SEVENTH AMENDMENT
TO THE FACILITY AGREEMENT
Made and entered into on this 11th day of November, 2003, by and
between:
(1) TOWER SEMICONDUCTOR LTD. ("THE BORROWER")
and
(2) BANK LEUMI LE-ISRAEL B.M. AND BANK HAPOALIM B.M. ("THE BANKS")
WHEREAS: the Borrower, on the one hand, and the Banks, on the other hand, are
parties to a Facility Agreement dated January 18, 2001, as amended
pursuant to a letter dated January 29, 2001 ("THE FIRST AMENDMENT"), a
Second Amendment dated January 10, 2002 ("THE SECOND AMENDMENT"), a
letter dated March 7, 2002 ("THE THIRD Amendment"), a letter dated
April 29, 2002 ("THE FOURTH AMENDMENT"), a letter dated September 18,
2002, as amended on October 22, 2002 ("THE FIFTH AMENDMENT") and a
letter dated June 10, 2003 ("THE SIXTH AMENDMENT") (the Facility
Agreement, as amended as aforesaid, hereinafter "THE FACILITY
AGREEMENT"); and
WHEREAS: the Borrower and the Banks have agreed to amend the Facility Agreement
in the manner set out below ("THIS SEVENTH AMENDMENT"),
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. INTERPRETATION
1.1. Terms defined in the Facility Agreement shall have the same meanings
when used in this Seventh Amendment.
1.2. References herein to clauses and paragraphs, are to clauses and
paragraphs of the Facility Agreement.
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1.3. References herein to sections, are to sections of this Seventh
Amendment.
2. AMENDMENT
Subject to the fulfilment of the conditions precedent referred to in
section 3 below, the Facility Agreement shall, with effect from the date
upon which the Banks shall, pursuant to section 3.2 below, have confirmed
in writing fulfilment of all of the conditions precedent set out in section
3 below (if fulfilled) (such date hereinafter being referred to as the
"SEVENTH AMENDMENT CLOSING DATE"), be amended in the manner set out below:
2.1. Clause 1 (Interpretation) shall be amended as follows:
2.1.1. clause 1.1.4 ("Advance") shall be amended by the insertion of the
following, after the words "clause 5.2 below":
"(including, for the removal of doubt, in respect of the Safety
Net Loans);"
2.1.2. clause 1.1.16 ("Business Plan") shall be amended by deleting the words
"January 2001" and substituting the words "No. 75, October 2003"
therefor;
2.1.3. clause 1.1.18 ("a Change of Ownership") shall be amended as follows:
(i) in paragraph (a) thereof, by deleting the words "3 (three)"
and substituting therefor the words "5 (five)"; and
(ii) in paragraph (a)(ii) thereof, by replacing the current
language with the following:
"TIC ceases to hold the higher of:
(1) at least 8,000,000 (eight million) shares of the
Borrower; or
(2) 16.5% (sixteen point five percent) of the total
outstanding issued share capital of the Borrower;
provided, however, that: (A) the sale by TIC of up to
2,000,000 (two million) shares (the "FREE Shares")
shall not be taken into account, inter alia, for the
purposes of this clause 1.1.18(a)(ii)(2), nor be
deemed as a `Change of Ownership', provided
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that TIC continues to hold at least 8,000,000 (eight
million) shares of the Borrower; (B) if TIC's
percentage ownership of the Borrower as required in
this clause 1.1.18(a)(ii)(2) above is reduced below
16.5% (sixteen point five percent) as a result of
additional issuances after the Seventh Amendment
Closing Date by the Borrower of shares ((i) whether
before or after sales by TIC of Free Shares or (ii)
after sales of shares by TIC that did not bring the
shareholdings of TIC under 16.5% (sixteen point five
percent) of the total outstanding issued share
capital of the Borrower), such reduction below 16.5%
(sixteen point five percent) shall not be deemed a
`Change of Ownership'; and (C) shares acquired by TIC
after the Seventh Amendment Closing Date shall not be
taken into account, inter alia, for the purposes of
this clause 1.1.18(a)(ii)(2) and the sale of such
shares shall not be deemed a `Change of Ownership'
and TIC shall be permitted to sell such acquired
shares at any time; and"
(iii) in paragraphs (a)(iii) and (b) thereof, the words "timeous
fulfilment of all the Milestones and" shall be deleted and the
following shall be added to the end thereof and the following
shall be taken into account for the purposes of the definition
of Committed Minimum Shareholdings in paragraph (c) thereof:
"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."
(iv) in paragraph (d)(i) thereof, by replacing the current language
thereof with the following:
"For the purposes of this paragraph, the "Number of
Shares" shall mean the number of shares of Tower held
by TIC on January 29, 2006, less (i) the Free Shares
not sold by
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TIC since the date of the Seventh Amendment, (ii) the
number of shares that were purchased after the date
of the Seventh Amendment but before January 29, 2006
and not yet sold, and (iii) the number of shares that
are held by TIC on January 29, 2006 above 16.5%
(sixteen point five percent) of the total outstanding
issued share capital of the Borrower; provided that
for purposes of determining the number of shares in
this (iii), the number of shares described in (i) and
(ii) above shall not be taken into account and
provided further that the Number of Shares shall not
be less than 8,000,000 (eight million) shares of the
Borrower;
TIC holds in any period below less than that Number
of Shares specified for such period below: (1) the
period commencing on January 29, 2006 and ending on
January 28, 2007--75% of the Number of Shares; (2)
the period commencing on January 29, 2007 and ending
on January 28, 2008--45% of the Number of Shares; and
(3) the period commencing on January 29, 2008 and
ending on January 28, 2009-10% of the Number of
Shares".
and
(v) in paragraph (e) thereof, by deleting the words "the planned
date for the achievement of the Fifth Milestone (as referred
to in Schedule 1.1.104 hereto)" and substituting therefor the
words "June 30, 2004";
2.1.4. the following shall be added to the end of clause 1.1.22
("Commitment"):
"Notwithstanding the aforegoing, in the event that the Banks
exercise, in their sole discretion, their option under clause
16.34.1 below to require a Safety Net Investment in the
Borrower in accordance therewith and such Safety Net
Investment is in fact made pursuant to clause 16.34.1 below,
then each Bank's Commitment under the Facility shall, at the
time of such Safety Net Investment, be increased by its
Proportion (excluding in relation to the Safety Net
Investment) of an amount equal to US $43 (forty-three United
States Dollars) for every US $50 (fifty
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United States Dollars) of Safety Net Investments actually made
by Safety Net Investors pursuant to clause 16.34.1 below, all
as set out in clause 16.34 below."
2.1.5. the words "the Initial Loans" in clause 1.1.34 ("Credit") in the third
line shall be deleted and the words "the Reborrowed Loans and the
Safety Net Loans" substituted therefor;
2.1.6. in clause 1.1.49A ("Equity Convertible Debentures"), the words "issued
by no later than May 31, 2002 and that they" shall be deleted;
2.1.6A in clause 1.1.51 ("Event of Default"), the words "17.2-17.20A
(inclusive)" shall be replaced with "17.2-17.20B (inclusive)";
2.1.7. clause 1.1.60 ("Final Maturity Date") shall be amended to read as
follows:
"`FINAL MATURITY
DATE' - means December 31, 2010; provided,
however, that if a Safety Net
Investment is made, the Final Maturity
Date shall be June 30, 2011;"
2.1.8. clause 1.1.74 ("Initial Loans") shall be deleted and the words
"[Intentionally Deleted]" substituted therefor;
2.1.9. in clause 1.1.77 ("Insurance Report"), there shall be inserted after
the word "Borrower", the words:
"including all revisions thereto in the form to be prepared by
the Insurance Adviser and addressed to the Banks and the
Borrower;"
2.1.10. in clause 1.1.84(c) ("Interest Periods"), the words "during the
Availability Period" shall be deleted;
2.1.11. clause 1.1.96 ("Loan") shall be amended by deleting the words "or the
Initial Loans" and substituting the words "or the Reborrowed Loans or
the Safety Net Loans, if any", therefor;
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2.1.12. clause 1.1.97 ("Loan Maturity Date") shall be amended to read as
follows:
"`LOAN MATURITY
DATE' - means, in respect of:
(a) all Loans outstanding on December
31, 2003 (including, for the
removal of doubt, all Advances
consolidated into a Loan in
accordance with clause 5.2.4
below, on the last Business Day of
the Quarter ending on December 31,
2003), December 31, 2003;
(b) the Reborrowed Loans, December 31,
2009;
(c) each Loan (other than a Safety Net
Loan) made after December 31,
2003, the 6th (sixth) anniversary
of the date on which the Advances
constituting such Loan are
consolidated into such Loan in
accordance with clause 5.2.4
below; and
(d) each Safety Net Loan, if any, the
earlier of December 31, 2007 and
the 3rd (third) anniversary of the
date on which the Advances
constituting such Safety Net Loan
are consolidated into such Safety
Net Loan in accordance with clause
5.2.4 below;"
2.1.13. clause 1.1.106 ("Net Cash Flow") shall be amended as follows:
(i) by inserting the words, "or during the period described in the
final paragraph of clause 16.29 below only, as specified in
Schedule 1.1.106A hereto" after the words "in Schedule 1.1.106
hereto"; and
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(ii) by deleting the words "1.5% (one and-a-half percent)" and
substituting "2.5% (two and-a-half percent)" therefor;
2.1.14. clause 1.1.113 ("Permitted Distribution") shall be amended as follows:
(i) the date "January 1, 2006" in paragraph (a) thereof shall be
deleted and the date "January 1, 2008" substituted therefor;
and
(ii) in subparagraph (b)(ii) thereof, the words "(that is, on the
basis that the SDPP shall have fallen within Q3'03)" shall be
deleted;
2.1.15. clause 1.1.114(d) ("Permitted Encumbrances") shall be deleted;
2.1.16. in clause 1.1.115 ("Permitted Financial Indebtedness"):
(i) in the first sentence of paragraph (c) thereof, the words
"(which may be secured by way of a first-ranking fixed charge
(only) over the items of equipment listed in SCHEDULE
1.1.115(C)(1) hereto)" shall be deleted; and
(ii) the second sentence of paragraph (c) thereof shall be deleted;
2.1.17. in clause 1.1.118 ("Permitted Subordinated Debt"):
(i) paragraph (e) thereof shall be amended to read as follows:
(a) the first sentence shall be deleted and replaced by
the following:
"the Borrower shall procure that, at all
times, an amount equal to 20% (twenty
percent) of the outstanding principal amount
of all 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) shall be deposited
in an account with either Bank Hapoalim or
Bank Leumi (`THE
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RESERVE ACCOUNT') which account shall be
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."
