SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (the “Agreement”)
is
made and entered into effective as of September 25, 2008 by and
between TOWER
SEMICONDUCTOR LTD. (the “Company”
or
“Tower”),
a
company organized under the laws of the State of Israel and ISRAEL CORPORATION
LTD., a company organized under the laws of the State of Israel (the
“Purchaser”).
WHEREAS,
Tower is an independent manufacturer of wafers whose Ordinary Shares are traded
on the Nasdaq National Market under the symbol TSEM and whose Ordinary Shares
and certain other securities are traded on the Tel-Aviv Stock Exchange
(“TASE”)
under
the symbol TOWER;
WHEREAS,
pursuant to a letter between Bank Hapoalim B.M. and Bank Leumi Le-Israel B.M.
(collectively the “Banks”),
Tower
and the Purchaser, dated August 19, 2008 (the “MOU”),
the
Purchaser has committed to the Banks, inter
alia,
subject
to certain conditions as provided in the MOU, to invest in the Company a sum
of
twenty million US Dollars as set forth in this Agreement (the “Investment”);
WHEREAS,
pursuant to the MOU, the Investment in Tower is a condition precedent to the
closing of an amendment of the Facility Agreement (as defined in the MOU) and
other definitive documentation (the “Amendment”);
and
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein and for other good and valuable consideration the receipt and adequacy
of
which are hereby acknowledged, the parties agree as follows:
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1
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Issue
and Sale of Securities by the Company.
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1.1
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Securities.
Subject to and in accordance with the terms and conditions of this
Agreement, the Company shall issue to the Purchaser, and the Purchaser
shall purchase from the Company for an aggregate purchase price of
US
$20,000,000 in immediately available funds (the “Note
Purchase Price”)
an equity convertible capital note, which capital note is convertible
into
28,169,014 shares of the Company (subject to adjustments to changes
in
capital structure, stock splits, etc.), such capital note being fully
convertible, at any time, in whole or in part and freely transferable,
at
any time, in whole or in part in the form attached hereto as Schedule
1
(the “Capital
Note”).
For the avoidance of doubt, the Capital Note issuable hereunder shall
not
entitle TIC to interest, dividends, early redemption rights (for
the
removal of doubt, no conversion of capital notes by TIC into shares
shall
be deemed a redemption or pre-payment of the capital note), anti-dilution
rights, or any adjustments due to changes to interest rates, the
market
price of the Company’s shares or indexation of any kind, but shall entitle
TIC, as a capital note holder, to participate in rights offerings
and
shall be subject to certain adjustments, including share splits,
combinations and other adjustments and with rights which are at least
as
good as the capital notes issued to the Banks pursuant to a Conversion
Agreement entered into with Tower on the date
hereof.
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| 2 |
Closing.
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2.1
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Closing
Date.
The issue and allotment of the Capital Note, the purchase thereof
by the
Purchaser and the registration of the Capital Note in the name of
the
Purchaser in the register of the Company, shall take place at a closing
(the “Closing”)
to be held on September 25, 2008 simultaneous with its signing in
Tel
Aviv, Israel at the offices of Xxxxx Xxxxx & Co., One Azrieli Center,
Tel-Aviv, Israel, or such other time and place as the parties shall
mutually agree. In the event that the Closing does not take place
prior to
September 30, 2008, the Purchaser shall have the right, but not the
obligation, to cancel this Agreement unless the Purchaser has caused
the
Closing not to have occurred in breach of this Agreement. The Company
shall use its commercially reasonable best efforts to (i) take or
cause to
be taken all necessary actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable
laws to
consummate and make effective all the transactions contemplated by
this
Agreement as soon as practicable, including, without limitation,
preparing
and filing all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information,
applications and other documents and (ii) obtain all approvals required
to
be obtained from any third party necessary, proper or advisable to
the
transactions contemplated by this Agreement. The Purchaser shall
cooperate
with the Company in the achieving the above but the primary responsibility
(including but not limited to bearing the relevant expenses therefor)
shall be the Company’s.
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2.2
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Transactions
upon Closing.
