ADDITIONAL PURCHASE OBLIGATION AGREEMENT
ADDITIONAL PURCHASE OBLIGATION AGREEMENT, dated as of July 4, 2000, between
Tower Semiconductor Ltd., an Israeli corporation ("T"), and SanDisk Corporation,
a Delaware corporation ("S").
WHEREAS, T and S are parties to that certain Share Purchase Agreement
dated July 4, 2000, relating to the sale by T to S of 866,551 of T's Ordinary
Shares (the "Share Purchase Agreement") and parties to that certain Foundry
Agreement dated July 4, 2000, relating to the production of certain silicon
wafers by T for delivery to S; and
WHEREAS, as a condition to the closing of the sale of certain of T's
shares under the Share Purchase Agreement and the effectiveness of the Foundry
Agreement, T and S have each agreed to enter into this Agreement providing for
the issuance and delivery of conditional additional purchase obligations for the
purchase by S of Ordinary Shares of T, subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Additional Purchase Obligations and the
respective rights and obligations thereunder of T and S, T and S hereby agree as
follows:
1. DEFINITIONS
1.1. CERTAIN DEFINITIONS. As used in this Agreement, terms
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not defined herein shall have the meaning
ascribed to them in the Share Purchase
Agreement and the following terms shall have
the following respective meanings:
"A ADDITIONAL PURCHASE OBLIGATION CERTIFICATES" shall have the
meaning ascribed to it in Section 2.2.
"A ADDITIONAL PURCHASE OBLIGATIONS" shall have the meaning ascribed
to it in Section 2.1.
"ADDITIONAL PURCHASE OBLIGATION CERTIFICATES" shall have the meaning
ascribed to it in Section 2.2.
"ADDITIONAL PURCHASE OBLIGATIONS" shall have the meaning ascribed to
it in Section 2.1.
"B ADDITIONAL PURCHASE OBLIGATION
CERTIFICATES" shall have the meaning ascribed
to it in Section 2.2.
"B ADDITIONAL PURCHASE OBLIGATIONS" - shall have the meaning
ascribed to it in Section 2.1.
"EQUITY SECURITIES" means (a) Ordinary Shares and securities
convertible into, or exercisable or exchangeable for, Ordinary
Shares or rights or options to acquire Ordinary Shares or such other
securities, and (b) shares of any other class or series of capital
shares and securities convertible into, or exercisable or
exchangeable for, shares of such other class or series and rights or
options to acquire shares of such other class or series or such
other securities, in each case, excluding the Additional Purchase
Obligations.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the purchase price per Ordinary Share to be
paid upon the exercise of each Additional Purchase Obligation in
accordance with the terms hereof, which price shall initially be $30
per share, as each may be adjusted from time to time pursuant to
Section 4 hereof.
"EXPIRATION DATE" means the fifth anniversary of the date of this
Agreement subject to earlier termination of one or more of the
Additional Purchase Obligations pursuant to Section 5.1.
"EXERCISE NOTICE" - shall have the meaning ascribed to in Section
2.1.3.
"GRACE PERIOD" - shall have the meaning ascribed to it in Section
5.1.
"MANDATORY EXERCISE EVENT" shall have the meaning ascribed to it in
Section 5.1.
"MISSED EXERCISE" - shall have the meaning ascribed to it in
Section 5.1.
"NASDAQ" means the Nasdaq National Market.
"B ADDITIONAL PURCHASE OBLIGATION CERTIFICATES" shall have the
meaning ascribed to it in Section 2.2.
"B ADDITIONAL PURCHASE OBLIGATIONS" - shall have the meaning
ascribed to it in Section 2.1.
"ORDINARY SHARES" means the ordinary shares, par value NIS1.00 per
share of T and any other capital shares of T into which such
ordinary shares may be converted or reclassified or that may be
issued in respect of, in exchange for, or in substitution of, such
ordinary shares by reason of any share splits, shares dividends,
distributions, mergers, consolidations or other like events.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE PURCHASE AGREEMENT" - as defined in the recitals to this
Agreement.
"T" means T, an Israeli corporation, and its successors and assigns.
"UNDERLYING ORDINARY SHARES" means the Ordinary Shares issuable or
issued upon the exercise of the Additional Purchase Obligations.