(b) in the second sentence, the amount US $396,000,000
(three hundred and ninety-six million United States
Dollars)" shall be deleted and replaced by "US
$544,000,000 (five hundred and forty-four million
United States Dollars)" and "50% (fifty percent)"
wherever it appears shall be deleted and replaced by
"20% (twenty percent)"; and
(c) following the second sentence, the following shall be
added:
"This clause 1.1.118(e) shall not apply to
convertible debentures issued to Safety Net
Investors within the framework of a Safety
Net Investment."
(ii) paragraph (g) shall be amended as follows:
(a) by deleting the date "July 1, 2005" in subparagraph
(i) thereof and substituting therefor the date "July
1, 2007";
(b) the year "2006" in subparagraph (ii) thereof shall be
deleted wherever it appears and the year "2008"
substituted therefor;
(c) the date "January 1, 2007" in subparagraph (iii)
thereof shall be deleted and the date "January 1,
2009" substituted therefor; and
(d) the following shall be added at the end thereof:
"Provided that: (1) the aforegoing
provisions of this paragraph (g) shall not
apply in respect of those Equity Convertible
Debentures issued in January 2002 (`THE 2002
EQUITY CONVERTIBLE DEBENTURES'), in respect
of which the cumulative amounts on
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account of principal of approximately US
$24,000,000 (twenty-four million United
States Dollars) which are to be repaid shall
be repayable in 4 (four) instalments on
January 20 of the years 2006-2009; and (2)
the amount specified in (i) above of this
paragraph (g) shall be reduced by the amount
of any principal repaid on account of the
2002 Equity Convertible Debentures prior to
July 1, 2007; and the amount referred to in
(ii) above of this paragraph (g) shall be
reduced by the amount of any principal
repaid on account of the 2002 Equity
Convertible Debentures prior to 2008 not
already applied to reduce the amount under
(i) above of this paragraph (g), i.e., to
the extent exceeding US $20,000,000 (twenty
million United States Dollars) in
aggregate."
2.1.18. clause 1.1.132 ("SDPP") shall be deleted and replaced by the following:
"`SDPP' - means the date on which the Banks
receive written notice signed by the
Consulting Engineer certifying that Fab
2 has a production capacity of 10,000
(ten thousand) wafer starts per month
based on the parameters set forth in
SCHEDULE 1.1.132 hereto;
2.1.19. clause 1.1.133 ("Security
Documents") shall be amended by adding
thereto new paragraphs (f) and (g), as
follows:
"(f) the Safety Net Undertaking; and
(g) Outside Investment Undertakings;"
2.1.20. clause 1.1.137 ("Termination Date") shall be amended to read as
follows:
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"`TERMINATION
DATE' - means December 31, 2004; provided that,
if a Safety Net Investment is made,
`the Termination Date' shall mean June
30, 2005;"
2.1.21. there shall be inserted at the end of clause 1.1.147 (Warrants"),
before the semi-colon, the following words:
"as well as any other warrants to acquire shares of the
Borrower issued by the Borrower to the Banks from time to
time;"
2.1.22. in clause 1.3.14, the word "Sales" shall be inserted after the words
"`Excess Cash Flow';".
and
2.1.23. the following new definitions shall be added:
(i) as new clause 1.1.9A:
"`BANK ADVISER' - shall bear the meaning
assigned to such term in
clause 16.16.3 below;"
(ii) as new clause 1.1.13A:
"`BORROWER
OFFERING
UNDERTAKING' - means the undertaking of the
Borrower, inter alia, to
complete a rights offering in
the event a Contribution
Notice (as defined in clause
16.34.1 below), is delivered
to it, such undertaking to be
in the form of SCHEDULE
1.1.13A hereto;"
(iii) as new clause 1.1.111A:
"`OUTSIDE
INVESTMENT
UNDERTAKING' - shall bear the meaning
assigned to such term in
clause 16.35.1 below;"
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(iv) as new clause 1.1.127A:
"`SAFETY NET
INVESTMENT' - means the amount actually
received by the Borrower from
Safety Net Investors for
Units, as defined in Schedule
1.1.13A hereof, purchased from
the Borrower in a public
offering or a private
placement following, and in
accordance with, a
Contribution Notice (as
defined in clause 16.34.1
below) delivered in the sole
discretion of the Banks to the
Borrower (with a copy to the
Safety Net Obligor) by the
Banks. For the removal of
doubt, amounts invested
pursuant to clauses 4.5, 4.6
and 16.27.1 below shall not
constitute Safety Net
Investments;"
(v) as new clause 1.1.127B:
"`SAFETY NET
INVESTOR AUDITOR' - means the respective auditors
of the Safety Net Investors,
provided that each such
auditor is one of the "big
four" internationally
recognised firms of auditors
(or a local country affiliate
thereof, in the case of Safety
Net Investors incorporated
outside of the United
States);"
(vi) as new clause 1.1.127C:
"`SAFETY NET
INVESTORS' - means TIC, Israel Corporation
Technologies (ICTech) Ltd.
(`ICTech'), Sandisk, Alliance,
Macronix, QuickLogic, Etgar
and any other shareholder of
the Borrower
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which holds at the date hereof
or at the time the relevant
Contribution Notice is
delivered by the Banks no less
than 6% (six percent) of the
issued and outstanding share
capital of the Borrower;"
(vii) as new clause 1.1.127D:
"`SAFETY NET
LOANS' - means Loans, if any, not to
exceed in the aggregate an
amount equal to US $43,000,000
(forty-three million United
States Dollars), made by the
Banks to the Borrower
following receipt of Safety
Net Investments made by Safety
Net Investors, all in
accordance with and subject to
the provisions of clause 16.34
below;"
(viii) as new clause 1.1.127E:
"`SAFETY NET
OBLIGOR' - means TIC;"
(ix) as new clause 1.1.127F:
"`SAFETY NET
OBLIGOR'S
AUDITORS' - means KPMG Somekh Xxxxxxx or
another leading firm of
independent Israeli auditors
affiliated to one of the "big
four" internationally
recognised firms of auditors;"
(x) as new clause 1.1.127G:
"`SAFETY NET
UNDERTAKING' - means the undertaking in the
form of SCHEDULE 1.1.127G
hereto to be executed by TIC
in
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accordance with clause 16.34
below and to be delivered to
the Banks;"
(xi) as new clause 1.1.133A:
"`SEVENTH
AMENDMENT
CLOSING DATE' - shall bear the meaning
assigned to such term in the
Seventh Amendment to this
Agreement;" and
(xii) as new clause 1.1.133B:
"`SEVENTH
AMENDMENT
FEE LETTER' - means the fee letter of the
date hereof between the
Borrower and the Banks;"
2.2. Clause 2 (The Facility) shall be amended as follows:
2.2.1. clause 2.1 (Grant of Facility) shall be amended by adding the following
as a second paragraph thereof:
"In addition, in the event that the Banks shall (in their sole
discretion) have exercised their option to require the making
of Safety Net Investments pursuant to clause 16.34 below, and
provided such Safety Net Investments are in fact made by
Safety Net Investors in accordance with the relevant
Contribution Notice (as defined in clause 16.34.1 below) and
otherwise in accordance with clause 16.34 below, the Banks
agree to increase the Facility by an aggregate amount equal to
US $43 (forty-three United States Dollars) for every US $50
(fifty United States Dollars) of Safety Net Investment made by
Safety Net Investors pursuant to clause 16.34.1 below (but not
to exceed an amount equal to US $43,000,000 (forty-three
million United States Dollars)), such increased amount of the
Facility to be made available by way of Safety Net Loans, all
as set out in, and subject to the terms and conditions of,
clause 16.34 below."
and
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2.2.2. in clause 2.2.1, the words "or of the Initial Loans" shall be deleted.
2.3. Clause 3 (Purpose) shall be amended as follows:
2.3.1. in clause 3.1.6, the words "in respect of the Availability Period"
shall be deleted; and
2.3.2. a new clause 3.1.10 shall be added as follows:
"to utilise, for the purpose of Fab 1, monies in an amount not
exceeding the aggregate amounts which were generated by Fab 1,
but were applied for the purposes of Fab 2 (all as recorded as
such in the books of the Borrower)."
2.4. Clause 5 (Availability of Credits) shall be amended as follows:
2.4.1. clause 5.1.1(ii) shall be amended to read as follows:
"5.1.1. (ii) the Total Outstandings shall at no time exceed the
product of 1.11 (one point one one) (or, in the
event, and only in the event, any Safety Net Loans
shall be made, then 1.29 (one point two nine)) and
the aggregate amount of investments in Paid-in Equity
(including a deemed amount of US $493,331 (four
hundred and ninety three thousand, three hundred and
thirty-one United States Dollars) from Etgar),
proceeds, net of taxes paid and related expenses from
the sale of shares in accordance with clause
16.27.2(b) below, wafer prepayments (including
credits), MEI Proceeds (other than any MEI Proceeds
constituting wafer prepayments and which are taken
into account as such under this clause 5.1.1(ii)
above) and principal (net of discounts) of Equity
Convertible Debentures or Permitted Subordinated Debt
issued to Safety Net Investors within the framework
of a Safety Net Investment, in all cases actually
received by the Borrower
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prior to such time and taken into account for the
purposes of the US $544,000,000 (five hundred and
forty-four million United States Dollars) investment,
all as required pursuant to clauses 16.27.1-16.27.2
below;"
2.4.2. clause 5.1.2 shall be deleted and the words "[Intentionally Deleted]"
substituted therefor;
2.4.3. clause 5.1.4 shall be amended as follows:
"5.1.4. Credits shall be made available during the Availability Period
only (except that Safety Net Loans, if any, may be provided
after the Availability Period pursuant to clause 16.34 below),
and then only, if all the following conditions (in addition to
those specific conditions for each type of Credit specified
hereunder in this clause 5 and, with respect to Safety Net
Loans, also in addition to those conditions specified in
clause 16.34 below), are fulfilled; provided that, only
clauses 5.1.4.2, 5.2.3, 5.2.4, 5.2.5, 5.2.6 and 5.2.7 below
and the delivery of a Drawdown Request in respect thereof
shall constitute conditions for the making of Safety Net
Loans."
