Document:

EXHIBIT 10.1

 

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE
SERURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

SETTLEMENT AGREEMENT

This Settlement Agreement (“Settlement Agreement”) is entered into as of July 31, 2007
(the “Effective Date”) by and between TC
Group, L.L.C., as the Stockholder’s Representative under the Merger Agreement
(as defined below) (the “Stockholders’
Representative”), and Jazz Technologies, Inc., a Delaware
corporation formerly known as Acquicor Technology Inc. (“Jazz”),
together with its affiliates and subsidiaries (the Stockholders’ Representative
and Jazz are each referred to as a “Party” or
collectively as the “Parties”).

WHEREAS, Jazz and the
Stockholders’ Representative are each party to that certain Merger Agreement by
and among Jazz, Joy Acquisition Corp., a Delaware corporation, Jazz
Semiconductor, Inc., a Delaware corporation (“Target”)
and the Stockholders’
Representative dated as of September 26, 2006 (the “Merger Agreement”) pursuant to which Jazz acquired
Target in a merger;

WHEREAS, unless separately defined within this
Settlement Agreement or otherwise indicated,
all capitalized terms used herein shall have the meaning given to such
terms in the Merger Agreement;

WHEREAS, pursuant to and in
accordance with the terms of Merger Agreement, $20,000,000
has been deposited into the Indemnity Escrow Fund and, to date, no amount has been
released from the Indemnity Escrow Fund;

WHEREAS, pursuant to and in
accordance with the terms of the Merger Agreement, $4,000,000 has
been deposited into the Working Capital Adjustment Escrow Fund and, to date, no
amount has been released from the Working Capital Adjustment Escrow Fund;

WHEREAS, pursuant to and in accordance with the terms of
the Merger Agreement, $3,884,291 has been deposited into the Company Retention
Bonus Escrow Fund; and

WHEREAS the Parties wish to settle any and all
disputes that have arisen between them that arise out of, are connected with or
relate to the Merger Agreement, including, without limitation, whether Jazz has
legitimate indemnification claims pursuant to Section 9 of the Merger
Agreement, whether Jazz is entitled to amounts remaining in the Indemnity
Escrow Fund or Working Capital Adjustment Escrow Fund and whether certain
payroll taxes payable, or to become payable, in connection with compensatory
payments made or to be made to current or former employees of Jazz or Target
are for the account of Jazz or Escrow Participants under the Merger Agreement.

NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby agree as follows:

 

 

 

1.                   Release of Indemnity Escrow Fund and Working Capital Adjustment Escrow
Fund.  Concurrently with the execution of this Agreement by the Stockholders’ Representative and Jazz, the Stockholders’
Representative and Jazz shall provide the Escrow Agent with executed joint instructions in the form attached
hereto as Exhibit A (the “Joint
Instructions”) providing for the release of all amounts, including
interest accrued thereon, remaining in the Indemnity Escrow Fund and the
Working Capital Adjustment Escrow Fund as follows:

(a)                                       any amounts due and payable by the Parties to the Escrow Agent in accordance with the terms of the Escrow Agreement through the date of
such release, shall be released and paid to the Escrow Agent;

(b)                                      $9,230,617
shall be released and paid to Jazz and, in consideration of the release by Jazz
provided herein, Jazz shall be entitled to retain such amount;

(c)                                       $129,662 shall
be released from the Working Capital Escrow Fund and deposited into the Company
Retention Bonus Escrow Fund; and

(d)                                      the aggregate
remaining balance shall be released and paid to each of the Escrow Participants
in an amount shown opposite such Escrow Participant’s name in the Joint
Instructions, and Jazz shall not be entitled to recover or make any claims
against such amounts released to the Escrow Participants.

