There is no such an "agreement", Turkish National pride would never allow for it. It's probably more of an "understanding" between the parties. Considering that the "drill" were to be held on 'Turkish soil', the turks would always have the last word on who's to participate, as would any country. The last one was held last june and then Israel chosed not to participate, as it had the right to do without breaking any "agreement". There are two camps in Israel, one that is trying to blow it out of proportions and another that would rather that the whole 'story' would have been dealt with through the ordinary diplomatic channels. You can see whom has the press on its side.
Woman moderately wounded by firebomb thrown at her car in north J'lem (Haaretz)
from the article: Barak warns against further harming Israel-Turkey relations