustee, including without derogation, the
withholding of any applicable tax due pursuant to the
Ordinance and Rules.
7.3. The Trustee and each Grantee shall comply with the applicable
laws and the terms and conditions of the Trust Agreement
entered into between the Company and the Trustee.
7.4. In the event that the Company issues securities as bonus
shares (minyot hatavah) on shares which derive from 102
Trustee Options, such bonus shares shall also be subject to
the provisions of this Section and the Required Holding Period
for such bonus shares shall be measured from the commencement
of the Required Holding Period for the 102 Trustee Option from
which the bonus shares were issued.
7.5. The Trustee shall not use the voting rights vested in such
shares issuable upon exercise of Options, except in cases
when, at his discretion and after consulting with the
Committee, the Trustee believes that the said rights should be
exercised for the protection of the Grantees as a minority
among the Company's shareholders.
3
7.6. The Company shall be entitled to replace the Trustee with
another appointee from time to time and shall notify the
Grantees of such replacement.
8. RESERVED SHARES:
The Company has reserved 2,780,420 authorized but unissued Ordinary
Shares (nominal value NIS 1.00 per share) for purposes of the Plan,
subject to adjustments as provided in Section 13 below. Other than with
respect to grants to employees who at the time of the grant of the
Option are also serving as members of the Board, if any Options granted
under the Plan terminate, expire or otherwise cease to exist, they
shall again be available for grant through Option Awards under the Plan
or under any other incentive plan that the Company may adopt.
9. OPTION AWARDS:
9.1. Option Awards to Israeli residents may be granted at any time
after the Plan has been approved by the Income Tax Authorities
as a plan under Section 102, and Option Awards to non-Israeli
residents may be granted at any time after the Plan has been
approved by the Board of Directors. The date of grant of each
Option Award shall be the date of the Option Award letter
granted to the Grantee (the "Date of Grant"). Notwithstanding
the aforesaid, 102 Trustee Options may be granted before this
Plan has been approved by the Income Tax Authorities as a plan
under Section 102, but not prior than 30 (thirty) days from
the filing of this Plan with the Income Tax Authorities;
however, in the event that the Income Tax Authorities may
require certain changes to the Plan, these Option Awards shall
be subject to these changes.
9.2. The instrument granting the Option Award shall state, inter
alia, the number of shares covered thereby, the dates when it
may be exercised, the option price and such other terms and
conditions as the Committee at its discretion may prescribe,
provided that they are consistent with this Plan and with
applicable law.
9.3. The Options hereunder will not be listed in any stock exchange
and are not transferable (except to the Grantee's legal heirs
or estate).
10. OPTIONS' EXERCISE PRICES:
Other than with respect to employees who at the time of the grant of
the Option are also serving as members of the Board, the purchase price
in $US of each share will be the closing sales price of the Company's
shares as reported by NASDAQ or the principal national securities
exchange upon which the Company's shares are listed or traded (the
"Fair Market Value") for the last market trading day prior to the Date
of Grant.
4
11. VESTING AND EXERCISE OF OPTION AWARD:
11.1. Option Awards shall become exercisable (vest) pursuant to the
terms under which they were awarded, subject to the terms and
conditions of this Plan, and unless determined otherwise with
respect to Israeli employees who at the time of the grant of
the Option are also serving as members of the Board, in
accordance with the following vesting schedule: one-quarter
(1/4) of the Options granted in each Option Award shall vest
and become exercisable 12 months after the Date of Grant,
one-quarter (1/4) of the Options granted in each Option Award
shall vest and become exercisable 24 months after the Date of
Grant, one-quarter (1/4) of the Options granted in each Option
Award shall vest and become exercisable 36 months after the
Date of Grant, and one-quarter (1/4) of the Options granted in
each Option Award shall vest and become exercisable 48 months
after the Date of Grant, subject to the Grantee's continuing
to be an Employee or a Israeli resident member of the Board of
Directors on such dates.
11.2. The consideration to be paid for the shares to be issued upon
exercise of an Option, including the method of payment, shall
be determined by the Company and may consist entirely of (1)
cash, (2) check, or (3) cashless in case of same day sale. The
procedure for exercise of the Options shall be published in
the Company's website. The Company may change the procedures
for exercise of the Options at its discretion, by giving
notice thereof to the Grantees.