At the Closing, the following transactions shall occur, which transactions
shall be deemed to take place simultaneously and no transaction shall
be
deemed to have been completed or any document delivered until all
such
transactions have been completed and all required documents
delivered:
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a)
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the
Company shall deliver to the Purchaser copies of resolutions of the
Company's Audit Committee, the Company's Board of Directors and the
Company's shareholders approving the execution and performance of
this
Agreement, including the issuance of the Capital Note;
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b)
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the
Note Purchase Price shall be transferred by the Purchaser to the
Company
by wire transfer into the account of the Company, in accordance with
the
written instructions provided by the Company to the
Purchaser;
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c)
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the
Company shall deliver to the Purchaser a copy of the approval of
the TASE
for listing the shares issuable upon conversion of the Capital Note
(the
“Shares”);
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d)
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the
Company shall record such issuance of the Capital Note in the name
of the
Purchaser on the records of the Company;
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e)
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The
Closings of the Amendment and each of the conversion agreements entered
into between the Company and the Banks shall take place simultaneously
with the Closing under this Agreement;
and
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-2-
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f)
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The
Amended and Restated Registration Rights Agreement shall be executed
and
delivered by the Company, in the form attached hereto as Schedule
2.
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g)
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The
Company shall pay the Purchaser US $100,000 as the first installment
of
the fee of US$300,000 provided for under the MOU.
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h)
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The
legal opinion of Xxxxx Xxxxx & Co., Advocates, the Company’s external
legal counsel has been delivered to the Purchaser.
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3
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Representations
and Warranties of the Company.
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The
Company hereby represents and warrants to the Purchaser, as
follows:
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3.1
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Organization.
The Company is duly organized and validly existing under the laws
of the
State of Israel and has full corporate power and authority to own,
lease
and operate its properties and assets and to conduct its business
as now
being conducted and to perform all its obligations under this
Agreement.
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3.2
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Memorandum
and Articles of Association.
The Company has made available for inspection by the Purchaser complete
and correct copies of the Articles of Association of the Company,
as
amended to the date furnished. Such Articles of Association are in
effect
as of the date hereof and as will be in effect at the
Closing.
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3.3
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Share
Capitalization.
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As
of
September 25, 2008, the authorized share capital of the Company consists of
1,100,000,000 ordinary shares, of which 159,656,318 shares are issued and
outstanding, 135,523,401 shares are reserved for issuance upon exercise of
outstanding options and warrants (including options granted to employees,
officers, directors, related parties, banks, and other public investors),
96,504,214 shares are reserved for issuance upon conversion of outstanding
convertible debentures, 321,988,510 shares are reserved for issuance upon
conversion of equity equivalent capital notes, and 5,900,000 shares are reserved
for future grants of options to employees, officers, consultants and directors.
Attached hereto as Schedule
3 is
a
capitalization table reflecting all shareholdings and holdings of securities
(including capital notes, warrants, options and convertible debentures) in
the
Company after the Closing. All issued and outstanding share capital of the
Company has been duly authorized, and is validly issued and outstanding and
fully paid and non-assessable. The Capital Note and the Shares issued upon
its
conversion will be validly issued, fully paid, nonassessable and not subject
to
any pledge, lien or restriction on transfer, except for restrictions on transfer
imposed hereunder and by the applicable securities laws. The Company has
reserved for issuance enough ordinary shares to issue the Shares. The issuance
of the Capital Note and the Shares issued upon its conversion will not conflict
with the Articles of Association of the Company then in effect nor with any
outstanding warrant, option, call, preemptive right or commitment of any type
relating to the Company's capital stock.
-3-
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3.4
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Authorization;
Approvals.
Prior to the Closing, all corporate action on the part of the Company
necessary for the execution, delivery and performance of this Agreement
and the other agreements contemplated to take place at the Closing
shall
have been taken. Except as set forth in Schedule
4.4,
no consent, approval or authorization of, exemption by, or filing
with,
any governmental or regulatory authority or any third party is required
in
connection with the execution, delivery and performance by the Company
of
this Agreement and the consummation by the Company of the transactions
contemplated hereby. Other than approval by the Company’s shareholders,
this Agreement when executed and delivered by or on behalf of the
Company,
shall constitute the valid and legally binding obligations of the
Company,
legally enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to creditor’s rights
generally and general principles of
equity.
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3.5
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No
Conflicts.
Neither the execution and delivery of this Agreement by Tower, nor
the
compliance with the terms and provisions of this Agreement on the
part of
Tower, will: (i) violate any statute or regulation of any governmental
authority, domestic or foreign, affecting Tower; (ii) require the
issuance
of any authorization, license, consent or approval of any governmental
agency, or any other person other than as set forth in Schedule
4.4;
or (iii) conflict with or result in a breach of any of the terms,
conditions or provisions of any judgment, order, injunction, decree,
loan
agreement or other material agreement or instrument to which Tower
is a
party, or by which Tower is bound, or constitute a default thereunder,
the
effect of which might have a material adverse effect on Tower.