2.                                       Treatment of Payroll Tax Amounts. The
Parties hereby agree that all Tax amounts
payable by an employer as a result of compensatory payments made to employees or
former employees of Jazz or Target, including payments made pursuant to the Company Retention Bonus Plan or the Company
Special Retention Bonus Plan prior to the date hereof shall be paid by
Jazz, in accordance with and as required by Law. The Parties further agree that
all Tax amounts payable by an employer as a result of compensatory payments
made to employees or former employees of Jazz
or Target pursuant to the Company Retention Bonus Plan or the Company
Special Retention Bonus Plan on or after the
date hereof shall be paid by Jazz, in accordance with and as required by
Law but shall be reimbursable to Jazz from the Company Retention Bonus Escrow
Fund.

3.                                       [ * ]
Retention Bonus Payment. The Parties agree that in
the event Jazz reaches a [ * ] in
connection with [ * ] prior to December 31, 2007, Jazz shall be entitled to cause amounts
remaining in the Company Retention Bonus Escrow Fund (to the extent those amounts relate to [ * ])
to, notwithstanding anything to the contrary set forth in the Company Special
Retention Bonus Plan or the Company Retention Bonus Plan and [ * ] under the express
terms of such plans, be paid [ * ]. In the
event that [ * ], the terms of the
Company Special Retention Bonus Plan, the Company Retention Bonus Plan, the
Merger Agreement and the Escrow Agreement relating to such payments shall
remain in full force and effect.

4.                                       Payment to [ * ]. The
Parties agree that the amount of $[ * ] due and owing to [ * ]
(collectively “[ * ]”) as a result of services provided
by [ * ] to Target or Jazz or any of their
Subsidiaries, shall be promptly paid by Jazz
and that the Escrow Participant Released
Parties (as defined below) shall have no obligation or liability in
respect of such amount.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

 

 

5.                                       Release by
Jazz.

(a) Jazz, on behalf of itself
and on behalf of its predecessors, successors, assigns and Affiliates (the “Jazz
Releasing Parties”), hereby generally releases and forever discharges the
Escrow Participants (including, without limitation, Carlyle Partners III, L.P.,
Carlyle High Yield Partners, L.P., CP III Coinvestment, L.P., Conexant Systems,
Inc. and RF Micro Devices, Inc.), the Stockholders’ Representative, and each of
their and Target’s respective past and present agents, representatives,
stockholders, members, officers, directors, managers, attorneys, employers,
employees, servants, assigns, subsidiaries, divisions, affiliates, partners,
partnerships, parent companies, immediate family members, spouses, insurers,
and predecessor or successor companies, and the officers, directors, employees,
agents, heirs, executors, administrators, and assigns of each of these (the “Escrow
Participant Released Parties”), from any and all claims,
demands, rights, suits, liens, obligations, damages, liabilities, and causes of
action, known or unknown, suspected or unsuspected:

(i)                                          from the beginning of time through the end of the Effective Date to the
extent such claims, demands, or causes of action arise out of, are connected with or relate to the Merger Agreement, documents
and agreements delivered in connection
with the Merger Agreement or the transactions contemplated by the Merger Agreement or such documents or agreements,
including pursuant to Section 9 thereunder;

(ii)                                       arising on or
after the Effective Date to the extent such claims,
demands or causes of action arise out of, are connected with or relate to a
breach of representation or warranty by Target or the Escrow Participant
Released Parties under the Merger Agreement or any document or agreement
delivered in connection with the Merger
Agreement or the transactions contemplated by the Merger Agreement or any covenant
or agreement to be performed prior to the Effective Date; and

(iii)                                    arising out of fraud or any claim that Jazz or its Affiliates were defrauded
in connection with the Merger Agreement, any document, agreement, verbal
information or lack of information delivered in connection with the Merger
Agreement, the transactions contemplated by the Merger Agreement or any
document, agreement verbal information or lack of information delivered in
connection with the Merger Agreement,
including any claim that Jazz or its Affiliates were induced to enter into
the Merger Agreement or any such document or agreement on the basis of any
fraudulent statement or omission.

(b)                                      Jazz acknowledges that it
may hereafter discover facts or other information different from or in addition
to those now known or believed to be true and agree that this Settlement
Agreement shall remain in full force and effect, notwithstanding the potential
existence of such different or additional facts.

