Exhibit 18
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THIS
TAG ALONG AGREEMENT (“this Agreement”) is made and entered into
effective as of September 28, 2006, by and between: |
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(1) |
ISRAEL CORPORATION LTD., a company organised under the laws
of the State of Israel (“TIC”) |
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(2) |
BANK LEUMI LE-ISRAEL B.M., a banking corporation organized under
the laws of the State of Israel (“the Bank”) |
| WHEREAS: |
Tower
Semiconductor Ltd. ("Tower") is an independent manufacturer of wafers whose
ordinary shares are traded on the Nasdaq National 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" and TIC is the largest
shareholder of Tower; and |
| WHEREAS: |
the Bank and Bank Hapoalim 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 United States Dollars) of its loans made to Tower pursuant to the
Facility Agreement (“the Loans”) into an equity-equivalent convertible
capital note (“a Capital Note”) to be issued to the Bank or its nominee
in the amount of US $39,500,000 (thirty-nine million five hundred thousand United
States Dollars) which will in turn be convertible, in whole or in part, 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) shares of Tower and the entering into by the Bank
and TIC of this Agreement; and |
| WHEREAS: |
clause 9.4
of the amended and restated Facility Agreement that has 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 Tower 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, be made in the form of shares and/or Capital Notes
and/or convertible debentures (“the Clause 9.4 Equity Issuances”);
and |
| WHEREAS: |
|
the
Bank holds warrants to acquire shares of Tower (such
warrants, collectively, "the Warrants"), |
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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1.1.1. |
“Affiliate” means,
with respect to any person, mean any company which controls, is controlled by,
or under common control with, such person; “control” shall in this clause 1.1.1
and clause 1.1.7 below bear the meaning assigned to such term in Section 1
of the Securities Law, 1968; |
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1.1.2. |
“Bank
Group” means the Bank and its Affiliates; |
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1.1.3. |
“Convertible
Securities” means any securities convertible into, or exercisable for,
Shares; |
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1.1.4. |
“including” and
“includes” means including, without limiting the generality of
any description preceding such terms; |
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1.1.5. |
a
“person” shall be construed as a reference to any person,
firm, company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal personality)
or two or more of the aforegoing; and |
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1.1.6. |
“Shares” means
the ordinary shares of Tower (and any shares of capital stock substituted for
the ordinary shares as a result of any stock split, stock dividend,
recapitalisation, rights offering, exchange, merger or similar event or
otherwise, including as described in any Capital Note and/or convertible
debenture). |
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1.1.7. |
“Subsidiary” of
TIC means (i) a company in which TIC holds directly at least 51% (fifty-one
percent) of the total issued share capital and other means of control
(including voting rights and rights to appoint directors) (excluding any such
company that is publicly held and that purchases, solely as a financial
investment, Shares or Convertible Securities in the market (i.e. not directly or
indirectly from Tower or TIC) and not at the request or instruction of TIC) and
(ii) any company controlled by TIC that has received Shares or Convertible
Securities, directly or indirectly, from TIC. |
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1.2. |
The
preamble to this Agreement constitutes an integral part thereof. |
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1.3. |
For
purposes of determining the numbers and/or percentages of Shares and/or
Convertible Securities pursuant to this Agreement, |
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1.3.1. |
only
the number of Shares into which the Convertible Securities are then convertible
or exercisable shall be taken into account and not the number or principal
amount, as the case may be, of the Convertible Securities; and |
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1.3.2. |
Convertible
Securities not being sold by the Shareholder (as defined in clause 2.1 below)
(other than Capital Notes) whose exercise or conversion price per Share, as the
case may be, exceeds the Per Share Price (as defined in clause 2.2 below) shall
not be taken into account. For the avoidance of doubt, Capital Notes shall be
counted as the number of Shares into which the Capital Notes are then
