EXHIBIT 99.7
RESTATED FACILITY AGREEMENT
ORIGINALLY MADE ON 18 JANUARY 2001
BETWEEN
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TOWER SEMICONDUCTOR LTD.
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AS THE BORROWER
AND
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BANK HAPOALIM B.M. BANK LEUMI LE-ISRAEL B.M.
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AS THE BANKS
(AS AMENDED AND RESTATED BY THE PARTIES THROUGH AUGUST 24, 2006)
TABLE OF CONTENTS
CLAUSE NO. PAGE
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1. INTERPRETATION 1
1.1. Definitions 1
1.2. Clause Headings/Table of Contents 69
1.3. Interpretation 69
2. THE LOANS 71
2.1. Loans to the Borrower 71
2.2. Banks' Obligations Several 72
2.3. Limits on Yen, Euro and Pound Sterling Credits 72
2.3. Banks' Rights Separate 72
2.4. Separate Enforcement by Banks 72
3. PURPOSE--INTENTIONALLY DELETED 73
3.1. Purpose of Advances and Loans 73
3.2. Purpose of L/Cs 73
3.3. Purpose of Permitted Hedging Transactions 73
3.4. No Obligation to Monitor 73
4. CONDITIONS PRECEDENT--INTENTIONALLY DELETED 73
5. AVAILABILITY OF CREDITS--INTENTIONALLY DELETED 73
5.1. Availability 73
5.2. Advances 73
5.3. Letters of Credit 73
5.4. Hedging 73
5.5. Applications to All Banks 73
6. REPAYMENT 74
6.1. Repayment of Loans 74
6.2. Payment of all other Sums Due on the Final Maturity Date 74
6.3. Repayment in US Dollars 74
6.4. Repayments to Payments Accounts 74
6.5. No Reborrowing 74
6.6. No Commitments 74
7. VOLUNTARY PREPAYMENT 74
7.1. Voluntary Prepayment 74
7.2. Notice of Prepayment 75
7.3. No Other Prepayments 75
7.4. No Reborrowing 75
7.5. Prepayment Commissions 75
7.6. Prepayment to Payments Account 75
7.7. Prepayments together with Interest and Other Sums Owed 76
7.8. Cancellation 76
7.9. Limits on Prepayment 76
7.10. Currency for Prepayment 77
7.11. Selection of Instalments for Voluntary Prepayment 77
7.12. Prepayment Pursuant to Clause 6.1.1 77
(i)
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8. MANDATORY PREPAYMENT 77
8.1. Mandatory Prepayment 77
8.2. No Reborrowing of Mandatory Prepayment 78
8.3. Account of Mandatory Prepayment 78
8.4. Mandatory Prepayment together with Interest and Other Sums Owed 79
8.5. Currency for Mandatory Prepayment 79
8.6. Schedule for Mandatory Prepayment 79
9. INTEREST 79
9.1. Interest Rate 79
9.2. Accrual of Interest 80
9.3. Payment of Interest 80
9.4. Certain Compensatory Payments 80
10. SUBSTITUTE INTEREST RATES 84
11. COMMISSIONS, FEES AND EXPENSES 85
11.1. Front End Fee 85
11.2. Commitment Commission 85
11.3. Legal and Other Costs 85
11.4. Consultants 86
11.5. Stamp Duties and Like Taxes 86
11.6. Other Commissions, Fees and Expenses 86
11.7. Currency for Payment 87
11.8. VAT 87
12. TAXES 87
12.1. Taxes 87
12.2. Notification of Taxes 87
12.3. Payment and Submission of Receipt 88
12.4. Tax Saving 88
12.5. XXX 00
00. INCREASED COSTS 89
13.1. Increased Costs 89
13.2. Exceptions 91
14. ILLEGALITY 91
15. REPRESENTATIONS AND WARRANTIES 92
15.1. General 92
15.2. Status 92
15.3. Legal Validity 92
15.4. Non-Conflict 92
15.5. No Default 94
15.6. Consents 94
15.7. Share Capital 94
15.8. SEC Documents; Financial Statements 95
15.9. Business Plan 96
(ii)
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15.10. Title to Properties; Encumbrances 96
15.11. Condition and Sufficiency of Assets 97
15.12. Customers and Suppliers 97
15.13. Permitted Subordinated Debt 97
15.14. Financial Indebtedness 97
15.15. Taxes 97
15.16. No Material Adverse Change 97
15.17. Compliance with Laws; Governmental Authorisations 97
15.18. Legal Proceedings; Orders 98
15.19. Absence of Certain Changes and Events 98
15.20. Contracts; No Defaults 98
15.21. Insurance 99
15.22. Environmental Matters 99
15.23. Intellectual Property 99
15.24. Grants, Incentives and Subsidies 99
15.25. Disclosure 99
15.26. Relationships with Related Persons 99
15.27. Documents 99
15.28. Ranking of Securities 99
15.29. Shareholdings 100
15.30. Repetition 100
16. UNDERTAKINGS 100
16.1. Financial Information 100
16.2. Accounts and Auditors 106
16.3. Purpose 107
16.4. Negative Pledge 107
16.5. No Financial Indebtedness 107
16.6. PARI PASSU Ranking 108
16.7. Distributions 108
16.8. Intellectual Property Assets 109
16.9. Environmental Matters 110
16.10. Insurance 111
16.11. Mergers and Amalgamations 114
16.12. Consents 114
16.13. Material Contracts 114
16.14. Auditors 115
16.15. Acquisitions 115
16.16. Access 116
16.17. Capital Expenditure 117
16.18. Organisational Documents 117
16.19. Project 118
16.20. Business Plan 118
16.21. Hedging 119
16.22. Transactions with Related Persons 119
16.23. Sale and Leaseback 119
16.24. Disposals 120
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16.25. Notification of Default 121
16.26. Compliance with Laws 121
16.27. Investments in the Borrower 121
16.28. Taxation 124
16.29. Financial Undertakings 124
16.30. Change of Business 125
16.31. Bank Accounts 125
16.32. Prohibition on Change of Ownership 128
16.33. Utilisation of Excess Cash Flow 128
16.34. Safety Net Undertaking 128
16.35. Outside Investment 128
16.36. Interest Payment Loans; Additional Investment Undertakings 130
17. DEFAULT 131
17.1. Events of Default 131
17.2. Non-Payment 131
17.3. Breach of Obligations 131
17.4. Misrepresentation/Breach of Warranties 132
17.5. Invalidity 132
17.6. Cross Acceleration 132
17.7. Insolvency and Rescheduling 134
17.8. Winding-Up 134
17.9. Execution or Other Process 134
17.10. Material Contracts 134
17.11. Proceedings 135
17.12. Consents 135
17.13. Material Adverse Effect 135
17.14. Fab 2 136
17.15. Completion of Fab 2 136
17.16. Construction Contract 136
17.17. Government Action 136
17.18. Illegality 136
17.19. Investment Centre Fab 2 Grants 136
17.20. Default by the Borrower under any Qualifying Wafer Prepayment Contract 137
17.20A. Prohibited Payment under the Permitted Subordinated Debt 137
17.20B. Outside Investment Undertakings 137
17.20C. Additional Investment Undertakings 138
17.21. Acceleration 138
17.22. Loans Due on Demand 138
17.23. Collection 139
17.24. Indemnity 139
17.25. Termination of Commitment 139
18. DEFAULT INTEREST 139
18.1. Default Rate Periods 139
18.2. Default Interest 140
18.3. Payment of Default Interest 140
(iv)
TABLE OF CONTENTS
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19. BROKEN FUNDING INDEMNITY 140
19.1. Broken Funding 140
19.2. Failure to Draw Advance 141
20. PAYMENTS 141
20.1. Payments by Borrower 141
20.2. Payments by Banks to Borrower 141
21. SET-OFF 142
21.1. Conditions for Set-Off 142
21.2. Debit or Credit of Accounts 142
22. APPLICATION OF PAYMENTS 142
22.1. Insufficient Payment 142
22.2. Currency Conversion 143
23. CALCULATIONS AND EVIDENCE OF DEBT 143
24. SHARING BETWEEN BANKS 144
25. ASSIGNMENTS AND TRANSFERS 144
26. REMEDIES AND WAIVERS 146
27. NOTICES 146
27.1. Notices in Writing 146
27.2. Addresses 146
28. AMENDMENTS 147
29. COUNTERPARTS 147
30. GOVERNING LAW AND JURISDICTION 148
31. ENTIRE AGREEMENT 148
32. CONFIDENTIALITY 148
33. BANKS REPRESENTATION 149
(v)
TABLE OF CONTENTS
(CONTINUED)
SCHEDULES DESCRIPTION
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SCHEDULE 1.1.2 Accounts of the Borrower
SCHEDULE 1.1.16 Business Plan
SCHEDULE 1.1.36 Form of Debenture
SCHEDULE 1.1.53 Floating Charge securing Grants made by the Investment
Centre in respect of Fab 1
SCHEDULE 1.1.64 DELETED
SCHEDULE 1.1.79 List of Intellectual Property Assets
SCHEDULE 1.1.101 List of Material Contracts
SCHEDULE 1.1.104 DELETED
SCHEDULE 1.1.105 List of Named Directors and Officers
SCHEDULE 1.1.106 Net Cash Flow of the Borrower
SCHEDULE 1.1.114 Details of equipment and other assets subject to certain
Permitted Encumbrances
SCHEDULE 1.1.115(C) Description of Financial Indebtedness of the Group in excess
of US $22,500,000
SCHEDULE 1.1.115(k) Other permitted Financial Indebtedness
SCHEDULE 1.1.147 List of Warrants issued by the Borrower to the Banks
SCHEDULE 15.2 DELETED
SCHEDULE 15.4 Non-conflict
SCHEDULE 15.6 Consents required to be obtained from any person or
Governmental Body
SCHEDULE 15.7 Information as to five per cent holders and options,
warrants and convertible debentures
SCHEDULE 15.10 Exceptions to representations as to good and marketable
title to assets and rights
SCHEDULE 15.11 DELETED
SCHEDULE 15.12 DELETED
SCHEDULE 15.13 Listed details and copies of all trust deeds, indentures and
other instruments reflecting the terms and conditions of all
existing Permitted Subordinated Debt
SCHEDULE 15.15.1 DELETED
SCHEDULE 15.17 Exceptions to compliance with law representation
(vi)
TABLE OF CONTENTS
(CONTINUED)
SCHEDULES DESCRIPTION
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SCHEDULE 15.18 Description of Proceedings pending against the Borrower or
any Subsidiary
SCHEDULE 15.19 DELETED
SCHEDULE 15.20 DELETED
SCHEDULE 15.22 DELETED
SCHEDULE 15.23.2 DELETED
SCHEDULE 15.23.3 DELETED
SCHEDULE 15.23.5 DELETED
SCHEDULE 15.24 DELETED
SCHEDULE 15.26 DELETED
SCHEDULE 15.29 DELETED
SCHEDULE 16.1.1(iv) Form of report setting out a comparison of actual results
with projected results of the Borrower
SCHEDULE 16.1.1(v)A Form of certificate of the Auditors setting out payments
with respect to the Project during the relevant Quarter or
Fiscal Year (as the case may be)
SCHEDULE 16.1.1(v)B Form of certificate of the Auditors setting out the amounts
invested in the relevant Quarter in Paid-in Equity
SCHEDULE 16.1.1(v)C Form of certificate of the Auditors setting out amounts
received under the Investment Centre Fab 2 Grants in the
relevant Quarter
SCHEDULE 16.1.1(v)D Form of certificate of the Auditors confirming that there
has been no breach of the financial covenants
SCHEDULE 16.10.6(a) Form of endorsement clause to be inserted into each
Insurance Policy taken out by the Borrower
SCHEDULE 16.10.6(d) Types of Insurance Policies taken out by the Borrower which
need not be assigned by way of charge
SCHEDULE 16.27 List of Amended Qualifying Wafer Prepayment Contracts
SCHEDULE 16.29 Financial Undertakings
SCHEDULE 16.35.1 Form of Outside Investment Undertaking
(vii)
THIS AGREEMENT was made on the 18th day of January, 2001 and amended and
restated by the parties through August 24, 2006,
BETWEEN:
(1) TOWER SEMICONDUCTOR LTD., a company incorporated under the laws of Israel
(company no. 52-004199-7), whose registered office is at X.X. Xxx 000,
Xxxxxxxxxx Xxxx, Xxxxxx Xxxxxx 00000, Xxxxxx
("THE BORROWER");
AND
(2) BANK HAPOALIM B.M. and BANK LEUMI LE-ISRAEL B.M.
IT IS HEREBY AGREED AS FOLLOWS:
1. INTERPRETATION
1.1. DEFINITIONS
In this Restated Facility Agreement ("THIS AGREEMENT"), the following terms have the
meanings given to them in this clause 1.1:
1.1.1. "ACCOUNTING PERIOD" - means any period of one Quarter or a Fiscal
Year for which Accounts are prepared;
1.1.2. "ACCOUNTS" - means, at any time and from time to time:
(a) the audited non-consolidated annual
financial statements of the Borrower
(including, for the removal of doubt:
(i) a profit and loss statement which
reflects the operating profit or
loss; (ii) cash flow statement;
(iii) sources and uses statement; and
(iv) a balance sheet reflecting
current assets, current liabilities
and fixed assets);
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(b) the reviewed non-consolidated
quarterly financial statements of the
Borrower (including, for the removal
of doubt: (i) a profit and loss
statement which reflects the
operating profit or loss; (ii) cash
flow statement; (iii) sources and
uses statement; and (iv) a balance
sheet reflecting current assets,
current liabilities and fixed assets);
(c) the audited consolidated annual
financial statements of the Borrower;
and
(d) the reviewed consolidated quarterly
financial statements of the Borrower,
(e) [INTENTIONALLY DELETED]
all of the Accounts referred to in
paragraphs (a)-(d) (inclusive) above to be
in the respective formats specified in
SCHEDULE 1.1.2 hereto.
For the removal of doubt, should any of the
statements referred to in paragraphs (a)
and (b) of this clause 1.1.2 above not be
required by GAAP, any reference in this
Agreement to the delivery of such Accounts
shall also include the supplemental
delivery of such statements;
1.1.3. "ACQUISITION" - means the acquisition, directly or
indirectly (whether by one transaction or
by a series of related transactions) of any
interest whatsoever in the share capital
(or equivalent) or the business or
undertaking or assets constituting a
separate business or undertaking of any
company or other person;
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1.1.3A. [INTENTIONALLY DELETED]
1.1.3B. [INTENTIONALLY DELETED]
1.1.3C. [INTENTIONALLY DELETED]
1.1.3D. [INTENTIONALLY DELETED]
1.1.4. [INTENTIONALLY DELETED]
1.1.5. "ALLIANCE" - means Alliance Semiconductor Corporation, a
corporation incorporated under the laws of
Delaware, USA;
1.1.6. "AMENDMENT
CLOSING DATE" - means September 28, 2006;
1.1.7. "AUDITORS" - means Xxxxxxxxx-Xxxxxxx & Co., or another
leading firm of independent Israeli
auditors affiliated to one of the big four
internationally recognised firms of
auditors;
1.1.8. [INTENTIONALLY DELETED]
1.1.9. [INTENTIONALLY DELETED]
1.1.9A. "BANK ADVISER" - shall bear the meaning assigned to such
term in clause 16.16.3 below;
1.1.10. "BANK HAPOALIM" - means Bank Hapoalim B.M.;
1.1.11. "BANK LEUMI" - means Bank Leumi Le-Israel B.M.;
1.1.12. "BANK" OR "BANKS" - means Bank Hapoalim, Bank Leumi, either of
such Banks and any other bank or financial
institution, if any, which becomes a party
to this Agreement pursuant to clause 25.3
below;
1.1.13. "BORROWER" - means Tower Semiconductor Ltd.;
1.1.13A. [INTENTIONALLY DELETED]
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1.1.14. "BUSINESS" - means the business of an independent
"foundry" manufacturer of semiconductor
integrated circuits and a provider of
related design services, as well as other
activities ancillary to such business;
1.1.15. "BUSINESS DAY" - means:
(a) with respect to payment, purchase or
any other transaction in, or
determination of LIBOR for, or
performance of, calculations in, sums
denominated in US Dollars, a day on
which: (i) the Banks are open for
trading in Israel in US Dollars; and
(ii) banks generally are open for
trading in US Dollars in London and
New York; and
(b) [INTENTIONALLY DELETED]
(c) [INTENTIONALLY DELETED]
(d) [INTENTIONALLY DELETED]
(e) in all other cases, as a reference to
a day (other than Saturday) on which
banks generally are open for business
in Israel;
1.1.16. "BUSINESS PLAN" - means the business plan of the Borrower
which has been approved by the Board of
Directors of the Borrower on March 31, 2006
and provided to the Banks, as such business
plan may be updated from time to time
subject to the provisions of clause 16.20.1
below, a copy of which business plan is
attached hereto as SCHEDULE 1.1.16;
1.1.17. [INTENTIONALLY DELETED]
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1.1.18. "A CHANGE OF
OWNERSHIP" - shall occur in the event that at any time
during the period commencing on the
Amendment Closing Date and ending prior to
the date that all amounts payable by the
Borrower under the Finance Documents shall
have been paid in full, any of the
following occurs:
(a) the Lead Investors shall, directly or
indirectly through Subsidiaries,
cease to nominate, in aggregate, more
than 50% (fifty percent) of the Board
of Directors of the Borrower
(excluding, for this purpose,
external directors (DAHAZ), 1 (one)
independent director under Nasdaq
Marketplace Rules, officers of the
Borrower who are ex-officio directors
of the Borrower and any directors
appointed by a purchaser of the
Banks' shares), it being recorded
that the chief executive officer (or
one of the co-chief executive
officers, as the case may be) may at
all times be a director; or
(b) at any time prior to the date on
which the Borrower shall have repaid
in accordance with clause 6 below (or
clause 7, if applicable) at least 50%
(fifty percent) of the principal of
the Loans (together with all Interest
and other amounts payable on such 50%
(fifty percent)) ("THE FIFTY PERCENT
REPAYMENT DATE"), TIC shall cease to
hold (directly or indirectly through
Subsidiaries), in the aggregate at
least 32,229,822 (thirty-two million
two hundred and twenty-nine thousand,
eight hundred and twenty-two)
ordinary shares of the Borrower
(and/or convertible debentures which
are convertible into such number of
ordinary shares of the Borrower); or
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(c) at any time after the Fifty Percent
Repayment Date, TIC shall cease to
hold (directly or indirectly through
Subsidiaries), in the aggregate at
least 14,048,004 (fourteen million,
forty-eight thousand and four)
ordinary shares of the Borrower; or
(d) at any time, the aggregate number of
shares of the Borrower held by the
Lead Investors (other than TIC) shall
at any time be less than 60% (sixty
percent) of the aggregate number of
shares in the Borrower held by the
Lead Investors (other than TIC) on
January 29, 2006, save for the sale
of shares in the Borrower, during a
period commencing on January 29,
2004, by any of the Lead Investors
(other than TIC) in an aggregate
amount equal to 30% (thirty percent)
of the shares in the Borrower held by
such Lead Investor on January 29,
2004 ("THE COMMITTED MINIMUM
SHAREHOLDINGS"), or, in the event
only that during any Quarter during
such period the average sales per
month made by the Borrower of wafers
produced during such Quarter in Fab 2
equals or exceeds 24,000 (twenty-four
thousand), then thereafter 50% (fifty
percent) of the Committed Minimum
Shareholdings; provided that, in the
event that for any Quarter during the
period commencing on January 1, 2006
the Net Debt of the Borrower shall be
less than: (i) US $250,000,000 (two
hundred and fifty million United
States Dollars), then, thereafter,
this paragraph (d) shall read as
follows:
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"at any time the aggregate
number of shares of the
Borrower held by the Lead
Investors (other than TIC)
shall at any time be less than
40% (forty percent) of the
aggregate number of shares in
the Borrower held by the Lead
Investors (other than TIC) on
January 29, 2006, save for the
sale of shares in the
Borrower, during a period
commencing on January 29,
2004, by any of the Lead
Investors (other than TIC) in
an aggregate amount equal to
30% (thirty percent) of the
shares in the Borrower held by
such Lead Investor on
January 29, 2004;"
or (ii) US $150,000,000 (one hundred
and fifty million United States
Dollars), then, thereafter, this
paragraph (d) shall no longer be
applicable; for the purposes of this
paragraph (d), "NET DEBT" for a
Quarter shall mean the Total Debt for
such Quarter, less the aggregate
amount held by the Borrower on deposit
in Charged Accounts, which deposits
are duly pledged by first-ranking fixed
charge in favour of the Banks under
the Debenture as at the last day of
such Quarter.
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For the purpose of this clause 1.1.18 each of the Lead
Investors shall be deemed to hold shares in the
Borrower, not only if such shares are held (or
acquired) by such Lead Investor directly, but also if
such shares are directly held (or acquired) by a
Subsidiary of a Lead Investor; for the purpose of this
clause, "SUBSIDIARY" of a person shall mean any company
in which such person 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).
For the purpose of this clause 1.1.18, adjustments
shall be made to the numbers of shares respectively
referred to in each of paragraphs (b), (c) and (d)
above (including numbers of shares not expressly
mentioned but which are ascertainable pursuant to the
above) to reflect all stock dividends or distributions
(including issues of bonus shares), subdivisions of
shares, combinations of shares into a smaller number of
shares, reclassification of shares or other change in
the share capital of the Borrower, such that each
number of shares specified or ascertainable as
aforesaid shall equal that number of shares which a
shareholder holding only the relevant number of shares
of the Borrower specified in the aforesaid paragraphs
would have held after any such stock dividends or
distributions (including issues of bonus shares),
subdivisions of shares, combinations of shares into a
smaller number of shares, reclassification of shares or
other change in the share capital of the Borrower, assuming
that such shareholder had exercised all rights
issued to it pursuant to any of the aforegoing and had
not, save by way of exercise of such rights, sold or
acquired any shares of the Borrower. For the avoidance
of doubt, this paragraph shall not apply to rights
offerings conducted by the Borrower not in connection
with any of the foregoing;
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1.1.19. "CHARGED ACCOUNTS" - means:
(a) (i) account number 545454 at Bank
Hapoalim, Xxxxxx Haemek Branch
No. 728, in the name of the
Borrower, into which account:
(1) all repayments and
prepayments of Loans to Bank
Hapoalim will be made; (2) all
other payments to Bank
Hapoalim under this Agreement
are to be made pursuant to
this Agreement; (3) gross
revenues from the Project
(including from Wafer
Prepayment Contracts or other
sources of revenue) are to be
paid pursuant to this
Agreement; (4) Grants from the
Investment Centre shall be
paid or transferred pursuant
to this Agreement; (5) subject
to (b) below, the proceeds of
all Paid-in Equity and
Permitted Subordinated Debt
are to be paid pursuant to
this Agreement; and
(6) proceeds of insurance,
nationalisation,
expropriation, or requisition
for title or use, all amounts
(including liquidated damages)
paid to the Borrower arising
out of or in connection with
any Contracts entered into by
the Borrower and all proceeds
of any sale, transfer or
licence of assets (including
Intellectual Property Assets)
used in connection with the
Project, are to be paid
pursuant to this Agreement
("THE HAPOALIM PROJECT
Account"); and
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(ii) account number 00000000 at
Bank Leumi, Haifa Branch, in
the name of the Borrower into
which account: (1) all
repayments and prepayments of
Loans to Bank Leumi will be
made; (2) all other payments
to Bank Leumi under this
Agreement are to be made
pursuant to this Agreement;
(3) gross revenues from the
Project (including from Wafer
Prepayment Contracts or other
sources of revenue) are to be
paid pursuant to this
Agreement; (4) Grants from the
Investment Centre shall be
paid or transferred pursuant
to this Agreement; (5) subject
to (b) below, the proceeds of
all Paid-in Equity and
Permitted Subordinated Debt
are to be paid pursuant to
this Agreement; and
(6) proceeds of insurance,
nationalisation,
expropriation, or requisition
for title or use, all amounts
(including liquidated damages)
paid to the Borrower arising
out of or in connection with
any Contracts entered into by
the Borrower and all proceeds
of any sale, transfer or
licence of assets (including
Intellectual Property Assets)
used in connection with the
Project, are to be paid
pursuant to this Agreement
("THE BLL PROJECT ACCOUNT")
(the Hapoalim Project Account
and the BLL Project Account
shall mean the "PROJECT
ACCOUNTS") and the Borrower
shall be entitled to determine
the allocation as between each
of the Project Accounts of the
funds described in each of (i)
and (ii)(3)-(6) above;
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(b) an account or accounts to be opened
at a branch or subsidiary of Bank
Leumi and/or Bank Hapoalim outside of
Israel into which (if the Borrower so
elects by written notice to the
Banks), any Paid-in Equity or amount
on account of Permitted Subordinated
Debt received by the Borrower from
non-Israeli investors shall be
deposited, provided, for the removal
of doubt, that such account or
accounts are first duly pledged in
favour of the Banks by way of a
first-ranking fixed pledge and
charge, in a manner satisfactory to
the Banks, as security for the
Borrower's obligations under the
Finance Documents (such account or
accounts, "THE FOREIGN PAID-IN EQUITY
ACCOUNT");
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(c) in the event that there shall be a
New Bank (as referred to in
clause 20.1 below), an account to be
opened at Bank Leumi or Bank Hapoalim
for the purposes of payments to and
from such New Bank pursuant to this
Agreement, all as referred to in
clause 20.1 below; and
(d) accounts opened and/or to be opened
at Bank Hapoalim and Bank Leumi in
accordance with clause 1.1.118(e)
below ("THE RESERVE ACCOUNTS");
1.1.20. [INTENTIONALLY DELETED]
1.1.21. [INTENTIONALLY DELETED]
1.1.22. [INTENTIONALLY DELETED]
1.1.23. "CONSENT" - means any approval, consent, permit,
ratification, waiver, licence, exemption,
filing, registration or authorisation
(including any Governmental Authorisation);
1.1.24. [INTENTIONALLY DELETED]
1.1.25. [INTENTIONALLY DELETED]
1.1.26. [INTENTIONALLY DELETED]
1.1.27. [INTENTIONALLY DELETED]
1.1.28. "CONSULTING ENGINEER" - means Ludan Engineering Co. Ltd., who is
engaged by the Borrower to act on behalf of
the Banks and the Borrower as supervising
engineer for the purposes of this
Agreement, as such engineer may, if so
requested by the Banks, be replaced from
time to time by another engineer acceptable
to the Banks and the Borrower, the
Borrower's consent not to be unreasonably
withheld;
- 12 -
1.1.29. [INTENTIONALLY DELETED]
1.1.30. [INTENTIONALLY DELETED]
1.1.31. [INTENTIONALLY DELETED]
1.1.32. "CONTRACTS" - means any agreement, contract, obligation,
promise or undertaking, whether oral or
written, that is legally binding;
1.1.33. "CONTRIBUTION" - means, in relation to a Bank at any time,
that amount of the Total Outstandings at
the time that is owing to such Bank;
1.1.34. [INTENTIONALLY DELETED]
1.1.35. "CURRENCY HEDGING
TRANSACTION" - includes any foreign exchange transaction,
currency swap transaction, cross currency
rate swap transaction, currency option,
collar transaction or other similar
transaction (including any option with
respect thereto and any combination in
respect thereof);
1.1.36. "DEBENTURE" - means the debenture in the form of
SCHEDULE 1.1.36 hereto between the Borrower
and the Banks, pursuant to which, subject
to the terms and conditions thereof, the
Borrower shall grant to the Banks:
(a) a first-ranking floating charge over
all of the Borrower's undertaking,
rights, assets and property
whatsoever and wheresoever located,
both present and future, not
otherwise effectively pledged,
charged or assigned as a
first-ranking fixed pledge and charge;
- 13 -
(b) a first-ranking fixed pledge and
charge over, INTER ALIA, the
following assets, from time to time,
of the Borrower: all immovable
property, all rights of the Borrower
under development agreements and/or
lease agreements with the XXX
relating to immovable property; all
machinery and equipment; all moneys;
all bank accounts (including the
Charged Accounts), including the
investments therein and the debts
represented thereby; accounts
receivable; goodwill; uncalled share
capital; subject to clause 16.15.2,
shares and securities (including all
shares, rights and securities of the
Borrower (with respect to securities
held as of January 18, 2001, to the
extent the pledge thereof is not
expressly prohibited by the terms
pursuant to which Borrower acquired
shares in such companies) in Azalea
Microelectronics Corporation and
Tower USA, Inc., subject to the right
of the Borrower to sell shares in
Azalea Microelectronics Corporation
as contemplated by clause 16.24
below); all Intellectual Property
Assets and other rights of the
Borrower. For the avoidance of
doubt, the pledge referred to in this
paragraph (b) shall not apply to
reserves for employee social benefits
which have been reserved for at third
party funds, which may not be pledged
under law and/or contract;
- 14 -
(c) a first-ranking fixed pledge and
charge (assignment by way of charge)
over all rights and interest of the
Borrower under all Material
Contracts, from time to time,
including under all maintenance
contracts, under all Contracts with
suppliers of equipment and/or
services to be supplied in connection
with the Project or otherwise, as
well as under all ancillary
documentation relating thereto,
including under all performance
bonds, sureties, collateral and other
securities to the obligations of the
counterparties to any of the
aforegoing Material Contracts, as
well as an assignment by way of
charge of all sums to be paid to the
Borrower pursuant to any of the
above, but excluding only:
(i) those Material Contracts in
force as of January 18, 2001
which under the express terms
of the Material Contract as
interpreted by the law
governing such Material
Contract prohibit the pledging
of such Material Contract,
provided that this
paragraph (i) shall not apply
to those Material Contracts
which were required to be
pledged pursuant to clause 4
of the original Facility
Agreement as a condition
precedent to the closing of
the original Facility
Agreement; and
- 15 -
(ii) those Material Contracts to be
entered into after January 18,
2001 which, by the express
terms of the Material Contract
as interpreted by the law
governing such Material
Contract prohibit the pledging
of such Material Contract
despite the best efforts of
the Borrower to have such
agreement provide otherwise,
provided that this
paragraph (ii) shall not apply
to any lease agreement to be
signed between the Borrower
and XXX which shall be pledged
for the benefit of the Banks;
and
(d) a first-ranking fixed pledge and
charge (assignment by way of charge)
over all rights, title and interest
of the Borrower under all Insurance
Policies (including in respect of all
sums payable to the Borrower pursuant
thereto) (other than Insurance
Policies in respect of the liability
of the Borrower to third parties or
of liability of the Borrower for the
damage to property of third parties);
1.1.37. "DEBT SERVICE" - means in relation to each Quarter:
(a) all Interest with respect to
Indebtedness under the Facility and
with respect to Permitted Financial
Indebtedness as referred to in
clauses 1.1.115(b), 1.1.115(c),
1.1.115(d) and 1.1.115(f) below
scheduled to be paid (whether or not
paid, whether or not capitalised and
whether or not accumulated and added
to the principal) by the Group in
respect of the 12 (twelve) month
period commencing on the first day of
the Quarter immediately following
such Quarter ("THE RELEVANT
TWELVE-MONTH PERIOD");
- 16 -
(b) scheduled repayments of principal by
the Borrower under the Facility in
respect of the Relevant Twelve-Month
Period; and
(c) scheduled payments or repayments of
principal by the Group in respect of
Permitted Financial Indebtedness as
referred to in clauses 1.1.115(b),
1.1.115(c) and 1.1.115(d) in respect
of the Relevant Twelve-Month Period,
all of the above amounts as determined and
certified as correct by: (i) the CFO of the
Borrower, if with respect to any of the
first three Quarters of each Fiscal Year;
and (ii) the Auditors, with respect to the
last Quarter of any Fiscal Year (that is,
the Quarter ending December 31st);
1.1.38. [INTENTIONALLY DELETED]
1.1.39. "DEFAULT" - means any Event of Default or any event
which with the giving of notice or lapse of
time, or the making of any determination
hereunder, or the satisfaction of any other
condition (or any combination thereof)
would constitute an Event of Default;
- 17 -
1.1.40. "DISTRIBUTION" - means the declaration or payment of any
dividend or distribution on or in respect
of any shares of any class of capital
stock; the purchase, redemption or other
retirement, or the giving of any financing
for the purchase, redemption or retirement,
of any shares of any class of capital stock
(including redeemable shares) or of
convertible securities, directly or
indirectly through a Subsidiary or
otherwise; the return of equity capital by
any person to its shareholders; or any
other distribution (within the meaning of
such term as defined in Section 1 of the
Companies Law, 1999) on or in respect of
any shares of any class of capital stock;
or any undertaking to do any of the
aforegoing;
1.1.41. [INTENTIONALLY DELETED]
1.1.42. [INTENTIONALLY DELETED]
1.1.43. "EBITDA" - means:
(1) for any Quarter (save for the
purposes of clause 16.29.5 below) and
for any Fiscal Year, the following in
respect of the period of 4 (four)
consecutive Quarters ending on the
last day of such Quarter or Fiscal
Year ("THE FOUR-QUARTER PERIOD"):
(a) the sum of the following, in
respect of such Four-Quarter
Period:
- 18 -
(i) the operating profit of
the Borrower, plus
Employee and Other
Option Costs.
