EXHIBIT 99.8
CONVERSION AGREEMENT
This Conversion Agreement (this "AGREEMENT") is made and entered into
effective as of September 28th, 2006 by and between TOWER SEMICONDUCTOR LTD.
(the "COMPANY" or "TOWER"), a company organized under the laws of the State of
Israel and BANK HAPOALIM B.M., a banking corporation organized under the laws of
the State of Israel (the "BANK").
WHEREAS, Tower is an independent manufacturer of wafers whose Ordinary
Shares are traded on the Nasdaq Stock Market ("NASDAQ") under the symbol TSEM
and whose Ordinary Shares and certain other securities are traded on the
Tel-Aviv Stock Exchange ("TASE") under the symbol TSEM;
WHEREAS, the Bank and Bank Leumi Le-Israel B.M. (collectively, the "BANKS")
and Tower are parties to a Facility Agreement dated January 18, 2001, as amended
(the "FACILITY AGREEMENT"); and
WHEREAS, at the request of Tower, the Banks and Tower have entered into an
Amending Agreement dated August 24, 2006 (the "AMENDING AGREEMENT"), the
conditions to the effectiveness of which include, INTER ALIA, the conversion by
each Bank of US $79,000,000 (seventy-nine million US dollars) of its loans made
to Tower pursuant to the Facility Agreement (the "LOANS") into an
equity-equivalent convertible capital note to be issued to the Bank (a "CAPITAL
NOTE") in the amount of US $39,500,000 (thirty-nine million five hundred
thousand US dollars) which will in turn be convertible, in whole or in part, by
the Bank at any time and from time to time into 25,986,842 (twenty-five million,
nine hundred and eighty-six thousand and eight hundred forty-two) ordinary
shares of Tower at a conversion price of US $1.52 (one US dollar and fifty-two
cents) per share (such number of shares and conversion price, in each case,
subject to adjustment from time to time as provided in the Capital Note) and the
entering into by the Bank and Tower of a Registration Rights Agreement (the
"REGISTRATION RIGHTS AGREEMENT") and of this Agreement, in each case, on the
date of the effectiveness of the Amending Agreement (the "AMENDMENT CLOSING
DATE"); and
WHEREAS, clause 9.4 of the amended and restated Facility Agreement that
will become effective pursuant to the Amending Agreement on the Amendment
Closing Date, as the same may be further amended from time to time (the
"RESTATED FACILITY AGREEMENT") obligates the Company to make certain
compensatory payments in January, 2011 to the Banks or their nominees on account
of the Banks' agreement to reduce the rate of Interest on the Loans, which
payments may, subject to said clause 9.4 and this Agreement, be made in the form
of shares and/or Capital Notes and/or convertible debentures (the "CLAUSE 9.4
EQUITY ISSUANCES"), which issuances are subject, INTER ALIA, to the terms and
conditions of this Agreement;
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:
1. INTERPRETATION.
1.1. As used in Sections 3.8 and 5.1 of this Agreement:
1.1.1. "CONTROL" (including the terms "CONTROLLING", "CONTROLLED BY"
or "UNDER COMMON CONTROL WITH", means the possession direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise; and
1.1.2. "SUBSIDIARY" of a person means any company (a) in which such
person, directly or indirectly, owns 25% (twenty-five percent) or
more of a class of voting securities or (b) which is otherwise
directly or indirectly controlled by such person. For the
avoidance of doubt, a subsidiary need not be consolidated for
financial statement purposes with such person in order to be
deemed a subsidiary in this Agreement.
1.2. DEFINITIONS. Except as otherwise defined herein, terms and expressions
defined in the Restated Facility Agreement shall have the same meanings when
used in this Agreement and all provisions of the Facility Agreement concerning
matters of construction and interpretation shall apply to this Agreement.
1.3. PREAMBLE. The preamble to this Agreement constitutes an integral part
thereof.