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3.6
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No
Litigation.
There are no actions, suits, proceedings, or injunctive orders, pending
or
threatened against or affecting Tower relating to the subject matter
of
this Agreement or any of the transactions expected to take place
simultaneously at the Closing.
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3.7
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Cross
Default.
Upon the Closing of the Amendment, the Company will not be in default
under the Facility Agreement.
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3.8
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The
Capital Notes shall have rights which are at least as good as the
capital
notes issued to the Banks pursuant to a Conversion Agreement entered
into
with Tower on the date hereof.
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4
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Representations
and Warranties of the Purchaser.
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The
Purchaser hereby represents and warrants to the Company as follows:
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4.1
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Organizations;
Good Standing.
The Purchaser is a corporation duly organized, validly existing,
and in
good standing under the laws of the State of Israel with full corporate
power and authority to perform all its obligations under this
Agreement.
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4.2
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Authorization;
Approvals.
Prior to the Closing, all corporate action on the part of the Purchaser
necessary for the execution and delivery of this Agreement and other
agreements contemplated hereby has been taken. No consent, approval
or
authorization of, exemption by, or filing with, any governmental
or
regulatory authority is required in connection with the execution,
delivery and performance by the Purchaser of this Agreement and the
consummation by the Purchaser of the transactions contemplated hereby
except relating to the filing of an amendment to a Schedule 13D which
will
be required with the US Securities and Exchange Commission. This
Agreement
and other agreements contemplated hereby, when executed and delivered
by
or on behalf of the Purchaser, shall constitute the valid and legally
binding obligations of the Purchaser, legally enforceable against
the
Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other laws relating to creditor’s rights generally and general
principles of equity.
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4.3
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Investment
Intent; No Registration
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The
Purchaser is acquiring the Capital Note and the Shares issued upon its
conversion for its own account and not with a view to their distribution within
the meaning of Section 2(11) of the Securities Act of 1933 (the "Securities
Act").
The
Purchaser has requisite knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of an investment in
the
Company and is an accredited investor as defined under Regulation D as
promulgated by the United States Securities and Exchange Commission;
and
The
Purchaser understands that none of the Capital Note or the Shares issued upon
its conversion have been registered under the Securities Act, or the laws of
any
jurisdiction, and agrees that the Capital Note and the Shares issued upon its
conversion may not be sold, offered for sale, transferred, pledged, hypothecated
or otherwise disposed of except in compliance with the Securities Act, Israeli
Securities Law or any applicable securities laws of any jurisdiction (including
but not limited to pursuant to an exemption therefrom). The Purchaser also
acknowledges that the Capital Note and the Shares issued upon its conversion,
upon issuance, will bear the following legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR ANY STATE OR OTHER JURISDICTION’S SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
(SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) THAT SUCH REGISTRATION
IS
NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF THE ACT.
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4.4
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No
Litigation.
There are no actions, suits, proceedings, or injunctive orders, pending
or
threatened against or affecting the Purchaser relating to the subject
matter of this Agreement.
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5
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Conditions
of Closing of the Purchaser.
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The
obligations of the Purchaser to purchase the Capital Note and to transfer the
Note Purchase Price at the Closing are subject to the fulfillment at or before
the Closing of the following conditions precedent, any one or more of which
may
be waived in whole or in part by the Purchaser, which waiver shall be at the
sole discretion of the Purchaser:
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5.1
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Representations
and Warranties.
The representations and warranties made by the Company in this Agreement
shall have been true and correct when made, and, shall be true and
correct
in all material respects as of the Closing, as if made on the date
of the
Closing.
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5.2
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Covenants.
All covenants, agreements, and conditions contained in this Agreement
to
be performed or complied with by the Company prior the Closing shall
have
been performed or complied with by the Company prior to or at the
Closing.
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5.3
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Consents,
etc.
The Company shall have secured all permits, consents and authorizations
that shall be reasonably necessary or required lawfully for the Company
to
consummate this Agreement and to issue the Capital Note and the Shares
issued upon its conversion to be purchased by the Purchaser at the
Closing, including the approval of the Company's Audit Committee,
Board of
Directors and General Assembly and third party and/or governmental
consents.
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5.4
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Registration
Rights Agreement.