"EMPLOYEE AND OTHER
OPTION COSTS" shall
mean costs and expenses
already deducted in
determining operating
profit, (as determined
in accordance with
GAAP), resulting from
the grant or issuance
to employees, officers,
service providers,
suppliers (including
the Banks) or directors
of the Borrower or its
Subsidiaries, of
options or warrants to
purchase shares of the
Borrower, all as
reflected in the
Accounts and which,
prior to 2006, were not
required to be deducted
in accordance with
GAAP; and
(ii) any amortisation and
depreciation reflected
in the Accounts.
All items referred to above shall be
taken from the Borrower's relevant
consolidated Accounts, being:
(A) in the event that such
Four-Quarter Period
constitutes a Fiscal Year, the
Borrower's consolidated annual
Accounts for such Fiscal Year;
- 19 -
(B) in the event that such
Four-Quarter Period shall not
constitute a Fiscal Year, the
consolidated quarterly
Accounts of the Borrower for
each Quarter falling within
such Four-Quarter Period; and
(2) for any Quarter, for the purposes
only of clause 16.29.5 below, the
items referred to in (1) above in
respect of such Quarter only, as
reflected in the Borrower's
consolidated quarterly Accounts for
such Quarter;
1.1.44. [INTENTIONALLY DELETED]
1.1.45. "ENCUMBRANCE" - means:
(a) any mortgage, charge (whether fixed
or floating), pledge, lien,
assignment, security interest, title
retention or other encumbrance of any
kind securing, or any right
conferring a priority of payment in
respect of, any obligation of any
person;
(b) any arrangement under which moneys or
claims to, or the benefit of, a bank
or other account may be set-off or
made subject to a combination of
accounts so as to effect payments of
sums owed or payable to any person; or
(c) any other type of preferential
arrangement having similar effect;
- 20 -
1.1.46. "ENVIRONMENT" - means the environment, including ambient
air, ground water, surface water, land
(surface and sub-surface strata);
1.1.47. "ENVIRONMENTAL CLAIM" - means any claim, action, cause of action,
administrative proceeding, investigation,
notice or other Proceeding by any person or
Governmental Body alleging potential
liability (including potential liability
for investigative costs, cleanup costs,
governmental response costs, natural
resources damages, property damages,
personal injuries, or penalties) arising
out of, based on or resulting from: (a) the
presence, or Release, of any Materials of
Environmental Concern at any location,
whether or not owned, leased, controlled or
occupied by the Borrower or its
Subsidiaries; or (b) circumstances or
conditions forming the basis of any
violation, or alleged violation, of any
Environmental Law. For the purpose of the
aforegoing, "RELEASE" means any spilling,
leaking, pumping, pouring, emitting,
discharging, injecting, escaping, leaching,
dumping or disposing into the Environment,
including the abandonment or discarding of
barrels, containers and other closed
receptacles containing Materials of
Environmental Concern];
1.1.48. "ENVIRONMENTAL LAWS" - means all laws (including regulations,
ordinances, codes, rules, Orders, decrees,
directives and standards) relating to
pollution or protection of human health or
the Environment (including relating to the
manufacture, processing, distribution, use,
treatment, storage, transport, planning and
building or handling of Materials of
Environmental Concern);
- 21 -
1.1.49. "ENVIRONMENTAL
PERMITS" - means any permits, licences,
authorisations, Consents, approvals and
registrations required pursuant to the
Environmental Laws;
1.1.49A [INTENTIONALLY DELETED]
1.1.50. "EQUITY WAFER PARTNER" - means Sandisk, Alliance, Macronix and
QuickLogic;
1.1.51. "EVENT OF DEFAULT" - means any of the events or circumstances
described in clauses 17.2-17.20B
(inclusive) below;
1.1.52. "EXCESS CASH FLOW" - for any Fiscal Year (or Quarter under
clause 7.9.2(c) below only), means the cash
flow from operating activities for such
Fiscal Year, or Quarter as the case may be,
as reflected in the Borrower's Accounts for
such Fiscal Year, or Quarter, as the case
may be, determined in accordance with GAAP
and expressed in US Dollars;
1.1.53. "EXISTING
ENCUMBRANCE" - means that floating charge, ranked
subordinate to the charge under the
Debenture, in favour of the State of Israel
and securing Grants made by the Investment
Centre in respect of Fab 1, a copy of which
is attached hereto as SCHEDULE 1.1.53;
1.1.54. "EXISTING XXX LEASES" - means the long-term lease agreements
between the Borrower and the XXX: (a) dated
September 10, 1990 (the rights under which
were assigned to the Borrower on
February 28, 1992) with regard to the land
on which Fab 1 is situated (being parts of
plots 19-27 (inclusive), 32-35 (inclusive)
and 63 in Block 17453, Xxxxxx Haemek), the
area of which is approximately 54,766
square meters; and (b) dated June 24, 2003
with regard to the land on which Fab 2 is
situated (being certain parts of
plots 19-35 (inclusive) and plot 63, all in
Block 17453 not already included in the
lease described in paragraph (a) above and
parts of plot 12 of Block 17454, all in
Xxxxxx Haemek, the area of which is
approximately 27,037 square metres;
- 22 -
1.1.55. "FAB 1" - means the Borrower's Fab facility which was
already operating as at January 18, 2001,
located in Xxxxxx Haemek;
1.1.56. "FAB 2" - means the Borrower's Fab facility which
began operating in 2003, located in Xxxxxx
Haemek;
1.1.57. [INTENTIONALLY DELETED]
1.1.58. "FACILITY" - means the credit facility which was granted
to the Borrower by the Banks pursuant to
this Agreement;
1.1.59. [INTENTIONALLY DELETED]
1.1.60. "FINAL MATURITY DATE" - means June 30, 2012;
1.1.61. "FINANCE DOCUMENTS" - means this Agreement, the Debenture, any
other Security Documents, any L/Cs (as
defined in clause 1.1.115(j) below) issued
by any Bank on account of the Borrower, any
other agreement between the Borrower and
any Bank in respect of any other Permitted
Financial Indebtedness, if any, made
available by such Bank to the Borrower and
any other agreement or document executed
pursuant to any of the aforegoing to which
the Borrower is a party, and designated by
the Banks as a Finance Document;
- 23 -
1.1.62. "FINANCIAL
INDEBTEDNESS" - means any Indebtedness in respect of or
pursuant to:
(a) moneys borrowed;
(b) any amount raised by acceptance under
any credit facility;
(c) any amount raised pursuant to any
note, purchase facility or the issue
of bonds, notes, debentures, bills,
loan stock or any similar instrument
(including any debt security
convertible, but not at the relevant
time converted, into share capital)
having the commercial effect of
borrowing (including, moneys raised
by the sale of invoices, bills or
notes or other financial assets on
terms that recourse may be had to the
vendor in the event of non-payment of
such invoices, bills or financial
assets when due);
(d) the amount of any liability in
respect of any lease contract
(including any sale and lease back,
sale and repurchase and similar
agreements and instruments) which
would, in accordance with GAAP, be
treated as a financial or capital
lease;
(e) receivables sold or discounted;
(f) any amount raised under any other
transaction having the commercial
effect of borrowing (other than
transactions specifically referred to
in the other paragraphs of this
clause 1.1.62);
- 24 -
(g) the acquisition cost of assets or
services to the extent payable on
deferred payment terms;
(h) moneys received in consideration for
the supply of goods and/or services
to the extent received before the due
date for such supply where the
receipt as aforesaid is arranged
primarily as a method of raising
finance;
(i) any Hedging Transaction or any other
derivative transaction entered into
in connection with protection against
or benefit from fluctuation in any
rate or price;
(j) any counter-indemnity obligation in
respect of a guarantee, indemnity,
bond, standby or documentary letter
of credit or any other instrument
issued by a bank or financial
institution;
(k) the amount of any liability in
respect of any guarantee, indemnity
or other legally binding instrument
to assure payment of, or against loss
in respect of non-payment of, any of
the items referred to in
paragraphs (a)-(j) above;
1.1.63. "FISCAL YEAR" - means a calendar year;
1.1.64. [INTENTIONALLY DELETED]
1.1.65. "GAAP" - means Israeli generally accepted accounting
principles, in force from time to time;
- 25 -
1.1.66. "GOVERNMENTAL
AUTHORISATION" - means any approval, exemption,
notification, licence, permit, waiver,
other authorisation issued, granted, given
or otherwise made available by or under the
authority of any Governmental Body or
pursuant to any law;
1.1.67. "GOVERNMENTAL BODY" - means any Israeli (and, for purposes of
clauses 1.1.109, 1.1.119, 9.46, 16.1.3(ii),
25.4 and 32.3 only, foreign) governmental,
national, state, local, municipal or other
government, governmental or
quasi-governmental authority of any nature
(including any governmental agency, branch,
ministry, department, official or entity
and any court or other tribunal), or body
exercising or entitled to exercise any
administrative, executive, judicial,
legislative, police, regulatory or taxing
authority or power of any nature;
1.1.68. "GRANTS" - means all pending and outstanding grants
from each Governmental Body of the State of
Israel, or from any other Governmental
Body, to the Borrower or any Subsidiary;
1.1.69. "GROUP" - means the Borrower, any Subsidiary and any
other entity the accounts of which are in
accordance with GAAP to be consolidated
with the consolidated Accounts of the
Borrower;
1.1.70. "HEDGING TRANSACTION" - means any Interest Rate Hedging Transaction
and any Currency Hedging Transaction;
1.1.71. "XXX" - means the Israel Lands Authority;
1.1.72. "INDEBTEDNESS" - means any obligation (whether incurred as
principal or surety or guarantor) for the
payment or repayment of money, whether
actual or contingent;
- 26 -
1.1.73. [INTENTIONALLY DELETED]
1.1.74. [INTENTIONALLY DELETED]
1.1.75. "INSURANCE ADVISER" - means M.M.I. Risk Management Consultants
Ltd., who is retained by the Borrower as
insurance adviser to the Banks and the
Borrower for the purposes of this
Agreement, as such person may, on the
request of the Banks, be replaced by
another firm acceptable to the Banks and
the Borrower, the Borrower's consent not to
be unreasonably withheld;
1.1.76. "INSURANCE POLICIES" - means all insurance policies to be
maintained or effected, from time to time,
by the Borrower in accordance with
clause 16.10 below;
1.1.77. "INSURANCE REPORT" - means the insurance report dated June 2006
prepared by the Insurance Adviser and
addressed to the Banks and the Borrower,
including all revisions thereto in the form
to be prepared by the Insurance Adviser and
addressed to the Banks and the Borrower;
1.1.78. [INTENTIONALLY DELETED]
1.1.79. "INTELLECTUAL
PROPERTY ASSETS" - means all such rights set forth in
paragraphs (a)-(e) below and all know-how,
trade secrets, confidential information,
customer lists, software, technical
information, data, process technology,
plans, drawings and blue prints
(collectively, "TRADE SECRETS"); owned,
used or licensed by the Borrower or its
Subsidiaries as licensee or licensor which
are, in each case, used in or are necessary
for the conduct of the Business as now
conducted and as approved by their
respective Boards of Directors to be
conducted, including for the design,
construction and operation of Fab 2 in
accordance with the Business Plan.
SCHEDULE 1.1.79 hereto sets forth a list of
the Intellectual Property Assets, other
than Trade Secrets and unregistered
Copyrights:
- 27 -
(a) trade names, registered and
unregistered trademarks, service
marks and applications (collectively,
"MARKS");
(b) all patents, patent applications and
inventions and discoveries that may
be patentable (collectively,
"PATENTS");
(c) all copyrights, registered and
unregistered in both published works
and unpublished works (collectively,
"COPYRIGHTS");
(d) all domain names; and
(e) all mask works, including rights in
the topography of integrated circuits;
1.1.80. "INTERCREDITOR
AGREEMENT" - means the intercreditor agreement entered
into between the Banks;
1.1.81. "INTEREST" - means:
(a) interest and amounts in the nature of
interest (including the interest
element of finance leases, linkage
differentials with respect to such
interest and any similar payment in
respect of indexation with respect to
such interest);
- 28 -
(b) prepayment penalties or premiums
incurred in repaying or prepaying any
Financial Indebtedness (including,
for the avoidance of doubt, amounts
payable pursuant to clause 19 below);
and
(c) discount fees and acceptance fees
payable or deducted in respect of any
Financial Indebtedness (including all
commissions payable in connection
with any letter of credit);
1.1.82. "INTEREST
DETERMINATION DATE" - in relation to any Interest Period, means
the Business Day falling 2 (two) Business
Days prior to the first day of such
Interest Period;
1.1.83. "INTEREST PAYMENT
DATE" - means the last Business Day of each Quarter;
1.1.83A. [INTENTIONALLY DELETED]
1.1.83B. [INTENTIONALLY DELETED]
1.1.84. "INTEREST PERIODS" - means consecutive periods of 1 (one)
Quarter; provided that, notwithstanding the
aforegoing:
(a) if any Interest Period would
otherwise end on a day which is not a
Business Day, such Interest Period
shall end on the immediately
preceding Business Day;
(b) each Interest Period (other than the
first Interest Period) shall commence
on the expiry of the Interest Period
preceding such Interest Period and,
for the removal of doubt, shall,
subject to (a) above, end on the last
day of the Quarter following such
preceding Interest Period;
- 29 -
(c) [INTENTIONALLY DELETED]
(d) no Interest Period may extend later
than the Final Maturity Date; and
(e) with respect to Unpaid Sums,
"INTEREST PERIOD" shall bear the
meaning assigned to such term in
clause 18.1 below;
1.1.85. "INTEREST RATE
HEDGING TRANSACTION" - includes any rate swap transaction, basis
swap, forward rate transaction, commodity
swap, commodity option, equity or equity
index swap, equity or equity index option,
Interest rate option, knock-out
transaction, cap transaction, floor
transaction, collar transaction or other
similar transaction (including any option
with respect thereto and any combination in
respect thereof);
1.1.86. "INVESTMENT CENTRE" - means the Investment Centre established
under the Encouragement of Capital
Investments Law, 1959;
1.1.87. "INVESTMENT CENTRE
FAB 2 GRANTS" - means those grants made and to be made
under the Encouragement of Capital
Investments Law, 1959, in respect of Fab 2,
as referred to in clause 16.27.3.3 below;
1.1.88. [INTENTIONALLY DELETED]
1.1.89. [INTENTIONALLY DELETED]
1.1.90. "KNOWLEDGE" - the Borrower will be deemed to have
"Knowledge" of a particular fact or other
matter if any individual who is serving as
a Named Director and Officer has, or at any
time had, knowledge of such fact or matter;
- 30 -
1.1.91. [INTENTIONALLY DELETED]
1.1.92. [INTENTIONALLY DELETED]
1.1.93. "LEAD INVESTORS" - means TIC, Sandisk, Alliance and Macronix;
1.1.94. "LIBOR" - means, with respect to each Interest
Period, the rate per annum rounded upward,
if necessary, to the nearest whole multiple
of (1)/16% (one-sixteenth of a percent) for
Euro-Dollar deposits for a period of 3
(three) months (or if such Interest Period
is less than a Quarter, then for the number
of weeks of such Interest Period,
rounded-up for part of a week), offered in
the London Interbank market, as quoted at
or about 11:00 a.m. (London time) on the
Interest Determination Date for such
Interest Period on the composite display
designated as LIBOR 01 Frasett (in the case
of Euro-Dollars) to subscribers of the
REUTERS service ("REUTERS") or, in the
absence of such page or pages, or if
Reuters shall, for any reason whatsoever,
amend, change or otherwise alter the data
basis or the reference banks used by it on
the Amendment Closing Date, for quotations
under said composite display, the rate of
Interest as quoted at or about 11:00 a.m.
London time on the relevant Interest
Determination Date on such other page or
pages of Reuters as shall be determined by
the Banks for a period of 3 (three) months
or, as the case may be, that number of
weeks comprising such Interest Period,
rounded-up, as aforesaid (rounded upward,
if necessary, to the nearest whole multiple
of (1)/16% (one-sixteenth of a percent)).