2. CONVERSION OF LOAN AND ISSUE OF CAPITAL NOTE ON THE AMENDMENT CLOSING DATE.
The Company hereby:
2.1. issues to the Bank, and the Bank hereby receives from the Company, in
conversion of US $79,000,000 (seventy-nine million US dollars) of the Loans, an
executed Capital Note in the principal amount of US $39,500,000 (thirty nine
million five hundred thousand US dollars) in the form attached as EXHIBIT 1
hereto. For the avoidance of doubt, as of the Amendment Closing Date, the
principal amount of Loans outstanding and owed by Tower to the Banks shall be as
set forth in the second sentence of clause 2.1 of the Restated Facility
Agreement;
2.2. furnishes to the Bank a copy of the approval of the TASE for listing
the 25,986,842 (twenty-five million, nine hundred and eighty-six thousand, eight
hundred and forty-two) shares issuable upon conversion of said Capital Note; and
2.3. confirms that the Company has recorded such issuance of the Capital
Note in the name of Bank on the records of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Bank on the Amendment
Closing Date as follows:
3.1. ORGANIZATION. The Company is duly organized and validly existing under
the laws of its jurisdiction of incorporation 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.
3.2. SHARE CAPITAL. All issued and outstanding share capital of the Company
has been duly authorized and is validly issued. The shares to be issued upon
conversion of any Capital Note or convertible debentures issued pursuant to this
Agreement (the "CONVERSION SHARES") and, if applicable, on the Clause 9.4
Closing Date, are duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms of such Capital Note or convertible
debentures or, as applicable, this Agreement and Clause 9.4 of the Restated
Facility Agreement, will be validly issued, fully paid, nonassessable and not
subject to any pledge, lien or restriction on transfer, except for restrictions
on transfer imposed by applicable securities laws. The entering into and
performance of this Agreement and the issuance of any shares, Capital Notes or
convertible debentures hereunder do not, and the issuance of any Conversion
Shares will not, conflict with the Memorandum of Association or the Articles of
Association of the Company nor with any outstanding convertible security,
warrant, option, call, preemptive right or commitment of any type relating to
the Company's capital stock (collectively, "EQUITY RIGHTS"). The entering into
and performance of this Agreement, the issuance of any shares or Capital Notes
hereunder and the issuance of the Conversion Shares do not require, or give any
holder of Equity Rights the right to have made, any adjustments to be made in
the conversion or exercise price, the number of shares issuable upon conversion
or exercise or any other provision of the aforegoing Equity Rights.
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3.3. AUTHORIZATION; APPROVALS. All corporate action on the part of the
Company necessary for the execution, delivery and performance of this Agreement
and the issuance of any shares, Capital Notes, convertible debentures and
Conversion Shares has been taken. Except as set forth in Schedule 3.3 hereto,
save for any consents, approvals, authorisations or exemptions already obtained,
and filings already made, no consent, approval or authorization of, exemption
by, or filing with, any governmental or regulatory authority, including any
approval of, or filings with, the Israeli Securities Authority (the "ISA"), the
TASE 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, including the issuance by way
of private placement pursuant to this Agreement of any Capital Notes,
convertible debentures or shares. This Agreement and all Capital Notes or
convertible debentures issued hereunder on the date which this representation is
given have been executed and delivered by the Company, and each constitutes 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.
3.4. CROSS-DEFAULT. No Default or Event of Default exists under the
Facility Agreement.
3.5. 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, including the issuance of shares, Capital Notes, convertible
debentures or Conversion Shares, 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 which has not been obtained, save as
set forth in Schedule 3.5 hereto; 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.
3.6. 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.
3.7. NO BROKERS. Except as set forth in Schedule 3.7 hereto, Tower has not
engaged any broker or finder in connection with the transactions contemplated by
this Agreement, and no broker or other person is entitled to any commission or
finder's fee in connection with such transactions.
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3.8. ACTIVITIES IN THE UNITED STATES.
