EXHIBIT 10.55
Date: November 11, 2003
To: Tower Semiconductor Ltd.
P.O. Box 619
Migdal Haemek 23105
Israel
Fax: +972-4-654-7788
Attention: Chief Executive Officer
Re: AMENDMENT NO.3 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
Dear Sirs,
With regard to the obligation of each party to this letter (a "Party") to
exercise its Series A-5 Additional Purchase Obligations, as provided for in its
Fab 2 Investment Agreements, as amended through the date hereof, including the
MS 5 Agreement attached hereto as Exhibit A (the "Amendment") and the letters
dated February 24, 2003 and April 14, 2003 (the "Prior Letters") (the Amendment
and the Prior Letters, together, the "Former MS 5 Agreement"), all capitalized
terms not defined herein shall be as defined in the Former MS 5 Agreement, each
Party to this letter agreement ("Amendment No. 3") hereby agrees as follows,
notwithstanding anything to the contrary set forth in the Former MS 5 Agreement:
1. In the event that each of Bank Hapoalim B.M. and Bank Leumi-Le-Israel
B.M. (the "Banks") and Tower shall have agreed to amend the terms of
the Facility Agreement, dated January 18, 2001, as amended (the
"Facility Agreement"), such that, inter alia, Tower's obligation to
raise any additional financing pursuant to Section 16.27.2 of the
Facility Agreement will be deferred until after December 31, 2003 (it
being acknowledged that such obligation shall be increased to
approximately $152,000,000 over and above the approximately
$86,000,000 already raised pursuant to said Section 16.27.2) (the
"Waiver") and all of Tower's Milestones, as such term is defined under
the current Facility Agreement, will be waived or adjusted in
accordance with the amended Business Plan Tower has adopted and
submitted to the Banks, each Party hereto shall advance to the Company
in one aggregate lump sum the remaining portion of each Party's
respective First Installment and the total portion of each Party's
respective Second Installment in the dollar amounts set forth with
respect to such Party
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in Exhibit B hereto (the "Payments"), by no later than three business
days following the date the Company's shareholders approve this
Amendment No. 3 (the "Payment Date"); the date the Company's
shareholders approve this Amendment No. 3 to be evidenced by a
certificate delivered to each of the Parties and executed by Tower's
CEO certifying the receipt of shareholder approval and the procurement
of the Waiver.
2. With respect to its remaining portion of the First Installment, each
Party will be issued fully-paid and non-assessable ordinary shares of
Tower equivalent to the aggregate of its remaining portion of the
First Installment divided by $2.983 as set forth in the Amendment.
3. With respect to the Second Installment, each Party will be issued
fully-paid and non-assessable ordinary shares of Tower equivalent to
the aggregate of the Second Installment divided by the price per share
in a public offering for which a draft prospectus was filed with the
SEC within ninety (90) days from the date hereof (the "Public
Offering"; such price per share referred to herein as the "Public
Offering Price Per Share"), provided however, that if such public
offering is not consummated within one hundred and eighty (180) days
from the date hereof, then each Party will be issued fully-paid and
non-assessable ordinary shares of Tower equivalent to the aggregate of
the Second Installment divided by the average trading price for the
ordinary shares of Tower during the fifteen (15) consecutive trading
days preceding the Payment Date (the "Second Installment Price Per
Share"). Promptly following the transfer of the Payments, shares with
respect to the First Installment will be issued as set forth above
and, with respect to the Second Installment (assuming the transfer of
the Payment with respect thereto), shares will be issued equivalent to
the aggregate of the Second Installment divided by the Public Offering
Price Per Share, or the Second Installment Price Per Share, as
applicable, provided however that the number of shares issued in
connection with the Second Installment may later be increased if the
price per share with respect to the Second Installment is the Second
Installment Price Per Share as described in Section 4 below.