In the event that the Reuters service
ceases to be available, the Banks may
specify another service (and the relevant
page thereof) displaying the appropriate
LIBOR rate;
- 31 -
1.1.95. "LLCR" - means the Life of Loan Coverage Ratio,
being, for any Quarter, the ratio of the
Net Cash Flow in respect of such Quarter to
the Total Debt for such Quarter;
1.1.96. "LOANS" - means, at any time, the loans which were
granted under this Agreement or, as the
case may be, the aggregate principal amount
of any such loan outstanding at such time,
it being recorded that, as at the Amendment
Closing Date, the aggregate principal
amount (excluding, for the removal of
doubt, accrued Interest and any other
amounts owing under the Finance Documents)
of the loans is US $368,693,001 (three
hundred and sixty-eight million, six
hundred and ninety-three thousand and one
United States Dollars), of which
US $184,348,255 (one hundred and eighty-four
million, three hundred and forty-eight
thousand, two hundred and fifty-five United
States Dollars) is owed to Bank Hapoalim
and US $184,344,746 (one hundred and
eighty-four million, three hundred and
forty-four thousand, seven hundred and
forty-six United States Dollars) is owed to
Bank Leumi; "LOANS" shall be construed to
mean each of them respectively;
1.1.97. [INTENTIONALLY DELETED]
1.1.98. "MACRONIX" - means Macronix International Co. Ltd., a
company incorporated under the laws of
Taiwan;
- 32 -
1.1.99. [INTENTIONALLY DELETED]
1.1.100. "MATERIAL ADVERSE
EFFECT" - means any effect which is or is likely to
be materially adverse to: (a) the business
or financial condition of the Borrower;
(b) the successful implementation of the
Project in accordance with the Business
Plan; or (c) the ability of the Borrower to
perform its obligations under any of the
Finance Documents;
1.1.101. "MATERIAL CONTRACTS" - means all of the Contracts currently in
existence as specified in SCHEDULE 1.1.101
hereto or types of Contracts to be entered
into in the future, as specified in
Schedule 1.1.101 hereto;
1.1.102. "MATERIALS OF
ENVIRONMENTAL CONCERN" - means any hazardous chemicals, pollutants,
contaminants, hazardous wastes, radioactive
or electromagnetic waste, toxic substances,
hazardous substances (as "hazardous
substances" is defined under applicable
Environmental Laws) or any other substance
defined or regulated pursuant to
Environmental Laws, including fluoride,
asbestos, PCBs, petroleum or petroleum
derived substances;
1.1.103. [INTENTIONALLY DELETED]
1.1.103A. [INTENTIONALLY DELETED]
1.1.103B. [INTENTIONALLY DELETED]
1.1.103C. [INTENTIONALLY DELETED]
1.1.104. [INTENTIONALLY DELETED]
1.1.105. "NAMED DIRECTORS
AND OFFICERS" - means those persons from time to time
holding the offices in the Borrower listed
in SCHEDULE 1.1.105 hereto;
- 33 -
1.1.106. "NET CASH FLOW" - means, for any Quarter, the net present
value as at the last Business Day of such
Quarter of the forecasted net cash flow
from operations of the Borrower for the
period commencing on the last Business Day
of such Quarter and ending two and a half
years after the Final Maturity Date, as
specified in SCHEDULE 1.1.106 hereto; in
calculating the net present value as
aforesaid, the applicable discount rate
shall be LIBOR for US Dollars for the
aforesaid period, plus 1.1% (one point one
percent) per annum;
1.1.107. "NET PROCEEDS" - means the aggregate consideration received
by the Borrower in respect of a sale,
transfer, loan or other disposal
("disposal") of assets (including shares) as
referred to in clause 8.1.5 below by the
Borrower to any third party after deduction
of:
(a) all amounts paid or provided for or
on account of Taxes applicable to, or
to any gain resulting from, the
disposal as aforesaid or the
discharge of any liability secured on
the relevant assets (including VAT);
and
(b) all costs, fees, expenses and the
like properly incurred by the
Borrower in arranging and effecting
such disposal;
1.1.107A. [INTENTIONALLY DELETED]
1.1.107B. [INTENTIONALLY DELETED]
1.1.107C. [INTENTIONALLY DELETED]
- 34 -
1.1.108. "OCS" - means the Office of the Chief Scientist in
the Ministry of Industry, Commerce and
Labour;
1.1.109. "ORDER" - means any award, decision, injunction,
judgment, order, ruling, subpoena or
verdict entered, issued, made or rendered
by any court, administrative agency or
other Governmental Body or by any
arbitrator;
1.1.110. "ORDINARY COURSE
OF BUSINESS" - an action taken by a person will be deemed
to have been taken in the "Ordinary Course
of Business" only if:
(a) such action is consistent with the
past practices of such person and is
taken in the ordinary course of the
normal day-to-day operations of such
person; and
(b) such action is similar in nature and
magnitude to activities customarily
taken in the ordinary course of the
normal day-to-day operations of other
persons that are in the same line of
business as such person;
1.1.111. "ORGANISATIONAL
DOCUMENTS" - means the certificate of incorporation,
Memorandum of Association, Articles of
Association, by-laws or other documents of
incorporation of any person being a
corporation;
1.1.111A. "OUTSIDE INVESTMENT
UNDERTAKING" - shall bear the meaning assigned to such
term in clause 16.35.1 below;
- 35 -
1.1.112. "PAID-IN EQUITY" - means the aggregate amount paid-up in cash
in respect of irredeemable share capital of
the Borrower or in respect of the sale of
warrants by the Borrower where the purchase
price of such warrants is registered as
owners' equity and is non-refundable and
the purchaser or holder of such warrants
shall not be entitled to claim refund of
such purchase price (or any part thereof)
under any circumstances whatsoever. For
the removal of doubt: (i) for the purposes
of this Agreement, any credit, prepayment
or other entitlement granted to an Equity
Wafer Partner or other person in respect of
any amount paid-up in cash in respect of
the irredeemable share capital of the
Borrower or in respect of the sale of any
warrant pursuant to agreements with such
Equity Wafer Partner or other person shall
not be regarded as Paid-in Equity and shall
be deducted from the amount of such equity;
(ii) the subsequent application of the debt
of the Borrower represented by such credit,
prepayment or other entitlement on account
of the purchase price for shares of the
Borrower shall be considered Paid-in Equity
at the time of such application; and
(iii) the net amount credited in the books
of the Borrower as irredeemable share
capital as a consequence of the conversion
of the convertible debentures which may be
issued by the Borrower shall be considered
Paid-in Equity at the time of such
conversion;
1.1.113. [INTENTIONALLY DELETED]
1.1.114. "PERMITTED
ENCUMBRANCES" - means:
(a) any Encumbrance constituted or
evidenced by the Security Documents;
- 36 -
(b) the Existing Encumbrance;
(c) a second-ranking floating charge in
favour of the State of Israel
(Investment Centre) or in favour of a
bank through which the Investment
Centre Fab 2 Grant is made, such
floating charge securing obligations
in respect of such Investment Centre
Fab 2 Grants as aforesaid and to be
subordinated to the Encumbrances
referred to in paragraph (a) above,
such floating charge to be in the
customary, standard form required by
the Investment Centre; and
(d) those first-ranking fixed charges
over certain equipment and other
assets granted by the Borrower in
favour of each of:
(i) Matsushita Electronic
Industrial Co. Ltd. ("MEI"),
pursuant to a pledge dated
October 31, 2002, entered into
in connection with the Joint
Development
and Cross-License Agreement
between the Borrower and MEI,
dated May 28, 2002 (as such
charge remains in effect
pursuant to that Termination
Agreement between the Borrower
and MEI entered into as of
April 5, 2005);
(ii) Siliconix Technology C.V.,
pursuant to a pledge dated
August 5, 2004, entered into
in connection with that
Foundry Agreement dated
May 12, 2004 by and among the
Borrower, Siliconix
Incorporated, and Siliconix
Technology C.V.; and
- 37 -
(iii) Sandisk, pursuant to that
consent dated August 7, 2006
by and between the Borrower
and the Banks,
full details of the equipment and
other assets respectively pledged
under each such pledge being set out
in SCHEDULE 1.1.114 hereto;
1.1.115. "PERMITTED FINANCIAL
INDEBTEDNESS" - means:
(a) Financial Indebtedness arising
pursuant to this Agreement;
(b) Permitted Subordinated Debt;
(c) Financial Indebtedness in respect of
a credit facility obtained from a
bank or other financial institution
to be applied with respect to Fab 1
and which, together with all other
Financial Indebtedness of the Group
(other than the Borrower), other than
those matters described in
SCHEDULE 1.1.115(C) hereto shall at
no time exceed, in aggregate,
US $22,500,000 (twenty-two million
five hundred thousand United States
Dollars) or its equivalent. For the
removal of doubt, the Banks shall be
under no obligation whatsoever to
provide such financing or to continue
to provide such financing if they
shall at any time do so;
- 38 -
(d) Financial Indebtedness in respect of
operating leases of up to
US $10,000,000 (ten million United
States Dollars) in aggregate relating
to Fab 2. In addition, such
additional Financial Indebtedness in
respect of operating leases relating
to the purchase of equipment for use
in Fab 2 to the extent the Banks
shall (on a case-by-case basis), give
their prior consent to such operating
leases (the Banks, for the removal of
doubt, being entitled to withhold
such consent in their sole discretion
or, if they shall give same, being
entitled to impose such conditions in
respect thereof as they shall see
fit);
(e) Financial Indebtedness comprising
guarantees or other contingent
Indebtedness in respect of any
obligations of a person, other than
the Borrower, incurred in the
Ordinary Course of Business in an
aggregate amount not exceeding at any
time US $5,000,000 (five million
United States Dollars) or its
equivalent. For the removal of doubt,
for the purposes of this
clause 1.1.115(e), "guarantees" shall
not include "independent" guarantees
by the Borrower for its own
obligations;
- 39 -
(f) the acquisition cost of assets or
services to the extent payable on
deferred payment terms, provided that
the aggregate Interest actually paid
by the Borrower to the supplier or
provider of such assets or services
in respect of all such assets or
services shall not exceed
US $2,000,000 (two million United
States Dollars) in any calendar year;
(g) moneys received in consideration for
the supply of goods and/or services
to the extent received before the due
date for such supply provided to the
extent such sums bear interest, they
shall not exceed the borrowing costs
of the Loan made hereunder;
(h) receivables sold or discounted;
provided that: (i) the maximum
recourse to the Borrower under each
invoice representing receivables sold
or discounted shall not exceed 15%
(fifteen percent) of the amount of
such invoice; and (ii) the
consideration for such sale or
discounting shall be received on the
date of such sale or discounting in
cash;
(i) Indebtedness under Hedging
Transactions entered into by the
Borrower (if any), in each case, with
the Banks, without derogating from
clause 16.21 below;
(j) Indebtedness under standby or
documentary letters of credit or bank
guarantees (collectively, "L/CS")
issued for the account of the
Borrower, provided that the aggregate
Indebtedness in respect of all such
L/Cs shall at no time exceed
US $10,000,000 (ten million United
States Dollars). For the removal of
doubt, no Bank shall be obligated to
issue any L/C for the account of the
Borrower; and
- 40 -
(k) Financial Indebtedness otherwise as
permitted pursuant to
paragraphs (a)-(j) (inclusive) above
created or subsisting as set forth in
SCHEDULE 1.1.115(K) hereto or set
forth on SCHEDULE 1.1.115(C) hereto or
otherwise with the prior written
consent of the Banks;
1.1.116. [INTENTIONALLY DELETED]
1.1.116A. [INTENTIONALLY DELETED]
1.1.117. [INTENTIONALLY DELETED]
1.1.118. "PERMITTED
SUBORDINATED DEBT" - means:
Indebtedness of the Borrower in respect of
convertible debentures (bonds) issued by
the Borrower for the purposes only of
additional financing for Fab 2, subject to
all of the following conditions:
(a) the principal amount of Indebtedness
in respect of such convertible
debentures shall at no time exceed
US $150,000,000 (one hundred and
fifty million United States Dollars)
in aggregate; provided that the net
amount that is actually received by
the Borrower in respect of such
convertible debentures (after
deducting all discounts, costs,
commissions, fees, expenses and other
issuance costs) shall be no less than
85% (eighty-five percent) of the
principal amount of the convertible
debentures;
- 41 -
(b) the Indebtedness in respect of such
convertible debentures is
subordinated to the rights of the
Banks under this Agreement and under
all other Finance Documents in all
respects, including with respect to
payments of principal and Interest
and all other amounts payable to the
Banks under this Agreement and under
all other Finance Documents and shall
not be secured by any collateral
whatsoever and, save in accordance
with the provisions of this
clause 1.1.118 below, no amount,
whether in respect of principal,
Interest or any other amount, shall
be payable by the Borrower on account
of such Indebtedness, prior to the
date on which: (i) all amounts
payable by the Borrower under the
Finance Documents shall have been
paid in full; and (ii) no Bank shall
be under any obligation under any
Finance Document to provide any
Financial Indebtedness to the
Borrower;
(c) the terms and conditions (including
financial covenants, if any) of such
convertible debentures and of all
instruments governing such
convertible debentures (other than
those terms expressly set out in
paragraphs (d)-(i) below) shall be
subject to the prior written approval
of the Banks, provided that the
approval of the Banks shall not be
required with respect to those
convertible debentures that meet the
conditions set forth in paragraph
(g)(ii) and paragraph (g)(iii) below;
- 42 -
(d) the terms and conditions of such
convertible debentures (and all
instruments governing such
convertible debentures) shall:
(i) provide that an event of
default under such convertible
debentures shall occur only in
the event that:
(1) there shall occur in
respect of the Borrower
an Event of Default as
referred to in
clause 17.8 below; or
(2) the Borrower shall fail
to pay an amount of
principal or Interest
in respect of the
convertible debentures
within 14 (fourteen)
Business Days of due
date therefor; or
(3) such other events of
default, if any, as the
Banks may consent to,
in their sole
discretion;
- 43 -
provided that, notwithstanding
the aforegoing, the holders of
the convertible debentures and
anybody acting on their behalf
(including any trustee) shall
not be entitled to take any
action against the Borrower in
the event of any event of
default as aforesaid, unless
the Borrower shall not have
remedied such event of default
within a period of not less
than 39 (thirty-nine) days
after the date of receipt by
the Borrower of a demand to
cure such default, a copy of
which demand shall have been
served on the Banks on the
same day as service of same on
the Borrower as aforesaid; and
(ii) provide that, in the event of
any event of default under the
convertible debentures, no
amount of whatsoever nature
shall be payable by the
Borrower in respect of the
convertible debentures
(whether in respect of
principal, Interest or any
other amount), until all
amounts owing by the Borrower
under the Finance Documents
shall have been paid in full;
- 44 -
(e) the Borrower shall procure that, at
all times, an amount equal to 20%
(twenty percent) of the outstanding
principal amount of all convertible
debentures, or, with respect to
convertible debentures listed in
Part B of Schedule 15.13), an amount
equal to 20% (twenty percent) of the
outstanding principal amount (net of
discounts) of such convertible
debentures (as may be increased from
time to time through the issuance of
additional convertible debentures and
as may be decreased from time to time
through repayment by the Borrower of
outstanding principal of some or all
of the convertible debentures) is
deposited in the Reserve Accounts
(50% (fifty percent) in each Reserve
Account) which accounts are duly
pledged in favour of the Banks, by
way of a first-ranking fixed charge
under the Debenture, as security for
the payment of all amounts by the
Borrower under the Finance Documents;
provided that, if the amounts so
deposited in the Reserve Accounts as
aforesaid shall exceed the amount of
the aggregate Interest payable in
respect of all such convertible
debentures during the 2 (two) year
period following December 28, 2005,
then the amount of such excess over
the aggregate Interest for such 2
(two) year period as aforesaid shall
be released; provided that, subject
to there at all times being on
deposit in the Reserve Accounts, duly
pledged, as aforesaid, an amount
equal at least to the sum of 20%
(twenty percent) of the outstanding
principal of the convertible
debentures (other than the
convertible debentures, listed in
Part B of Schedule 15.13) and 20%
(twenty percent) of the outstanding
principal (net of discounts) of the
convertible debentures, listed in
Part B of Schedule 15.13, the
following amounts may be released in
the aggregate from the Reserve
Accounts: (1) on the dates for
payment of Interest in respect of the
convertible debentures, an amount
equal to the aggregate Interest
payable on such date in respect of
the convertible debentures shall be
released from the Reserve Accounts
and applied in respect of such
Interest only, and (2) an amount
equal to amounts converted into
Paid-in Equity upon conversion of the
convertible debentures;
- 45 -
(f) the rate of Interest to be paid on
such convertible debentures shall be
no higher than the rate of Interest
payable as at the date of issue of
the convertible debentures on bonds
issued by the State of Israel, which
bonds are denominated in the same
currency and have the same linkage
conditions (if any) as the
convertible debentures and the period
of which State of Israel bonds is the
same as, or closest to, the average
duration (taking into account
repayments) of the convertible
debentures;
- 46 -
(g) no amount shall be payable on account
of the principal of any convertible
debentures at any time on or prior to
the Final Maturity Date, save only
for: (i) amounts not to exceed the
amounts of principal repayable on
account of those convertible
debentures existing as at the
Amendment Closing Date (which amounts
and the times for repayment of which
are set out in Schedule 15.13
hereto); (ii) an amount in respect of
convertible debentures issued after
the Amendment Closing Date and to be
subject to identical (save for the
later issuance of such convertible
debentures) terms and conditions to
those applicable to the convertible
debentures issued by the Borrower
pursuant to the prospectus dated
June 21, 2006 (as set out in Part A
of Schedule 15.13 hereto), which
shall not exceed NIS 39,000,000
(thirty-nine million New Israel
Sheqels) linked to the Israeli
consumer price index which may be
issued upon the exercise of options
to purchase convertible debentures,
which options were issued by the
Borrower pursuant to the prospectus
dated June 21, 2006, as set out in
Part A of Schedule 15.13 hereto, and
which shall be paid not earlier than
December 2011; and (iii) an amount
(principal, interest and all other
amounts) in respect of convertible
debentures which may be issued by the
Borrower (in its discretion) after
the Amendment Closing Date and to be
subject to identical (save for
adjustments to reflect the later
issuance of such convertible
debentures) terms and conditions to
those applicable to the convertible
debentures issued by the Borrower
pursuant to the prospectus dated
June 21, 2006 not to exceed
US $40,000,000 (forty million United
States Dollars) and which, shall be
paid not earlier than December 2011;
- 47 -
(h) any variation of the terms of the
Finance Documents, including increase
(if any) of the amount of the
Facility or the provision of any
other credit facilities by the Banks
or any of them to the Borrower shall
not require the consent of the
holders of the convertible debentures
or anyone acting on their behalf, nor
shall it constitute a default under
the terms of the convertible
debentures;
(i) no payment of principal or Interest
shall be made in respect of the
convertible debentures unless, as at
the date of any such payment: (i) all
amounts due and payable under the
Finance Documents as of such date
have been paid in full; and (ii) no
Default exists and is continuing
under any of the Finance Documents;
(j) with respect to those convertible
debentures referred to in
paragraph (g)(i)-(iii) above
(including convertible debentures
existing as at the Amendment Closing
Date) ("THE EQUITY CONVERTIBLE
DEBENTURES"), the provisions of this
clause 1.1.118 above (other than
paragraph (i) above) shall apply in
all respects, subject only to the
express provisions set out in this
paragraph (j) below:
- 48 -
(i) each payment of Interest in
respect of the Equity
Convertible Debentures (to the
extent permitted under this
clause 1.1.118) may be made
only on 1 (one) Business Day
falling in the month
immediately following a day
which is a day for payment of
Interest under this Agreement
and each payment of principal
in respect of the Equity
Convertible Debentures (to the
extent permitted under this
clause 1.1.118) shall be made
only on 1 (one) Business Day
falling in the month
immediately following a day
which is a day for repayment
of principal under this
Agreement (any date for
payment of Interest or for
repayment of principal to the
Banks under this Agreement,
hereinafter "A BANK PAYMENT
DATE");
- 49 -
(ii) in the event of the existence
on any Bank Payment Date ("A
DEFAULT BANK PAYMENT DATE") of
a Default under any of the
Finance Documents, then no
payment of principal or
Interest shall be made in
respect of the Equity
Convertible Debentures and the
holders of the Equity
Convertible Debentures and
anybody acting on their behalf
(including any trustee) shall
not be entitled to take any
action against the Borrower in
the event of any non-payment
as aforesaid, unless such
non-payment shall continue for
a period of more than 6 (six)
months commencing from the
Bank Payment Date falling
immediately prior to the date
of the first scheduled payment
in respect of the Equity
Convertible Debentures due
immediately after the Default
Bank Payment Date; provided
that:
(1) in the event that during
any such 6 (six) month period
("THE RELEVANT SIX-MONTH
PERIOD"), the Borrower shall
make any payment to the Banks
on account of Interest or
principal under the Finance
Documents, then the Borrower
shall be entitled on or after
the date of such payment to
the Banks ("THE PAYMENT DATE")
to make a payment on account
of Interest or principal (as
the case may be) then
outstanding in respect of the
Equity Convertible Debentures,
such payment to comprise the
same percentage of the
Interest or principal (as the
case may be) due and payable
under the Equity Convertible
Debentures as of the date
scheduled for payment on the
Equity Convertible Debentures
which falls during the
Relevant Six-Month Period as
the payment to the Banks as
aforesaid comprises of the
Interest or principal (as the
case may be) due and payable
under the Finance Documents as
of the Payment Date; and
- 50 -
(2) in the event that the
Borrower and the Banks shall
during the Relevant Six-Month
Period reach an agreement (the
Banks being under no
obligation whatsoever to
negotiate or reach any such
agreement):
(A) regarding a
rescheduling of
payments by the
Borrower to the Banks
under the Finance
Documents, such
rescheduling (whether
of principal or
Interest) shall apply
pro rata also to
payments of principal
and/or Interest, as the
- 51 -
case may be, in respect
of the Equity
Convertible Debentures,
MUTATIS MUTANDIS, and
the holders of the
Equity Convertible
Debentures shall be
bound by such
rescheduling agreement;
provided that, any such
rescheduling agreement
shall apply only to
payments (of principal
and Interest) scheduled
to be made under the
Equity Convertible
Debentures and under
this Agreement during
the period of 12
(twelve) months from
the Default Bank
Payment Date and shall
postpone each such
scheduled payment under
the Equity Convertible
Debentures to a date
falling not more than
12 (twelve) months
after the scheduled
date for such payment
pursuant to the terms
of the Equity
- 52 -
Convertible Debentures
(all payments, whether
of Interest or
principal, in respect
of the Equity
Convertible Debentures
rescheduled under any
such rescheduling
agreement, hereinafter
"THE RESCHEDULED ECD
PAYMENTS" and all
payments, whether of
Interest or principal
under this Agreement,
rescheduled under such
rescheduling agreement,
hereinafter "THE
RESCHEDULED FACILITY
PAYMENTS"). Pursuant
to any such
rescheduling agreement,
the Borrower shall be
entitled, on any date
for payment of any
Rescheduled ECD Payment
("RESCHEDULED ECD
PAYMENT DATE"), to pay,
in respect of the
Rescheduled ECD
Payments, an aggregate
amount (of principal
and/or Interest) which,
together with the
aggregate of all
payments (of principal
and/or Interest)
actually made prior to
such Rescheduled ECD
Payment Date in respect
of the Rescheduled ECD
Payments under such
rescheduling agreement,
comprises the same
percentage of the
aggregate Rescheduled
- 53 -
ECD Payments
rescheduled under such
rescheduling agreement
as the aggregate
Rescheduled Facility
Payments under such
rescheduling agreement
actually made prior to
such Rescheduled ECD
Payment Date comprise
of the aggregate
Rescheduled Facility
Payments rescheduled
under such rescheduling
agreement; or
(B) pursuant to which, to
the extent relating to
the Equity Convertible
Debentures, payments of
principal and Interest
on account of the
Equity Convertible
Debentures shall, with
effect from the
termination of the
Relevant Six-Month
Period be made to the
holders of the Equity
Convertible Debentures
in accordance with the
original schedule under
the terms of the Equity
Convertible Debentures,
provided that amounts
not paid during the
Relevant Six-Month
Period, or prior
thereto, as the case
may be, shall be
postponed to be paid
pro rata to those
payments not made to
the Banks during the
Relevant Six-Month
Period or prior
thereto, MUTATIS
MUTANDIS, in accordance
with the provisions of
paragraph (ii)(2)(A) of
this clause 1.1.118(j)
above and the holders
of the Equity
Convertible Debentures
shall be bound by such
an agreement.
- 54 -
For the removal of doubt, in
the event of the existence of
a Default under any of the
Finance Documents during or
after any Rescheduling Period
(including non-payment on due
date of any amount of
principal or Interest, whether
pursuant to any rescheduling
agreement or otherwise), the
provisions of this
paragraph (ii) shall again
apply, MUTATIS MUTANDIS (all
without derogating from
paragraph (iii) below);
- 55 -
(iii) for the removal of doubt,
notwithstanding anything to
the contrary in this
paragraph (j):
(1) in the event that:
(A) the holders of the
Equity Convertible
Debentures (or anybody
acting on their behalf,
including the trustee)
shall institute any
Proceedings against the
Borrower, save only for
Excluded Proceedings.
"EXCLUDED PROCEEDINGS"
shall mean any of the
following:
(I) Proceedings where
the sole claim of the
holders of the Equity
Convertible Debentures
is in respect of
failure by the Borrower
to make a payment
permitted to be paid by
the Borrower to the
holders of the Equity
Convertible Debentures
in accordance with
paragraph (ii)(1) above
(in the event of a
payment to the Banks
pursuant to
paragraph (ii)(1)
above) or failure by
the Borrower to make a
payment under a
rescheduling agreement
which payment is
permitted to be paid by
the Borrower to the
holders of the Equity
Convertible Debentures
in accordance with
paragraph (ii)(2)
above, subject, in
either case above, to
the holders of the
Equity Convertible
Debentures not being
entitled to receive
under any such claim
any amount in excess of
the relevant permitted
payment not made as
aforesaid;
- 56 -
(II) Proceedings where
the sole claim of the
holders of the Equity
Convertible Debentures
is in respect of
failure by the Borrower
to make a scheduled
payment to the holders
of the Equity
Convertible Debentures
due to the operation of
the opening paragraph
of (ii) above and the
Relevant Six-Month
Period referred to in
such opening paragraph
has expired without
such scheduled amount
being either paid in
full pursuant to
subparagraph (1) above
or made subject to
rescheduling under
paragraph (ii)(A) or
(B) above, subject to
the holders of the
Equity Convertible
Debentures not being
entitled to receive
under any such claim
any amount in excess of
such scheduled payment
not made as aforesaid);
or
- 57 -
(III) Proceedings
instituted which relate
only to a material
misleading fact ("PRAT
MATEH") in such
prospectus;
In the case of
subparagraph (I) or
(II) above, for the
further removal of
doubt, subject to the
Banks receiving 39
(thirty-nine) days'
prior notice as
required pursuant to
clause 1.1.118(d) above
before institution of
any such Proceedings; or
- 58 -
(B) a Default occurs
pursuant to clause 17.7
(save for a Default
referred to therein
comprising only the
commencement of
negotiations by the
Borrower with
individual suppliers of
the Borrower to make an
adjustment or
rescheduling of its
Indebtedness to such
suppliers), 17.8 or
17.9 (save for a
Default referred to
therein where the
amount being the
subject of the relevant
execution, attachment,
sequestration or other
process does not exceed
US $2,500,000 (two
million five hundred
thousand United States
Dollars)) below
(including the granting
of an order of
receivership,
winding-up or any
similar order against
or in respect of the
Borrower or any of its
assets); or
- 59 -
(C) the Banks shall
have declared the Loans
to be due and payable
pursuant to
clause 17.21 or 17.22
below (for the further
removal of doubt,
including where any
such declaration is
made following an Event
of Default constituted
by Proceedings as
referred to in
subparagraph (A)(I),
(II) or (III) of this
paragraph (iii) above,
then no amount of
whatsoever nature shall
be payable by the
Borrower in respect of
the Equity Convertible
Debentures (whether in
respect of principal,
Interest or any other
amount) until all
amounts owing by the
Borrower under the
Finance Documents shall
have been paid in full
and in the event that,
contrary to the above,
the holders of the
Equity Convertible
Debentures (or, as
applicable, any person
acting on their behalf,
including a trustee)
shall receive any
payment, distribution
or benefit, the
recipient thereof shall
be deemed to hold same
on trust for the Banks
and shall forthwith pay
or transfer to the
Banks any payment,
distribution or benefit
so received;
- 60 -
(2) the Borrower shall not
be entitled at any time
after the expiry of any
Relevant Six-Month
Period as referred to
in paragraph (ii)(1)
above (including in the
event of any
Proceedings as referred
to in subparagraph
(1)(A)(II) of this
paragraph (iii) above)
to make any payment in
respect of any
scheduled payment to
the holders of the
Equity Convertible
Debentures not made
during such Relevant
Six-Month Period due to
the operation of the
opening paragraph of
(ii) above unless all
amounts then due and
payable under the
Finance Documents shall
have been paid in full
or a final judgment
shall have been given
in favour of the
holders of the Equity
Convertible Debentures
in respect of such
scheduled payment; and
- 61 -
(3) nothing contained in
this paragraph (j)
shall be construed as
in any way obliging the
Banks to refrain from
exercising, or to delay
exercising, any right
or remedy which the
Banks may have against
the Borrower, as a
consequence of the
occurrence of a Default;
1.1.119. "PROCEEDING" - means any action, arbitration, audit,
hearing, investigation, litigation or suit
(whether civil, criminal, administrative,
investigative or informal) commenced,
brought, conducted or heard by or before or
otherwise involving, any Governmental Body,
arbitrator or mediator;
1.1.120. "PROJECT" - means the project for the design,
construction and operation of Fab 2 and the
operation of Fab 1 and all activities
necessary for, or ancillary to, any of the
aforegoing, all as contemplated by the
Business Plan;
1.1.121. "PROPORTION" - means, in relation to a Bank at any time,
the proportion borne by its Contribution at
such time to the aggregate Contributions at
such time;
- 62 -
1.1.122. "QUALIFYING WAFER
PREPAYMENT CONTRACT" - means a Wafer Prepayment Contract which
includes all of the following conditions,
which conditions the Borrower shall procure
shall not be varied, save with the prior
written consent of the Banks or as set
forth in clause 16.27.3.1 below:
(a) prepayments (including credits) may
be applied as a credit against no
more than 15% (fifteen percent) of
the order value of any order placed
under such Wafer Prepayment Contract;
and
(b) no Interest shall be credited or
accrue in respect of any prepayment
(including credit). For the purposes
of this clause 1.1.122(b) Interest
("RIBIT RAYONIT") which is required
under GAAP to be recorded in the
books of the Borrower in respect of
any such prepayment or credit, but
which is not in practice credited or
otherwise applied for the benefit of
the counterparty, shall not be deemed
"Interest".
For the removal of doubt, nothing contained
in the above definition shall prevent the
Borrower from entering into Wafer
Prepayment Contracts which are not
Qualifying Wafer Prepayment Contracts;
1.1.123. "QUARTER DAY" - means 31 March, 30 June, 30 September and
31 December in any year and "QUARTER DAY"
means any of them;
1.1.124. "QUARTERS" - means each period commencing on the day
after a Quarter Day and ending on the next
following Quarter Day;
- 63 -
1.1.125. "QUICKLOGIC" - means QuickLogic Corporation, a corporation
incorporated under the laws of Delaware,
USA;
1.1.126. [INTENTIONALLY DELETED]
1.1.127. "REPRESENTATIVE RATE" - means, with respect to any currency other
than NIS, the representative rate of
exchange of the NIS and such currency, last
published by the Bank of Israel immediately
prior to the relevant date of payment or
calculation (as the case may be) and, if
the Bank of Israel shall cease to publish a
representative rate, then any other rate of
exchange of the NIS and such currency,
officially published, which comes in place
of such representative rate, last published
immediately prior to the relevant date of
payment or calculation (as the case may be)
and, in the absence of any such official
rate, then the average of the selling and
buying rates of exchange of such currency,
for NIS (for cheques and remittances)
prevailing at Bank Hapoalim and Bank Leumi
at the end of the last Business Day prior
to the relevant date of payment or
calculation (as the case may be);
1.1.127A. [INTENTIONALLY DELETED]
1.1.127B. [INTENTIONALLY DELETED]
1.1.127C. [INTENTIONALLY DELETED]
1.1.127D. [INTENTIONALLY DELETED]
1.1.127E. [INTENTIONALLY DELETED]
1.1.127F. [INTENTIONALLY DELETED]
1.1.127G. [INTENTIONALLY DELETED]
1.1.128. [INTENTIONALLY DELETED]
- 64 -
1.1.129. [INTENTIONALLY DELETED]
1.1.130. "SANDISK" - means Sandisk Corporation, a corporation
incorporated under the laws of Delaware,
USA;
1.1.131. [INTENTIONALLY DELETED]
1.1.132. [INTENTIONALLY DELETED]
1.1.133. "SECURITY DOCUMENTS" - means:
(a) the Debenture;
(b) each mortgage, pledge or assignment
by way of charge to be executed by
the Borrower in favour of the Banks
in accordance with the provisions of
the Debenture;
(c) each security agreement entered into
pursuant to the provisions of the
Debenture;
(d) all acknowledgments and consents
required to be delivered pursuant to
the documents referred to above;
(e) any other agreement or deed from time
to time entered into by the Borrower
in favour of the Banks for the
purposes of securing any obligations
and liabilities of the Borrower under
the Finance Documents and in respect
of any other Permitted Financial
Indebtedness, if any, made available
by the Banks to the Borrower; and
(f) [INTENTIONALLY DELETED]
(g) Outside Investment Undertakings;
- 65 -
1.1.133A. [INTENTIONALLY DELETED]
1.1.133B. [INTENTIONALLY DELETED]
1.1.134. [INTENTIONALLY DELETED]
1.1.135. "TAX ON OVERALL
NET INCOME" - means an income tax or capital gains tax
including income tax on interest;
1.1.136. "TAXES" - means all income and other taxes,
including, taxes or charges on capital
gains, profits, value-added taxes and all
other taxes of whatsoever nature and
levies, imposts, duties (including stamp
duty), charges, deductions and withholdings
in the nature of or on account of tax,
together with Interest thereon and
penalties and fees with respect thereto, if
any, and any payments made on or in respect
thereof and "TAX" and "TAXATION" shall be
construed accordingly;
1.1.137. [INTENTIONALLY DELETED]
1.1.138. "THREATENED" - a claim, Proceeding, dispute, action or
other matter will be deemed to have been
"Threatened" if either:
(a) any demand or statement has been made
in writing or any notice has been
given in writing or any other event
has occurred or any other
circumstance exists, that leads any
Named Officer and Director actually
to believe that such a claim will be
filed or otherwise pursued in the
future; or
(b) any demand or statement has been made
in writing or orally or any notice
has been given in writing or orally
to the effect that such a claim,
Proceeding, dispute, action or other
matter will be asserted, commenced,
taken or otherwise pursued in the
future;
- 66 -
1.1.139. "TIC" - means The Israel Corporation Ltd., a
company incorporated under the laws of
Israel;
1.1.140. "TOSHIBA" - means Toshiba Corporation, a company
incorporated under the laws of Japan;
1.1.141. "TOSHIBA LICENCE
AGREEMENT" - means the Technology Licence Agreement
effective as at April 7, 2000 between the
Borrower and Toshiba;
1.1.142. "TOTAL DEBT" - means, for any Quarter, the sum of:
(a) the Total Outstandings, as at the
last day of such Quarter;
(b) the balance on the last day of such
Quarter of all Permitted Financial
Indebtedness under
clauses 1.1.115(b), (c) and (d), and
under clause 1.1.115(f) (with respect
to (f), for periods of over 180 (one
hundred and eighty) days, but
including all Interest payable on
Permitted Financial Indebtedness
referred to in clause 1.1.115(f)
(including in respect of periods of
180 (one hundred and eighty) days or
less) and any Interest or other
amounts payable on account of such
Permitted Financial Indebtedness,
all of the above amounts as determined and
certified as correct by: (i) the CFO of the
Borrower, if with respect to any of the
first 3 (three) Quarters of each Fiscal
Year; and (ii) the Auditors, with respect
to the last Quarter of any Fiscal Year
(that is the Quarter ending December 31st);
- 67 -
1.1.143. [INTENTIONALLY DELETED]
1.1.144. "TOTAL OUTSTANDINGS" - means, at any time, the sum in Dollars of
the Loans at such time;
1.1.145. "UNPAID SUM" - shall bear the meaning assigned to such
term in clause 18.1 below;
1.1.146. "WAFER PREPAYMENT
CONTRACT" - means a wafer-manufacturing contract
between the Borrower and a wafer customer
and/or designer pursuant to which contract
such wafer customer and/or designer shall
have paid the Borrower in advance for
wafers to be manufactured by the Borrower
at Fab 2 for such wafer customer and/or
designer (including, in the case of
Sandisk, Alliance and Macronix, by way of
receipt of credits against payments for
shares or otherwise) and, under the terms
of such contract, the wafer customer and/or
designer shall be entitled to claim
reimbursement ("reimbursement"--for the
purpose of this clause--not to include the
credit of such prepayment against purchase
of Paid-in Equity of the Borrower or
against payments of invoices in respect of
wafers) of such advance payment (or any
part thereof) only in the event that such
wafers are not, due to the fault of the
Borrower, manufactured in accordance with
the timetable specified under such
prepayment contract for such manufacture;
- 68 -
1.1.147. "WARRANTS" - means those warrants to acquire shares of
the Borrower issued by the Borrower to the
Banks (or their respective nominees or
Affiliates) as listed in SCHEDULE 1.1.147
hereto as well as any other warrants to
acquire shares of the Borrower issued by
the Borrower to the Banks (or their
respective nominees or Affiliates) from
time to time.