The Company and the Purchaser shall have entered into a registration
rights agreement in form and substance satisfactory to the Purchaser
and
the Banks and with rights which are at least as good as those provided
to
the Banks and no worse than those currently enjoyed by the Purchaser
and
provides a satisfactory arrangement with respect to the registration
rights of the Shares of the Company owned by the Purchaser on the
date of
this Agreement.
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5.5
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Delivery
of Documents.
All of the documents to be delivered by the Company, and all actions
to be
performed or concluded pursuant to Section 2 by the Company, shall
be in a
form and substance reasonably satisfactory to the Purchaser and its
counsel and shall have been delivered to the
Purchaser.
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5.6
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The
Amendment. The
conditions precedent for the closing of transactions contemplated
by the
Amendment shall have been satisfied (or waived by the Bank) other
than the
Investment contemplated by this Agreement which shall take place
simultaneously thereto.
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6
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Conditions
of Closing of the Company.
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The
obligations of the Company to sell and issue the Capital Note at the Closing
are
subject to the fulfillment at or before the Closing of the following conditions
precedent, any one or more of which may be waived in whole or in part by the
Company, which waiver shall be at the sole discretion of the
Company:
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6.1
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Representations
and Warranties.
The representations and warranties made by the Purchaser in this
Agreement
shall have been true and correct when made, and shall be true and
correct
in all material respects as of the Closing, as if made on the date
of the
Closing.
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6.2
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Covenants.
All covenants, agreements, and conditions contained in this Agreement
to
be performed or complied with by the Purchaser prior the Closing
shall
have been performed or complied with by the Purchaser prior to or
at the
Closing.
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6.3
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Consents,
etc.
The Purchaser and the Company shall have secured all permits, consents
and
authorizations, including, without limitations, approval of its corporate
organs that shall be reasonably necessary or required lawfully for
the
Company to consummate this Agreement and to issue the Capital Note
and the
Shares issued upon its conversion to be purchased by the Purchaser
at the
Closing.
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6.4
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Delivery
of Documents.
All of the documents to be delivered by the Purchaser, and all actions
to
be performed or concluded pursuant to Section 2 by the Purchaser,
shall be
in a form and substance reasonably satisfactory to the Company and
its
counsel.
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6.5
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Antitrust
Approval.
To the extent required under law, the unconditional approval of the
Comptroller to the consummation of the Closing under this Agreement
has
been received.
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7
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Covenants.
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7.1
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Ordinary
Course.
Between the date hereof and the Closing Date, the Company will operate
in
the ordinary course of business as now being conducted and as currently
proposed to be conducted , except that the Company may perform its
obligations pursuant to the Agreement and Plan of Merger and
Reorganization entered into as of May 19, 2008, by and among the
Company,
Xxxxxxxxx Acquisition Corp., a wholly owned subsidiary of the Company,
and
Jazz Technologies, Inc., and the transactions pursuant thereto, including
with respect to the closing of the merger transaction.
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7.2
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Dividends.
Between the date hereof and the Closing Date, the Company will not
declare, make or pay any dividend or other
distribution.
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7.3
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Actions
inconsistent with this Agreement.
Between the date hereof and the Closing Date, neither the Purchaser
nor
the Company will take any action inconsistent with this Agreement.
For the
avoidance of any doubt, nothing herein shall require the Purchaser
to take
or refrain from taking any action as a shareholder or investor in
the
Company.
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7.4
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Fees.
The Company shall pay the Purchaser a fee of US$100,000 on January
1, 2009
and an additional fee of US$100,000 on April 1, 2009.
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8
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Miscellaneous.
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8.1
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Further
Assurances.
Each of the parties hereto shall perform such further acts and execute
such further documents as may reasonably be necessary to carry out
and
give full effect to the provisions of this Agreement and the intentions
of
the parties as reflected thereby.
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8.2
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Governing
Law; Jurisdiction.
This Agreement will be governed by the laws of the State of Israel
without
regard to conflicts of law principles. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising
out of
or in connection with, this Agreement or the transactions contemplated
hereby may be brought in the Courts of Tel Aviv-Jaffa, and each of
the
parties hereby consents to the jurisdiction of such courts in any
such
suit, action or proceeding and irrevocably waives, to the fullest
extent
permitted by law, any objection which it may now or hereafter have
to the
laying of the venue of any such suit, action or proceeding in any
such
court or that any such suit, action or proceeding which is brought
in any
such court has been brought in an inconvenient forum.
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8.3
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Successors
and Assigns; Assignment.
Except as otherwise expressly limited herein, the provisions hereof
shall
inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors, and administrators of the parties hereto. This
Agreement
may not be assigned by any party without the prior written consent
of the
other party hereto.