11.3. Anything herein to the contrary notwithstanding, if any Option
Award, or any part thereof, has not been exercised within ten
(10) years after the Date of Grant (or any shorter period set
forth in the instrument granting such Option Award), such
Option Award, or such part thereof, shall terminate, and all
interests and rights of the Grantee in and to the Option Award
or such part thereof shall expire.
12. TERMINATION OF EMPLOYMENT; TERMINATION OF RIGHT TO EXERCISE:
12.1. Subject to the provisions of paragraph 12.2 and 12.3 hereof,
unless determined otherwise by the Board of Directors if a
Grantee should cease to be employed by the Company for any
reason, all of the Grantee's rights which have vested and are
exercisable in respect of all Option Awards granted to the
Grantee under the Plan, and which are not exercised within
sixty (60) days after the date of cessation of the
employee-employer relationship, shall terminate upon the
expiration of such sixty-day period. Options which are
unvested at the time of termination of the Grantee's
employment with the Company will become void and unexercisable
at the time of such termination.
12.2. Notwithstanding paragraph 12.1, in the event the employment of
a Grantee is terminated by the Company under circumstances
that entitle the Company (1) not to pay severance pay, or to
pay only part of the severance pay, pursuant to the provisions
of the Severance Pay Law, 5723-1963, or (2) to terminate the
5
Grantee for Cause as such term is defined in such Grantee's
employment agreement, vested Options shall lapse and become
void and unexercisable on the last day of the Grantee's
employment with the Company or on such date as set forth in
the Grantee's employment agreement.
12.3. Anything herein to the contrary notwithstanding, if a Grantee
should die, or become unable to continue to be employed by the
Company by reason of becoming incapacitated while in the
employ of the Company due to an accident, illness or other
cause approved by the Committee, or if a Grantee should retire
at the legal retirement age, vested Options can be exercised
by the Grantee or the Grantee's estate or legal
representative, as the case may be, within one (1) year after
the Grantee's last day of employment with the Company.
Thereafter, such Options shall lapse and become void and
unexercisable. In the case of an ISO, if such disability is
not a "disability" as such term is defined in Section 22(e)(3)
of the Code, such ISO shall be treated for tax purposes as an
NSO on the day three months and one day following such
termination.
13. ADJUSTMENTS:
13.1. In the event that the Company shall issue any of its Ordinary
Shares or other securities as bonus shares (minyot hatavah)
upon or with respect to any shares which shall at the time be
subject to a right of purchase by a Grantee hereunder, each
Grantee upon exercising such right shall be entitled to
receive (for the purchase price payable upon such exercise),
the shares as to which he is exercising such right and, in
addition thereto (at no additional cost), such number of
shares of the class or classes in which such bonus shares
(stock dividend) were declared, as the Grantee would have
received had he been the holder of the shares as to which he
is exercising his right at all times between the date of the
granting of such right and the date of its exercise. No
fractional shares will be issued under this Section. All
resulting fractional shares may be aggregated and sold by the
Company, who will be entitled to the proceeds of the sale
thereof.
13.2. If securities of any kind are offered to the Company's
shareholders by means of a rights offering, the exercise price
of the Options will not be adjusted but the number of shares
into which the Options are exercisable ("Underlying Shares")
will be increased to take into account the element of economic
benefit of the rights issue ("markeev hahatavah"), as such
element is calculated by the Tel-Aviv Stock Exchange (the
"TASE") in accordance with its rules.
13.3. If the Company consolidates its Ordinary Shares, NIS 1.00
nominal value, into shares having a larger nominal value, or
if it splits them into a larger number of shares having a
lesser nominal value, then the number of Underlying Shares
that is allotted due to the Options' exercise will be
decreased or increased, as the case may be, after such an
action.
13.4. In any event in which the execution of an adjustment is
actually required
6
as detailed in this Section 13, the Committee is authorized to
implement the actual adjustment and to execute the required
calculations, all subject to the principles in this Section
13.
14. CONTINUANCE OF EMPLOYMENT:
Neither the Plan nor the Option Award letter shall impose any
obligation on the Company or a Subsidiary, to continue any Grantee in
its employ or as a member of its Board of Directors, and nothing in the
Plan or in any Option Award pursuant thereto shall confer upon any
Grantee any right to continue in the employ or as a member of the Board
of Directors of the Company or a Subsidiary, or restrict the right of
the Company or a Subsidiary, to terminate such employment or position
as a member of its Board of Directors at any time.
15. GOVERNING LAW:
The Plan and all instruments issued hereunder or in connection
therewith, shall be governed by, and interpreted in accordance with,
the laws of the State of Israel.