2. ORIGINAL ISSUE OF ADDITIONAL PURCHASE OBLIGATIONS
2.1. THE ADDITIONAL PURCHASE OBLIGATIONS.
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2.1.1. A ADDITIONAL PURCHASE OBLIGATIONS. On the basis
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of the representations, warranties and
agreements contained in this Agreement,
but subject to the terms and conditions
hereof, concurrently with the execution
of this Agreement, T shall issue and
deliver to S warrants mandatorily
exercisable under Section 5.1 hereof for
the purchase of up to an aggregate of
1,833,450 Ordinary Shares of T by S
subject to adjustment as set forth
herein (the "A Additional Purchase
Obligations").
2.1.2. B ADDITIONAL PURCHASE OBLIGATIONS. On the basis
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of the representations, warranties and
agreements contained in this Agreement,
but subject to the terms and conditions
hereof, concurrently with the execution
of this Agreement, T shall issue and
deliver to S Additional Purchase
Obligations for the purchase of up to an
aggregate of 2,700,000 Ordinary Shares
of T by S subject to adjustment as set
forth herein. Pursuant to the election
of S to exercise the B Additional
Purchase Obligations as provided in
Section 2.1.3 below, the B Additional
Purchase Obligations shall become
mandatorily exercisable under Section
5.1 hereof (the "B Additional Purchase
Obligations" and together with the A
Additional Purchase Obligations, the
"Additional Purchase Obligations").
2.1.3. B ADDITIONAL PURCHASE OBLIGATIONS EXERCISE
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NOTICE. In the event that S elects to
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exercise the B Additional Purchase
Obligations, S is required to deliver to
T, no later than October 1, 2001(the
"Exercise Date") , a written notice (the
"Exercise Notice") of its election to
exercise the B Additional Purchase
Obligations under Section 5.1 hereof.
The Exercise Notice shall be accompanied
by a payment for such number of B
Additional Purchase Obligations as shall
have been exercised in the A Additional
Purchase Obligation series through the
Exercise Date. For instance, if by the
Exercise Date the A-1, A-2 and A-3
Additional Purchase Obligations shall
have been exercised, on the Exercise
Date S shall make a payment for the B-1,
B-2 and B-3 Additional Purchase
Obligations. For the avoidance of all
doubt, the B Additional Purchase
Obligations shall not become exercisable
until the delivery of the Election
Notice and failure to deliver the
Election Notice to T within the above
date shall cause the B Additional
Purchase Obligations to terminate and
become void.
2.2. FORM OF ADDITIONAL PURCHASE OBLIGATION CERTIFICATES. The A
Additional Purchase Obligations shall be designated in five series
(Series A1 - A5), each evidenced by an Additional Purchase
Obligation certificate in the form of EXHIBITS A1 - A5 attached
hereto (the "A Additional Purchase Obligation Certificates"). The B
Additional Purchase Obligations shall be designated in five series
(Series B1 - B5), each evidenced by an Additional Purchase
Obligation certificate in the form of EXHIBITS B1 - B5 attached
hereto (the "B Additional Purchase Obligation Certificates" and
together with the A Additional Purchase Obligation Certificates, the
"Additional Purchase Obligation Certificates"). Each A Additional
Purchase Obligation series shall contain Additional Purchase
Obligations to purchase up to an aggregate of 366,690 Ordinary
Shares of T. Each B1- to B-5 Additional Purchase Obligation series
shall contain Additional Purchase Obligations to purchase 540,000
Ordinary Shares of T. Each Additional Purchase Obligation
Certificate shall be dated the date hereof and shall bear the legend
set forth in Exhibit C, together with such other legends and
endorsements thereon as may be required to comply with any law or
with any rule or regulation pursuant thereto or with any rule or
regulation of any securities exchange on which the Ordinary Shares
may be listed, or to conform to customary usage.
3. EXERCISE PRICE; EXERCISE OF ADDITIONAL PURCHASE
OBLIGATIONS GENERALLY
3.1. PAYMENT OF EXERCISE PRICE. Each Additional Purchase Obligation
Certificate shall entitle the holder thereof, subject to the
provisions thereof and of this Agreement, to receive up to the
number of Ordinary Shares stated therein, subject to adjustment as
herein provided, upon payment of the Exercise Price for each of such
shares. The Exercise Price shall be payable by wire transfer of
immediately available funds to T in accordance with written wiring
instructions provided by T, or by such other means as may be
mutually agreed by the parties.
3.2. EXERCISE PERIODS OF A AND B ADDITIONAL PURCHASE
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OBLIGATIONS
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3.2.1. EXERCISE PERIOD OF A ADDITIONAL PURCHASE
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OBLIGATIONS. Subject to the terms and
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conditions set forth herein, the A
Additional Purchase Obligations shall be
exercisable at any time on or after the
Closing Date under the Share Purchase
Agreement and on or prior to the
Expiration Date.
