EXHIBIT 10.2
Date: February 24, 2003
To: Tower Semiconductor Ltd.
P.O. Box 619
Migdal Haemek 23105
Israel
Fax: +972-4-654-7788
Attention: Co-Chief Executive Officer
cc: Yigal Arnon & Co.
One Azrieli Center
Tel-Aviv 67021
Israel
Fax: +972-3-608-7714
Attention: David H. Schapiro, Adv.
Re: AMENDMENT TO PAYMENT SCHEDULE OF SERIES A-5 ADDITIONAL PURCHASE
OBLIGATIONS, WAIVER OF SERIES A-5 CONDITIONS, CONVERSION OF SERIES A-4 WAFER
CREDITS AND OTHER PROVISIONS (THE "AMENDMENT")
Dear Sirs,
With regard to the obligation of each party to this letter (a "Party")
to exercise the Series A-5 Additional Purchase Obligations, as provided for in
its Fab 2 Investment Agreements, as amended through the date hereof, including
the Amendment attached hereto as Exhibit A, all capitalized terms not defined
herein shall be as defined therein, each Party hereby agrees that with respect
to the parties to this letter agreement (the "Side Letter"), subject only to
Section 7 of the Amendment and the contents of this Side Letter, the Amendment
shall be effective upon the receipt by Tower Semiconductor Ltd. (the "Company"
or "Tower") of the signatures of each of SanDisk Corporation, Alliance
Semiconductor Corporation, Macronix International Co., Ltd. and Israel
Corporation Technologies (ICTech) Ltd.
In addition, each of the Company, SanDisk Corporation, Alliance
Semiconductor Corporation, Macronix International Co., Ltd. and Israel
Corporation Technologies (ICTech) Ltd. hereby agree that notwithstanding
anything to the contrary set forth in the Amendment:
1. When the term Minimum Financing is used in the Amendment it
shall mean the Raising (as defined in the Amendment) by the
Company of the dollar amount equal to (a) $22,105,730,
provided that if the Company does not receive a portion of the
Series A-5 Additional Purchase Obligation, such $22,105,730
Minimum Financing amount shall not be increased in the event
each of Bank Hapoalim B.M. and Bank Leumi-Le-Israel Limited
shall have agreed to amend the terms of the Facility Agreement
to which Tower is a party (the "Facility Agreement") such that
the Company is not in breach of Section 16.27.1 or 16.27.2, as
applicable, of the Facility Agreement notwithstanding the fact
that the Company did not receive such portion of the Series
A-5 Additional Purchase Obligation, or (b) $22,105,730 plus
the dollar amount represented by the portion of the Series A-5
Additional
Purchase Obligation which the Company did not receive and
which was not forgiven under (a) above.
2. The Amendment and the parties obligations thereunder is
subject to and shall only become effective upon the Company
receiving the consent of each of Bank Hapoalim B.M. and Bank
Leumi-Le-Israel Limited to amend the terms of the Facility
Agreement to (a) postpone the date for Tower to next raise an
aggregate of $26 million pursuant to section 16.27.2 of the
Facility Agreement, and (b) recognize any of the payment of
the First Installment in satisfaction of Tower's obligation to
raise funds under section 16.27.2 of the Facility Agreement.
3. This Side Letter supersedes all prior agreements,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Notwithstanding the preceding sentence, the provisions of the
Parties' Fab 2 Investment Agreements, including the Amendment,
shall remain unchanged to the extent they are not amended by
the terms of this Side Letter.
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IN WITNESS WHEREOF, the parties have executed this Side Letter as of
the date first above written.
/s/ Rafi Levin /s/ Yossi Rosen
- -------------------------------- ------------------------------------
TOWER SEMICONDUCTOR LTD. ISRAEL CORPORATION TECHNOLOGIES
(ICTECH) LTD.
By: Rafi Levin
--------------------------- By: Yossi Rosen
Title: Co-CEO --------------------------------
Title: CEO
-----------------------------
/s/ Michael Gray /s/ N.D. Reddy
- -------------------------------- ------------------------------------
SANDISK CORPORATION ALLIANCE SEMICONDUCTOR CORPORATION
By: Michael Gray By: N.D. Reddy
---------------------------- -------------------------------
Title: CFO Title: President & CEO
------------------------- ----------------------------
/s/ Miin C. Wu
- ---------------------------------
MACRONIX (BVI) CO., LTD.