16. APPLICATION OF FUNDS:
The proceeds received by the Company from the sale of shares pursuant
to Option Awards granted under the Plan will be used for general
corporate purposes of the Company or any Subsidiary.
17. TAX CONSEQUENCES:
17.1. Any tax consequences arising from the grant or exercise of any
Option Award, from the payment for shares covered thereby or
from any other event or act (of the Company or the Grantee)
hereunder, and commissions and other expenses relating thereto
shall be borne solely by the Grantee. Furthermore, the Grantee
shall agree to indemnify the Company and/or any of its
Subsidiaries and/or the Trustee and hold them harmless against
and from any and all liability for any such tax or interest or
penalty thereon, including without limitation, liabilities
relating to the necessity to withhold, or to have withheld,
any such tax from any payment made to the Grantee. The Company
and/or any of its Subsidiaries and/or the Trustee may withhold
any taxes, expenses and commissions from the exercise of the
Options and/or the sale of the underlying shares.
17.2. Before any 102 Trustee Options are granted, the Grantee will
confirm in writing that he/she (1) understands that the
Options are granted pursuant to a Plan under Section 102, (2)
is aware which taxation track applies to the Options and (3)
will undertake that he/she will not exercise the Options prior
to the end of the Required Holding Period unless otherwise
permitted as set forth in Section 7.2 above.
7
18. MISCELLANEOUS
18.1. MAINTAINING REGISTERED CAPITAL: The Company will maintain a
sufficient quantity of Ordinary Shares, NIS 1.00 nominal
value, in its registered capital to ensure the execution of
the exercise right hereunder, and if necessary it will cause
its registered capital to be increased.
18.2. SHARE EXCHANGE TRANSACTION: In the event that the Company is a
party to any agreement or arrangement for exchanging shares
(such as a merger or reorganization) (hereinafter, the
"Exchange Transaction"), in which the holders of the Company's
ordinary shares are offered the opportunity to exchange their
shares for the securities of any other corporation, the
Company will cause such other corporation to allot such
securities as were offered to its ordinary shareholders as
aforesaid to any Grantee who exercises his/her options during
the exercise period and subject to the exercise conditions, as
if that Grantee was the holder of the Underlying Shares on the
determining date for purposes of the said Exchange
Transaction.
18.3. VOLUNTARY LIQUIDATION: In the event of a decision to
voluntarily liquidate the Company, each Grantee will be deemed
to have used his exercise right immediately prior to the
decision having been taken, without having to pay the exercise
price. In this event, the Grantee will be entitled to a
payment which is equal to the amount that he would receive in
liquidation if he were a holder of Underlying Shares
immediately prior to the decision to liquidate, less the
exercise price.
18.4. CHANGES IN THE OPTIONS' CONDITIONS: The Committee is entitled
to change the Options' provisions from time to time for the
Grantees' benefit (subject to Section 102), without the need
to obtain the consent of the Grantees. In addition, to the
extent that during the period of this plan, new tax
legislation applicable to employees' option plans enters into
force, the Committee may introduce changes to this plan with
respect to options hereunder not yet granted until the date of
the change, as well as changes to the terms of Options already
granted hereunder until the date of the change, to the extent
considered desirable by the Committee in order to benefit from
such new tax laws, provided that with respect to Options
already granted, the Committee will not introduce changes that
may in certain circumstances prejudice the Grantees, without
their consent.
Notice of any changes to the Options' terms will be given promptly to
the Trustee.
19. AMENDMENT AND TERMINATION OF THE PLAN
The Plan was adopted by the Board of Directors of the Company on June
23, 2003 and approved by the Company's shareholders on ___________ .No
ISO granted under the Plan shall become exercisable unless and until
the Plan shall have been approved by the Company's shareholders. If
such shareholder approval is not obtained within 12 (twelve) months
after the effective date of the Plan, no Options previously granted
under the Plan shall be deemed to be ISOs and no ISOs shall be granted
thereafter. The Board may, at any time and from time to
8
time, terminate, alter, adjust or amend the Plan in any respect, except
that if at any time the approval of the shareholders of the Company is
required under Section 422 of the Code or any successor provision with
respect to ISOs, the Board may not effect such modification or
amendment without such approval. The Plan shall become effective upon
its adoption by the Board, and it shall remain in effect for a term of
ten (10) years after its adoption by the Board, or the date the Plan is
approved by the stockholders, whichever is earlier.
