**Exhibit4.1**

 

AMENDED AND RESTATED MANAGEMENT STOCKHOLDERS AGREEMENT

 

 

DATED AS OF APRIL 27, 2006

 

 

among

 

CPI INTERNATIONAL, INC. (FORMERLY KNOWN AS CPI ACQUISITION CORP. AND CPI HOLDCO, INC.)

 

CYPRESS MERCHANT BANKING PARTNERS II L.P.

 

CYPRESS MERCHANT B II C.V.

 

55TH STREET PARTNERS II L.P.

 

CYPRESS SIDE-BY-SIDE LLC

 

and

 

THE MANAGEMENT STOCKHOLDERS NAMED HEREIN

 

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**AMENDED AND RESTATED MANAGEMENT STOCKHOLDERSAGREEMENT**

** **

AMENDEDAND RESTATED MANAGEMENT STOCKHOLDERS AGREEMENT dated as of April 27, 2006 (this“Agreement”) among CPI International, Inc. (formerly known as CPIAcquisition Corp. and CPI Holdco, Inc.), a Delaware corporation (the “Company”),Cypress Merchant Banking Partners II L.P., a Delaware limited partnership (“CypressOnshore”), Cypress Merchant B II C.V., a Netherlands limited partnership (“CypressOffshore”), 55th Street Partners II L.P., a Delaware limited partnership (“Cypress55th Street”), Cypress Side-by-Side LLC, a Delaware limited liabilitycompany (“Cypress Side-by-Side,” and together with Cypress Onshore,Cypress Offshore, Cypress 55th Street, “Cypress”), and certainmanagement stockholders of the Company listed on Schedule I hereto (eachsuch management stockholder is hereinafter referred to as a “Management Stockholder”).

 

WITNESSETH:

 

WHEREAS,all of the parties hereto are parties to the Management Stockholders Agreement,dated as of January 23, 2004 (the “Original Agreement”), which providedfor certain restrictions on the sale, assignment, transfer, encumbrance orother disposition of the Shares, and certain rights, obligations and otheragreements in respect of the Shares and the Company, all as set forth therein; and

 

WHEREAS,in connection with the contemplated Initial Public Offering (as defined below),and effective upon the consummation thereof, the parties hereto desire to amendand restate the Original Agreement in its entirety, as hereinafter provided;

 

NOWTHEREFORE, in consideration of the mutual covenants and agreements containedherein, the parties hereto agree as follows:

 

# ARTICLE I

#  

# DEFINITIONS

#  

## Section 1.1.            Definitions. As used in this Agreement, the followingterms have the following meanings:

##  

“Affiliate”,as applied to any Person, shall mean any other Person directly or indirectlycontrolling, controlled by, or under common control with, that Person.  For the purposes of this definition “control”(including, with correlative meanings, the terms “controlling”, “controlledby” and “under common control with”), as applied to any Person, meansthe possession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of that Person, whether through theownership of voting securities (the ownership of more than 50% of the votingsecurities of an entity shall for purposes of this definition be deemed to be “control”),by contract or otherwise.

 

“Agreement”shall have the meaning set forth in the preamble of this Agreement.

 

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“BusinessDay” shall mean any day that is not a Saturday or Sunday or a day on whichbanks located in New York City are authorized or required to be closed.

 

“Cause”shall mean, unless otherwise defined in a Management Stockholder’s EmploymentAgreement, (i) the Management Stockholder’s continued failure to performsuch Management Stockholder’s duties (other than as a result of total orpartial incapacity due to physical or mental illness) which is not cured for aperiod of 10 days following written notice by the Company or its Affiliates tothe Management Stockholder of such failure, (ii) conviction or plea ofguilty or no contest to a (x) felony, or (y) crime involving moral turpitudeor the property or business of the Company or its Affiliates, (iii) willfulmalfeasance or willful misconduct in performance of duties to the Company orits Affiliates, or (iv) breach by the Management Stockholder of thematerial terms of any non-compete, non-solicitation or confidentialityprovisions of this Agreement.

 

“CommonStock” shall mean the common stock, par value $0.01 per share, of the Company.

 

“Company”shall have the meaning set forth in the preamble of this Agreement.

 

“CompetitiveBusiness” shall have the meaning set forth in Section 3.4(b).

 

“ConfidentialInformation” shall have the meaning set forth in Section 3.5(c).

 

“Cypress”shall have the meaning set forth in the preamble of this Agreement.

 

“CypressOnshore” shall have the meaning set forth in the preamble of this Agreement.

 

“CypressOffshore” shall have the meaning set forth in the preamble of this Agreement.

 

“CypressSide-by-Side” shall have the meaning set forth in the preamble of this Agreement.

 

“Cypress55th Street” shall have the meaning set forth in the preamble of this Agreement.

 

“EmploymentAgreement” shall mean an employment agreement between a ManagementStockholder and the Company or any of its Subsidiaries that is in effect as ofthe date hereof or that becomes effective at the time of the Initial PublicOffering and continues to be effective thereafter in accordance with its terms.

 

“Employment”shall mean (i) a Management Stockholder’s employment if the ManagementStockholder is an employee of the Company or any of its Affiliates, (ii) aManagement Stockholder’s services as an non-employee director, if theManagement Stockholder is a non-employee member of the board of directors ofthe Company or an Affiliate or (iii) a Management Stockholder’s servicesas an independent contractor, vendor or third-party service provider, if theManagement Stockholder is an independent contractor, vendor or third-party serviceprovider to the Company or any of its Affiliates; provided,

 

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however, that unless otherwisedetermined by a committee of the board of directors of the Company, a change ina Management Stockholder’s status from employee to a consultant shallconstitute a termination of employment hereunder.

 

“ExchangeAct” shall mean the United States Securities and Exchange Act of 1934, asamended, and the rules and regulations promulgated thereunder.