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4. Provided that the price per share with respect to the Second
Installment is the Second Installment Price Per Share, then following
the completion of a Raising (as defined below) by Tower, and provided
(1) that the price per share in such Raising is lower than the Second
Installment Price Per Share, (the "Raising Price Per Share") and (2)
that an Equity Raising shall not include (a) the Public Offering, (b)
an offering of securities to all or substantially all of Tower's
shareholders, and (c) any offering of securities in connection with a
Safety Net Investment (as defined below), each party shall receive
additional ordinary shares of Tower equivalent to the aggregate of its
Second Installment divided by the Raising Price Per Share less the
amount of shares already issued to it in connection with the Second
Installment (the "Adjustment"). The term Raising shall mean the
receipt of proceeds of at least $28 million from the sale, in one or
more public or private offerings, of ordinary shares of the Company or
securities convertible into ordinary shares of the Company that close
prior to June 30, 2004 (an "Equity Raising"). Should the Raising be
achieved through multiple Equity Raisings, the Raising Price Per Share
shall be the lowest price per share of the various Equity Raisings,
provided that such Equity Raising shall generate proceeds of at least
$10 million. Should the price per share not be determinable in the
case of a public or private offering of securities convertible into
ordinary shares as aforesaid, the parties hereto shall agree on a
financial expert to determine the price per share.
5. WAFER CREDITS.
5.1 Each Party that is a Wafer Partner agrees, notwithstanding any
conflicting provision in any other agreement in the past, that it
shall not be reimbursed or refunded for any credits in its respective
Pre-Paid Wafer Accounts (the "Credits") and will only utilize, or be
credited against actual orders for Credits made after December 31,
2006, other than as set forth in Section 5.2 below and except with
respect to purchase orders issued before the date hereof utilizing
wafer credits.
5.2 For each quarterly period commencing on January 1, 2004 and ending
December 31, 2006 (the "Credit Period"), Tower shall provide a written
report within five business (5) days after the end
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of each quarter (a "Credit Report") to each Party that is a Wafer
Partner setting forth the amount of Credits that could have been
utilized against the actual payment for wafers manufactured at Fab 2
during the relevant quarter (the "Quarterly Credit Amount"). Within
five (5) business days from the receipt of a Credit Report, each Party
that is a Wafer Partner shall have the option to convert all or a
portion of its respective Quarterly Credit Amount (the "Converted
Quarterly Credit Amount") into validly issued, fully-paid and
non-assessable ordinary shares of Tower equivalent to the aggregate of
the Converted Quarterly Credit Amount divided by the average trading
price for the ordinary shares of Tower during the fifteen (15)
consecutive trading days preceding the last day of the relevant
quarter. Any Party that is a Wafer Partner exercising such option
shall notify Tower in writing that it is exercising such option and of
the Converted Quarterly Credit Amount; such notice shall be
irrevocable. All portions of the Quarterly Credit Amount which are not
converted as described above (the "Non-Converted Credits"), shall
accrue interest at a rate per annum equal to three-month LIBOR plus
2.5% through December 31, 2007 (the "Credit Interest Amount") from the
end of the relevant quarter. The Credit Interest Amount shall accrue
from day to day and shall be calculated on the basis of the actual
number of days elapsed and a 360 (three hundred and sixty) day year.
The respective quarterly Credit Interest Amount will be paid to each
Party who is a Wafer Partner within five (5) business days after the
last day of the subsequent quarter following the issuance of the
relevant Credit Report, while the aggregate principal amount of the
Non-Converted Credits shall be repaid to such Wafer Partner in one
lump sum on December 31, 2007.
5.3 Effective as of December 31, 2005, each Wafer Partner that is a
Party hereto has an option to convert all of the then remaining Series
A-4 Credits (the "Remaining Series A-4 Credits") into validly issued,
fully-paid and non-assessable ordinary shares of Tower equivalent to
the amount of the Remaining Series A-4 Credits divided by the average
trading price for the ordinary shares of the Company during the
fifteen (15) 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 Remaining Series A-4
Credits no earlier than December 31, 2005 and by no later than January
31, 2006 (the "Conversion Notice"). The Conversion Notice shall be
irrevocable. 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 Remaining Series A-4 Credits
promptly after its receipt of such Conversion Notice. To the extent
that the Remaining Series A-4 Credits which are converted into
ordinary shares pursuant to this Section 5.3 above is equivalent to or
greater than an aggregate of 5% of Tower's issued and outstanding
share capital on January 31, 2006 (not including shares issued
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pursuant to a Conversion Notice), 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 the aforementioned conversion of the Remaining Series
A-4 Credits, for the distribution of rights to all of Tower's
shareholders other than the Wafer Partners but including Israel
Corporation Technologies (IC Tech) Ltd. ("IC Tech"), to purchase
additional shares in Tower at a price per share equivalent to the
Conversion Price. 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.