9
RE: GRANT OF OPTIONS - 2003/1 PLAN
Dear : ________
We are pleased to grant you options ("Options") to purchase up to
__________ Ordinary Shares, nominal value NIS 1.00 each, of Tower Semiconductor
Ltd. (the "Company"), pursuant to the Employee Share Option Plan 2003/1 of the
Company, (the "Plan"), as of __________ (the "Date of Grant").
The Plan is a Plan under Section 102 of the Income Tax Ordinance
("Section 102") and the United States Internal Revenue Code of 1986, as amended,
and the grant and issuance of Options pursuant to this letter is subject to the
receipt of all the approvals required under applicable law. The Options will be
issued to David H. Schapiro, Legal Services Esq. (the "Trustee").
The exercise price of the Options shall be $________ per share. The
terms and conditions set forth in this letter are subject to and supplemented by
the terms and conditions set forth in the Plan posted on our website attached
hereto. You are urged to review the Plan and shall be deemed to be fully aware
of all the terms and conditions governing the Options set forth in the Plan. By
your signature below, you agree to be bound by the terms and conditions of the
Plan.
The Options pursuant to this letter will be issued once you sign: (I)
this letter, (II) the attached Employee's Declaration, and (III) any other form
which is required under Section 102 and which will be provided to you by the
Company, and return them to the Company. The forms referred to above must be
SENT to the Human Resources Manager only, no later than ________ on 15:00. No
options will be granted to you if the forms are not returned by such date. If
you are unable to return the forms by such date, you may contact the CFO or VP
Human Resources of the Company, who is authorized, at his/her discretion, to
extend such date, but in any event no later than ________.
The issuance of the Options is subject to the main terms and conditions
set out below. The full terms and conditions of the Options are set out in the
Plan.
1. ISSUANCE OF OPTIONS.
The Options are hereby issued to the Trustee for your benefit, subject
to the terms and conditions hereunder.
The Options will not be listed in any stock exchange and are not
transferable (except to your legal heirs or estate).
2. VESTING; PERIOD OF EXERCISE.
2.1. Subject to the terms and conditions of the Plan and this
letter, the Options granted pursuant to this letter shall
become exercisable (vest) in accordance with the following
schedule:
10
(a) ________ of the Options shall vest 12 months from the Date of
Grant;
(b) ________ of the Options shall vest 24 months from the Date of
Grant; and
(c) ________ of the Options shall vest 36 months from the Date of
Grant; and.
(d) ________ of the Options shall vest 48 months from the Date of
Grant;
2.2. The above Options will vest and become exercisable only if on the date
of vesting you are still employed by the Company.
2.3. Vested Options may be exercised in whole or in part, at any time within
a period of ten (10) years from the Date of Grant (the "Exercise
Period"). Any Option not exercised within the Exercise Period shall
lapse and become void and unexercisable.
2.4. Options which are unvested at the time of termination of your
employment with the Company will become void and unexercisable at the
time of such termination. In addition, if your employment with the
Company is terminated voluntarily by you or is terminated by the
Company for any reason, vested Options can be exercised by you within
sixty (60) days after your last day of employment with the Company.
Thereafter, such options shall lapse and become void and unexercisable.
2.5. The procedure for exercise of the Options shall be as it appears on the
web-site of the Company. However, the Company may change the procedure
for exercise of the Options at its discretion. The Company will notify
you of any changes in the procedure.
3. NOTICES.
All notices, consents and other communications under this Agreement
shall be sent in writing and shall be deemed to have been given when
(a) delivered by hand, (b) mailed by certified or registered mail,
return receipt requested or express delivery service, or (c) when
received by the addressee, if sent by Express Mail, Federal Express or
other express service, in each case to the appropriate addresses set
forth below (or to such other addresses as a party may designate as to
itself by notice to the other parties).
(a) If to you, at your address listed beneath your signature below;
(b) If to the Company: Human Resources Department, Tower Semiconductor,
P.O. Box 619, Migdal Ha'emek, Israel;
(c) If with respect to Option exercise procedures:
BENEFIT@MYBENEFIT.CO.IL or facsimile no.: 09-766-5080.
4. NO WAIVER.
The delay or failure on the part of any party hereto to insist, in any
one instance or more, upon strict performance of any of the terms or
11
conditions of this Agreement, or to exercise any right or privilege
herein conferred shall not be construed as a waiver of any such terms,
conditions, rights or privileges but the same shall continue and remain
in full force and effect.
