EXHIBIT 2
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
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1.1. Certain Definitions. As used in this Agreement, terms not defined
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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,
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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.
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"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
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2.1. The Additional Purchase Obligations.
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2.1.1. A Additional Purchase Obligations. On the basis of the
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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 of the
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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 Notice. In the event
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that S elects to 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 X-0, X-0 xxx X-0 Xxxxxxxxxx
Xxxxxxxx Obligations shall have been exercised, on the Exercise
Date S shall make a payment for the X-0, X-0 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
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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
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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
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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
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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
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3.1. Payment of Exercise Price. Each Additional Purchase Obligation
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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 Obligations
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3.2.1. Exercise Period of A Additional Purchase Obligations.
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Subject to the terms and 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 Obligations.
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Subject to the terms and conditions set forth herein, the B
Additional Purchase Obligations shall be exercisable at any
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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 Additional
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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
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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
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4.1. Adjustment of Exercise Price and Number of Shares of 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, etc. In case T
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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
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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 case of any
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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.
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4.1.3. Deferral of Certain Adjustments. No adjustment to the Exercise
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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, however, that any adjustments which by reason of this
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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 time, as a result
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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
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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
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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
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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
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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
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5.1. Mandatory Exercise Events; Termination of Obligation. Subject to the
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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
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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
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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 provisions
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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
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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 the
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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
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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. Each of
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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 Agreement,
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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 following
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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
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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
continue 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
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6.1. Representations and Warranties of T. (i) T hereby makes in favor
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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
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"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
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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
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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
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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 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 Xxxxxxx
X.X. Xxx 000
Xxxxxx Xxxxxx 00000 Xxxxxx
Facsimile No.: 972-6-654-7788
with a copy to: Xxxxx Xxxxx & Co.
0 Xxxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx
Attention: Xxxxx X. Xxxxxxxx, Adv.
Facsimile No.: 972-3-608-7714
S:
Attention: President and CEO
SanDisk Corporation
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to: SanDisk Corporation
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Vice President and General Counsel
Facsimile No.: (000) 000-0000 or 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
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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 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 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 Sections of
--------
this Agreement are inserted for convenience and shall not control
or affect the meaning or construction of any of the provisions
hereof.
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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 Xxxxx
-----------------------------------
Name: Yoav Nissan Xxxxx
Title: Co-Chief Executive Officer
SanDisk Corporation
By: /s/ Xxx Xxxxxx
-----------------------------------
Name: Xxx Xxxxxx
Title: Chief Executive Officer