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8.4
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Expenses.
Each party to this agreement shall bear its own expenses and costs
with
respect to this agreement and the transactions contemplated
thereby.
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8.5
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Entire
Agreement; Amendment and Waiver.
This Agreement and the Schedules hereto constitute the full and entire
understanding and agreement between the parties with regard to the
subject
matters hereof and thereof. Any term of this Agreement may be amended
and
the observance of any term hereof may be waived (either prospectively
or
retroactively and either generally or in a particular instance) only
with
the written consent of the parties to this
Agreement.
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8.6
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Notices,
etc.
All notices and other communications required or permitted hereunder
to be
given to a party to this Agreement shall be in writing and shall
be faxed
or mailed by registered or certified mail, postage prepaid, or otherwise
delivered by hand or by messenger, addressed to such party's address
as
set forth below or at such other address as the party shall have
furnished
to each other party in writing in accordance with this
provision:
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Israel
Corporation Ltd.
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Xxxxxxxxxx
Xxxxx,
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00
Xxxxxx Xx.
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Xxx
Xxxx Xxxxxx 00000
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Fax:
000-0-000-0000
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Attn:
Chief Financial Officer
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with
a copy to
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(which
shall not
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constitute
notice):
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Gornitzky
& Co.
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00
Xxxxxxxxxx Xxxx.,
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Xxx-Xxxx
00000 Xxxxxx
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Fax:
000-0-000-0000
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Attn:
Adv. Xxx Xxxxxx
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-8-
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if
to the Company:
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Tower
Semiconductor Ltd.
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Ramat
Gavriel Industrial Area
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X.X.
Xxx 000
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Xxxxxx
Xxxxxx Xxxxxx 00000
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Fax.
000-0-0000000
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Attn:
Xxxx Xxxxxxx, Acting CFO
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with
a copy to
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(which
shall not
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constitute
notice):
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Xxxxx
Xxxxx & Co.
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1
Azrieli Xxxxxx
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00xx
Xxxxx
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Xxx
Xxxx, Xxxxxx, 00000
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Fax:
00-000-0000
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Attn:
Xxxxx Xxxxxxxx, Adv.
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or
such
other address with respect to a party as such party shall notify each other
party in writing as above provided. Any notice sent in accordance with this
Section 8.6 shall be effective (i) if mailed, five (5) business days after
mailing, (ii) if sent by messenger, upon delivery, and (iii) if sent via
facsimile, one (1) business day following transmission and electronic
confirmation of receipt.
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8.7
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Delays
or Omissions.
No delay or omission to exercise any right, power, or remedy accruing
to
any party upon any breach or default under this Agreement, shall
be deemed
a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent, or approval of any kind or
character on the part of any party of any breach or default under
this
Agreement, or any waiver on the part of any party of any provisions
or
conditions of this Agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. Unless
provided
otherwise herein, all remedies, either under this Agreement or by
law or
otherwise afforded to any of the parties, shall be cumulative and
not
alternative.
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8.8
|
Severability.
If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, then such
provision
shall be excluded from this Agreement and the remainder of this Agreement
shall be interpreted as if such provision were so excluded and shall
be
enforceable in accordance with its terms; provided, however, that
in such
event this Agreement shall be interpreted so as to give effect, to
the
greatest extent consistent with and permitted by applicable law,
to the
meaning and intention of the excluded provision as determined by
such
court of competent jurisdiction.
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8.9
|
Counterparts.
This Agreement may be executed in any number of counterparts (including
facsimile counterparts), each of which shall be deemed an original,
and
all of which together shall constitute one and the same
instrument.
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8.10
|
Headings.
The headings of the sections and paragraphs of this Agreement are
inserted
for convenience only and shall not be deemed to constitute part of
this
Agreement or to affect the construction
hereof.
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-9-
[Signature
Page to Securities Purchase Agreement]
IN
WITNESS WHEREOF, each of the parties has signed this Agreement as of the date
first hereinabove set forth.
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TOWER
SEMICONDUCTOR LTD.
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ISRAEL
CORPORATION LTD.
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/s/
Xxxx Xxxxxxx & /s/ Xxxxx Xxxxx
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/s/Avisar
Paz & Nir Gilad
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Name:
Xxxx
Xxxxxxx & Xxxxx Xxxxx
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Name:
Avisar
Paz & Nir Gilad
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Title:
Acting
VP/CFO & Treasurer
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Title:
CFO
& CEO
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-10-
