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Exhibit 10.39  


 
 

SECOND AMENDED AND RESTATED    
    
    CARLYLE BOARD REPRESENTATION AGREEMENT    
    



        THIS SECOND AMENDED AND RESTATED CARLYLE BOARD REPRESENTATION AGREEMENT (this "Agreement") is effective as of
October 15, 2002, by and among Carlyle Partners III, L.P., a Delaware limited partnership ("CP III"), CP III Coinvestment, L.P., a Delaware
limited partnership ("Coinvestment"), Carlyle High Yield Partners, L.P., a Delaware limited partnership ("High Yield
Partners" and, collectively with CP III and Coinvestment, "Carlyle"), Conexant Systems, Inc., a Delaware corporation
("Conexant" and, collectively with Carlyle, the "Original Stockholders"), RF Micro Devices, Inc.,
a North Carolina corporation ("RFMD" and, together with the Original Stockholders, the "Stockholders"),
Jazz Semiconductor, Inc., a Delaware corporation formerly known as Specialtysemi, Inc. (the "Company") and Newport Fab, LLC, a Delaware
limited liability company ("Newport Fab"). 


RECITALS  


        WHEREAS, Carlyle Capital Investors, L.L.C., a Delaware limited liability company ("Carlyle Capital"), Conexant,
and the Company entered into that certain Contribution Agreement dated as of February 23, 2002 (the "Contribution Agreement") pursuant to which
Carlyle Capital agreed to contribute cash and Conexant agreed to contribute all of the membership interests of Newport Fab and a warrant, each in exchange for shares of Common Stock of the Company; 


        WHEREAS,
Carlyle Capital and Carlyle entered into that certain Assignment and Assumption Agreement, dated as of March 12, 2002, whereby Carlyle Capital assigned all of its rights
and obligations under the Contribution Agreement to Carlyle and Carlyle assumed such rights and obligations; 



        WHEREAS,
in connection with the consummation of the closing of the transactions contemplated by the Contribution Agreement, each Original Stockholder, the Company and Newport Fab entered
into that certain Carlyle Board Representation Agreement dated as of March 12, 2002 (the "Original Carlyle Board Representation Agreement"); 


        WHEREAS,
in connection with the consummation of the closing of the transactions contemplated by the Contribution Agreement, each Original Stockholder and the Company entered into the
Stockholder Agreement dated as of March 12, 2002 (the "Original Stockholder Agreement"); 


        WHEREAS,
as of March 12, 2002, the Company owned all of the membership interests of Newport Fab; 


        WHEREAS,
the Company entered into the Amended and Restated Operating Agreement of Newport Fab, dated as of March 12, 2002 (the "First Amended and Restated
Operating Agreement"); 


        WHEREAS,
the Company, Carlyle and Conexant entered into the Recapitalization Agreement dated as of July 30, 2002 (the "Recapitalization
Agreement") pursuant to which the outstanding shares of Common Stock of the Company held by each Original Stockholder were exchanged for shares of Preferred Stock of the
Company; 


        WHEREAS,
in connection with the consummation of the closing of the transactions contemplated by the Recapitalization Agreement, each Original Stockholder and the Company entered into an
Amended and Restated Stockholder Agreement dated as of July 30, 2002 (the "Amended and Restated Stockholder Agreement"); 


        WHEREAS,
as of July 30, 2002, the Company owned all of the membership interests of Newport Fab; 





 



        WHEREAS,
in connection with the consummation of the closing of the transactions contemplated by the Recapitalization Agreement, the Company entered into the Second Amended and Restated
Operating Agreement of Newport Fab dated as of July 30, 2002 (the "Second Amended and Restated Operating Agreement"); 


        WHEREAS,
in connection with the consummation of the closing of the transactions contemplated by the Recapitalization Agreement, each of the Original Stockholders entered into the Amended
and Restated Carlyle Board Representation Agreement dated as of July 30, 2002 (the "Amended and Restated Carlyle Board Representation
Agreement"), which amended and restated the Original Carlyle Board Representation Agreement in its entirety; 


        WHEREAS,
the Company and RFMD have entered into that certain Preferred Stock Purchase Agreement dated as of August 22, 2002 (as amended, modified and supplemented to date, the
"Stock Purchase Agreement"), pursuant to which the Company has agreed to issue to RFMD and RFMD has agreed to purchase from the Company up to an
aggregate of 13,071,888 shares of Series B Preferred Stock of the Company; 