3.2.2. EXERCISE PERIOD OF B ADDITIONAL PURCHASE
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OBLIGATIONS. Subject to the terms and
-----------
conditions set forth herein, the B
Additional Purchase Obligations shall be
exercisable at any time after the
delivery of the Exercise Notice,
pursuant to Section 2.1.3, and on or
prior to the Expiration Date.
3.3. EXPIRATION OF ADDITIONAL PURCHASE OBLIGATIONS. The
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Additional Purchase Obligations shall terminate
and become void as of the close of business on
the Expiration Date.
3.4. EXERCISE GENERALLY. Subject to Section 5, in order to exercise an
Additional Purchase Obligation, S must surrender the Additional
Purchase Obligation Certificate evidencing such Additional Purchase
Obligation to T, with one of the forms on the reverse of or attached
to the Additional Purchase Obligation Certificate duly executed.
Subject to the terms of Section 5, each Additional Purchase
Obligation may be exercised in whole or in part, provided that no
Additional Purchase Obligation may be exercised for the purchase of
less than an aggregate of 100,000 Ordinary Shares. If fewer than all
of the Additional Purchase Obligations represented by an Additional
Purchase Obligation Certificate are surrendered, such Additional
Purchase Obligation Certificate shall be surrendered and a new
Additional Purchase Obligation Certificate substantially in the form
of the Additional Purchase Obligation Certificate surrendered for
partial exercise thereof providing for purchase by S of the number
of Ordinary Shares that were not exercised shall be executed by T
and issued to S.
Upon surrender of an Additional Purchase Obligation Certificate and
payment of the Exercise Price in conformity with the foregoing
provisions, T shall promptly issue to S appropriate evidence of
ownership of the Ordinary Shares or other securities or property to
which S is entitled, including share certificates in the name of S
and evidence of such Ordinary Shares having been registered in the
share register of T in the name of S. Such Shares shall bear the
same legend as set forth in Section 4.3.2 of the Share Purchase
Agreement.
4. ADJUSTMENTS
4.1. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF
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ORDINARY SHARES
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The (a) number and kind of shares purchasable upon the exercise of
Additional Purchase Obligations and (b) Exercise Price shall both be
subject to adjustment from time to time as follows:
4.1.1. STOCK DIVIDENDS, SHARE-SPLITS, COMBINATIONS,
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etc. In case T shall hereafter (a) pay a
stock dividend or make a distribution
(whether in Ordinary Shares or capital
shares of any other class on its
Ordinary Shares), (b) subdivide its
outstanding Ordinary Shares, (c) combine
its outstanding Ordinary Shares into a
smaller number of shares, or (d) issue
by reclassification of its Ordinary
Shares any capital shares of T, the
Exercise Price in effect immediately
prior to such action (after giving
effect to all other adjustements under
this Section 4) shall be adjusted so
that, in relation to any Additional
Purchase Obligation thereafter
exercised, S shall be entitled to
receive the number of Ordinary Shares or
of other capital shares which S would
have owned immediately following such
action had such Additional Purchase
Obligation been exercised immediately
prior thereto. An adjustment made
pursuant to this paragraph shall become
effective immediately after the record
date in the case of a dividend and shall
become effective immediately after the
effective date in the case of a
subdivision, combination or
reclassification.
4.1.2. RECLASSIFICATION, COMBINATION, MERGERS, ETC. In
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case of any reclassification or change
of outstanding Ordinary Shares issuable
upon exercise of the Additional Purchase
Obligations (other than (i) as set forth
in paragraph 4.1.1 above, and (ii) a
change in par value, or from par value
to no par value, or from no par value to
par value or (iii) as a result of a
subdivision or combination), or in case
of any consolidation or merger of T with
or into another corporation (other than
a merger in which T is the continuing
corporation and which does not result in
any reclassification or change of the
then outstanding Ordinary Shares or
other capital shares issuable upon
exercise of the Additional Purchase
Obligations (other than a change in par
value, or from par value to no par
value, or from no par value to par value
or as a result of a subdivision or
combination), or in case of any sale or
conveyance to another corporation of the
property of T as an entirety or
substantially as an entirety, then, as a
condition of such reclassification,
change, consolidation, merger, sale or
conveyance, T or such a successor or
purchasing corporation, as the case may
be, shall forthwith make lawful and
adequate provision whereby S shall have
the right thereafter to receive on
exercise of such Additional Purchase
Obligation the kind and amount of shares
and other securities and property
receivable upon such reclassification,
change, consolidation, merger, sale or
conveyance by a holder of the number of
Ordinary Shares issuable upon exercise
of such Additional Purchase Obligation
immediately prior to such
reclassification, change, consolidation,
merger, sale or conveyance. Such
provisions shall include provision for
adjustments which shall be as nearly
equivalent as may be practicable to the
adjustments provided for in this Section
4. The above provisions of this
paragraph 4.1.2 shall similarly apply to
successive reclassification and changes
of Ordinary Shares and to successive
consolidations, mergers, sales or
conveyances.
