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       Execution
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    AMENDMENT
AGREEMENT

    

    This
Amendment Agreement (the “Agreement”), dated as
of June 25, 2010, by and among Elite Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), on the one
hand, and Epic Pharma, LLC, a Delaware limited liability company (the “Parent”), and Epic
Investments, LLC, a Delaware limited liability company (including its successors
and assigns, the “Purchaser” and
together with the Parent, the “Epic Parties”), on
the other hand.

    

    WHEREAS,
pursuant to a Strategic Alliance Agreement, dated March 18, 2009 (as amended,
the “SAA”),
among the Company, on the one hand, and the Epic Parties, on the other hand, the
Company issued Series E Convertible Preferred Stock (the “Series E Preferred
Stock”), pursuant to a Certificate of Designation of Preferences, Rights
and Limitations of Series E Convertible Preferred Stock, filed with Secretary of
State of the State of Delaware on June 3, 2009 (the “COD” and, together
with the SAA, the “Transaction
Documents”);

    

    WHEREAS,
the parties wish to amend certain terms of the Transaction Documents and the
amendments to the SAA shall constitute the fourth amendment
thereof.

    

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Epic Parties agree as
follows:

    

    ARTICLE
I

    DEFINITIONS

    

    Section
1     
Definitions.  Capitalized
terms not defined in this Agreement shall have the meanings ascribed to such
terms in the SAA.

    

    ARTICLE
II

    AMENDMENTS
AND OTHER AGREEMENTS

    

    Section
2.1    Amendment to
COD.  On or prior to the date hereof, the Company shall deliver
evidence of the filing of an Amendment to the Certificate of Designation, in the
form attached hereto as Exhibit A (the “Certificate of
Amendment”).  Each of the Epic Parties hereby consents to the
terms and the filing of the Certificate of Amendment, including the Purchaser as
the sole holder of Series E Preferred Stock.

    

    Section
2.2    Amendment to Section 1.1 of
the SAA.  The definition of “Third Closing Date” in Section 1.1
of the SAA is hereby amended in its entirety and replaced with the
following:

    

    ““Third Closing Date”
means the date of the Third Closing, which shall occur on or before December 31,
2010, provided that all conditions precedent to (i) the Purchaser’s obligation
to purchase the Third Closing Shares have been satisfied or waived by the
Purchaser and (ii) the Company’s obligation to issue and deliver the Third
Closing Shares have been satisfied or waived by the Company.”

     

    
      
        
        

      

      
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    Section
2.3    Amendment to Section 2.7 of
the SAA. The first sentence of Section 2.7 of the SAA is hereby amended
in its entirety and replaced with the following:

    

    “Additional
Shares.  In addition, the Company agrees to issue and sell, and
the Purchaser agrees to purchase, Sixty Two and one-half (62.5) shares of Series
E Preferred Stock on each of the following dates (each such date, an “Additional Closing
Date”):  (y) on or prior to November 30, 2009 and (x) within
ten (10) Business Days following the last day of each calendar quarter,
beginning with the calendar quarter ending on September 30, 2010 and continuing
for each of the ten (10) calendar quarters thereafter, upon the terms and
subject to the conditions set forth herein.”

    

    Section 2.4    Effect on SAA. The
foregoing consents and waivers are given solely in respect of the transactions
described herein. Except as expressly set forth herein, all of the
terms and conditions of the Transaction Documents shall continue in full force
and effect after the execution of this Agreement, and shall not be in any way
changed, modified or superseded by the terms set forth herein.  This Agreement shall not
constitute a novation or
satisfaction and accord of any Transaction Document.

    

    Section
2.5    Increase in Authorized
Shares; Reverse Split.

    

    (i)           At
its next meeting of shareholders the Company shall seek shareholder approval to
amend the Company’s certificate or articles of incorporation to increase the
number of authorized but unissued shares of Common Stock to at least 760 million
shares (the “Authorized Share
Increase”), subject to downward adjustment if the Company shall effect a
Reverse Split (as defined below), with the recommendation of the Company’s Board
of Directors that such proposal be approved, and the Company shall solicit
proxies from its shareholders in connection therewith in the same manner as all
other management proposals in such proxy statement and all management-appointed
proxyholders shall vote their proxies in favor of such proposal.

    

    (ii)           The
Purchaser hereby agrees to vote all shares of Series E Preferred Stock and
Common Stock beneficially owned by it on the applicable record date in favor of
(i) the Authorized Share Increase and (ii) a reverse stock split, in the ratio
of no greater than 50 to 1 (the “Reverse
Split”).  The Company represents, warrants and covenants that
all outstanding securities of the Company (including Common Stock and Common
Stock Equivalents) will proportionally adjust as to the number of shares
issuable and the conversion or exercise prices as a result of any reverse stock
split.