(c)                                       Jazz acknowledges that it
has been advised regarding the effect of California Civil Code Section 1542,
which provides as follows:

 

 

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.”

Jazz having been so advised, agrees that the
provisions of California Civil Code section
1542 and all similar federal or state laws, rights, rules and legal principles of any other jurisdiction or political subdivision
which may be applicable hereto, to the extent
they apply to any of the matters relating released herein, ARE KNOWINGLY AND VOLUNTARILY WAIVED AND RELINQUISHED BY JAll ON
BEHALF OF ITSELF AND ITS AFFILIATES,
in each and every capacity, to the fullest extent possible, and Jazz, on
behalf of its self and its Affiliates, FURTHER AGREES AND ACKNOWLEDGES that
this waiver is an essential term of the release set forth in this Agreement,
without which the Stockholders’ Representative would not have entered into this
Agreement.

(d)                                      Jazz hereby represents and warrants, on behalf of itself and each of its Affiliates,
that neither it, nor they have made any assignment or other transfer of any
interest in any claims which Jazz or any of its Affiliates has or may have had
against the Escrow Participant Released Parties, and Jazz agrees to indemnify
and hold the Escrow Participant Released
Parties harmless from any liability, claims, demands, damages, costs, expenses and attorneys’ fees incurred by
them as a result of any Person asserting any such assignment or
transfer. It is the intention of Jazz that this indemnity does not require
payment as a condition precedent to recovery by any Escrow Participant Released
Party under this indemnity.

(e)                                       Jazz hereby
agrees to indemnify the Escrow Participant Released Parties, and defend and hold the Escrow Participant Released Parties from
and against any liability, loss, cost, and expense whatsoever (including
attorneys’ fees) incurred as a direct or indirect result of any lawsuit or
other proceeding commenced on any claim released pursuant to this Settlement
Agreement.

 

6.                                       Release by Escrow Participants.

(a) The Stockholders’
Representative, on behalf of itself and each Escrow Participant that is an
Affiliate of the Stockholders’ Representative (and each other Escrow
Participant to the extent it is entitled to bind such Escrow Participant in
accordance with the terms of Section 10 of the Merger Agreement) and each of
their respective predecessors, successors, assigns and Affiliates (to the same
extent as such Escrow Participant) (collectively, the “Escrow Participant
Releasing Parties”), hereby generally releases and forever discharges Jazz and
its past and present agents, representatives, stockholders, members, officers,
directors, managers, attorneys, employers, employees, servants, assigns,
subsidiaries, divisions, affiliates, partners, partnerships, parent companies,
immediate family members, spouses, insurers, and predecessor or successor
companies, and the officers, directors, employees, agents, heirs, executors,
administrators, and assigns of each of these (the
“Jazz Released Parties”), from any and
all claims, demands, rights, suits, liens, obligations, damages, liabilities, and
causes of action, known or unknown, suspected or unsuspected:

 

 

 

(i)                                          from the
beginning of time through the end of the Effective Date to the extent such claims, demands, or causes of action arise out
of are connected with or relate to
the Merger Agreement, documents and agreements delivered in connection with the Merger Agreement or the
transactions contemplated by the Merger Agreement or such documents or agreements, including pursuant to
Section 9 thereunder;

(ii)                                       arising on or after the Effective Date to the extent such claims, demands
or causes of action arise out of, are connected with or relate to a breach of representation or warranty by the Parent, Merger
Sub or any of the Jazz Released Parties under the Merger Agreement or any
document or agreement delivered in connection
with the Merger Agreement or the transactions contemplated by the Merger Agreement or any covenant or agreement to be
performed prior to the Effective Date; and

(iii)                                    arising out of
fraud or any claim that any of the Escrow Participants were defrauded in
connection with the Merger Agreement, any document, agreement, verbal
information or lack of information delivered in connection with the Merger
Agreement, the transactions contemplated by the Merger Agreement or any
document, agreement verbal information or lack of information delivered in
connection with the Merger Agreement,
including any claim that any of the Escrow Participants were induced to enter into the Merger Agreement or any
such document or agreement on the basis of any fraudulent statement or
omission.