4.1.3. DEFERRAL OF CERTAIN ADJUSTMENTS. No adjustment
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to the Exercise Price (including the
related adjustment to the number of
Ordinary Shares purchasable upon the
exercise of each Additional Purchase
Obligation) shall be required hereunder
unless such adjustment, together with
other adjustments carried forward as
provided below, would result in an
increase or decrease of at least one
percent of the Exercise Price, PROVIDED,
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HOWEVER, that any adjustments which by
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reason of this paragraph 4.1.3 are not
required to be made shall be carried
forward and taken into account in any
subsequent adjustment. No adjustment
need be made for a change in the par
value of the Ordinary Shares.
4.1.4. OTHER ADJUSTMENTS. In the event that at any
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time, as a result of an adjustment made
pursuant to this Section 4, S shall
become entitled to receive any
securities of T other than Ordinary
Shares thereafter the number of such
other securities so receivable upon
exercise of the Additional Purchase
Obligations and the Exercise Price
applicable to such exercise shall be
subject to adjustment from time to time
in a manner and on terms as nearly
equivalent as practicable to the
provisions with respect to the Ordinary
Shares contained in this Section 4.
4.2. NOTICE OF ADJUSTMENT. Whenever the number of Ordinary Shares or
other Equity Securities or property issuable upon the exercise of
each Additional Purchase Obligation or the Exercise Price is
adjusted, as herein provided, T shall promptly mail by first class
mail, postage prepaid, to S notice of such adjustment or adjustments
and shall deliver to S a certificate of T's chief financial officer
setting forth the number of Ordinary Shares or other Equity
Securities or property issuable upon the exercise of each Additional
Purchase Obligation or the Exercise Price after such adjustment,
setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such
adjustment was made.
4.3. STATEMENT ON ADDITIONAL PURCHASE OBLIGATIONS. Irrespective of any
adjustment in the number or kind of shares issuable upon the
exercise of the Additional Purchase Obligations or the Exercise
Price, Additional Purchase Obligations theretofore or thereafter
issued may continue to express the same number and kind of shares as
are stated in the Additional Purchase Obligations initially issuable
pursuant to this Agreement.
4.4. FRACTIONAL INTEREST. T shall not be required to issue fractional
Ordinary Shares upon the exercise of Additional Purchase
Obligations. If more than one Additional Purchase Obligation shall
be presented for exercise in full at the same time, the number of
full Ordinary Shares which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of Ordinary
Shares acquirable on exercise of the Additional Purchase Obligations
so presented. If any fraction of an Ordinary Share would, except for
the provisions of this section, be issuable on the exercise of any
Additional Purchase Obligation (or specified portion thereof), T
shall pay an amount in cash calculated by it to equal to the then
current market value per share multiplied by such fraction computed
to nearest whole cent. S, by its acceptance of the Additional
Purchase Obligation Certificates, expressly waive any and all rights
to receive any fraction of an Ordinary Share or a share certificate
representing a fraction of an Ordinary Share.