By: Miin C. Wu
-----------------------------
Title: Director
--------------------------
EXHIBIT A
Date: February 21, 2003
To: Tower Semiconductor Ltd.
P.O. Box 619
Migdal Haemek 23105
Israel
Fax: +972-4-654-7788
Attention: Co-Chief Executive Officer
cc: Yigal Arnon & Co.
One Azrieli Center
Tel-Aviv 67021
Israel
Fax: +972-3-608-7714
Attention: David H. Schapiro, Adv.
Re: AMENDMENT TO PAYMENT SCHEDULE OF SERIES A-5 ADDITIONAL PURCHASE
OBLIGATIONS, WAIVER OF SERIES A-5 CONDITIONS, CONVERSION OF SERIES A-4 WAFER
CREDITS AND OTHER PROVISIONS (THE "AMENDMENT")
Dear Sirs,
With regard to the obligation of each party to this letter (a
"Party") to exercise the Series A-5 Additional Purchase Obligations, as provided
for in its Fab 2 Investment Agreements, as amended through the date hereof, all
capitalized terms not defined herein shall be as defined therein, each Party
hereby agrees that its agreements shall be amended as follows:
1. EXERCISE OF SERIES A-5 ADDITIONAL PURCHASE OBLIGATION.
1.1. FIRST INSTALLMENT. Each Party hereby notifies Tower
Semiconductor Ltd. (the "Company" or "Tower") that in
accordance with the terms set forth hereunder, and subject to
and effective upon Tower obtaining all required approvals as
specified in Section 7 hereof, it shall irrevocably exercise
sixty percent (60%) of the Series A-5 Additional Purchase
Obligation (the "First Installment"), which is the amount
identified as the First Installment with respect to such Party
as set forth in Exhibit A hereto, without regard to whether
the Series A-5 Mandatory Exercise Event occurs or whether any
of the conditions to a Mandatory Exercise are satisfied. The
First Installment shall be paid no later than five (5)
business days following satisfaction of the condition
specified in the first sentence above as evidenced by a
certificate delivered to each of the parties and executed by
Tower's CEO(s) certifying the satisfaction of such condition.
1.2. SECOND INSTALLMENT. Provided the conditions of Section 1.1 are
met, each Party hereby further notifies the Company that in
accordance with the terms set forth hereunder, and subject to
and conditioned upon the completion of the Minimum Financing
(as defined below), it shall irrevocably exercise forty
percent (40%) of the Series A-5 Additional
Purchase Obligation (the "Second Installment"; the First
Installment and the Second Installment shall collectively be
referred to as the "Series A-5 APO Installments"), which is
the amount identified as the Second Installment with respect
to such Party as set forth in Exhibit A hereto, without regard
to whether the Series A-5 Mandatory Exercise Event occurs or
whether any of the conditions to a Mandatory Exercise are
satisfied. The term Minimum Financing shall mean the Raising
(as defined below) by the Company of the dollar amount equal
to $22,105,730. The term Raising shall mean the receipt of
proceeds from (i) the sale, in a public or private offering,
of ordinary shares of the Company or debt convertible into
ordinary shares of the Company; or (ii) any other form of fund
raising which satisfies the requirements for additional
financing pursuant to section 16.27.2 of the Facility
Agreement, as amended, to which the Company is a party. The
Second Installment shall be paid upon satisfaction of the
condition specified in the first sentence above as evidenced
by a certificate delivered to each of the parties and executed
by Tower's CEO(s) certifying the satisfaction of such
condition; provided, further, that the Second Installment
shall not be due before the later of (i) August 1, 2003, and
(ii) five (5) business days following the date upon which the
Company has completed the Minimum Financing. Notwithstanding
the preceding sentence, the obligation to advance the Second
Installment shall terminate, and there shall be no further
obligation or liability to pay the Second Installment, if the
Minimum Financing shall not have been completed by December
31, 2003.