convertible, whether or not the then conversion price is less than, equal to or
greater than the Per Share Price. |
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2.1. |
If
TIC and/or any of its Subsidiaries (collectively, “the Shareholder”)
proposes to sell, in one or a series of related transactions, any of its Shares
and/or Convertible Securities to any person and/or any of such person’s
Affiliates (other than non-prearranged sales of Shares into the market executed
on any stock exchange on which the Shares are then listed for trading or
submitted for quotation), such that, immediately following any such sale, the
Shareholder would cease to be the largest holder of: (a) the then issued
and outstanding Shares (for the avoidance of doubt, not taking into account any
Convertible Securities); or (b) the Shares on a fully-diluted basis,
taking into account the Convertible Securities (for the avoidance of doubt, as
determined pursuant to clause 1.3 above), the Shareholder may only sell such
Shares or Convertible Securities if it complies with the provisions of this
clause 2. |
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2.2. |
TIC
shall give written notice (“the Offer Notice”) to the Bank of
such intended sale on the earlier of (i) 5 (five) days after any person or
persons comprising the Shareholder enters into an agreement to effect such sale
(whether or not subject to conditions) and (ii) 30 (thirty) days prior to the
Proposed Sale Date (as defined below). The Offer Notice shall specify the
identity of the proposed purchaser (“the Third Party Purchaser”),
the purchase price (“the Purchase Price”), including the
purchase price per Share (“the Per Share Price”), and other terms
and conditions of payment, the proposed date of sale (“the Proposed
Sale Date”), the number of Shares and/or Convertible Securities
(together with details of such Convertible Securities) proposed to be purchased
by the Third Party Purchaser (“the Offered Shares”) and the
percentage that the Offered Shares represent of all (a) Shares owned by
the Shareholder, in the event the Shareholder proposes to sell Shares only
and/or only clause 2.1(a) above is applicable; or (b) the Shareholder’s
Shares and Convertible Securities, in the event that the Shareholder proposes
to sell both Shares and Convertible Securities or Convertible Securities only
and clause 2.1(b) above is (or for the avoidance of doubt, both clauses 2.1(a)
and 2.1(b) above are) applicable. For the avoidance of doubt, the Offer Notice
shall describe any other transactions relating to the Shares and/or Convertible
Securities with the Third Party Purchaser and/or its Affiliates that have taken
place or are proposed to take place or certify that no such transaction has
taken place or are proposed to take place. |
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2.3. |
The
Bank shall be entitled, by written notice given to TIC within 20 (twenty) days
of receipt of the Offer Notice, to join (and, if applicable, have its
Affiliates join) the sale to such Third Party Purchaser. If the Bank has
notified the Shareholder of its election to exercise its tag along rights under
this clause 2, the Shareholder shall, as a condition to the sale by it of any
of the Offered Shares, cause the Third Party Purchaser to purchase from the
Bank Group the number of the Bank Group’s (i) Capital Notes issued
pursuant to clause 5.4 of the Amending Agreement or Shares received from the
conversion of such Capital Notes; (ii) Capital Notes and/or convertible
debentures issued as part of the Clause 9.4 Equity Issuances or Shares received
from the conversion of such Capital Notes and/or convertible debentures; and
(iii) Shares received as part of the Clause 9.4 Equity Issuances (collectively,
“the Bank Group’s Shares”) multiplied by the Bank Group’s
Percentage (as determined pursuant to clause 2.4 below)) on the same terms and
conditions (per Share) as those set out in the Offer Notice. For the avoidance
of doubt, the Per Share Price for Capital Notes and/or convertible debentures
of Tower held by the Shareholder shall be the total purchase price offered for
such Convertible Securities divided by the number of Shares into which such
Convertible Securities are then convertible. |
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2.4. |
The
Bank shall be entitled to sell to the Third Party Purchaser such percentage of
the Bank Group’s Shares equal to the percentage (“the Bank Group’s
Percentage”) which the Offered Shares constitute of all Shares and, if
applicable, Convertible Securities, held by the Shareholder (as determined
pursuant to clauses 2.1(a), 2.1(b), 2.2(a) and 2.2(b) above, as
applicable, and, for the avoidance of doubt, as determined pursuant to clause
1.3 above). The number of Offered Shares proposed to be sold by the Shareholder
shall be reduced if and to the extent necessary to provide for the exercise of
the “tag along” rights set forth in this clause 2. The number of