2.4.4. clause 5.1.4.2 shall be amended by adding the following words:
", except that a Safety Net Loan may be made after the
Termination Date;"
2.4.5. in clause 5.1.4.4, there shall be inserted at the beginning thereof,
the following words:
"save only with respect to the Credit to be made pursuant to
clause 6.1.1 below,..."
2.4.6. in clause 5.1.4.6, the words "save with respect to the Initial Loans",
in the first line shall be deleted;
2.4.7. the opening paragraph of clause 5.2 shall be amended by adding the
following after the words "during the Availability Period only":
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"(except that Safety Net Loans, if any, may be provided after
the Availability Period pursuant to clause 16.34 below),"
2.4.8. clause 5.2.2 shall be amended by adding the following words to the
beginning thereof:
"except with respect to Safety Net Loans,"
2.4.9. in clause 5.2.7, there shall be inserted at the beginning thereof, the
following words:
"save only with respect to the Credit to be made pursuant to
clause 6.1.1 below,..."
and
2.4.10. clause 5.2.8 shall be deleted and replaced by the following:
"5.2.8. for the removal of doubt, the Borrower shall not be entitled
to obtain any Advances in respect of that part of the Facility
comprising the Safety Net Loans, unless and until the Banks
shall, in their discretion, have exercised their option to
require the making of Safety Net Investments and the relevant
Safety Net Investments shall in fact have been received from
Safety Net Investors in accordance with the relevant
Contribution Notice (as defined in clause 16.34.1 below) and
otherwise in accordance with clause 16.34 below."
2.5. Clause 6 (Repayment) shall be amended as follows:
2.5.1. clause 6.1 (Repayment of Loans) shall be amended to read as follows:
"6.1. REPAYMENT OF LOANS
6.1.1. On December 31, 2003, or, if not a Business Day, on the
immediately preceding Business Day, the Borrower shall repay
the Total Outstandings in respect of Loans and Advances as at
such date in
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accordance with this clause 6.1.1 below. The Borrower shall
deliver to each of the Banks an irrevocable Drawdown Request
for a Loan in the amount of each Bank's Proportion of the
Total Outstandings in respect of Loans and Advances of the
Borrower, such Loan to be drawn down by the Borrower on
December 31, 2003, or, if not a Business Day, on the
immediately preceding Business Day, together with instructions
to each Bank to apply such Loan towards repayment in full of
all then outstanding Loans and Advances, together with all
accrued and unpaid Interest thereon (such Loans to be made on
December 31, 2003, or, if not a Business Day, on the
immediately preceding Business Day, in accordance with the
aforegoing, hereinafter `THE REBORROWED Loans'). Subject to
all the conditions for an Advance under this Agreement being
met, each Bank shall make available its Proportion of the
Reborrowed Loans in accordance with the aforegoing, to be
applied in repayment in accordance with this clause 6.1.1.
The Borrower shall repay to each Bank its Proportion of the
Reborrowed 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
Reborrowed Loans to be paid on March 31, 2007 and the last
such instalment to be paid on December 31, 2009.
6.1.2. With respect to all Advances made after December 31, 2003
(other than Safety Net Loans), the Borrower shall repay to
each Bank its Proportion of each such Loan by way of 12
(twelve) equal consecutive quarterly instalments, payable on
the last Business Day of each Quarter,
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the first such instalment in respect of each such Loan to be
paid on the date falling 36 (thirty-six) months after the
Consolidation Date for such Loan (in any event all Advances
and Loans to be fully repaid by no later than the Final
Maturity Date).
6.1.3. With respect to Safety Net Loans, if any, the Borrower shall
repay to each Bank its Proportion of each such Safety Net Loan
by way of a lump sum payment made on the earlier of: (a)
December 31, 2007; and (b) the 3rd (third) anniversary of the
Consolidation Date for such Safety Net Loan. Notwithstanding
the aforegoing, the Borrower shall use its best efforts to
voluntarily prepay the Safety Net Loan, in accordance with
clause 7 below, as soon as practicable."
2.5.2. in clause 6.5 (No Reborrowing), the following shall be added to the
beginning thereof:
"Except only as otherwise provided in clause 6.1.1, ...".
2.5.3. in clause 6.6 (Cancellation of Commitments), the words " of the Initial
Loans pursuant to clause 5.2.8.3 above" shall be deleted and replaced
by:
"on December 31, 2003 (or, if not a Business Day, on the
immediately preceding Business Day), as referred to in
clause 6.1.1 above."
2.6. Clause 7 (Voluntary Prepayment) shall be amended as follows:
2.6.1. by deleting, in the third line of clause 7.1, the words "after the
Availability Period";
2.6.2. by deleting in clause 7.4, the words "or for amounts applied in
repayment of the Initial Loans pursuant to clause 5.2.8.3 above)";
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2.6.3. by adding to the beginning of clause 7.5:
"Except with respect to prepayment of Safety Net Loans,"
and
2.6.4. by adding a new clause 7.12 thereto, as follows:
"7.12. PREPAYMENT PURSUANT TO CLAUSE 6.1.1
Notwithstanding anything to the contrary in this clause 7
above, the provisions of clauses 7.1, 7.2, 7.3, 7.4, 7.5, 7.8,
7.9 and 7.11 above shall not apply to the prepayment on
December 31, 2003 and to the making of the Reborrowed Loans in
accordance with the provisions of clause 6.1.1 above."
2.7. Clause 9 (Interest) shall be amended as follows:
2.7.1. clause 9.1 (Interest Rate) shall be deleted and replaced with the
following:
"9.1. INTEREST RATE
The rate of Interest applicable to each of the Advances and
each Loan (including the Reborrowed Loans) in respect of each
Interest Period shall be:
9.1.1. with respect to all Advances and Loans (other than Safety Net
Loans), 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) 2.5% (two point five percent) per
annum; and
9.1.2. with respect to Safety Net Loans, 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) 2.5% (two
point five percent) per annum."
and
- 20 -
2.7.2. clause 9.2 (Accrual of Interest) shall be amended by deleting the words
"and 5.2.8.2" in the first line thereof.
2.8. Clause 11 (Commissions, Fees and Expenses) shall be amended as follows:
2.8.1. clause 11.1 shall be amended to read as follows:
"11.1. SEVENTH AMENDMENT FRONT-END FEE
The Borrower shall pay to each of the Banks, on the earlier
of: (a) the Seventh Amendment Closing Date; and (b) December
31, 2003, the fees set out in paragraph 1 of the Seventh
Amendment Fee Letter."
2.8.2. clause 11.2 (Commitment Commission) shall be amended as follows:
(i) the first sentence of clause 11.2 shall be replaced by the
following:
"The Borrower shall, from and after the date of
signature of the Seventh Amendment to this Agreement
through the end of the Availability Period, pay to
each of the Banks a Commitment commission at the rate
per annum as specified in paragraph 2 of the Seventh
Amendment Fee Letter on such Bank's Available Loan
Commitment (other than in respect of that part of the
Commitment, if any, which may relate to Safety Net
Loans) from time to time as from the date of the
Seventh Amendment to this Agreement until the last
day of the Availability Period."
(ii) the following shall be inserted before the sentence commencing
" `Available Loan Commitment' means ...":
"If the Termination Date is extended until June 30,
2005 as a result of the exercise by the Banks of
their option to call for the making of Safety Net
Investments pursuant to clause 16.34 below, then,
with respect to such extended period the Commitment
commission shall be payable for the period
- 21 -
commencing from the date the Contribution Notice
exercising such option was delivered to the Safety
Net Obligor and ending on the Termination Date (as
extended)."
and
2.8.3. clause 11.4 (Consultants) shall be amended to read as follows:
"11.4. CONSULTANTS
The Borrower shall, in accordance with the letters of
engagement referred to in clauses 4.8-4.10 (inclusive) above
and, in the case of the Bank Adviser, the letter described in
section 3.1.11 of the Seventh Amendment to this Agreement,
retain the following experts: the Consulting Engineer, the
Insurance Adviser, the Consulting Economist 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, economic, 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, in the case of the Consulting Economist, to provide an
opinion as to the economic viability of the Project 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."
2.9. Clause 16 (Undertakings) shall be amended as follows:
2.9.1. the following subclauses shall be added at the end of clause 16.7.2:
- 22 -
"(v) payments permitted by clause 16.27.3.1 below;
(vi) payments in connection with the Borrower's indemnification
obligations as contemplated by the Borrower Offering
Undertaking;
(vii) warrants to TIC or TIC's Subsidiary, ICTech, in consideration
for the provision by TIC of the Safety Net Undertaking, the
value of which warrants not to exceed US $500,000 (five
hundred thousand United States Dollars) plus 5% (five percent)
of the Safety Net Investments actually made by TIC or IC
Tech."
2.9.2. the following shall be added in the second line of clause 16.14.2,
after the word "Banks", wherever it appears: "(and with the Bank
Adviser)";
2.9.3. clause 16.16.1 shall be amended as follows:
(i) in the second line, the words "(including the Bank Adviser)"
shall be inserted after the words "professional adviser"; and
(ii) the words ", the Bank Adviser" shall be added after the words
"the Consulting Engineer".
2.9.4. a new clause 16.16.3 shall be added to read as follows:
"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
- 23 -
acceptance by the Banks of any such matter or
matters as to which the Banks' professional
advisors (including the Bank Advisor) obtain
knowledge."