3.8.1. More than 50% (fifty percent) of the consolidated assets of the
Company as shown or would be shown on its consolidated financial
statements (a) as of the last day of the immediately preceding
calendar year and (b) as of the date hereof are, in each case,
are located outside of the United States.
3.8.2. More than 50% (fifty percent) of the consolidated revenues of
the Company as shown or would be shown on its consolidated
financial statements (a) for the immediately preceding calendar
year; and (b) during the current calendar year to date, in each
case, are derived from outside the United States.
3.8.3. For the purposes of Section 3.8.1, Section 3.8.2, Section
5.1.1, Section 5.1.2, Section 5.1.6, Section 5.1.7 and Section
6.6 herein, assets and revenues of the Company will be deemed to
be located or derived from "outside the United States" if they
are recorded on the books of the Company or of any subsidiaries
of the Company incorporated outside the United States ("NON-U.S.
SUBSIDIARIES") (provided that such revenues are not recorded on
the books of any offices of the Company or of its Non-U.S.
Subsidiaries located in the United States ("U.S. OFFICES")) and
will be deemed to be located in or derived from the United States
if they are recorded on the books of any U.S. Offices or of any
subsidiaries of the Company incorporated in the United States
("U.S. SUBSIDIARIES"). By way of example, revenues recorded on
the books of the Company itself (but not on the books of any U.S.
Offices) will be considered revenues derived from outside the
United States, even if the revenues derive from a sale of the
Company's products to a U.S. person and even if the Company's
U.S. Subsidiary was involved in marketing, sales or post-sales
support efforts.
3.8.4. The activities, if any, of the Company and its Non-U.S.
Subsidiaries within the United States and the activities of all
U.S. Subsidiaries are the same kind as or support the Company's
or its Non-U.S. Subsidiaries' activities outside of the United
States. For purposes of this Section 3.8.4, Section 5.1.3,
Section 5.1.6, Section 5.1.7 and Section 6.6 below (a) "the same
kind as" shall mean activities that are within the same
"establishment" categories of the North American Classification
System published by the United States Census Bureau, and (b)
"support" shall mean supply, distribution, sales, marketing,
servicing, research and development, licensing, design, customer
relations and/or similar activities.
3.8.5. Neither the Company nor any of its subsidiaries conducts
activities in the United States that consist of engaging in the
business of banking, securities, insurance or real estate.
3.8.6. Neither the Company nor any of its subsidiaries engages, nor do
either own more than 5% (five percent) of a class of voting
securities of a person that engages, in the business of
securities underwriting or distribution in the United States.
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3.9. The Company acknowledges that the Bank is acquiring the Capital Notes
on the Amendment Closing Date in full reliance upon the representations and
warranties made by the Company in this Agreement, including in Section 3.8
above.
4. REPRESENTATIONS AND WARRANTIES OF THE BANK.
The Bank hereby represents and warrants to the Company that it:
4.1. is acquiring the securities issued and to be issued to the Bank
pursuant to this Agreement for investment and not with a view to distribution
without registration under the U.S. Securities Act of 1933 (the "Securities
Act");
4.2. 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 in Rule 501(a) under the
Securities Act;
4.3. understands that none of the Capital Notes issued and to be issued
under this Agreement have been, or will be, registered under the Securities Act,
or the laws of any jurisdiction;
4.4. agrees that none of the securities issued and to be issued to the Bank
pursuant to this Agreement may be sold, offered for sale, transferred, pledged,
hypothecated or otherwise disposed of except by registration under the
Securities Act or otherwise in compliance with the Securities Act, the Israeli
Securities Law or any applicable securities laws of any jurisdiction (including
pursuant to an exemption therefrom); and
4.5. acknowledges that the securities, upon issuance, will, unless in the
reasonable opinion of counsel for the Company such legend is not required in
order to ensure compliance under the Securities Act, bear the following legend:
THESE SECURITIES [(INCLUDING THE SECURITIES ISSUABLE PURSUANT HERETO)](1)
HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR ANY U.S. STATE OR OTHER JURISDICTION'S SECURITIES LAWS. THESE
SECURITIES (INCLUDING THE SECURITIES ISSUABLE PURSUANT HERETO) MAY NOT BE SOLD,
OFFERED FOR SALE OR PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED, (THE "ACT") WITH RESPECT TO ANY SUCH SECURITIES OR AN OPINION
OF COUNSEL (REASONABLY SATISFACTORY TO THE COMPANY) THAT SUCH REGISTRATION IS
NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF THE ACT OR ON THE TEL-AVIV
STOCK EXCHANGE IN COMPLIANCE WITH REGULATION S UNDER THE ACT.
