Document:

Exhibit 10.1

NATIONWIDE FINANCIAL SOLUTIONS, INC.

2005 LONG-TERM EQUITY INCENTIVE PLAN

(Effective October 3, 2005)

 

 

 

Table of Contents

Page

	
            1.
 	
            Purposes of the Plan
 	
            1
 
	
            2.
 	
            Definitions
 	
            1
 
	
             
 	
            (a)
 	
            Award
 	
            1
 
	
             
 	
            (b)
 	
            Award Agreement
 	
            1
 
	
             
 	
            (c)
 	
            Beneficial Ownership
 	
            1
 
	
             
 	
            (d)
 	
            Board
 	
            1
 
	
             
 	
            (e)
 	
            Cause
 	
            1
 
	
             
 	
            (f)
 	
            Change of Control
 	
            2
 
	
             
 	
            (g)
 	
            Code
 	
            3
 
	
             
 	
            (h)
 	
            Committee
 	
            3
 
	
             
 	
            (i)
 	
            Common Stock
 	
            3
 
	
             
 	
            (j)
 	
            Company
 	
            3
 
	
             
 	
            (k)
 	
            Consultant
 	
            3
 
	
             
 	
            (l)
 	
            Continuous Status as a Participant
 	
            3
 
	
             
 	
            (m)
 	
            Director
 	
            3
 
	
             
 	
            (n)
 	
            Disability
 	
            3
 
	
             
 	
            (o)
 	
            Effective Date
 	
            4
 
	
             
 	
            (p)
 	
            Employee
 	
            4
 
	
             
 	
            (q)
 	
            Exchange Act
 	
            4
 
	
             
 	
            (r)
 	
            Executive Officers
 	
            4
 
	
             
 	
            (s)
 	
            Fair Market Value
 	
            4
 
	
             
 	
            (t)
 	
            FAS 123
 	
            5
 
	
             
 	
            (u)
 	
            FLSA
 	
            5
 
	
             
 	
            (v)
 	
            Former Plans
 	
            5
 
	
             
 	
            (w)
 	
            Incentive Stock Option
 	
            5
 
	
             
 	
            (x)
 	
            Independent Director
 	
            5
 
	
             
 	
            (y)
 	
            Maximum Annual Participant Award
 	
            5
 
	
             
 	
            (z)
 	
            Non-Employee Director
 	
            5
 
	
             
 	
            (aa)
 	
            Nonqualified Stock Option
 	
            5
 
	
             
 	
            (bb)
 	
            Option
 	
            5
 
	
             
 	
            (cc)
 	
            Option Price
 	
            5
 
	
             
 	
            (dd)
 	
            OTCBB
 	
            5
 
	
             
 	
            (ee)
 	
            Parent
 	
            5
 
	
             
 	
            (ff)
 	
            Participant
 	
            6
 
	
             
 	
            (gg)
 	
            Performance Criteria
 	
            6
 
	
             
 	
            (hh)
 	
            Plan
 	
            6
 
	
             
 	
            (ii)
 	
            Reprice
 	
            6
 
	
             
 	
            (jj)
 	
            Resignation (or Resign) for Good Reason
 	
            6
 
	
             
 	
            (kk)
 	
            Restricted Stock
 	
            6
 
	
             
 	
            (ll)
 	
            Restricted Stock Units
 	
            6
 
	
             
 	
            (mm)
 	
            SAR
 	
            6
 

 

 

i

 

 

 

 

	
             
 	
            (nn)
 	
            SEC
 	
            6
 
	
             
 	
            (oo)
 	
            Share
 	
            6
 
	
             
 	
            (pp)
 	
            Stand-Alone SARs
 	
            6
 
	
             
 	
            (qq)
 	
            Subcommittee
 	
            6
 
	
             
 	
            (rr)
 	
            Subsidiary
 	
            7
 
	
             
 	
            (ss)
 	
            Tandem SARs
 	
            7
 
	
             
 	
            (tt) 
 	
            Ten Percent Shareholder
 	
            7
 
	
            3.
 	
            Shares Subject to the Plan
 	
            7
 
	
             
 	
            (a)
 	
            Reservation of Shares
 	
            7
 
	
             
 	
            (b)
 	
            Substitutions and Assumptions
 	
            8
 
	
             
 	
            (c)
 	
            Securities Law Compliance
 	
            8
 
	
            4.
 	
            Adjustments to Shares Subject to the Plan
 	
            8
 
	
            5.
 	
            Plan Administration
 	
            8
 
	
             
 	
            (a)
 	
            Authority
 	
            8
 
	
             
 	
            (b)
 	
            Powers of the Committee
 	
            9
 
	
             
 	
            (c)
 	
            Effect of Committee’s Decision
 	
            10
 
	
             
 	
            (d)
 	
            Delegation and Administration
 	
            10
 
	
            6.
 	
            General Eligibility
 	
            10
 
	
             
 	
            (a)
 	
            Awards
 	
            10
 
	
             
 	
            (b)
 	
            Maximum Annual Participant Award
 	
            10
 
	
             
 	
            (c)
 	
            No Employment/Service Rights
 	
            10
 
	
            7.
 	
            Grant, Terms and Conditions of Options
 	
            11
 
	
             
 	
            (a)
 	
            Designation
 	
            11
 
	
             
 	
            (b)
 	
            Option Price
 	
            11
 
	
             
 	
            (c)
 	
            Term of Options
 	
            11
 
	
             
 	
            (d)
 	
            Vesting
 	
            11
 
	
             
 	
            (e)
 	
            Substitution of SARs for Options
 	
            11
 
	
             
 	
            (e)
 	
            Exercise
 	
            12
 
	
            8.
 	
            Grant, Terms and Conditions of Stock Awards
 	
            12
 
	
             
 	
            (a)
 	
            Designation
 	
            12
 
	
             
 	
            (b)
 	
            Restrictions
 	
            12
 
	
             
 	
            (c)
 	
            Performance Criteria
 	
            12
 
	
             
 	
            (d)
 	
            Vesting
 	
            12
 
	
            9.
 	
            Grant, Terms and Conditions of SARs
 	
            13
 
	
             
 	
            (a)
 	
            Grants
 	
            13
 
	
             
 	
            (b)
 	
            Tandem SARs
 	
            13
 
	
             
 	
            (c)
 	
            Stand-Alone SARs
 	
            14
 
	
            10.
 	
            Procedure for Exercise; Rights as a Shareholder
 	
            14
 
	
             
 	
            (a)
 	
            Procedure
 	
            14
 
	
             
 	
            (b)
 	
            Method of Payment
 	
            14
 

 

 

ii

 

 

 

 

	
             
 	
            (c)
 	
            Withholding Obligations
 	
            15
 
	
             
 	
            (d)
 	
            Shareholder Rights
 	
            15
 
	
             
 	
            (e)
 	
            Non-Transferability of Awards
 	
            15
 
	
            11.
 	
            Expiration of Awards
 	
            15
 
	
             
 	
            (a)
 	
            Expiration, Termination or Forfeiture of Awards
 	
            15
 
	
             
 	
            (b)
 	
            Extension of Term
 	
            16
 
	
            12.
 	
            Effect of Change of Control
 	
            16
 
	
             
 	
            (a)
 	
            Acceleration
 	
            16
 
	
             
 	
            (b)
 	
            Definition
 	
            17
 
	
             
 	
            (c)
 	
            Limitations
 	
            17
 
	
            12.
 	
            Term, Amendment and Termination of the Plan
 	
            17
 
	
             
 	
            (a)
 	
            Term of Plan
 	
            17
 
	
             
 	
            (b)
 	
            Amendment and Termination
 	
            17
 
	
             
 	
            (c)
 	
            Participants in Foreign Countries
 	
            17
 
	
             
 	
            (d)
 	
            Effect of Amendment or Termination
 	
            17
 

 

 

 

iii

 

 

 

NATIONWIDE FINANCIAL SOLUTIONS, INC.

2005 LONG-TERM EQUITY INCENTIVE PLAN

1.          Purposes of the Plan. The purposes of this Plan are to enhance stockholder value and financial performance by attracting, retaining and motivating the Company’s Employees, Consultants and Directors and to encourage stock ownership by Employees, Consultants and Directors by providing an opportunity to acquire an ownership interest in the Company and by providing both performance rewards and long term incentives for future contributions to the success of the Company.

The Plan permits the grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, or Stock Appreciation Rights, at the discretion of the Committee and as reflected in the terms of the Award Agreement. Each Award will be subject to conditions specified in the Plan, such as continued employment or satisfaction of performance criteria.

	
            2.
 	
            Definitions. As used herein, the following definitions shall apply:
 

(a)           “Award” shall mean any award or benefits granted under the Plan, including Options, Restricted Stock, Restricted Stock Units, and SARs.

(b)          “Award Agreement” shall mean a written or electronic agreement between the Company and the Participant setting forth the terms of the Award.

(c)           “Beneficial Ownership” shall have the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.

	
            (d)
 	
            “Board” shall mean the Board of Directors of the Company.
 