Shares and/or Convertible Securities actually sold to the Third Party Purchaser
by the Bank Group as a proportion of the number of Shares and/or Convertible
Securities actually sold by the Shareholder to the Third Party Purchaser shall
be referred to as “the Bank Group’s Proportion”. In
effecting any such sale to the Third Party Purchaser, the Bank Group shall be
entitled to substitute Capital Notes and/or convertible debentures convertible
into all or a portion of the number of Shares to be sold by the Bank Group
pursuant to this clause 2. |
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2.5. |
For
the avoidance of doubt, if the Bank shall have exercised its “tag along” right
as aforesaid, TIC shall procure that no person comprising the Shareholder shall
sell any Shares or Convertible Securities to the Third Party Purchaser without
the Bank Group joining in such sale, as aforesaid. |
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2.6. |
Notwithstanding
anything to the contrary in this Agreement, no person comprising the Bank Group
shall be required to make any representations or warranties to the Third Party
Purchaser regarding any matters except the ownership of, and title to, the
Shares and/or Convertible Securities to be sold by such person to the Third
Party Purchaser as aforesaid, nor shall any person comprising the Bank Group be
required to agree to any undertakings except to deliver the Shares and/or
Convertible Securities to the Third Party Purchaser against payment therefor in
accordance with this clause 2, provided that in the event that (a) not all of
the Purchase Price is received by the Shareholder at the closing of the sale to
the Third Party Purchaser because of a requirement that the Shareholder place a
portion of the Purchase Price into escrow to secure representations, warranties
or covenants (other than those related to the Shareholder (and not Tower)
and/or its title to the Shares and/or Convertible Securities being sold), a
portion of the Purchase Price equal to the Bank Group’s Proportion
multiplied by the amount of Purchase Price placed into escrow by the
Shareholder shall also be placed into escrow and (b) any payment is made to the
Third Party Purchaser (whether from such escrow or not) on account of an
indemnification obligation of the Shareholder (other than an indemnification
obligation related to (i) representations, warranties or covenants relating to
the Shareholder (and not Tower) and/or its title to the Shares and/or
Convertible Securities sold and/or (ii) a fraudulent misrepresentation
fraudulently made by the Shareholder (such payment, after such exclusion, “an
Indemnification Payment”), the amount to be released from such escrow
to the Bank Group shall be reduced by the Bank Group’s Proportion of the
Indemnification Payment or the Bank Group shall pay the Shareholder or the
Third Party Purchaser the Bank Group’s Proportion of the Indemnification
Payment, as applicable. For the avoidance of doubt, no placement into escrow
and/or sharing in an Indemnification Payment as aforesaid shall be construed to
mean that the Bank Group has any liability whatsoever to any person, including
the Third Party Purchaser, on account of the representations, warranties or
covenants of the Shareholder, such placement and/or sharing representing only
an adjustment between TIC and the Bank of the tag along right granted pursuant
to this clause 2 to reflect when the Purchase Price is actually received by TIC
out of such escrow and/or the actual Price Per Share finally received by TIC
after such Indemnification Payment. |
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2.7. |
For
the avoidance of doubt, (a) in the event the transactions contemplated by an
Offer Notice shall not be consummated by the Shareholder for any reason, the
Bank Group shall not be required to sell any Shares or Convertible Securities
to the Third Party Purchaser and (b) in the event that the Shareholder proposes
to sell to a different third party or on terms and conditions other than as set
forth in the Offer Notice or in the event that the transaction is not
consummated within 2 (two) months after the Bank’s notification of its
exercise of its “tag along” rights hereunder, then TIC shall procure
that no person comprising the Shareholder shall proceed with any sale without
TIC again complying with the terms and conditions of this Clause 2. |
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2.8. |
TIC
shall cause its Subsidiaries to act in accordance with this Agreement. |
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2.9 |
For
the avoidance of doubt, the Bank Group’s Shares shall not include, the Warrants or
any other security of Tower except for those securities enumerated in Sections 2.3
(i)-(iii). |
| 3. |
REPRESENTATIONS
AND WARRANTIES BY TIC |
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TIC hereby
represents and warrants that: |
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3.1 |
it