For the avoidance of doubt, nothing in this Section 4 shall derogate from
the Company's obligations under the Registration Rights Agreement.
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(1) Following the effective date of the Registration Statement covering the
Conversion Shares, if applicable, bracketed language to be removed from all
future Capital Notes and convertible debentures to be issued and, at the request
of the holder, a substitute Capital Note omitting the bracketed language will
promptly be delivered to the holder. If shares are directly issued in the Clause
9.4 Equity Issuance, the first sentence of the legend and the first
parenthetical in the second sentence will be removed following the effective
date of the Registration Statement covering such shares.
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5. UNDERTAKINGS BY THE COMPANY.
5.1. For so long as (a) any shares or Capital Notes are issuable to the
Bank and/or its subsidiaries (for the avoidance of doubt, as defined in Section
1.1.2 above) pursuant to this Agreement and (b) any securities of the Company
(including Capital Notes, Warrants and shares), constituting or convertible into
5% or more of any class of voting securities (as defined in the United States
Code of Federal Regulations - 12 C.F.R. Section 225.2(q)) of the Company are
beneficially owned by the Bank and/or its subsidiaries (for the avoidance of
doubt, as defined in Section 1.1.2 above), the Company shall use its best
efforts in order:
5.1.1. that more than 50% (fifty percent) of the consolidated assets
of the Company as of December 31 of each calendar year are
located outside of the United States (the "ASSET TEST");
5.1.2. that more than 50% (fifty percent) of the consolidated revenues
of the Company as of December 31 of each calendar year are
derived from outside the United States (the "REVENUE TEST");
5.1.3. that the activities of the Company within the United States and
the activities of the U.S. Subsidiaries are of the same kind as
or support the activities of the Company or its Non-U.S.
Subsidiaries outside the United States (the "SAME LINE OF
BUSINESS TEST");
5.1.4. that neither the Company nor any of its subsidiaries will
conduct activities in the United States that consist of engaging
in the business of banking, securities, insurance or real estate
(the "FINANCIAL ACTIVITIES TEST") (for the avoidance of doubt,
nothing in the aforesaid shall derogate from the obligations of
the Company under the Restated Facility Agreement);
5.1.5. not to engage, or permit any of its subsidiaries to engage, or
to own or permit any of its subsidiaries to own more than 5%
(five percent) of a class of voting securities of a person that
engages, in the business of securities' underwriting or
distribution in the United States (the "NO UNDERWRITING Test")
(for the avoidance of doubt, nothing in the aforesaid shall
derogate from the obligations of the Company under the Restated
Facility Agreement);
5.1.6. Nothing in Sections 5.1, 5.1.1, 5.1.2, 5.1.3, 5.1.4 or 5.1.5
above shall require the Company to prejudice the business or
financial interests of the Company and the Company may take such
actions or refrain from taking actions that may cause it not to
satisfy the Asset Test, the Revenue Test, the Same Line of
Business Test, the Financial Activities Test and/or the No
Underwriting Test, provided that the taking of such actions, or
refraining from taking such actions, are in the business or
financial interests of the Company as reasonably determined by
the Company;
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5.1.7. furnish to the Bank and, subsequent to the Clause 9.4 Closing
Date, any nominee of the Bank pursuant to clause 6 below, as soon
as practicable (and, in any event, within thirty (30) days after
the end of each calendar year), a certificate of the Chief
Financial Officer of the Company, in a form reasonably
satisfactory to the Bank (i) confirming whether the Company is in
compliance with each of the Asset Test, the Revenue Test, the
Same Line of Business Test, the Financial Activities Test and the
No Underwriting Test, provided that if the Company is not in
compliance with the Asset Test or the Revenue Test in a
particular calendar year, the Chief Financial Officer shall
describe the steps, if any, being taken by the Company to ensure
compliance in the immediately following calendar year (for the
removal of doubt, without derogating from Section 5.1.6 above);
and (ii) setting out (a) the amount and percentage of the
consolidated revenues of the Company derived from outside the
United States during the immediately preceding calendar year, and
(b) the amount and percentage of the consolidated assets of the
Company located outside of the United States as of December 31 of
such immediately preceding calendar year; and
5.1.8. furnish promptly to the Bank and, subsequent to the Clause 9.4
Closing Date, any nominee of the Bank pursuant to clause 6 below,
such other information as such person may reasonably request in
order to satisfy their obligations to file certain reports or
assess its compliance with applicable legal or regulatory
requirements relating to the transactions contemplated herein.