     

    
      
        
        

      

      
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    Section
2.6.    Series D Preferred
Stock.    The Epic Parties hereby consent to, and the
Company agrees to cause as a condition to the effectiveness of this Agreement,
the amendments set forth in the Series D Amendment Agreement (as defined below),
including, without limitation, the amendment (the “Series D COD
Amendment”) of the terms of the Company’s Series D Convertible Preferred
Stock (the “Series D
Preferred Stock”) issued pursuant to a Certificate of Designation of
Preferences, Rights and Limitations of Series D 8% Convertible Preferred Stock,
filed with the Secretary of State of the State of Delaware on September 15,
2008.

    

    Section
2.6    Conditions to the Epic
Parties’ Obligations.  The respective obligations of the Epic
Parties hereunder in connection with the Closing are subject to the following
conditions being met:

    

    (a)    the
accuracy in all material respects on the date of the Closing of the
representations and warranties of the Company contained herein;

    

    (b)    all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing shall have been performed;

    

    (c)    the
execution and delivery of the Amendment Agreement, by and among the Company,
Bushido Capital Master Fund, LP and Midsummer Investment Ltd. (the “Series D Amendment
Agreement”), in substantially the form attached hereto as Exhibit B and the
receipt of all necessary consents to the Series D COD Amendment, and the receipt
by the Epic Parties of true, correct and complete copies thereof (including
evidence of the filing of the Series D COD Amendment); and

    

    (d)    the
execution and delivery of a settlement and release agreement, by and among the
Company, Bushido Capital Master Fund, LP, BCMF Trustees, LLC, Midsummer
Investment Ltd. And the Epic Parties (the “Settlement
Agreement”), in substantially the form attached hereto as Exhibit
C.

    

    Section
2.7    Conditions to Company’s
Obligations.  The obligations of the Company hereunder in
connection with the Closing are subject to the following conditions being
met:

    

    (a)    the
accuracy in all material respects on the date of the Closing of the
representations and warranties of each of the Epic Parties contained
herein;

    

    (b)    all
obligations, covenants and agreements of each of the Epic Parties required to be
performed at or prior to the Closing shall have been performed;

    

    (c)    the
execution and delivery of the Series D Amendment Agreement; and

    

    (d)    the
execution and delivery of the Settlement Agreement.

     

    
      
        
        

      

      
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    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES

    

    Section
3.1    Representations and
Warranties of the Company.  The Company hereby make the
representations and warranties set forth below to the Epic Parties that as of
the date of its execution of this Agreement:

    

    (a)    Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, its board of directors or its
stockholders in connection therewith.  This Agreement has been duly
executed by the Company and, when delivered in accordance with the terms hereof
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

    

    (b)    No
Conflicts.  The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien upon any of the properties or
assets of the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other material instrument
(evidencing Company debt or otherwise) or other material understanding to which
the Company is a party or by which any property or asset of the Company is bound
or affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.

    

    Section
3.2    Representations and
Warranties of the Epic Parties.  Each Epic Party, jointly and
severally, hereby represents and warrants to the Company that, as of the date
hereof, each Epic Party has the requisite corporate, partnership and/or company
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of this
Agreement by each Epic Party and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of each Epic Party and no further action is required by either Epic Party,
their respective board of directors (or equivalent governing body) or their
respective stockholders, members or partners in connection
therewith.  This Agreement has been duly executed by each Epic Party
and, when delivered in accordance with the terms hereof will constitute the
valid and binding obligation of each Epic Party enforceable against each Epic
Party in accordance with its terms except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

    

    
      
        
        

      

      
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    ARTICLE
IV

    MISCELLANEOUS

    

    Section
4.1    Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be made in accordance with the provisions of the
SAA.

    

    Section
4.2    Survival. All
warranties and representations (as of the date such warranties and
representations were made) made herein or in any certificate or other instrument
delivered by it or on its behalf under this Agreement shall be considered to
have been relied upon by the parties hereto and shall survive the execution and
delivery hereof. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties; provided
however that no party may assign this Agreement or the obligations and rights of
such party hereunder without the prior written consent of the other parties
hereto.

    

    Section
4.3    Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile or email transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or email signature
page were an original thereof.

    

    Section
4.4    Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

    

    Section
4.5    Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined pursuant to
the Governing Law provision of the SAA.

     

    
      
        
        

      

      
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    Section
4.6    Entire
Agreement.  The Agreement, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.

    

    Section
4.7    Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.

    

    

    

    ***********************

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

     

    
       

      
        
          
            	 	ELITE PHARMACEUTICALS,
      INC.	 
	 	 	 	 
	
                  	
                    By:
      

                  	  	 
	 	 	Name:	 
	 	 	Title:	 

          

        

         

        
           

          
            
              
                	 	EPIC PHARMA,
    LLC	 
	 	 	 	 
	
                      	
                        By:
      

                      	  	 
	 	 	Name:	 
	 	 	Title:	 

              

            

            

               

              
                
                  
                    	 	

                            EPIC
      INVESTMENTS, LLC

                          	 
	 	 	 
	 	

                            By:
      EPIC PHARMA LLC, its Managing Member

                          	 
	 	 	 	 
	 	 	 	 
	
                          	
                            By:
      

                          	  	 
	 	 	Name:	 
	 	 	Title:	 

                  

                

                 

              

            

          

        

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

      

    

     