5.4 For the removal of doubt, the amount of Credits that may be
utilized or credited as set forth in Section 5.1 above and the amount
of Credits that could have been utilized during the Credit Period as
described in Section 5.2 above shall be subject to the conditions that
Credits issued in connection with the execution of the Series A-3
Additional Purchase Obligations and the Series A-4 Credits may be
credited or utilized against purchases at a rate of 7.5% until June
30, 2005, and, thereafter, 15% with respect to all Credits.
6. EXTENSION OF LOCK-UP PERIOD. Subject to the following sentence, all of
the parties to the CSA hereby agree to amend the definition of Initial
Restricted Period set forth in the CSA to read as follows: "From the
date of this Agreement and until the end of five years from the
Closing." Notwithstanding the previous sentence, 30% of the amount of
all shares in Tower that each party to the CSA holds at the end of
three years from the Closing (the "Third Anniversary Date") (including
the 1.2 million shares that may be transferred during this period
pursuant to Section 3 of the CSA, all securities purchased by the
parties hereto in connection with Tower's rights offering of September
2002, shares issued in connection with the Payments (if issued
following the Third Anniversary Date), and all ordinary shares issued
to the Wafer Partners upon the conversion of their Credits in
accordance with Section 4 above), shall be exempt from the transfer
restrictions in effect during the Initial Restricted Period as
redefined herein (all capitalized terms in this section as defined in
the CSA, unless redefined herein). The Subsequent Restricted Period
shall commence five years from the Closing and shall end seven years
from the Closing.
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7. REGISTRATION RIGHTS. No later than 120 (one hundred and twenty) days
from the date Safety Net Investments are made by any of the Parties,
Tower shall prepare and file a registration statement on Form F-3
covering a resale offering by such Parties of securities purchased in
the framework of a Safety Net Investment and shall use its reasonable
efforts to cause the registration statement to be declared effective
by the SEC. It is agreed that Section 2.7 of the Registration Rights
Agreement, dated January 18, 2001 shall apply to the above mutatis
mutandis.
Each Party hereby agrees not to exercise any of the rights granted to
it under Sections 2 and 3 of the Registration Rights Agreement, prior
to the earlier of (i) December 31, 2005 and (ii) such date that Tower
has fulfilled all of its obligations to raise any additional financing
pursuant to Section 16.27.2 of the Facility Agreement.
Each Party agrees that notwithstanding Section 13 of the Registration
Rights Agreement, they shall not sell, sell any option, or otherwise
transfer or dispose of any of Tower's ordinary shares or other
securities for a period of 180 days from the date the prospectus in
connection with the Public Offering is declared effective, without the
prior written consent of Tower and any underwriters of the Public
Offering, other than pursuant to a granting of an option to a service
provider of such Party to purchase Tower's ordinary shares which are
held by a Party, provided that the terms of such grant are that the
service provider shall not exercise or sell, or otherwise transfer or
dispose of such option during the aforementioned 180 day period Each
Party additionally agrees to enter into an agreement with the
underwriters to such effect and acknowledge that the underwriters in
connection with such registration statement are intended third party
beneficiaries of this provision. It is further agreed that in order to
enforce the foregoing covenant, Tower may impose stop-transfer
instructions with respect to the securities held by each Party until
the end of such 180 day period.
8. The advancement of the Payments shall be subject to the satisfaction
of the condition set forth in paragraph 1 above and the approval of
Tower's shareholders of this Amendment No. 3 and the Investment Center
not having informed the Company that it is not continuing its funding
of the Fab 2 project.
9. All provisions of the Former MS 5 Agreement not amended or modified
hereby shall remain unchanged.