1.1.148. [INTENTIONALLY DELETED]
1.2. CLAUSE HEADINGS/TABLE OF CONTENTS
Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this
Agreement.
1.3. INTERPRETATION
In this Agreement, unless the context otherwise requires:
1.3.1. references to clauses and Schedules are to be construed as
references to the clauses of, and Schedules to, this Agreement and
references to this Agreement include its Schedules. For the removal of
doubt, Schedules to this Agreement which have not been deleted and
which are not attached (whether on the date hereof or on the Amendment
Closing Date) to this Agreement shall remain effective in their
respective forms as applicable immediately prior to the Amendment
Closing Date;
1.3.2. references to (or to any specified provision of) this Agreement or
any other document shall be construed as references to this Agreement,
that provision or that document as in force for the time being and as
amended in accordance with the terms thereof, or, as the case may be,
with the agreement of the relevant parties;
1.3.3. words importing the plural shall include the singular and VICE
VERSA;
1.3.4. "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 1.3.4 and in clause 1.3.10
below bear the meaning assigned to such term in Section 1 of the
Securities Law, 1968;
- 69 -
1.3.5. "BANKS" shall be construed so as to include any subsequent permitted
successors, transferees and permitted assigns of a Bank in accordance
with their respective interests pursuant to clause 25 below;
1.3.6. the "EQUIVALENT" on any given date in one currency (the "FIRST
CURRENCY") of an amount denominated in another currency (the "SECOND
CURRENCY") means the amount of the first currency which could be
purchased with the amount of the second currency at: (i) in the case
that one of the two relevant currencies is NIS, the Representative
Rate for the other currency; or (ii) in the case that neither of the
relevant currencies is NIS, the rate equal to a fraction, the
numerator of which is the Representative Rate of the second currency
and the denominator of which is the Representative Rate of the first
currency;
1.3.7. "INCLUDING" and "INCLUDES" means including, without limiting the
generality of any description preceding such terms;
1.3.8. a "LAW" includes any Israeli statute, law, regulation, treaty, rule,
official directive, request or guideline of any governmental, fiscal,
monetary or regulatory body, agency, department or regulatory,
self-regulatory or other authority or organisation, including, the
position (guidelines) of the Examiner of Banks with respect to proper
conduct of bank affairs ("HORA'OT XXXXX BANKAI Takin") or any
interpretation of any of the aforegoing by the Examiner of Banks (all
the above whether or not having the force of law, but if not having
the force of law, being one with which it is the practice of banks to
comply);
1.3.9. 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;
1.3.10. "SUBSIDIARY" of a person means any company which is directly or
indirectly controlled by such person;
1.3.11. "US $", "UNITED STATES DOLLARS", "US DOLLARS" and "DOLLARS" denote
the lawful currency of the United States of America; and "NIS" and
"NEW ISRAEL SHEQELS" denote the lawful currency of Israel;
- 70 -
1.3.12. "VAT" shall be construed as a reference to Israeli value added tax,
including any similar Israeli Tax which may be imposed in place
thereof from time to time;
1.3.13. the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or
corporation shall be construed so as to include any equivalent or
analogous Proceedings under the law of the jurisdiction in which such
company or corporation is incorporated or any jurisdiction in which
such company or corporation carries on business, including the seeking
of liquidation, winding-up, reorganisation, dissolution,
administration, arrangement, adjustment, protection or relief of
debtors;
1.3.14. all accounting expressions which are not otherwise defined herein
shall be construed in accordance with GAAP. Save as expressly stated
otherwise, each of "Debt Service", "EBITDA", "Excess Cash Flow",
"Sales" and "Total Debt" for any period, shall be determined from the
consolidated Accounts for the relevant period or for the periods
comprising such period, or, if not included in the Accounts, shall be
determined from a certificate signed by the Auditors delivered to the
Banks together with the Accounts;
1.3.15. any reference in this Agreement to a law shall be construed as a
reference to such law as the same may have been, or may from time to
time be, amended or re-enacted.
2. THE LOANS
2.1. LOANS TO THE BORROWER
The principal amount of the Loans outstanding immediately prior to the
conversions referred to below taking place on the Amendment Closing
Date was US $526,693,001 (five hundred and twenty-six million, six
hundred and ninety-three thousand and one United States Dollars). The
principal amount of the Loans outstanding and owing by the Borrower to
the Banks as at the Amendment Closing Date (after conversion by each
Bank of US $79,000,000 (seventy-nine million United States Dollars) of
its Loans to the Borrower into US $39,500,000 (thirty-nine million,
five hundred thousand United States Dollars) of capital notes
convertible into 25,986,842 (twenty-five million, nine hundred and
eighty-six thousand, eight hundred and forty-two) shares) (subject to
the adjustments set forth in the capital notes) is US $368,693,001
(three hundred and sixty eight million, six hundred and ninety-three
thousand and one United States Dollars), of which US $184,348,255 (one
hundred and eighty-four million, three hundred and forty-eight
thousand, two hundred and fifty-five United States Dollars) is owed to
Bank Hapoalim and US $184,344,746 (one hundred and eighty four
million, three hundred and forty-four thousand, seven hundred and
forty-six United States Dollars) is owed to Bank Leumi.
- 71 -
2.2. BANKS' OBLIGATIONS SEVERAL
The obligations of each of the Banks under this Agreement shall be
several; accordingly, the failure of a Bank to perform its obligations
under this Agreement shall not result in: (1) the obligations of any
other Bank being increased; nor (2) the Borrower being discharged (in
whole or in part) from its obligations under this Agreement towards a
Bank (without derogating from rights and remedies the Borrower may
have against the Bank in breach) and in no circumstances shall a Bank
have any responsibility for a failure of another Bank to perform its
obligations under this Agreement.
2.3. LIMITS ON YEN, EURO AND POUND STERLING CREDITS
[INTENTIONALLY DELETED]
2.3. BANKS' RIGHTS SEPARATE
The rights of each Bank under or in connection with the Finance
Documents are separate and independent rights and any debt arising
under the Finance Documents to a Bank from the Borrower shall be a
separate and independent debt.
2.4. SEPARATE ENFORCEMENT BY BANKS
A Bank may, except as otherwise stated in the Finance Documents,
separately enforce its rights under the Finance Documents.
- 72 -
3. PURPOSE--INTENTIONALLY DELETED
3.1. PURPOSE OF ADVANCES AND LOANS
[INTENTIONALLY DELETED]
3.2. PURPOSE OF L/CS
[INTENTIONALLY DELETED]
3.3. PURPOSE OF PERMITTED HEDGING TRANSACTIONS
[INTENTIONALLY DELETED]
3.4. NO OBLIGATION TO MONITOR
[INTENTIONALLY DELETED]
4. CONDITIONS PRECEDENT--INTENTIONALLY DELETED
[INTENTIONALLY DELETED]
5. AVAILABILITY OF CREDITS--INTENTIONALLY DELETED
5.1. AVAILABILITY
[INTENTIONALLY DELETED]
5.2. ADVANCES
[INTENTIONALLY DELETED]
5.3. LETTERS OF CREDIT
[INTENTIONALLY DELETED]
5.4. HEDGING
[INTENTIONALLY DELETED]
5.5. APPLICATIONS TO ALL BANKS
[INTENTIONALLY DELETED]
- 73 -
6. REPAYMENT
6.1. REPAYMENT OF LOANS
The Borrower shall repay to each Bank its Proportion of the Loans by
way of 12 (twelve) equal consecutive quarterly instalments, payable on
the last Business Day of each Quarter, the first such instalment in
respect of the Loans to be paid on September 30, 2009 and the last
such instalment to be paid on the Final Maturity Date.
6.2. PAYMENT OF ALL OTHER SUMS DUE ON THE FINAL MATURITY DATE
On the Final Maturity Date, the Borrower additionally shall pay to the
Banks all other sums then outstanding under the Finance Documents.
6.3. REPAYMENT IN US DOLLARS
For the removal of doubt, each Loan, as well as all Interest thereon,
shall be repaid in US Dollars.
6.4. REPAYMENTS TO PAYMENTS ACCOUNTS
Subject to clause 20.1 below, all repayments as aforesaid shall be
made by transfer to each Bank to their respective Project Accounts.
6.5. NO REBORROWING
The Borrower shall not be entitled to reborrow any part of the Loan
which is repaid.
6.6. NO COMMITMENTS
For the removal of doubt, the Borrower has no rights to borrow any
amount, nor to obtain any other form of credit or Indebtedness from
the Banks (whether in respect of Hedging Transactions, letters of
credit or in any other form) under this Agreement.
7. VOLUNTARY PREPAYMENT
7.1. VOLUNTARY PREPAYMENT
Subject to clause 7.9 below, the Borrower may, in the manner and
subject to the terms and conditions set out in this clause 7 below, if
it has given to the Banks not less than 25 (twenty-five) Business
Days' advance written notice to such effect, make a prepayment to each
Bank of its Proportion of the Loans, in each case on an Interest
Payment Date, provided that, the aggregate amount of each such
prepayment (principal) (for all Banks), shall not be less than US
$10,000,000 (ten million United States Dollars).
- 74 -
7.2. NOTICE OF PREPAYMENT
Any notice of prepayment given by the Borrower pursuant to clause 7.1
above shall be irrevocable, shall specify the Interest Payment Date
upon which such prepayment is to be made and the amount of such
prepayment and shall oblige the Borrower to make such prepayment on
such date. A prepayment of any Loan shall be made in the currency of
the Loan.
7.3. NO OTHER PREPAYMENTS
The Borrower shall not prepay any part of any Loan except in
accordance with the aforegoing in this clause 7 or clause 8 below.
7.4. NO REBORROWING
The Borrower shall not be entitled to reborrow any amount repaid or
prepaid on account of any Loan.
7.5. PREPAYMENT COMMISSIONS
The Borrower shall pay to the Banks, in their respective Proportions,
on the date of prepayment in accordance with this clause 7 above, a
commission of 0.25% (nought point two five percent) of the amount
(principal) prepaid, unless the prepayment is of the entire Total
Outstandings, in which event the commission shall be 0.125% (nought
point one two five percent) of the amount (principal) prepaid.
7.6. PREPAYMENT TO PAYMENTS ACCOUNT
Subject to clause 20.1 below, all prepayments as aforesaid shall be
made by transfer to each Bank to their respective Project Accounts
(Hapoalim Project Account or BLL Project Account) their respective
Proportions of each such prepayment.
- 75 -
7.7. PREPAYMENTS TOGETHER WITH INTEREST AND OTHER SUMS OWED
All prepayments shall be made together with all accrued Interest on
the amount prepaid and all other sums due in respect of the amount
prepaid.
7.8. CANCELLATION
[INTENTIONALLY DELETED]
7.9. LIMITS ON PREPAYMENT
Notwithstanding anything to the contrary in this clause 7, the
Borrower shall not be entitled to make a voluntary prepayment pursuant
to this clause 7, unless:
7.9.1. the Banks are reasonably satisfied that the Borrower has
sufficient funds available from sources permitted under this
Agreement to perform the Project in accordance with the Business
Plan; and
7.9.2. in the case of prepayments, such prepayments are made only
from:
(a) proceeds of investments in the Paid-in Equity of the
Borrower or proceeds of investments in exchange for equity
equivalent capital notes in the form issued to TIC on or
about the Amendment Closing Date;
(b) the proceeds of the issue of convertible bonds (convertible
into irredeemable share capital); provided that: (i) such
convertible bonds shall constitute Permitted Subordinated
Debt; and (ii) the cost of the Project shall not be
increased in any way by reason of the issue of such
convertible bonds; provided further that, in the event only
that such prepayment is of all amounts payable by the
Borrower under the Finance Documents and at the time of such
prepayment no Bank shall be under any obligation under any
Finance Document to provide any Financial Indebtedness to
the Borrower, the conditions set out in paragraphs (i) and
(ii) above shall not be applicable; or
(c) cumulative Excess Cash Flow as at the end of the Quarter
preceding the Quarter in which such prepayment is made.
- 76 -
7.10. CURRENCY FOR PREPAYMENT
A prepayment of a Loan shall be made in the currency of such Loan.
7.11. SELECTION OF INSTALMENTS FOR VOLUNTARY PREPAYMENT
Any prepayment shall be applied to those repayment instalments in
respect of the Loans as selected by the Borrower in the relevant
prepayment notice given pursuant to clause 7.1 above; for the removal
of doubt, the prepayments to each of the Banks shall be applied to the
same instalments of the Loans for each Bank.
7.12. PREPAYMENT PURSUANT TO CLAUSE 6.1.1
[INTENTIONALLY DELETED]
8. MANDATORY PREPAYMENT
8.1. MANDATORY PREPAYMENT
Unless the Banks shall, in any particular case, otherwise direct in
writing, subject to the last sentence of this clause 8.1, all the
following amounts shall be deposited in a Project Account immediately
on receipt thereof (such deposit not to be withdrawn) and shall be
applied in mandatory prepayment to each Bank of its Proportion of the
Loans on the first Interest Payment Date after receipt of such amounts
by the Borrower:
8.1.1. all proceeds from time to time received under the Insurance
Policies, in excess of US $5,000,000 (five million United States
Dollars) in aggregate (other than under Insurance Policies in
respect of liability of the Borrower to third parties or of
liability of the Borrower for damage to property of third
parties), unless such proceeds are received in respect of damage
to Fab 1 or Fab 2 or any other equipment used in Fab 1 or Fab 2
and may be applied, through utilisation of such proceeds, to
repair the Fab 1 or Fab 2 buildings, as applicable, or to repair
or replace such equipment or otherwise purchase equipment or
technology for Fab 1 or Fab 2 in accordance with the Business
Plan, without resulting in a Material Adverse Effect or delaying
the completion of Fab 2 in accordance with the Business Plan by
more than 6 (six) months;
- 77 -
8.1.2. [INTENTIONALLY DELETED]
8.1.3. all proceeds from time to time received by the Borrower in
connection with the nationalisation, expropriation or requisition
for title of Fab 2 or any other part of the Borrower's assets;
8.1.4. [INTENTIONALLY DELETED]
8.1.5. without derogating from clause 16.24 below, if the Borrower
sells, transfers, lends, leases, licenses or otherwise disposes
of any of its assets (including Intellectual Property Assets
and/or securities the Borrower holds (directly or indirectly) in
any Subsidiary or other corporation (for the removal of doubt,
subject to any such disposal being permitted under the Finance
Documents)), the Borrower shall prepay an amount equal to the Net
Proceeds resulting from such sale, transfer, loan, lease, licence
or disposal (provided such Net Proceeds are greater than US
$5,000,000 (five million United States Dollars) or its equivalent
and, when aggregated with any other Net Proceeds received during
the Fiscal Year in which the relevant Net Proceeds are received,
exceed an aggregate amount equal to US $10,000,000 (ten million
United States Dollars) or its equivalent).
The provisions of clauses 8.1.3 and 8.1.5 above shall not apply in
respect of amounts which the Borrower confirms to the Banks in writing
are to be applied in respect of the Project in accordance with the
Business Plan (including in bringing forward the making of investments
which, in accordance with the Business Plan, are to be made at future
dates).
8.2. NO REBORROWING OF MANDATORY PREPAYMENT
The Borrower shall not be entitled to reborrow any amount mandatorily
prepaid in accordance with this clause 8 above.
8.3. ACCOUNT OF MANDATORY PREPAYMENT
Subject to clause 20.1 below, all mandatory prepayments as aforesaid
shall be made by transfer thereof to the respective Project Accounts
(Hapoalim Project Account or BLL Project Account).
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8.4. MANDATORY PREPAYMENT TOGETHER WITH INTEREST AND OTHER SUMS OWED
Any mandatory prepayment shall be made together with all accrued
Interest on the amount prepaid and all other sums due in respect of
the amount prepaid.
8.5. CURRENCY FOR MANDATORY PREPAYMENT
A mandatory prepayment on account of an instalment of a Loan shall be
made in the currency of such Loan.
8.6. SCHEDULE FOR MANDATORY PREPAYMENT
Any prepayment shall be applied to the repayment instalments in
respect of the Loans in reverse order (that is, shall be deemed first
to be made on account of the last repayment instalment, then the
second last, and so on and so forth).
9. INTEREST
9.1. INTEREST RATE
The rate of Interest applicable to the Loans in respect of each
Interest Period shall be the sum of: (a) the rate per annum determined
by the Banks to be LIBOR on the Interest Determination Date for such
Interest Period; and (b) 1.1% (one point one percent) per annum.
Subject to the effectiveness of the amendment and restatement of this
Agreement on the Amendment Closing Date the rate of Interest set forth
in (b) above, as it applies to the principal amount of the Loans
outstanding immediately prior to the conversions referred to in clause
2.1 ("THE LOAN CONVERSION"), shall be deemed to have taken effect from
May 17, 2006. The Banks and the Borrower record that the outstanding
loan and percentage previously set forth in (b) above were US
$526,693,001 (five hundred and twenty-six million, six hundred and
ninety-three thousand and one United States Dollars) and 2.5% (two
point five percent), respectively. An amount equal to the amounts
actually paid by the Borrower to the Banks on the Interest Payment
Date (or, if applicable Interest Payment Dates), falling between May
17, 2006 and the Amendment Closing Date on account of Interest in
respect of the period commencing on May 17, 2006 in excess of Interest
for such period at the rate of LIBOR plus 1.1% (one point one percent)
per annum, shall be paid by the Banks to the Borrower within 5 (five)
Business Days following the Amendment Closing Date.
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9.2. ACCRUAL OF INTEREST
Interest as aforesaid in clause 9.1 above in respect of the Loans
shall accrue from day to day and shall be calculated on the basis of
the actual number of days elapsed and a 360 (three hundred and sixty)
day year.
9.3. PAYMENT OF INTEREST
All Interest accrued as aforesaid in clause 9.2 above on the Loans
shall be paid on each Interest Payment Date and on the Final Maturity
Date. Subject to clause 20.1 below, the Borrower shall pay to each
Bank all Interest payable as aforesaid into such Bank's Project
Account.
9.4. CERTAIN COMPENSATORY PAYMENTS
As compensation to the Banks for the reduction in the rate of Interest
reflected in clause 9.1 above, the Borrower agrees as follows:
9.4.1. If every reported closing share price of the Borrower's shares
on the Nasdaq Stock Market (or on such other stock exchange or
quotation system in the United States on which the Borrower's
shares are listed or admitted for quotation in the event the
Borrower's shares are not listed on the Nasdaq Stock Market ("A
SALE PRICE")) on every trading day during the six month period
commencing on July 1, 2010 and ending on December 31, 2010 ("THE
DETERMINATION PERIOD") exceeds US $3.49 (three United States
Dollars and forty-nine cents), as such price shall be adjusted to
take into account all subdivisions of shares (including stock
splits) and combinations of shares into a smaller numbers of
shares (including reverse stock splits) ("THE MINIMUM PRICE"),
the Borrower shall, within 30 (thirty) days of the end of the
Determination Period, subject to clause 9.4.6 below: (a) issue
and allot to the Banks (or their respective nominees), the
aggregate number of shares of the Borrower that equals US
$11,936,436 (eleven million, nine hundred and thirty six thousand
four hundred and thirty six United States Dollars) ("THE CLAUSE
9.4.1 AMOUNT") divided by the average closing price of the
Borrower's shares on the Nasdaq Stock Market (or on such other
stock exchange or quotation system in the United States on which
the Borrower's shares are listed or admitted for quotation in the
event the Borrower's shares are not listed on the Nasdaq Stock
Market) during the fourth Quarter of 2010 ("THE AVERAGE CLOSING
PRICE") with each Bank (or its nominee) receiving its Proportion
of such shares; or (b) at the election of any Bank not wishing to
receive shares, issue to such Bank (or its nominee) equity
equivalent convertible capital notes in a principal amount equal
to such Bank's Proportion of the Clause 9.4.1 Amount and in the
form, MUTATIS MUTANDIS, of the capital note issued to such Bank
or its nominee on or about the Amendment Closing Date (or, if no
such capital note was issued, in form and substance satisfactory
to such Bank) which capital notes are convertible into such
number of shares of the Borrower as shall be equal to such Bank's
Proportion of the Clause 9.4.1 Amount divided by the Average
Closing Price, subject to the adjustments set forth in the
capital note, such capital notes being fully convertible, at any
time, in whole or in part, and fully transferable, at any time,
in whole or in part. Whenever the Minimum Price is required to be
adjusted pursuant to this clause 9.4.1 or clause 9.4.2 below, the
Borrower shall promptly prepare a certificate, in form and
substance satisfactory to the Banks, signed by the Chief
Financial Officer of the Borrower, setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated
and the Minimum Price after giving effect to such adjustment.
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9.4.2. Should any Sale Price during the Determination Period not
exceed the Minimum Price, the Borrower shall, within 30 (thirty)
days following the end of the Determination Period, subject to
clause 9.4.6 below: (a) issue and allot to the Banks (or their
respective nominees) the aggregate number of shares of the
Borrower that equals US $23,872,872 (twenty three million, eight
hundred and seventy two thousand eight hundred and seventy two
United States Dollars) ("THE CLAUSE 9.4.2 AMOUNT") divided by the
Average Closing Price, with each Bank (or its nominee) receiving
its Proportion of such shares; or (b) at the election of any Bank
not wishing to receive shares, issue to such Bank (or its
nominee) equity equivalent convertible capital notes in a
principal amount equal to such Bank's Proportion of the Clause
9.4.2 amount in the form, MUTATIS MUTANDIS, of the capital note
issued to such Bank (or its nominee) on or about the Amendment
Closing Date (or, if no such capital note was issued, in form and
substance satisfactory to such Bank) which capital notes are
convertible into such number of shares of the Borrower as shall
be equal to such Bank's Proportion of the Clause 9.4.2 Amount
divided by the Average Closing Price, subject to the adjustments
set forth in the capital note, such capital notes being fully
convertible, at any time, in whole or in part, and fully
transferable, at any time, in whole or in part.
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9.4.3. If any Sale Price during the Determination Period shall not
exceed the Minimum Price, the Borrower shall promptly, but not
later than 3 (three) Business Days after the end of the
Determination Period, give written notice thereof to the Banks.
9.4.4. If every Sale Price on every trading day during the
Determination Period exceeds the Minimum Price, the Borrower
shall provide the Banks, by no later than 5 (five) days after the
end of the Determination Period, a table setting forth the Sale
Price of the Borrower's shares on every trading day during the
Determination Period, certified as correct by the Chief Financial
Officer of the Borrower, who shall further certify that the Sale
Price on every trading day during the Determination Period
exceeded the Minimum Price, all in form and substance
satisfactory to the Banks.
9.4.5. No fractional shares will be issued in connection with any
share issuance pursuant to clause 9.4.1 or 9.4.2 above, but in
lieu of such fractional shares, the Borrower shall make a cash
payment therefor on the basis of the Average Closing Price.
9.4.6. Notwithstanding anything to the contrary in this clause 9.4, it
shall be a condition to the Borrower's issuance of shares (or, at
the election of any Bank, capital notes) to the Banks pursuant to
clause 9.4.1 or 9.4.2 above that: (a) no Default or Event of
Default has occurred; (b) no law (including foreign laws or
interpretations by foreign Governmental Bodies) prohibits any
Bank from acquiring its Proportion of such shares or capital
notes or restricts such Bank's ability to indefinitely hold such
shares or capital notes; and (c) all of the Borrower's agreements
with each of the Banks or their respective nominees with respect
to such Bank's investment in the shares, or in securities
convertible into or exercisable for shares, of the Borrower,
including any investment and registration rights agreements
(collectively, "THE EQUITY DOCUMENTS"), shall be in full force
and effect and the Borrower shall not be in default of any of its
obligations under any of the Equity Documents. In the event that
any of the above conditions shall not be met, then, instead of
issuing shares (or capital notes), the Borrower shall pay the
Clause 9.4.1 Amount or the Clause 9.4.2 Amount, as applicable (as
the same may be adjusted pursuant to clause 9.4.7 below, if
applicable) in cash by paying each Bank's Proportion of such
aggregate amount into such Bank's Project Account on the 30th
(thirtieth) day following the end of the Determination Period.
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9.4.7. Notwithstanding anything to the contrary in this clause 9.4, in
the event that: (i) clause 9.4.2 shall apply; and (ii) at any
time prior to the end of the Determination Period a Bank (or its
nominee) shall sell shares of the Borrower issued to such Bank
(or its nominee) pursuant to the Loan conversion described in
clause 2.1 above ("THE CONVERSION SHARES") at a price per share
that exceeds the Minimum Price ("THE SOLD SHARES"), then the
compensation payable to such Bank under this clause 9.4 shall be
as follows: (a) with respect to the compensation payable to such
Bank under clause 9.4.2 above, the Clause 9.4.2 Amount shall be
deemed to be an amount equal to the Clause 9.4.2 Amount
multiplied by a percentage equal to 100 (one hundred) minus the
Percentage Sold; and (b) notwithstanding that clause 9.4.2 is
applicable, the Bank shall also be entitled to compensation under
clause 9.4.1, provided that the Clause 9.4.1 Amount shall be
deemed to be an amount equal to the Clause 9.4.1 Amount
multiplied by the Percentage Sold. As used in this clause 9.4.7
the term "PERCENTAGE SOLD" means the Sold Shares expressed as a
percentage of the Conversion Shares, as the Sold Shares and the
Conversion Shares shall be adjusted to reflect any subdivisions
or combinations of shares occurring between the Amendment Closing
Date and the end of the Determination Period. For the avoidance
of doubt, sales by a Bank of shares that are not Conversion
Shares, including shares issuable upon the exercise of any
Warrants granted or to be granted to any Bank or its nominee,
shall not be taken into account for the purposes of this clause
9.4.7.