2.9.5. clause 16.27 (Investments in the Borrower) shall be amended as follows:
(i) clause 16.27.1 shall be amended to read as follows:
"16.27.1 procure that, notwithstanding anything to the
contrary in the Finance Documents, the balance of
the aggregate amount of all investments in Paid-in
Equity of the Borrower to be invested and all
wafer prepayments, including credits, under
Qualifying Wafer Prepayment Contracts to be made
(other than by QuickLogic), all as described in
the undertakings (other than by QuickLogic)
referred to in clause 4.6 above (such balance
being US $24,635,440 (twenty-four million six
hundred and thirty-five thousand, four hundred and
forty United States Dollars) such balance, broken
down as amongst each counterparty to such
undertakings, as detailed in SCHEDULE 16.27.1
hereto) are invested and received (into one of the
Project Accounts or into the Foreign Paid-in
Equity Account) in full, by not later than 3
(three) Business Days following the date the
Borrower's shareholders approve the Amendment No.
3 to Payment Schedule of Series A-5 Additional
Purchase Obligations, Waivers of Series A-5
Conditions, Conversion of Series A-4 Wafer Credits
and all other provisions pursuant to which, inter
alia, the Lead Investors (other than QuickLogic)
give their written consents, as referred to in
section 3.1.5 of the Seventh Amendment to this
Agreement (`THE AMENDMENT XX. 0 XXXXXX').
- 00 -
Xxx Xxxxxxxx shall, on or prior to 5 (five) days
after such 3 (three) Business Days, submit to the
Banks a certificate from the Auditors, in the form
of Schedule 16.1.1(v)(B) hereto, confirming
receipt by the Borrower of all such sums."
(ii) clause 16.27.2 shall be amended to read as follows:
"16.27.2. procure that (in addition to the investments
already made prior to the date of execution of the
Seventh Amendment to this Agreement pursuant to
this clause 16.27.2 (the aggregate amount of which
investments the Borrower declares amounts to US
$86,000,000 (eighty-six million United States
Dollars)), there shall have been: (a) invested in
the Paid-in Equity of the Borrower, by way of
private placement or public offering (including
exercise of employee share options or any other
warrants issued by the Borrower); and/or (b)
received by the Borrower proceeds, net of taxes
paid and related expenses, generated from the sale
of shares of the Borrower in Saifun, Azalea
Microelectronics Corporation, Chip Express
Corporation and/or Virage Logic Corporation;
provided that, the Borrower shall have undertaken
in writing to the Banks to capitalise the amount
of such proceeds, which comprises a net capital
gain, into Paid-in Equity by way of share issue,
by no later than September 30, 2005 (to the extent
necessary to satisfy
- 25 -
the Borrower's obligations on such date pursuant
to the last sentence of this clause 16.27.2) and
that such capital gains are recognised as
additional paid-up share capital by the Investment
Centre in accordance with the terms of the
Investment Centre Fab 2 Grants (to the extent
necessary to satisfy the Borrower's obligations
pursuant to the last sentence of this clause
16.27.2) (such net capital gains, when duly
capitalised and recognised as aforesaid,
hereinafter `THE RECOGNISED INVESTMENTS'); and/or
(c) received by the Borrower wafer prepayments
(including credits) under Qualifying Wafer
Prepayment Contracts; and/or (d) received by the
Borrower an amount (net of discounts, but not net
of commissions, fees and other issuance costs) in
respect of the principal amount of Equity
Convertible Debentures (subject to the terms of
clause 1.1.118 above) or Permitted Subordinated
Debt issued to Safety Net Investors within the
framework of a Safety Net Investment. (For the
purposes of this clause 16.27.2 only, Safety Net
Investments shall also include investments made by
shareholders of the Borrower who are not Safety
Net Investors within the framework of an
investment made pursuant to the Borrower Offering
Undertaking); and/or (e) received by the Borrower
MEI Proceeds (excluding any MEI Proceeds
comprising wafer prepayments under Qualifying
Wafer Prepayment Contracts which are taken into
account under (c) above, all the above in an
aggregate amount of not less than US $152,000,000
(one hundred and fifty-two million United States
Dollars) to be invested and/or received as
aforesaid, as to US $28,000,000 (twenty-eight
million United States Dollars) by not later than 4
(four) months after the date of execution of the
Seventh Amendment to this Agreement; as to an
additional US $25,500,000 (twenty-five million,
five hundred thousand United States Dollars), by
not later
- 26 -
than June 30, 2004; as to an additional US
$25,500,000 (twenty-five million, five hundred
thousand United States Dollars) by not later than
December 31, 2004; as to an additional US
$36,500,000 (thirty-six million five hundred
thousand United States Dollars), by not later than
June 30, 2005; and as to an additional US
$36,500,000 (thirty-six million, five hundred
thousand United States Dollars), by not later than
December 31, 2005 (such amount of US $152,000,000
(one hundred and fifty-two million United States
Dollars) being in addition to the amount of US
$86,000,000 (eighty-six million United States
Dollars) already invested pursuant to this clause
16.27.2 prior to the date of execution of the
Seventh Amendment pursuant to this Agreement and
in addition to the investment of US $306,323,000
(three hundred and six million, three hundred and
twenty-three thousand United States Dollars) to be
invested in accordance with clauses 4.5 and 4.6
above. Notwithstanding anything to the contrary in
this Agreement, the aggregate investments in
Paid-in Equity as referred to in clauses 4.5 and
4.6 above together with the aggregate proceeds
pursuant to this clause 16.27.2 above (other than
from wafer prepayments (including Credits)) shall
not be less than US $459,000,000 (four hundred and
fifty-nine million United States Dollars).
Accordingly, in the event that at any date for
receipt of an investment under Schedule 4.6 it
becomes apparent that the amount received by the
Borrower in respect of wafer prepayments
(including credits) under Qualifying Wafer
Prepayment
- 27 -
Contracts (it being recorded that all amounts of
MEI Proceeds in excess of US $8,000,000 (eight
million United States Dollars) in aggregate shall,
for this purpose, be deemed to constitute wafer
prepayments under Qualifying Wafer Prepayment
Contracts as aforesaid) is in excess of US
$85,000,000 (eighty-five million United States
Dollars), the Borrower shall, within 41/2 (four
and-a-half) months from the date the capacity of
Fab 2 is 15,000 (fifteen thousand) wafer starts,
procure that there shall have been invested in the
Borrower in Paid-in Equity an amount equal to the
excess of such wafer prepayments over US
$85,000,000 (eighty-five million United States
Dollars) as aforesaid (in addition to all other
Paid-in Equity to be invested pursuant to this
Agreement). The Borrower shall within 7 (seven)
days of receipt of each investment, proceeds from
the sale of shares, wafer prepayment, payment on
account of Equity Convertible Debentures or Safety
Net Investments or MEI Proceeds, submit to the
Banks a confirmation by the Auditors of each
investment in Paid-in Equity, proceeds and net
capital gains referred to in paragraph (b) above,
wafer payment, payment on account of Equity
Convertible Debentures or Safety Net Investments
or MEI Proceeds referred to in this clause 16.27.2
above, together, with respect to net capital gains
as referred to in paragraph (b) above, with the
undertaking by the Borrower to capitalise same as
aforesaid. In addition, by no later than September
30, 2005, the aggregate investments in Paid-in
Equity as referred to in clauses 4.5 and 4.6 above
and as
- 28 -
described above in paragraph (a) above and the
Recognised Investments of the Borrower under
Schedule 4.6 shall not be less than US
$345,000,000 (three hundred and forty-five million
United States Dollars);"
(iii) clause 16.27.3 shall be amended as follows:
(a) the existing clause 16.27.3 shall be renumbered
"16.27.3.2" and shall commence with the words "With
effect from January 1, 2007 ..."; and
(b) a new clause 16.27.3.1 shall be inserted as follows:
"16.27.3.1 The Borrower shall cause all Qualifying
Wafer Prepayment Contracts to which it
is a party as at the date of execution
of the Seventh Amendment to this
Agreement to be amended to the effect
(and all Qualifying Wafer Prepayment
Contracts which the Borrower shall enter
into after the date of execution of the
Seventh Amendment to this Agreement
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 the date of
execution of the Seventh Amendment to
this Agreement and
- 29 -
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 in effect as
of the date of execution of the Seventh
Amendment to this Agreement 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
- 30 -
pursuant to clause 9.1.1 above, during
such period 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."
2.9.6. clause 16.29 (Financial Undertakings) shall be amended as follows:
(i) the opening paragraph will be deleted and replaced by the
following:
"The Borrower will procure that: (a) with respect to
clauses 16.29.1 and 16.29.2 below, at all times
during the period of this Agreement; (b) with respect
to clause 16.29.9 and clause 16.29.11 below, with
effect from June 30, 2004 (including for the Quarter
ending on June 30, 2004), at all times during this
Agreement; and (c) with respect to clauses
16.29.3-16.29.8 and clause 16.29.10 below, with
effect from June 30, 2005 (including for the Quarter
ending on June 30, 2005), at all times during this
Agreement, the Borrower shall comply with the
Financial Undertakings set out below:"
(ii) in clause 16.29.1, the words "30% (thirty percent)" should be
deleted and replaced with the words "the applicable ratio set
out in Schedule 16.29";
(iii) in clause 16.29.2, the words "1.5 (one point five)" should be
deleted and replaced with the words "1.3 (one point three)";
- 31 -
(iv) a new clause 16.29.11 shall be inserted to read as follows:
"16.29.11 for any Quarter, Sales (determined on the same
basis as the term `Sales' appearing in the audited
consolidated annual financial statements of the
Borrower) for such Quarter for Fab 2, shall not be
less than the amount for such Quarter as set out
in Schedule 16.29 hereto."
and
(v) the following paragraph shall be added at the end of clause
16.29:
"Notwithstanding the aforegoing in this clause 16.29
above, in the event and only in the event that
Contribution Notices (as defined in clause 16.34.1
below) are or have been delivered by the Banks and
Safety Net Investments are duly made in accordance
with the provisions of clause 16.34 below, then, in
respect of the period commencing on the date of the
confirmation of the making of Safety Net Investments
in accordance with the provisions of clause 16.34
below and until the earliest of the following 3
(three) dates: (a) June 30, 2006 (or, in the event a
Contribution Notice is made within 3 (three) months
prior to June 30, 2006, the date corresponding to the
date Safety Net Investments are made pursuant to such
Contribution Notice or, if earlier, 3 (three) months
after the date of such Contribution Notice); (b) the
date on which the Borrower shall have fulfilled all
of its obligations under clause 16.27.2 above; and
(c) the date on which the Total Outstandings shall
first equal or exceed US $500,000,000 (five hundred
million United States Dollars) (disregarding, for
this purpose only, Safety Net Loans) and in respect
of such period only, all references in this clause
16.29 above to `Schedule 16.29' shall be deemed to be
replaced by SCHEDULE 16.29A hereto and in determining
LLCR for the purposes of this clause 16.29 above, the
Net Cash Flow shall
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be that as specified in SCHEDULE 1.1.106A hereto
(rather than the Net Cash Flow as specified in
Schedule 1.1.106 hereto)."