Sincerely,
Tower Semiconductor Limited
Name of Employee: ___________ Date: _____________
Employee signature: _____________________
Employee ID number: ___________________
Employee address: _____________________
12
EMPLOYEE'S DECLARATION
1. I, the undersigned, confirm that the contents of this letter, dated
____________ are acceptable and agreed to by me.
2. All taxes, commissions and other expenses and payments payable in
connection with the grant of the Options, the exercise thereof, the
sale of the shares purchased by way of exercise of the Options (to the
extent payable) and/or the transfer of funds (including currency
conversions) will be borne by me. I will promptly indemnify the Company
in the event it makes any of such payments.
3. I acknowledge and agree that in the event that bonus shares are issued
by the Company in respect of the shares granted to me pursuant to this
letter, such bonus shares shall be transferred by the Company to the
Trustee, and the terms and provisions of the Income Tax Rules mentioned
above shall apply to the bonus shares, as shall the Trustee's
undertakings under the Agreement between the Trustee and the Company.
4. Without derogating from the former provisions, I acknowledge that the
ultimate liability for income tax, social insurance or other
tax-related withholding in connection with this grant or its exercise
is my responsibility. I specifically acknowledge that any and all
applicable laws and regulations in Israel pertaining to the granting of
options including but not limited to the provisions set forth in
Section 102 of the Income Tax Ordinance [New Version] - 1961 (the
"Ordinance") and any rules promulgated thereunder including any
amendment thereto, any interpretation published by the Israeli tax
authorities in their official guidelines and any judicial
interpretation of the Israeli courts, shall each apply with respect to
my Options and may affect the terms of my Options. Any exercise of an
Option and sale of shares received upon the exercise of my Options (the
"Shares"), which deviates from the rules set forth in Section 102 of
the Ordinance or in regulations promulgated thereunder may result in
adverse tax consequences for me. I further acknowledge that each of the
Company, brokers effecting transactions relating to my Options and the
Trustee (as defined below) is under no obligation to inform me as to
whether a particular transaction I may consider effecting complies with
the rules set forth in Section 102 of the Ordinance or in regulations
promulgated thereunder. I further acknowledge that the Company has not,
nor does it intend to, provide tax advice with respect to the tax
ramifications of an Option grant under the laws of any jurisdiction,
including Section 102 of the Ordinance or any Rules promulgated
thereunder, and that I am urged to seek my own personal tax advice.
5. I acknowledge that a trustee (the "Trustee") has been appointed to
administer my Options in accordance with Section 102 of the Ordinance
and the Income Tax Rules (Tax Benefits Regarding the Grant of Options
to Employees), 2003 (the "Rules") and pursuant to an agreement with the
Trustee that may be amended from time to time (the "Trust Agreement").
In accordance with the terms of this Option Agreement, the Company
13
and/or the Trustee are responsible, among other things, to: (a)
withhold and pay any applicable taxes owed to the tax authorities in
Israel in connection with my Options, including as a result of an
exercise of my Options and sale of the Shares by me, prior to releasing
any funds owed to me, (b) provide the tax authorities in Israel with an
annual report in accordance with the Rules and (c) provide the Israeli
tax authorities with a report regarding the grant of Options under the
Plan, within ninety (90) days from the Grant Date in accordance with
the Rules. Any fees associated with the exercise of my Options as
specified in the Trust Agreement will be borne solely by me. In
accordance with the approval granted by the Israel Tax authorities in
connection with this Plan, certain of the functions related to the
administration of my options may be performed by the Company.
6. In accepting this grant, I acknowledge that unless otherwise permitted
by the Income Tax Authorities, the Rules as of the Option Date prohibit
me from selling Shares issued upon exercise of my Options during a
period of twenty-four months from the end of the tax year in which the
grant took place in the event that my Options are subject to the
"capital gains track" as set forth in Section 102(b)(2) (the "Capital
Gains Track") of the Ordinance (the "Capital Gains Track"), or during a
period of twelve months from the end of the tax year in which the grant
took place in the event that my Options are subject to the "employment
income track" as set forth in Section 102(b)(1) of the Ordinance (the
"Required Holding Period"). Notwithstanding the above, if I elect to
sell my Shares during the Required Holding Period, I hereby acknowledge
that the sale of the Shares will be taxed in accordance with the
relevant provisions of Section 102 of the Ordinance and the Rules
regarding a breach of the terms of the Required Holding Period. For the
avoidance of doubt, in the event that my Options are subject to the
"capital gains track", a sale of the shares issued upon exercise of my
Options during the Required Holding Period will forfeit my right to
receive the tax benefits of the "capital gains track" under Section
102(b)(2) of the Ordinance and the income derived from the exercise of
the Options and the sale of the Shares will be taxed as regular
employment income (and not at the reduced capital gains tax rate, if
applicable) and will be subject to National Insurance and Health tax.