    EXHIBIT
A

    FORM OF
CERTIFICATE OF AMENDMENT TO THE SERIES E CERTIFICATE OF DESIGNATION

    

    

    1.    (a)           The
following definitions shall be added to Section 1 of the Certificate of
Designation in the correct alphabetical order:

    

    ““Adjusted Convertible
Outstanding Amount” means, for purposes of determining the adjustment to
the Conversion Price under Section 7(i) hereof, as of the time of such
determination, the sum of (i) the number of outstanding shares of Common Stock
(assuming, solely for purposes of such calculation, that all shares of Series D
Preferred Stock which have converted after the date of the Series D Amendment
Agreement shall have converted at the Adjusted Series D Conversion Price), (ii)
the number of shares of Common Stock into which all Series B Preferred Stock are
then convertible at the Original Series B Preferred Stock Conversion Price,
(iii) the number of shares of Common Stock into which all Series C Preferred
Stock are then convertible at the Original Series C Preferred Stock Conversion
Price, and (iv) the number of shares of Common Stock into which all Series D
Preferred Stock are then convertible at the Original Series D Preferred Stock
Conversion Price.  For the avoidance of doubt, the Adjusted
Convertible Outstanding Amount shall not include any
shares of Common Stock into which the Series E Preferred Stock is
convertible.

    

    ““Adjusted Series D Conversion
Price” means the conversion price of the Series D Preferred Stock under
the Series D Certificate, as in effect immediately after  the date of
the Series D Certificate Amendment  (without any future adjustment
under the Series D Certificate other than adjustment under Section 7(a)
thereof), which initially was $0.07.”

     

    ““Original Series B Conversion
Price” means $1.56, representing the conversion price of the Series B
Preferred Stock under the Series B Certificate in effect immediately prior to
the date of the Series D Amendment Agreement (subject only to adjustment under
Section 7(a) of the Series B Certificate).”

    

    ““Original Series C Conversion
Price” means $1.61, representing the conversion price of the Series C
Preferred Stock under the Series C Certificate in effect immediately prior to
the date of the Series D Amendment Agreement (subject only to adjustment under
Section 7(a) of the Series C Certificate).”

    

    ““Original Series D Conversion
Price” means $0.20, representing the conversion price of the Series D
Preferred Stock under the Series D Certificate in effect immediately prior to
the date of the Series D Certificate Amendment  (subject only to
adjustment under Section 7(a) of the Series D Certificate).”

     

    
      
        
        

      

      
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    ““Series D Amendment
Agreement” means the certain Amendment Agreement, dated as of June 25,
2010, by and among the Corporation, Bushido Capital Master Fund, LP and
Midsummer Investment Ltd.”

    

    ““Series D Certificate
Amendment” means the  Series D Certificate of Amendment to
Certificate of Designation filed with the Secretary of State of the State of
Delaware on June __, 2010.”

    

    ““Series D Warrants”
means the common stock warrant, as amended, issued to the purchasers of the
Series D Preferred Stock pursuant to a certain Securities Purchase Agreement,
dated September 15, 2008, as amended, among the Corporation and the investors
signatory thereto.”

    

    (b)                 The
following definitions set forth in Section 1 of the Certificate of Designation
shall be amended to read as follows:

    

    ““Existing Preferred
Stock” means, as of any date of determination, the then issued and
outstanding shares of Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock.”

    

    ““Series D
Certificate” means the
Certificate of Designation of Preferences, Rights and Limitations of the Series
D 8% Convertible Preferred Stock, filed with the Secretary of State of the State
of Delaware on September 15, 2008, as amended by the Series D Certificate
Amendment.”

    

    2.           The
first sentence of Section 6(a) of the Certificate of Designation is hereby
amended in its entirety and replaced with the following:

    

    “Conversions at Option of the
Holder. Subject to Section 6(c) below, each share of Series E Preferred
Stock shall be convertible at the option of the Holder, at any time and from
time to time from and after the Original Issue Date into that number of shares
of Common Stock  determined by dividing the Stated Value of such share
of Series E Preferred Stock by the Conversion Price.”

    

    3.           Section
6(c) of the Certificate of Designation is hereby amended in its entirety and
replaced with the following:

    

    “Authorized Share
Limitations.  Notwithstanding anything herein to the contrary,
the Holder’s ability to convert Series E Preferred Stock into Conversion Shares
shall be limited to a number of Conversion Shares equal to the difference
between (a) the Company’s total authorized shares of Common Stock as of the
applicable Conversion Date, minus (b) as of the applicable Conversion Date, the
sum of (i) the Company’s total issued and outstanding Common Stock and (ii) the
total number of shares of Common Stock reserved for issuance upon the exercise
or conversion, as applicable, of outstanding Common Stock Equivalents
(including, without limitation, the Warrants, the Series D Preferred Stock and
the Series D Warrants), after giving effect to the Series D Amendment Agreement.
The portion of the Series E Preferred Stock which may not be converted as a
result of this Section 6(c) shall thereafter be unconvertible to such extent
until and unless approval by the Corporation’s stockholders of an increase in
the number of authorized shares of Common Stock of the Corporation is
subsequently obtained; provided, however, the rights and preferences of the
Series E Preferred Stock otherwise set forth in this Certificate of Designation
shall otherwise remain in full force and effect. For the avoidance of doubt, the
voting rights of the Holder under Section 4(a) shall not be affected by the
restrictions of this Section 6(c).”

