Letter Agreement, dated August 19, 2003-Regarding Management Rights




 Exhibit 10.3 
  
 STAKTEK HOLDINGS, INC. 
 300 West Sixth Street, Suite 2300 
 Austin, Texas 78701 
  
 August 19, 2003 
  
 Austin Ventures VII, LP 
 300 West Sixth Street, Suite 2300 
 Austin, Texas 78701 
 Attn: Joseph C. Aragona 
  
 Austin Ventures VIII, LP 
 300 West Sixth Street, Suite 2300 
 Austin, Texas 78701 
 Attn: Joseph C. Aragona 
  
 Re: Management Rights 
  
 Gentlemen: 
  
 This letter will confirm our agreement that pursuant to and effective as of
your purchase of Common Stock (the “Stock”) of Staktek Holdings, Inc., a Delaware corporation (the “Company”), you (together with your designees, the “Investor”), shall be entitled, so long as you
hold (beneficially or otherwise) the Stock or any shares of capital stock of the Company to the following contractual management rights, in addition to any rights to non-public financial information, inspection rights, and other rights specifically
provided to all investors in the current financing and as otherwise required by law: 
  
 1. Each Investor shall be entitled to consult with and advise management of the Company on significant business issues, including management’s proposed annual operating plans, and management will meet with you
regularly during each year at the Company’s facilities at mutually agreeable times for such consultation and advice and to review progress in achieving said plans. 
  
 2. Each Investor may examine the books and records of the Company and inspect its facilities and may request information at
reasonable times and intervals concerning the general status of the Company’s financial condition and operations, provided that access to highly confidential proprietary information and facilities need not be provided. 
  
 3. If an Investor is not represented on the Company’s Board of
Directors, the Company shall give a representative of such Investor copies of all notices, minutes, consents and other material that the Company provides to its directors, except that the representative may be excluded from access to any material or
meeting or portion thereof if the Company believes, upon advice of counsel, that such exclusion is reasonably necessary to preserve the attorney-client 









 
privilege, to protect highly confidential proprietary information, or for other similar reasons. Upon reasonable notice and at a scheduled meeting of the
Board of Directors or such other time, if any, as the Board of Directors may determine in its sole discretion, such representative may address the Board of Directors with respect to Investor’s concerns regarding significant business issues
facing the Company. 
  
 4. Each Investor agrees, and any
representative of Investor will agree, to hold in confidence and trust and not use or disclose any confidential information provided to or learned by it in connection with its rights under this letter. 
  
 The rights described herein shall terminate and be of no further force or
effect upon the consummation of the sale of the Company’s securities pursuant to a registration statement filed by the Company under the Securities Act of 1933 in connection with the firm commitment underwritten offering of its securities to
the general public. The confidentiality provisions hereof will survive any such termination. 
  

	 Very truly yours,

	
	STAKTEK HOLDINGS, INC.
		
	 By:
	 	 /s/ Joseph C. Aragona


	 	 	Joseph C. Aragona
	 	 	President










 AGREED TO AND ACCEPTED THIS 19th DAY OF AUGUST, 2003: 
  
 AUSTIN VENTURES VII, L.P. 
  

	 By:
	 	 AV Partners VII, L.P.,

	 	 	 Its General Partner

		
	 By:
	 	 *



  

	 * By:
	 	 /s/ Joseph C. Aragona


	 	 	 Joseph C. Aragona.

	 	 	 General Partner



  
 AUSTIN VENTURES VIII, L.P. 
  

	 By:
	 	 AV Partners VIII, L.P.,

	 	 	 Its General Partner

		
	 By:
	 	 *



  
 Signature Page to
Staktek Holdings Management Rights Letter