(b)                                      Stockholders’ Representative acknowledges that it may hereafter discover facts
or other information different from or in addition to those now known or believed to be true and agree that this Settlement
Agreement shall remain in full force and
effect, notwithstanding the potential existence of such different or additional
facts.

 

(c)                                       Stockholders’ Representative acknowledges that it has been advised
regarding the effect of California Civil Code Section 1542, which provides as
follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

Stockholders’ Representative having been so advised,
agrees on its behalf and behalf of the
Escrow Participant Releasing Parties that the provisions of California Civil Code section 1542 and all similar federal or
state laws, rights, rules and legal principles
of any other jurisdiction or political subdivision which may be applicable hereto,
to the extent they apply to any of the matters relating released herein, ARE
KNOWINGLY AND VOLUNTARILY WAIVED AND RELINQUISHED BY STOCKHOLDERS’ REPRESENTATIVE
ON BEHALF OF ITSELF AND THE ESCROW PARTICIPANT RELEASING PARTIES, in each and every capacity, to the fullest extent
possible, and Stockholders’ Representative, on behalf of itself and each of the
Escrow Participant Releasing Parties,
FURTHER AGREES AND ACKNOWLEDGES that
this waiver is an essential term of the release set forth in this Agreement,
without which Jazz would not have

 

 

 

entered into this Agreement.

(d)                                      Stockholders’ Representative hereby represents and warrants that it has not made
any assignment or other transfer of any interest in any claims which Stockholders’ Representative has or may have had
against the Jazz Released Parties, and Stockholders’ Representative
agrees to indemnify and hold the Jazz Released Parties harmless from any liability, claims, demands, damages, costs, expenses
and attorneys’ fees incurred by them as a result of any Person asserting
any such assignment or transfer. It is the intention of Stockholders’
Representative that this indemnity does not require payment as a condition precedent to recovery by any Released Party under
this indemnity.

(e)                                       Stockholders’
Representative hereby agrees to indemnify the Jazz Released Parties, and defend
and hold the Jazz Released Parties from and against any liability, loss, cost, and expense whatsoever (including attorneys’ fees)
incurred as a direct or indirect result of any lawsuit or other
proceeding commenced on any claim released by Stockholders’ Representative
pursuant to this Settlement Agreement.

7.                   Survival of Merger Agreement Terms.
Except as set forth in this Settlement Agreement, including the release
provided herein, the terms of the Merger Agreement, including, without
limitation, the provisions of Section 1.8, 1.12, 5.10, 5.14, 5.19, 9.8 and 10,
excluding any indemnification obligations contained therein, shall not be
modified or altered and shall continue in full force and effect and Jazz shall
promptly satisfy its obligations thereunder in accordance with the terms of the
Merger Agreement.

 

8.                                     Claims Not Released. Notwithstanding
the provisions of Sections 5 and 6 of this Settlement Agreement, it is not the
intention of the parties to release any claims, rights, debts, liabilities,
demands, obligations, promises, damages, causes of action and claims for relief
of whatever kind or nature, known or unknown, that any of the Jazz Releasing
Parties may have against any of the Escrow Participant Released Parties or that
any of the Escrow Participant Releasing Parties may have against any of the
Jazz Released Parties that do not arise out of, are not connected with or do
not relate to the Merger Agreement. In addition, the releases shall not release
any rights or claims between Jazz, on the one hand, and Conexant Systems, Inc.
or RF Micro Devices, Inc., on the other hand, or between Jazz or Jazz
Semiconductor, Inc., on the one hand, and current or former employees of Jazz
or Jazz Semiconductor, Inc, on the other hand, arising out of, in connection
with or relating to their continuing obligations under the following Agreements:

a)         Half
Dome Lease Agreement between Specialtysemi, Inc. and Conexant Systems, Inc.
dated March 12, 2002 as amended by the First Amendment to the Half Dome Lease
Agreement between Newport Fab, LLC and Conexant Systems, Inc. dated May 1,
2004, by the Second Amendment to the Half Dome Lease Agreement between Newport
Fab, LLC and Conexant Systems, Inc. dated December 31, 2005 and by the Third
Amendment to the Half Dome Lease Agreement between Newport Fab, LLC and
Conexant Systems, Inc. dated September 26, 2006.