        WHEREAS,
in connection with the consummation of the closing of the transactions contemplated by the Stock Purchase Agreement, each Stockholder and the Company have entered into a Second
Amended and Restated Stockholder Agreement dated as of the date hereof (the "Second Amended and Restated Stockholder Agreement"); 


        WHEREAS,
as of the date hereof, the Company owns all of the membership interests of Newport Fab; 


        WHEREAS,
the Company has entered into the Third Amended and Restated Operating Agreement of Newport Fab dated as of the date hereof (the "Third Amended and
Restated Operating Agreement"); 


        WHEREAS,
Article 4 of the Second Amended and Restated Stockholder Agreement provides that each Stockholder agrees to take all such steps as may be necessary, including through the
exercise of their respective voting power, to ensure that Carlyle may designate five (5) directors (the "Carlyle Designated Directors") to the
Company Board (the "Article 4 Rights"); 


        WHEREAS,
the Third Amended and Restated Operating Agreement of Newport Fab, dated as of the date hereof (the "Third Amended and Restated Operating
Agreement"), provides that Carlyle shall have the right to elect five (5) managers to serve on the Newport Fab Board (the "Carlyle Designated
Managers") as long as Carlyle has Article 4 Rights; 


        WHEREAS,
the Stockholders, the Company and Newport Fab desire to make clear that as long as Carlyle has Article 4 Rights and CP III Beneficially Owns one or more shares of Company
Stock, CP
III shall have the exclusive right to appoint the Carlyle Designated Directors and the Carlyle Designated Managers; and 



        WHEREAS,
in connection with the foregoing, the parties desire to amend and fully restate the Amended and Restated Carlyle Board Representation Agreement in its entirety as set forth
herein. 


AGREEMENT  


        NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties
hereby agree as follows: 


        1.    Certain Definitions.    As used in this Agreement, the following terms shall have the following respective
meanings: 



        (a)   "Beneficial Ownership" shall mean the power, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, to (i) vote, or to direct the voting of, a 



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security;
and (ii) dispose, or to direct the disposition of, such security. "Beneficially Owns" shall mean having Beneficial Ownership. 



        (b)   "Newport Fab Board" shall mean the board of managers of Newport Fab. 


        (c)   "Company Board" shall mean the board of directors of the Company. 


        (d)   "Company Stock" shall mean the Class A Common Stock of the Company, par value $0.001 per share, the Class B
Common Stock of the Company, par value $0.001 per share, the Series A Preferred Stock of the Company, par value $0.001 per share and the Series B Preferred Stock of the Company, par
value $0.001 per share. 




        2.    Election of Company Directors and Newport Fab Managers.    



        (a)   Election
of Company Directors 



        i.      The
Stockholders and the Company agree that as long as Carlyle has Article 4 Rights and CP III Beneficially Owns at least one share of Company Stock, CP III shall
be entitled to appoint the Carlyle Designated Directors to serve as members of the Company Board (the "Company Carlyle Nominees"). 



        ii.     CP
III hereby designates Claudius E. Watts, IV, Todd Newnam, Allan M. Holt, and such other two persons as shall be designated by Carlyle as the Company Carlyle Nominees. 


        iii.    Each
of the Stockholders agrees to (A) vote (at any regular or special meeting of the stockholders of the Company) all of the Company Stock then Beneficially
Owned by it (whether so Beneficially Owned as of the date hereof or hereafter acquired) in favor of, or otherwise to consent to the election or appointment of the Company Carlyle Nominees to the
Company Board; and (B) take all other actions necessary and appropriate (whether by vote or consent or otherwise) to cause the election or appointment of the Company Carlyle Nominees to the
Company Board. 


        iv.    Carlyle
agrees not to assign the right to designate any of the Company Carlyle Nominees under the Second Amended and Restated Stockholder Agreement to any entity other
than CP III. 




        (b)   Election
of Newport Fab Managers 



        i.      The
Stockholders, the Company, and Newport Fab agree that as long as Carlyle has Article 4 Rights and CP III Beneficially Owns at least one share of Company Stock,
CP III shall be entitled to appoint the Carlyle Designated Managers to serve as members of the Newport Fab Board (the "Newport Fab Carlyle Nominees"
and, collectively with the Company Carlyle Nominees, the "Carlyle Nominees"). 


        ii.     CP
III hereby designates Claudius E. Watts, IV, Todd Newnam, Allan M. Holt, and such other two persons as shall be designated by Carlyle as the Newport Fab Carlyle
Nominees. 


        iii.    The
Stockholders, the Company and Newport Fab agree to take any and all actions necessary and appropriate (whether by vote or consent or otherwise) to cause the
election or appointment of the Newport Fab Carlyle Nominees to serve as members of the Newport Fab Board. 


        iv.    The
Stockholders and the Company agree not to amend the Third Amended and Restated Operating Agreement to modify or eliminate the right of Carlyle to appoint the Newport
Fab Carlyle Nominees to the Newport Fab Board as long as Carlyle has Article 4 Rights. 