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10. In addition to the above, each of The Israel Corporation, IC Tech and
the Wafer Partners which are parties hereto acknowledge and consent to
the following proposed terms of an amendment to the Facility Agreement
summarily outlined in Section 1 above, in this Section 10 below and to
the undertaking of Tower set forth in Exhibit C hereto (Exhibit C
being incorporated into this Section 10 by reference).
I. Should Tower fail to meet its financing obligations under Section
16.27.2 of the Facility Agreement, the Banks will have the option (the
"Option") to require that The Israel Corporation (or IC Tech) invest
in Tower an amount equal to 50/93 of the difference actually raised
towards such a financing obligation and what was to be raised (up to
an aggregate amount of $50 million) (the "Safety Net Investment").
Following the receipt by Tower of the Safety Net Investment, the Banks
will increase the total amount which may be drawn under the credit
facility by up to $43 million (based on a ratio of $43 made available
for every $50 of Safety Net Investments made), which will be repayable
no later than the earlier of (i) December 31, 2007 and (ii) three
years from the date the loan is drawn.
The parties hereby agree that the giving by TIC of the undertakings to
the Banks described in this Section 10(I) shall not vest any rights in
Tower, its shareholders or any third party vis-a - vis TIC nor create
any obligations in favour of Tower, any of its shareholders or any
third party.
II. Following certain triggering events such as the commencement of
bankruptcy or receivership proceedings against Tower which are ordered
by a court of competent jurisdiction or the prior determination of an
arbitrator, mutually appointed by the Banks and Tower, that a
bankruptcy or receivership order would be issued by a court against
Tower were a petition to be filed with a court of competent
jurisdiction or, an order providing for creditor protection is issued,
the parties shall cooperate with a firm offer made by a potential
investor (the "Outside Offeror") to purchase shares of Tower at a
price in the offer (the "Outside Offer"). If the Outside Offer is
accompanied by an opinion of a reputable investment banking firm that
the Outside Offer is fair to Tower, then Tower shall thereafter
procure a rights offering to invest up to 60% of the
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amount of the Outside Offer on the same terms.
If a condition of the Outside Offer is to purchase at least a majority
of Tower's shares (the "Minimum Threshold Amount"), the rights
offering will be limited to allow for this, unless Israel Corporation
Technologies (ICTech) Ltd. and the Wafer Partners (other than
QuickLogic) (the "Investing Parties") agree to exercise all of their
rights in a rights offering and to purchase shares in a subsequent
private placement so as to ensure that the full amount of the Outside
Offer is invested in Tower. If such commitment is not obtained, the
rights offering shall be limited to no more than 49% of the Outside
Offer (the "Investor Portion"); provided, however, that each of the
Investing Parties that exercised its rights in the rights offering
shall be entitled to purchase any amounts of the Investor Portion
unsubscribed for by the other Investing Parties in an amount which is
pro rata to such over-subscribing Investing Party's then holdings in
Tower.
Each Party acknowledges that the Banks are willing to enter into an
amendment to the Facility Agreement (known as the "Seventh Amendment")
and to advance further sums to Tower (notwithstanding that the Banks
are not obliged to do so as of the date hereof under the Facility
Agreement) upon the execution of the Seventh Amendment (i.e., prior to
the closing and effectiveness of said Seventh Amendment) in full
reliance upon the Parties consenting to the terms summarily outlined
in Sections 1, 10(I) and 10(II) above as well as, the restrictions on
the utilization of Credits described in Sections 5.1 and 5.2 above and
each Party agreeing to advance its Payment by no later than three
business days following the date the Company's shareholders approve
this Amendment No. 3. Each Party hereby consents to, and irrevocably
undertakes and agrees to vote or cause shares beneficially owned by it
to be voted, at any general meeting of Tower in favour of the approval
of this Amendment No. 3, the Seventh Amendment, which shall include,
inter alia, the aforementioned terms summarily outlined above and
described in Exhibit C hereto, and such other documents or
transactions that need to be approved in connection therewith. Each
Party hereby consents to the provision of an undertaking by The Israel
Corporation or IC Tech to provide the Safety Net Investment following
the request of the Banks, in the sole discretion of the Banks, upon
the terms summarily outlined above and described in Exhibit C hereto.