 

 

 

b)        El
Capitan Lease Agreement between Specialtysemi, Inc. and Conexant Systems, Inc.
date March 12, 2002 as amended by the First Amendment to the El Capitan Lease
Agreement between Newport Fab, LLC and Conexant Systems, Inc. dated October 1,
2004, by the Second Amendment to the El Capitan Lease Agreement between Newport
Fab, LLC and Conexant Systems, Inc. dated November 31, 2005 and by the Third
Amendment to the El Capitan Lease Agreement between Newport Fab, LLC and
Conexant Systems, Inc. dated September 1, 2006 and by the Fourth Amendment to
El Capitan Lease Agreement between Newport Fab, LLC and Conexant Systems, Inc.
dated September 26, 2007.

c)         Contribution
Agreement among Specialtysemi, Inc., Conexant Systems, Inc. and Carlyle Capital
Investors, L.L.C. dated February 23, 2002, as amended by First Amendment to
Contribution Agreement between Specialtysemi, Inc., Conexant Systems, Inc. and
Carlyle Capital Investors, L.L.C. dated March 12, 2002 and Second Amendment to
Contribution Agreement dated July 1, 2002 among Jazz Semiconductor, Inc.,
Conexant Systems, Inc., Carlyle Partners III L.P., CP III Coinvestment, L.P.
and Carlyle High Yield Partners, L.P. and Third Amendment to Contribution
Agreement dated September 1, 2003 among Jazz Semiconductor, Inc., Conexant
Systems, Inc., Carlyle Partners III L.P., CP III Coinvestment, L.P. and Carlyle
High Yield Partners, L.P.

d)        Newport Fab, LLC
Contribution Agreement between Conexant Systems, Inc. and Newport Fab, LLC
dated February 23, 2002.

e)         IP License Agreement between
Specialtysemi, Inc., Newport Fab, LLC and Conexant Systems, Inc. dated
March 12, 2002, as amended by First Amendment to IP License Agreement dated
July 1, 2002 between Jazz Semiconductor, Inc. and Conexant Systems, Inc.

f)           Transferred
IP License Agreement between Specialtysemi, Inc., Newport Fab, LLC and Conexant Systems, Inc. dated March 12, 2002, as amended by First
Amendment to Transferred IP License Agreement
dated July 1, 2002 among Jazz Semiconductor, Inc., Conexant Systems,
Inc. and Newport Fab, LLC.

g)        Guarantee between Specialtysemi, Inc. and Conexant Systems, Inc. dated March 12, 2002.

h)        Wafer
Supply and Services Agreement between Specialtysemi, Inc. and Conexant Systems, Inc. dated March 30, 2002, as amended by First Amendment to Wafer
Supply and Services Agreement between Jazz Semiconductor, Inc. and Conexant
Systems, Inc. dated July 1, 2002.

i)            Wafer Supply Agreement between Newport Fab, LLC and RF Micro Devices, Inc.
dated October 15, 2002.

j)            Master
Joint Technology Development Agreement between Newport Fab, LLC and RF
Micro Devices, Inc. dated October 15,
2002.

 

 

 

k) License Agreement between Jazz Semiconductor,
Inc. and Conexant Systems, Inc. dated as of July 2, 2004.