2.9.7. clause 16.31.2 shall be amended by adding the words "MEI Proceeds",
after the words "proceeds of Permitted Subordinated Debt";
2.9.8. clause 16.31.3 shall be amended by adding the words "MEI Proceeds",
after the words "Wafer Prepayment Contracts";
2.9.9. a new clause 16.34 shall be added to read as follows:
"16.34. SAFETY NET UNDERTAKING
16.34.1. The parties record that the Safety Net Obligor has
provided a Safety Net Undertaking in favour of the
Banks (such undertaking, for the removal of doubt,
being only to the Banks and not to the Borrower,
its shareholders or any third party) that may be
called upon at the option of the Banks (the Banks
being under no obligation to exercise said
option), in the event that the Borrower shall fail
to fulfil any of its finance raising obligations
under clause 16.27.2 above (such obligations under
clause 16.27.2 above, hereinafter `THE BORROWER'S
EQUITY RAISING OBLIGATIONS'). The Borrower
acknowledges, for the removal of doubt, that: (a)
such Safety Net Undertaking is in addition to, and
does not in any way derogate from, the obligations
and undertakings of the Borrower described in
clauses 4.5, 4.6 and 16.27 above; and (b) subject
to clause 16.34.4 below, in the event of any
Default under clause 16.27.2 above, the Banks
shall have available to them all remedies under
the Finance Documents (including pursuant to
clauses 17.21, 17.22, 17.23, 17.24 and 17.25
below) and nothing in this clause 16.34 nor the
fact of the giving of the Safety Net Undertaking
shall derogate from the Banks' rights and remedies
as aforesaid. The
- 33 -
maximum aggregate amount of Safety Net Investments
that the Banks may require the Safety Net Obligor
to make pursuant to the Safety Net Undertaking
shall not exceed an amount equal to US $50,000,000
(fifty million United States Dollars).
It is further recorded that the Borrower has
delivered a Borrower Offering Undertaking to TIC
and the Banks and that pursuant to the Borrower
Offering Undertaking and the Safety Net
Undertaking (and subject to the terms and
conditions of each such Undertaking), in the event
that the Borrower shall fail to meet any of the
Borrower's Equity Raising Obligations under clause
16.27.2 above (by the relevant date provided
therefor pursuant to clause 16.27.2 above), then,
at any time thereafter, subject to the terms of
the Safety Net Undertaking, the Banks shall be
entitled (but shall not be obliged) to exercise
(not more than twice in any 1 (one) calendar year)
their option to call upon the Borrower by way of
sending a contribution notice, in the form of
SCHEDULE 16.34.1 hereto (`THE CONTRIBUTION
NOTICE') to the Borrower, with a copy to the
Safety Net Obligor, to make a rights offering in
accordance with the Borrower Offering Undertaking
in an amount equal to the difference between the
aggregate of the Borrower's Equity Raising
Obligations which, pursuant to clause 16.27.2
above were required to have been performed by the
date of the Contribution Notice and the aggregate
amounts actually invested in the Borrower or
received by the Borrower (after the Seventh
Amendment Closing Date) pursuant to clause 16.27.2
above, as at the date of such Contribution Notice
(`THE DEFICIENT AMOUNT') (or such lesser amount as
may be required to be raised by the Contribution
Notice)
- 34 -
(the amount which is required to be raised by the
Contribution Notice, hereinafter, `THE AMOUNT TO
BE Raised'). In the event a Contribution Notice
will be delivered as aforesaid, the Safety Net
Obligor shall, within 3 (three) months of such
Contribution Notice, make, or procure the making
by the Safety Net Investors of Safety Net
Investments in an amount equal to 50/93 of the
Amount to be Raised by no later than 3 (three)
months from the date of such Contribution Notice,
all in accordance with the terms of the Safety Net
Undertaking. Pursuant to the Safety Net
Undertaking, inter alia, with respect to each
Contribution Notice, in the event that during the
Relevant Period ending immediately prior to the
date of such Contribution Notice, there shall have
been made Additional Investments, then, for the
purposes of calculating the amount of the Safety
Net Investments required to be made pursuant to
such Contribution Notice: (i) the aggregate amount
of the Recognised Additional Investments during
such Relevant Period shall be deemed to be added
to the Amount to be Raised; and (ii) the Safety
Net Obligor shall be deemed to have provided
Safety Net Investments in respect of such
Contribution Notice in an amount equal to the
aggregate Recognised Additional Investments for
such Relevant Period.
In this clause 16.34.1:
(1) `ADDITIONAL INVESTMENT' means, in respect
of any Relevant Period (as defined
below), the aggregate of the amount of
Paid-in Equity and Permitted Subordinated
Debt, in each case, actually received by
the Borrower from the Safety Net Obligor
during such Relevant Period within the
framework of a public offering
- 35 -
or private placement by the Borrower of
Paid-in Equity and/or Permitted
Subordinated Debt, as such amount shall
be certified by the Safety Net Obligor's
Auditors or the Auditors (such
certificate to be in a form satisfactory
to the Banks), but excluding any Safety
Net Investment and the investments that
TIC is required to make as referred to in
clauses 4.6 and 16.27.1 above. It is
recorded that it is a term of the Safety
Net Undertaking that the Safety Net
Obligor shall, within 10 (ten) days after
each Relevant Period, submit to the Banks
a certificate from the Safety Net
Obligor's Auditors or the Auditors (such
certificate to be in a form satisfactory
to the Banks), confirming the amount and
receipt of all such amounts received, as
aforesaid, during such Relevant Period;
(2) `RECOGNISED ADDITIONAL INVESTMENT' means,
with respect to any Additional
Investment, an amount equal to the lowest
of:
(aa) the amount of the Additional
Investment;
(bb) US $10,000,000 (ten million United
States Dollars); and
(cc) 20% (twenty percent) of the amount
actually invested in the Borrower
within the framework of the
relevant public offering or private
placement in which such Additional
Investment is made;
(3) `A RELEVANT PERIOD' means the period
commencing from the date a Contribution
Notice is
- 36 -
made by the Banks pursuant to clause
16.34.1 above and ending on the date
before the next Contribution Notice is
made, as aforesaid, save that the period
of the first Relevant Period shall
commence from the date of the Safety Net
Undertaking and shall end on the date
before the first Contribution Notice is
made.
By way of example only, and without
derogating from the generality of the
aforegoing, if the Deficient Amount is US
$41,500,000 (forty-one million five
hundred thousand United States Dollars)
and the aggregate of the Recognised
Additional Investments made in the
Relevant Period is US $5,000,000 (five
million United States Dollars), then the
Banks could require the Safety Net
Obligor to contribute US $20,000,000
(twenty million United States
Dollars)--representing the amount found
by subtracting the amount of the
Recognised Additional Investment (i.e.,
US $5,000,000 (five million United States
Dollars)) from US $25,000,000
(twenty-five million United States
Dollars), which latter amount represents
the amount found by multiplying the sum
of the Deficient Amount and the
Recognised Additional Investment (i.e.,
US $46,500,000 (forty-six million five
hundred thousand United States Dollars))
by 50/93.
Any failure by the Borrower to perform timeously
all of the Borrower's obligations under the
Borrower Offering Undertaking shall constitute an
Event of Default.
- 37 -
For the removal of doubt, the option granted to
the Banks pursuant to this clause 16.34.1 above is
exercisable each time that the Borrower shall fail
to meet any of the Borrower's Equity Raising
Obligations and at any time after such failure,
subject to the terms of the Safety Net
Undertaking.
16.34.2. Should the Banks exercise their option, from time
to time, to require Safety Net Investments in the
Borrower and such Safety Net Investments are in
fact made pursuant to the terms of the Safety Net
Undertaking as referred to in clause 16.34.1 above
by Safety Net Investors, and the Safety Net
Investor Auditors shall have delivered a
certificate in a form satisfactory to the Banks
confirming same or the Auditors shall have
confirmed receipt thereof by the Borrower, the
Borrower shall be entitled, subject to delivery of
a Drawdown Request and fulfilment of the condition
as set forth in clause 5.1.4.2 above and in
accordance with the conditions set out in clauses
5.2.3, 5.2.4, 5.2.5, 5.2.6 and 5.2.7 above, to
obtain from the Banks Safety Net Loans in an
aggregate amount equal to 86% (eighty-six percent)
of the amount of Safety Net Investments actually
received from Safety Net Investors as aforesaid
(including, for the removal of doubt, the amount
of Recognised Additional Investments deemed as
Safety Net Investments by the Safety Net Obligor
as referred to in clause 16.34.1(ii) above, if
any, taken into account for the purposes of the
relevant Contribution Notice) (based on a ratio of
US $43 (forty-three United States Dollars) of
Safety Net Loans for every US $50 (fifty United
States Dollars) constituting a Safety Net
Investment), but not more than US $43,000,000
(forty-three million United States Dollars) in the
aggregate. For the removal of
- 38 -
doubt, only Safety Net Investments made by Safety
Net Investors (and not any other person) shall be
taken into account for the purposes of this clause
16.34.2. Subject to the aforegoing, the Safety Net
Loans shall be available for drawdown by the
Borrower from the date of confirmation of receipt
of the relevant Safety Net Investment, as
aforesaid.