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9.4.8. All issuances of shares or capital notes, as the case may be,
in accordance with this clause 9.4 above, shall be made in
accordance with the terms of the respective Equity Documents and,
without limiting the generality of the foregoing, all
Governmental Authorisations, third party consents, certificates
and legal opinions to be delivered and all such other actions to
be taken by the Borrower under the Equity Documents in connection
with the issue of such shares or capital notes, as the case may
be, shall be so delivered and taken by the Borrower by not later
than 30 (thirty) days after the end of the Determination Period.
9.4.9. Notwithstanding anything to the contrary in this clause 9.4,
should the Borrower prepay any of the Loans in conformity with
clause 7 or clause 8 above prior to the last Interest Payment
Date in the Determination Period, then the 9.4.1 Amount and/or
the 9.4.2 Amount, as applicable, shall be multiplied by a
fraction, the numerator of which shall be 4.625 (four point six
two five) (which is the average life ("MESHECH HAYIM MEMUTZA") of
the Loans in years calculated as from May 17, 2006 through the
Final Maturity Date, assuming no prepayments) ("THE ORIGINAL
AVERAGE LIFE") as such Original Average Life shall be adjusted to
reflect such prepayment and the denominator of which shall be
4.625 (four point six two five). On the date of any such
prepayment by the Borrower, the Borrower shall deliver a
certificate, in form and substance satisfactory to the Banks,
signed by the Chief Financial Officer setting forth, in
reasonable detail, the adjusted average life ("MESHECH HAYIM
MEMUTZA") of the Loans in years reflecting such prepayment as
aforesaid.
10. SUBSTITUTE INTEREST RATES
If and whenever, at any time prior to the commencement of any Interest
Period:
10.1. by reason of changes affecting the Eurodollar Interbank market, the
Banks shall have determined that, due to circumstances beyond their
control, adequate means do not exist for ascertaining LIBOR during
such Interest Period; or
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10.2. deposits in US Dollars are not available to any of the Banks in the
London Interbank market in the Ordinary Course of Business in
sufficient amounts to fund the Loans for such Interest Period or there
shall be no objective possibility for the Banks to fund the then
outstanding balance of the Loans or any of them in US Dollars,the
Banks shall forthwith give notice ("A DETERMINATION NOTICE") of such
event to the Borrower (a Determination Notice to contain particulars
of the relevant circumstances giving rise to its issue) and,
notwithstanding the provisions of clause 9 above, the Banks shall
offer the Borrower an alternative basis ("THE SUBSTITUTE BASIS") for
the determination of the relevant Interest rate for such Interest
Period, the Substitute Basis to be binding upon the Borrower and to
take effect in accordance with its terms from the commencement of the
relevant Interest Period. If the Borrower determines that it does not
wish to continue the relevant Loans under the Substitute Basis, it
shall so notify the Banks within 90 (ninety) days of receipt of the
Banks' notice specifying such Substitute Basis, whereupon the
outstanding balance of the principal amount of the relevant Loans,
together with all accrued Interest thereon, as well as all other
amounts in respect thereof, shall become immediately due and payable.
11. COMMISSIONS, FEES AND EXPENSES
11.1. FRONT END FEE
[INTENTIONALLY DELETED]
11.2. COMMITMENT COMMISSION
[INTENTIONALLY DELETED]
11.3. LEGAL AND OTHER COSTS
The Borrower shall pay to the Banks on demand:
11.3.1. all costs and expenses (including legal fees for external
counsel and out-of-pocket expenses) incurred by the Banks in
connection with: (i) the performance of all legal due diligence
inquiries as the Banks have required or shall require with
respect to the Project and the proposed transactions in
connection therewith; (ii) the negotiation, preparation and
execution of this Agreement and the other Finance Documents and
the completion of the transactions herein contemplated; and (iii)
assignment or participation pursuant to clause 25 below; all
subject, with respect to legal fees, to such limits and/or
tariffs as have been or may be agreed, from time to time, between
the Banks and the Borrower in writing;
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11.3.2. all expenses (including legal fees and out-of-pocket expenses)
incurred by the Banks (or any of them) in contemplation of, or
otherwise in connection with, the enforcement of, or preservation
of any rights under, this Agreement or any of the other Finance
Documents or otherwise in respect of the moneys owing under this
Agreement, together with Interest at the rate referred to in
clause 18 below from the date on which the payment of such
expenses was demanded by the Banks until the date of payment
(after as well as before judgment).
11.4. CONSULTANTS
The Borrower shall, in accordance with the letters of engagement with
each of the Consulting Engineer, Insurance Adviser and Bank Adviser,
retain the following experts: the Consulting Engineer, the Insurance
Adviser and the Bank Adviser, to advise and act on behalf of the Banks
and the Borrower in respect of the Project, including to perform on
behalf of the Banks such financial, insurance and technical due
diligence inquiries, review, analysis and monitoring as the Banks may
require in connection with the Project, as well as, in the case of the
Consulting Engineer, to perform all those functions referred to in
this Agreement, in the case of the Insurance Adviser, to provide the
Insurance Report and, in the case of the Bank Adviser, to monitor,
review and analyse the financial information received by the Banks
from the Borrower pursuant to this Agreement and any of the Finance
Documents. The Borrower shall pay all fees of such experts, such fees
to be payable in accordance with the tariffs agreed to between the
Borrower and such experts.
11.5. STAMP DUTIES AND LIKE TAXES
The Borrower shall pay all stamp, documentary, registration or other
like duties or Taxes (including any such duties or Taxes payable by
the Banks) imposed on or in connection with this Agreement, the
Facility and any of the Finance Documents.
11.6. OTHER COMMISSIONS, FEES AND EXPENSES
Nothing in this clause 11 shall be construed as derogating from the
obligations of the Borrower to pay the Banks other commissions, fees
and reasonable expenses usually payable to banks in connection with
regular, day-to-day banking transactions performed in connection with
the Facility and which are not specifically provided for herein.
- 86 -
11.7. CURRENCY FOR PAYMENT
All sums payable by the Borrower under this clause 11 shall be payable
in the currency in which such sums were incurred by the relevant Bank.
11.8. VAT
All fees and expenses referred to in this clause 11 are exclusive of
any VAT or any other Taxes which might be charged in connection with
such fees and expenses. If any VAT or other such Tax is so chargeable,
it shall be paid by the Borrower at the same time as it pays the
relevant fees and expenses.
12. TAXES
12.1. TAXES
All payments to be made by the Borrower to the Banks shall be made
free and clear of and without deduction for or on account of Tax,
unless the Borrower is required by law to make such payment subject to
the deduction or withholding of Tax, in which case (save where such
deduction or withholding is in respect of Tax on Overall Net Income of
a Bank and the Borrower shall have delivered to such Bank a receipt as
referred to in clause 12.3 below, simultaneously with the making of
the payment from which such Tax deduction has been made) the sum
payable by the Borrower in respect of which such deduction or
withholding is required to be made shall be increased, to the extent
necessary, to ensure that after the making of the required deduction
or withholding, such Bank receives and retains (free from any
liability in respect of any such deduction or withholding), a net sum
equal to the sum which it would have received and so retained had no
such deduction or withholding been made or required to be made,
provided that the aforesaid shall not apply with respect to any Taxes
(including, for the removal of doubt, Tax on Overall Net Income) of
the Banks in connection with the issuance of any shares, Warrants or
capital notes of the Borrower or the exercise or conversion thereof.
12.2. NOTIFICATION OF TAXES
If, at any time, the Borrower is required by law to make any deduction
or withholding from any sum payable by it hereunder, the Borrower
shall, as soon as reasonably practicable, notify the relevant Bank.
- 87 -
12.3. PAYMENT AND SUBMISSION OF RECEIPT
If the Borrower makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the relevant Bank, as soon as
reasonably practicable after it has made such payment to the
applicable authority, an original receipt (or a certified copy
thereof) issued by such authority evidencing the payment to such
authority of all amounts so required to be deducted or withheld in
respect of such payment.
12.4. TAX SAVING
12.4.1. In the event that following the imposition of any Tax on any
payment by the Borrower in consequence of which the Borrower is
required, under clause 12.1, to pay any additional amount in
respect thereof, any Bank shall, in its sole opinion and based on
its own interpretation of any relevant laws or regulations (but
acting in good faith), receive or be granted a repayment of Tax,
or a credit against, or remission for, or deduction from, or in
respect of, any Tax payable by it (any of the aforegoing, to the
extent so reasonably identifiable and quantifiable, being
referred to as "A SAVING"), such Bank shall, to the extent that
it can do so without prejudice to the retention of the relevant
saving and subject to the Borrower's obligation to repay the
amount to such Bank, if the relevant saving is subsequently
disallowed or cancelled (which repayment shall be made promptly
on receipt of notice by the Borrower from such person of such
disallowance or cancellation), reimburse the Borrower promptly
after receipt of such saving by such Bank with such amount equal
to the lower of: (i) the additional amount paid by the Borrower
in respect of such Tax under clause 12.1 as aforesaid; and (ii)
such amount as such Bank shall, in its sole opinion but in good
faith, have concluded to be the finally determined amount or
value of the relevant saving.
12.4.2. Nothing contained in this Agreement shall interfere with the
right of any Bank to arrange its Tax and other affairs in
whatever manner it thinks fit and, in particular, no Bank shall
be under any obligation to claim relief from Tax on its corporate
profits, or from any similar Tax liability, in respect of the
Tax, or to claim relief in priority to any other claims, reliefs,
credits or deductions available to it or to disclose details of
its Tax affairs. No Bank shall be required to disclose any
confidential information relating to the organisation of its
affairs.
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12.4.3. Each Bank will notify the Borrower promptly of the receipt by
such Bank of any saving and of such Bank's opinion as to the
amount or value of that saving.
12.5. VAT
The Borrower shall pay to the Banks all VAT, if any, payable in
respect of any payment to be made by the Borrower to the Banks under
this Agreement or under any other Finance Document.
13. INCREASED COSTS
13.1. INCREASED COSTS
Subject to clause 13.2 below, if by reason of any change in, or the
introduction of, or any change in the interpretation, administration
or application by any Governmental Body of any law or by reason of the
interpretation, administration or application adopted or declared by
any Governmental Body in respect of any law (including of any official
directive or official request from, or the rules of, any governmental,
fiscal, monetary or regulatory (including self-regulatory) authority,
organisation or agency (whether or not having the force of law but, if
not having the force of law, being a regulation, treaty, official
directive, official request or rule which it is the practice of banks
in Israel to comply with)) after the date of this Agreement which
affects the Banks or compliance by any of the Banks with any such
change, introduction, adoption or declaration, including, in each
case, those relating to Taxation, reserves, special deposits, cash
ratio, liquidity, limits on provision of credit to single borrowers or
groups of borrowers or capital adequacy requirements or other forms of
banking, fiscal, monetary or regulatory controls:
13.1.1. any of the Banks incurs a cost as a result of it having
entered into and/or performing and/or assuming and/or maintaining
and/or funding its obligations or commitments under, any Finance
Document and/or maintaining the outstanding balance of the Loans;
or
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13.1.2. any Bank is unable to obtain the rate of return on its overall
capital which it would have been able to obtain but for it having
entered into and/or performing its obligations under any of the
Finance Documents (including maintaining the outstanding balance
of the Loans); or
13.1.3. any amount receivable by any of the Banks under any Finance
Document is reduced (save to the extent matched by a reduction in
the cost of providing the Loans or maintaining the outstanding
balance of the Loans); or
13.1.4. any of the Banks makes any payment or forgoes any Interest or
other return on, or calculated by reference to, any amount
received or receivable by it from the Borrower under any Finance
Document; or
13.1.5. there is any increase in the cost of any Bank of funding or
maintaining all or any other outstanding balances of the Loans
and such cost (or the relevant proportion thereof), reduction,
payment, forgone Interest or other return is not compensated for by
any other provision of this Agreement, then and in each such case:
(i) such Bank shall notify the Borrower of that event promptly upon
it becoming aware of the event, including, in reasonable detail,
particulars of the event; and
(ii) within 30 (thirty) Business Days after receipt by the Borrower of
a demand from time to time by such Bank accompanied by a
certificate of such Bank specifying the amount of compensation
claimed and setting out the calculation of the amount in
reasonable detail, the Borrower shall pay to such Bank such
amount as shall compensate such Bank for such increased cost,
reduction, payment or forgone Interest or other return. Nothing
in this clause 13 shall oblige such Bank to disclose any
confidential information relating to the organisation of its
affairs.
The Borrower may, after receipt of a demand as aforesaid in (ii)
above, notify the Banks that it will prepay, on the next following
Interest Payment Date, the whole (but not part only) of the Total
Outstandings. Such notice shall be irrevocable and the Borrower shall
on such Interest Payment Date as aforesaid pay to the Banks, each in
respect of its participation in the Total Outstandings, together with
all accrued Interest thereon and all other amounts owing to the Banks
under the Finance Documents (including pursuant to clause 19 below).
In the event of prepayment under this clause 13.1, the provisions of
clause 7.5 above requiring the payment of a prepayment commission in
respect of prepayments, shall not be applicable.
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13.2. EXCEPTIONS
Clause 13.1 shall not apply so as to oblige the Borrower to compensate
such Bank for any increased cost, reduction, payment or forgone
Interest or other return resulting only from any change in, or the
introduction of, or any change in the interpretation or application
of, any law relating to, or any change in the rate of, Tax on Overall
Income of such Bank or change in the rate of VAT. For the purposes
only of this clause 13, the term "FINANCE DOCUMENTS" shall be deemed
not to include Warrants or capital notes issued by the Borrower to the
Banks.
14. ILLEGALITY
If any change in or the introduction of any law, or any change in the
interpretation, administration or application of laws by a final decision
of a competent court or the relevant authority or agency or compliance by
any of the Banks with any such change or introduction of laws or change in
interpretation, administration or application of laws or by reason of the
interpretation, administration or application adopted or declared by any
Governmental Body in respect of any law, shall make it unlawful or a breach
of laws or impracticable for such Bank to maintain the Loans under this
Agreement or to give effect to its obligations and exercise its rights as
contemplated by this Agreement or any Bank is requested to reduce the
volume of its loans or credit to the Borrower, such Bank may, by notice to
the Borrower, declare that to the extent necessary to avoid any such
illegality or breach of laws or impracticability or to comply with such
reduction, its obligations to the Borrower under the Finance Documents
shall be to the extent necessary as aforesaid, terminated forthwith or, if
later, on the latest date to which the obligations may remain in effect
without causing such Bank to be in breach of laws, whereupon the Borrower
will, by the earlier of: (i) the date on which the illegality or breach or
impracticability in question takes effect; and (ii) the Interest Payment
Date next following such notice from the Banks, prepay the Loans, to the
extent necessary as aforesaid. All such prepayments shall be made together
with all Interest and other charges accrued on all the aforegoing to the
date of the prepayment (as well as all amounts payable under clause 19
below and all other amounts payable to such Bank under the Finance
Documents). In the event of prepayment under this clause 14, the provisions
of clause 7.5 above requiring the payment of a prepayment commission in
respect of prepayments, shall not be applicable.
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15. REPRESENTATIONS AND WARRANTIES
15.1. GENERAL
The Borrower hereby makes the representations and warranties set out
in this clause 15 to the Banks. The Borrower acknowledges that the
Banks have entered into this Agreement in full reliance on the
representations and warranties set out in this clause 15 below.
15.2. STATUS
The Borrower is a corporation duly organised and validly existing
under the laws of Israel, with full corporate power and authority to
conduct its business as it is now being conducted and as currently
approved by the Borrower's Board of Directors to be conducted in the
future and to own or use its properties and assets. No event exists
with respect to it which would constitute an Event of Default under
clause 17.7 below.
15.3. LEGAL VALIDITY
The Borrower has the absolute and unrestricted right, power, authority
and capacity to execute and deliver the Finance Documents and to
perform its obligations under the Finance Documents and has taken all
corporate action necessary to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and
thereunder. Each Finance Document (including this Agreement and the
Debenture) has been duly authorised, executed and delivered by the
Borrower and constitutes the legal, valid and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its
terms.
15.4. NON-CONFLICT
Neither the execution and delivery of this Agreement or the Finance
Documents nor the consummation or performance of any of the aforegoing
is or will, directly or indirectly (with or without notice of lapse of
time):
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15.4.1. contravene, conflict with, or result in a violation of (a) any
provision of the Organisational Documents of the Borrower or any
Subsidiary, or (b) any resolution adopted by the board of
directors or the shareholders of the Borrower or any Subsidiary;
or
15.4.2. contravene, conflict with, or result in a violation of, or
give any Governmental Body or other person the right to challenge
or to exercise any remedy or obtain any relief under, any law to
which the Borrower or any of the assets owned or used by the
Borrower may be subject; or
15.4.3. contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorisation that is held by the Borrower or
that otherwise relates to the business of, or any of the assets
owned or used by, the Borrower; or
15.4.4. contravene, conflict with, or result in a violation or breach
of any provision of, or give any person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify,
any Contract or instrument to which the Borrower is a party; or
15.4.5. result in the imposition or creation of any Encumbrance (other
than an Encumbrance under the Security Documents) upon or with
respect to any of the assets owned or used by the Borrower or any
Subsidiary.
Without limiting the generality of the aforegoing, except as set forth
on SCHEDULE 15.4, there is no restriction or prevention, legal or
otherwise, on the creation of the Encumbrances to be created pursuant
to the Security Documents or on the realisation, sale or assignment of
any collateral continuing under any such Security Document in the case
of an Event of Default or on the application by the Banks of any
proceeds of any such realisation or sale.
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15.5. NO DEFAULT
As at the Amendment Closing Date, no Default is continuing which has
not been waived.
15.6. CONSENTS
Except as set forth in SCHEDULE 15.6 hereto, no notice to, filing with
or Consent from any person or Governmental Body is or will be required
to be made or obtained in connection with the execution, delivery and
validity of any of the Finance Documents, or the consummation or
performance of any of the transactions contemplated hereby or thereby
(save for registrations with the Registrar of Pledges and the
Registrar of Companies). As at the Amendment Closing Date, the
Borrower shall have received all the Consents (including Governmental
Authorisations) listed in Schedule 15.6 hereto. All such Consents are,
or shall, on or prior to the date on which such Consents are required
to have been obtained, be in full force and effect, the Borrower is in
compliance in all material respects with all provisions thereof and
such Consents (including Governmental Authorisations) are not the
subject of any pending, or, to the best of the Borrower's Knowledge,
threatened attack or revocation by any competent authority.
15.7. SHARE CAPITAL
As at August 17, 2006, the authorised share capital of the Borrower
consists of 500,000,000 (five hundred million) ordinary shares, of
which 85,406,010 (eighty-five million, four hundred and six thousand
and ten) shares are issued and outstanding, 40,600,675 (forty million,
six hundred thousand, six hundred and seventy-five) shares are
reserved for issuance upon exercise of outstanding options and
warrants (including options granted to employees, officers, directors,
related parties, banks, contractors and other public investors),
51,143,776 (fifty-one million, one hundred and forty-three thousand,
seven hundred and seventy-six) shares are reserved for issuance upon
conversion of outstanding convertible debentures, 4,341,571 (four
million, three hundred and forty-one thousand, five hundred and
seventy-one) shares are reserved for issuance upon conversion of
convertible debentures issuable upon exercise of outstanding warrants
and 14,124,285 (fourteen million, one hundred and twenty-four
thousand, two hundred and eighty-five) shares are reserved for future
grants of options to employees, officers, consultants and directors.
All of the outstanding ordinary shares have been duly authorised and
validly issued. SCHEDULE 15.7 hereto sets forth the list of all those
persons which, to the Knowledge of the Borrower, are the beneficial
holders of 5% (five percent) or more of the issued and outstanding
shares of the Borrower and a list of all the options outstanding, the
vesting schedules of such options and the exercise prices thereof as
well as a list of all outstanding warrants and convertible debentures
as at August 17, 2006.
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15.8. SEC DOCUMENTS; FINANCIAL STATEMENTS
15.8.1. The Borrower has furnished to the Banks copies of the
Borrower's Annual Report on Form 20-F for the year ended December
31, 2005 ("THE ANNUAL REPORT") as filed with the US Securities
and Exchange Commission ("SEC") on July 13, 2006. The Borrower
represents and warrants to that: (a) the Annual Report has been
duly filed with the SEC and when filed was in compliance in all
material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC applicable to such Annual
Report; and (b) the Annual Report was complete and correct in all
material respects as of its date and, as of its date, did not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The
Borrower has provided the Banks with a copy of each document
submitted to the SEC on Form 6-K since January 1, 2006 ("THE 6K
REPORTS" and, together with the Annual Report, "THE SEC
DOCUMENTS"). The Borrower represents and warrants to the Banks
that: (i) the 6K Reports have been duly submitted to the SEC and
when submitted were in compliance in all material respects with
the requirements of law relating to the 6K Reports; and (ii) the
6K Reports were complete and correct in all material respects as
of their respective dates and, as of such dates, did not contain
any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under
which they were made, not misleading.
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15.8.2. The Borrower has delivered to the Banks: (a) audited
consolidated Accounts of the Borrower as at December 31 in each
of the years from 2004 to 2005 (inclusive) (the December 31, 2005
balance sheet being hereinafter referred to as "THE 2005 BALANCE
SHEET") (including the audited consolidated balance sheets,
consolidated statements of income, changes in shareholders'
equity and cash flow for each of the Fiscal Years then ended,
together with the report thereon of the Auditors; and (b)
unaudited reviewed consolidated Accounts of the Borrower as at
the Quarter ending June 30 2006 (including the consolidated
balance sheets, consolidated statements of income, changes in
shareholders' equity and cash flow for the 6 (six) month period
then ended, including in each case the notes thereto). Such
Accounts and notes truly and fairly present the financial
condition and the results of operations, changes in shareholders'
equity and cash flow of the Borrower as at the respective dates
of and for the periods referred to in such Accounts, all in
accordance with GAAP, subject, in the case of interim Accounts,
to normal recurring year-end adjustments (the effect of which
will not, individually or in the aggregate, be materially
adverse); the Accounts referred to in this clause 15.8.2 reflect
the consistent application of such accounting principles
throughout the periods involved.
15.9. BUSINESS PLAN
The Borrower believes that the opinions, assumptions and timetables
contained in the Business Plan (including both the alternate case
assumptions and the base assumptions, as defined therein) are
reasonable. The financial, business and other projections set out in
the Business Plan (including both the alternate case assumptions and
the base assumptions, as defined therein) have been prepared with due
diligence, care and consideration.
15.10. TITLE TO PROPERTIES; ENCUMBRANCES
Except for under the Security Documents, for the Existing Encumbrance
and except as set forth in SCHEDULE 15.10 hereto, the Borrower and its
Subsidiaries have good and marketable title, free and clear of all
Encumbrances (other than Encumbrances for current Taxes not yet due)
to all of the assets, real property, interests in real property,
rights, franchises, Intellectual Property Assets, licences and
properties, tangible or intangible, real or personal, wherever located
which are used in the conduct of the business conducted and as
currently approved by the Borrower's Board of Directors to be
conducted in the future by the Borrower, other than property that is
leased or licensed. Except as set forth in Schedule 15.10 hereto, the
Borrower has valid and enforceable leases or licences, as the case may
be, with respect to assets consisting of property that is leased or
licensed, under which there exists no default, event of default or
event which, with notice or lapse of time or both, would constitute a
default, except for such defaults which could not have a Material
Adverse Effect.
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15.11. CONDITION AND SUFFICIENCY OF ASSETS
[INTENTIONALLY DELETED]
15.12. CUSTOMERS AND SUPPLIERS
[INTENTIONALLY DELETED]
15.13. PERMITTED SUBORDINATED DEBT
A complete and accurate list of, details of, and copies of all trust
deeds, indentures and other instruments reflecting the terms and
conditions of, all Permitted Subordinated Debt existing as at the
Amendment Closing Date are attached as SCHEDULE 15.13 hereto.
15.14. FINANCIAL INDEBTEDNESS
[INTENTIONALLY DELETED]
15.15. TAXES
[INTENTIONALLY DELETED]
15.16. NO MATERIAL ADVERSE CHANGE
[INTENTIONALLY DELETED]
15.17. COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORISATIONS
15.17.1. Except as set forth in SCHEDULE 15.17 hereto, the Borrower
and its Subsidiaries are and at all times since December 31, 2004
have been, in full compliance with each law that is or was
applicable to them or to the conduct or operation of their
respective businesses or the ownership or use of any of their
respective assets, except for such non-compliance which would not
have a Material Adverse Effect.
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15.17.2. The Borrower and each Subsidiary has all Governmental
Authorisations necessary to permit the Borrower and its
Subsidiaries to lawfully conduct and operate the Business, as
currently conducted and as approved by the respective Boards of
Directors of the Borrower and its Subsidiaries to be conducted in
the future, except for such authorisations, the failure to
possess which would not have a Material Adverse Effect. The
Borrower and its Subsidiaries are and have been in full
compliance with all of the terms and requirements of each
Governmental Authorisation that is held by the Borrower and its
Subsidiaries or that otherwise relates to the Business as
presently conducted and as approved by the Borrower's Board of
Directors to be conducted in the future, or to any of the assets
owned or used by the Borrower and its Subsidiaries, except for
such non-compliance which would not have a Material Adverse
Effect.
15.18. LEGAL PROCEEDINGS; ORDERS
15.18.1. Except as set forth in SCHEDULE 15.18 hereto, there is no
pending Proceeding or Proceeding Threatened in writing: (i) that
has been commenced by or against the Borrower or that otherwise
relates to or may affect the business of, or any of the assets
owned or used by, the Borrower or any Subsidiary which, if
decided against the Borrower, would have a Material Adverse
Effect; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the transactions contemplated under this Agreement
or under any other Finance Documents or with the implementation
of the Business Plan.
15.18.2. [INTENTIONALLY DELETED]
15.18.3. [INTENTIONALLY DELETED]
15.18.4. [INTENTIONALLY DELETED]
15.19. ABSENCE OF CERTAIN CHANGES AND EVENTS
[INTENTIONALLY DELETED]
15.20. CONTRACTS; NO DEFAULTS
[INTENTIONALLY DELETED]
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15.21. INSURANCE
15.21.1. [INTENTIONALLY DELETED]
15.21.2. All factual information furnished by the Borrower or its
respective advisors to the Insurance Adviser and contained or
referred to in the Insurance Report was true in all material
respects.
15.21.3. [INTENTIONALLY DELETED]
15.22. ENVIRONMENTAL MATTERS
[INTENTIONALLY DELETED]
15.23. INTELLECTUAL PROPERTY
[INTENTIONALLY DELETED]
15.24. GRANTS, INCENTIVES AND SUBSIDIES
[INTENTIONALLY DELETED]
15.25. DISCLOSURE
[INTENTIONALLY DELETED]
15.26. RELATIONSHIPS WITH RELATED PERSONS
[INTENTIONALLY DELETED]
15.27. DOCUMENTS
[INTENTIONALLY DELETED]
15.28. RANKING OF SECURITIES
The security conferred by the Security Documents constitutes a
priority security interest of the type therein described (subject to
statutory preferences which may rank ahead of the security created
thereunder and subject to those Permitted Encumbrances as referred to
in clause 1.1.114(d) above) over the security assets therein referred
to, which are not subject to any prior or other Encumbrances and is
not liable to be set aside on insolvency of the Borrower.
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15.29. SHAREHOLDINGS
[INTENTIONALLY DELETED]
15.30. REPETITION
The representations and warranties set out in this clause 15 shall be
deemed to be repeated on the Amendment Closing Date.