5. MANDATORY EXERCISE
5.1. MANDATORY EXERCISE EVENTS; TERMINATION OF Obligation. Subject to the
terms and conditions contained herein, S shall be obligated to
exercise each Additional Purchase Obligation within thirty days of
the following events (each a "Mandatory Exercise Event"):
5.1.1. In respect of the Series A-1 Additional Purchase
Obligation (and the B-1 Additional
Purchase Obligation if an Exercise
Notice was delivered prior to the date
the Series A-1 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs (or by the
CEO, in the event that at the relevant
time the Company shall employ only one
CEO) and the Chairman of the Board of T
certifying that the Board of Directors
of T has authorized commencement of
construction of Fab 2 at the site set
forth in the Business Plan, which
approval shall not occur prior to
obtaining all regulatory approvals
necessary for the construction start as
described in the Business Plan, provided
that such event must occur no later than
one month after the Closing under the
Share Purchase Agreement;
5.1.2. In respect of the Series A-2 Additional Purchase
Obligation and the Series B-2 Additional
Purchase Obligation (if an Exercise
Notice was delivered prior to the date
the Series A-2 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs or the CEO, as
the case may be, and the Chairman of the
Board of T certifying the commencement
of construction of the shell of the Fab
2 building in accordance with the
Business Plan provided that such event
must occur no later than three months
after the Closing under the Share
Purchase Agreement;
5.1.3. In respect of the Series A-3 Additional
Purchase Obligation and the Series B-3
Additional Purchase Obligation (if an
Exercise Notice was delivered prior to
the date the Series A-3 Additional
Purchase Obligation is mandatorily
exercisable), upon receipt of written
notice from T signed by the two Co-CEOs
or the CEO, as the case may be, and the
Chairman of the Board of T certifying
the completion of the construction of
the first phase of the cleanroom of
Fab 2 in accordance with the Business
Plan provided that such event must occur
no later than 12 months after the
Closing under the Share Purchase
Agreement;
5.1.4. In respect of the Series A-4 Additional Purchase
Obligation and the Series B-4 Additional
Purchase Obligation (if an Exercise
Notice was delivered prior to the date
the Series A-4 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs or the CEO, as
the case may be, and the Chairman of the
Board of T certifying the completion of
successful pilot production in Fab 2 in
accordance with the Business Plan
provided that such event must occur no
later than 18 months after the Closing
under the Share Purchase Agreement; and
5.1.5. In respect of the Series A-5 Additional Purchase
Obligation and the Series B-5 Additional
Purchase Obligation (if an Exercise
Notice was delivered prior to the date
the Series A-5 Additional Purchase
Obligation is mandatorily exercisable),
upon receipt of written notice from T
signed by the two Co-CEOs or the CEO, as
the case may be, and the Chairman of the
Board of T certifying that Fab 2 has
successfully produced wafers at the rate
of 5,000 per month for two full
consecutive months in accordance with
the Business Plan provided that such
event must occur no later than 22 months
after the Closing under the Share
Purchase Agreement.
Each of the Mandatory Exercise Events shall be deemed to have
occurred if the Mandatory Exercise Event occurs within seven and
one-half months from its original exercise date set forth above
(such seven and one-half month period, a "Grace Period"). In the
event that one of the Mandatory Exercise Events does not occur by
the last date set forth in the relevant clause of clauses 5.1.1 -
5.1.5, including during the corresponding Grace Period (a "Missed
Exercise"), then, if the subsequent Mandatory Exercise Event does
not occur by no later than the end of its corresponding Grace
Period, S shall not be obligated to effect the Missed Exercise and
any subsequent series of Additional Purchase Obligations and the
Additional Purchase Obligation relating to the Missed Exercise, to
the extent such Additional Purchase Obligations are unexercised,
shall automatically expire. However, if such subsequent Mandatory
Exercise Event does occur within the applicable Grace Period, then S
shall be obligated to exercise the Additional Purchase Obligation
related to that subsequent Mandatory Exercise Event and shall be
required to either effect the Missed Exercise within thirty days of
the occurrence of the relevant subsequent Mandatory Exercise Event
or the Additional Purchase Obligation relating to the Missed
Exercise shall expire.
In addition, and without limiting any other remedies available to T,
in the event that S fails to exercise an Additional Purchase
Obligation in connection with a Mandatory Exercise Event which it is
obligated to effect pursuant to this Section 5, any Additional
Purchase Obligations unexercised at such time shall automatically
expire
5.2. PERCENTAGE OWNERSHIP DELAY. Notwithstanding the
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provisions of Section 5.1, S may delay the
exercise of any Additional Purchase Obligation
if any such exercise would result in S owning
more than 19.9% of the outstanding share
capital of T.
5.3. OTHER CONDITIONS TO MANDATORY EXERCISE. In addition to the
conditions to Mandatory Exercise contained in Section 5.1, S's
obligation to effect a Mandatory Exercise shall be subject to
satisfaction of the following conditions (any of which may be waived
by S, in whole or in part, in S's discretion) in relation to each
Mandatory Exercise:
5.3.1. ACCURACY OF REPRESENTATIONS. All of T's
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representations and warranties in
Section 6.1(i) of this Agreement must
have been accurate in all material
respects (except that such
representations and warranties
specifically qualified by materiality
shall be read for purposes of this
Section so as not to require an
additional degree of materiality) as of
the date of this Agreement, and must be
accurate in all material respects as of
the date of the relevant Mandatory
Exercise, after giving effect, with
respect to the representations made in
Section 3.1 and 3.3 of the Share
Purchase Agreement, to the issuance of
Ordinary Shares contemplated by the
Business Plan and Additional Financing
Plan and without giving effect to any
supplement to the Schedules other than
supplements disclosing events and facts
not existing at the time of the Closing
and arising in the Ordinary Course of
Business.