     

    
      
        
        

      

      
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    4.           The
first sentence of Section 7(c) of the Certificate of Designation is hereby
amended in its entirety and replaced with the following:

    

    “Subsequent Dividend
Issuances.  If the Corporation, at any time while the Series E
Preferred Stock is outstanding, shall issue shares of Common Stock or shares of
Series D Preferred Stock in lieu of cash in satisfaction of its dividend
obligations on shares of outstanding Existing Preferred Stock in accordance with
the Series B Certificate, Series C Certificate and/or Series D Certificate, as
applicable (any such issuance, a “Dividend Issuance”),
then the then applicable Conversion Price shall be reduced to a price equal to
(i) the aggregate Stated Value of Series E Preferred Stock then outstanding
divided by (ii) the product of (x) aggregate number of Conversion Shares
issuable upon conversion of the then outstanding Series E Preferred Stock
immediately prior to Dividend Issuance multiplied by (y) the sum of one plus a
fraction with: (A) a numerator equal to (I) the number of outstanding shares of
Common Stock immediately after giving effect to the Dividend Issuance (assuming
conversion of all Existing Preferred Stock in accordance with the Series B
Certificate, Series C Certificate and/or Series D Certificate, as applicable,
but not the Series E Preferred Stock) minus (II) the number of outstanding
shares of Common Stock immediately prior to the Dividend Issuance (assuming
conversion of all Existing Preferred Stock  in accordance with the
Series B Certificate, Series C Certificate and/or Series D Certificate, as
applicable, but not the Series E Preferred Stock); and (B) a denominator equal
to the number of outstanding shares of Common Stock immediately prior to the
Dividend Issuance (assuming conversion of all Existing Preferred Stock in
accordance with the Series B Certificate, Series C Certificate and/or Series D
Certificate, as applicable, but not the Series E Preferred Stock).

     

    
      
        
        

      

      
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    5.           The
following is hereby added to the Certificate of Designation as new Section
7(i):

    

    “Special
Adjustment relating to Series D Preferred Stock.  If the Corporation, at
any time while the Series E Preferred Stock is outstanding, shall issue shares
of Common Stock in conversion of shares of outstanding Series D Preferred Stock
in accordance with the Series D Certificate (any such issuance, a “Series D
Conversion Issuance”),
then the then applicable Series E Conversion Price shall be reduced to a
price equal to (i) the aggregate Stated Value of Series E Preferred Stock then
outstanding divided by (ii) the product of (x) the aggregate number of
Conversion Shares issuable upon conversion of the then outstanding Series E
Preferred Stock immediately prior to the Series D Conversion Issuance multiplied
by (y) the sum of one plus a fraction with: (A) a numerator equal to (I) the
Adjusted Convertible Outstanding Amount immediately after giving effect to such
Series D Conversion Issuance minus (II) the Adjusted Convertible Outstanding
Amount immediately prior to such Series D Conversion Issuance; and (B) a
denominator equal to the Adjusted Convertible Outstanding Amount immediately
prior to such Series D Conversion Issuance.  The Corporation shall notify the
Holder in writing on a quarterly basis of all Series D Conversions which shall
have occurred during the preceding calendar quarter, indicating therein the
number of shares of Series D Preferred Stock as to which a Series D Conversion
shall have occurred and the calculation of such adjusted Conversion Price (such
notice, the “Series D
Conversion Adjustment Notice”).  Such Series D
Conversion Adjustment Notice shall be given by the Corporation to the Holder in
accordance with Section 10(a). For purposes of clarification, whether or not the
Corporation provides a Series D Conversion Adjustment Notice pursuant to this
Section 7(c), upon the occurrence of any Series D Conversion, the Holder is
entitled to receive a number of Conversion Shares based upon the adjusted
Conversion Price on or after the date of such Series D Conversion, regardless of
whether the Holder accurately refers to the adjusted Conversion Price in the
Notice of Conversion.”

    

    
      
        
        

      

      
        11exhibit_10-1.htm

Exhibit 10.1

FOURTH AMENDMENT TO SECOND AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT

This FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of June 29, 2010, is entered into among Jazz Semiconductor, Inc., a Delaware corporation (“Jazz”), Newport Fab, LLC (d/b/a Jazz Semiconductor Operating Company), a Delaware limited liability company (“Operating Company” and together with Jazz, the “Borrowers” and each individually, a “Borrower”), Jazz Technologies, Inc., formerly known as Acquicor Technology Inc., a Delaware corporation (“Guarantor”), the lenders party to the “Loan Agreement” as defined below (each individually, a “Lender” and collectively, “Lenders”), and Wachovia Capital Finance Corporation (Western), a California corporation, in its capacity as agent for the Lenders (in such capacity, “Agent”).