For the avoidance of all doubt and notwithstanding the
provisions set forth in Sections 5 and 6 of the Additional
Purchase Obligation Agreement between SanDisk Corp. and Tower
dated July 4, 2000 or the Additional Purchase Obligation
Agreement between Israel Corporation Technologies (ICTech)
Ltd. and Tower dated December 12, 2000 or the Additional
Purchase Obligation Agreement between The Challenge Fund-Etgar
II, LP and Tower dated February 11, 2001 and as incorporated
by reference in all of the other Fab 2 Investment Agreements,
as applicable to each Party, each Party's undertaking to pay
the First Installment and the Second Installment is, upon
satisfaction of all of the conditions specified in this
Amendment and subject to the last sentence of the first
paragraph of this Section 1.2, completely irrevocable.
2. SHARE ISSUANCES. Immediately following the advancement of the
First Installment, each Party will be issued fully-paid and
non-assessable ordinary shares of Tower equivalent to the
aggregate of the First Installment divided by the average
trading price for the ordinary shares of the Company during
the thirty (30) consecutive trading days preceding the date
that this Amendment is approved by the Board of Directors of
the Company. Immediately following the advancement of the
Second Installment, each Party will be issued fully-paid and
non-assessable ordinary shares of Tower equivalent to the
Second Installment divided by the price per ordinary share of
the Company paid in connection with the Minimum Financing (the
"Minimum Financing Price"); provided, however, that if the
Minimum Financing
Price cannot reasonably be calculated from the documents
evidencing the Minimum Financing, then the Minimum Financing
Price shall be the average trading price for the ordinary
shares of the Company during the thirty (30) consecutive
trading days preceding the date the Second Installment is
paid.
3. CONVERSION OF PORTION OF PRE-PAID CREDIT ACCOUNT. Tower hereby
grants to each Party who is either SanDisk Corp. ("SNDK"),
Alliance Semiconductor Corp. ("ALSC"), Macronix International
Co., Ltd. ("MXIC") or QuickLogic Corp. ("QUIK") (SNDK, ALSC,
MXIC and QUIK shall each be referred to as a "Wafer Partner"
and collectively shall be referred as the "Wafer Partners") an
option to convert a number of credits equal to the number of
credits in each of its respective Pre-Paid Wafer Accounts that
were issued in connection with its advancement of the Series
A-4 Additional Purchase Obligation payment in October 2002 and
that are held in its Pre-Paid Wafer Account on December 31,
2005 (the "Series A-4 Credits") into fully-paid and
non-assessable ordinary shares of Tower equivalent to the
amount of the Series A-4 Credits divided by the average
trading price for the ordinary shares of the Company during
the thirty (30) consecutive trading days preceding December
31, 2005 (the "Conversion Price"), provided that such Party
provides Tower advance written notice to convert all or a
portion of the Series A-4 Credits no earlier than December 31,
2005 and by no later than January 31, 2006 (the "Conversion
Notice"). Tower hereby agrees to issue to each Wafer Partner
that provides it with a Conversion Notice the ordinary shares
to be issued in connection with its exercise of the Series A-4
Credits promptly after its receipt of such Conversion Notice.
4. RIGHTS OFFERING. To the extent that any of the Wafer Partners
shall convert their "Series A-4 Credits" into fully-paid and
non-assessable ordinary shares pursuant to paragraph 3, and
provided that such amount of converted Series A-4 Credits are
equivalent to or greater than an aggregate of 5% of Tower's
then outstanding share capital, Tower hereby undertakes to
prepare and file a registration statement, within a reasonable
time following the issuance of the ordinary shares to the
Wafer Partners in connection with their conversion of the
Series A-4 Credits, for the distribution of rights to all of
Tower's shareholders other than Wafer Partners but including
each of the Parties who are either Israel Corporation
Technologies (ICTech) Ltd. ("ICTech") or The Challenge
Fund-Etgar II, LP ("CF") (ICTech and CF shall each be
referred to as an "Equity Partner"), to purchase additional
shares in Tower at the Conversion Price to maintain their
percentage of ordinary shares held in Tower immediately prior
to the conversion of the Series A-4 Credits. Tower shall use
its reasonable best efforts to cause the registration
statement to be declared effective by the Securities and
Exchange Commission and the Israel Securities Authority as
soon as reasonably practicable after filing thereof with the
Securities and Exchange Commission and the Israel Securities
Authority.