 

“InitialPublic Offering” shall mean the initial Public Offering (other than pursuantto a registration statement on Form S-8 (or comparable form for a privateissuer or otherwise relating to equity securities issuable under any employeebenefit plan)) of the Common Stock.

 

“MajorityManagement Stockholders” shall mean, at any time, Management Stockholdersand their Permitted Transferees holding a majority of the number of Shares (includingany Shares issuable upon the conversion, exchange or exercise of ShareEquivalents) then outstanding and held by the Management Stockholders and theirPermitted Transferees.

 

“ManagementStockholder” shall have the meaning set forth in the preamble of thisAgreement.

 

“OriginalAgreement” shall have the meaning set forth in the recitals of thisAgreement.

 

## “PermittedTransferee” shall mean, with respect to any Management Stockholder,(a) in the event of such Management Stockholder’s death, the heirs, executors,administrators, testamentary trustees, legatees or beneficiaries of suchManagement Stockholder (or their Permitted Transferees), (b) suchManagement Stockholder’s spouse and lineal descendants and (c) trusts,partnerships, limited liability companies or other entities of which suchManagement Stockholder and/or such Management Stockholder’s spouse or lineal descendantsare the sole owners and beneficiaries.

##  

“Person”shall mean an individual, partnership, corporation, business trust, joint stockcompany, limited liability company, unincorporated association, joint ventureor other entity of whatever nature.

 

“PublicOffering” shall mean any public offering of equity securities of the Companypursuant to an effective registration statement under the Securities Act.

 

“RestrictedPeriod” shall have the meaning set forth in Section 3.4(a).

 

“SecuritiesAct” shall mean the United States Securities Act of 1933, as amended, andthe rules and regulations promulgated thereunder.

 

“SeniorManager” shall mean each of the persons listed on Schedule II hereto.

 

“ShareEquivalents” shall mean securities of any kind (including “phantom” securities)issued by the Company convertible into or exchangeable for Shares or options,

 

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warrants or other rights to purchase or subscribe for Shares orsecurities convertible into or exchangeable for Shares.

 

“Shares”shall mean, with respect to any Stockholder, any and all shares of CommonStock, whether now owned or hereafter acquired (including upon exercise ofoptions, preemptive rights or otherwise), held by such Stockholder.

 

“Stockholder”shall mean each of Cypress and the Management Stockholders.

 

“Subsidiary”shall mean, with respect to any Person, any corporation or other entity ofwhich a majority of the capital stock or other ownership interests havingordinary voting power to elect a majority of the board of directors or otherpersons performing similar function at the time directly or indirectly owned bysuch Person.

 

# ARTICLE II

#  

# PERMITTED TRANSFEREES

#  

NoManagement Stockholder shall Transfer any Shares to a Permitted Transferee of suchManagement Stockholder, unless, as a condition precedent to such Transfer, thePermitted Transferee executes an instrument in the form of Exhibit Bhereto or otherwise reasonably satisfactory to the Company agreeing to be boundhereby as a Permitted Transferee of such Management Stockholder; provided,however, the foregoing restriction shall not apply after the Piggy-BackTermination Date (as defined in Exhibit C); provided, further, the foregoingrestriction shall not apply to Transfers to parties that are not PermittedTransferees.

 

# ARTICLE III

#  

# RIGHTS AND OBLIGATIONS OF MANAGEMENT STOCKHOLDERS AND THE COMPANY

#  

## Section 3.1.            [IntentionallyOmitted]

##  

## Section 3.2.            RegistrationRights.  The Company hereby grants tothe Management Stockholders (and their Permitted Transferees) the registrationand other rights set forth in, and the Management Stockholders (and theirPermitted Transferees) agree to comply with the terms and conditions containedin, Exhibit C hereto.

##  

## Section 3.3.            [IntentionallyOmitted]

##  

## Section 3.4.            CovenantNot to Compete; Non-Solicitation.  Each Senior Manager acknowledges andrecognizes the highly competitive nature of the businesses of the Company andits Subsidiaries and accordingly agrees that, if such Senior Manager is subjectto an Employment Agreement, he/she will abide by the non-competition andnon-solicitation covenants contained therein, which are incorporated herein byreference with respect to such Senior Manager.  If no such covenants are contained in theEmployment Agreement or if

 

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## there is no suchagreement, then each Senior Manager agrees, subject to Section 3.4(f), asfollows:

##  

### (a)           Duringthe term of Employment by the Company or any of its Subsidiaries and for theperiod of time set forth on Schedule II opposite such Senior Manager’s name followingthe date such Senior Manager ceases to be employed by the Company for anyreason (the “Restricted Period”), such Senior Manager will not, whetheron his/her own behalf or on behalf of or in conjunction with any Person,directly or indirectly solicit or assist in soliciting in competition with theCompany or any of its Subsidiaries, the business of any client or prospectiveclient:

###  

#### (i)            withwhom such Senior Manager had personal contact or dealings on behalf of theCompany or its Subsidiaries during the one year period preceding such SeniorManager’s termination of Employment;

####  

#### (ii)           withwhom employees reporting to such Senior Manager have had personal contact ordealings on behalf of the Company or any of its Subsidiaries during the oneyear immediately preceding such Senior Manager’s termination of Employment; or

####  

#### (iii)          forwhom such Senior Manager had direct or indirect responsibility during the oneyear immediately preceding such Senior Manager’s termination of Employment.

####  

### (b)           Duringthe Restricted Period, such Senior Manager will not directly or indirectly:

###  

#### (i)            engagein any business that competes with the business of the Company or itsSubsidiaries (including, without limitation, businesses which the Company orits Subsidiaries have specific plans to conduct in the future and as to which suchSenior Manager is aware of such planning) in any geographic area in which the Companyor its Subsidiaries conducts such business (a “Competitive Business”);

####  

#### (ii)           enterthe employ of, or render any services to, any Person (or any division orcontrolled or controlling Affiliate of any Person) who or which engages in a CompetitiveBusiness;

####  

#### (iii)          acquirea financial interest in, or otherwise become actively involved with, anyCompetitive Business, directly or indirectly, as an individual, partner, shareholder,officer, director, principal, agent, trustee or consultant; or

####  

#### (iv)          interferewith, or attempt to interfere with, business relationships (whether formedbefore, on or after the date of this Agreement) between the Company or any ofits Subsidiaries, on the one hand, and customers, clients, suppliers partners, membersor investors of the Company or its Subsidiaries, on the other hand.