16.34.3. At any time after delivery of a Contribution
Notice (but not later than 1 (one) day prior to
the date on which the relevant rights offering
prospectus or private placement is due to become
effective), the Banks may, at their sole
discretion and without any liability to the Safety
Net Obligor or the Borrower arising therefrom, by
notice in writing to the Safety Net Obligor and
the Borrower, withdraw a Contribution Notice.
Without derogating from the foregoing, in the
event that, if after delivery of a Contribution
Notice, the Banks are of the view that, due to a
legal impediment, they would not be in a position
to make Safety Net Loans available to the
Borrower, the Banks shall so notify the Safety Net
Obligor and the Borrower, and the Contribution
Notice shall be withdrawn. Notwithstanding the
aforegoing, the Banks shall be entitled to send a
Contribution Notice once they are of the view that
they would be in a position to make Safety Net
Loans.
16.34.4. In the event that Safety Net Investments shall be
duly made in accordance with the Safety Net
Undertaking and this clause 16.34, then the Banks
agree that: (a) they shall not be entitled to
exercise their rights pursuant to clauses
17.21-17.25 below nor shall the Banks be entitled
to refrain from making Credits pursuant to clause
5 above, by reason only of the Borrower's Default
in failing to comply with
- 39 -
clause 16.27.2 above, and (b) until the earlier
of: (i) the date on which the Safety Net
Undertaking expires; and (ii) the date on which
the Total Outstandings shall first reach or exceed
US $500,000,000 (five hundred million United
States Dollars) (disregarding, for this purpose
only, Safety Net Loans), with respect only to
Defaults or Events of Defaults listed in (1)-(3)
hereunder, the Banks shall not be entitled to
exercise their rights pursuant to clauses
17.21-17.25 below nor shall the Banks be entitled
to refrain from making Credits pursuant to clause
5 above, by reason only of such Default or Events
of Default (without derogating from the
requirement that all other conditions for the
making of a particular Credit will still have to
be complied with):
(1) an Event of Default constituted by the
receipt by the Borrower of a Credit, in
breach of clauses 2.3 or 5.1 above. For
the removal of doubt, the aforegoing
shall not entitle the Borrower to a
Credit if at the time of the request of
same, it does not comply with clauses 2.3
or 5.1 above (however, if a Credit is
made despite such non-compliance, the
mere fact of the making of such Credit,
despite non-compliance, shall not prevent
the making of further Credits); or
(2) a Default constituted by a failure by the
Borrower to make payments to suppliers on
the due date for payment; or
(3) a Default specifically waived pursuant to
the Waiver Notice, or the Additional
Waiver Notice (each as defined below) as
set forth in clause 16.34.5 below.
- 40 -
16.34.5. After a Contribution Notice is made, the Borrower
may, no later than 25 (twenty-five) Business Days
before the date corresponding to 3 (three) months
after the date of such Contribution Notice, or, if
earlier, before the date a Safety Net Investor
makes a Safety Net Investment pursuant to such
Contribution Notice (the earlier of the
aforegoing, `THE SAFETY NET INVESTMENT DATE'),
send a written notice to the Banks expressly
setting out and particularising all actually
existing Defaults or Events of Default, including
all relevant facts, and the steps being taken to
remedy the same (`THE DEFAULT NOTICE'), that have
occurred and are continuing as at the date of such
Default Notice. In connection therewith, the
Borrower shall not be entitled to set out and
particularise in any Default Notice any Default or
Event of Default arising from any act or omission
by, or under the control of, the Safety Net
Obligor. In the event the Banks agree, within 15
(fifteen) Business Days after the receipt of such
Default Notice to waive such Defaults or Events of
Default by way of a waiver notice (`THE WAIVER
NOTICE') in substantially the same form as set out
in SCHEDULE 16.34.5 hereto, then, subject to the
Banks receiving certificates from each applicable
Safety Net Investor Auditor or a certificate from
the Auditors (in a form or forms satisfactory to
the Banks), confirming that all Safety Net
Investments to be made by the Safety Net Investors
in respect of such Contribution Notice pursuant to
clause 16.34.1 above have actually been made, with
effect from the date such Safety Net Investments
are made, the Banks shall be deemed to have waived
those actually existing Defaults or Events of
Default expressly set out and particularised in
such Default Notice as aforesaid.
- 41 -
For the avoidance of doubt: (i) any such waiver
shall only relate to the period prior to the
making of such Safety Net Investments by the
Safety Net Investors, as aforesaid, and shall not
be interpreted in any event as a waiver by the
Banks of any representation, warranty or
obligation (including, under clause 16.29 above)
of the Borrower included in the Finance Documents,
or of any Default or Event of Default not actually
existing and not expressly set out and
particularised in such Default Notice, as
aforesaid; and (ii) in the event the Banks do not
send a Waiver Notice within such 15 (fifteen)
Business Day period, or if the Safety Net
Investors do not actually make all of the Safety
Net Investments, as aforesaid, as required under
the relevant Contribution Notice, or if the Banks
do not receive such certificates from the Safety
Net Investor Auditors or the Auditors (in a form
satisfactory to the Banks), as aforesaid, then the
Banks shall not be deemed to have waived any
rights they have or may have arising from the
Defaults or Events of Default set out and
particularised in such Default Notice as
aforesaid. In the event the Banks do not send a
Waiver Notice to the Banks within 15 (fifteen)
Business Days after receipt of the relevant
Default Notice from the Borrower, then the
relevant Contribution Notice shall be deemed to
have been withdrawn by the Banks and the Safety
Net Obligor shall not be required to make, or
procure to be made, Safety Net Investments in
accordance with said Contribution Notice and the
Borrower shall not be required to fulfil its
undertakings under the Borrower Offering
Undertaking with respect, only, to such withdrawn
Contribution Notice. If after a Waiver Notice is
sent by the Banks to the Borrower, but no later
than 8 (eight) Business Days prior to
- 42 -
the Safety Net Investment Date, the Borrower sends
a written notice to the Banks expressly setting
out and particularising additional actually
existing Defaults or Events of Default not listed
on the Default Notice (or adds more detail to the
ones detailed in the Default Notice) and the steps
being taken to remedy same (`THE ADDITIONAL
DEFAULT NOTICE'), that have occurred and are
continuing as at the date of such Additional
Default Notice (the above provisions applicable to
the Default Notice to be equally applicable to the
Additional Default Notice, mutatis mutandis), the
Banks shall have 7 (seven) Business Days after the
receipt of such Additional Default Notice to
decide whether to waive such additional Defaults
or Events of Default by way of an additional
waiver notice (`THE ADDITIONAL WAIVER NOTICE')
(the above provisions applicable to the Waiver
Notice to be equally applicable to the Additional
Waiver Notice, mutatis mutandis). In the event the
Banks do not send an Additional Waiver Notice to
the Borrower within 7 (seven) Business Days after
receipt of the relevant Additional Default Notice
from the Borrower, then the relevant Contribution
Notice shall be deemed to have been withdrawn by
the Bank and the Safety Net Obligor shall not be
required to make, or procure to be made, Safety
Net Investments in accordance with said
Contribution Notice and the Borrower shall not be
required to fulfil its undertakings under the
Borrower Offering Undertaking with respect, only,
to such withdrawn Contribution Notice. For the
removal of doubt, notwithstanding anything to the
contrary in this clause, any waiver granted as
aforesaid, shall not apply in the event of any
change or development occurring after the date of
the relevant Default Notice or Additional Default
Notice (as
- 43 -
the case may be) in the circumstances described in
the relevant Default Notice or Additional Default
Notice (as the case may be), including in the
event that any "Default" included in a Default
Notice or Additional Default Notice (as the case
may be) becomes an "Event of Default", other than
a change or development occurring after the date
of the relevant Default Notice or Additional
Default Notice (as the case may be), which does
not have any adverse effect on the interests of
the Banks."
and
2.9.10. a new clause 16.35 shall be added to read as follows:
"16.35. OUTSIDE INVESTMENT
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
- 44 -
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
- 45 -
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.
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
- 46 -
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."
2.10. Clause 17 (Default) shall be amended as follows:
2.10.1A in clause 17.1, the words "clause 17.20A" shall be deleted and replaced
with the words "clause 17.20B";
2.10.1. in clause 17.3, the following new clause 17.3.3 shall be inserted:
"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."
2.10.2. in clause 17.6, the following clause 17.6.6 shall be inserted:
"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
- 47 -
Permitted Financial Indebtedness) placed with the
relevant Banks and duly charged by first-ranking
floating charge in favour of the Banks."
2.10.3. clause 17.10.3 shall be amended such that the number "16,000 (sixteen
thousand)" shall be replaced by "15,733 (fifteen thousand seven hundred
and thirty-three)";
2.10.4. clause 17.15 (Completion of Fab 2) shall be amended as follows:
"Any of the following occur: (a) SDPP is not
achieved within 71/2 (seven and-a-half) months after
the date specified therefor in the Forecast (such
specified date being June 30, 2004); (b)
construction of Fab 2 is not completed (completion
constituting for this purpose the reaching of wafer
capacity for Fab 2 of 33,000 (thirty-three thousand)
wafer starts per month in accordance with the
Business Plan) by December 31, 2007; or (c) it
becomes apparent that, save as a result of any
action by a Bank in breach of this Agreement, SDPP
shall not be achieved by the date referred to in (a)
above or construction of Fab 2 shall not be
completed by the date referred to in (b) above."
and
2.10.5. a new clause 17.20B shall be inserted, as follows:
"17.20B SAFETY NET UNDERTAKING AND OUTSIDE INVESTMENT
UNDERTAKINGS
17.20B.1 (a) If within 3 (three) months after any
Contribution Notice is sent by the Banks,
the Amount to be Raised (as defined in
clause 16.34.1) under such Contribution
Notice shall not have been invested in the
Borrower by way of Additional Capital (as
defined in the Safety Net Undertaking).
- 48 -
(b) The Safety Net 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 the Safety Net Obligor or it
shall be unlawful for the Safety Net Obligor
to perform any of its material obligations
under the Safety Net Undertaking, unless it
expires in accordance with its terms.