RECITALS

A.           Borrowers, Guarantor, Agent, Lenders, and Wachovia Capital Markets, LCC, in its capacity as lead arranger, bookrunner and syndication agent, have previously entered into that certain Second Amended and Restated Loan and Security Agreement, dated as of September 19, 2008, as amended by the First Amendment to Second Amended and Restated Loan and Security Agreement, dated as of March 17, 2009, as further amended by the Second Amendment to Second Amended and Restated Loan and Security Agreement, dated as of July 16, 2009, and as further amended by the Third Amendment to Second Amended and Restated Loan and Security Agreement, dated as of April 21, 2010 (the “Loan Agreement”), pursuant to which Agent and Lenders have made certain loans and financial accommodations available to Borrowers.  Terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.

B.           Borrowers and Guarantor have requested that Agent and Lenders amend the Loan Agreement, which Agent and Lenders are willing to do pursuant to the terms and conditions set forth herein.

C.           Borrowers and Guarantor are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement is being waived or modified by the terms of this Amendment.

 

  

  

  

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.           Amendment to Loan Agreement.

a.           The definition of “Account Sublimit” set forth in Section 1.2 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“1.2 “Accounts Sublimit” shall mean, at any time, the amount equal to $35,000,000, as reduced by any reduction thereof pursuant to Section 2.1(c) hereof.”

b.           The definition of “Applicable Margin” set forth in Section 1.10 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“1.10 “Applicable Margin” shall mean, at any time, with respect to any Prime Rate Loan or Eurodollar Rate Loan, the applicable rate per annum set forth below under the caption “Prime Spread” or “Eurodollar Spread”, as the case may be, based upon the Consolidated Fixed Charge Coverage Ratio of Parent Guarantor and its Subsidiaries during the four (4) fiscal quarters ending on the most recent determination date:

	
Level

	
Consolidated Fixed Charge Coverage Ratio (“CFCCR”)

	
Prime Spread

	
Eurodollar Spread

	
Tier I

	
CFCCR<1.10 to 1.0

	
1.0%

	
2.75%

	
Tier II

	
CFCCR>1.10 to 1.0 and <1.35 to 1.0

	
0.75%

	
2.50%

	
Tier III

	
CFCCR>1.35 to 1.0

	
0.50%

	
2.25%

 

provided, however, that, notwithstanding the foregoing, if the Excess Availability on the date on which the “Applicable Margin” would otherwise be adjusted pursuant to clause (b) below is less than $10,000,000, the “Applicable Margin” shall be the applicable rate per annum set forth above in Tier I.  For purposes of the foregoing, (a) the Applicable Margin shall be determined as of the end of each fiscal year or quarter of Parent Guarantor based upon the audited yearly or quarterly financial statements delivered pursuant to Section 9.6(a), and (b) each change in the Applicable Margin resulting from the Consolidated Fixed Charge Coverage Ratio of Parent Guarantor and its Subsidiaries shall be effective during the period commencing on and including the first day of the month immediately following the date of delivery to Agent of such financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change, provided that the Consolidated Fixed Charge Coverage Ratio shall be deemed to be in Tier I at the option of Agent or at the request of the Required Lenders if Parent Guarantor fails to deliver the audited yearly or quarterly financial statements required to be delivered by it pursuant to Section 9.6(a) hereof, during the period from the expiration of the time for delivery thereof until such financial statements are delivered.  If any such financial statements overstate the Consolidated Fixed Charge Coverage Ratio, and if as a result of such overstatement, the interest and fees charged hereunder are less than what would have been charged had such financial statements accurately stated the Consolidated Fixed Charge Coverage Ratio, then Borrowers shall be responsible for the difference between the interest and fees charged as result of such overstatement and what would have been charged had such financial statements accurately stated the Consolidated Fixed Charge Coverage Ratio, and shall pay the amount of such difference to Agent upon its demand therefor.”

 

  

2

  

 

c.           The definition of “Borrowing Base” set forth in Section 1.17 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“1.17  “Borrowing Base” shall mean, at any time, the sum of:

(a)           the amount equal to the lesser of:  (i) eighty-five (85%) of the Eligible Accounts of Borrowers, minus Reserves relating to Accounts, or (ii) the Accounts Sublimit; plus

(b)           the amount equal to the lesser of:  (i)(A) the product of (I) seventy percent (70%) times (II) the “net forced liquidation value” of the Eligible Equipment of Borrowers as defined in the most recent appraisal of Equipment then received by Agent in accordance with Section 7.4 hereof, minus (B) Reserves relating to Equipment, or (ii) the Equipment Sublimit; minus

(c)           $5,000,000; minus

(d)           Reserves other than those set forth in Sections 1.17(a) or (b) hereof and actually applied.”

d.           The definition of “Commitment” set forth in Section 1.28 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“1.28  “Commitment” shall mean, at any time, as to each Lender, the principal amount set forth below designated as the Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Commitments”:

	
Lender

	
Commitment

	
Wachovia Capital Finance Corporation (Western)

	$	45,000,000

 

  

3

  

 

e.           The definition of “Equipment Sublimit” set forth in Section 1.49 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“1.49 “Equipment Sublimit” shall mean (i) until the later to occur of (1) July 31, 2010, and (2) such time as Agent completes its due diligence with respect the Equipment, the results of which are satisfactory to Agent, $16,033,850.00, and (ii) at all times thereafter, the amount set forth on Schedule 1.49 with respect to the period set forth opposite such amount.”