Each Party hereby consents to the giving of undertakings with respect
to an Outside Offer upon the terms summarily outlined above. Without
derogating from the foregoing, each Party undertakes to perform all
actions reasonably required to ensure the implementation of the Option
(if exercised), the Safety Net Investments and an Outside Offer.
[end of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Amendment No. 3 as of
the date first above written.
_______________________________
_________________________________
TOWER SEMICONDUCTOR LTD. ISRAEL CORPORATION TECHNOLOGIES
(ICTECH) LTD.
By: /s/ Carmel Vernia and Amir Harel By: /s/ Udi Hillman and Yossi Rosen
-------------------------------- -------------------------------
_________________________________ _______________________________
SANDISK CORPORATION ALLIANCE SEMICONDUCTOR CORPORATION
By: /s/ Eli Harari By: /s/ Ronald K. Shelton
----------------------------- ---------------------------
_________________________________
MACRONIX INTERNATIONAL CO., LTD.
By: /s/ Miin Wu
_________________________
For the purposes of Section 10 above:
THE ISRAEL CORPORATION LTD.
By: /s/ Udi Hillman and Yossi Rosen
________________________________
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EXHIBIT A
MS5 AGREEMENT
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EXHIBIT B
WAFER PARTNER OR EQUITY REMAINDER OF SECOND TOTAL
PARTNER FIRST INSTALLMENT INSTALLMENT PAYMENT
------- ----------------- ----------- -------
SanDisk Corp. $2,318,670 $4,400,280 $6,718,950
Alliance Semiconductor Corp. $2,318,670 $4,400,280 $6,718,950
Macronix International Co.,
Ltd. $2,318,670 $4,400,280 $6,718,950
Israel Corporation
Technologies (ICTech) Ltd. $1,545,254 $2,933,336 $4,478,590
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EXHIBIT C
The Israel Corporation Ltd. (the "SAFETY NET OBLIGOR")
Bank Hapolaim B.M.
Bank Leumi Le-Israel B.M.
Dear Sir or Madam,
Re: UNDERTAKING TO COMPLETE RIGHTS OFFERING
We irrevocably undertake that should we fail to meet any of our
financing obligations under clause 16.27.2 of the Facility Agreement by and
among Bank Hapoalim B.M. and Bank Leumi Le-Israel B.M. (together: "the Banks")
and us, dated January 18, 2001, as amended (the "Facility Agreement") and should
the Banks send a Contribution Notice (as defined in the Facility Agreement), as
amended by the Seventh Amendment thereto and subject to the terms of the
Facility Agreement, provided that the Safety Net Undertaking has not been
terminated, we will complete a rights offering (subject to compliance with
applicable laws) (a "Rights Offering") within three months of the date of the
Contribution Notice on the following terms:
- The amount of a Rights Offering shall not be less than the amount
required under the Contribution Notice, which amount shall not exceed
the difference between what we were obliged to raise under clause
16.27.2 through the date of said Contribution Notice and the amount
actually raised (the "Amount to be Raised").
- We will offer convertible securities to all of our shareholders in
units comprised of convertible debentures ("CD" or "CDs", as
applicable) convertible into, and warrants (the "Warrants" and,
together with the CDs the "Units") exercisable for, our ordinary
shares such that the Warrants included in each unit will be
exercisable for a number of shares equal to 45% of the number of
shares which may be issued on the basis of an assumed conversion of
the CDs included in such units.
- The CDs will contain such terms and conditions so as to constitute
Equity Convertible Debentures (as defined in the Facility Agreement),
save that clause 1.118(a) of the Facility Agreement shall not apply
and no deposit shall be required to be made pursuant to clause
1.118(e) of the Facility Agreement, and, for the removal of doubt, the
amount of which shall not be limited, and subject to such other terms
as set forth in the Facility Agreement. We shall pay all stamp tax (if
due), VAT on interest and linkage differentials relating to the CD's.