7. I am aware that: (i) the Company intends to issue additional shares and
options in the future to various entities and individuals, as the
Company in its sole discretion shall determine; and (ii) the Company
may increase its share capital by new securities in such amount as it
finds expedient; and I hereby waive any claim I might or may have
regarding such issuance or increase.
8. I am aware that pursuant to Section 102(b)(3) if my Options are issued
on the Capital Gains Track with an exercise price lower than the
average closing price of the Company's shares on the 30 (thirty)
trading days preceding the issuance of the Options, a part of any
benefit ultimately derived from the exercise of the Options and the
sale of the shares issued upon exercise of my Options, up to the amount
equivalent to the difference between these prices, will be taxed as
regular employment income and not at the reduced capital gains tax rate
and will be subject to National Insurance and Health tax.
14
9. I hereby consent to the transfer of information that the Company is
required to report to the tax authorities and to the Trustee relating
to the Options in accordance with the provisions of Section 102 of the
Ordinance and the Rules.
Name of Employee: ___________ Signature: ___________
I.D. Number: _______________ Date: _______________
15
Exhibit 4.4
RE: GRANT OF OPTIONS - 2003/1 PLAN
Dear : ________
We are pleased to grant you options ("Options") to purchase Ordinary
Shares, nominal value NIS 1.00 each (the "Shares), of Tower Semiconductor Ltd.
(the "Company"), pursuant to the Employee Share Option Plan 2003/1 of the
Company, (the "Plan"), as of __________ (the "Date of Grant"), as follows:
1. Total Number of Options Granted _________________________
2. Type of Option:
|_| Option intended to qualify as an incentive
stock option ("ISO") within the meaning of
Section 422 of the Internal Revenue Code
of 1986, as amended ("Code").
|_| Option not intended to qualify as an
Incentive Stock Option ("NSO").
3. The exercise price of the Options shall be $________ per
Share.
4. The Options are hereby issued (the "Option Award") to the
Trustee (as defined in the Plan) for your benefit, subject to
the terms and conditions hereunder and the Plan which we have
posted on our website. You are urged to review the Plan and
shall be deemed to be fully aware of all the terms and
conditions governing the Options set forth in the Plan. By
your signature below, you agree to be bound by the terms and
conditions of the Plan.
5. Subject to the terms and conditions of the Plan and this
letter, the Options granted pursuant to this letter shall
become exercisable (vest) in accordance with the following
schedule:
(a) ________ of the Options shall vest 12 months from the Date of
Grant;
(b) ________ of the Options shall vest 24 months from the Date of
Grant; and
(c) ________ of the Options shall vest 36 months from the Date of
Grant; and.
(d) ________ of the Options shall vest 48 months from the Date of
Grant.
6. The above Options will vest and become exercisable only if on
the date of vesting you are still employed by the Company.
Vested Options may be exercised in whole or in part, at any
time within a period of ten (10) years from the Date of Grant
(the "Exercise Period"). Any Option not exercised within the
Exercise Period shall lapse and become void and unexercisable.
In addition, Options which are unvested at the time of
termination of your employment with the Company will become
void and unexercisable at the time of such termination. In
addition, if your employment with the Company is terminated
voluntarily by you or is terminated by the Company for any
reason (other than as set forth in the Plan), vested Options
can be exercised by you within sixty (60) days after your last
day of employment with the Company. Thereafter, such options
shall lapse and become void and unexercisable.
7. The procedure for exercise of the Options shall be as detailed
on our website. However, the Company may change the procedures
for exercise of the Options at its discretion. The Company
will notify you of any changes in the procedure.