5.2. The Company shall fulfil all of its obligations under the Equity
Documents, including the Capital Notes issued pursuant hereto and the
Registration Rights Agreement.
5.3. In the event that the adjustment provisions of any Capital Notes
issued pursuant hereto result in additional Conversion Shares to be issued upon
conversion of the Capital Notes, the Company shall promptly furnish the Bank
with a copy of the approval of the TASE for listing such additional Conversion
Shares (if the Company's shares are then traded on the TASE).
5.4. To the extent that ordinary shares (or other shares of capital stock
substituted therefor) of the Company are listed on one or more securities
exchanges, including the NASDAQ and the TASE, the Company shall maintain, at its
expense, the listing of the shares of the Company issued pursuant to this
Agreement (including upon conversion of Capital Notes issued pursuant to this
Agreement) on such exchanges or, in the event such shares of the Company are
listed on only one securities exchange, such exchange. Nothing in this Section
5.4 shall constitute an obligation of the Company to list or maintain the
listing of its ordinary shares (or other shares of capital stock substituted
therefor) on any securities exchanges, including the NASDAQ and the TASE.
6. CLAUSE 9.4 CLOSING; CONDITIONS PRECEDENT.
The issuance and allotment of the shares of the Company, or the issuance of
Capital Notes, pursuant to and in accordance with clause 9.4 of the Restated
Facility Agreement (such date, the "CLAUSE 9.4 CLOSING DATE"), to the Bank or
its nominee (which shall be an Affiliate of the Bank) shall be subject to the
conditions set forth in clause 9.4.6 of the Restated Facility Agreement and to
the conditions precedent that the Bank shall have received, by no later than 2
(two) Business Days prior to the Clause 9.4 Closing Date, all of the following
documents, matters and things in form and substance satisfactory to the Bank:
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6.1. copies of all resolutions of the Board of Directors of the Company
and, if necessary, its Audit Committee and shareholders, authorizing all
agreements and acts to be performed by the Company as conditions precedent to,
or otherwise in connection with, the Clause 9.4 Equity Issuances, to the extent
not already authorized in the resolutions delivered on or about the Amendment
Closing Date;
6.2. an opinion of the Company's external legal counsel, satisfactory to
the Bank, addressed to the Bank and, if applicable, its nominee, MUTATIS
MUTANDIS, to the Clause 9.4 Equity Issuances in the form of such opinion
delivered by Xxxxx Xxxxx & Co., Advocates to the Banks, on or about the
Amendment Closing Date, provided that paragraphs 4.7 (i) and 5.4 shall be
omitted;
6.3. an opinion of U.S. counsel, satisfactory to the Bank, to the effect
that, based upon their review of United States federal or New York State
statutes, rules and regulations which, in their opinion, based on their
experience, are normally applicable to transactions of the types contemplated by
clause 9.4 of the Restated Facility Agreement ("UNITED STATES APPLICABLE LAWS"),
(i) subject to the effectiveness of the registration statement to be filed by
the Company with respect to the Clause 9.4 Equity Issuances pursuant to the
Registration Rights Agreement, no consent, approval, authorization, order,
registration or qualification of or with any United States federal or New York
State court or governmental agency or body is required for the sale in the
United States (including through the Nasdaq Stock Market) by the Bank or its
nominee of the ordinary shares to be issued or issuable upon conversion of
Capital Notes or convertible debentures to be issued to the Bank or its nominee
pursuant to clause 9.4 of the Restated Facility Agreement and this Agreement,
provided that no opinion need be expressed with respect to state securities or
Blue Sky laws; (ii) the acquisition and indefinite holding of the Capital Notes
or convertible debentures (provided that, with respect to the convertible
debentures, counsel shall assume, solely for purposes of rendering such opinion,