(c) The Safety Net Obligor repudiates the Safety
Net Undertaking.
(d) There occurs with respect to the Safety Net
Obligor any of the events or circumstances
referred to in clauses 17.7-17.9 above, such
clauses to be read as if references to `the
Borrower' therein were instead references to
`the Safety Net Obligor'.
Notwithstanding the provisions of this clause
17.20B.1, for the removal of doubt, the Safety Net
Undertaking does not create any rights or
obligations in favour of the Borrower or any of its
shareholders.
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
- 49 -
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.
(d) Any Lead Investor repudiates the Outside
Investment Undertaking to which it is a
party."
2.11. Clause 18.2 (Default Interest) shall be amended to read as follows:
"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 clauses 9.1.1 or 9.1.2 above (namely, 2.5% (two point
five percent)) (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) 2.5%
(two point five percent) plus a rate as certified by the Banks
in accordance with clause 9 above."
- 50 -
2.12. Each of the following Schedules shall be replaced by updated Schedules
as referred to in section 3.1.28 below (the updated Schedules, for the
removal of doubt, to bear the same heading (Schedule number) as those
replaced): Schedule 1.1.16 (Business Plan); Schedule 1.1.42 (Form of
Drawdown Request); Schedule 1.1.64 (Borrower's Forecast); Schedule
1.1.101 (List of Material Contracts); Schedule 1.1.105 (List of Named
Directors and Officers); Schedule 1.1.106 (Net Cash Flow); Schedule
1.1.115(c)(2) (Description of Financial Indebtedness Exceeding US
$40,000,000); Schedule 1.1.115(j) (Other Permitted Financial
Indebtedness); Schedule 4.11.2 (Indebtedness of the Group); all
Schedules required by clause 15; and Schedule 16.29 (Financial
Undertakings); provided that Schedules 1.1.42, 1.1.101, 1.1.105,
1.1.115(c)(2), 1.1.115(j) and 4.11.2 (in form and substance
satisfactory to the Banks in their sole discretion), may be delivered
by the Borrower following the date hereof by no later than the Seventh
Amendment Closing Date.
2.13. New Schedules 16.27.1 (Breakdown of Amounts Owing to the Borrower
pursuant to Undertakings referred to in clause 4.6, as at the Seventh
Amendment Closing Date) and 16.29A (Financial Undertakings applicable
during Safety Net Period) in the forms respectively attached as
APPENDIX A and APPENDIX B hereto; new Schedules 1.1.13A (Borrower
Offering Undertaking); 1.1.132 (SDPP); 1.1.106A (Net Cash Flow);
1.1.127G (Form of Safety Net Undertaking); 16.34.1 (Contribution
Notice); 16.34.5 (Form of Waiver Notice); 16.35.1 (Form of Outside
Investment Undertakings); and Appendices C-M (inclusive) hereto shall
be added to and form part of the Facility Agreement; provided that,
Schedules 16.34.5, 16.35.1 and Appendices D, F, G, I, J, K and L (in
form and substance satisfactory to the Banks in their sole discretion),
may be delivered following the date hereof but by no later than the
Seventh Amendment Closing Date and the legal opinions to be attached
hereto as Appendices J, K and L shall be delivered as of the Seventh
Amendment Closing Date.
2.14. Schedule 1.1.104 (Description of Milestones) shall be deleted.
3. CONDITIONS PRECEDENT
3.1. This Seventh Amendment, other than section 3.3 below, is subject to the
conditions precedent that the Banks shall have received, by not later
than December 21, 2003 (or such earlier date expressly set out with
respect thereto below), the following documents, information, matters
and things in form and substance satisfactory to the Banks:
- 51 -
3.1.1. a copy, certified a true copy by a duly authorised officer of the
Safety Net Obligor of the Organisational Documents of the Safety Net
Obligor;
3.1.2. copies of resolutions of the Board of Directors of the Safety Net
Obligor and of each other Lead Investor and, to the extent applicable,
its audit committee and shareholders evidencing approval of the Finance
Documents to which the Safety Net Obligor and such other Lead Investor,
as aforesaid (as applicable) is a party and authorising named officers
of the Safety Net Obligor and such other Lead Investor, as aforesaid
(as applicable) to execute, deliver and perform each of such Finance
Documents and to give all notices and take all other action required to
be given or taken by the Safety Net Obligor and such other Lead
Investor, as aforesaid (as applicable) under such Finance Documents;
3.1.3. the Safety Net Undertaking (in the form of APPENDIX C hereto), duly
executed by TIC and a certification by TIC as set forth in section 8A
of the Safety Net Undertaking;
3.1.4. the Outside Investment Undertakings (in form satisfactory to the Banks
in their sole discretion and to be attached hereto as APPENDIX D), duly
executed by each of the Lead Investors;
3.1.5. written consents by each of the Lead Investors (other than QuickLogic):
(i) to make, in accordance with clause 16.27.1, those investments in
Paid-in Equity and/or prepayments under Qualifying Wafer Prepayment
Contracts required to be made pursuant to clause 16.27.1; (ii) to the
execution of the Safety Net Undertaking by the Safety Net Obligor;
(iii) to the amendments to the Qualifying Wafer Prepayment Contracts to
be made pursuant to clause 16.27.3.1; (iv) to the giving of the Outside
Investment Undertakings and (v) to this Seventh Amendment;
3.1.6. the Seventh Amendment Fee Letter executed as at the date hereof by the
Borrower;
3.1.7. the Borrower Offering Undertaking (in the form attached hereto as
APPENDIX E), duly executed by the Borrower;
3.1.8. the Borrower shall procure that the Debenture is updated (and such
updates are duly registered with the Registrar of
- 52 -
Companies and the Registrar of Pledges), such that all Material
Contracts entered into by it and all assets and rights acquired by it,
after January 18, 2001 (including, any lease with the XXX flowing from
the development agreement with the XXX described in clause 4.17 and the
two new development agreements with the XXX, any new Intellectual
Property Assets, any immovable property, any new machinery and
equipment and any new Insurance Policies), are duly pledged to the
Banks by way of first-ranking fixed charge (or, as applicable, assigned
by way of charge) under the Debenture, and that such updates are
otherwise perfected in accordance with its terms and the Borrower shall
deliver to the Banks all documents as referred to in clause 3.2 of the
Debenture (mutatis mutandis) and shall sign all such other documents
and forms required for the purposes of the aforegoing);
3.1.9. the Borrower shall procure that the Borrower's shares in Tower
Semiconductor USA, Inc. and all Intellectual Property Assets held
outside the State of Israel be duly pledged to the Banks by way of
first-ranking fixed charge (or its equivalent under the laws of the
relevant jurisdiction) under a debenture (or appropriate security
agreement) and otherwise perfected in accordance with its terms;
3.1.10. execution of amendments to the existing Warrants, in the form
satisfactory to the Banks in their sole discretion and to be attached
hereto as APPENDIX F and execution of additional warrants in favour of
the Banks, to acquire shares of the Borrower, in the form satisfactory
to the Banks in their sole discretion and to be attached hereto as
APPENDIX G, such amendments and additional warrants to reflect the
principles set out in APPENDIX H hereto;
3.1.11. duly executed letter of engagement of the Bank Adviser in the form
satisfactory to the Banks in their sole discretion and to be attached
hereto as APPENDIX I;
3.1.12. the Borrower paying the fees set out in section 5 below by the earlier
of: (a) the Seventh Amendment Closing Date; and (b) December 31, 2003;
3.1.13. copies of resolutions of the Board of Directors, audit committee and
shareholders of the Borrower, evidencing approval of this Seventh
Amendment (including, specifically, of the Borrower Offering
Undertaking, the Safety Net Undertaking, the Outside
- 53 -
Investment Undertakings, the Amendment No. 3 Letter (as defined in
section 2.9.5(i) above) (together with a copy of the certificate
delivered to each of the parties thereto as referred to in the last
sentence of Section 1 of the Amendment No. 3 Letter), as referred and
of the Borrower's obligations pursuant to clause 16.34) and authorising
designated officers of the Borrower to execute, deliver and perform
this Seventh Amendment and to give all notices and take all other
action required to be given or taken by the Borrower under this Seventh
Amendment;
3.1.14. payment on the date of signature of this Seventh Amendment of the fees
and costs referred to in section 5 below, that are payable on or before
such date;
3.1.15. an opinion of Xxxxx Xxxxx & Co., Advocates, the Borrower's external
legal counsel, addressed to the Banks, in the form to be attached
hereto as APPENDIX J and an opinion from the Borrower's external
foreign counsel addressed to the Banks in respect of the pledges
referred to in section 3.1.9 above, to be attached hereto as APPENDIX
K;
3.1.16. opinions addressed to the Banks by the external legal counsel of the
Safety Net Obligor and of the other Lead Investors in the form
satisfactory to the Banks in their sole discretion and to be attached
hereto as APPENDIX L;
3.1.17. copies, certified by the external legal counsel of the Borrower, of the
amendments to the Wafer Prepayment Contracts in accordance with clause
16.27.3.1 (as it will be amended, if amended, by this Seventh
Amendment);
3.1.18. a copy, certified as a true copy by the external legal counsel of the
Borrower, of all amendments to the Certificate of Incorporation,
Memorandum of Association and Articles of Association of the Borrower
since January 18, 2001;
3.1.19. copies of the MEI Agreement;
3.1.20. copies of all amendments to the Organisational Documents of each of the
Subsidiaries of the Borrower since January 18, 2001;
3.1.21. copies of all amendments and restatements and documentation in
connection therewith since January 18, 2001 (in English or in
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Hebrew or, if the original is in another language, translated into
English by a certified translator), certified by the Borrower's
external legal counsel, as being true, complete and up-to-date, of all
the Material Contracts referred to in clause 4.25;
3.1.22. copies (in English or in Hebrew or, if the original is in another
language, translated into English by a certified translator), certified
by the Borrower's external legal counsel, as being true, complete
(including all amendments thereto and documentation in connection
therewith) and up-to-date of all Material Contracts entered into after
January 18, 2001;
3.1.23. an updated certificate by the Auditors confirming investments made
pursuant to clauses 4.5, 4.6 and 16.27 in Paid-in Equity and/or credits
(wafer prepayments) through and as of the Seventh Amendment Closing
Date;
3.1.24. a certificate of the Auditors and a certificate of the Chief Financial
Officer of the Borrower certifying that, as of the Seventh Amendment
Closing Date, the Borrower has no Indebtedness, save for Permitted
Financial Indebtedness;
3.1.25. all other amendments to Take-or-Pay Contracts and/or Wafer Prepayment
Contracts and/or if the other party to an agreement is one of the Lead
Investors (other than TIC) or another Equity Wafer Partner, agreements
providing for a right on the part of such other party to order wafers
from the Borrower;
3.1.26. all the Material Contracts described in sections 3.1.17, 3.1.19 3.1.20
and 3.1.22 above shall be in full force and effect and shall not have
been breached by any party thereto (save for any breach which: (a) is
not material; and (b) cannot constitute (including with the passage of
time or the giving of notice) a cause of action permitting termination
of any such Material Contract or any variation thereof adverse to the
Borrower);
3.1.27. an amended Insurance Report;
3.1.28. updated Schedules to replace each of the Schedules referred to in
section 2.12 above and each of the new Schedules referred to in section
2.13 above;
3.1.29. evidence that this Seventh Amendment and all documentation pursuant
thereto, including, the Safety Net Undertaking, required, if required,
to be stamped for stamp duty purposes,
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has been stamped and the relevant duty payable has been paid; and
3.1.30. all of the Borrower's representations and warranties given pursuant to
this Seventh Amendment shall be accurate in all material respects as of
the Seventh Amendment Closing Date, as if made on the Seventh Amendment
Closing Date.