8. Any tax consequences arising from the grant or exercise of any Option Award,
from the payment for Shares covered thereby or from any other event or act (of
the Company, its subsidiaries or you) hereunder, and commissions and other
expenses relating thereto shall be borne solely by you. Furthermore, you shall
agree to indemnify the Company and/or any of its subsidiaries and/or the Trustee
and hold them harmless against and from any and all liability for any such tax
or interest or penalty thereon, including without limitation, liabilities
relating to the necessity to withhold, or to have withheld, any such tax from
any payment made to you. The Company and/or any of its subsidiaries and/or the
Trustee may withhold any taxes, expenses and commissions from the exercise of
the Options and/or the sale of the underlying Shares.
9. While we are not providing you any tax advice with respect to the grant of
Options, we understand that :
a. In the case of an ISO, the exercise of the Option, under current
applicable law that is subject to change, will not be subject to U.S. federal
income tax, although the excess, if any, of the Fair Market Value (as defined
below) of the Shares on the date of exercise over their the Fair Market Value as
defined below of the Shares on the date of grant will be included in computing
the alternative minimum tax for federal income tax purposes and may subject you
to the alternative minimum tax
2
in the year of exercise
b. The exercise of an NSO will be subject to U.S. federal income tax
liability (at ordinary tax rates) upon the excess, if any, of the fair market
value of the Shares on the date of exercise over their exercise price. If you
are an employee or a former employee, we will be required to treat such excess
as compensation income and withhold from your compensation or collect from you
and pay to the applicable taxing authorities an amount in cash equal to a
percentage of this compensation income at the time of exercise. We may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are
not delivered at the time of exercise.
c. In the case of an NSO, if Shares are held for at least one year
after exercise, any gain realized on disposition of the Shares, i.e. the excess
of the sale proceeds over the basis in the Shares (which will generally be equal
to the the Fair Market Value of the Shares on the date of exercise), will be
treated as long-term capital gain for U.S. federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and for at least two years after the Date of
Grant, any gain realized on disposition of the Shares will also be treated as
long-term capital gain for U.S. federal income tax purposes. If Shares purchased
under an ISO are disposed of within one year after exercise or within two years
after the Date of Grant, any gain realized on such disposition will be treated
as compensation income (taxable at ordinary income rates) to the extent of the
difference between the lesser of (1) the Fair Market Value of the Shares on the
date of exercise, or (2) the sale price of the Shares and the exercise price.
Any additional gain will be taxed as capital gain
D. In the case of an ISO, if a Grantee sells or otherwise disposes of
any of the Shares acquired pursuant to the ISO on or before the later of (1) the
date two years after the Date of Grant, or (2) the date one year after the date
of exercise, such Grantee shall immediately notify the Company in writing of
such disposition. You agree that you may be subject to income tax withholding by
the Company or the Subsidiary on the compensation income recognized by you.
e. In the case of an ISO, the Option shall not be considered an ISO to
the extent that the aggregate Fair Market Value (determined at the time each ISO
is granted) of the Shares with respect to which Options designated as ISOs are
exercisable for the first time by you during any calendar year exceeds $100,000;
such Options shall be treated as NSOs. Options shall be taken into account in
the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted. For the purposes of this letter, "Fair Market Value" means the last
reported sales price of the Company's Shares as reported by NASDAQ or the
principal national securities exchange upon which the Company's Shares are
listed or traded before the Date of Grant.
f. You are hereby informed that other and/or additional tax
consequences may be applicable to you with respect to the particular
circumstances relating to the grant or exercise of any Option Award or from the
payment for Shares covered thereby or from a change in your residence or from
any other event or act under applicable law, and the above provisions are not a
comprehensive description of all tax law provisions which may apply to you and
do not replace professional tax advice in these matters.
3
10. The Options pursuant to this letter will be issued once you sign
and return to the Company: (I) this letter and (II) any other form
which is required under applicable law and which will be provided to
you by the Company. The forms referred to above must reach the Human
Resources Manager only, no later than ________ on 15:00. No options
will be granted to you if the forms are not returned by such date. If
you are unable to return the forms by such date, you may contact the
CFO or VP, Human Resources of the Company, who is authorized, at
his/her discretion, to extend such date, but in any event no later than
________.
11. All notices, consents and other communications under this Agreement shall be
sent in writing and shall be deemed to have been given when (a) delivered by
hand, (b) mailed by certified or registered mail, return receipt requested or
express delivery service, or (c) when received by the addressee, if sent by
Express Mail, Federal Express or other express service, in each case to the
appropriate addresses set forth below (or to such other addresses as a party may
designate as to itself by notice to the other parties).