Agent will endeavor in good faith to complete its due diligence with respect to the Equipment by July 31, 2010.

f.           Schedule 1.49 to the Loan Agreement is hereby amended and restated to read in its entirety to read as attached to this Amendment.

g.           The definition of “Maximum Credit” set forth in Section 1.94 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“1.92 “Maximum Credit” shall mean the amount equal to $45,000,000, as reduced by any reduction thereof pursuant to Section 2.1(c) hereof.”

h.           Clauses (a) and (b) of Section 3.2 of the Loan Agreement are hereby amended and restated to read in their entirety as follows:

“(a)          Borrowers shall pay to Agent, for the account of Lenders, monthly, an unused line fee at a rate of .50% per annum, calculated upon the amount by which Maximum Credit exceeds the average daily principal balance of the outstanding Loans and Letters of Credit during the immediately preceding month (or part thereof) while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears.

 

  

4

  

 

(b)           In the case of letters of credit, Borrowers shall pay to Agent, for the account of Lenders, a fee at a rate per annum equal to the then in effect “Eurodollar Spread” as determined in the definition of Applicable Margin on the average daily maximum amount available to be drawn under such Letters of Credit for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month, computed for each day from the date of issuance to the date of expiration; except that Borrowers shall pay, at Agent’s option, without notice, such fee at a rate two percent (2%) greater than the otherwise applicable rate on such average daily maximum amount for:  (i) the period from and after the date of termination hereof until Lenders have received full and final payment of all Obligations (notwithstanding entry of a judgment against any Borrower or Guarantor) and (ii) the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing as determined by Agent.  Such letter of credit fees shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligations of Borrowers to pay such fee shall survive the termination of this Agreement.  In addition to the letter of credit fees provided above, Borrowers shall pay to the issuer of any Letter of Credit a fronting fee at a rate equal to one-eighth of one percent (0.125%) per annum on the undrawn face amount of such Letter of Credit, as well as the customary charges from time to time of such issuer with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit.”

 

i.           Section 6.3(d) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“(d)           Notwithstanding the foregoing in this Section 6.3, Agent shall exercise control over the Blocked Accounts and shall be entitled to receive payments on and/or proceeds of Accounts only in the event that (i) Borrowers’ Excess Availability plus Qualified Cash shall be less than $10,000,000 or (ii) an Event of Default has occurred and is continuing.  Following any exercise of control by Agent over the Blocked Accounts pursuant to clause (i) of this Section 6.3(d), Agent shall relinquish control over the Blocked Accounts if at all times during a period thereafter of ninety (90) calendar days Borrowers’ Excess Availability plus Qualified Cash shall be equal to or greater than $10,000,000.”

j.           Section 7.4(g)(a) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“(a) upon Agent’s request, Borrowers and Guarantors shall, at their expense, no more than (i) one (1) time in any twelve (12) month period, but at any time or times as Agent may request on or after an Event of Default has occurred and is continuing, deliver or cause to be delivered to Agent written full appraisals as to the Equipment and (ii) one (1) time in any six (6) month period, but at any time or times as Agent may request on or after an Event of Default has occurred and is continuing, deliver or cause to be delivered to Agent desktop appraisals as to the Equipment, each such full and desktop appraisal to be in form, scope and methodology reasonably acceptable to Agent and by an appraiser reasonably acceptable to Agent, addressed to Agent and upon which Agent is expressly permitted to rely; without limiting in any way the foregoing in this clause (a), Agent, at its expense, shall have the right to have such an appraiser, at any time, perform such additional appraisals as to the Equipment;”

 

  

5

  

k.           Section 9.11(g) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“(g)  Parent Guarantor may repurchase any of its Indebtedness arising under the Senior Notes; provided that at the time of such repurchase and after giving effect thereto, (A) no Default or Event of Default shall have occurred and be continuing, (B) Borrowers’ Excess Availability plus Qualified Cash shall not be less than $25,000,000 after giving effect to the purchase of the Senior Notes; and (C) Borrowers’ Excess Availability plus Qualified Cash shall be projected, to Agent’s reasonable satisfaction, to be $25,000,000 or more for 60 consecutive days following the consummation of such repurchase.”

l.           Section 9.18 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“If the sum of Excess Availability plus Qualified Cash is at any time during any fiscal quarter (beginning with the fiscal quarter ending September 30, 2008) less than $10,000,000, Parent Guarantor and its Subsidiaries (other than any Excluded Subsidiaries) shall earn, on a consolidated basis and determined as of the last day of such fiscal quarter, Consolidated EBITDA of not less than $35,000,000 during the four (4) fiscal quarters then ended.”