16. UNDERTAKINGS
The Borrower undertakes to the Banks that so long as any sum remains
payable by the Borrower under any Finance Document or any Bank shall be
under any obligation under any Finance Document to provide any Financial
Indebtedness to the Borrower:
16.1. FINANCIAL INFORMATION
16.1.1. The Borrower shall furnish the Banks:
(i) as soon as practicable (and, in any event, within 90
(ninety) days after the end of each Fiscal Year, the audited
Accounts (consolidated and non-consolidated) of the Borrower
for that Fiscal Year (provided that, for so long as the
Borrower shall not have acquired a Subsidiary, other than
Subsidiaries of the Borrower as at January 18, 2001 as
referred to in Schedule 15.2 hereto, the Borrower shall only
be required to furnish the aforesaid consolidated Accounts);
(ii) as soon as practicable (and, in any event, within 60 (sixty)
days after the end of each Quarter of each Fiscal Year, the
reviewed Accounts (consolidated and non-consolidated) of the
Borrower for that Quarter (or with respect to the second
Quarter, for the relevant half-year)(provided that, for so
long as the Borrower shall not have acquired a Subsidiary,
other than Subsidiaries of the Borrower as at January 18,
2001 as referred to in Schedule 15.2 hereto, the Borrower
shall be required to furnished the aforesaid consolidated
Accounts as aforesaid only);
(iii) [INTENTIONALLY DELETED]
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(iv) at the same time as the Accounts are delivered pursuant to
paragraphs (i) and (ii) above, a report, in the form and
substance attached hereto as SCHEDULE 16.1.1(IV) comparing
actual results with projected results of the Borrower
(including separately for Fab 2);
(v) at the same time as the Accounts are delivered pursuant to
paragraphs (i) and (ii) above, a certificate of the Chief
Financial Officer of the Borrower which shall be certified
as accurate by the Auditors in a form reasonably
satisfactory to the Banks: (a) setting out in reasonable
detail, with respect to Accounts referred to in paragraph
(i) above, computations establishing the Excess Cash Flow
(if any) for that Fiscal Year; (b) setting out in reasonable
detail computations establishing, as at the date of such
Accounts, the following financial ratios for such Quarter or
Fiscal Year (as the case may be): EBITDA, Equity/Total
Assets and Total Debt/EBITDA; (c) a certificate of the
Auditors in the form of SCHEDULE 16.1.1(V)A hereto with
regard to payment of all amounts made in respect of the
Project during the relevant Quarter or Fiscal Year, as the
case may be; (d) a certificate of the Auditors in the form
of SCHEDULE 16.1.1(V)B hereto setting out the amounts
invested in such Quarter in Paid-in Equity, by way of
capital notes, by way of Permitted Subordinated Debt,
without derogating from clause 16.5 below and by way of
Wafer Prepayments; (e) a certificate of the Auditors in the
form of SCHEDULE 16.1.1(V)C hereto setting out the amounts
received under the Investment Centre Fab 2 Grants during
such Quarter; (f) for each Quarter, a statement regarding
ageing of accounts receivable; and (g) a certificate of the
Auditors in the form of SCHEDULE 16.1.1(V)D hereto
confirming that the Auditors did not in the course of their
audit of the Accounts come across any breach of the
financial covenants set forth herein;
(vi) at the same time as the Accounts are delivered pursuant to
paragraphs (i) and (ii) above, a certificate signed by the
Chief Executive Officer (or one of the co-Chief Executive
Officers) of the Borrower on its behalf setting out:
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(1) in reasonable detail computations establishing as at
the date of such Accounts, whether each of the
financial ratios set out in clause 16.29 below
(including, for the removal of doubt, LLCR and
EBITDA/Debt Service) were complied with and certifying
that:
(a) the relevant Accounts fairly present (in relation to
the relevant Accounting Period) the financial position
of the Borrower;
(b) the relevant Accounts were prepared in accordance with
GAAP, consistently applied; and
(c) no Default has occurred or, if it has occurred,
specifying the Default and the steps, if any, being
taken to remedy it;
(2) the number of shares in the Borrower held by each of
the Lead Investors and by each shareholder of the
Borrower who, to the Knowledge of the Borrower, holds
at least 5% (five percent) of the issued share capital
of the Borrower as at the end of such Accounting
Period; and
(3) a certificate of compliance by the Borrower with the
provisions of clause 16.27 below, attaching
documentation, confirming such compliance;
(vii) not less than 7 (seven) days before the end of each month,
an updated forecast of all payments to be made under the
Project in respect of the purchase of equipment and other
payments in respect of the following 3 (three) month period;
(viii) by not later than 7 (seven) days before the end of each
Fiscal Year, a budget for the Borrower approved by the Board
of Directors of the Borrower for each Quarter of the next
Fiscal Year, in the format customary at the Borrower;
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(ix) if in the course of any Fiscal Year, the Borrower wishes to
update or revise any of the assumptions underlying the
projections under the Business Plan pursuant to paragraph
(vii) above in any material respect, the Borrower shall
furnish to the Banks such updated assumptions. Nothing
contained in this clause shall derogate from the provisions
of clause 16.20 below.
16.1.2. The Borrower will:
(i) within 15 (fifteen) days of the end of June 30 and December
31 of each Fiscal Year, supply to the Consulting Engineer
(and, if so required by the Banks, also the Banks) a report
on the progress of Fab 2 during the 2 (two) 6 (six) month
periods ending June 30 and December 31, respectively, and
(prior to completion of Fab 2) of any possible delays or
cost overruns of the completion of Fab 2, prepared by the
Borrower and certified as approved by the Chief Executive
Officer (or one of the Co-Chief Executive Officers) of the
Borrower relating, INTER ALIA, to the purchase, delivery and
installation of equipment in connection with Fab 2 as
against the Business Plan and the timetable therein;
(ii) notify the Banks immediately of details of any material
default under any Material Contract or adverse claims
against the Borrower by any party to any Material Contract
or by any other person in connection with the Project or of
any other material claim by a person against the Borrower,
whether or not in connection with the Project;
(iii) notify the Banks of details of any shut-down of the
Project, any force majeure event under a Material Contract
and any event which might interrupt Project construction or
performance;
(iv) notify the Banks of details of the occurrence of any Release
or of any Environmental Claim.
16.1.3. The Borrower shall furnish to the Banks:
(i) promptly, all notices, reports or other documents required
by law to be despatched by the Borrower to its shareholders
generally (or any class of them) or to the holders of the
Permitted Subordinated Debt and all notices, reports or
other documents relating to the financial difficulties or
debt obligations of the Borrower despatched by or on behalf
of the Borrower to its creditors generally or to any class
of its creditors;
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(ii) promptly, copies of notices or other filings made by the
Borrower with the SEC or any other regulatory Governmental
Body;
(iii) [INTENTIONALLY DELETED]
(iv) promptly, copies of all monthly reports furnished by the
Borrower to its directors;
(v) as soon as the same are instituted or, Threatened, details
of any litigation, arbitration or other Proceedings
involving it which, if adversely determined, would have a
Material Adverse Effect; or which involves a liquidated
claim or alleged liability which is likely to be in excess
of US $2,500,000 (two million five hundred thousand United
States Dollars) or its equivalent, or, together with any
other claims or alleged liability, to be in excess of US
$5,000,000 (five million United States Dollars) (or its
equivalent) in aggregate;
(vi) promptly, such further information regarding the Project or
the Borrower's financial condition, business and assets
(including any requested amplification or explanation of any
item in any Accounts, the Business Plan or other material
provided by the Borrower hereunder) as the Banks may
reasonably request from time to time;
(vii) without derogating from clause 16.32 below, promptly, upon
being notified of the same, details of the occurrence of a
Change of Ownership or details of any proposed Change of
Ownership of which it is aware;
(viii) promptly, on request, certificates signed by the CEO (or
one of the co-CEO's) of the Borrower as to compliance by the
Borrower with the Finance Documents, Security Documents and
Material Contracts and as to the absence of any Default;
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(ix) promptly, notice of any Default and the steps being taken to
remedy same;
(x) [INTENTIONALLY DELETED];
(xi) promptly after the execution thereof, any Contract which it
reasonably considers may constitute a Material Contract and
the Borrower shall promptly take all steps required by the
Banks to duly pledge and assign by way of charge all rights
and interest of the Borrower under such Material Contracts
in accordance with the Debenture;
(xii) promptly, after receipt thereof, of any material
communication from any Governmental Body with respect to the
Project, as well as all other material notices and
correspondence received by the Borrower under or in relation
to the Project or any of the Material Contracts;
(xiii) [INTENTIONALLY DELETED]
(xiv) the amounts of all deposits at each Bank; and
(xv) [INTENTIONALLY DELETED].
16.1.4. As soon as practicable (and, in any event, within 45 (forty
five) days after the end of each Quarter), the Borrower shall
send to the Banks:
(a) a certificate signed by the Borrower's Chief Executive
Officer (or one of the Co-Chief Executive Officers) and
Chief Financial Officer certifying that the Borrower is in
full compliance with all of the terms and conditions of the
Finance Documents and if not so in compliance, specifying
the relevant non-compliance and the steps, if any, being
taken to remedy it;
(b) a report certified by the CEO (or one of the Co-chief
Executive Officers) and Chief Financial Officer of the
Borrower detailing any Acquisition made or resolved to be
made by the Borrower in an aggregate amount equal to or in
excess of US $1,000,000 (one million) United States Dollars)
during the preceding Quarter;
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(c) a resolution of any organ of the Borrower to make, or
evidencing any intention to make, whether conditionally or
unconditionally, preparations for the issuance of a
prospectus and/or any offer to the public (whether or not
any such offer requires the approval or publication of a
prospectus), in any jurisdiction, relating to the sale or
offer of any securities or debentures of the Borrower;
(d) details of any loans (other than loans to employees in the
ordinary course of the Borrower's business) or guarantees
made by the Borrower, exceeding in each case US $1,000,000
(one million United States Dollars) or loans or guarantees
exceeding US $2,500,001 (two million five hundred thousand
and one United States Dollars) in aggregate;
(e) any disposal as referred to in clause 16.24 below, the
Dollar amount (or, if denominated in a currency other than
US Dollars, the Dollar equivalent) of the Net Proceeds of
which equals or exceeds US $5,000,000 (five million United
States Dollars) when aggregated with the Net Proceeds of all
such other disposals in the Fiscal Year in which such
Quarter occurs, equals or exceeds US $10,000,000 (ten
million United States Dollars).
16.2. ACCOUNTS AND AUDITORS
The Borrower will ensure that:
16.2.1. the annual Accounts (including the consolidated annual
Accounts) to be delivered to the Banks pursuant to clause 16.1
above are audited by the Auditors and that the quarterly Accounts
are, unless otherwise indicated herein, reviewed by the Auditors
(including the consolidated Accounts);
16.2.2. the Borrower shall at all times have duly appointed Auditors;
16.2.3. the Borrower will not change its financial year-end without
the prior written consent of the Banks;
16.2.4. all Accounts shall be prepared in accordance with GAAP
(consistently applied) or shall indicate in notes to or
accompanying such Accounts (including the consolidated financial
statements) any material departures from GAAP or (without
derogating from clause 16.2.5 below) changes in the accounting
policy of the Borrower;
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16.2.5. each set of Accounts delivered to the Banks is prepared in the
respective formats attached as Schedule 1.1.2 hereto and is
prepared on substantially the same basis as was used in the
preparation of the Accounts previously delivered to the Banks,
subject to changes required by GAAP;
16.2.6. in the event that any Accounts are delivered which are not
prepared on a substantially consistent basis to Accounts
previously delivered hereunder, such Accounts are accompanied by
an explanation of any changes to the accounting basis used in
respect of the Business Plan; and
16.2.7. all Accounts shall fairly present in all material respects
(subject to adjustments which fall to be made at the end of the
financial year in accordance with GAAP), the financial position
and results of operations of its financial position and results
of operations, as at the end of and for the Accounting Period to
which they relate.
16.3. PURPOSE
[INTENTIONALLY DELETED]
16.4. NEGATIVE PLEDGE
The Borrower shall not create or permit to subsist any Encumbrance on
the whole or any part of its, or any of its Subsidiaries' present or
future assets, business or undertaking, save for the Encumbrances
under the Security Documents and for the other Permitted Encumbrances.
16.5. NO FINANCIAL INDEBTEDNESS
Save with the prior written consent of the Banks, the Borrower will
not incur and will procure that the Group will not incur any Financial
Indebtedness, save for Permitted Financial Indebtedness. Without
limiting the generality of the aforegoing, the Borrower will not and
will procure that its Subsidiaries will not make any loans or give any
guarantees or incur other contingent Indebtedness, other than as
referred to (and subject to the limits set out) in clause 1.1.115(e).
The Borrower will deliver to the Banks, within 60 (sixty) days of the
end of each Quarter during this Agreement, a certificate from the
chief financial officer of the Borrower confirming compliance by the
Borrower with the provisions of this clause 16.5. In addition, the
Borrower shall not give any credit, save for customary credits in the
Ordinary Course of Business constituting credit to customers or loans
to employees.
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16.6. PARI PASSU RANKING
The Borrower undertakes that its obligations under this Agreement rank
and will at all times rank at least PARI PASSU in right and priority
of payment and in priority of security (save by reason of and to the
extent of the security afforded thereto by the Security Documents)
with all its other present and future unsecured and unsubordinated
obligations, other than obligations which are mandatorily preferred by
law applying to companies generally.
16.7. DISTRIBUTIONS
The Borrower will not, prior to the date that all amounts payable by
the Borrower under the Finance Documents shall have been paid in full:
16.7.1. make or resolve to make any Distribution (other than payments
with respect to Permitted Subordinated Debt specifically
permitted by clause 16.7.2 below);
16.7.2. make or resolve to make any repayment, prepayment or payment
(in cash or in kind) of the principal of, or Interest (whether or
not capitalised) or other amount on or in respect of the
Permitted Subordinated Debt, save to the extent permitted under
the approved terms thereof in accordance with clause 1.1.118
above (including, for the removal of doubt, all Permitted
Subordinated Debt set forth on Schedule 15.13 hereto). For the
removal of doubt, the Borrower shall not or make or resolve to
make any other changes to or in respect of the Permitted
Subordinated Debt without the prior written consent of the Banks;
16.7.3. without derogating from clause 16.22 below, make or resolve to
make any other payment or transfer of assets to or acquisition
from any shareholder of the Borrower or Affiliate of any
shareholder, save for:
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(i) payment to Toshiba of licence fees under the Toshiba Licence
Agreement;
(ii) payment to TIC of a management fee in an amount not to
exceed US $500,000 (five hundred thousand United States
Dollars) per annum;
(iii) payment to directors of reasonable directors' fees and
expenses;
(iv) payments or transfers contemplated under the Foundry
Agreements with the Equity Wafer Partners listed in Schedule
1.1.101 hereto;
(v) payments permitted by clause 16.27.3.1 below;
(vi) payments in connection with the Borrower's indemnification
obligation as contemplated by the undertaking from the
Borrower to TIC dated November 11, 2003 with respect to what
was known as the Safety Net Undertaking;
(vii) payments to TIC in connection with the Equipment Purchase
Agreement between the Borrower and TIC, dated May 17, 2006;
(viii) payments to SanDisk in connection with the Loan Agreement
between the Borrower and SanDisk, dated August 10, 2006; and
(ix) payments or transfers to the Banks pursuant to: (a) the
Finance Documents; (b) any other Permitted Financial
Indebtedness; or (c) the Equity Documents.
16.8. INTELLECTUAL PROPERTY ASSETS
The Borrower will:
16.8.1. make such registrations and pay such fees and similar amounts
as are necessary to keep those registered Intellectual Property
Assets owned by the Borrower: (a) which are material to the
conduct of the Project from time to time; or (b) over which the
Banks have been granted fixed security pursuant to the Security
Documents (if any), in force and to record its interest in those
Intellectual Property Assets;
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16.8.2. take such steps as are necessary and commercially reasonable
(including the institution of Proceedings) to prevent third
parties infringing those Intellectual Property Assets referred to
in clause 16.8.1 above and (without prejudice to clause 16.8.1
above) take such other steps as are reasonably practicable to
maintain and preserve its interests in those rights;
16.8.3. promptly upon being required to do so by the Banks, comply
with all proper instructions of the Banks which the Banks are
entitled to give under the Security Documents in respect of its
Intellectual Property Assets referred to in clause 16.8.2 above;
16.8.4. not sell, transfer, lease, license on an exclusive basis or
otherwise dispose of all or any part of its interest in any of
the Intellectual Property Assets referred to in clause 16.8.1
above (whether in a single transaction or in a series of
transactions whether related or not and whether voluntary or
involuntary), save for any licence arrangements in respect of
those rights entered into with any third party, where those
licence arrangements are entered into on arms' length terms and
in the Ordinary Course of Business and which do not adversely
affect the interests of the Banks under the Finance Documents or
the conduct of the Project; and
16.8.5. not permit any registration of any of the Intellectual
Property Assets referred to in clause 16.8.1 above to be
abandoned, cancelled or lapsed or to be liable to any claim of
abandonment for non-use or otherwise, except in respect of
Intellectual Property Assets, the non-registration of which shall
not have a Material Adverse Effect.
16.9. ENVIRONMENTAL MATTERS
The Borrower will:
16.9.1. (i) obtain all Environmental Permits required for the
operation of the business of the Borrower as contemplated under
the Business Plan by not later than the date when such
Environmental Permit is required to be obtained; (ii) comply with
the terms and conditions of all Environmental Permits applicable
to it; (iii) comply with all applicable Environmental Laws; (iv)
use its best endeavours to prevent any Release of Materials of an
Environmental Concern; and (v) remedy all Environment damage
caused in connection with the Project, in each case where failure
to do so would have a Material Adverse Effect; and
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16.9.2. promptly upon receipt of the same, notify the Banks of any
claim, notice or other communication served on it in respect of
any alleged breach of or corrective or remedial obligation or
liability under any Environmental Law.
16.10. INSURANCE
16.10.1. Until the date upon which all amounts payable by the Borrower
under the Finance Documents shall have been paid in full, the
Borrower will insure and keep insured all such properties and
assets of the Borrower, with reputable insurance companies or
underwriters approved by the Banks, to such extent, at such times
and against such risks, as described in the schedule to the
Insurance Report (including with respect to deductibles,
exclusions and exceptions) (the Insurance Report to be revised
only at the recommendation of the Insurance Advisor and subject
to the consent of the Borrower and the Banks) and the Borrower
will procure that all the Insurance Policies required under the
Insurance Report as aforesaid shall, for so long as so required
in accordance with the Insurance Report, be in full force and
effect and legal, valid, binding and enforceable in accordance
with their respective terms. Without limiting the generality of
the aforegoing, the Borrower shall ensure that at all times the
proceeds of all Insurance Policies in force payable in the event
of loss of Fab 2 or of the Project shall be equal to at least
110% (one hundred and ten percent) of the Total Outstandings at
such time.
16.10.2. The Borrower will promptly after becoming aware of the
relevant requirement, effect and maintain all insurances required
by the terms of any applicable law or any Contract binding on it.
16.10.3. The Borrower will ensure that it has such insurance coverage
in respect of any risks or liabilities other than those specified
in the Insurance Report as would from time to time generally and
customarily be insured by a company carrying on a business
similar to the Business.
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16.10.4. Subject as hereinafter provided, the Borrower may, at its
discretion at any time, effect such other insurances in addition
to or supplementing those referred to in this clause 16.10 as it
may think fit; provided that, such supplementary insurance shall
not adversely affect any insured party's rights or ability to
recover under the insurance referred to in this clause 16.10 and
the Borrower shall notify the Banks at least annually of any
material insurances effected since the previous such notification
pursuant to this clause 16.10.
16.10.5. The Borrower shall pay all premiums on all Insurance Policies
when due and the Borrower shall maintain and comply with the
provisions of the Insurance Policies and the Borrower shall
ensure that the Insurance Policies do not become void or
voidable. The Borrower will promptly supply to the Banks on
request evidence reasonably satisfactory to the Banks of payment
of all premiums and other amounts payable by it under and a
certified copy of, each insurance policy taken out and maintained
by it pursuant to this clause 16.10, together with such other
information as to the Insurance Policies taken out pursuant
hereto (including regarding renewals thereof) as the Banks may
reasonably request.
16.10.6. The Borrower shall ensure that, in respect of each Insurance
Policy taken out pursuant to clause 16.10.1 (except for third
party insurances as referred to in the schedule to the Insurance
Report):
(a) a clause is endorsed upon such policy in the form of
SCHEDULE 16.10.6(A) hereto;
(b) an undertaking is endorsed upon such policy by the insurer
to notify the Banks promptly in writing if the premium or
other moneys payable under such policy are not paid when due
and to refrain from cancelling such policy by reason only of
the non-payment of such moneys for a period of at least 120
(one hundred and twenty) days from the due date;
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(c) a provision is endorsed upon such policy to the effect that
the relevant insurance company waives any rights of
contribution arising against any other insurance taken out
by the Banks in respect of payments made by it and any
rights of subrogation arising in respect of the rights of
the Banks under the Finance Documents;
(d) a notice of assignment by way of charge in respect of all
the Insurance Policies (other than under Insurance Policies
in respect of liability of the Borrower to third parties or
of liability of the Borrower for damage to property of third
parties or of the type listed in SCHEDULE 16.10.6(D)
attached hereto) is duly given to the relevant insurers in
accordance with the Debenture and such insurers shall have
given acknowledgments thereof, pursuant to which, INTER
ALIA, all proceeds of the Insurance Policies are to be paid
directly to the Banks by way of payment into the Project
Account;
(e) the Banks are joined as an additional insured (named
insured) thereunder and the interests of the Banks are duly
noted and endorsed upon all slips, cover notes, policies or
other instruments of insurance issued or to be issued in
connection therewith;
(f) the insurers agree that the Banks are not liable for
premiums or other policy obligations.
16.10.7. The Borrower will ensure that (other than third party
liability insurance (as referred to in the schedule to the
Insurance Report)) all of the Insurance Policies required to be
taken out and maintained by it pursuant to this clause 16.10
shall be contain provisions providing for payment in the manner
described in clause 16.10.6(d) above.
16.10.8. All moneys received or receivable under any insurances in
respect of property or assets damaged or destroyed or otherwise
shall be paid into the Project Account and may, unless required
to be prepaid in accordance with clause 8.1.1 above, thereafter
promptly be applied: (i) subject to (ii) below, in repairing,
replacing, restoring or rebuilding the property or assets damaged
or destroyed or applied in respect of the Project or (in the case
of third party liability cover), in satisfaction of the third
party liability in question; or (ii) on and after the occurrence
of a Default and for so long as such Default is continuing, at
the option of the Banks: (A) to prepay the Loans in accordance
with clause 7 above; or (B) in repairing, replacing, restoring or
rebuilding the property or assets damaged or destroyed or applied
in respect of the Project as the Banks reasonably see fit as
permitted pursuant to this Agreement or (in the case of third
party liability cover) in satisfaction of the third party
liability in question.
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16.10.9. The Borrower shall promptly notify the Banks of any insurance
claim where the amount of such claim exceeds US $2,500,000 (two
million five hundred thousand United States Dollars) (or its
equivalent, on the date on which the claim is made, in the
currency in which such claim is made) and of any insurance claims
which, in the aggregate, exceed US $5,000,000 (five million
United States Dollars) (or their respective equivalents, as
aforesaid).
16.11. MERGERS AND AMALGAMATIONS
The Borrower will not, and will procure that its Subsidiaries will
not, enter into or resolve to approve any merger, consolidation,
amalgamation or scheme of reconstruction or in any way transfer its or
their respective businesses or part thereof, save with the prior
written consent of the Banks.
16.12. CONSENTS
The Borrower will obtain every Consent required for the Project or Fab
2 or to perform its obligations under this Agreement, under any other
Finance Document and under any Material Contract and ensure that: (a)
none of the Consents is revoked, cancelled, suspended, withdrawn,
terminated, expires or is not renewed or otherwise ceases to be in
full force and effect; and (b) no Consent is modified and that it does
not commit any breach of the terms or conditions of any Consent (save
for a breach which cannot be a cause for revocation of such Consent or
for variation thereof materially adverse to the Borrower). The
Borrower will promptly furnish to the Banks certified copies of all
Consents.
16.13. MATERIAL CONTRACTS
16.13.1. The Borrower shall comply with the terms of each of the
Material Contracts, save for any non-compliance which: (i) is not
material; and (ii) cannot constitute (including with the passage
of time or the giving of notice) a cause of action permitting
cancellation of any such Material Contract or any variation
thereof materially adverse to the Borrower).
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16.13.2. The Borrower shall not, without the prior written consent of
the Banks (the Banks to inform the Borrower within 20 (twenty)
Business Days of having been requested in writing, such request
to be accompanied by all relevant information relating thereto),
amend, cancel, terminate, suspend, supplement, supersede, or
waive any term of, a Material Contract, save, in the case where
such action is not materially adverse to the interests of the
Borrower or the Banks.
16.13.3. The Borrower shall take all reasonable action necessary to
perfect, preserve and enforce all of its rights under the
Material Contracts, save where failure to take such action would
not be materially adverse to the Borrower.
16.13.4. [INTENTIONALLY DELETED]
16.13.5. The Borrower shall use its best efforts to procure that all
Material Contracts entered into after the date hereof are duly
pledged to the Banks by way of first-ranking fixed charge
(assignment by way of charge) under the Debenture and otherwise
perfected in accordance with its terms.
16.14. AUDITORS
16.14.1. If the Borrower wishes to change its Auditors it will notify
the Banks as to the reasons for any such proposed change and if
the Banks so request, will instruct the audit partner of each of
the outgoing firm of Auditors and the replacement firm of
Auditors to discuss the financial position of the Borrower with
the Banks.
16.14.2. The Borrower will authorise the Auditors to discuss the
Borrower's financial position with the Banks (and with the Bank
Adviser) on the Banks' reasonable request and after notice is
provided to the Borrower, at the expense of the Borrower.
16.15. ACQUISITIONS
16.15.1. The Borrower shall not, without the prior written consent of
the Banks, make any Acquisition (including any investment of any
kind in any Subsidiary or other Affiliate), unless: (a) the
aggregate amount of the investment by the Borrower in all
Acquisitions during the period of this Agreement does not exceed
US $5,000,000 (five million United States Dollars); and (b) the
Borrower shall not incur any Indebtedness (contingent or
otherwise) in connection with such Acquisition, save for the
amount invested as permitted under paragraph (a) above.
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16.15.2. The Borrower's ability to make any Acquisition pursuant to
clause 16.15.1 above will be conditional upon the Borrower using
its best efforts to provide that such Acquisition is first
capable of being pledged in favour of the Banks by way of a first
pledge and charge under the Debenture or any other charge, in a
form satisfactory to the Banks.
16.16. ACCESS
16.16.1. The Borrower shall, subject to prior coordination with the
Borrower of the time, permit any professional adviser (including
the Bank Adviser) to the Banks or representative of the Banks to
have access to the Borrower's corporate, financial and
operational books, records, accounts, documents, computer
programmes, data or other information in the possession of or
available to it, subject to such adviser executing a
confidentiality undertaking in customary form reasonably
acceptable to the Banks and the Borrower and to take such copies
as may be considered appropriate by such representative or
professional adviser and to discuss the affairs, finances and
Accounts of the Borrower with the directors, officers and
Auditors of the Borrower, all at such reasonable times after
giving written notice and as often as the Banks may from time to
time request. For the removal of doubt, the Consulting Engineer,
the Bank Adviser and such other professional advisors shall be
entitled to reveal to the Banks all confidential information
regarding the Borrower to which it has access.
16.16.2. The Borrower will procure that the Consulting Engineer and
any other persons designated in writing by the Banks shall have
full access to all sites on which activities or works relating to
Fab 2 or for the performance of the Project are carried out from
time to time, to inspect the Project and the progress thereof at
all times, to receive reports regarding receipt of raw materials,
equipment and progress, to receive copies of all technical
correspondence, records and documentation relating to the
Project, to attend all testing and otherwise to have access to
all other aspects of the Project.
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16.16.3. For the avoidance of doubt, no information or access provided
to any of the Banks' professional advisors, including, the
adviser to the Banks on financial and accounting matters ("THE
BANK ADVISER"), pursuant to this Agreement shall release the
Borrower from its obligations to make and provide, and to be
fully responsible for, all reports and notices as shall be
required under this Agreement, or in any way place any
responsibility on the Banks with respect to the Borrower or to
any third parties with respect to such information and access,
including, any claim that any knowledge obtained by the Banks'
professional advisors (including the Bank Advisor), constitutes
any waiver of any nature or acceptance by the Banks of any such
matter or matters as to which the Banks' professional advisors
(including the Bank Advisor) obtain knowledge.
16.17. CAPITAL EXPENDITURE
16.17.1. The Borrower will not incur any capital expenditure, save for
the specified capital costs in accordance with the Business Plan,
including for Fab 1 and Fab 2 and Acquisitions which are
permitted hereby.
16.17.2. Without limiting the generality of the aforegoing, the
Borrower shall procure that all investments (including in Paid-in
Equity, by way of capital notes, and the Investment Centre Fab 2
Grants) and all income of whatsoever nature received, is applied
in accordance with the Business Plan.
