November 11, 2003
Bank Hapoalim B.M.
Bank Leumi Le-Israel B.M.
1. General Provisions
1.1. This undertaking (hereinafter: "THIS UNDERTAKING") has been furnished
by The Israel Corporation Ltd. (hereinafter: the "COMPANY") as part of
arrangements that were requested by Bank Hapoalim B.M. and Bank Leumi
Le-Israel B.M. (hereinafter: the "Banks") in order to facilitate, and
as a condition to, their continued financing of Tower Semiconductor
Ltd. (hereinafter: "TOWER") pursuant to the Facility Agreement (as
defined in Section 2 below) that was executed between the Banks and
Tower with respect to the financing of the construction of Tower's Fab
2 facility. This Undertaking shall neither confer any rights or
remedies upon, nor create any obligations by the Company to, any person
(including, for the avoidance of doubt, Tower or any of its
shareholders), other than the Banks.
1.2. The obligations in this Undertaking are related to Tower's obligation
under the Facility Agreement to raise Additional Capital (as defined in
Section 2 below) of US $152 (one hundred and fifty-two) million on or
prior to December 31, 2005.
1.3. The maximum aggregate amount of the Safety Net Investments, as defined
in Section 2 below, that the Banks may require pursuant to this
Undertaking is limited to US $50 (fifty) million. Safety Net
Investments actually made will be considered a portion of the raising
of Additional Capital by Tower as described above in Section 1.2. The
Banks confirm that the Facility Agreement provides that in the event
the Banks, in their sole discretion, exercise their option to require
Safety Net Investments, and such Safety Net Investments are actually
made, then the Banks will, subject to Section 4.1 below, make available
additional financing to Tower (in addition to the US $500 (five
hundred) million Facility provided pursuant to the Facility Agreement),
in a maximum aggregate amount of up to US $43 (forty-three) million,
the terms and conditions of the Facility Agreement to apply to such
additional financing, if and when made. The Banks undertake to the
Company that, subject to the foregoing, they will make available such
1.4. Pursuant to this Undertaking, the Company shall be obliged, in
accordance with the provisions of this Undertaking below, to make
Safety Net Investments in amounts not to exceed 50/93 of the amount of
Additional Capital that Tower is required to raise, but has not yet
raised on or prior to the relevant date, as required by clause 16.27.2
of the Facility Agreement, a copy of which clause is attached hereto as
SCHEDULE 1, such Safety Net Investments not to exceed the maximum
aggregate amount set forth in
- 2 -
Section 1.3 above. The Banks confirm that the Facility Agreement
provides that should the Safety Net Investments be made by the Safety
Net Investors and the Banks shall have received confirmation of such
receipt by the relevant Safety Net Investor Auditor or the Auditors,
then, subject to Section 4.1 below, the Banks shall make available
additional financing to Tower (up to the maximum aggregate amount set
forth in Section 1.3 above), in an amount equal to 86% (eight-six
percent) of the amount of Safety Net Investments received from the
Safety Net Investors (based on a ratio of US $43 (forty-three) of
additional loan availability for every US $50 (fifty) constituting a
Safety Net Investment), the terms and conditions of the Facility
Agreement to apply to such loans if and when made.
1.5. For the avoidance of doubt, this Undertaking will be decreased
proportionally to the extent that the amount of Additional Capital that
remains to be raised by Tower is less than US $93 (ninety three)
million. In this event, the ratios will not change, however, the
remaining commitment represented by this Undertaking shall not exceed
50/93 of the remaining Additional Capital to be raised by Tower.
With regard to this Undertaking, the terms below shall have the following
2.1. "ADDITIONAL CAPITAL" shall mean the funds which Tower is required to
raise pursuant to clause 16.27.2 of the Facility Agreement, a copy of
which clause is attached hereto as Schedule 1, as aforesaid.
2.2. "CONTRIBUTION NOTICE" means a notice substantially in the form set out
in SCHEDULE 2 hereto pursuant to which the Banks request a Safety Net
Investment to be made pursuant to Section 3 below.
2.3. "EXPIRY DATE" means the earliest of: (i) the date on which Tower shall
have fulfilled all of its obligations under clause 16.27.2 of the
Facility Agreement; (ii) June 30, 2006 or such later date as may be
required by operation of the provisos to Section 5.2 below; and (iii)
the date on which Safety Net Investments in an amount of US $50 (fifty)
million are made, without derogating from Section 1.5 above.
2.4. "FACILITY AGREEMENT" shall mean the Facility Agreement that was
executed between the Banks and Tower on January 18, 2001 including all
amendments made from time to time thereto, including, without
limitation, the Seventh Amendment thereto.
2.5. "PROJECT ACCOUNTS" means: (i) account number 545454 at Bank Hapoalim,
Migdal Haemek Branch, No. 728, in the name of Tower; and (ii) account