5. TERMINATION OF WAFER PARTNER DIFFERENTIAL CONDITION. Upon
satisfaction of the condition set forth in the first sentence
of Section 1.1, the parties shall irrevocably agree to fully
and indefinitely waive Tower's obligation to raise an
additional $50 million from additional wafer partners in
connection with the provisions set forth in the Fab 2
Investment Agreements and related letters with respect to the
Wafer Partner Differential.
6. RESTRICTION ON TRANSFER OF EQUITY SECURITIES UNDER THE
CONSOLIDATED SHAREHOLDERS AGREEMENT; REGISTRATION RIGHTS. All
of the parties to the Consolidated Shareholders Agreement
dated January 18, 2001 by and between SanDisk, Alliance,
Macronix and Israel Corporation Ltd. (the "CSA"), hereby agree
that all of the ordinary shares in Tower to be issued to such
parties with respect to the Series A-5 Additional Purchase
Obligations will be subject to the restrictions on transfer of
Equity Securities during the Initial Restricted Period and the
Subsequent Restricted Period (all capitalized terms in this
section as defined in the CSA). All shares issued or
contemplated to be issued to the parties pursuant to Sections
2 and 3 of this Amendment shall be deemed to be Purchaser
Group Registrable Securities as defined in and as provided for
in the Registration Rights Agreement made as of January 18,
2001, by and among Tower Semiconductor Ltd., SanDisk
Corporation, Alliance Semiconductor Corp., Macronix
International Co., Ltd, QuickLogic Corporation and The Israel
Corporation Ltd.
7. APPROVALS. This Amendment and the parties obligations
hereunder are subject to and shall only become effective upon
the approval of the Company's audit committee, its board of
directors (which approval shall include the unanimous vote of
approval of its independent directors), its shareholders, the
Office of the Chief Scientist, the Investment Center and, to
the extent applicable, the Israel Land Administration.
8. FAB 2 INVESTMENT AGREEMENTS. Except as expressly set forth in
this Amendment and effective upon payment of the First
Installment in full, the Company hereby irrevocably waives,
forever excuses and releases the Wafer Partners and their
respective officers, directors and employees, from their
obligation to exercise the Series A-5 Additional Purchase
Obligation as provided for in the Fab 2 Investment Agreements,
including without limitation, the Additional Purchase
Obligation Agreement. All other provisions of the Parties' Fab
2 Investment Agreements shall remain unchanged.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
- ---------------------------------- ------------------------------------
TOWER SEMICONDUCTOR LTD. ISRAEL CORPORATION TECHNOLOGIES
(ICTECH) LTD.
By:
By: --------------------------------
-------------------------------
Title:
Title: Co-CEO -----------------------------
- ---------------------------------- ------------------------------------
SANDISK CORPORATION ALLIANCE SEMICONDUCTOR CORPORATION
By: By:
------------------------------ --------------------------------
Title: Title:
--------------------------- -----------------------------
- ---------------------------------- ------------------------------------
MACRONIX INTERNATIONAL CO., LTD. QUICKLOGIC CORP.
By: By:
------------------------------ --------------------------------
Title: Title:
--------------------------- -----------------------------
- ----------------------------------
THE CHALLENGE FUND-ETGAR II, LP
By:
------------------------------
Title:
---------------------------
EXHIBIT A
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WAFER PARTNER OR EQUITY PARTNER FIRST SECOND
INSTALLMENT INSTALLMENT
- -----------------------------------------------------------------------------------
SanDisk Corp. $6,600,420 $4,400,280
Alliance Semiconductor Corp. $6,600,420 $4,400,280
Macronix International Co., Ltd. $6,600,420 $4,400,280
QuickLogic Corp. $2,200,140 $1,466,760
Israel Corporation Technologies (ICTech) Ltd. $4,400,004 $2,933,336
The Challenge Fund-Etgar II, LP $440,000.40 $293,333.60
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