5.3.2. ADDITIONAL FINANCINGS. T shall have raised all
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the funds under the Additional
Financings required thereunder to have
been raised or obtained either prior to
or simultaneously with the date of the
relevant Mandatory Exercise as described
in the Additional Financing Plan (each,
a "Target Date"), including those funds
required to have been raised by the
relevant Target Date under (i) the debt
or equity financing described in Section
10 of the Business Plan and (ii) under
the grant from the Investment Center, in
each case on terms and conditions which
do not significantly deviate from the
terms and conditions agreed upon in
accordance with Section 5.6 of the Share
Purchase Agreement, PROVIDED, HOWEVER,
that this condition shall be deemed to
have been not satisfied only if the
failure to raise such funds causes a
material change in the timetable or cost
of the Fab 2 project in relation to the
Business Plan as determined by S.
Notwithstanding the foregoing, the
conditions set forth in this Section
5.2.2 shall be deemed to have been met
if the funds which were not raised as of
the relevant Target Date are raised
within 90 days of such Target Date on
terms and conditions substantially
similar to the terms and conditions upon
which such funds were supposed to have
been raised in accordance with Section
5.6 of the of the Share Purchase
Agreement.
5.3.3. TRANSACTION DOCUMENTS; ANCILLARY AGREEMENTS.
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Each of the Transaction Documents and
the Toshiba Agreement shall be in full
force and effect and shall not have been
materially breached by any party thereto.
5.3.4. CERTIFICATES. In addition to the documents T is
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obligated to deliver to S under this
Section 5, T shall furnish S with such
other documents as T may reasonably
request for the purpose of (i)
evidencing the performance by T of, or
the compliance by T with, any covenant
or obligation required to be performed
or complied with by T in relation to the
relevant Mandatory Exercise and
(ii) evidencing the satisfaction of any
condition referred to in this Section 5.
5.3.5. NO PROCEEDINGS. Since the date of this
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Agreement, there must not have been
commenced by a third party against S or
T, or against any Person affiliated with
S or T, any Proceeding (a) involving any
challenge to, or seeking damages or
other relief in connection with, any of
the Contemplated Transactions, or (b)
that may have the effect of preventing,
delaying, making illegal, or otherwise
interfering with any of the Contemplated
Transactions.
5.3.6. BANKRUPTCY-RELATED EVENTS. None of the
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following events shall have occurred for
any reason whatsoever (and whether such
occurrence shall be voluntary or
involuntary, or come about or be
effected by operation of law, or
pursuant to or in compliance with any
judgement, decree or order of any court
or any order, rule or regulation of any
administrative or governmental body):
5.3.6.1. T shall be unable to pay its debts generally as
they become due; file a petition
to take advantage of any
insolvency statute; make an
assignment for the benefit of its
creditors; commence a proceeding
for the appointment of a
receiver, trustee, liquidator or
conservator of itself or of the
whole or any substantial part of
its property; file a petition or
answer seeking reorganization or
arrangement or similar relief
under applicable bankruptcy laws;
or
5.3.6.2. A court of competent jurisdiction shall have
entered an order, judgement or
decree appointing a custodian,
receiver, trustee, liquidator or
conservator of T or of the whole
or any substantial part of its
properties, or approve a petition
filed against T seeking
reorganization or arrangement or
similar relief under applicable
bankruptcy, or if, under the
provisions of any law for the
relief or aid of debtors, a court
of competent jurisdiction shall
assume custody or control of T or
of the whole or any substantial
part of its properties, or if
there was commenced against T any
proceeding or petition seeking
reorganization or arrangement or
similar relief under applicable
bankruptcy laws, or if T shall
have taken any action to indicate
its consent to or approval of
any such proceeding or petition,
and any one of which proceedings
shall not have been vacated or
abandoned within 30 days.