 

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### (c)           Duringthe Restricted Period, such Senior Manager will not, whether on such SeniorManager’s own behalf or on behalf of or in conjunction with any Person,directly or indirectly:

###  

#### (i)            solicitor encourage any employee of the Company or its Subsidiaries to leave theEmployment of the Company or its Subsidiaries (except in cases during a SeniorManager’s Employment where such Senior Manager reasonably believes such actionto be in the best interests of the Company or its Subsidiaries); or

####  

#### (ii)           hireany such employee who was employed by the Company or its Subsidiaries as of thedate of such Senior Manager’s termination of Employment with the Company or wholeft the Employment of the Company or its Subsidiaries coincident with, orwithin one year prior to, the termination of such Senior Manager’s Employment withthe Company (other than any such employee whose Employment with the Company isterminated by the Company without Cause).

####  

### (d)           Duringthe Restricted Period, such Senior Manager will not, directly or indirectly,encourage or solicit to cease to work with the Company or its Subsidiaries any consultantthen under contract with the Company or its Subsidiaries.

###  

### (e)           Notwithstandinganything to the contrary in this Agreement, any Senior Manager may, directly orindirectly own, solely as an investment, securities of any Person engaged inthe business of the Company or its Subsidiaries which are publicly traded on a nationalor regional stock exchange or on the over-the-counter market if the SeniorManager (i) is not a controlling person of, or a member of a group whichcontrols, such person and (ii) does not, directly or indirectly, own 5% ormore of any class of securities of such Person.

###  

### (f)            Itis expressly understood and agreed that although the Senior Managers and theCompany consider the restrictions contained in this Section 3.4 to bereasonable, if a final judicial determination is made by a court of competentjurisdiction that the time or territory or any other restriction contained inthis Agreement is an unenforceable restriction against the relevant SeniorManager, the provisions of this Agreement will not be rendered void but will bedeemed amended to apply as to such maximum time and territory and to suchmaximum extent as such court may judicially determine or indicate to beenforceable.  Alternatively, if any courtof competent jurisdiction finds that any restriction contained in thisAgreement is unenforceable, and such restriction cannot be amended so as tomake it enforceable, such finding will not affect the enforceability of any ofthe other restrictions contained herein.

###  

## Section 3.5.            ConfidentialInformation.  (a) No ManagementStockholder will at any time (whether during or after such ManagementStockholder’s employment with the Company) (i) retain or use for thebenefit, purposes or account of such Management Stockholder or any otherPerson; or (ii) disclose, divulge, reveal, communicate, share, transfer orprovide access to any Person outside the Company (other than its professionaladvisers who are bound by confidentiality obligations), any non-public,proprietary or

 

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## confidentialinformation – including without limitation trade secrets, know-how,research and development, software, databases, inventions, processes, businessstrategies, formulae, technology, designs and other intellectual property,information concerning finances, investments, profits, pricing, costs,products, services, vendors, customers, clients, partners, investors,personnel, compensation, recruiting, training, advertising, sales, marketing,promotions, government and regulatory activities and approval – concerningthe past, current or future business, activities and operations of the Company,its subsidiaries, Affiliates or any third party that has disclosed or providedany of same to the Company on a confidential basis (“ConfidentialInformation”) without the prior written authorization of the board ofdirectors of the Company.

##  

(b)           “ConfidentialInformation” will not include any information that is (i) generally knownto the industry or the public other than as a result of such Management Stockholder’sbreach of this covenant or any breach of other confidentiality obligations bythird parties; (ii) made legitimately available to the ManagementStockholder by a third party without breach of any confidentiality obligation;or (iii) required by law or a court of competent jurisdiction to bedisclosed; provided that such Management Stockholder will give prompt writtennotice to the Company of such requirement, disclose no more information than isso required, and cooperate with any attempts by the Company to obtain aprotective order or similar treatment.

 

(c)           [IntentionallyOmitted]

 

(d)           Upontermination of such Management Stockholder’s employment for any reason, theManagement Stockholder will (i) cease and not thereafter commence use ofany Confidential Information or intellectual property (including withoutlimitation, any patent, invention, copyright, trade secret, trademark, tradename, logo, domain name or other source indicator) owned or used by the Companyor its Affiliates; (ii) immediately destroy, delete, or return to theCompany, at the Company’s option, all originals and copies in any form ormedium (including memoranda, books, papers, plans, computer files, letters andother data) in such Management Stockholder’s possession or control (includingany of the foregoing stored or located in the Management Stockholder’s office,home, laptop or other computer, whether or not Company property) that containConfidential Information or otherwise relate to the business of the Company andits Affiliates, except that such Management Stockholder may retain only thoseportions of any personal notes, notebooks and diaries that do not contain anyConfidential Information; and (iii) notify and fully cooperate with theCompany regarding the delivery or destruction of any other ConfidentialInformation of which the Management Stockholder is or becomes aware

 

## Section 3.6.            [IntentionallyOmitted]

##  

# ARTICLE IV

#  

# MISCELLANEOUS

#  

## Section 4.1.            [IntentionallyOmitted]

 

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## Section 4.2.            [IntentionallyOmitted]

##  

## Section 4.3.            Employmentby the Company.  Nothing contained inthis Agreement or any option agreement entered into by the Company and anyManagement Stockholder (a) obligates the Company or any Subsidiary orAffiliate of the Company to employ any Management Stockholder or his/herPermitted Transferees in any capacity whatsoever or (b) prohibits orrestricts the Company (or any such Subsidiary or Affiliate) from terminatingthe Employment of any Management Stockholder at any time or for any reasonwhatsoever, with or without Cause, and each of the Management Stockholders andtheir Permitted Transferees hereby acknowledges and agrees that neither theCompany nor any other Person has made any representations or promises in thisAgreement or in any option agreement to such Management Stockholder or PermittedTransferee concerning such person’s Employment or continued Employment by theCompany or any Subsidiary or Affiliate of the Company.