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        (c)   If
any Carlyle Nominee shall be unable or unwilling to serve prior to his or her election or appointment to the Company Board or the Newport Fab Board, CP III shall be
entitled to nominate a replacement who shall then be the Carlyle Nominee for the purposes of this Agreement. If, following election or appointment to the Company Board or the Newport Fab Board, any
Carlyle Nominee shall resign or be removed for cause or be unable to serve by reason of death or disability, CP III shall, within 30 days of such event, notify the Company Board in writing of a
replacement, and all parties hereto shall take such steps as may be necessary to elect or appoint such replacement to the Company Board to fill the unexpired term of the Carlyle Nominee. 



        (d)   Each
party hereto agrees not to take any action or permit any Carlyle Nominee to take any action without the written consent of CP III, which consent may be given or
withheld in the sole discretion of CP III, to remove, whether or not for cause, any Carlyle Nominee from the Company Board or the Newport Fab Board following his or her election thereto, including,
without limitation, by decreasing the size of the Company Board or the Newport Fab Board such that there are an insufficient number of directors or managers on the Company Board or the Newport Fab
Board, as applicable, to permit CP III to exercise its rights to nominate the Carlyle Designated Directors to the Company Board or the Carlyle Designated Managers to the Newport Fab Board pursuant to
this Section 2. 




        3.    Proxy.    


        For
so long as this Agreement is in effect, if any Stockholder fails or refuses to vote the Company Stock as provided in Section 2 hereof, without further action by the Company or
any Stockholder, CP III shall have an irrevocable proxy to vote such Company Stock in accordance with this Agreement, and each Stockholder hereby grants to CP III such irrevocable proxy. 


        4.    Acceptance and Acknowledgment.    


        The
Stockholders, the Company, and Newport Fab hereby acknowledge and agree to the rights granted to CP III hereunder. 


        5.    Miscellaneous.    



        (a)   Each
party hereto agrees to execute and deliver such documents and take such further actions as may be necessary or desirable to effect the purposes and objectives of
this Agreement. 


        (b)   This
Agreement may not be amended or modified except by a written instrument signed by each of the parties hereto. The waiver by any party of such party's rights under
this Agreement in any particular instance or instances, whether intentional or otherwise, shall not be considered as a continuing waiver which would prevent subsequent enforcement of such rights or of
any other rights. 


        (c)   This
Agreement shall automatically terminate upon the termination of the Second Amended and Restated Stockholder Agreement. 



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        (d)   All
notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if sent by recognized overnight delivery service, return
receipt requested, to the following parties at the following addresses or to such other parties and at such other addresses as shall be specified by like notices: 



If
to Carlyle, the Company, or Newport Fab: 



The
Carlyle Group

101 S. Tryon Street, 25th Floor

Charlotte, NC 28280

Attn: Claudius E. Watts, IV

Facsimile: (704) 632-0299 




with
a copy to: 



Latham &
Watkins

555 11th Street, Suite 1000

Washington, DC 20004-1304

Attn: Raymond B. Grochowski, Esq.

Facsimile: (202) 637-2201 




If
to Conexant: 



Conexant
Systems, Inc.

4311 Jamboree Road

Newport Beach, CA 92660

Attn: General Counsel

Facsimile: (949) 483-9576 




with
a copy to: 



Cooley
Godward LLP

4401 Eastgate Mall

San Diego, CA 92121

Attn: Carl R. Sanchez, Esq.

Facsimile: (858) 550-6420 




If
to RFMD: 



RF
Micro Devices, Inc.

7628 Thorndike Road

Greensboro, NC 27409

Attn: Suzanne Rudy

Facsimile: (336) 931-7655 




with
a copy to: 



Womble
Carlyle Sandridge & Rice, PLLC

One West Fourth Street

Winston-Salem, NC 27101

Attn: Jeffrey C. Howland, Esq.

Facsimile: (336) 733-8317 





Notice
so given shall be deemed to be given and received on the second business day after sending by recognized overnight delivery service, return receipt requested. 