	
            (e)
 	
            “Cause” shall mean any of the following:
 	
             

(i)            any material breach of an agreement between the Participant and the Company which, if curable, has not been cured within twenty (20) days after the Participant has been given written notice of the need to cure such breach, or which breach, if previously cured, recurs;

(ii)          willful unauthorized use or disclosure of confidential information or trade secrets of the Company by the Participant;

(iii)         the Participant’s continued willful and intentional failure to satisfactorily perform Participant’s essential responsibilities, in the good faith discretion of the Board, provided that the Participant has been given at least twenty (20) days’ written notice of the need to cure the failure and cure has not been effected within that time period, or which failure, if previously cured, recurs;

(iv)         material failure of the Participant to comply with rules, policies or procedures of the Company, as they may be amended from time to time, provided that the Participant has been given at least twenty (20) days’ written notice of the need to cure the failure, 

 

 

if such failure is curable, and cure has not been effected within that time period, or which failure, if previously cured, recurs;

(v)          Participant’s dishonesty, fraud or gross negligence related to the business or property of the Company;

(vi)         personal conduct that is materially detrimental to the business of the Company; or

	
            (vii)
 	
            conviction of or plea of nolo contendere to a felony.
 

(f)           “Change of Control” shall mean the first day that any one or more of the following conditions shall have been satisfied:

(i)            the sale, liquidation or other disposition of all or substantially all of the Company’s assets in one or a series of related transactions;

(ii)          an acquisition (other than directly from the Company) of any outstanding voting securities by any person, after which such person (as the term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) has Beneficial Ownership of twenty-five percent (25%) or more of the then outstanding voting securities of the Company, other than a Board approved transaction;

(iii)         during any 24-consecutive month period, the individuals who, at the beginning of such period, constitute the Board (“Incumbent Directors”) cease for any reason other than death to constitute at least a majority of the members of the Board; provided however that except as set forth in this Section 2(f)(iii), an individual who becomes a member of the Board subsequent to the beginning of the 24-month period, shall be deemed to have satisfied such 24-month requirement and shall be deemed an Incumbent Director if such Director was elected by or on the recommendation of or with the approval of at least two-thirds of the Directors who then qualified as Incumbent Directors either actually (because they were Directors at the beginning of such
period) or by operation of the provisions of this section; if any such individual initially assumes office as a result of or in connection with either an actual or threatened solicitation with respect to the election of Directors (as such terms are used in Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitations of proxies or consents by or on behalf of a person other than the Board, then such individual shall not be considered an Incumbent Director; or

(iv)         a merger, consolidation or reorganization of the Company, as a result of which the shareholders of the Company immediately prior to such merger, consolidation or reorganization own directly or indirectly immediately following such merger, consolidation or reorganization less than fifty percent (50%) of the combined voting power of the outstanding voting securities of the entity resulting from such merger, consolidation or reorganization.

	
            (g)
 	
            “Code” shall mean the Internal Revenue Code of 1986, as amended.
 

(h)           “Committee” shall mean the Compensation Committee appointed by the Board, which at all times shall consist of two (2) or more members of the Board, each of whom must qualify as an Independent Director, or the Board, in the event that a Compensation Committee has not been established by the Board.

 

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(i)           “Common Stock” shall mean the common stock of the Company, $0.0001 par value per share.

(j)           “Company” shall mean Nationwide Financial Solutions, Inc., a Nevada corporation and any successor thereto.

(k)          “Consultant” shall mean any person, except an Employee, engaged by the Company or any Subsidiary of the Company, to render personal services to such entity, including as an advisor, pursuant to the terms of a written agreement.

(l)            “Continuous Status as a Participant” shall mean (i) for Employees, the absence of any interruption or termination of service as an Employee, (ii) for Directors, the absence of any interruption or termination of service as a Director, and (iii) for Consultants, the absence of any interruption, expiration, or termination of such person’s consulting or advisory relationship with the Company or the occurrence of any termination event as set forth in such person’s Award Agreement. Continuous Status as a Participant shall not be considered interrupted (A) for an Employee in the case of sick leave, maternity leave, infant care leave, medical emergency leave, military leave, or
any other leave of absence properly taken in accordance with the policies of the Company or any applicable Subsidiary as may be in effect from time to time, and (B) for a Consultant, in the case of any temporary interruption in such person’s availability to provide services to the Company which has been authorized in writing by an authorized officer of the Company prior to its commencement. Whenever a mandatory severance period applies under applicable law with respect to a termination of services as an Employee shall be considered terminated upon such Employee’s receipt of notice of termination in whatever form prescribed by applicable law.

	
            (m)
 	
            “Director” shall mean a member of the Board.
 

(n)           “Disability” shall mean (i) in the case of a Participant whose employment with the Company or a Subsidiary is subject to the terms of an employment or consulting agreement that includes a definition of “Disability” as used in this Plan shall have the meaning set forth in such employment or consulting agreement during the period that such employment or consulting agreement remains in effect; and (ii) in all other cases, the term “Disability” as used in this Plan shall have the same meaning as set forth under the Company’s long-term disability plan applicable to the Participant as may be amended from time to time, and in the event the Company does not maintain any such
plan with respect to a Participant, a physical or mental condition resulting from bodily injury, disease or mental disorder which renders the Participant incapable of continuing his or her usual and customary employment with the Company or a Subsidiary, as the case may be, for a period of not less than one hundred twenty (120) days or such other period as may be required by applicable law.

(o)          “Effective Date” shall mean the date on which the Company’s shareholders have approved this Plan.

(p)          “Employee” shall mean any person, including an officer, who is a common law employee of, receives remuneration for personal services to, is reflected on the official human resources database as an employee of, and is on the payroll of the Company or any Subsidiary of the Company. A person is on the payroll if he or she is paid from or at the direction of the payroll department of the Company, or any Subsidiary of the Company. Persons 

 

3

 

 

providing services to the Company, or to any Subsidiary of the Company, pursuant to an agreement with a staff leasing organization, temporary workers engaged through or employed by temporary or leasing agencies, and workers who hold themselves out to the Company, or a Subsidiary to which they are providing services as being independent contractors, or as being employed by or engaged through another company while providing the services, and persons covered by a collective bargaining agreement (unless the collective bargaining agreement applicable to the person specifically provides for participation in this Plan) are not Employees for purposes of this Plan and do not and cannot participate in this Plan, whether or not such persons are, or may be reclassified by the courts, the Internal Revenue Service, the U. S. Department of Labor, or other person or entity, as common law employees of the Company, or any
Subsidiary, either solely or jointly with another person or entity.

(q)          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(r)           “Executive Officers” shall mean the officers of the Company as such term is defined in Rule 16a-1 under the Exchange Act.

(s)           “Fair Market Value” shall mean the closing price per share of the Common Stock on the OTCBB as to the date specified (or the previous trading day if the date specified is a day on which no trading occurred), or if the OTCBB shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s principal exchange or quotation system.

(t)           “FAS 123” shall mean Statement of Financial Accounting Standard 123, “Accounting for Stock-based Compensation,” as promulgated by the Financial Accounting Standards Board.

	
            (u)
 	
            “FLSA” shall mean the Fair Labor Standards Act of 1938, as amended.
 

(v)           “Former Plans” shall mean  the Nationwide Financial Solutions, Inc. Stock Option Plan.

(w)          “Incentive Stock Option” shall mean any Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(x)           “Independent Director” shall mean a Director who: (1) meets the independence requirements of the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s principal exchange or quotation system; (2) qualifies as an “outside director” under Section 162(m) of the Code and the Treasury Regulations promulgated thereunder; (3) qualifies as a “non-employee director” under Rule 16b-3 promulgated under the Exchange Act; and (4) satisfies independence criteria under any other
applicable laws or regulations relating to the issuance of Shares to Employees.

 

4

 

 

 

(y)            “Maximum Annual Participant Award” shall have the meaning set forth in Section 6(b).

(z)            “Non-Employee Director” shall mean a Director who is not an Employee.

(aa)          “Nonqualified Stock Option” shall mean an Option that does not qualify or is not intended to qualify as an Incentive Stock Option.

(bb)          “Option” shall mean a stock option granted pursuant to Section 7 of the Plan.

(cc)          “Option Price” shall mean the per share purchase price of a Share purchased pursuant to an Option.

	
            (dd)
 	
            “OTCBB” shall mean the OTC Bulletin Board quotation service.
 

(ee)          “Parent” shall mean a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

	
            (ff)
 	
            “Participant” shall mean an Employee, Director or Consultant.
 	
             

	
            (gg)
 	
            “Performance Criteria” shall have the meaning set forth in Section 8(c).
 

(hh)         “Plan” shall mean this Nationwide Financial Solutions, Inc. 2005 Long-Term Equity Incentive Plan, including any amendments thereto.

(ii)           “Reprice” shall mean the adjustment or amendment of the exercise price of Options or SARs previously awarded whether through amendment, cancellation, replacement of grants or any other means.