##  

## Section 4.4.            [IntentionallyOmitted]

##  

## Section 4.5.            Successorsand Assigns.  This Agreement shall bebinding upon and shall inure to the benefit of the parties hereto, and theirrespective successors and permitted assigns.

##  

## Section 4.6.            NoWaivers, Amendments.

##  

## (a)           Exceptas expressly set forth herein, no failure or delay by any party in exercisingany right, power or privilege hereunder shall operate as a waiver thereof, norshall any single or partial exercise thereof preclude any other or furtherexercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shallbe cumulative and not exclusive of any rights or remedies provided by law.

##  

(b)           Anyamendment, modification or supplement to this Agreement shall not be enforcedagainst any party hereto unless such amendment, modification or supplement is signedby the Company and the Majority Management Stockholders, provided, howeverthat notwithstanding the foregoing, any amendment, modification or supplementto this Agreement with respect to a matter that does not directly or indirectlyadversely affect the rights of any of the Management Stockholders shall beenforceable without requiring that such amendment, modification or supplementbe signed by the Majority Management Stockholders.

 

(c)           Anyprovision of this Agreement may be waived if, but only if, such waiver is inwriting and is signed by the party against whom the enforcement of such waiveris sought.

 

## Section 4.7.            Notices. All notices, requests and othercommunications to any party hereunder shall be in writing (including telex,telecopier or similar writing) and shall be given to such party at its addressor telecopier number set forth below, or such other address or telecopiernumber as such party may hereinafter specify for the purpose to the partygiving such notice.  Each such notice,request or other communication shall be effective (a) if given by telecopy,when such telecopy is transmitted to the telecopy number specified

 

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## in this Sectionand the appropriate answerback is received or, (b) if given by overnightcourier or express mail service, when delivery is confirmed or, (c) ifgiven by any other means, when delivered at the address specified in thisSection 4.7.  In each case, notice shallbe sent to the parties at the following addresses (or at such other address fora party as shall be specified by like notice):

##  

#### (i)            ifto the Company:

####  

CPI International, Inc.

811 Hansen Way, Mail StopA-028

Palo Alto, California94303

Attention:  Joel A. Littman

Telecopier:  (650) 846-3276

 

with a copy to:

 

Irell & Manella LLP

1800 Avenue of the Stars,Suite 900

Los Angeles, California90067

Attention:  Richard C. Wirthlin

Telecopier:  (310) 203-7199

 

#### (ii)           ifto Cypress:

####  

c/o The Cypress GroupL.L.C.

65 East 55thStreet

New York, New York 10022

Attention:  Michael F. Finley

Telecopier:  (212) 705-0199

 

with a copy to:

 

Simpson Thacher &Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attention:  Marni J. Lerner

Telecopier:  (212) 455-2502

 

#### (iii)          ifto a Management Stockholder, at the address for such Management Stockholderlisted below such Management Stockholder’s signature hereto.

####  

## Section 4.8.            Termof Agreement.  This Agreement shallterminate (a) in full on the earlier to occur of (i) January 23, 2014 (providedthat the registration rights in Exhibit C hereto shall survive any suchtermination until such time as all Management Stockholders hold no RegistrableSecurities) and (ii) when all Management Stockholders cease tobeneficially own any Shares, and, if earlier, (b) with respect to anyManagement Stockholder, when such Management Stockholder ceases to beneficiallyown any Shares;

 

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## providedthat any termination pursuant to this Section 4.8 will not relieve any partyfor any liability arising from a breach of representation, warranty, covenantor agreement occurring prior to such termination.  Notwithstanding the foregoing, Section 5.3(Holdback Agreements) of Exhibit C shall terminate on the secondanniversary of the date of the Initial Public Offering.

##  

## Section 4.9.            Inspection. So long as this Agreement shall be ineffect, this Agreement and any amendments hereto shall be made available forinspection by any Management Stockholder at the principal offices of theCompany.

##  

## Section 4.10.          **GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.** Each of the parties hereto hereby (a) submitsto the jurisdiction of the courts of the State of Delaware and the UnitedStates District Court for the District of Delaware with respect to mattersarising out of or relating hereto, (b) agrees that all claims with respectto such matters may be heard and determined in an action or proceeding in suchDelaware courts, and (c) agrees that a final judgment in any such actionor proceeding will be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law.

##  

## Section 4.11.          SectionHeadings.  The section headingscontained in this Agreement are for reference purposes only and shall notaffect the meaning or interpretation of this Agreement.

##  

## Section 4.12.          EntireAgreement.  This Agreement (includingthe Exhibits hereto) constitutes the entire agreement and understanding amongthe parties hereto and supersedes any and all prior agreements andunderstandings, written or oral, relating to the subject matter hereof.

##  

## Section 4.13.          Severability. Any term or provision of this Agreementwhich is invalid or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such invalidity orunenforceability without rendering invalid or unenforceable the remaining termsand provisions of this Agreement or affecting the validity or enforceability ofany of the terms or provisions of this Agreement in any other jurisdictions, itbeing intended that all rights and obligations of the parties hereunder shallbe enforceable to the fullest extent permitted by law.

##  

## Section 4.14.          Counterparts. This Agreement may be signed in counterparts,each of which shall constitute an original and which together shall constituteone and the same agreement.

##  

## Section 4.15.          Partiesin Interest.  This Agreement and allthe provisions hereof shall be binding upon and inure to the benefit of the partieshereto and their respective successors and Permitted Transferees.  Except as expressly set forth herein, neitherthis Agreement nor any of their rights hereunder shall be assigned by any ofthe parties hereto who are not Permitted Transferees without the prior writtenconsent of the other parties.