that the condition set forth in Section 6.6.2 has been satisfied and that if the
Company is, as of the Clause 9.4 Closing Date, satisfying the Tests (as set
forth in Section 6.6.1 below) that it shall continue to satisfy the Tests) or
the shares issuable in connection with the Clause 9.4 Equity Issuances by the
Bank or its nominee is permissible under United States Applicable Laws,
including under the Bank Holding Company Act of 1956, as amended; and (iii) the
acquisition and holding of either the Capital Notes or the shares issuable in
connection with the Clause 9.4 Equity Issuances by the Bank or its nominee will
not be subject to the notification and filing requirements under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended. Such opinion
shall be based upon and subject to reasonable assumptions (without derogating
from the parenthetical phrase in subsection (ii) above) and limitations,
provided that, if such opinion cannot be delivered, at the request of the
Company, such counsel shall describe the legal basis or bases for why such
opinion cannot be delivered;
6.4. all of the Company's (a) representations and warranties given pursuant
to this Agreement shall be repeated on the Clause 9.4 Closing Date as if made on
the Clause 9.4 Closing Date, other than the representations and warranties given
pursuant to the last sentence of Section 3.2 above and pursuant to Section 3.8
above, and (b) all of the Company's obligations under this Agreement and the
Registration Rights Agreement to be performed on or prior to the Clause 9.4
Closing Date shall have been fulfilled, and the Company shall have delivered a
certificate of its Chief Executive Officer or Chief Financial Officer to the
effect of (a) and (b) in form and substance satisfactory to the Bank;
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6.5. all Governmental Authorisations and third party consents required to
be obtained by the Company in connection with the Clause 9.4 Equity Issuances
shall have been received, including, if applicable:
6.5.1. confirmation of the Controller of Restrictive Trade Practices
(the "CONTROLLER") that no approval is required in connection
with the Clause 9.4 Equity Issuances or, if any such approval is
considered by the Controller to be required, the unconditional
receipt of same (provided that if the Controller shall refuse to
provide such confirmation for the reason that the Controller does
not see a reason to review the request for the same, such
confirmation shall be deemed to have been obtained) (for the
removal of doubt, if required, the Bank shall also make such a
request);
6.5.2. the consent of the Investment Centre to the issue of shares,
capital notes or convertible debentures (and shares issuable upon
conversion of the Capital Notes or convertible debentures) to the
Bank and, if applicable, its nominee as contemplated under clause
9.4 to the Restated Facility Agreement;
6.5.3. the approval of the XXX under the Existing XXX Leases, and any
other long term lease agreements between the Company and the XXX,
to the issue of shares, capital notes or convertible debentures
(and shares issuable upon conversion of the Capital Notes or
convertible debentures) to the Bank and, if applicable, its
nominee as contemplated under clause 9.4 to the Restated Facility
Agreement; and
6.6. provided that the first paragraph of Section 5.1 is applicable,
confirmation from the Chief Financial Officer of the Company, in form and
substance satisfactory to the Bank, that the Company:
6.6.1. has satisfied the Asset Test, the Revenue Test, the Same Line
of Business Test, the Financial Activities Test and the No
Underwriting Test (collectively, the "TESTS") as of December 31
in each of the two years immediately prior to the year in which
the Clause 9.4 Closing Date falls, and meets, on the Clause 9.4
Closing Date, the Same Line of Business Test, the Financial
Activities Test and the No Underwriting Test; and
6.6.2. is not aware of any reason why it would not continue to satisfy
each of the Tests during the then current year and the
immediately following year.