(jj)           “Resignation (or Resign) for Good Reason” shall mean any voluntary termination by written resignation of the Continuous Status as a Participant of any Employee after a Change of Control because of: (1) a material reduction in the Participant’s authority, responsibilities or scope of employment; (2) an assignment of duties to the Participant inconsistent with the Participant’s role at the Company prior to the Change of Control, (3) a reduction in the Participant’s base salary or total incentive compensation; (4) a material reduction in the Participant’s benefits unless such reduction applies to all Participants of comparable rank; and (5) the relocation of the
Participant’s primary work location more than fifty (50) miles from the Participant’s primary work location prior to the Change of Control; provided that the Participant’s written notice of voluntary resignation must be tendered within one (1) year of the Change of Control, and shall specify which of the events described in (1) through (5) resulted in the resignation.

(kk)         “Restricted Stock” shall mean a grant of Shares pursuant to Section 8 of the Plan.

(ll)           “Restricted Stock Units” shall mean a grant of the right to receive Shares in the future or their cash equivalent (or both) pursuant to Section 8 of the Plan.

 

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(mm)      “SAR” shall mean a stock appreciation right awarded pursuant to Section 9 of the Plan.

	
            (nn)
 	
            “SEC” shall mean the Securities and Exchange Commission.
 

(oo)         “Share” shall mean one share of Common Stock, as adjusted in accordance with Section 4 of the Plan.

(pp)          “Stand-Alone SARs” shall have the meaning set forth in Section 9(c) of the Plan.

	
            (qq)
 	
             “Subcommittee” shall have the meaning set forth in Section 5(d).
 

(rr)           “Subsidiary” shall mean (1) in the case of an Incentive Stock Option a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code, and (2) in the case of a Nonqualified Stock Option, Restricted Stock, a Restricted Stock Unit or a SAR, in addition to a subsidiary corporation as defined in (1), (A) a limited liability company, partnership or other entity in which the Company controls fifty percent (50%) or more of the voting power or equity interests, or (B) an entity with respect to which the Company possesses the power, directly or indirectly, to direct or cause the direction of the management and policies of that entity, whether through
the Company’s ownership of voting securities, by contract or otherwise.

(ss)          “Tandem SARs” shall have the meaning set forth in Section 9(a) of the Plan.

(tt)           “Ten Percent Shareholder” shall mean a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock comprising more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary.

	
            3.
 	
            Shares Subject to the Plan.
 

(a)           Reservation of Shares. The shares of Common Stock reserved under this Plan will include reserved shares of Common Stock that are not subject to a grant under the Former Plan in an amount equal to 3,000,000 shares. Subject to the provisions of Section  4, the maximum aggregate number of Shares which may be awarded and delivered under the Plan shall not exceed 6,000,000 Shares (adjusted, proportionately, in the event of any stock split or stock dividend with respect to the Shares), and the maximum number which may be granted as Incentive Stock Options under the Plan shall not exceed 2,000,000. The number of Shares, underlying an Award not issued as a result of any of the
following actions shall again be available for issuance under the Plan:  (i) a payout of a Non-Tandem SAR, or a performance-based Restricted Stock Unit in the form of cash; or (ii) a cancellation, termination, expiration, forfeiture, or lapse for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Options, or the termination of a related Option upon exercise of the corresponding Tandem SAR) of any Award. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. Shares available for issuance under the Plan shall be increased by any shares of Common Stock subject to outstanding awards under the Former Plans on the date of 

 

6

 

 

shareholder approval of the Plan that later cease to be subject to such awards for any reason other than such awards having been exercised, subject to adjustment from time to time as provided in Section 5, which shares of Common Stock shall, as of the date such shares cease to be subject to such awards, cease to be available for grant and issuance under the Former Plans, but shall be available for issuance under the Plan. The Shares may be authorized but unissued, or reacquired shares of Common Stock.

(b)          Substitutions and Assumptions. The Board or the Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code applies, provided such substitutions and assumptions are permitted by Section 424 of the Code and the regulations promulgated thereunder. The number of Shares reserved pursuant to Section 3(a) may be increased by a corresponding number of Awards assumed and, in the case of substitution, by the net increase in the number of Shares subject to Awards before and after the substitution.

(c)           Securities Law Compliance. Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated under either such Act, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

4.          Adjustments to Shares Subject to the Plan. If any change is made to the Shares by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Shares as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the number and/or class of securities and/or the price per Share covered by outstanding Awards under the Plan, and (iii) the Maximum Annual Participant Award. The Committee may also make adjustments described in (i)-(iii) of the previous sentence in the event of any distribution of assets to shareholders other
than a normal cash dividend. In determining adjustments to be made under this Section 4, the Committee may take into account such factors as it deems appropriate, including the restrictions of applicable law and the potential tax consequences of an adjustment, and in light of such factors may make adjustments that are not uniform or proportionate among outstanding Awards. Adjustments, if any, and any determinations or interpretations, including any determination of whether a distribution is other than a normal cash dividend, made by the Committee shall be final, binding and conclusive. The Committee in its discretion may provide holders of Restricted Stock or Restricted Stock Units a dividend equivalent right with respect to the Shares the Participant shall be entitled to receive or purchase. For purposes of this Section 4, conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”

Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award.

	
            5.
 	
            Plan Administration.
 

 

 

7

 

 

 

(a)           Authority. The Plan shall be administered by the Board until such time as the Board establishes a Compensation Committee. The Committee shall have full and exclusive power to administer the Plan on behalf of the Board, subject to such terms and conditions as the Committee may prescribe. Notwithstanding anything herein to the contrary, the Committee’s power to administer the Plan, and actions the Committee takes under the Plan, shall be consistent with the provisions set forth in the Committee’s charter, as such charter may be amended from time to time, and the further limitation that certain actions may be subject to review and approval by either the full Board or a panel consisting of all of the Independent
Directors of the Company.

(b)          Powers of the Committee. Subject to the other provisions of this Plan, the Committee shall have the authority, in its discretion:

(i)            to grant Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, and SARs to Participants and to determine the terms and conditions of such Awards, including the determination of the Fair Market Value of the Shares and the exercise price (subject to Section 7(b), and to modify or amend each Award, with the consent of the Participant when required;

(ii)          to determine the Participants to whom Awards, if any, will be granted hereunder, the timing of such Awards, and the number of Shares to be represented by each Award;

(iii)         to construe and interpret the Plan, the Awards granted hereunder, and any Award Agreement;

(iv)         to prescribe, amend, and rescind rules and regulations relating to the Plan, including the form of Award Agreement, and manner of acceptance of an Award, such as correcting a defect or supplying any omission, or reconciling any inconsistency so that the Plan or any Award Agreement complies with applicable law, regulations and listing requirements and to avoid unanticipated consequences deemed by the Committee to be inconsistent with the purposes of the Plan or any Award Agreement;

(v)          to establish performance criteria for Awards made pursuant to the Plan in accordance with a methodology established by the Committee, and to determine whether performance goals have been attained;

(vi)         to accelerate or defer (with the consent of the Participant) the exercise or vested date of any Award;

(vii)        to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Award previously granted by the Committee;

(viii)       to establish subplans, procedures or guidelines for the grant of Awards to Employees, Directors and Consultants;

(ix)          to authorize the cancellation, forfeiture or suspension of an Award; and

(x)           to make all other determinations deemed necessary or advisable for the administration of the Plan;

 

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Provided that, no consent of a Participant is necessary under clauses (i) or (vi) if a modification, amendment, acceleration, or deferral, in the reasonable judgment of the Committee confers a benefit on the Participant or is made pursuant to an adjustment in accordance with Section 4.

(c)           Effect of Committee’s Decision. All decisions, determinations, and interpretations of the Committee shall be final, conclusive and binding on all Participants, the Company, any shareholder and all other persons.

(d)          Delegation and Administration. Consistent with the Committee’s charter, as such charter may be amended from time to time, the Committee may delegate to one or more subcommittees consisting of members of the Committee or other Directors who are Independent Directors (any such committee a “Subcommittee”) the administration of the Plan, and such administrator(s) may have the authority to directly, or under their supervision, execute and distribute agreements or other documents evidencing or relating to Awards granted by the Committee under this Plan, to maintain records relating to the grant, vesting, exercise, forfeiture or expiration of Awards, to process or oversee the issuance of Shares upon the exercise, vesting
and/or settlement of an Award, to interpret the terms of Awards and to take such other actions as the Committee may specify. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee.

	
            6.
 	
            General Eligibility.
 

(a)           Awards. Awards may be granted to Participants who are Employees, Directors or Consultants, provided however that Incentive Stock Options may only be granted to Employees.

(b)          Maximum Annual Participant Award. The aggregate number of Shares with respect to which an Award or Awards may be granted to any one Participant in any one taxable year of the Company (the “Maximum Annual Participant Award”) shall not exceed 300,000 shares of Common Stock (adjusted, proportionately, in the event of any stock split or stock dividend with respect to the Shares). If an Option is in tandem with a SAR, such that the exercise of the Option or SAR with respect to a Share cancels the tandem SAR or Option right, respectively, with respect to each Share, the tandem Option and SAR rights with respect to each Share shall be counted as covering but one Share for purposes of the Maximum Annual Participant Award.

(c)           No Employment/Service Rights. Nothing in the Plan shall confer upon any Participant the right to an Award or to continue in service as an Employee or Consultant for any period of specific duration, or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary employing or retaining such person), or of any Participant, which rights are hereby expressly reserved by each, to terminate such person’s services at any time for any reason, with or without Cause.