        (e)   The
parties acknowledge and agree that the breach of the provisions of this Agreement by any party could not be adequately compensated with monetary damages, and the
parties hereto 



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agree,
accordingly, that injunctive relief and specific performance shall be appropriate remedies to enforce the provisions of this Agreement and waive any claim or defense that there is an adequate
remedy at law for such breach; provided, however, that nothing herein shall limit the remedies herein,
legal or equitable, otherwise available and all remedies herein are in addition to any remedies available at law or otherwise. 



        (f)    If
any provision of this Agreement shall be held to be illegal, invalid or unenforceable under any applicable law, then such contravention or invalidity shall not
invalidate the entire Agreement. Such provision shall be deemed to be modified to the extent necessary to render it legal, valid and enforceable, and if no such modification shall render it legal,
valid and enforceable then this Agreement shall be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties shall be construed and enforced
accordingly. 


        (g)   This
Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, administrators, executors, successors and assigns. 



        (h)   The
headings of the Sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement. 


        (i)    The
parties agree that this Agreement shall be governed by and construed in accordance with the laws of the state of Delaware, excluding any laws thereof which would
direct application of law of another jurisdiction. 


        (j)    This
Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, with the same effect as if each party had signed the
same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 


        (k)   When
the context requires, the gender of all words used herein shall include the masculine, feminine and neuter and the number of all words shall include the singular
and plural. 


        (l)    This
Agreement shall remain in effect as long as Carlyle has Article 4 Rights. 



[THIS SPACE INTENTIONALLY LEFT BLANK]


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        IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written. 



	 	 	CONEXANT SYSTEMS, INC.,

a Delaware corporation
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	/s/  DWIGHT DECKER      
 Dwight Decker

Chief Executive Officer
	 	 	 	 	 
	 	 	JAZZ SEMICONDUCTOR, INC.,

a Delaware corporation
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	/s/  SHU LI      
 Shu Li

President and Chief Executive Officer
	 	 	 	 	 
	 	 	NEWPORT FAB, LLC,

a Delaware limited liability company
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	/s/  SCOTT SILCOCK      
 Scott Silcock

Vice President Operations
	 	 	 	 	 
	 	 	RF MICRO DEVICES, INC.,

a North Carolina corporation
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	/s/  JERRY D. NEAL      
 Jerry D. Neal

Executive Vice President of Marketing &

Strategic Development
	 	 	 	 	 
	 	 	 	 	 
	 	 	CARLYLE PARTNERS III, L.P.,

a Delaware limited partnership
	 	 	 	 	 
	 	 	By:	 	TC Group III, L.P.,

its General Partner
	 	 	 	 	 
	 	 	By:	 	TC Group III, L.L.C.,

its General Partner
	 	 	 	 	 





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	 	 	By:	 	TC Group, L.L.C.,

its Managing Member
	 	 	 	 	 
	 	 	By:	 	TCG Holdings, L.L.C.,

its Managing Member





	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/  ALLAN M. HOLT      
 Allan M. Holt

Managing Director





	 	 	 	 	 
	 	 	 	 	 
	 	 	CP III COINVESTMENT, L.P.,

a Delaware limited partnership
	 	 	 	 	 
	 	 	By:	 	TC Group III, L.P.,

its General Partner
	 	 	 	 	 
	 	 	By:	 	TC Group III, L.L.C.,

its General Partner
	 	 	 	 	 
	 	 	By:	 	TC Group, L.L.C.,

its Managing Member
	 	 	 	 	 
	 	 	By:	 	TCG Holdings, L.L.C.,

its Managing Member





	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/  ALLAN M. HOLT      
 Allan M. Holt

Managing Director





	 	 	 	 	 
	 	 	 	 	 
	 	 	CARLYLE HIGH YIELD PARTNERS, L.P.,

a Delaware limited partnership
	 	 	 	 	 
	 	 	By:	 	TCG High Yield, L.L.C.,

its General Partner
	 	 	 	 	 
	 	 	By:	 	TCG High Yield Holdings, L.L.C.,

its Managing Member
	 	 	 	 	 
	 	 	By:	 	TC Group, L.L.C.,

its sole Member
	 	 	 	 	 
	 	 	By:	 	TCG Holdings, L.L.C.,

its Managing Member





	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/  ALLAN M. HOLT      
 Allan M. Holt

Managing Director




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SECOND AMENDED AND RESTATED CARLYLE BOARD REPRESENTATION AGREEMENT