1) Wafer Supply Termination Agreement by and
between Jazz Semiconductor, Inc. and Conexant Systems, Inc., dated as of
June 26, 2006.

m) Any and all agreements of any kind between Jazz or Jazz
Semiconductor, Inc., on the one hand, and
any employee(s) or former employee(s) of Jazz or Jazz Semiconductor,
Inc., on the other hand, including without limitation, employment agreements, noncompetition agreements, employee confidential
information and invention assignment agreements, stock option agreements, agreements and understandings relating to
participation in the Company Special
Retention Bonus Plan or the Company Retention Bonus Plan, and any other agreements that were entered into by any
employee or former employee in his or
her individual capacity on his or her own behalf, but excluding the Merger Agreement and documents and agreements
delivered in connection with the Merger Agreement, other than agreements
delivered in connection with the Merger
Agreement that were entered into by any employee or former employee in
his or her individual capacity on his or her own behalf.

n) Any claim under Section 1.8 of the Merger Agreement.

9.                                       Assignment. None of the
obligations under this Settlement Agreement may be assigned by a Party
to any third party unless specifically agreed to in writing by the other Party.

10.                                 Waiver. The failure or delay by any
Party to exercise any rights under this Settlement Agreement shall not operate
as a waiver of any rights under this Settlement Agreement.
The Parties may affirmatively waive rights under this Settlement Agreement, but to be effective, such waiver must be in writing and
signed by the Party to be bound thereby.

11.                                 Governing Law. This Settlement
Agreement and any claim or controversy arising out of or relating
to this Settlement Agreement, shall be governed by the laws of the State of California without regard to conflict
of law principles that would result in the application of any law other
than the State of California.

12.                                 Currency. All payments made pursuant to this Settlement Agreement shall be in U.S. dollars.

13.                                 Cumulative Remedies. All
rights and remedies of either Party are cumulative of each other and
of every other right or remedy such Party may otherwise have at law or in
equity, and the exercise of one or more rights or remedies shall not prejudice
or impair the concurrent or subsequent exercise of other rights or remedies.

14.                                 Representation by Counsel. The Parties  hereto  acknowledges  that  they are each represented by counsel of their
choice and that they have had adequate opportunity to consult with counsel prior to signing this Agreement. The Parties
have carefully reviewed the terms of this Settlement Agreement and fully
understand its contents. The Parties agree
that this Settlement Agreement shall be treated as having been drafted by both
Parties, with no presumption or interpretation against either Party as the
drafter of this Settlement Agreement.

 

 

 

15.                               Representations and Warranties. Each of
the Parties represents, warrants, and
agrees as follows:

(a)                                  Such Party has
all requisite power and authority to enter into this Settlement Agreement and
to perform its obligations hereunder.

(b)                                 All action on the part of such Party necessary for the authorization, execution and
delivery of this Settlement Agreement and the consummation of the transactions contemplated hereby (including, with
respect to Jazz, action by the board of directors of Jazz), has been duly taken. This Settlement Agreement
constitutes the legal, valid and binding obligation of such Party, enforceable
against such Party in accordance with its terms.

 

(c)                                       Such Party has received prior independent legal advice from legal counsel of such Party’s choice with respect to the advisability of
making the settlement provided for in this Settlement
Agreement and with respect to the advisability of executing
this Settlement Agreement. Such Party’s attorney has reviewed the Settlement Agreement at
length and made any desired changes.

(d)                                      In executing this Settlement Agreement such Party has relied solely on the statements expressly set forth herein. Such Party further
represents, warrants, and agrees that in
executing this Settlement Agreement it has placed no reliance whatsoever on
any statement, representation or promise of any other Party or any other
Person, not expressly set forth herein, or upon the failure of any other Party
or any other Person to make any statement, representation or disclosure of
anything whatsoever. This clause shall: (i)
preclude any claim that any Party was in any way fraudulently induced to execute this Settlement Agreement; and (ii)
preclude the introduction of parol evidence to vary, interpret,
supplement, or contradict the terms of this Settlement Agreement.

(e)                                       Such Party has read this Settlement Agreement carefully, knows and
understands the contents of this Settlement Agreement, and has made such
investigation of the facts pertaining to the settlement and this Settlement
Agreement and of all matters pertaining to this Settlement Agreement as such
Party deems necessary or desirable.