	
            7.
 	
            Grant, Terms and Conditions of Options.
 

(a)           Designation. Each Option shall be designated in an Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. However, notwithstanding the foregoing, if an Option is not designated as an Incentive Stock Option, such Option will be 

 

9

 

 

deemed to be a Nonqualified Stock Option. To the extent that the aggregate Fair Market Value (determined at the time of grant) of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Employee during any calendar year exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options. For this purpose, Options shall be taken into account in the order in which they were granted.

(b)          Option Price. The per Share exercise price under an Incentive Stock Option (i) granted to a Ten Percent Shareholder, shall be no less than 110% of the Fair Market Value per Share on the date of grant, or (ii) granted to any other Participant, shall be no less than 100% of the Fair Market Value per Share on the date of grant. The per Share exercise price under a Nonqualified Stock Option or SAR shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. In no event shall the Board or the Committee be permitted to Reprice an Option after the date of grant.

(c)           Term of Options. The term of each Incentive Stock Option shall be no more than ten (10) years from the date of grant. However, in the case of an Incentive Stock Option granted to a Ten Percent Shareholder, the term of the Option shall be no more than five (5) years from the date of grant. The term of all Nonqualified Options shall be seven (7) years unless otherwise provided by the Committee in its discretion.

(d)          Vesting. To the extent Options vest and become exercisable in increments, unless otherwise provided in the applicable Award Agreement or any severance agreement (i) such Options shall immediately vest upon verification of a Participant’s Disability, (ii) such Options shall cease vesting upon termination of such Participant’s Continuous Status as a Participant (other than upon a Participant’s death), and (iii) such Options shall immediately vest in full upon a Participant’s death.

(e)           Substitution of SARs for Options. Notwithstanding the foregoing, if the Company is required to or elects to expense the cost of Options pursuant to FAS 123 (or a successor or other standard), the Committee shall have the sole discretion to substitute without receiving Participants’ permission, SARs paid only in stock for outstanding Options; provided, the terms of the substituted stock SARs are the same as the terms of the Options, the number of shares underlying the number of stock SARs equals the number of shares underlying the Options and the difference between the Fair Market Value of the underlying Shares and the grant price of the SARs is equivalent to the difference between the Fair Market Value of the
underlying Shares and the exercise price of the Options.

(f)           Exercise. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Committee at the time of grant, and as shall be permissible under the terms of the Plan. No fractional Shares may be issued or delivered pursuant to the Plan or any Award.

	
            8.
 	
            Grant, Terms and Conditions of Stock Awards.
 

(a)           Designation. Restricted Stock or Restricted Stock Units may be granted under the Plan. Restricted Stock or Restricted Stock Units may include a dividend equivalent right, as permitted by Section 4. After the Committee determines that it will offer Restricted Stock or Restricted Stock Units, it will advise the Participant in writing or electronically, by means of an Award Agreement, of the terms, conditions and restrictions, including vesting, if 

 

10

 

 

any, related to the offer, including the number of Shares that the Participant shall be entitled to receive or purchase, the price to be paid, if any, and, if applicable, the time within which the Participant must accept the offer. The offer shall be accepted by execution of an Award Agreement or as otherwise directed by the Committee. Restricted Stock Units may be paid as permitted by Section 10(b). The term of each award of Restricted Stock or Restricted Stock Units shall be at the discretion of the Committee.

(b)          Restrictions. Subject to Section 8(c), the Committee may impose such conditions or restrictions on the Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may determine advisable, including the achievement of specific performance goals, time based restrictions on vesting, or others. If the Committee established performance goals, the Committee shall determine whether a Participant has satisfied the performance goals.

(c)           Performance Criteria. Restricted Stock and Restricted Stock Units granted pursuant to the Plan that are intended to qualify as “performance based compensation” under Section 162(m) of the Code shall be subject to the attainment of performance goals relating to the Performance Criteria selected by the Committee and specified at the time such Restricted Stock and Restricted Stock Units are granted. For purposes of this Plan, “Performance Criteria” means one or more of the following (as selected by the Committee): (i) cash flow; (ii) earnings per share; (iii) earnings before interest, taxes, and amortization; (iv) return on equity; (v) total shareholder return; (vi) share price performance; (vii) return on
capital; (viii) return on assets or net assets; (ix) revenue; (x) revenue growth; (xi) earnings growth; (xii) operating income; (xiii) operating profit; (xiv) profit margin; (xv) return on operating revenue; (xvi) return on invested capital; (xvii) market price; (xviii) brand recognition; (xix) customer satisfaction; (xx) operating efficiency; or (xxi) productivity. Any of these Performance Criteria may be used to measure the performance of the Company as a whole or any business unit or division of the Company.

(d)          Vesting. Unless the Committee determines otherwise, the Award Agreement shall provide for the forfeiture of the non-vested Shares underlying Restricted Stock or the termination of Restricted Stock Units upon cessation of a Participant’s Continuous Status as a Participant, and the Shares underlying Restricted Stock and Restricted Stock Units shall vest in full immediately upon death. To the extent that the Participant purchased the Shares granted under any such Restricted Stock award and any such Shares remain non-vested at the time of cessation of a Participant’s Continuous Status as a Participant, the cessation of Participant’s Continuous Status as a Participant shall cause an immediate sale of such non-vested
Shares to the Company at the original price per Share paid by the Participant. Non-vested Shares underlying Restricted Stock and Restricted Stock Units shall vest in full immediately upon death.

	
            9.
 	
            Grant, Terms and Conditions of SARs.
 

(a)           Grants. The Committee shall have the full power and authority, exercisable in its sole discretion, to grant SARs to selected Participants. The Committee is authorized to grant both tandem stock appreciation rights consisting of SARs with underlying Options (“Tandem SARs”) and stand-alone stock appreciation rights consisting of SARs not tied to underlying Options (“Stand-Alone SARs”). The term of a SAR shall be at the discretion of the Committee. In no event shall the Board or the Committee be permitted to Reprice a SAR after the date of grant without shareholder approval.

 

11

 

 

 

	
            (b)
 	
            Tandem SARs.
 

(i)            Participants may be granted a Tandem SAR, exercisable upon such terms and conditions as the Committee shall establish, to elect between the exercise of the underlying Option for Shares or the surrender of the Option in exchange for a distribution from the Company in an amount equal to the excess of (A) the Fair Market Value (on the Option surrender date) of the number of Shares in which the Participant is at the time vested under the surrendered Option (or surrendered portion thereof) over (B) the aggregate exercise price payable for such vested Shares.

(ii)          No such Option surrender shall be effective unless it is approved by the Committee, either at the time of the actual Option surrender or at any earlier time. If the surrender is so approved, then the distributions to which the Participant shall become entitled under this Section 9(b) may be made in Shares valued at Fair Market Value (on the Option surrender date), in cash, or partly in Shares and partly in cash, as the Committee shall deem appropriate.

(iii)         If the surrender of an Option is not approved by the Committee, then the Participant shall retain whatever rights he or she had under the surrendered Option (or surrendered portion thereof) on the Option surrender date and may exercise such rights at any time prior to the later of (A) five (5) business days after the receipt of the rejection notice or (B) the last day on which the Option is otherwise exercisable in accordance with the terms of the instrument evidencing such Option, but in no event may such rights be exercised more than ten (10) years after the date of the Option grant.

	
            (c)
 	
            Stand-Alone SARs.
 

(i)            A Participant may be granted a Stand-Alone SAR not tied to any underlying Option under Section 7 of the Plan. The Stand-Alone SAR shall cover a specified number of Shares and shall be exercisable upon such terms and conditions as the Committee shall establish. Upon exercise of the Stand-Alone SAR, the holder shall be entitled to receive a distribution from the Company in an amount equal to the excess of (A) the aggregate Fair Market Value (on the exercise date) of the Shares underlying the exercised right over (B) the aggregate base price in effect for those Shares.

(ii)          The number of Shares underlying each Stand-Alone SAR and the base price in effect for those Shares shall be determined by the Committee at the time the Stand-Alone SAR is granted. In no event, however, may the base price per Share be less than the Fair Market Value per underlying Share on the grant date.

(iii)         The distribution with respect to an exercised Stand-Alone SAR may be made in Shares valued at Fair Market Value on the exercise date, in cash, or partly in Shares and partly in cash, as the Committee shall deem appropriate.

	
            10.
 	
            Procedure for Exercise; Rights as a Shareholder.
 

(a)           Procedure. An Award shall be exercised when written, electronic or verbal notice of exercise has been given to the Company, or the brokerage firm or firms approved by the Company to facilitate exercises and sales under this Plan, in accordance with the 

 

12

 

 

terms of the Award by the person entitled to exercise the Award  and full payment for the Shares with respect to which the Award is exercised has been received by the Company or the brokerage firm or firms, as applicable. The notification to the brokerage firm shall be made in accordance with procedures of such brokerage firm approved by the Company. Full payment may, as authorized by the Committee, consist of any consideration and method of payment allowable under the terms of this Plan. The Company shall issue (or cause to be issued) such share certificate promptly upon exercise of the Award. In the event that the exercise of an Award is treated in part as the exercise of an Incentive Stock Option and in part as the exercise of a Nonqualified Stock Option pursuant to Section 7(a), the Company shall issue a share certificate evidencing the Shares treated as acquired upon the exercise of an Incentive Stock
Option and a separate share certificate evidencing the Shares treated as acquired upon the exercise of a Nonqualified Stock Option, and shall identify each such certificate accordingly in its share transfer records. No adjustment will be made for a dividend or other right for which the record date is prior to the date the share certificate is issued, except as provided in Section 4 of the Plan.