5.3.6.3. A default shall have occurred in any agreement
or instrument under or pursuant
to which any material
indebtedness of T shall have been
issued, created, assumed,
guaranteed or secured, and such
default shall continure for more
than the period of grace, if any,
therein specified, or if such
default shall permit the holder
of such indebtedness to
accelerate the maturity thereof,
provided, however, that the
condition contained in this
Section 5.3.6.3 shall not be
deemed to have been satisfied in
the event that a default in any
agreement or instrument under
which any indebtedness of T has
been issued could give rise to a
cross default provision in in any
agreement or instrument under or
pursuant to which any material
indebtedness of T shall have been
issued, created, assumed,
guaranteed or secured, or if the
cumulative effect of any or all
such defaults could be material
to the Company.
6. REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES OF T. (i) T hereby makes in favor of
S, as of the date hereof and as of the date of each exercise of each
Additional Purchase Obligation, each of the representations and
warranties made by the Company in Sections 3.1, 3.2, 3.3, 3.14.1(i),
the first two sentences of 3.14.2 and clause (ii) of the first
paragraph of 3.15 of the Share Purchase Agreement, provided that
references to "this Agreement" shall refer both to this Agreement
and the Share Purchase Agreement; references, directly or
indirectly, to the Escrow Agreement shall be ignored; references to
"Shares" and the "Closing" shall be deemed to be references to the
Ordinary Shares to be issued pursuant to the exercise of the
Additional Purchase Obligation; and references to the "Closing Date"
shall refer to the date that Ordinary Shares are actually issued and
delivered to S pursuant to the relevant exercise of an Additional
Purchase Obligation. Notwithstanding the foregoing, the
representation contained in the first two sentences of Section
3.14.2 shall be read to relate to Fab 2. In the event that it is
uncertain if a situation, event or fact that would otherwise be
included in the scope of such representation relates to Fab 2, the
matter shall be conclusively decided by the Project Committee.
6.2. REPRESENTATIONS AND WARRANTIES OF S. S hereby makes in favor of T,
as of the date hereof and as of the date of each exercise of an
Additional Purchase Obligation, the representations and warranties
made by S under Sections 4.1 - 4.5 of the Share Purchase Agreement,
provided that references to "this Agreement" shall refer both to
this Agreement and the Share Purchase Agreement, references to
Shares shall refer to the Additional Purchase Obligations and the
Ordinary Shares issuable upon the exercise thereof and references,
directly or indirectly, to the Escrow Agreement shall be ignored.
7. COVENANTS
7.1. RESERVATION OF SHARES. T will reserve for issuance such number of
Ordinary Shares as shall be sufficient for issuance and delivery
thereof upon exercise of all outstanding Additional Purchase
Obligations and will take any and all corporate action necessary to
validly and legally issue fully paid and nonassessable Ordinary
Shares.
7.2. CONSENTS; REQUIRED APPROVALS. T and S will each, as promptly as
practicable after the date of this Agreement, take all action
required of each of them, respectively, to obtain as promptly as
practicable all necessary Consents and agreements of, and to give
all notices and make all other filings with, any third parties,
including Governmental Bodies, necessary to authorize, approve or
permit the consummation of the transactions contemplated hereby, the
Contemplated Transactions and the transactions contemplated by the
Ancillary Agreements. Between the date of this Agreement and the
date of the last issuance of Ordinary Shares pursuant to an exercise
of a Additional Purchase Obligation, T will cooperate with S with
respect to all filings that S elects to make or is required by Legal
Requirements to make in connection with the performance of this
Agreement and the Additional Purchase Obligations and S will
likewise cooperate with T.
7.3. OPERATION OF T'S BUSINESS. Between the date of this Agreement and
the date of the last issuance of Ordinary Shares pursuant to a
Mandatory Exercise, T will not (i) take or agree or commit to take
any action that would make any representation or warranty of T
hereunder inaccurate in any respect at, or as of any time prior to,
the date of the last issuance of Ordinary Shares pursuant to a
Mandatory Exercise or (ii) omit or agree or commit to omit to take
any action necessary to prevent any such representation or warranty
from being inaccurate in any respect at any such time.
8. MISCELLANEOUS
8.1. PAYMENT OF TAXES. T will pay all taxes and other governmental
charges (other than on the net income of S) that may be imposed or
deliverable upon exercise of Additional Purchase Obligations and
issuance of Ordinary Shares with respect thereto. T will not be
required, however, to pay any tax or other charges which may be
payable in respect of any transfer involved in the issue of any
certificate for Ordinary Shares or other securities underlying the
Additional Purchase Obligations or payment of cash or other property
to any person other than the holder of an Additional Purchase
Obligation Certificate surrendered upon the exercise thereof.