16.18. ORGANISATIONAL DOCUMENTS
The Borrower shall not amend its Articles of Association or other
Organisational Documents in any respect materially adverse to the
interests of the Banks under the Finance Documents, without the prior
written consent of the Banks. For the purposes of this clause 16.18,
the term "FINANCE DOCUMENTS" shall be deemed not to include any
shares, Warrants and capital notes issued by the Borrower to the
Banks.
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16.19. PROJECT
16.19.1. The Borrower will not: (i) delegate the management of the
Project to any other person; (ii) abandon all or any part of the
Project, save with the consent of the Banks; or (ii) maintain any
bank account in connection with the Project (or any payments or
receipts in relation thereto), save for the Charged Accounts and
for accounts as permitted pursuant to clauses 16.31.3(i) and (ii)
below.
16.19.2. The Borrower will use all reasonable efforts to procure that
the Project is implemented in accordance with the Business Plan.
16.20. BUSINESS PLAN
16.20.1. The Borrower will develop the Project in accordance with the
Business Plan and otherwise carry on its business in accordance
with the Business Plan and will not, save with the prior written
consent of the Banks, alter the Business Plan in a way which
would:
(a) change the schedule for the installation of equipment in,
and the completion of, Fab 2 as set forth in the Business
Plan;
(b) change the plan for financing the Project as set forth in
the Business Plan, other than (subject to the conditions of
this Agreement relating to raising of capital) with respect
to capital raising transactions for the Borrower;
(c) increase the cost of the Project beyond that set forth in
the Business Plan;
(d) change the production capacity of Fab 2 as set forth in the
Business Plan; or
(e) in any other way which, in the opinion of the Banks, is
material for the protection of the interests of the Banks.
The Borrower shall give the Banks adequate prior notice of any
proposed variation of the Business Plan.
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16.20.2. The Borrower shall not make any change to the Business Plan,
save with the prior written consent of the Banks. Any such change
consented to as aforesaid shall amend all those provisions and
Schedules contained herein which are affected by such change in
order only to take account of such change provided that all such
consequential changes as aforesaid have been agreed to by the
Banks in writing and in advance.
16.21. HEDGING
The Borrower shall not enter into any Hedging Transaction, other than
Permitted Hedging Transactions. "PERMITTED HEDGING TRANSACTIONS" shall
mean: (i) forward transactions, swap transactions, future transactions
or other similar types of transactions; or (ii) other Hedging
Transactions in which the maximum financial exposure is reasonable and
the exact amount thereof may be calculated pursuant to the Hedging
Transaction agreement at the time such agreement is entered into,
provided, in the case of both (i) and (ii), such Hedging Transaction
is made with one of the Banks in respect of interest rates or
currencies exposures with respect to the Group and, provided further
that, the Borrower shall not: (a) enter into any Permitted Hedging
Transactions for any speculative purpose; and (b) enter into any
Permitted Hedging Transactions, save with the prior written consent of
the Banks.
16.22. TRANSACTIONS WITH RELATED PERSONS
Except with the prior written consent of the Banks, the Borrower will
not, directly or indirectly, purchase, acquire or lease any property
from, or sell transfer or lease any property to, or otherwise have any
dealings or enter into any transaction after the date of this
Agreement with, any interested person (BAAL INYAN), Affiliate or any
Subsidiary of the Borrower or with any Lead Investor or Affiliate of a
Lead Investor, except on terms no more favourable to such other person
than would apply in the case of arm's length Contracts entered into in
the Ordinary Course of Business, except for transactions which are not
material.
16.23. SALE AND LEASEBACK
The Borrower will not sell, transfer or otherwise dispose of any of
its assets or any interest therein on terms whereby such asset is or
may be leased to or re-acquired or acquired by the Borrower or any
member of the Group in circumstances where the transaction is entered
into primarily as a method of raising finance or of financing the
acquisition of an asset.
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16.24. DISPOSALS
The Borrower will not and will procure that none of its Subsidiaries
will, either in a single transaction or in a series of transactions
whether related or not and whether voluntarily or involuntarily, sell,
transfer, lease or otherwise dispose of all or any part of or interest
in its respective assets or undertaking to any person, save for:
16.24.1. disposals in the Ordinary Course of Business;
16.24.2. disposals of assets in exchange for or for investment in
other assets performing substantially the same function which are
comparable or superior as to type, value and quality;
16.24.3. (i) disposals of shares of a Subsidiary on arm's length
terms where the business of that Subsidiary is not
required for the efficient operation of the Business
and such business has been, or is in the process of
being, terminated;
(ii) disposals of surplus, obsolete or redundant plant and
equipment or other assets or of land or buildings in
connection with the termination of any business or
operation not required for the efficient operation of
the Business, in each case on arm's length terms; or
16.24.4. any other disposal with the prior written consent of the
Banks.
Nothing in this clause 16.24, however, will permit the disposal of and
the Borrower shall not dispose of: (i) any assets which are, or are
intended to be, the subject of fixed security created by any Security
Document except in accordance with the relevant Security Document; or
(ii) any assets (including rights under Material Contracts) which, in
accordance with clause 1.1.36(c)(i) or (ii) above are not charged in
favour of the Banks under the Debenture. In the event that the
Borrower shall wish to dispose of assets as referred to in clause
16.24.2 or 16.24.3(ii) above, it shall request for the Banks to
release such assets from any fixed security under the relevant
Security Document and, provided no Default or Event of Default has
occurred, the Banks shall consent to such release, provided further
that, with respect to the assets referred to in clause 16.24.2 above,
such replacement assets are all duly pledged by fixed charge under the
relevant Security Document. Notwithstanding any other provision
herein, the Borrower shall be entitled to dispose of any shares or
other securities or other similar rights of the Borrower in or in
connection with Azalea Microelectronics Corporation, without the prior
written consent of the Banks provided that the proceeds of any such
disposal are invested in the Project in accordance with the Business
Plan.
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16.25. NOTIFICATION OF DEFAULT
The Borrower shall notify the Banks of any Default or Event of Default
of which it is aware (and the steps, if any, being taken to remedy
such Default or Event of Default) promptly upon becoming aware
thereof.
16.26. COMPLIANCE WITH LAWS
The Borrower will, and will procure that each of its Subsidiaries
will, comply in all respects material to the Banks with all applicable
laws and Orders.
16.27. INVESTMENTS IN THE BORROWER
[INTENTIONALLY DELETED]
16.27.1. [INTENTIONALLY DELETED]
16.27.2. [INTENTIONALLY DELETED]
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16.27.3.
16.27.3.1. The Borrower shall cause all those Qualifying Wafer
Prepayment Contracts listed in SCHEDULE 16.27 hereto to be
amended to the effect (and all Qualifying Wafer Prepayment
Contracts which the Borrower shall enter into after November
11, 2003 shall provide) that no prepayments made to the
Borrower with respect to the purchase of wafers may be
reimbursed or refunded to, or utilised by, or credited in
favour of, the wafer customer and/or designer party to the
Qualifying Wafer Prepayment Contract providing such
prepayment, except with respect to: (a) the utilisation of
such prepayments towards the purchase price of wafers which
were ordered prior to November 11, 2003 and which were or
will be manufactured and delivered by the Borrower for such
wafer customer and/or designer in an aggregate amount not to
exceed US $1,100,000 (one million one hundred thousand
United States Dollars); (b) the utilisation of such
prepayments towards the purchase price of wafers
manufactured and delivered by the Borrower to such wafer
customer and/or designer after December 31, 2006; and (c)
the utilisation of such prepayments to purchase shares of
the Borrower. The Borrower shall be entitled to pay
quarterly, in arrears, to the counterparty to any Qualifying
Wafer Prepayment Contract listed in Schedule 16.27 hereto
which is amended in accordance with the aforegoing in this
clause 16.27.3.1, Interest in respect of the amount of any
prepayment to a counterparty which is a party as aforesaid,
in respect of the period commencing on the date stipulated
for utilisation thereof pursuant to such Qualifying Wafer
Prepayment Contract prior to such amendment as aforesaid in
this clause 16.27.3.1 and ending on January 1, 2007, such
Interest to be at a rate not higher than that payable by the
Borrower to the Banks pursuant to clause 9.1.1 above
(provided that for the purposes of this clause 16.27.3.1
with respect only to Qualifying Wafer Prepayment Contracts
in full force and effect on the Amendment Closing Date and
providing for Interest payable at the rate of US LIBOR plus
2.5% (two point five percent) per annum, clause 9.1.1(b)
shall be deemed to read "2.5% (two point five percent) per
annum)", through December 31, 2007 and the Borrower shall be
further entitled to pay to any such counterparty under any
such Qualifying Wafer Prepayment Contract the principal of
such prepayment in cash after June 30, 2007; provided that,
at the date of payment of any such Interest or principal as
aforesaid, the Banks shall not have declared an Event of
Default to have occurred or to have made any other
declarations under clause 17.21 below. For the avoidance of
doubt, no Interest shall be payable on any Qualifying Wafer
Prepayment Contract as aforesaid beyond the period ending on
December 31, 2007.
16.27.3.2. [INTENTIONALLY DELETED]
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16.27.3.3. The Borrower shall endeavour to procure that, by no
later than December 31, 2006, the Investment Centre shall
approve the Borrower's eligibility to receive new Fab 2
Grants in an amount equal to US $80,000,000 (eighty million
United States Dollars) in respect of investments made or to
be made in Fab 2 after December 31, 2005. In the event that
the Borrower shall not succeed in obtaining the approval of
the Investment Centre as aforesaid, or shall receive such
approval but the grants in respect of investments made in
Fab 2 shall not be made in accordance with the terms of such
approval, then the Borrower shall, with respect to, and
within 90 (ninety) days following the making of, each
cumulative investment in Fab 2 of US $100,000,000 (one
hundred million United States Dollars) up to cumulative
investments in Fab 2 of US $400,000,000 (four hundred
million United States Dollars) (and each time such
cumulative investments are made, up to cumulative
investments in Fab 2 of US $400,000,000 (four hundred
million United States Dollars)) in respect of which
investment grants would have been receivable had the said
Investment Centre Fab 2 Grants been approved, procure the
receipt by it of Paid-in Equity and/or wafer prepayments
under Qualifying Wafer Prepayment Contracts entered into
after the Amendment Closing Date and/or payments in exchange
for equity equivalent capital notes in the form issued to
TIC on or about the Amendment Closing Date, in an amount of
US $20,000,000 (twenty million United States Dollars). For
the purposes of the aforegoing: (a) all Paid-in Equity
(including, for the removal of doubt, as referred to in
clause 1.1.112(iii) above or pursuant to the exercise of
options or warrants received after May 17, 2006 (excluding,
for the removal of doubt: (i) the investment by TIC of US
$100,000,000 (one hundred million United States Dollars) in
equity equivalent capital notes to be made on or about the
Amendment Closing Date; (ii) the conversion by the Banks of
their Loans into equity equivalent capital notes; (iii) the
issue to the Banks of shares or equity equivalent capital
notes pursuant to clause 9.4 above; and (iv) the conversion
of any equity equivalent capital notes, in whole or in part,
into shares) shall be taken into account as if invested on
account of the Borrower's aforesaid obligation; (b) only
investments in Fab 2 made since January 1, 2006 and which
are in excess of an aggregate investment of US $130,000,000
(one hundred and thirty million United States Dollars) in
respect of which investment grants would have been
receivable had the said Investment Centre Fab 2 Grants been
approved as of January 1, 2006, shall be taken into account;
and (c) only wafer prepayments received after the Amendment
Closing Date up to an aggregate amount of US $30,000,000
(thirty million United States Dollars) shall be taken into
account for purposes of determining compliance with this
clause 16.27.3.3.
- 123 -
16.27.4. [INTENTIONALLY DELETED]
16.28. TAXATION
The Borrower shall file or cause to be filed all Tax returns required
to be filed in the jurisdiction in which it is situated or carries on
business or otherwise subject to pay Tax and will promptly pay all
Taxes which are due and payable on such returns or any assessment made
against it except for non-payment, or a claim for payment, non-payment
of which would in each such case not have a Material Adverse Effect.
16.29. FINANCIAL UNDERTAKINGS
The Borrower will procure that: (a) with respect to clauses 16.29.1
and 16.29.3-16.29.11 below, at all times during the period of this
Agreement; and (b) with respect to clause 16.29.2, with effect from
December 31, 2006 (including for the Quarter ending on December 31,
2006), at all times during this Agreement; the Borrower shall comply
with the Financial Undertakings set out below:
16.29.1. the ratio of: (a) Equity to (b) Total Assets of the Borrower,
as determined pursuant to the Borrower's consolidated quarterly
and annual Accounts, shall at no time be less than the applicable
ratio set out in SCHEDULE 16.29;
16.29.2. for any Quarter commencing from the Quarter ending on
December 31, 2006, LLCR for such Quarter for the Borrower shall
not be less than the applicable ratio set out in Schedule 16.29;
16.29.3. for any Quarter, the ratio of: (a) EBITDA to (b) Debt
Service, all for such Quarter, shall not be less than the
percentage for such Quarter as set out in Schedule 16.29 hereto;
16.29.4. for any Quarter, the ratio of: (a) Total Debt to (b) EBITDA,
all for such Quarter, shall not exceed the ratio for such Quarter
as set out in Schedule 16.29 hereto;
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16.29.5. for any Quarter, EBITDA for such Quarter, shall not be less
than the amount for such Quarter as set out in Schedule 16.29
hereto;
16.29.6. for any Fiscal Year and for any Quarter, EBITDA for such
Fiscal Year or for the four consecutive Quarters ending on the
last day of such Quarter shall not be less than the amount for
such Fiscal Year or four consecutive Quarters ending on the last
day of such Quarter as set out in Schedule 16.29 hereto;
16.29.7. [INTENTIONALLY DELETED]
16.29.8. [INTENTIONALLY DELETED];
16.29.9. [INTENTIONALLY DELETED];
16.29.10. [INTENTIONALLY DELETED]; and
16.29.11. for any Quarter, Sales for the Borrower (determined on the
same basis as the term `Sales' appearing in the audited
consolidated annual financial statements of the Borrower) for
such Quarter, shall not be less than the amount for such Quarter
as set out in Schedule 16.29 hereto.
16.30. CHANGE OF BUSINESS
16.30.1. The Borrower will not make or threaten to make any
substantial change in the nature of its business (save as
contemplated in the Business Plan).
16.30.2. The Borrower will not and will procure that its Subsidiaries
will not, carry on any business other than the Business.
16.31. BANK ACCOUNTS
16.31.1. So long as any Loans are outstanding, the Borrower shall
maintain in its own name all the Charged Accounts. The Borrower
will not maintain any bank account other than the Charged
Accounts and other than bank accounts duly charged in favour of
the Banks by way of a first-ranking fixed pledge and charge under
the Debenture, being: (a) bank accounts at the Banks into which
accounts moneys not relating to the Project, may be paid or
withdrawn; or (b) the bank accounts referred to in clauses
16.31.3(i) and (ii) below, to the extent applicable.
Notwithstanding the foregoing, the Borrower shall be entitled to
continue to maintain and shall not be required to pledge as
aforesaid for the benefit of the Banks the bank account
maintained for the purpose only of employee option exercises and
shall be entitled to open and maintain bank accounts with respect
to Permitted Financial Indebtedness referred to in clauses
1.1.115(c) and 1.1.115(j) and shall not be required to pledge
such accounts as aforesaid for the benefit of the Banks, provided
that such accounts shall only be used by the Borrower for the
purpose of receipt and payment of the particular Permitted
Financial Indebtedness referred to in such clauses and for no
other purpose.
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16.31.2. The Borrower shall procure that all payments in connection
with the Project, payments by the Borrower under the Finance
Documents, investments of Paid-in Equity, investments by way of
capital notes, payments under Wafer Prepayment Contracts,
proceeds of Permitted Subordinated Debt, proceeds from disposals
and, subject to clause 16.31.3(i) below, Grants from the
Investment Centre and all other payments directly or indirectly
relating to the Project or Fab 2 shall be made, directly from the
relevant payor, to the relevant Charged Accounts.
16.31.3. The Borrower shall procure that all revenues from the Project
(including from the Wafer Prepayment Contracts, proceeds from
disposals and other Material Contracts) and from authorised
investments, as well as all proceeds of all Paid-In Equity
subscriptions, investments by way of capital notes, Investment
Centre Fab 2 Grants and Permitted Subordinated Debt, are paid
direct to one of the Project Accounts (or in the case only of
amounts received from non-Israeli investors, the Foreign Paid-in
Equity Account); provided that: (i) if so required by the
Investment Centre, the proceeds of the Investment Centre Fab 2
Grants may be allocated by banks or financial institutions other
than the Banks (but to be transferred directly to either of the
Project Accounts); (ii) proceeds from a public offering made on
an exchange outside Israel may be placed on deposit in foreign
banks until such time as the Borrower uses such proceeds;
provided further that, in both cases, the accounts at such other
banks or financial institutions are duly pledged under the
Debenture by way of a first-ranking fixed pledge and charge in
favour of the Banks. Except as otherwise specified above, no
other sums shall be paid into either of the Project Accounts or
into the Foreign Paid-in Equity Account without the prior
agreement of the Banks.
- 126 -
16.31.4. The Borrower shall at the request of the Banks furnish the
Banks with copy invoices or other evidence acceptable to the
Banks with respect to any withdrawal of sums from the Project
Account or into the Foreign Paid-in Equity Account.
16.31.5. The Borrower shall procure that: (a) the proceeds of all
insurance claims under the Insurance Policies taken out by the
Borrower with respect to Fab 1 and Fab 2 or any part of either,
other than in respect of third party liabilities which are or are
to be paid by the insurer or re-insurer direct to the third party
claimant; (b) all proceeds of nationalisation, expropriation, or
requisition for title or use; and (c) [INTENTIONALLY DELETED];
(d) all proceeds of any sale, transfer or licence of Intellectual
Property Assets used in connection with the Project or other Net
Proceeds, shall be paid directly to one of the Project Accounts.
16.31.6. Sums standing to the credit of any of the Charged Accounts
shall be placed on deposit and shall earn Interest at such rates
as may be agreed from time to time by the Borrower and the
relevant Bank at which such Charged Account is held. All Interest
earned on the balance thereof to the credit of a Charged Account
shall be credited to such Charged Account.
16.31.7. The Borrower shall not create or permit to subsist any
Encumbrance on all or any part of the Charged Accounts or any
other account charged under the Debenture, other than any
Encumbrance created by the Security Documents, nor assign,
transfer or otherwise dispose of all or any part of its right or
title to, or Interest in, the Charged Accounts or any other
account charged under the Debenture.
16.31.8. (a) No amounts may be withdrawn or transferred from any of
the Charged Accounts and the Borrower may not give any
instructions in relation to any of the Charged
Accounts, except in accordance with the express terms
of this Agreement.
(b) The Borrower shall ensure that all moneys paid to it
from a Charged Account in response to any instruction
given by it are applied only in discharging the
obligations in respect of which they were paid from the
relevant Charged Account (or as otherwise permitted
under this Agreement).
- 127 -
16.31.9. The Borrower agrees that each Bank may provide to any of the
other Banks copies of bank statements for any of the Charged
Accounts and other information relating to transactions effected
or to be effected on the Charged Accounts save for information
regarding financial terms such as interest rates, commissions,
fees and terms of deposits.
16.31.10. The Borrower acknowledges that neither any insufficiency of
funds in the Charged Accounts (or any of them), nor any inability
to apply any fund in the Charged Accounts (or any of them)
against any or all amounts owing under this Agreement, shall at
any time limit, reduce or otherwise affect the Borrower's payment
obligations under this Agreement.
16.31.11. Each Bank may transfer sums from one Charged Account to
another Charged Account or to the Banks as required in order to
meet payments and withdrawals from the Charged Accounts, but
without liability or responsibility as a consequence of such
application.
16.32. PROHIBITION ON CHANGE OF OWNERSHIP
Save with the prior written consent of the Banks, there shall be no
Change of Ownership.
16.33. UTILISATION OF EXCESS CASH FLOW
All Excess Cash Flow shall be invested only in accordance with the
Business Plan, unless otherwise agreed by the Banks in advance in
writing or unless applied in prepayment (to the extent permitted) in
accordance with clause 7 above.
16.34. SAFETY NET UNDERTAKING
[INTENTIONALLY DELETED]
16.35. OUTSIDE INVESTMENT
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16.35.1. The Borrower shall procure that each of the Lead Investors
provide an undertaking, in the form of SCHEDULE 16.35.1 hereto
("THE OUTSIDE INVESTMENT UNDERTAKINGS"), that obligates each such
Lead Investor to cooperate with an Outside Investment Offer, all
subject to the terms and conditions of Schedule 16.35.1. For
purposes of this clause 16.35 "AN OUTSIDE INVESTMENT OFFER" means
a binding offer by a person or persons (acceptable to the Banks
in their sole discretion) having sufficient assets, or having
available to it a binding financial commitment in an amount
sufficient from one or more reputable financial institutions, to
make the Outside Investment Offer ("THE OUTSIDE OFFEROR") to
subscribe for shares from the Borrower at a price specified in
such offer, which offer is: (a) made after the commencement and
continuation for 60 (sixty) days after the institution thereof of
bankruptcy or receivership proceedings against the Borrower which
are ordered by a court of competent jurisdiction or the prior
determination of an arbitrator, mutually appointed by the Banks
and the Borrower, that a bankruptcy or receivership order would
be issued by a court against the Borrower were a petition to be
filed with a court of competent jurisdiction or, an order
providing for creditor protection in favour of the Borrower
pursuant to the request therefor by the Borrower is issued by a
court of competent jurisdiction shall have occurred and be
continuing ("THE TRIGGERING EVENT"); and (b) in an amount
sufficient, at least, to enable the Borrower (after deduction of
all attendant expenses) to cure and remedy the Triggering Event.
16.35.2. Upon the happening of a Triggering Event, the Borrower shall
take all steps to cooperate with any Outside Offeror (or
potential Outside Offerors), including, by permitting persons
seeking to become an Outside Offeror (and their representatives)
the opportunity to conduct a due diligence examination of the
Borrower and of its assets, liabilities, business and prospects
(provided that such persons enter into a confidentiality
agreement in a reasonable and customary form with the Borrower).
If the Outside Investment Offer is made and accompanied by an
opinion of a reputable investment banking firm that the Outside
Investment Offer is fair to the Borrower, the Borrower shall
procure that a rights offering ("THE RIGHTS OFFERING") be made to
its shareholders to invest up to 60% (sixty percent) of the
amount proposed to be invested by the Outside Offeror in the
Borrower at the same price per share and the other terms and
conditions set forth in the Outside Investment Offer.
Notwithstanding the aforegoing, if the Outside Investment Offer
is conditioned on the Outside Offeror acquiring at least 51%
(fifty-one percent) of the shares of the Borrower, the maximum
number of shares that may be purchased in the Rights Offering
shall be limited to that number of offered shares which, together
with the number of then outstanding shares not owned by the
Outside Offeror, shall not exceed a maximum of 49% (forty-nine
percent) of the shares of the Borrower, unless the Lead Investors
agree to invest an amount at least equal to, and at a price per
share no less than, the Outside Investment Offer ("THE
ALTERNATIVE OUTSIDE OFFER") and further agree, in addition to
exercising all rights offered to them in the Rights Offering, to
exercise in a subsequent private placement all rights not
exercised by the other shareholders of the Borrower in such
rights offering, so as to ensure that the full amount of the
Outside Investment Offer is invested in the Borrower; in such
case, the Alternative Outside Offer shall be made the subject of
the Rights Offering and the Lead Investors shall ensure that the
full amount of the Alternative Outside Offer is invested in the
Borrower and, to the extent required, used to cure and remedy the
Triggering Event.
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16.35.3. For the removal of doubt: (a) nothing in this clause 16.35
above (or in the Outside Investment Undertakings) shall prevent
the Banks from enforcing any and all of their rights or remedies
under this Agreement (including in the case of the occurrence of
a Triggering Event) at any time, even if such enforcement does
not permit, or in any way adversely affects the possibility of,
an Outside Investment Offer, or an Alternative Outside Offer, as
the case may be, to be made, or if made, to be completed and, for
the further removal of doubt, even after an Outside Investment
Offer has already been made; and (b) in the event an Outside
Investment Offer is conditional on the Outside Offeror acquiring
at least 51% (fifty-one percent) of the shares of the Borrower
and, pursuant thereto, the Outside Offeror subscribes for shares
from the Borrower as contemplated in clause 16.35.1 above and the
shares subscribed, as aforesaid, confer on such Outside Offeror
at least 51% (fifty-one percent) of the shares of the Borrower,
then, with effect upon the occurrence of such event, clauses
16.1.3(vii) and 16.32 above shall cease to have any effect.
16.36. INTEREST PAYMENT LOANS; ADDITIONAL INVESTMENT UNDERTAKINGS
[INTENTIONALLY DELETED]
- 130 -
17. DEFAULT
17.1. EVENTS OF DEFAULT
Each of the events set out in clause 17.2 to clause 17.20B is an Event
of Default (whether or not caused by any reason outside the control of
the Borrower or of any other person).
17.2. NON-PAYMENT
The Borrower does not pay any amount payable by it under any Finance
Document at the place and in the funds expressed to be payable, within
the earlier of: (i) 7 (seven) Business Days; or (ii) 10 (ten) days, of
the due date for payment.
17.3. BREACH OF OBLIGATIONS
17.3.1. There is any breach of: (i) the provisions of any of clauses
16.4-16.7 (inclusive); clauses 16.8.4, 16.9.1, 16.10, 16.11,
16.13.1, 16.13.2, 16.15, 16.17, 16.19.1, 16.20, 16.24 and clauses
16.31-16.33 (inclusive) and, if such default is capable of remedy
within such period, within 7 (seven) days after receipt by the
Borrower of written notice from the Banks requiring the failure
to be remedied, the Borrower shall have failed to cure such
default; or (ii) the provisions of any of clauses 16.25, 16.27 or
16.29.
17.3.2. The Borrower fails to comply with any undertaking or
obligation contained in any Finance Document (other than an
undertaking referred to in clause 17.3.1 above) and, if such
default is capable of remedy within such period, within 14
(fourteen) days after receipt by the Borrower of written notice
from the Banks requiring the failure to be remedied, the Borrower
shall have failed to cure such default. For the removal of doubt,
this clause 17.3 shall not be construed as derogating from any
other provision of this clause 17 and, without limiting the
generality of the aforegoing, the respective cure periods
specified in this clause 17.3 shall be applicable only with
respect to Defaults specified in clause 17.3.1(i) or this clause
17.3.2 (as applicable) and not to any other provision of this
clause 17.
17.3.3. No breach in respect only of Permitted Financial Indebtedness
as referred to in clause 1.1.115(c) above shall constitute an
Event of Default, provided the conditions set forth in clauses
17.6.6(a) and (b) below are met.
- 131 -
17.4. MISREPRESENTATION/BREACH OF WARRANTIES
Any representation or warranty made or repeated by or on behalf of the
Borrower in any Finance Document, or in any certificate or statement
delivered by or on behalf of the Borrower or under any Finance
Document is incorrect or misleading in any material respect when made
or deemed to be made or repeated.
17.5. INVALIDITY
Any of the Finance Documents shall cease to be in full force and
effect in any respect or shall cease to constitute the legal, valid,
binding and enforceable obligation of the Borrower or in the case of
any Security Document, fail to provide effective perfected security in
favour of the Banks over the assets over which security is intended to
be given by that Security Document.
17.6. CROSS ACCELERATION
17.6.1. Any amount in respect of Financial Indebtedness of the
Borrower which aggregates US $20,000,000 (twenty million United
States Dollars) or its equivalent, or more at any one time
outstanding:
(a) becomes prematurely due and payable;
(b) becomes due for redemption before its normal maturity date;
(c) is placed on demand,
in each such case by reason of the occurrence of an event of
default (howsoever characterised) or any event having the same
effect resulting from a default by the Borrower.
17.6.2. Any amount in respect of such Financial Indebtedness which
aggregates US $20,000,000 (twenty million United States Dollars)
or its equivalent, or more, are not paid when due (whether
falling due by demand, at scheduled maturity or otherwise) or
within any applicable grace period provided for in the document
evidencing or constitute such Financial Indebtedness.