(b)          Method of Payment. The consideration to be paid for any Shares to be issued upon exercise or other required settlement of an Award, including a method of payment, shall be determined by the Committee at the time of settlement, and which forms may include: (i) check; (ii) wire transfer; (iii) tender of shares of Common Stock owned by the Participant in accordance with rules established by the Committee from time to time; and (iv) a request that the Company or a designated brokerage firm conduct a cashless exercise of the Option. Shares used to pay the Option Price shall be valued at their Fair Market Value on the exercise date. Payment of the aggregate Option Price by means of tendering previously-owned shares of Common Stock
shall not be permitted when the same may, in the reasonable opinion of the Company, cause the Company to record a loss or expense as a result thereof.

(c)           Withholding Obligations. To the extent required by applicable federal, state, local or foreign law, the Committee may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Incentive Stock Option, Nonqualified Stock Option, SAR, Restricted Stock or Restricted Stock Units, or any sale of Shares. The Company shall not be required to issue Shares or to recognize the disposition of such Shares until such obligations are satisfied. These obligations may be satisfied by having the Company withhold a portion of the Shares that otherwise would be issued to a Participant under such Award (provided, however, that no Shares are
withheld with a value exceeding the minimum amount of tax required to be withheld by law) or by tendering Shares previously acquired by the Participant in accordance with rules established by the Committee from time to time.

(d)          Shareholder Rights. Except as otherwise provided in this Plan, until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the share certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to the Award, notwithstanding the exercise of the Award.

(e)           Non-Transferability of Awards. An Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in exchange for consideration, and may not be transferred other than by will or by the laws of descent or distribution and may be exercised, 

 

13

 

 

during the lifetime of the Participant, only by the Participant; unless the Committee permits further transferability, on a general or specific basis, in which case the Committee may impose conditions and limitations on any permitted transferability.

	
            11.
 	
            Expiration of Awards.
 

(a)           Expiration, Termination or Forfeiture of Awards. Unless otherwise provided in the applicable Award Agreement or any severance agreement, vested Awards granted under this Plan shall expire, terminate, or otherwise be forfeited as follows:

(i)            three (3) months after the date of termination of a Participant’s Continuous Status as a Participant other than in circumstances covered by (ii), (iii), (iv) or (v) below;

(ii)          immediately upon termination of a Participant’s Continuous Status as a Participant for Cause;

(iii)         twelve (12) months after the date on which a Participant ceased performing services as a result of his or her Disability; and

(iv)         twelve (12) months after the date of the death of a Participant who was a Participant whose Continuous Status as a Participant terminated as a result of his or her death.

(b)          Extension of Term. Notwithstanding subsection (a) above, the Committee shall have the authority to extend the expiration date of any outstanding Options or SARs other than an Incentive Stock Option in circumstances in which it deems such action to be appropriate (provided that no such extension shall extend the term of an Option or SAR beyond the date on which the Award would have expired or been forfeited if there had been no termination of the Employee’s Continuous Status as a Participant).

12.       Effect of Change of Control. Notwithstanding any other provision in the Plan to the contrary, the following provisions shall apply unless otherwise provided in the most recently executed agreement between the Participant and the Company, or specifically prohibited under applicable laws, or by the rules and regulations of any applicable governmental agencies or national securities exchanges or quotation systems:

(a)           Acceleration. Awards of a Participant shall be Accelerated (as defined in Section 12(b) below) as follows:

(i)            With respect to Non-Employee Directors upon the occurrence of a Change of Control;

(ii)          With respect to any Employee upon the occurrence of a Change of Control as described in Section 2(f)(i);

(iii)         If an Employee’s Continuous Status as a Participant terminates either without Cause or the Employee Resigns for Good Reason within one year after a Change of Control described in Section 2(f)(ii) or (iii);

 

14

 

 

 

(iv)         With respect to any Employee upon the occurrence of a Change of Control described in Section 2(f)(iv) in connection with each Award which is not assumed or substituted for an equivalent award by such successor entity or a parent or subsidiary of such successor entity; and

(v)          If an Employee’s Continuous Status as a Participant terminates without Cause or the Employee Resigns for Good Reason within one year following a Change of Control described in Section 2(f)(iv) in connection with which each Award is assumed or an equivalent award substituted by the successor entity or a parent or subsidiary of such successor entity.

(b)            Definition. For purposes of this Section 12, an “Accelerated” Award means:

(i)            any and all Options and SARs shall become fully vested and immediately exercisable, and shall remain exercisable throughout their entire term;

(ii)          any restriction periods and restrictions imposed on Restricted Stock or Restricted Stock Units that are not performance based shall lapse; and

(iii)         the restrictions and deferral limitations and other conditions applicable to any other Awards shall lapse, and such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant.

(c)           Limitations. The terms and conditions as set forth in this Section 12 shall be subject to the limitations imposed by Section 13.

	
            13.
 	
            Term, Amendment and Termination of the Plan.
 

(a)           Term of Plan. The Plan shall become effective as of the Effective Date. It shall continue in effect until the tenth anniversary of the Effective Date or until terminated under this Section 13 of the Plan or extended by an amendment approved by the shareholders of the Company pursuant to Section 13(b).

(b)          Amendment and Termination. The Board or the Committee may amend or terminate the Plan from time to time in such respects as the Board may deem advisable (including, but not limited to amendments which the Board deems appropriate to enhance the Company’s ability to claim deductions related to stock option exercises); provided that to the extent required by the Code or the rules of the OTCBB or the SEC, shareholder approval shall be required for any amendment of the Plan. Subject to the foregoing, it is specifically intended that the Board or Committee may amend the Plan without shareholder approval to comply with legal, regulatory and listing requirements and to avoid unanticipated consequences deemed by the Committee to be
inconsistent with the purpose of the Plan or any Award Agreement.

(c)           Participants in Foreign Countries. The Committee shall have the authority to adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan.

 

15

 

 

 

(d)          Effect of Amendment or Termination. Any such amendment or termination of the Plan shall not affect Awards already granted and such Awards shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company.

 

 

16F-2/A

Exhibit 4.5  

NINTH AMENDMENT 

TO THE FACILITY
AGREEMENT  

	 	
Made
and entered into on this 24th day of July, 2005, 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, a Second Amendment dated January 10, 2002, a letter dated
March 7, 2002, a letter dated April 29, 2002, a letter dated September 18,
2002, as amended on October 22, 2002, a letter dated June 10, 2003, a Seventh
Amendment dated November 11, 2003 and a letter dated January 30, 2005
(“the Eighth 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 Ninth Amendment”),  

NOW, THEREFORE, IT IS
HEREBY AGREED AS FOLLOWS: 

	1.  	INTERPRETATION

	 	1.1. 	Terms
and expressions defined in the Facility Agreement shall have the same           meanings
when used in this Ninth Amendment. 

	 	1.2. 	References
herein to clauses and paragraphs, are to clauses and paragraphs of           the Facility
Agreement. 

	 	1.3. 	References
herein to sections, are to sections of this Ninth 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 Ninth 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 “the Safety Net Loans” within the
                    parentheses therein, “and Interest Payment Loans”;  

	 	2.1.2. 	the
following shall be inserted in clause 1.1.22                     (“Commitment”)
after the figures                     “US $250,000,000” wherever they
appear:  

	 	
"plus
50% (fifty  percent) of the  aggregate  increase in the Facility due to the Interest
 Payment                             Loans, as referred to in clause 2.1 below";

	 	2.1.3. 	clause 1.1.34
(“Credit”) shall be amended by deleting the           words “and
the Safety Net Loans” in the parentheses thereof and           substituting therefor
the words “, the Safety Net Loans and the           Interest Payment Loans”;  

	 	2.1.4. 	in
clause 1.1.51 (“Event of Default”), the words           “17.2-17.20B
(inclusive)” shall be replaced with           “17.2–17.20C (inclusive)";  

	 	2.1.5. 	clause 1.1.96
(“Loan”) shall be amended by adding the           words “or the
Interest Payment Loans” after the words “or the           Reborrowed Loans”;  

	 	2.1.6. 	clause
1.1.97 (“Loan Maturity Date”) shall be amended as           follows:  

	 	2.1.6.1. 	by
adding the words “or an Interest Payment Loan” after the words           “Safety
Net Loans” in paragraph (c) thereof; and  

- 2 -

	 	2.1.6.2. 	by
adding thereto the following new paragraph (e) to read as follows:  

	 	“(e)	
each Interest Payment Loan, the first anniversary of the date on which the
          Advances constituting such Interest Payment Loan are consolidated into such
          Interest Payment Loan in accordance with clause 5.2.4 below;" 

	 	2.1.7. 	clause 1.1.118
(“Permitted Subordinated Debt”), shall be           amended as follows:  

	 	2.1.7.1. 	the
following two sentences shall be added prior to the last sentence of           paragraph (e)
thereof to read as follows:  

	 	
“Notwithstanding
the aforegoing, with respect to Additional Subordinated Debt, the Borrower shall procure
that: (i) upon the issuance of such Additional Subordinated Debt, an amount equal to
the aggregate amount of Interest payable in cash by the Borrower thereunder from the date
of such issuance until the date immediately prior to the fourth anniversary of the
issuance of such Additional Subordinated Debt shall be deposited in the Reserve Account
and duly pledged in favour of the Banks as aforesaid; and (ii) none of such amounts
are released from the Reserve Account during such 4 (four) year period, except to pay such
Interest on such Additional Subordinated Debt as are required to be paid in cash during
such period.”