- Each CD will bear interest at the rate of 6% per year; 1% interest
will be payable once a year and the balance of such interest (5%) will
accrue until the maturity of the CDs on a compound basis, which
maturity shall be a date no earlier than December 31, 2009, any such
payment of principal and interest to be subject to the terms and
conditions of the Facility Agreement.
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- The CDs will be convertible into our ordinary shares (principal and
compounded interest) at a rate equal to the Amount to be Raised plus
the accumulated unpaid interest at such time of conversion divided by
the lower of: (a) 50% discount of the trading price for the ordinary
shares of Tower on Nasdaq (or such other stock exchange or quotation
system on which Tower's ordinary shares are listed in the event that
they cease to be traded on Nasdaq) (Nasdaq or such alternative stock
exchange or quotation system, the "Stock Exchange") at the close of
trading on the trading day immediately prior to the date of the
prospectus relating to the Rights Offering or (b) 50% discount of the
average trading price for the ordinary shares of Tower on the Stock
Exchange during the fifteen (15) consecutive trading days preceding
the date of the prospectus relating to the Rights Offering.
- Each Warrant will be exercisable into one of our ordinary shares at
such exercise price which is equivalent to 80% of the lower of: (a)
the trading price for the ordinary shares of Tower on the Stock
Exchange at the close of trading on the trading day immediately prior
to the date of the prospectus relating to the Rights Offering or (b)
the average trading price for the ordinary shares of Tower on the
Stock Exchange during the fifteen (15) consecutive trading days
preceding the date of the prospectus relating to the of the Rights
Offering.
- The Warrants shall expire five years from their date of issuance.
- In consideration of the Safety Net Obligor's commitment to execute the
Safety Net Investment, we shall pay such Safety Net Obligor a fee to
be agreed to between us and the Safety Net Obligor, provided that (a)
the terms of such fee are approved by our audit committee and board of
directors and (b) said fee shall be satisfied only by the issue of
Warrants exercisable into shares of the Company.
We understand and agree that the Safety Net Obligor will procure that it or
Safety Net Investors will invest in Tower in accordance with Section 3.2 of the
Safety Net Undertaking (as defined in the Facility Agreement) addressed to the
Banks and agree to take all actions to facilitate compliance by the Safety Net
Obligor with the Safety Net Undertaking, including but not limited to, if
necessary, increasing the authorized capital and completing a private placement
on substantially the same terms and conditions that would have applied to the
Rights Offering, if necessary. We hereby agree that the giving by the Safety Net
Obligor of its Undertaking to the Banks shall not vest any rights in us, our
shareholders or any third party nor any obligations in favour of us, our
shareholders or any third party.
We confirm that should we fail to file a registration statement with the United
States Securities and Exchange Commission ((hereinafter: the "SEC") within 12
(twelve) Business Days of the date a Contribution Notice is given by the Banks
as described in Section 3.1 above, or fail promptly to respond, to the
satisfaction of the staff of the SEC, to SEC staff comments with respect to said
registration statement, or fail promptly to take all actions required by all
applicable jurisdictions in which shareholders of Tower are resident to qualify
said rights offering in such jurisdiction,
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including, without limitation, Israel and applicable states within the United
States, or otherwise fail to diligently proceed with the rights offering, and
any such failure is attributed by us or our counsel to one or more legal
impediments, then we or any of, the Company or the Banks may request that Aaron
Lampert, Adv. (or failing him Cliff Felig, Adv.) (hereinafter: the "Expert"),
within 2 (two) weeks of the date requested to do so by any of us, the Company
and the Banks, confirm whether or not the Rights Offering may legally proceed,
notwithstanding the legal impediment or impediments cited by us. We agree that
if the Expert confirms that the Rights Offering may legally proceed, we
undertake, pursuant to this undertaking, promptly to cure such failures, in
consultation with the Expert, and complete the Rights Offering in accordance
with this undertaking. We further undertake to bear the reasonable fees of, and
reasonable costs incurred by, the Expert in providing his confirmation as
aforesaid.