16.                                 Settlement of
Claims. The Parties acknowledge and covenant that this Settlement Agreement represents a settlement and
compromise of disputed claims and that by entering into this Settlement
Agreement, no Party admits or acknowledges the existence of any liability or wrongdoing, all such liability or wrongdoing
being expressly denied. No provision of this Settlement Agreement shall be
construed as an admission or concession
of any factual conclusion, status, or liability on the part of any Party or any
liability or wrongdoing or of any
preexisting liability or wrongdoing of any Party. The terms of this
Agreement are contractual, not a mere recital, and are the result of
negotiations between the Parties.

17.                                 Confidentiality. The Parties agree that, except to the
extent required to be disclosed by law
(including applicable securities laws and the rules of any stock exchange on which a Parties’ securities are
listed), the Parties will maintain in confidence the terms of Sections 3
and 4 of this Settlement Agreement, as well as any settlement negotiations,
communications, negotiating positions or legal theories relied upon by the Parties
preceding, leading to or in

 

 

 

connection with this Settlement Agreement.
Notwithstanding the foregoing, such information may be disclosed in a legal
action or proceeding to approve, interpret or
enforce this Settlement Agreement; by order of a court of competent jurisdiction; and to the Escrow Participants and the
Parties’ or Escrow Participants’
respective spouses, employees, accountants, tax or financial advisors, lenders, potential lenders, insurers, and with
respect to such professionals only to the extent necessary to permit such individuals or entities to perform
required tax, accounting, financial, legal or administrative tasks or
services, which Persons shall be directed to refrain from disclosing the
information.

 

18.                                 Third Party Beneficiaries. Each of
the Escrow Participant Released Parties and Jazz Released Parties is intended
to be a third party beneficiary of this Agreement and shall be entitled to
enforce such agreement as if such Released Party is a party hereto. Except for
the Escrow Participant Released Parties and Jazz Released Parties, nothing
expressed or implied in this Agreement is intended or shall be construed to
confer upon or give any other Person, other than the parties hereto, any right
or remedies under or by reason of this Agreement.

19.                Attorneys’ Fees. In the event that a
Party files an action or proceeding to enforce or interpret or for breach of
this Settlement Agreement, the prevailing Party in that action or proceeding
shall be entitled to recover its costs and expenses (including reasonable
attorneys’ fees).

20.               Execution and Counterparts. This
Settlement Agreement may be executed in two or more counterparts, each of which
when executed shall be deemed an original and all of which together shall
constitute a single instrument. The Parties agree that facsimile signatures
shall be deemed effective as original signatures.

 

 

 

IN WITNESS WHEREOF, each of the
Parties, has entered into this Settlement Agreement as of the date
first above written.

 

	
   

  	
  TC GROUP L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Claudius E. Watts, IV

  
	
   

  	
  Name:

  	
  Claudius E. Watts, IV

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

 

	
   

  	
  JAZZ TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gilbert F. Amelio

  
	
   

  	
  Name:

  	
  Gilbert F. Amelio

  
	
   

  	
  Title:

  	
  Chairman and CEO

  

 

 

 

 

July
31, 2007

VIA FACSIMILE & FEDERAL EXPRESS

U.S. Bank National Association

60 Livingston Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

Attention: Richard
Prokosch

Facsimile No.: (651) 495-8097

 

	
   

  	
  Re:

  	
  Escrow Instruction

  	
   

  

Dear Richard:

Reference is made to (i) that certain Escrow Agreement (“Escrow
Agreement”) made and entered into as of February 16, 2007, by and among Jazz
Technologies, Inc. (f/k/a Acquicor Technology Inc.), a Delaware corporation (“Parent”),
T.C. Group L.L.C., as representative of the Escrow Participants and for the
purposes described therein (the “Stockholders’ Representative”) (each of such
capitalized terms as defined in the Merger Agreement referenced below), and
U.S. Bank National Association, a national banking association (the “Escrow
Agent”), and (ii) that certain Agreement and Plan of Merger made and entered
into as of September 26, 2006 (the “Merger Agreement”) by and among Parent, Joy
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent
(“Merger Sub”), Jazz Semiconductor, Inc., a Delaware corporation (the “Company”)
and the Stockholders’ Representative.