is a limited liability company, duly incorporated and validly existing under the laws
of Israel; |
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3.2 |
its
signature of this Agreement and the performance by it of its obligations pursuant to this
Agreement do not in any way contradict any rights of third parties, any contracts or
agreements to which it is a party, its Articles of Association or any applicable law; |
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3.3 |
the
signature of this Agreement and the performance of its obligations under this Agreement
are within its power and authority and have been duly and validly authorised by all
necessary corporate action; |
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3.4 |
this
Agreement has been duly and validly executed by it and constitutes its valid, legal and
binding obligation, enforceable against TIC in accordance with its terms; and |
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3.5 |
TIC
owns directly, and is the registered owner of, all Shares and Convertible Securities
beneficially owned by TIC and, for the avoidance of doubt, no person controlled by TIC
(including any Subsidiary) owns any Shares or Convertible Securities. |
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4.1. |
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
▇▇▇ TIC in any jurisdiction in which TIC has an office or holds assets. |
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4.2. |
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: (a) 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; and/or (b) any
person that acquires from such Bank 5% (five percent) or more of the then
issued share capital of Tower (including, for the avoidance of doubt, through
the acquisition of Capital Notes and conversion by such acquirer into Shares). |
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4.3. |
Expenses. Each
of the parties shall bear and pay all of its expenses and costs in connection
with the negotiation, execution and performance of this Agreement. |
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4.4. |
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. |
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4.5. |
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 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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4.5.1. |
if to the Bank:
|
Bank Leumi Le-Israel B.M.
Corporate Division
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇▇
▇▇▇▇▇▇
Facsimile: 972-3-514-9278
Attention: Manager of Hi-Tech
Industries Section
|
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4.5.2. |
if to TIC: |
Israel Corporation Ltd.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Israel
Facsimile: 972-3-684-4574
Attention: Chief Financial Officer
|
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|
with a copy to (which
shall not be considered
notice):
|
Gornitzky & Co.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Adv.
Facsimile: 972-3-560-6555
|
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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 clause 4.5 shall
be effective: (a) if mailed, 5 (five) business days after mailing; (b) if sent
by messenger, upon delivery; and (c) if sent via facsimile, 1 (one) business day
following transmission and electronic confirmation of receipt. |
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4.6. |
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. |
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4.7. |
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. |
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4.8. |
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. |
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4.9. |
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. |
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4.10. |
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 reflected thereby. |
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4.11 |
Termination. This
Agreement shall terminate on such date on which the Bank beneficially owns less than 1%
of the then issued share capital of Tower (whether in the form of (a) Capital Notes
and/or convertible debentures (determined as if such Capital Notes and/or convertible
debentures were converted into Shares), (b) Shares received from conversion of such
Capital Notes and/or convertible debentures and/or (c) Shares issued as part of the
Clause 9.4 Equity Issuances). |
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IN WITNESS WHEREOF, the parties
have signed this Tag Along Agreement effective as of the date first mentioned above.
| for |
ISRAEL
CORPORATION LTD. |
| By: |
/s/
▇▇▇▇▇ ▇▇▇▇▇; /s/ Avisar Paz |
| for |
BANK LEUMI LE-ISRAEL B.M. |
| By: |
/s/ ▇▇▇▇ ▇▇▇▇▇; /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
| Title: |
Sector Manager; Senior Relationship Manager |
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