 

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## Section 4.16.          Enforcement;Further Assurances.

##  

## (a)            Theparties hereto agree that irreparable damage would occur in the event that anyof the provisions of this Agreement were not performed in accordance with theirspecific terms.  It is accordingly agreedthat the parties shall be entitled to specific performance of the terms hereof,this being in addition to any other remedy to which they are entitled at law orin equity.

##  

(b)           Theparties hereto agree to execute, acknowledge, deliver, file and record suchfurther certificates, amendments, instruments, agreements and documents, and todo all such other acts and things, as may be required by law or as may benecessary or advisable to carry out the intent and purposes of this Agreement.

 

## Section 4.17.          Adviceof Counsel.  Each ManagementStockholder and Permitted Transferee of a Management Stockholder acknowledgesthat, in executing this Agreement, he or she has had the opportunity to seekthe advice of independent legal counsel, and has read and understood all of theterms and provisions of this Agreement.

##  

## Section 4.18.          Amendmentand Restatement of Original Agreement; Effectiveness of Agreement. Theparties hereto intend that this Agreement shall amend and restate, and shallsupersede in all respects, the Original Agreement.  Notwithstanding anything to the contrarycontained herein, this Agreement shall become effective upon the consummation ofthe Initial Public Offering.  In theevent that the Initial Public Offering shall not be consummated, this Agreementshall be null and void and shall have no force or effect.

##  

## Section 4.19.          AdditionalParties to this Agreement.  Exceptfor Permitted Transferees of a Management Stockholder who become a party heretoby executing and delivering to the Company an instrument in the form of ExhibitB hereto or otherwise reasonably satisfactory to the Company, no additionalPersons shall become a party hereto.

 

 

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INWITNESS WHEREOF, the undersigned have executed this Agreement as of the dateset forth above.

 
|   | CPI  INTERNATIONAL, INC.                    |                                                     |
|--------|---------------------------------------------|----------------------------------------------------------|
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | By:                                         | /s/  O. Joe Caldarelli                                   |   |
|   |                                        | Name:                                                    | O.  Joe Caldarelli |
|   |                                        | Title:                                                   | CEO |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | CYPRESS  MERCHANT BANKING PARTNERS II  L.P. |
|   |                                        |                                                     |
|   | By:                                         | Cypress  Associates II LLC, as general partner           |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | By:                                         | /s/  James A. Stern                                      |   |
|   |                                        | Name:                                                    | James  A. Stern |
|   |                                        | Title:                                                   | Managing  Member |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | CYPRESS  MERCHANT B II C.V.                 |                                                     |
|   |                                        |                                                     |
|   | By:                                         | Cypress  Associates II LLC, as managing  general partner |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | By:                                         | /s/  James A. Stern                                      |   |
|   |                                        | Name:                                                    | James  A. Stern |
|   |                                        | Title:                                                   | Managing  Member |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | CYPRESS  SIDE-BY-SIDE LLC                   |                                                     |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | By:                                         | /s/  James A. Stern                                      |   |
|   |                                        | Name:                                                    | James  A. Stern |
|   |                                        | Title:                                                   | Sole  Member |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | 55TH  STREET PARTNERS II L.P.               |                                                     |
|   |                                        |                                                     |
|   | By:                                         | Cypress  Associates II LLC, as general partner           |
|   |                                        |                                                     |
|   |                                        |                                                     |
|   | By:                                         | /s/  James A. Stern                                      |   |
|   |                                        | Name:                                                    | James  A. Stern |
|   |                                        | Title:                                                   | Managing  Member |
|        |                                             |                                                          |  |  |  |  |

 

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|   | Joe  Caldarelli        |   |
|--------|------------------------|--------|
|   |                   |   |
|   | /s/  O. Joe Caldarelli |   |
|   |                   |   |
|   | Address:               |   |
|   |                   |   |
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|   |                   |   |
|   |                   |   |
|   | Fax:                   |   |   |
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|   |                   |   |
|   | Robert  Fickett        |   |
|   |                   |   |
|   | /s/  Robert A. Fickett |   |
|   |                   |   |
|   | Address:               |   |
|   |                   |   |
|   |                   |   |
|   |                   |   |
|   |                   |   |
|   | Fax:                   |   |   |
|   |                   |   |
|   |                   |   |
|   | Don  Coleman           |   |
|   |                   |   |
|   | /s/  Don Coleman       |   |
|   |                   |   |
|   | Address:               |   |
|   |                   |   |
|   |                   |   |
|   |                   |   |
|   |                   |   |
|   | Fax:                   |   |   |
|   |                   |   |
|   |                   |   |
|   | Joel  Littman          |   |
|   |                   |   |
|   | /s/  Joel A. Littman   |   |
|   |                   |   |
|   | Address:               |   |
|   |                   |   |
|   |                   |   |
|   |                   |   |
|   |                   |   |
|   | Fax:                   |   |   |

 

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|   | Mike  Cheng          |   |
|--------|----------------------|--------|
|   |                 |   |
|   | /s/  Mike Cheng      |   |
|   |                 |   |
|   | Address:             |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   | Fax:                 |   |   |
|   |                 |   |
|   |                 |   |
|   | John  Beighley       |   |
|   |                 |   |
|   | /s/  John Beighley   |   |
|   |                 |   |
|   | Address:             |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   | Fax:                 |   |   |
|   |                 |   |
|   |                 |   |
|   | Michael  Targoff     |   |
|   |                 |   |
|   | /s/  Michael Targoff |   |
|   |                 |   |
|   | Address:             |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   | Fax:                 |   |   |
|   |                 |   |
|   |                 |   |
|   | Chris  Toffales      |   |
|   |                 |   |
|   | /s/  Chris Toffales  |   |
|   |                 |   |
|   | Address:             |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   |                 |   |
|   | Fax:                 |   |   |