- 132 -
17.6.3. Any Encumbrances over any assets of any one or more members of
the Group (taken together, if more than one) securing an
aggregate of US $20,000,000 (twenty million United States
Dollars) or its equivalent, or more, become enforceable and steps
are taken to enforce the same.
17.6.4. The Borrower or any Subsidiary fails to discharge in full any
judgment debt entered against it in excess of an aggregate amount
of US $20,000,000 (twenty million United States Dollars) or its
equivalent, within 30 (thirty) days of the relevant judgment
being entered against it, unless such judgment is being contested
in good faith on reasonable grounds following external legal
advice.
17.6.5. Any default under or breach of the terms and conditions of the
Permitted Subordinated Debt shall have occurred. For the removal
of doubt, the institution of Proceedings as referred to in clause
1.1.118(j)(iii)(1)(A)(I), (II) or (III) above or the non-payment
by the Borrower of amounts payable by it in respect of the Equity
Convertible Debentures pursuant to clause 1.118(j)(ii)(1) or (2)
above (including pursuant to a rescheduling agreement) shall be
deemed to constitute a default under or breach of the terms and
conditions of the Permitted Subordinated Debt.
17.6.6. The aforegoing in this clause 17.6 shall not be applicable in
respect only of Permitted Financial Indebtedness as referred to
in clause 1.1.115(c) above and only, and for so long as, the
following 2 (two) conditions are both met:
(a) such Permitted Financial Indebtedness is to one or both of
the Banks; and
(b) such Permitted Financial Indebtedness is secured in full by
deposits (in amounts to be not less than the amount of such
Permitted Financial Indebtedness) placed with the relevant
Banks and duly charged by first-ranking floating charge in
favour of the Banks.
- 133 -
17.7. INSOLVENCY AND RESCHEDULING
The Borrower is unable to pay its debts as they fall due or admits
inability to pay its debts as they fall due, commences negotiations
with any one or more of its creditors with a view to the general
readjustment or rescheduling of its Indebtedness or makes a general
assignment for the benefit of or a composition with its creditors.
17.8. WINDING-UP
The Borrower takes any corporate action or other steps are taken or
Proceedings are started or are consented to or any Order is made for
its winding-up, liquidation, bankruptcy, dissolution, administration
or re-organisation (or for the suspension of payments generally or any
process giving protection against creditors) or for the appointment of
a liquidator, receiver, administrator, administrative receiver or
similar officer of it or of all or any part of its revenues or assets
or such a person is appointed, which action, steps, Proceedings or
Order are not cancelled or withdrawn within 60 (sixty) days of the
occurrence or institution thereof.
17.9. EXECUTION OR OTHER PROCESS
Any execution, attachment, sequestration or other process arising out
of any claim by any third party against the Borrower, save where: (a)
the Borrower is in good faith on reasonable grounds, contesting the
execution, attachment, sequestration or other process by appropriate
Proceedings diligently pursued; (b) the Banks are satisfied that the
ability of the Borrower to comply with its respective obligations
under the Finance Documents will not be adversely affected whilst such
distress, execution, attachment, diligence or other process is being
so contested; and (c) such process as aforesaid is cancelled or
withdrawn not later than 45 (forty-five) days after the institution
thereof.
17.10. MATERIAL CONTRACTS
17.10.1. [INTENTIONALLY OMITTED]
17.10.2. Other than as permitted under clause 16.13 above: (i) any of
the Material Contracts specified in Schedule 1.1.101 hereto shall
cease to be in full force and effect or shall cease to constitute
the legal, valid, binding and enforceable obligation of the
Borrower or the relevant counterparty thereto; or (ii) any change
adverse to the interests of the Borrower or the Banks is made to
the terms of any of such Material Contracts, without the prior
written consent of the Banks; or (iii) the specifications for Fab
2 are materially varied.
- 134 -
17.10.3. [INTENTIONALLY DELETED]
17.11. PROCEEDINGS
There is current or pending any litigation, dispute, arbitration,
administrative, regulatory or other Proceedings or enquiry concerning
or involving the Borrower which is likely to have a Material Adverse
Effect.
17.12. CONSENTS
17.12.1. Any Consent necessary for the Borrower to comply with its
obligations under the Finance Documents or to perform the Project
in whole or in part:
(i) is not obtained or is surrendered, terminated, withdrawn,
suspended, cancelled or revoked or does not remain in full
force and effect or otherwise expires and is not renewed
prior to its expiry (in each case, without replacement by
permits, consents or authorisations, as applicable, having
equivalent effect); or
(ii) is modified in any material adverse respect or breached.
17.12.2. The Borrower becomes aware of any event which is reasonably
likely to give rise to the revocation, termination, cancellation
or suspension of the Consents or any of them (without
replacement) in such circumstance where the Borrower is unable to
demonstrate to the reasonable satisfaction of the Banks within 30
(thirty) days of such event occurring that such termination,
suspension or revocation will not occur.
17.13. MATERIAL ADVERSE EFFECT
Any event or series of events occur which, in the reasonable opinion
of the Banks, after discussion with the Borrower, is likely to have a
Material Adverse Effect, including, any material adverse change in the
business or financial condition of the Borrower or in the ability of
the Borrower to perform its obligations under the Finance Documents or
under the Material Contracts or to complete the Project.
- 135 -
17.14. FAB 2
Fab 2 or any other material equipment needed for the Project is
destroyed or materially damaged so as to render Fab 2 or a substantial
portion thereof inoperable or declared by the insurers to be a total
loss or a constructive total loss.
17.15. COMPLETION OF FAB 2
[INTENTIONALLY Deleted]
17.16. CONSTRUCTION CONTRACT
[INTENTIONALLY DELETED]
17.17. GOVERNMENT ACTION
Any government or Governmental Body: (a) nationalises, seizes or
expropriates all or any substantial or material part of the assets of
the Borrower, or its share capital, or Fab 2 or any part thereof; or
(b) assumes custody or control of such assets, or of the business or
operations of the Borrower, or of its share capital or of Fab 2; or
(c) takes any action for the dissolution of the Borrower, or (d) takes
any action that would prevent the Borrower or its officers from
carrying on its business or operations or a substantial or material
part thereof, or the Project; or by or under the authority of the
government of Israel or any other competent Israeli Governmental Body
any law is introduced after the date hereof imposing restrictions on
the free exchange of NIS for Dollars or of Dollars for NIS.
17.18. ILLEGALITY
It is or becomes unlawful for the Borrower to perform any of its
material obligations under the Finance Documents or any of its
material obligations under any of the Material Contracts.
17.19. INVESTMENT CENTRE FAB 2 GRANTS
The Borrower is in breach of any material condition of the approvals
of the Investment Centre Fab 2 Grants or the Israeli government
cancels or reduces such Grants or any part thereof (save to the extent
that such Grants may be, and are in fact, replaced by Paid-in Equity
and/or equity equivalent capital notes and/or wafer prepayments under
Qualifying Wafer Prepayment Contracts pursuant to and subject to the
conditions set out in clause 16.27 above).
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17.20. DEFAULT BY THE BORROWER UNDER ANY QUALIFYING WAFER PREPAYMENT
CONTRACT
[INTENTIONALLY DELETED]
17.20A. PROHIBITED PAYMENT UNDER THE PERMITTED SUBORDINATED DEBT
The Borrower shall make any payment (whether of principal, Interest or
any other amount) in respect of the Permitted Subordinated Debt, other
than as permitted pursuant to the provisions of clause 1.1.118 above.
17.20B. OUTSIDE INVESTMENT UNDERTAKINGS
17.20B.1. [INTENTIONALLY DELETED]
17.20B.2. (a) Any of the representations and warranties by any Lead
Investor in any Outside Investment Undertaking to which
it is a party are incorrect or misleading in any
material respect when made or deemed to be made or
repeated.
(b) Any Lead Investor fails to comply with any undertaking
or obligation contained in any Outside Investment
Undertaking to which it is a party and, if such default
is capable of remedy within such period, within 7
(seven) days after the earlier of the Lead Investor
becoming aware of such default and receipt by the Lead
Investor of written notice from the Banks requiring the
failure to be remedied, that Lead Investor shall have
failed to cure such default.
(c) Any Outside Investment Undertaking shall cease to be in
full force and effect in any material respect or shall
cease to constitute the legal, valid, binding and
enforceable obligation of any Lead Investor party to it
or it shall be unlawful for any Lead Investor to
perform any of its material obligations under any of
the Outside Investment Undertakings, unless it expires
in accordance with its terms.
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(d) Any Lead Investor repudiates the Outside Investment
Undertaking to which it is a party.
17.20C. ADDITIONAL INVESTMENT UNDERTAKINGS
[INTENTIONALLY DELETED]
17.21. ACCELERATION
Upon the occurrence of an Event of Default and at any time thereafter
while the same is continuing, the Banks may, by notice to the
Borrower:
17.21.1. declare that an Event of Default has occurred; and/or
17.21.2. declare that the Loans together with all Interest accrued on
all Loans and all other amounts (including amounts due under
clause 19, to the extent applicable) payable by the Borrower
under the Finance Documents from time to time, shall thenceforth
be repayable on demand being made by the Banks (and in the event
of any such demand, the Loans, such Interest and such other
amounts shall be immediately due and payable); and/or
17.21.3. declare the Loans immediately due and payable, whereupon they
shall become immediately due and payable, together with all
Interest accrued on the Loans and all other amounts payable by
the Borrower or under the Finance Documents (including, amounts
due under clause 19, to the extent applicable); and/or
17.21.4. [INTENTIONALLY DELETED]
17.22. LOANS DUE ON DEMAND
If, pursuant to clause 17.21.2 above the Banks declare the Loans to be
due and payable on demand, then and at any time thereafter, so long as
any Event of Default is continuing or has not been waived, the Banks
may by written notice to the Borrower require repayment of the Loans
on such date as the Banks may specify in such notice (whereupon the
same shall become due and payable on such date together with accrued
Interest thereon and any other sums then owed by the Borrower
hereunder) or withdraw such declaration with effect from such date as
they may specify in such notice.
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17.23. COLLECTION
In the event of acceleration of the Loans pursuant to clause 17.21.3
above or of a written notice under clause 17.22 above, then, without
derogating from any other remedies or relief available to the Banks
under law or under any of the Finance Documents, the Banks shall be
entitled to take all steps as they deem fit in order to collect all
sums owed by the Borrower to the Banks (including all sums referred to
in clause 17.21 above), including, to realise all or any of the assets
secured under the Security Documents, all at the expense of the
Borrower and to utilise the sums received to repay in part or in full
all amounts owed by the Borrower hereunder.
17.24. INDEMNITY
The Borrower shall indemnify the Banks against any losses, charges or
expenses which the Banks may sustain or incur as a consequence of:
17.24.1. the occurrence of any Event of Default or Default; or
17.24.2. the operation of clauses 17.21, 17.22 or 17.23,
including, any losses, charges or expenses on account of funds
acquired, contracted for or utilised to fund any amount payable under
this Agreement or any amount repaid or prepaid. A certificate of the
Banks as to the amount of any such loss or expense shall be PRIMA
FACIE evidence in the absence of manifest error.
17.25. TERMINATION OF COMMITMENT
[INTENTIONALLY DELETED]
18. DEFAULT INTEREST
18.1. DEFAULT RATE PERIODS
If any sum due and payable by the Borrower hereunder or under any
other Finance Document is not paid on the due date therefor in
accordance with the provisions of this Agreement ("UNPAID SUM"), the
period beginning on such due date and ending on the date upon which
the obligation of the Borrower to pay the Unpaid Sum is discharged,
shall be divided into successive periods, each of which (other than
the first) shall start on the last day of such preceding period and
the duration of each of which shall (except as otherwise provided in
this clause 18) be selected by the Banks (such periods selected as
aforesaid "INTEREST PERIODS").
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18.2. DEFAULT INTEREST
During each such Interest Period as is mentioned in clause 18.1 above,
an Unpaid Sum shall bear Interest at the rate per annum which is the
sum from time to time of: (a) 3% (three percent); and (b) the Interest
rate in respect of such Interest Period as would have been determined
in accordance with clause 9.1.1 above (provided that, if, for any such
Interest Period LIBOR cannot be determined, the rate of Interest
applicable to such Unpaid Sum shall be the rate per annum which is the
sum of: (i) 3% (three percent); and (ii) 1.1% (one point one percent)
plus a rate as certified by the Banks in accordance with clause 9
above.
18.3. PAYMENT OF DEFAULT INTEREST
Any Interest which shall have accrued under clause 18.2 above in
respect of an Unpaid Sum shall be due and payable and shall be paid by
the Borrower at the end of each Interest Period by reference to which
it is calculated or on such other dates as the Banks may specify by
written notice to the Borrower.
19. BROKEN FUNDING INDEMNITY
19.1. BROKEN FUNDING
If any Bank receives or recovers all or any part of the Loans
otherwise than on the scheduled date of repayment of the Loans, the
Borrower shall on the first Interest Payment Date following such
repayment on demand pay to such Bank an amount equal to the amount (if
any) by which: (a) the additional amount of Interest which would, in
accordance with the terms of this Agreement, have been payable on the
amount so received or recovered had it been received or recovered on
the following Interest Payment Date exceeds (b) the amount of Interest
which, in the opinion of such Bank, would have been payable to such
Bank on the last day of such Interest Period in respect of a deposit
in the currency of the Loans, of an amount equal to the amount so
received or recovered, had such an amount been placed by it with a
prime bank in London for a period starting on the date of such receipt
or recovery and ending on the following Interest Payment Date. For the
removal of all doubt: (i) with respect to all or any part of the Loans
received or recovered otherwise than on the scheduled date of
repayment of such amount relating to the Loans, the payment set forth
above shall only be made once; and (ii) voluntary or mandatory
prepayments made in accordance with clause 7 or 8, as the case may be,
on an Interest Payment Date shall not be subject to a payment of
broken funding in accordance with this clause 19.1.
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19.2. FAILURE TO DRAW ADVANCE
[INTENTIONALLY DELETED]
20. PAYMENTS
20.1. PAYMENTS BY BORROWER
All payments to be made by the Borrower to the Banks shall be made in
same day funds to the Project Accounts at such Bank or, in the event
that there shall be any Bank other than Bank Hapoalim or Bank Leumi
(any such other Bank, "THE NEW BANK"), to an account in the name of
the Borrower to be opened at Bank Hapoalim or Bank Leumi (such
account, "THE NEW ACCOUNT"), which account shall be duly charged in
favour of the Banks by way of a first-ranking fixed pledge and charge
under the Debenture and shall, for all purposes under this Agreement,
be a Charged Account. All payments required to be made by the Borrower
under the Finance Documents shall be calculated without reference to
any set-off or counterclaim and shall be made free and clear of and
without any deduction for or on account of, any set-off or
counterclaim. Any amount received by the Bank at which the New Account
is opened ("THE ACCOUNT BANK") under this Agreement into the New
Account for the account of a New Bank shall be made available by the
Account Bank to such New Bank by payment in same day funds to such
account as such New Bank may have notified to the Account Bank in
writing not less than 2 (two) Business Days prior to such
distribution. Any amounts received by the Account Bank on account of
the New Banks generally shall be distributed by the Account Bank to
the New Bank or, if more than one, each New Bank, pro rata to the
amounts which are due to the New Banks under the Finance Documents.
20.2. PAYMENTS BY BANKS TO BORROWER
[INTENTIONALLY DELETED]
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21. SET-OFF
21.1. CONDITIONS FOR SET-OFF
Each Bank may (but shall not be obliged to) set-off against any
obligation of the Borrower due and payable by it to or for the account
of such Bank under the Finance Documents and not paid on the due date
or within any applicable grace period, any moneys held by such Bank
for the account of the Borrower at any office of such Bank anywhere
and in any currency, whether or not matured. For that purpose, such
Bank may: (i) break or alter the amounts of all or any deposit of the
Borrower; or (ii) effect such currency exchanges as are appropriate to
implement the set-off and any usual charges in relation to such
currency exchanges shall be paid by the Borrower and such Bank shall
not be liable to the Borrower for any penalties, losses or other
damage resulting from any such breakage, alteration or currency
exchange. The Banks shall give notice to the Borrower of any such
set-off on or prior to the date of making such set-off.
21.2. DEBIT OR CREDIT OF ACCOUNTS
Each Bank shall be entitled (but not obliged): (i) to debit any of the
Borrower's accounts at such Bank (even if not related to the Project)
with any amount needed to pay any amount payable by the Borrower to
such Bank under this Agreement and whether such account is credited or
overdrawn or will become overdrawn as a result of such debiting; and
(ii) to credit any amount received from the Borrower or for its
account to such account of the Borrower at such Bank as it deems fit.
22. APPLICATION OF PAYMENTS
22.1. INSUFFICIENT PAYMENT
If any Bank receives a payment insufficient to discharge all the
amounts then due and payable by the Borrower to it under the Finance
Documents, such Bank shall apply that payment towards the obligations
of the Borrower under the Finance Documents in the following order or
in such other order as such Bank may deem fit:
22.1.1. FIRSTLY, in or towards payment of any unpaid fees, costs and
expenses of such Bank or any Receiver (as defined in any Security
Document) under the Finance Documents; and
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22.1.2. SECONDLY, in or towards payment of any other amount due to
such Bank but unpaid under this Agreement or any other Finance
Document, other than principal (including, Interest, damages,
commissions, fees, broken funding indemnity fees and all other
costs), the above in such order as such Bank deems fit; and
22.1.3. THIRDLY, in or towards payment to such Bank on account of the
principal of the Loans.
22.2. CURRENCY CONVERSION
If, notwithstanding the obligations of the Borrower under this
Agreement (and without derogating from such obligations), any sum is
received by any Banks in a currency ("THE FIRST CURRENCY") other than
the currency ("THE SECOND CURRENCY") in which the relevant amount is
to be paid pursuant to the provisions of this Agreement, then such sum
shall be converted into the second currency at the buying rate of the
second currency in the first currency prevailing at such Bank at the
close of business on the date of receipt thereof.
23. CALCULATIONS AND EVIDENCE OF DEBT
23.1. Each Bank shall maintain in accordance with its usual practice
accounts evidencing the amounts from time to time lent by and owing to
it hereunder.
23.2. In any legal action or Proceeding arising out of or in connection
with this Agreement the entries made in the accounts maintained
pursuant to clause 23.1 above shall, in the absence of manifest or
proven error, be PRIMA FACIE evidence of the existence and amounts of
the specified obligations of the Borrower.
23.3. A certificate of a Banks as to: (a) the amount by which a sum payable
to it hereunder is to be increased under clause 12.1 above; or (b) the
amount for the time being required to indemnify it against any such
cost, payment or liability as is mentioned in clause 13.1 above shall,
in the absence of manifest or proven error, be PRIMA FACIE evidence of
the existence and amounts of the specified obligations of the
Borrower.
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24. SHARING BETWEEN BANKS
The Borrower acknowledges that it has been or will be agreed between the
Banks that, subject to certain conditions, if a Bank ("THE SHARING BANK")
receives or recovers (including by way of set-off) any sum in respect of an
amount due to it from the Borrower under this Agreement or any of the other
Finance Documents otherwise than by payment by the Borrower in accordance
with the terms of this Agreement or any of the other Finance Documents:
24.1. the Sharing Bank shall forthwith pay to each of the other Banks an
amount equal to each other Bank's Proportion of the sum so received or
recovered. The Borrower hereby acknowledges and agrees that, subject
to clauses 24.2 below, upon such payment being made, as between the
Borrower and the Sharing Bank, the Borrower shall remain indebted to
the Sharing Bank under this Agreement in the amount paid by the
Sharing Bank to such other Banks as if the Sharing Bank had not
received or recovered the sum mentioned above and each Bank receiving
a payment from a Sharing Bank shall treat the amount paid to it by the
Sharing Bank as if it were a payment by the Borrower on account of
amounts due from the Borrower under this Agreement; and
24.2. any payment made by the Sharing Bank under clause 24.1 above shall
(whether or not stated to be so subject) be subject to the condition
that, if all or any part of the amount paid by the Sharing Bank to
such other Bank has to be repaid by the Sharing Bank to the Borrower
or any other person, whether under any insolvency law or otherwise,
each of the Banks (other than the Sharing Bank) which received any
part of the Sharing Bank's payment shall repay to the Sharing Bank the
amount which the Sharing Bank distributed to that Bank, together with
such amount (if any) as is necessary to reimburse the Sharing Bank the
appropriate portion of any Interest it was obliged to pay on the sum
it repaid to the Borrower or other person concerned.
25. ASSIGNMENTS AND TRANSFERS
25.1. This Agreement shall be binding upon and enure to the benefit of each
party hereto and its or any subsequent permitted successors,
transferees and permitted assigns.
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25.2. The Borrower shall not be entitled to assign or transfer all or any
of its rights, benefits and obligations under any of the Finance
Documents.
25.3. Any Bank may, at any time, assign all or any of its rights, benefits
and obligations under the Finance Documents to any Israeli bank,
financial institution (including benefit funds) or Israeli authorised
dealer under the Value Added Tax Law; or (iii) with the prior consent
of the Borrower (not to be unreasonably withheld), any other banking
corporation or financial institution; provided that: (a)
[INTENTIONALLY DELETED]; (b) the total number of Banks shall not
exceed 8 (eight) at any time; and (c) in the event that any such Bank
shall, in accordance with the aforegoing, wish to make an assignment
as referred to in clause 25.3 above to a foreign bank in respect of
which the Borrower shall, under clause 12.1 above be required to make
an additional payment (which it is not entitled pursuant to clause
12.1, to deduct from payments to such foreign bank), by virtue of such
bank being a foreign bank, then such an assignment shall not be
permitted, unless: (1) such foreign bank waives its rights under
clause 12 to receive such additional payment as aforesaid; or (2) the
Bank making such assignment is doing so as a result of Bank of Israel
requirements relating to the making of loans to, or the making of
reserves in respect of loans to, a group of borrowers or a single
borrower. Any Bank may also sell sub-participations in the Loans to
such bank or financial institution as such Bank may deem fit. As a
condition to any assignment, the assignee shall sign a written
undertaking which provides that the Borrower shall only be required to
interface with the assigning Banks and all communications, notice and
other interactions, or waivers, consents or other agreements relating
to the Borrower shall only be facilitated by and on behalf of the
assigning Bank.
25.4. The Banks may at any time disclose to any actual or potential
assignee or transferee or subparticipant (or other party entering into
contractual arrangements to assume risks in relation to the Loans) in
respect of the Finance Documents, such information about the Finance
Documents, the Project (including Fab 2) and the Borrower as the Banks
shall consider appropriate but only after having first obtained from
such potential assignee, transferee or subparticipant or equivalent a
confidentiality undertaking equivalent in effect to the
confidentiality agreements set out in clause 33 below in writing and
addressed to the relevant Bank and the Borrower. The Banks may also
disclose any such information to the Bank of Israel, the Supervisor of
Banks and any person acting on their behalf or any other Governmental
Body to which the Banks are subject, upon receipt by such Bank of a
demand for such information from any such person or Governmental Body.
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26. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Banks, or of the Borrower, of any right or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right
or remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies herein provided are
cumulative and not exhaustive of any rights or remedies provided by law.
27. NOTICES
27.1. NOTICES IN WRITING
Notices to be given hereunder shall be in writing and may be given
personally, by facsimile or, if not available, as required by clause
27.2 below. Any notice to be given to a Bank or by a Bank must be
given during normal banking hours of such Bank to the person and at
the address designated below. If notice is sent by facsimile during
normal banking hours as aforesaid, it shall be deemed to have been
served when confirmation of receipt by the intended recipient has been
received. All notices given by facsimile shall be confirmed by letter
despatched in the manner provided in clause 27.2 within 24
(twenty-four) hours of transmission.
27.2. ADDRESSES
Any other notices to be given hereunder shall be served on a party by
prepaid express registered letter (or nearest equivalent) to its
address given below or such other address as may from time to time be
notified for this purpose and any notice so served shall be deemed to
have been served within 5 (five) days after the time at which such
notice was posted and in proving such service, it shall be sufficient
to prove that the notice was properly addressed and posted:
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27.2.1. to the Borrower at: Tower Semiconductor Ltd.
X.X. Xxx 000
Xxxxxx Xxxxxx
Xxxxxx
FACSIMILE: (00) 000 0000
ATTENTION: XXXX XXXXXXX
ACTING CHIEF FINANCIAL OFFICER
WITH A COPY TO: Xxxxx Xxxxx & Co.
1 Azrieli Xxxxxx
00xx Xxxxx, Xxx Xxxxx Xxxxx
Xxx-Xxxx, 00000
FACSIMILE: (00) 000 0000
ATTENTION: XXXXX X. XXXXXXXX, ADV./
XXX XXXXX, ADV.
27.2.2. to Bank Hapoalim at: Corporate Division
Xxxxxx Xxxxxxxxxx
00 Xxxxxxxx Xxxxx Xxxx
Tel-Aviv
FACSIMILE: (00) 000 0000
ATTENTION: HEAD OF CORPORATE DIVISION
27.2.3. to Bank Leumi at: Corporate Division
00 Xxxxxx Xxxxxx Xxxxxx
Tel-Aviv
FACSIMILE: (00) 000 0000
ATTENTION: MANAGER OF HI-TECH
INDUSTRIES SECTION
28. AMENDMENTS
Any addition, variation, modification or amendment to this Agreement shall
not be effective unless any such addition, variation, modification or
amendment is in writing and signed by the authorised signatories of all of
the parties to this Agreement.
29. COUNTERPARTS
This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the
same instrument.
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30. GOVERNING LAW AND 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 Banks shall be entitled
to xxx the Borrower in any jurisdiction in which it has an office or holds
assets.
31. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the subject-matter hereof and supersedes any prior agreement, or
arrangement amongst the parties. Any addition or amendment to this
Agreement shall not be effective unless in writing signed by the authorised
signatories of both the parties.
32. CONFIDENTIALITY
Subject to clause 25.4 above, the Banks shall keep confidential all
confidential information received from the Borrower concerning the Borrower
and its Business and will not disclose any such information to any third
party, including to any shareholders of the Borrower, without the prior
written consent of the Borrower unless such disclosure is:
32.1. made in connection with any Proceedings arising out of or in
connection with any Finance Document, to the extent that such a party
reasonably considers it necessary to protect its interests; or
32.2. required by an Order of a court of competent jurisdiction; or
32.3. made or required pursuant to any law or Proceeding in accordance with
which the relevant party concerned is required to act or otherwise
required to be disclosed by any banking or other regulatory or
examining authorities or enquirers (whether Governmental Body or
otherwise); or
32.4. made to its auditors for the purpose of enabling them to undertake
any audit or to its legal advisers when seeking BONA FIDE legal advice
in connection with the Finance Documents or otherwise to any of its
officers and employees considered to need to know the information
concerned.
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The restriction contained in this clause 32 shall continue to bind each
Bank after termination of, or after the termination of its participation
in, the Facility, without limit in time.
For the purpose of the above, "CONFIDENTIAL INFORMATION" shall exclude:
(i) information which at the time of disclosure to any Bank (or any of its
advisers) is in the public domain (other than through a breach of this
clause 32 by such Bank);
(ii) information which, prior to such disclosure, becomes generally
available to third parties or otherwise in the public domain by
publication or through no fault of any Bank; and
(iii) information which is lawfully in the possession of any Bank prior to
such disclosure or subsequently comes into its possession, other than
by reason of any breach of any confidentiality undertaking in favour
of the Borrower.
Nothing herein contained shall limit or restrict the liability or right of
any Bank and any Bank shall be entitled, to disclose to any other Bank,
confidential information concerning the Borrower, the Project, Fab 2 or any
other matter relating to the Finance Documents and the Material Contracts,
including regarding the bank accounts of the Borrower.
33. BANKS REPRESENTATION
Each of the Banks, with respect to itself only, hereby represents that the
relevant committees and other bodies of the Banks have passed all
resolutions necessary to approve the Loans granted to the Borrower under
this Agreement.
for: TOWER SEMICONDUCTOR LTD.
By: ________________________
Title: ________________________
for: BANK HAPOALIM B.M. for: BANK LEUMI LE-ISRAEL B.M.
By: ________________________ By: ________________________
Title: ________________________ Title: ________________________
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