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In the event that the conditions precedent set out in this Section 6 above and
in clause 9.4.6 of the Restated Facility Agreement are not satisfied by no later
than 2 (two) Business Days prior to the Clause 9.4 Closing Date, including if a
representation and warranty that is to be repeated cannot be repeated, then the
Clause 9.4.1 Amount or the Clause 9.4.2 Amount, as applicable, shall be paid in
cash by the Company to the Bank or its nominee on the Clause 9.4 Closing Date,
(a) provided however, if said conditions precedent set out in this Section 6
above and in Clause 9.4.6 of the Restated Facility Agreement are otherwise
satisfied, by no later than 2 (two) Business Days prior to the Clause 9.4
Closing Date, with respect to the issuance of Capital Notes instead of shares,
then the Clause 9.4.1 Amount or the Clause 9.4.2 Amount, as applicable, will not
be paid in cash by the Company and Capital Notes shall be issued as contemplated
by Section 7.1 below; and (b) provided further that, if all said conditions
precedent, other than as set forth in Section 6.6.2 above, are satisfied by no
later than 2 (two) Business Days prior to the Clause 9.4 Closing Date, then the
Clause 9.4.1 Amount or the Clause 9.4.2 Amount, as applicable, will, at the
option of the Company, in its sole discretion, either be paid in cash or by way
of issue of convertible debentures that will (except for consequential changes
flowing from the redemption right described below) have the same terms as the
Capital Notes (including, for the removal of doubt, that such convertible
debentures will not bear interest or be linked to any index), save that the Bank
or its nominee or other Affiliate thereof holding said convertible debentures
(the "HOLDER") shall have the right to require the Company to redeem the
convertible debentures, in whole or in part, on the date which is 30 (thirty)
months after the Clause 9.4 Closing Date (or, if such date is not a Business
Day, on the Business Day immediately prior to such anniversary) (the "REDEMPTION
DATE"), for an amount in cash equal to the then principal amount thereof
submitted for redemption, upon the giving by the Holder to the Company of at
least 30 (thirty) days prior written notice. For the avoidance of doubt, if such
redemption right is not exercised by a Holder as aforesaid, said convertible
debentures shall remain convertible into shares of the Company and shall,
subsequent to the Redemption Date, only be payable in accordance with clause 2
of the Capital Note.