 

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SCHEDULE I

 

**Management Stockholders**

 

JoeCaldarelli

 

RobertFickett

 

DonColeman

 

JoelLittman

 

MikeCheng

 

JohnBeighley

 

MichaelTargoff

 

ChrisToffales

 

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SCHEDULE II

 

**Senior Managers**

 
| **Name**        | ** ** | **Restricted Period** | ** ** |
|-----------------|------------|-----------------------|------------|
|            |       |                  |       |
| Joe  Caldarelli |       | 18  months            |       |
|            |       |                  |       |
| Robert  Fickett |       | 18  months            |       |
|            |       |                  |       |
| Don  Coleman    |       | 12  months            |       |
|            |       |                  |       |
| Joel  Littman   |       | 18  months            |       |
|            |       |                  |       |
| Mike  Cheng     |       | 12  months            |       |
|            |       |                  |       |
| John  Beighley  |       | 12  months            |       |

 

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EXHIBIT A

 

[Intentionally Omitted]

 

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EXHIBIT B

 

PERMITTED TRANSFEREE

FORM OF AGREEMENT TO BE BOUND

 

[DATE]

 

To theParties to the

Amendedand Restated Management Stockholders Agreement

datedas of April 27, 2006

 

Ladiesand Gentlemen:

 

Referenceis made to the Amended and Restated Management Stockholders Agreement, dated asof April 27, 2006 (as may be amended, supplemented or modified from time totime in accordance with the terms thereof, the “Management StockholdersAgreement”), among CPI International, Inc., Cypress Merchant Banking PartnersII L.P., Cypress Merchant B II C.V., 55th Street Partners II L.P., CypressSide-by-Side LLC, and the stockholders listed on Schedule 1 thereto and eachother Permitted Transferee who shall become party to the ManagementStockholders Agreement as provided therein, as the same may be subsequentlymodified, supplemented or amended in accordance with its terms.  Capitalized terms used herein and not definedhave the meanings ascribed to them in the Management Stockholders Agreement.

 

Inconsideration of the mutual covenants and agreements contained in the ManagementStockholders Agreement, the undersigned hereby confirms and agrees that itshall be bound by all of the provisions thereof as a Permitted Transferee of[Name of Transferor].

 

Thisletter shall be construed and enforced in accordance with the laws of Delaware.

 
|   | Very  truly yours,      |
|--------|-------------------------|
|   |                    |
|   |                    |
|   |                    |
|   | [Permitted  Transferee] |

 

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EXHIBIT C

 

REGISTRATION RIGHTS

 

ARTICLE IDEFINITIONS

 

Section 1.1.            Definitions. Terms defined in the Amended andRestated Management Stockholders Agreement, dated as of April 27, 2006 (as maybe amended, supplemented or modified from time to time in accordance with theterms thereof, the “Management Stockholders Agreement”), among CPIInternational, Inc., Cypress Merchant Banking Partners II L.P., CypressMerchant B II C.V., 55th Street Partners II L.P., Cypress Side-by-Side LLC, andthe stockholders listed on Schedule I thereto and each other person who shall becomeparty to the Management Stockholders Agreement as provided therein, are usedherein as therein defined. In addition, the following terms shall have themeanings ascribed to them below:

 

“Commission”means the United States Securities and Exchange Commission.

 

“ExchangeAct” means the United States Securities Exchange Act of 1934, as amended.

 

“Holder”means any Management Stockholder and any Permitted Transferee of a ManagementStockholder, in each case holding Registrable Securities.

 

“IndemnifiedParty” has the meaning set forth in Section 4.3.

 

“IndemnifyingParty” has the meaning set forth in Section 4.3.

 

“Inspectors”has the meaning set forth in Section 3.1(h).

 

“Piggy-BackRegistration” has the meaning set forth in Section 2.1.

 

“Records”has the meaning set forth in Section 3.1(h).

 

“RegistrableSecurity” means any outstanding shares of Common Stock held by a Holder asof the date of the Initial Public Offering or shares of Common Stock issuable pursuantto stock options held by a Holder as of the date of the Initial Public Offering(whether or not such options are vested at the time of the Initial PublicOffering) until (i) a registration statement covering such Common Stockhas been declared effective by the Commission and such stock has been disposedof pursuant to such effective registration statement, (ii) such stock issold pursuant to Rule 144 (or any similar provisions then in force) under theSecurities Act or (iii) such stock is eligible to be sold pursuant to Rule144(k) (or any similar provision then in force) under the Securities Act.

 

“RegistrationExpenses” has the meaning set forth in Section 3.2.

 

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“SellingHolder” means a Holder who is selling Registrable Securities pursuant to aregistration statement under the Securities Act.

 

“Underwriter”means a securities dealer who purchases any Registrable Securities as principalin an underwritten offering and not as part of such dealer’s market-makingactivities.

 

ARTICLE IIREGISTRATION RIGHTS

 