m.           Section 9.22(f)(ii) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“(ii) a per diem charge at Agent’s then standard rate for Agent's examiners in the field and office (which rate as of the date hereof is $1,000.00 per person per day);”

 

  

6

  

n.           Section 13.1(a) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“This Agreement and the other Financing Agreements shall continue in full force and effect for a term ending on the date September 19, 2014 (the “Maturity Date”), unless sooner terminated pursuant to the terms hereof.  Borrowers may terminate this Agreement at any time upon ten (10) Business Days' prior written notice to Agent (which notice shall be irrevocable); provided, that this Agreement and all other Financing Agreements must be terminated simultaneously.   In addition, Agent may terminate this Agreement at any time that an Event of Default has occurred and is continuing.  In addition, Agent may terminate this Agreement effective September 5, 2011 upon written notice to Borrowers if, on or before September 1, 2011, one of the following has not occurred: (i) all Senior Notes have had their maturity date extended beyond December 19, 2014, on terms and conditions satisfactory to Agent; (ii) all of the Senior Notes which are due prior to the Maturity Date have been paid in accordance with the terms of this Agreement; or (iii) Borrowers deposit into a deposit account under the sole control of Agent pursuant to a Deposit Account Control Agreement, an amount at least equal to the then current outstanding balance of the Senior Notes due prior to the Maturity Date as of the date of such deposit.  Upon the Maturity Date or any other effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash collateral to Agent (or at Agent’s option, a letter of credit issued for the account of Borrowers and at Borrowers’ expense, in form and substance satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts as Agent determines are reasonably necessary to secure Agent and Lenders from loss, cost, damage or expense, including reasonable attorneys' fees and expenses, in connection with any contingent Obligations that are known or ascertainable or that are likely to ripen, including issued and outstanding Letter of Credit Obligations and checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final and indefeasible payment and any continuing obligations of Agent or any Lender pursuant to any Deposit Account Control Agreement.  The amount of such cash collateral (or letter of credit, as Agent may determine) as to any Letter of Credit Obligations shall be in the amount equal to one hundred two percent (102%) of the amount of the Letter of Credit Obligations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of the Letters of Credit giving rise to such Letter of Credit Obligations.  Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in Federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Borrowers for such purpose.  Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 12:00 noon, Pasadena, California time.”

 

  

7

  

o.           Section 13 of the Loan Agreement is hereby amended by inserting the following new clause (c):

“(c)           If for any reason this Agreement is terminated prior to the Maturity Date, in view of the impracticality and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of Agent’s and Lenders’ lost profits as a result thereof, Borrowers agree to pay to Agent, for the pro rata benefit of the Lenders, upon the effective date of such termination, an early termination fee in the amount set forth below if such termination is effective in the period indicated:

	
Amount

	
Period

	
One percent (1.00%) of the Maximum Credit

	
From the date hereof to and including June 30, 2011

	
One-half percent (0.50%) of the Maximum Credit

	
From June 30, 2011 to and including June 30, 2012

	
Zero percent (0.00%) of the Maximum Credit

	
From June 30, 2012 to the Maturity Date

Such early termination fee shall be presumed to be the amount of damages sustained by Agent and Lenders as a result of such early termination and Borrowers agree that it is reasonable under the circumstances currently existing.  In addition, Agent and Lenders shall be entitled to such early termination fee upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.(h) hereof, even if Agent and Lenders do not exercise their right to terminate this Agreement, but elects, at its option, to provide financing to Borrowers or permit the use of cash collateral under the United States Bankruptcy Code.  The early termination fee provided for in this Section 13.1 shall be deemed included in the Obligations.

2.           Effectiveness of this Amendment.  The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

a.           Appraisals.  Agent shall have received an updated written appraisal of the Equipment (i) in form, scope and methodology reasonably acceptable to Agent, (ii) from an appraiser reasonably acceptable to Agent, (iii) addressed to Agent and (iv) upon which Agent is expressly permitted to rely.

b.           Amendment.  Agent shall have received this Amendment, fully executed by Borrowers, Guarantor, Agent and Lenders in a sufficient number of counterparts for distribution to all parties.

c.           Accommodation Fee.  Agent shall have received, for the ratable benefit of Lenders, a non-refundable accommodation fee in the amount of $225,000, which fee is fully earned as of and due and payable on the date hereof.

d.           Representations and Warranties.  The representations and warranties set forth herein and in the Loan Agreement must be true and correct.

e.           Other Required Documentation.  All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be inform and substance satisfactory to Agent.

 

  

8

  

3.           Conditions Subsequent.

a.      Not later than December 31, 2010, Borrowers will maintain Wells Fargo Bank, N.A. as their principal depository bank, including for the maintenance of operating, administrative, cash management, collection activity, and other deposit accounts for the conduct of its business.