	 	2.1.7.2. 	paragraph (f)
thereof shall be amended by adding the following thereto:  

	 	
“,
provided that no Interest (other than periodic Interest at a rate not to exceed 1.5% (one
point five percent) per annum) or other amount shall be paid on any Additional
Subordinated Debt prior to the sixth anniversary of the issuance of such Additional
Subordinated Debt;"

- 3 -

	 	2.1.7.3. 	paragraph (g)
thereof shall be amended by adding the following thereto:  

	 	
“,
provided further that no principal or other amount (other than periodic Interest at a rate
not to exceed 1.5% (one point five percent) per annum) with respect to Additional
Subordinated Debt shall be repayable or repaid earlier than the sixth anniversary of the
issuance of such Additional Subordinated Debt;"

	 	
and

	 	2.1.7.4. 	paragraph (j)
thereof shall be amended by adding the following sentence           thereto:  

	 	
“All
references to ‘Equity Convertible Debentures’ in this paragraph (j) above
shall also be deemed to refer to ‘Additional Subordinated Debt’;"

	 	2.1.8. 	clause 1.1.133
(“Security Documents”) shall be amended by           adding thereto a
new paragraph (h) to read as follows:  

	 	                            "(h) 	the
Additional Investment Undertakings;" 

	 	
and 

	 	2.1.9. 	the
following new definitions shall be added:  

	 	2.1.9.1. 	as
new clause 1.1.3A:  

	 	“‘Additional 
Investment 
Obligors’ 	

–	

means the person or entity which provides the  Additional  Investment
Undertaking;”

- 4 -

	 	2.1.9.2. 	as
new clause 1.1.3B:  

	 	“‘Additional 
Investment 
Undertakings’ 	

–	

means the undertakings
by any of the Lead Investors or any other
person acceptable to the
Banks, in their sole discretion, to invest
in Paid-in Equity of the
Borrower or, in respect of Additional
Subordinated Debt, in an
amount equal to an aggregate of not less
than US $23,500,000
(twenty-three million five hundred thousand
United States Dollars)),
each in the forms of Schedule 1.1.3B(1) and
Schedule 1.1.3B(2)
hereto, to be executed by such Lead Investor or
other person and delivered
to the Banks, all in accordance with the
terms and conditions set
forth in clause 16.36 below and each, ‘an
Additional Investment
Undertaking’;”  

	 	2.1.9.3. 	as
new clause 1.1.3C:  

	 	“‘Additional 
Ninth 
Amendment 
Investment’ 	

–	

means an  amount of
 Paid-in  Equity  and/or an amount of  Additional
                                                               Subordinated  Debt,  net
of  discounts,  but not net of  commissions,
                                                               fees and other issuance
costs, in either case,  actually  received by
                                                               the Borrower  after  May
25,  2005 and prior to the Interest  Payment
                                                               Date  occurring in March
2006,  the  aggregate  amount of which shall
                                                               equal  US $30,000,000
 (thirty  million United States  Dollars).  For
                                                               the  removal of doubt,  to
the extent that the  aggregate  amounts of
                                                               Paid-in   Equity  and/or
  Additional   Subordinated   Debt  (net  of
                                                               discounts,  but not  net
of  commissions,  fees  and  other  issuance
                                                               costs) received after May
25,  2005 and prior to the Interest Payment
                                                               Date  occurring  in March
2006 shall  exceed  US $30,000,000  (thirty
                                                               million United States
Dollars),  such excess (`the Excess') shall not
                                                               constitute  an Additional
 Ninth  Amendment  Investment  and shall be
                                                               taken into account towards
the Borrower's  obligations to raise funds
                                                               pursuant to clause 16.27.2
below;” 

- 5 -

	 	2.1.9.4. 	as
new clause 1.1.3D:  

	 	“‘Additional 
Subordinated 
Debt’ 	

–	

means  Permitted
 Subordinated  Debt issued  after  May 25,  2005 and
                                                               prior to the Interest
Payment Date occurring in March 2006,  provided
                                                               that no principal or other
amount (other than periodic  Interest at a
                                                               rate not to exceed 1.5%
(one point five  percent) per annum) shall be
                                                               repayable  or  repaid
 earlier  than  the  sixth  anniversary  of the
                                                               issuance of such Permitted
Subordinated Debt;” 

	 	2.1.9.5. 	as
new clause 1.1.83A:  

	 	“‘Interest 
Payment 
Loan 
Availability 
Period’ 	

–	

means the period
 commencing on the Ninth Amendment  Closing Date and
                                                               ending on the Interest
Payment Date occurring in March 2006;” 

- 6 -

	 	2.1.9.6. 	as
new clause 1.1.83B:  

	 	“‘Interest 
Payment 
Loans’ 	

–	

means Loans  actually
 made by the Banks to the Borrower  pursuant to
                                                               the increase in the
Facility  available to the Borrower  described in
                                                               the  last  paragraph  of
 clause 2.1  below,  all as set out in,  and
                                                               subject to, the terms and
conditions of, clause 16.36 below;” 

	 	2.1.9.7. 	as
new clause 1.1.107A:  

	 	“‘Ninth Amendment'’ 	
–	
shall bear the meaning  assigned to such term in the Ninth  Amendment
                                                               to this Agreement;” 

	 	2.1.9.8. 	as
new clause 1.1.107B:  

	 	“‘Ninth 
Amendment 
Closing 
Date’ 	

–	

shall bear the meaning
assigned to such term in the Ninth Amendment;“ 

	 	
and

	 	2.1.9.9. 	as
new clause 1.1.107C:  

	 	“‘Ninth 
Amendment 
Side Letter’ 	

–	

means the side letter or
letters,  dated the date hereof, between the
                                                               Borrower and the Banks;” 

- 7 -

	 	2.2. 	Clause 2.1
(Grant of Facility) shall be amended by adding the           following as a third
paragraph thereof: 

	 	
“In
addition, subject to, and otherwise in accordance with, the terms and conditions of
clause 16.36 below, the Banks agree to increase the Facility by an aggregate amount
equal to up to the lesser of: (a) Interest actually paid by the Borrower to the Banks
during Fiscal Year 2005; and (b) US $30,000,000 (thirty million United States
Dollars), such increased amount of the Facility to be made available by way of Interest
Payment Loans, all as set out in, and subject to the terms and conditions of,
clause 16.36 below.” 

	 	2.3. 	Clause 5
(Availability of Credits) shall be amended as follows: 

	 	2.3.1. 	clause 5.1.1(ii)
shall be amended by adding the following at the end           thereof:  

	 	
“Notwithstanding
anything to the contrary in this clause 5.1.1(ii) above, neither any Interest Payment
Loan, nor any Additional Ninth Amendment Investment, shall be taken into account for the
purposes of this clause 5.1.1(ii). For the removal of doubt, any Excess (as defined
in clause 1.1.3C above) shall be taken into account for the purposes of this
clause 5.1.1(ii).”

	 	2.3.2. 	the
opening paragraph of clause 5.1.4 shall be amended to read as follows:  

	 	
“Credits
shall be made 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
Interest Payment Loans may be provided after the Availability Period during the Interest
Payment Loan Availability Period pursuant to clause 16.36 below) and then only if all
the following conditions for each specific 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 and, with respect to Interest Payment Loans, also in
addition to those conditions specified in clause 16.36 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 and, provided further, that only clauses 5.1.4.2, 5.1.4.3,
5.1.4.4, 5.1.4.5 (but only with respect to the first sentence of clause 15.2, the
first two sentences of clause 15.3, clause 15.4 (except that solely for purposes
of the repetition of the representations and warranties in such clause 15.4 as a
condition to the making of the Interest Payment Loan, the words “or any of the
Material Contracts” shall be deemed to be deleted therefrom), paragraph (ii) of
clause 15.18.1 (except that solely for purposes of the repetition of the
representations and warranties in such paragraph (ii) of clause 15.18.1 as a
condition to the making of the Interest Payment Loan, the words “or under the
Material Contracts” shall be deemed to be deleted therefrom) and clause 15.28),
5.2.1, 5.2.3, 5.2.4, 5.2.5 and 5.2.7 below shall constitute conditions for the making of
Interest Payment Loans.”