Section 2.1.            Piggy-BackRegistration.  If at any timefollowing the consummation of an Initial Public Offering the Company proposesto file a registration statement under the Securities Act with respect to anoffering by the Company for its own account and/or for the account of any ofits security holders of any common stock (other than (i) a registration statementon Form S-4 (or F-4) or S-8 (or any substitute form that may be adopted by the Commission)or (ii) a registration statement filed in connection with an exchangeoffer or an offering of securities solely to the Company’s existingsecurityholders), then the Company shall give written notice of such proposedfiling to the Holders as soon as practicable (but in no event less than 15 daysbefore the anticipated filing date), and such notice shall identify theanticipated filing date and offer such Holders the opportunity to register suchnumber of shares of Registrable Securities as each such Holder may request(which request shall specify the Registrable Securities intended to be disposedof by such Holder and the intended method of distribution thereof and shall bedelivered to the Company at least two days prior to the anticipated filingdate) (a “Piggy-Back Registration”).  The Company shall use its commercially reasonableefforts to cause the managing Underwriter or Underwriters of a proposed underwrittenoffering to permit the Registrable Securities requested to be included in a Piggy-BackRegistration to be included on the same terms and conditions to permit the saleor other disposition of such Registrable Securities in accordance with theintended method of distribution thereof.  Any Holder shall have the right to withdraw itsrequest for inclusion of its Registrable Securities in any registrationstatement pursuant to this Section 2.1 by giving written notice to the Companyof its request to withdraw.  The Companymay withdraw a Piggy-Back Registration at any time prior to the time it becomeseffective, provided that, in such event, the Company shall reimburseHolders requested to be included in such Piggy-Back Registration for allRegistration Expenses (including reasonable counsel fees and expenses) incurredprior to such withdrawal; provided, further, a Holder shall not be eligible forpiggy-back registration rights pursuant to this Section 2.1 withrespect to any registration statements which are initially filed by the Companyafter the Piggy-Back Termination Date with respect to such Holder (or offeringsmade after such Piggy-Back Termination Date pursuant to shelf registrationstatements previously on file).   Forthese purposes, the “Piggy-Back Termination Date” shall mean the secondanniversary of the Company’s Initial Public Offering; provided, however, withrespect to any Holder whose status as an employee or director of the Company orits subsidiaries terminates prior to such second anniversary, the Holder may,by written notice to the Company, elect to have the Piggy-Back Termination Date(with respect to such Holder and his Permitted Transferees only) occur any dateafter the date of such termination of employee or director status and beforesuch second anniversary.

 

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Section 2.2.            Reductionof Offering.  Notwithstandinganything contained herein, if the managing Underwriter(s) of an offeringdescribed in Section 2.1 determine that the offering that the Holders, theCompany and/or such other Persons intend to make is such that the success ofthe offering would be materially and adversely affected by inclusion of the RegistrableSecurities requested to be included, then the Company shall include in such registration: (i) first, the shares, ifany, proposed to be registered by the Company for its own account or for theaccount of a holder exercising “demand registration rights”; and (ii) second,an amount of securities requested to be included in such registration(including pursuant to Section 2.1) by the holders exercising “piggy-backregistration rights” (such amount to be allocated among such holders inproportion to the number of shares of Common Stock held by such holders).  Holders may not sell shares in a PublicOffering if the managing Underwriter(s) determine in their reasonable businessjudgment that such participation will have an adverse impact on such PublicOffering.  Notwithstanding any provisionin this Agreement to the contrary, no Holder may exercise piggybackregistration rights to the extent it would otherwise result in the sale by himor her, on a cumulative basis taking into account all prior sales, of a greaterpercentage of the Common Stock that has ever been held by him than thepercentage equal to the cumulative shares of Common Stock sold by Cypressdivided by the total shares of Common Stock ever held by Cypress.  The Holders agree that they will not sell anyshares in an Initial Public Offering.

 

ARTICLE IIIREGISTRATION PROCEDURES

 

Section 3.1.            Filings;Information.  Whenever the Holdershave requested that any Registrable Securities be registered pursuant to thisagreement, the Company will use its reasonable efforts to effect theregistration of such Registrable Securities in accordance with the intendedmethod of disposition thereof as quickly as practicable, and in connection withany such request:

 

(a)           TheCompany will as expeditiously as practicable prepare and file with the Commissiona registration statement on any form for which the Company then qualifies orwhich counsel for the Company shall deem appropriate and which form shall beavailable for the sale of the Registrable Securities to be registeredthereunder in accordance with the intended method of distribution thereof (itbeing understood that the Company shall use Form S-3 (or any replacement form)if such form is then available), and use its commercially reasonable efforts tocause such filed registration statement to become effective.

 

(b)           TheCompany will prepare and file with the Commission such amendments andsupplements to such registration statement and the prospectus used in connectiontherewith as may be necessary to keep such registration statement effective andto comply with the provisions of the Securities Act with respect to thedisposition of all securities covered by such registration statement until suchtime as all of such securities have been disposed of in accordance with theintended methods of disposition by the Selling Holder or Selling Holdersthereof set forth in such registration statement.

 

(c)           TheCompany will, prior to filing a registration statement or prospectus or anyamendment or supplement thereto, furnish to each Selling Holder, counsel

 

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representingany Selling Holders, and each Underwriter, if any, of the RegistrableSecurities covered by such registration statement copies of such registrationstatement as proposed to be filed, together with exhibits thereto, whichdocuments will be subject to review by the foregoing within 5 Business Daysafter delivery, and thereafter furnish to such Selling Holder, counsel andUnderwriter, if any, such number of copies of such registration statement, eachamendment and supplement thereto (in each case including all exhibits theretoand documents incorporated by reference therein), the prospectus included insuch registration statement (including each preliminary prospectus) and suchother documents as such Selling Holder or Underwriter may reasonably request inorder to facilitate the disposition of the Registrable Securities owned by suchSelling Holder.

 

(d)           Afterthe filing of the registration statement, the Company will promptly notify eachSelling Holder covered by such registration statement of any stop order issuedor threatened by the Commission and take all reasonable actions required toprevent the entry of such stop order or to remove it if entered.

 

(e)           TheCompany will use its commercially reasonable efforts to (i) register or qualifythe Registrable Securities under such other securities or blue sky laws of suchjurisdictions in the United States and such other jurisdictions as any SellingHolder reasonably (in light of such Selling Holder’s intended plan ofdistribution) requests and (ii) cause such Registrable Securities to beregistered with or approved by such other governmental agencies or authoritiesin the United States as may be necessary by virtue of the business andoperations of the Company and do any and all other acts and things that may bereasonably necessary or advisable to enable such Selling Holder to consummatethe disposition of the Registrable Securities owned by such Selling Holder; providedthat the Company will not be required to (A) qualify generally to dobusiness in any jurisdiction where it would not otherwise be required to qualifybut for this paragraph (d), (B) subject itself to taxation in any suchjurisdiction or (C) consent to general service of process in any suchjurisdiction.