4.           Representations and Warranties.  Each Borrower and Guarantor represents and warrants as follows:

a.           Authority.  Each Borrower and Guarantor have the requisite company power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Financing Agreements (as amended or modified hereby) to which it is a party.  The execution, delivery and performance by each Borrower and Guarantor of this Amendment have been duly approved by all necessary company action and no other company proceedings are necessary to consummate such transactions.

b.           Enforceability.  This Amendment has been duly executed and delivered by each Borrower and Guarantor.  This Amendment and each Financing Agreement (as amended or modified hereby) are the legal, valid and binding obligation of each Borrower and Guarantor, enforceable against each Borrower and Guarantor in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or similar laws limiting creditors’ rights generally or by general equitable principles, and are in full force and effect.

c.           Representations and Warranties.  The representations and warranties contained in each Financing Agreement (other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof) are correct on and as of the date hereof as though made on and as of the date hereof.

d.           Due Execution.  The execution, delivery and performance of this Amendment are within the power of each Borrower and Guarantor, have been duly authorized by all necessary company action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restrictions binding on any Borrower or Guarantor.

e.           No Default.  No event has occurred and is continuing that constitutes an Event of Default.

5.           Choice of Law.  The validity of this Amendment, its construction, interpretation and enforcement, the rights of the parties hereunder, shall be determined in accordance with the internal laws of the State of California governing contracts only to be performed in that State.

 

  

9

  

6.           Counterparts.  This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

7.           Capitalized terms not express defined elsewhere in this Amendment have the meanings set forth in the Loan Agreement.

8.           Reference to and Effect on the Financing Agreements.

a.      Upon and after the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Financing Agreements to “the Loan Agreement”, “thereof”, or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as modified and amended hereby.

b.      Except as specifically amended above, the Loan Agreement and all other Financing Agreements, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

c.      The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Financing Agreements, nor constitute a waiver of any provision of any of the Financing Agreements.

d.      To the extent that any terms and conditions in any of the Financing Agreements shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Loan Agreement as modified or amended hereby.

 

  

10

  

 

9.             Estoppel.  To induce Agent and Lenders to enter into this Amendment and to induce Agent and Lenders to continue to make advances to Borrowers under the Loan Agreement, each Borrower and Guarantor hereby acknowledges and agrees that, after giving effect to this Amendment, as of the date hereof, there exists no Default or Event of Default and no right of offset, defense, counterclaim or objection in favor of any Borrower or Guarantor as against Agent or any Lender with respect to the Obligations.

 

10.           Integration.  This Amendment incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

11.           Severability.  In case any provision of this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

[Remainder of Page Intentionally Left Blank]

 

 

 

  

11

  

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

 

	 	
JAZZ SEMICONDUCTOR, INC.,

	 	
as a Borrower

	 	  
	 	
By:  /s/ SUSANNA BENNETT

	 	
       Name:  Susanna Bennett

	 	
       Title: CFO and VP HR

	 	  
	 	  
	 	
NEWPORT FAB, LLC,

	 	
as a Borrower

	 	  
	 	
By:  /s/ SUSANNA BENNETT

	 	
       Name: Susanna Bennett

	 	
       Title:  CFO and VP HR

	 	  
	 	 
	 	
JAZZ TECHNOLOGIES, INC.,

	 	
as a Guarantor

	 	  
	 	
By:  /s/ SUSANNA BENNETT

	 	
       Name:  Susanna Bennett

	 	
       Title:  CFO and VP HR

	 	  
	 	  
	 	
WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN),

	 	
as Agent and a Lender

	 	  
	 	
By:  /s/ DENNIS KING

	 	
       Name:  Dennis King

	 	
       Title:  Vice President

 

  

12

  

 

SCHEDULE 1.49

TO

FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Equipment Sublimit

 

	 	  Equipment Sublimit	 	
Period

	 	 	 	 	 
	1.	 	$21,000,000.00	 	
July 1, 2010 to September 30, 2010

	2.	 	$20,500,000.00	 	
October 1, 2010 to December 31, 2010

	3.	 	$20,000,000.00	 	
January 1, 2011 to March 31, 2011

	4.	 	$19,500,000.00	 	
April 1, 2011 to June 30, 2011

	5.	 	$19,000,000.00	 	
July 1, 2011 to September 30, 2011

	6.	 	$18,500,000.00	 	
October 1, 2012 to December 31, 2012

	7.	 	$18,000,000.00	 	
January 1, 2012 to March 31, 2012

	8.	 	$17,500,000.00	 	
April 1, 2012 to June 30, 2012

	9.	 	$17,000,000.00	 	
July 1, 2012 to September 30, 2012

	10.	 	$16,500,000.00	 	
October 1, 2012 to December 31, 2012

	11.	 	$16,000,000.00	 	
January 1, 2013 to March 31, 2013

	12.	 	$15,500,000.00	 	
April 1, 2013 to June 30, 2013

	13.	 	$14,562,500.00	 	
July 1, 2013 to September 30, 2013

	14.	 	$13,625,000.00	 	
October 1, 2013 to December 31, 2013

	15.	 	$12,687,500.00	 	
January 1, 2014 to March 31, 2014

	16.	 	$11,750,000.00	 	
April 1, 2014 to June 30, 2014

	17.	 	$10,812,500.00	 	
July 1, 2014 to Maturity Date

 

13

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