We further agree that we will indemnify the Safety Net Obligor and/or its
subsidiary, Israel Corporation Technologies (ICTech) Ltd., jointly but not
severally, (the "Indemnified Party"), subject to the Safety Net Undertaking
coming into effect, from and against any claims, actions, suits, proceedings,
damages and liabilities awarded thereunder and expenses in relation to such
claims, actions, suits, or proceedings (including reasonable legal fees) based
on a final judgment by a competent court which is not subject to appeal (the
"Judgment") incurred by the Indemnified Party arising out of its giving the
Safety Net Undertaking or the making of a Safety Net Investment (collectively,
"Losses"). We shall not, however, be liable under the foregoing indemnity to the
extent that any such Losses result from the gross negligence, willful
misconduct, or bad faith of any of the Safety Net Obligor and/or Israel
Corporation Technologies (ICTech) Ltd. The foregoing indemnity shall be limited
to maximum payments aggregating no more than $100,000,000 (one hundred million
US dollars) (the "Maximum Amount"), whose terms of payment are subject to the
below conditions, and will be the exclusive monetary remedy of the Indemnified
Party.
In addition to the condition that the maximum aggregate payments shall not
exceed the Maximum Amount, payments under this indemnity shall be subject to the
following conditions:
1) (a) On account of any requirement to make a payment to the Indemnified
Party, we will pay to the Indemnified Party, within 60 (sixty) days
from the date of the Judgment (the "Period"), in cash, equal to the
Losses, up to the maximum aggregate amount of $25,000,000 (twenty five
million US dollars) (the "Base Payment").
(b) If on account of any requirement to make a payment, the Base
Payment does not satisfy our indemnification obligation hereunder with
respect thereto (the "Completing Amount"), the Completing Amount will
accrue interest from the date of the Judgment at a rate per annum
equal to three-month LIBOR plus 2.5% (such interest accruing from day
to day and calculated on the basis of the actual number of days
elapsed and a 360 (three hundred and sixty) day year. Such interest
and principal to be paid by us in equal installments, on the dates
that we actually
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pay the Banks in accordance with the repayment schedule for Loans
(other than Safety Net Loans) (as such terms are defined in the
Facility Agreement) beginning no earlier than the next repayment date
following the date of the Judgment and ending on the Final Maturity
Date (as such term is defined in the Facility Agreement) (as amended
from time to time).
2) Notwithstanding anything herein, should we have adequate insurance
that will cover an amount of any of our indemnification payment
obligations, then we have the option to make any such payment in full
or any lesser amount that we choose without regard to the conditions
set forth in clause 1)(a) above, but at all times, without derogating
from the condition that the maximum aggregate payments shall not
exceed the Maximum Amount.
If any of the Safety Net Obligor or Israel Corporation Technologies (ICTech)
Ltd. becomes aware of any claim, action, suit, or proceeding which may give rise
to a liability hereunder, such person will promptly give notice thereof to us in
writing. Without our prior written consent, which shall not be unreasonably
withheld, the Indemnified Party may not agree to any settlement or compromise of
any claim, action, suit, or proceeding involving a payment for which it intends
to seek indemnification hereunder. We will make our best commercial efforts to
obtain insurance with respect to our aforegoing indemnification undertaking.
We hereby confirm that all corporate action to be taken by us (including by our
Board of Directors, Audit Committee and by our shareholders) in order to approve
the contents of this undertaking has been duly and properly obtained or will be
obtained prior to the Seventh Amendment Closing Date. Notwithstanding the
previous sentence, this undertaking, including our indemnification obligations
as set forth above, is subject to our obtaining shareholder approval in
accordance with law.
This undertaking is being made to you pursuant to clause 16.34 of the Facility
Agreement.
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Sincerely,
______________________________________
Carmel Vernia, Chairman and Acting CEO
Tower Semiconductor Ltd.
Acknowledged and agreed:
______________________________________
The Israel Corporation Ltd.
By: __________________________________
Title: _______________________________
Acknowledged and agreed:
______________________________________
Bank Hapoalim B.M.
By: __________________________________
Title: _______________________________
Acknowledged and agreed:
______________________________________
Bank Leumi Le-Israel B.M.
By: __________________________________
Title: _______________________________
[Signature Page - Undertaking to Complete Rights Offering]
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