(a) If to you, at your address listed beneath your signature
below;
(b) If to the Company: Human Resources Department, Tower
Semiconductor, P.O. Box 619, Migdal Ha'emek, Israel;
(c) If with respect to Option exercise procedures:
BENEFIT@MYBENEFIT.CO.IL or facsimile no.: 972-9-766-5080.
Sincerely,
Tower Semiconductor Limited
4
I HEREBY ACKNOWLEDGE THAT A COPY OF THE PLAN HAS BEEN POSTED
ON THE COMPANY'S WEBSITE AND REPRESENT THAT I AM FAMILIAR WITH THE
TERMS AND PROVISIONS THEREOF, AND HEREBY ACCEPT THIS OPTION SUBJECT TO
ALL OF THE TERMS AND PROVISIONS THEREOF. I FURTHER ACKNOWLEDGE THAT I
AM AWARE THAT (I) THE COMPANY INTENDS TO ISSUE ADDITIONAL SHARES AND
OPTIONS IN THE FUTURE TO VARIOUS ENTITIES AND INDIVIDUALS, AS THE
COMPANY IN ITS SOLE DISCRETION SHALL DETERMINE; AND (II) THE COMPANY
MAY INCREASE ITS SHARE CAPITAL BY NEW SECURITIES IN SUCH AMOUNT AS IT
FINDS EXPEDIENT; AND I HEREBY WAIVE ANY CLAIM I MIGHT OR MAY HAVE
REGARDING SUCH ISSUANCE OR INCREASE. I HAVE REVIEWED THE PLAN AND THIS
OPTION IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE
OF COUNSEL PRIOR TO EXECUTING THIS OPTION AND FULLY UNDERSTAND ALL
PROVISIONS OF THE OPTION. I HEREBY AGREE TO ACCEPT AS BINDING,
CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE BOARD OF
DIRECTORS UPON ANY QUESTIONS ARISING UNDER THE PLAN OR THIS OPTION. I
FURTHER AGREE TO NOTIFY THE COMPANY UPON ANY CHANGE IN THE ADDRESS
INDICATED BELOW.
Name of Employee: ___________ Date: _____________
Employee signature: _____________________
Employee Social Security number: ___________________
Employee address: _____________________
5
Exhibit 5.1
August__, 2003
To:
Tower Semiconductor Ltd.
P.O. Box 619
Migdal Haemek, Israel 10556
Re: Registration Statement on Form S-8
Dear Sirs:
We have acted as Israeli counsel for Tower Semiconductor Ltd., a company
organized under the laws of Israel (the "Company"), in connection with the
Registration Statement on Form S-8 (the "Registration Statement") being filed by
the Company under the Securities Act of 1933 for the purposes of registering
2,780,420 of its Ordinary Shares, par value New Israeli Shekel 1.00 per share.
These shares are all shares that may be issued pursuant to options that have
been, or may hereafter be, granted pursuant to the plan ("Plan") identified in
the Registration Statement (the "Option Shares").
On the basis of such investigation as we have deemed necessary, we are of the
opinion that the Option Shares have been duly and validly authorized for
issuance and, when issued upon due exercise of options granted or hereafter
granted under the Plans in accordance with the provisions of the relevant Plan
and the related option agreements (including payment of the option exercise
price provided for therein), will be fully paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
The above opinion is based on facts existing on the date hereof and of which we
are aware. We express no opinion as to any laws other than the laws of the State
of Israel as the same are in force on the date hereof and we have not, for
purpose of giving this opinion, made any investigation of the laws of any other
jurisdiction.
Very truly yours,
/s/Yigal Arnon & Co.
Yigal Arnon & Co.
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) pertaining to various share option plans of
Tower Semiconductor Ltd. and the registration of 2,780,420 ordinary shares of
Tower Semiconductor Ltd.; and to the incorporation by reference therein of (1)
our auditor's report dated February 24, 2003, with respect to the consolidated
financial statements of Tower Semiconductor Ltd. included in its Annual Report
(Form 20-F) for the year ended December 31, 2002, filed with the Securities and
Exchange Commission; and (2) our accountants' review report dated August 8,
2003, with respect to the condensed interim consolidated financial statements of
Tower Semiconductor Ltd. included in its Report on Form 6-K for the month of
August 2003 submitted to the Securities and Exchange Commission.
/s/ Brightman Almagor & Co.
Brightman Almagor & Co.
Certified Public Accountants
A member of Deloitte Touche Tohmatsu
Tel Aviv, Israel
August 11, 2003