- 8 -

	 	2.3.3. 	clause 5.1.4.2
shall be amended by adding the following thereto:  

	 	
“and
an Interest Payment Loan may be made after the Termination Date during the Interest
Payment Loan
Availability Period;"

	 	
and 

	 	2.3.4. 	clause 5.2.2
shall be amended by adding the words “or Interest Payment                     Loans” after
the words “Safety Net Loans”.  

	 	2.4. 	Clause 6.1
(Repayment of Loans) shall be amended as follows: 

	 	2.4.1. 	the
words “or Interest Payment Loans” shall be added after the words
                    “Safety Net Loans” in the first parenthetical phrase in
                    clause 6.1.2; and  

	 	2.4.2. 	a
new clause 6.1.4 shall be added to read as follows:  

	 	“6.1.4.	
               With respect to Interest Payment Loans, the Borrower shall repay to each
Bank                its Proportion of each such Interest Payment Loan on the Loan
Maturity Date for                such Interest Payment Loan.” 

	 	2.5. 	Clause 7
(Voluntary Prepayment) shall be amended by adding the words                “or
Interest Payment Loans” after the words “Safety Net                Loans” in
clause 7.5. 

- 9 -

	 	2.6. 	Clause 9.1
(Interest Rate) shall be amended by adding the words                “and
Interest Payment Loans” after the words “Safety Net                Loans” in
clause 9.1.1 and by adding a new clause 9.1.3 thereto to read as follows: 

	 	“9.1.3.	
               with respect to Interest Payment 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) the percentage per annum set
out in the Ninth                Amendment Side Letter;.” 

	 	2.7. 	Clause
11 (Commissions, Fees and Expenses) shall be amended as follows: 

	 	2.7.1. 	clause 11.1
shall be amended to read as follows:  

	 	“11.1.	
Ninth Amendment Fees  

	 	
The
Borrower shall pay to each of the Banks, in accordance with, and on the dates set forth
in, the Ninth Amendment Side Letter, the fees set out in the Ninth Amendment Side
Letter.”

	 	
and 

	 	2.7.2. 	clause 11.2
(Commitment Commission) shall be amended as follows:  

	 	2.7.2.1. 	the
first sentence of clause 11.2 shall read as follows:  

	 	
“The
Borrower shall, from and after the date of signature of the Ninth Amendment to this
Agreement through the end of the Interest Payment Loan Availability Period, pay to each
of the Banks a Commitment commission at the rate per annum as specified in the Ninth
Amendment Side Letter on such Bank’s Available Commitment with respect to Interest
Payment Loans from time to time as from the date set out in the Ninth Amendment Side
Letter until the last day of the Interest Payment Loan Availability Period.”

	 	
and 

	 	2.7.2.2. 	the
third and fourth sentences shall be deleted.  

- 10 -

	 	2.8. 	Clause
16.27 (“Investments in the Borrower”) shall be amended           as
follows: 

	 	2.8.1. 	the
date “December 31, 2005” in clause 16.27.2 shall be
          replaced with the date “June 30, 2006"; and  

	 	2.8.2. 	a
new clause 16.27.4 shall be inserted to read as follows:  

	 	“16.27.4.	
               Notwithstanding anything to the contrary in this Agreement (including in
this                clause 16.27 above), any amounts of Paid-in Equity or Additional
               Subordinated Debt received by the Borrower after May 25, 2005 as part
of                the Additional Ninth Amendment Investment shall not be taken into
account for                the purposes of clause 16.27.2 above. For the removal of
doubt, any Excess                (as defined in clause 1.1.3C above) shall be taken
into account for the                purposes of clause 16.27.2 above.” 

	 	2.9. 	Clause 16.29
(Financial Undertakings) shall be amended as follows: 

	 	2.9.1. 	by
adding the words “and Interest Payment Loans” after the words
                    “disregarding, for this purpose only, Safety Net Loans” within
the                     parenthetical phrase in the last paragraph thereof; and  

	 	2.9.2. 	by
adding the following new paragraph at the end thereof:  

	 	
“With
respect only to each of the third and fourth Quarters of Fiscal Year 2005, Fiscal Year
2005, and to each of the first, second and third Quarters of Fiscal Year 2006,
Schedules 1.1.106 and 16.29 hereto shall be replaced and be in the respective forms
to be delivered in accordance with the Ninth Amendment. For the removal of doubt, with
respect to the first and second Quarters of Fiscal Year 2005, Schedule 16.29 shall
continue to be in the form of Appendix A to the Eighth Amendment and, with respect to
any period after the third Quarter of Fiscal Year 2006, Schedule 16.29 shall continue
to be in the form delivered on the Seventh Amendment Closing Date.”

- 11 -

	 	2.10. 	A
new clause 16.34.6 shall be inserted to read as follows:  

	 	“16.34.6.	
               Notwithstanding clause 16.27.4 above, for the purposes of this
               clause 16.34 only, any amount on account of the Additional Ninth
Amendment                Investment actually received by the Borrower shall be deemed to
be an amount                raised under clause 16.27.2 above. For the removal of
doubt, without                derogating from the previous sentence, clause 16.34
and the Safety Net                Undertaking shall be of no more force should TIC invest
at least                US $14,000,000 (fourteen million United States Dollars) in
connection with                the Additional Ninth Amendment Investment. “ 

	 	2.11. 	A
new clause 16.36 shall be added to read as follows:  

	 	“16.36.	
Interest Payment Loans; Additional Investment Undertakings  

	 	16.36.1. 	The
Borrower shall procure that it shall receive the Additional Ninth Amendment
               Investment in full by the following times:  

	 	16.36.1.1. 	an
amount of at least US $23,500,000 (twenty-three million five hundred
               thousand United States Dollars), by not later than October 31, 2005;
and  

	 	16.36.1.2. 	the
remainder of the Additional Ninth Amendment Investment, by no later than the
               Interest Payment Date occurring in March 2006.  

- 12 -

	 	
Without
derogating from the Borrower’s obligations as aforesaid, the parties record that the
Additional Investment Obligors have provided Additional Investment Undertakings in favour
of the Banks (such undertakings, for the removal of doubt, being only to the Banks and not
to the Borrower, its shareholders or any third party) to invest an aggregate of
US $23,500,000 (twenty-three million five hundred thousand United States Dollars)) in
respect of Paid-in Equity of the Borrower, or in respect of Additional Subordinated Debt,
by way of a rights offering to be completed by the Borrower which the Borrower hereby
undertakes to complete. The Borrower acknowledges, for the removal of doubt, that:
(a) such Additional Investment Undertakings are in addition to, and do not in any way
derogate from, the obligations and undertakings of the Borrower, the Safety Net Obligor
and the Lead Investors, as applicable, as described in clauses 16.27, 16.34 and 16.35
above, provided that should TIC invest at least US $14,000,000 (fourteen million US
Dollars) in connection with an Additional Ninth Amendment Investment the Safety Net
Undertaking shall be of no more force and effect as provided for in clause 16.34.6
above; and (b) in the event of any Default by the Borrower, the Banks shall have
available to them, subject to clause 16.34, if applicable, 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 16.36 nor the fact of the giving of the Additional
Investment Undertakings to the Banks shall derogate from the Banks’ rights and
remedies as aforesaid.

	 	
The
Borrower shall, within 10 (ten) days after each investment in Paid-in Equity and/or
Additional Subordinated Debt, submit to the Banks a certificate from the Auditors (such
certificate to be in a form satisfactory to the Banks), confirming the amount of such
Additional Ninth Amendment Investment actually received by the Borrower.

	 	16.36.2. 	Subject
to compliance by the Borrower with all of the provisions of this                Agreement
relating to the making available of Interest Payment Loans (including                the
remainder of this clause 16.36 with respect to Interest Payment Loans),
               the Banks shall make available the Interest Payment Loans in no more than
3                (three) separate Advances during the Interest Payment Loan Availability
Period                as follows:  

- 13 -

	 	16.36.2.1. 	1
(one) Advance of Interest Payment Loans from and after the Ninth Amendment
               Closing Date through and including the Business Day immediately prior to
the                Interest Payment Date occurring in September 2005, in an amount not to
exceed                the amount of Interest actually paid by the Borrower to the Banks
in March and                June 2005;  

	 	16.36.2.2. 	1
(one) Advance of Interest Payment Loans made from and after the Interest
               Payment Date in September 2005 through and including the Business Day
               immediately prior to the Interest Payment Date occurring in December 2005,
in an                amount not to exceed the sum of: (a) the amount of Interest
paid by the                Borrower to the Banks in September 2005 (if such Advance is
made after such                Interest Payment Date) or payable by the Borrower to the
Banks in September 2005                (if such Advance is made on such Interest Payment
Date); plus (b) any                amount that the Borrower was entitled to borrow
under clause 16.36.2.1                above but did not so borrow; and  

	 	16.36.2.3. 	(one)
Advance of Interest Payment Loans made from and after the Interest Payment
               Date in December 2005 through the end of the Interest Payment Loan
Availability                Period in an amount not to exceed the sum of: (a) the
amount of Interest                paid by the Borrower to the Banks in December 2005 (if
such Advance is made                after such Interest Payment Date) or payable by the
Borrower to the Banks in                December 2005 (if such Advance is made on such
Interest Payment Date); plus                (b) any amount that the Borrower was
entitled to borrow under                clause 16.36.2.1 or clause 16.36.2.2
above but did not so borrow.  