7. TRANSACTIONS UPON THE CLAUSE 9.4 CLOSING.
Subject to the fulfilment of the conditions precedent set out in Section 6
above and in clause 9.4.6 of the Restated Facility Agreement, on the Clause 9.4
Closing Date (unless cash is payable pursuant to Section 6 above or clause 9.4.6
of the Restated Facility Agreement):
7.1. the Company shall issue (and, in the case of shares, allot) to the
Bank or its nominee either (a) such number of shares in the name of the Bank or
its nominee as provided in clause 9.4.1 or clause 9.4.2 (as adjusted, if
applicable, pursuant to clauses 9.4.7 and 9.4.9) of the Restated Facility
Agreement and shall send irrevocable instructions to its stock transfer agent to
issue a share certificate in respect of such shares (the Bank or its nominee may
elect to deliver to Tower an undertaking not to exercise means of control in
respect of such shares for a certain period) or (b) (i) at the election of the
Bank or its nominee, or if the proviso set forth in subsection (a) in the last
paragraph of Section 6 is applicable, Capital Notes or (ii) if the proviso set
forth in subsection (b) in the last paragraph of Section 6 is applicable (and
the Company has not elected to pay cash), convertible debentures, in each case,
substantially in the form attached as EXHIBIT 1 hereto (save that, in the case
of the convertible debentures, a provision granting the redemption right
described in subsection (b) in the last paragraph of Section 6 and consequential
changes flowing from such redemption right shall be made, in form and substance
satisfactory to the Holder), as the case may be, in the principal amounts
provided in clause 9.4.1 or clause 9.4.2 (as adjusted, if applicable, pursuant
to clauses 9.4.7 and 9.4.9) of the Restated Facility Agreement, as applicable,
convertible into shares at the Average Closing Price (as defined in clause 9.4.1
of the Restated Facility Agreement) (subject to adjustments as provided in the
Capital Notes);
7.2. the Company shall deliver to the Bank or, if applicable, its nominee a
copy of the approval of the TASE for listing the shares issued or issuable
pursuant to clause 7.1 above (if the Company's shares are then traded on the
TASE); and
7.3. the Company shall record such issuance of the shares or Capital Note
in the name of the Bank, or, if applicable, its nominee on the records of the
Company.
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8. MISCELLANEOUS.
8.1. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
shall be construed in accordance with Israeli law and the courts of
Tel-Aviv-Jaffa shall have exclusive jurisdiction to hear any matters, provided
that the Bank and any other Affiliate of the Bank party to this Agreement shall
be entitled to xxx Tower in any jurisdiction in which it has an office or holds
assets.
8.2. 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 and permitted assigns of the parties hereto. This
Agreement may not be assigned by any party without the prior written consent of
the other party hereto, provided that the Bank may assign this Agreement, in
whole or in part, to any Affiliate of the Bank or add an Affiliate of the Bank
as an additional party hereto, including, for the avoidance of doubt, any
nominee of the Bank in connection with the Clause 9.4 Equity Issuances. Nothing
in this Agreement shall be deemed to restrict the (a) transferability of the
shares, convertible debentures and Capital Notes to be issued pursuant to this
Agreement or the Conversion Shares, in each case, in whole or in part at any
time and from time to time, except for restrictions on transfer imposed by
applicable securities laws or (b) the assignability of the registration rights
in accordance with the Registration Rights Agreement.
8.3. EXPENSES. The Company shall bear the expenses and costs of all the
parties to the transactions contemplated hereby (including the fees and expenses
of counsel to the Bank and any nominee of the Bank that is an Affiliate of the
Bank in connection with the Clause 9.4 Equity Issuances).
8.4. ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subject matter hereof. 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.
8.5. 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:
If to the Bank: Corporate Division
Xxxxxx Xxxxxxxxxx
23 Xxxxxxxx Xxxxx Road
Tel-Aviv
Israel
Fax. 000-0-0000000
Attn: Head of Corporate Division
If to the Company: Tower Semiconductor Ltd.
Ramat Gavriel Industrial Area
X.X. Xxx 000
Xxxxxx Xxxxxx
Xxxxxx 00000
Fax. 000-0-0000000
Attn: Xxxx Xxxxxxx, Acting CFO
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with a copy to
(which shall not
constitute notice): Xxxxx Xxxxx & Xx.
0 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx-Xxxx, Xxxxxx, 00000
Fax: 000-0-0000000
Attn: Xxxxx Xxxxxxxx, Adv.
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 8.5 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.
8.6. 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.
8.7. 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.
8.8. 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.
8.9. 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.
8.10. 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, including the provision by the
Bank to the Company of such information as shall be required in order to
determine the adjustments, if any, required under clause 9.4.7 of the Restated
Facility Agreement.
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IN WITNESS WHEREOF, each of the parties has signed this Agreement as of the
date first hereinabove set forth.
TOWER SEMICONDUCTOR LTD. BANK HAPOALIM B.M.
By: ________________________ By: ________________________
Name: ________________________ Name: ________________________
Title: ________________________ Title: ________________________
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