3.2. In the event that the aforegoing conditions precedent are not all fulfilled
by December 21, 2003, then, save for sections 3.3 and 5 below, this Seventh
Amendment shall no longer be of any force or effect and the Facility
Agreement shall remain unaltered and in full force and effect and, save as
aforesaid, no party shall have any claim arising out of or in connection
with this Seventh Amendment. The Banks undertake that promptly following
the fulfilment to the satisfaction of the Banks of all the conditions
precedent referred to in section 3.1 above, the Banks shall confirm to the
Borrower in writing that the conditions precedent have been fulfilled and
this Seventh Amendment has become effective.
3.3. Subject to the fulfilment by the Borrower of the conditions precedent set
out in sections 3.1.3, 3.1.5, 3.1.6 and 3.1.7 above ("THE BRIDGE CONDITIONS
PRECEDENT") to the Banks' satisfaction, the Banks shall, upon fulfilment of
the Bridge Conditions Precedent, if fulfilled, notwithstanding that the
Banks are not obliged as at the date hereof to make any Advance under the
Facility, make available Credits to the Borrower under the Facility in the
amount of US $60,000,000 (sixty million United States Dollars), subject to
compliance with the terms and conditions for making a Credit under clause 5
(other than clause 5.2.1). It is hereby agreed that the making of such
Credit shall not constitute a waiver by the Banks of any Event of Default
referred to in APPENDIX M hereto. The Borrower shall immediately utilise US
$10,000,000 (ten million United States Dollars) of such Credits to repay
the Banks on account of Indebtedness of the Borrower to the Banks on
account of Fab 1, in accordance with clause 3.1.10.
4. REPRESENTATIONS AND WARRANTIES
The Borrower acknowledges that the Banks have agreed to this Seventh
Amendment in full reliance on the representations and warranties referred
to in clause 15. Without derogating from the provisions of clause 15, all
of those representations and warranties which are demanded to be repeated
pursuant to clause 15.30 shall be deemed to be repeated on the date of
signature of this Seventh Amendment, on the Seventh Amendment
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Closing Date and on the date of drawdown of the Reborrowed Loans and,
notwithstanding anything to the contrary in clause 15.30, the Borrower
shall be deemed also to have repeated, on each of the aforegoing dates, the
following further representations and warranties: the second sentence of
clause 15.2 (excluding with regard to a Default comprising only of 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); all of clause 15.3, clause 15.4, clause 15.5, the last two
sentences of clause 15.6, clause 15.13, clause 15.8.2 (but with respect to
audited consolidated Accounts of the Borrower, for the period ending
December 31, 2002 and with respect to unaudited reviewed consolidated
Accounts, for the periods ending March 31, 2003, June 30, 2003 and
September 30, 2003), clause 15.14, clause 15.16 (but the words "1999
Balance Sheet" shall be replaced by "December 31, 2002" and save for those
changes since December 31, 2002 expressly referred to in the Borrower's
annual report on Form 20-F for 2002 filed with the Securities Exchange
Commission and in the registration statement on Form F-3 filed with the
Securities Exchange Commission in September 2003, clause 15.18, clause
15.21 and clause 15.24, subject only to the specific disclosures set out in
APPENDIX N hereto).
For the removal of doubt, the term "Finance Documents" when referred to in
the representations and warranties set out in clause 15, includes also this
Seventh Amendment.
5. FEES AND EXPENSES
Without derogating from the obligations of the Borrower to pay the Banks
commissions, fees and expenses pursuant to the Facility Agreement and in
addition thereto, and for the removal of doubt, the Borrower shall pay to
the Banks on the date of signature of this Seventh Amendment and thereafter
on demand all costs and expenses (including legal fees for external counsel
and out-of-pocket expenses) incurred by the Banks in connection with the
negotiation, preparation and execution of this Seventh Amendment
(including, with respect to all Appendices thereto and all Schedules
attached, or to be delivered pursuant, thereto to the Facility Agreement)
and the completion of the transactions herein contemplated and with respect
to all further amendments to the Facility Agreement, as to any Permitted
Subordinated Debt to be issued by the Borrower, all subject, with respect
to legal fees, to such tariffs as have been agreed between the Banks and
the Borrower in writing.
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6. LIMITED WAIVER
The Banks agree that, with effect from the Seventh Amendment Closing Date,
the Banks waive those Defaults and Events of Default actually existing and
expressly set out in APPENDIX M hereto. For the removal of doubt, the
aforegoing waiver shall not be interpreted in any event as a waiver by the
Banks of any representation, warranty or obligation (including under clause
16.29) of the Borrower included in the Finance Documents or of any Default
or Event of Default not expressly set out in Appendix M or, for the removal
of doubt, of any Default or Event of Default occurring after the date of
signature of this Seventh Amendment. The aforegoing waiver shall not apply
in the event of any change or development occurring after the date of
signature of this Seventh Amendment in the circumstances described in said
Appendix M (including in the event any "Default" included in Appendix M
becomes an "Event of Default"), other than a change or development
occurring after the date of signature of this Seventh Amendment, which does
not have any adverse effect on the interests of the Banks.
The Banks further agree that they shall not, during the period commencing
from the date hereof and ending 40 (forty) days after the date hereof, or,
subject to the preceding sentence of this section 6, if earlier, ending on
the Seventh Amendment Closing Date, exercise any rights they may have under
clause 17.21 as a result of the Defaults and Events of Default actually
existing and expressly set out in Appendix M, as aforesaid. The aforegoing
shall not apply in the event of any change or development occurring after
the date of signature of this Seventh Amendment in the circumstances
described in said Appendix M (including in the event any "Default" included
in Appendix M becomes an "Event of Default"), other than a change or
development occurring after the date of signature of this Seventh
Amendment, which does not have any adverse effect on the interests of the
Banks. For the avoidance of doubt, in the event the conditions precedent
referred to in section 3.1 above are not fulfilled within such 40 (forty)
day period, then the Banks shall be entitled to exercise any rights they
have under clause 17.21 as a result of such Defaults or Events of Default,
as aforesaid, and the provisions of this section 6 shall neither
constitute, nor be construed, as a waiver of such Defaults or Events of
Default or of any rights the Banks may have against the Borrower in
connection therewith.
For the avoidance of doubt, although the Banks are waiving the fact that a
total of approximately $95,506,000 (ninety five million five hundred and
six thousand United States Dollars) in Investment Centre Fab 2 Grants that
were to be made to the Borrower by October 31, 2003 in accordance with the
previous Business Plan and Forecast were not made on schedule, the
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Banks are not waiving the receipt of these grants in the future in
accordance with the new Business Plan and Forecast attached hereto.
Accordingly, even though the Borrower has informed the Banks that it
neither expects to complete its investment program by 2005 as required by
the certificate of approval regarding, nor expects to achieve the levels of
revenues and employees that it forecasted to the Investment Centre in
connection with, Investment Centre Fab 2 Grants, failure by the Borrower in
the future to actually receive Investment Centre Fab 2 Grants in accordance
with the new Business Plan and Forecast or any actual breach by the
Borrower of any material condition of such approvals or cancellation or
reduction of such Investment Centre Fab 2 Grants or any part thereof (save
to the extent that such Investment Centre Fab 2 Grants may be, and are in
fact, replaced by Paid-in Equity pursuant to and subject to the conditions
set out in clause 16.27) or the Investment Centre informing the Borrower
that it is not continuing its funding of the Project, shall be considered
an Event of Default and nothing herein shall be deemed to constitute a
waiver in advance of such Default. The aforegoing shall apply, mutatis
mutandis, to any waiver arising from any Waiver Notice or any Additional
Waiver Notice.
7. AMENDMENT TO THE FACILITY AGREEMENT
Subject to the fulfilment of the conditions precedent set out in section
3.1 above and with effect from the Seventh Amendment Closing Date, the
Facility Agreement is hereby amended as expressly set out in this Seventh
Amendment above. This Seventh Amendment shall be read together with the
Facility Agreement as one agreement and, save as expressly amended by this
Seventh Amendment, the Facility Agreement shall remain unaltered and in
full force and effect.
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IN WITNESS WHEREOF, THE PARTIES HAVE SIGNED THIS SEVENTH AMENDMENT ON THE DATE
FIRST MENTIONED ABOVE.
for: TOWER SEMICONDUCTOR LTD.
By: ________________________
Title: ________________________
for: BANK LEUMI LE-ISRAEL B.M. for: BANK HAPOALIM B.M.
By: ________________________ By: ______________________
Title: ________________________ Title: ______________________