Capitalized terms used in this Joint Instruction and not
defined herein shall have the meanings ascribed to such terms in the Merger Agreement.

Notwithstanding anything to the contrary set forth in the
Merger Agreement or the Escrow Agreement, each of Parent and the
Stockholders’ Representative hereby jointly instruct the Escrow Agent to
transfer $129,662 from the Working Capital Adjustment Escrow Fund to the
Company Retention Bonus Escrow Fund and to release all amounts reflected on Schedule
A attached hereto, the final amounts reflected in the wiring instructions
may vary depending on
the date of release.

Parent agrees to pay any amounts due to current or former
employee as reflected on Schedule A. Accordingly, the amounts
reflected on Schedule A as payable to Jazz employees are to be wired to
Parent.

The above
requested actions are to be taken on, July 31, 2007 or as soon as practicable
thereafter.

[Signature Page
Follows]

 

 

 

Very truly yours,

 

JAZZ TECHNOLOGIES, INC.

 

 

	
  By:

  	
   

  	
   

  
	
  Name:
  Gilbert F. Amelio

  	
   

  
	
  Title:
  Chairman and CEO

  	
   

  

TC GROUP L.L.C.

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

EXHIBIT A

JOINT ESCROW INSTRUCTIONS

 

[ * - 13 pages redacted ]

 

 

[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.Exhibit
10.3

 

FIRST
AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY

AGREEMENT

THIS FIRST AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Amendment”), dated as of September 6, 2007, 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 Operating
Company together with Jazz, collectively, the “Borrowers” and each of them individually, a “Borrower”), Jazz
Technologies, Inc , formerly known as Acquicor Technology Inc , a Delaware
corporation (“Guarantor), the parties hereto as lenders (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, LLC, in its capacity as lead
arranger, bookrunner and syndication agent, have previously entered into that certain Amended and Restated Loan and
Security Agreement dated as of February 28, 2007 (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 the Lenders amend the Loan Agreement, which Agent and the
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,
THEREF ORE, 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)                                     Section 9.11(g)(D) of the Loan Agreement
is hereby amended and restated in its entirety to read as follows:

“(D)
the aggregate amount of all such dividends, distributions and repurchases
permitted by this Section 9 11(g) shall not exceed $75,000,000 “

 

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

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

 

 

1

 

(b)                                    Accommodation Fee. Agent shall have
received, for the ratable benefit of the Lenders, a non-refundable accommodation fee in the
amount of Five Thousand Dollars ($5,000), which fee is fully earned as of and
due and payable on the date hereof’.

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

(d)                                    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 in form and substance satisfactory to Agent.

3.                                          Representations and Warranties, Each Borrower and Guarantor each
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 obligations 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.

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

5.                                          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.

6.                                          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 

 

2

 

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.

7.                                          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.

8.                                          Integration  This Amendment, together with the other Financing
Agreements, 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.

9.                                          Severability. In case any
provision in 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 Left Intentionally Blank]

 

 

3

 

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/ Paul A.
  Pittman

  
	
   

  	
  Name:

  	
  Paul A. Pittman

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  NEWPORT FAB,
  LLC,

  
	
   

  	
  as a Borrower

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Paul A.
  Pittman

  
	
   

  	
  Name:

  	
  Paul A. Pittman

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  JAZZ
  TECHNOLOGIES, INC.,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Paul A.
  Pittman

  
	
   

  	
  Name:

  	
  Paul A. Pittman

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  WACHOVIA CAPITAL
  FINANCE CORPORATION (WESTERN),

  
	
   

  	
  as Agent and a
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robin Van Meter

  
	
   

  	
  Name:  Robin
  Van Meter

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

4

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