- 14 -

	 	16.36.3. 	For
the avoidance of doubt, and notwithstanding anything to the contrary in this
               Agreement and without derogating from all the other remedies available to
the                Banks under the Finance Documents, as aforesaid, the Banks shall have
no                obligation to make any Interest Payment Loans after October 31,
2005,                unless the Banks shall have received a certificate or certificates
from the                Auditors as aforesaid, confirming the actual receipt by the
Borrower of an                amount of Additional Ninth Amendment Investment equal to at
least                US $23,500,000 (twenty-three million five hundred thousand
United States                Dollars) or, if the aggregate Interest Payment Loans which
have been made and                are requested exceed such amount, then equal to the
full amount of                US $30,000,000 (thirty million United States Dollars).” 

	 	2.12. 	Clause
17 (Default) shall be amended as follows: 

	 	2.12.1. 	in
clause 17.1 (Events of Default), the words                     “clause 17.20B” shall
be deleted and replaced with the words                     “clause 17.20C”;
and  

	 	2.12.2. 	a
new clause 17.20C shall be inserted to read as follows:  

	 	“17.20C.	
Additional Investment Undertakings  

	 	
For
so long as the obligations of the Additional Investment Obligors to make investments in
accordance with Additional Investment Undertakings shall not have been completely
fulfilled in accordance with the terms of such Additional Investment Undertakings:

	 	17.20C.1. 	Any
of the representations and warranties by any Additional Investment Obligor
               in any Additional Investment Undertaking to which it is a party are
incorrect or                misleading in any material respect.  

	 	17.20C.2. 	If
the amount to be invested pursuant to any Additional Investment Undertaking
               shall not have been invested in the Borrower in accordance with the terms
of                such Additional Investment Undertaking.  

- 15 -

	 	17.20C.3. 	Other
than with respect to a default described in clause 17.20C.2 above,
               any Additional Investment Obligor fails to comply with any undertaking or
               obligation contained in any Additional Investment Undertaking to which it
is a                party and, if such default is capable of remedy within such period,
within 7                (seven) days after the earlier of the Additional Investment
Obligor becoming                aware of such default and receipt by the Additional
Investment Obligor of                written notice from the Banks requiring the failure
to be remedied, that                Additional Investment Obligor shall have failed to
cure such default.  

	 	17.20C.4. 	Any
Additional 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 Additional Investment Obligor
party to it or                it shall be unlawful for any Additional Investment Obligor
to perform any of its                material obligations under any of the Outside
Investment Undertakings.  

	 	17.20C.5. 	Any
Additional Investment Obligor repudiates the Additional Investment
               Undertaking to which it is a party.  

	 	17.20C.6. 	There
occurs with respect to any Additional Investment 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 ‘any Additional Investment Obligor’.  

	 	
Notwithstanding
the provisions of this clause 17.20C, for the removal of doubt, no Additional
Investment Undertaking shall create any rights or obligations in favour of the Borrower or
any of its shareholders.”

- 16 -

          	 	2.13. 	
               Clause 18.2 (Default Interest) shall be amended by deleting the
               words “or 9.1.2” in paragraph (b) thereof and substituting
               therefor the words “, 9.1.2 or 9.1.3” and deleting the words
               “(namely, 2.5% (two point five percent))". 

               

          	 	2.14. 	
               New Schedules 1.1.3B(1) and 1.1.3B(2) (Forms of Additional Investment
               Undertaking) in the forms respectively attached as Appendices A
               and B hereto shall be added to and form part of the Facility Agreement. 

               

          	 	2.15. 	
               Each of the following Schedules shall be replaced by the Ninth Amendment Closing
               Date by updated Schedules as referred to in section 3.1.8 below (the
               updated Schedules, for the removal of doubt, to be in form and substance
               acceptable to the Banks and to bear the same heading (Schedule number) as those
               replaced): Schedule 1.1.42 (Form of Drawdown Request);
               Schedule 1.1.105 (List of Named Directors and Officers);
               Schedule 1.1.106 (Net Cash Flow) and Schedule 16.29
               (Financial  Undertakings), but only with respect to the third and
               fourth Quarters of Fiscal Year 2005, Fiscal Year 2005 and the first and second
               Quarters of Fiscal Year 2006. 

               

	3.  	CONDITIONS
PRECEDENT

          	 	3.1. 	
               This Ninth Amendment is subject to the conditions precedent that the Banks shall
               have received, by not later than September 30, 2005 (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: 

               

	 	3.1.1. 	the
Additional Investment Undertakings duly executed by each Additional
               Investment Obligor;  

	 	3.1.2. 	the
written consent, acknowledgment and waiver by TIC, pursuant to its
               Undertaking to the Banks, dated November 11, 2003 (“the
Safety Net                Undertaking”):  

	 	3.1.2.1. 	consenting
to all of the amendments to the Facility Agreement made by this Ninth
               Amendment;  

- 17 -

	 	3.1.2.2. 	amending
clauses 2.3 and 5.2 of the Safety Net Undertaking to delete the                date
“June 30, 2006” wherever it appears therein and
               substituting, in each case, the date “December 31, 2006",
               therefor; and  

	 	3.1.2.3. 	without
derogating from clause 16.34.6, waiving any right of TIC to                terminate
the Safety Net Undertaking on account of, or in relation to, any of                the
amendments to the Facility Agreement made by this Ninth Amendment;  

	 	3.1.3. 	the
Ninth Amendment Side Letter executed as at the date hereof by the Borrower;  

	 	3.1.4. 	copies
of resolutions of the Board of Directors of the Borrower, evidencing
               approval of this Ninth Amendment (including, specifically, of the
Additional                Investment Undertakings) and authorising designated officers of
the Borrower to                execute, deliver and perform this Ninth Amendment and to
give all notices and                take all other action required to be given or taken
by the Borrower under this                Ninth Amendment;  

	 	3.1.5. 	payment
on the date of signature of this Ninth Amendment of the fees and costs
               referred to in section 5 below, that are payable on or before such
date;  

	 	3.1.6. 	an
opinion of Yigal Arnon & Co., Advocates, the Borrower’s external
               legal counsel, addressed to the Banks;  

	 	3.1.7. 	an
updated certificate by the Auditors confirming investments made in accordance
               with clauses 16.27.2 and 16.36 through and as of the Ninth Amendment
               Closing Date;  

	 	3.1.8. 	each
updated Schedule referred to in section 2.15 above;  

	 	3.1.9. 	evidence
that this Ninth Amendment and all documentation pursuant thereto,
               including, the Additional Investment Undertakings, required, if required,
to be                stamped for stamp duty purposes, has been stamped and the relevant
duty payable                has been paid; and  

	 	3.1.10. 	all
of the Borrower’s representations and warranties given pursuant to this
               Ninth Amendment shall be accurate in all material respects as of the Ninth
               Amendment Closing Date, as if made on the Ninth Amendment Closing Date.  

- 18 -

          	 	3.2. 	
               In the event that the aforegoing conditions precedent are not all fulfilled by
               September 30, 2005, then, save for section 5 below, this Ninth
               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 Ninth
               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 Ninth Amendment has become
               effective. 

               

	4.  	REPRESENTATIONS
AND WARRANTIES

	 	
The
Borrower acknowledges that the Banks have agreed to this Ninth Amendment in full reliance
on the representations and warranties set forth in the first sentence of clause 15.2,
the first two sentences of clause 15.3, clause 15.4 (except that solely for
purposes of the repetition of the representations and warranties in such clause 15.4
as a condition to this Ninth Amendment, the words “or any of the Material
Contracts” shall be deemed to be deleted therefrom), paragraph (ii) of
clause 15.18.1 (except that solely for purposes of the repetition of the
representations and warranties in such paragraph (ii) of clause 15.18.1 as a
condition to this Ninth Amendment, the words “or under the Material Contracts”
shall be deemed to be deleted therefrom) and clause 15.28, which are deemed to be
repeated on the date of signature of this Ninth Amendment, on the Ninth Amendment Closing
Date and on each date of drawdown of Interest Payment Loans. 

	 	
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 Ninth
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 the Ninth Amendment Side Letter and in
addition thereto, and for the removal of doubt, the Borrower shall pay to the Banks on the
date of signature of this Ninth Amendment and thereafter on demand legal fees for external
counsel (and out-of-pocket expenses incurred by such counsel) incurred by the Banks in
connection with the negotiation, preparation and execution of this Ninth Amendment. 

- 19 -

	6.  	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 Ninth Amendment Closing Date, the Facility Agreement is hereby amended as
expressly set out in this Ninth Amendment above. This Ninth Amendment shall be read
together with the Facility Agreement as one agreement and, save as expressly amended by
this Ninth Amendment, the Facility Agreement shall remain unaltered and in full force and
effect. 

	7.  	FURTHER
DISCUSSIONS  

	 	
Following
the Ninth Amendment Closing Date, the Banks and the Borrower shall discuss (but without
any obligation on the part of the Banks to agree) the rescheduling of the repayment dates
of the Interest Payment Loans. 

IN WITNESS WHEREOF, the parties
have signed this Ninth 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:  ______________________

- 20 -

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