8.2. MUTILATED, DESTROYED, LOST AND STOLEN ADDITIONAL PURCHASE OBLIGATION
CERTIFICATES. If (a) any mutilated Additional Purchase Obligation
Certificate is surrendered to T or (b) T receives evidence to its
satisfaction of the destruction, loss or theft of any Additional
Purchase Obligation Certificate, then, T shall execute and deliver,
in exchange for any such mutilated Additional Purchase Obligation
Certificate or in lieu of any such destroyed, lost or stolen
Additional Purchase Obligation Certificate, a new Additional
Purchase Obligation Certificate of like tenor and for a like
aggregate number of Additional Purchase Obligations.
Upon the issuance of any new Additional Purchase Obligation
Certificate under this Section 8.2, T may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and other expenses in connection
therewith and an appropriate indemnity with respect to losses
related thereto.
Every new Additional Purchase Obligation Certificate executed and
delivered pursuant to this Section 8.2 in lieu of any destroyed,
lost or stolen Additional Purchase Obligation Certificate shall
constitute an original contractual obligation of T, whether or not
the destroyed, lost or stolen Additional Purchase Obligation
Certificate shall be at any time enforceable by anyone, and shall be
entitled to the benefits of this Agreement equally and
proportionately with any and all other Additional Purchase
Obligation Certificates duly executed and delivered hereunder.
The provisions of this Section 8.2 are exclusive and shall prelude
(to the extent lawful) all other rights or remedies with respect to
the replacement of mutilated, destroyed, lost or stolen Additional
Purchase Obligation Certificates.
8.3. MISCELLANEOUS RIGHTS. The rights of S upon the occurrence of the
events set forth in this Agreement are cumulative. If more than one
such event shall occur and the periods following the occurrence of
such events and prior to the closing of the transactions that are
the subject of such events overlap, S may exercise such rights
arising therefrom as S may elect without any condition imposed upon
such exercise not contained in this Agreement.
8.4. NOTICES. Any notice, demand or delivery authorized by
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this Agreement shall be sufficiently given or
made when mailed if sent by first-class mail,
postage prepaid, addressed to the parties as
follows:
T:
Attention: Co-Chief Executive Officer
P.O. Box 619
Migdal Haemek 23105 Israel
Facsimile No.: 972-6-654-7788
with a copy to: Yigal Arnon & Co.
3 Daniel Frisch Street
Tel Aviv, Israel
Attention: David H. Schapiro, Adv.
Facsimile No.: 972-3-608-7714
S:
Attention: President and CEO
SanDisk Corporation
140 Caspian Court
Sunnyvale, California 94089
Facsimile No.:(408) 542-0600
with a copy to: SanDisk Corporation
140 Caspian Court
Sunnyvale, California 94089
Attention: Vice President and General
Counsel
Facsimile No.: (408) 548-0385or such
other address as shall have been
furnished to the party giving or making
such notice, demand or delivery.
8.5. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior
consent of the other parties, except that S may assign any of its
rights under this Agreement to any wholly owned Subsidiary of S or
to any Subsidiary which is wholly owned other than a nominal
interest, so long as such ownership shall be maintained. Subject to
the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to
in this Agreement will be construed to give any Person other than
the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to
this Agreement and their successors and assigns.
8.6. COUNTERPARTS. This Agreement may be executed in any
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number of counterparts, each of which shall be
deemed an original, but all of which together
constitute one and the same instrument.
8.7. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject
matter (including the term sheet between S and T dated March 15,
2000 and all drafts hereof and thereof) and constitutes (along with
the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be
charged with the amendment.
8.8. TERMINATION. This Agreement (other than T's obligations with respect
to Additional Purchase Obligations previously exercised) and the
indemnification provisions relating hereto appearing in Sections 10
of the Share Purchase Agreement, shall terminate and be of no
further force and effect on the Expiration Date.
8.9. APPLICABLE LAW. This Agreement and each Additional
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Purchase Obligation issued hereunder and all
rights arising hereunder shall be governed by
the law of the State of California, without
giving effect to the conflict of laws
provisions thereof.
8.10. HEADINGS. The descriptive headings of the several
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Sections of this Agreement are inserted for
convenience and shall not control or affect the
meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
Tower Semiconductor Ltd.
By: /S/ YOAV NISSAN COHEN
Name: Yoav Nissan Cohen
Title: Co-Chief Executive Officer
SanDisk Corporation
By: /S/ ELI HARARI
Name: Eli Harari
Title: Chief Executive Officer