 

(f)            TheCompany will immediately notify each Selling Holder of such RegistrableSecurities, at any time when a prospectus relating thereto is required to bedelivered under the Securities Act, of the occurrence of an event requiring thepreparation of a supplement or amendment to such prospectus so that, asthereafter delivered to the purchasers of such Registrable Securities, suchprospectus will not contain an untrue statement of a material fact or omit tostate any material fact required to be stated therein or necessary to make thestatements therein not misleading, and will promptly make available to eachSelling Holder any such supplement or amendment.

 

(g)           TheCompany will enter into customary agreements (including, if applicable, anunderwriting agreement in customary form) and take such other actions as are reasonablyrequired in order to expedite or facilitate the disposition of such RegistrableSecurities in accordance with the intended plan of distribution of the SellingHolders.

 

(h)           TheCompany will deliver promptly to each Selling Holder of such RegistrableSecurities and each Underwriter, if any, subject to restrictions imposed by theUnited States federal government or any agency or instrumentality thereof,copies of all correspondence between the Commission and the Company and itscounsel or auditors and

 

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allmemoranda relating to discussions with the Commission or its staff with respectto the registration statement and make available for inspection by any SellingHolder of such Registrable Securities, any Underwriter participating in anydisposition pursuant to such registration statement and any attorney,accountant or other professional retained by any such Selling Holder orUnderwriter (collectively, the “Inspectors”), all financial and otherrecords, pertinent corporate documents and properties of the Company(collectively, the “Records”), as shall be reasonably necessary to enablethem to perform a reasonable and customary due diligence investigation, andcause the Company’s officers, directors and employees to supply all informationreasonably requested by any Inspectors in connection with such registrationstatement.  Records which the Company determines,in good faith, to be confidential and which it notifies the Inspectors areconfidential shall not be disclosed by the Inspectors unless (i) thedisclosure of such Records is necessary to avoid or correct a misstatement oromission in such registration statement or (ii) the disclosure or releaseof such Records is requested or required pursuant to oral questions,interrogatories, requests for information or documents or a subpoena or otherorder from a court of competent jurisdiction or other process; providedthat prior to any disclosure or release pursuant to clause (ii), the Inspectorsshall provide the Company with prompt notice of any such request or requirementso that the Company may seek an appropriate protective order or waive such Inspectors’obligation not to disclose such Records; and provided, further,that if failing the entry of a protective order or the waiver by the Companypermitting the disclosure or release of such Records, the Inspectors, uponadvice of counsel, are compelled to disclose such Records, the Inspectors maydisclose that portion of the Records which counsel has advised the Inspectorsthat the Inspectors are compelled to disclose.  Each Selling Holder of such RegistrableSecurities agrees that it will, upon learning that disclosure of such Recordsis sought in a court of competent jurisdiction, give notice to the Company andallow the Company at its expense, to undertake appropriate action to preventdisclosure of the Records deemed confidential.

 

(i)            TheCompany will furnish to each Underwriter, if any, (i) an opinion or opinionsof counsel to the Company and (ii) a comfort letter or comfort letters fromthe Company’s independent public accountants, each in customary form andcovering such matters of the type customarily covered by opinions or comfortletters, as the case may be, as the managing Underwriter, if any, thereforreasonably requests.

 

(j)            TheCompany will use its commercially reasonable efforts to comply with allapplicable rules and regulations of the Commission, and make available to itssecurityholders, as soon as reasonably practicable, an earnings statementcovering a period of 12 months, beginning within three months after theeffective date of the registration statement, which earnings statement shallsatisfy the provisions of Section 11(a) of the Securities Act and Rule 158thereunder.

 

(k)           TheCompany will use its commercially reasonable efforts (a) to cause all suchRegistrable Securities to be listed on a national securities exchange (if suchshares are not already so listed) and on each additional national securitiesexchange on which similar securities issued by the Company are then listed (ifany), if the listing of such Registrable Securities is then permitted under therules of such exchange or (b) to secure designation of all suchRegistrable Securities covered by such registration statement as a

 

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NASDAQ“national market system security” within the meaning of Rule 11Aa2-1 of theCommission or, failing that, to secure NASDAQ authorization for suchRegistrable Securities and, without limiting the generality of the foregoing,to arrange for at least two market makers to register as such with respect tosuch Registrable Securities with the NASD.

 

(l)            TheCompany will appoint a transfer agent and registrar for all such RegistrableSecurities covered by such registration statement not later than the effectivedate of such registration statement.

 

TheCompany may require each Selling Holder of Registrable Securities to promptlyfurnish in writing to the Company such information regarding the distributionof the Registrable Securities as the Company may from time to time reasonablyrequest and such other information as may be legally required in connectionwith such registration.

 

EachSelling Holder agrees that, upon receipt of any notice from the Company of thehappening of any event of the kind described in Section 3.1(f) hereof, suchSelling Holder will forthwith discontinue disposition of Registrable Securitiespursuant to the registration statement covering such Registrable Securitiesuntil such Selling Holder’s receipt of the copies of the supplemented oramended prospectus contemplated by Section 3.1(f) hereof, and, if so directedby the Company such Selling Holder will deliver to the Company all copies,other than permanent file copies then in such Selling Holder’s possession, ofthe most recent prospectus covering such Registrable Securities at the time ofreceipt of such notice.  In the event theCompany shall give such notice, the Company shall extend the period duringwhich such registration statement shall be maintained effective (including theperiod referred to in Section 3.1(b) hereof) by the number of days during theperiod from and including the date of the giving of notice pursuant to Section3.1(f) hereof to the date when the Company shall make available to the SellingHolders of Registrable Securities covered by such registration statement aprospectus supplemented or amended to conform with the requirements of Section3.1(f) hereof.

 

Section 3.2.            RegistrationExpenses.  In connection with anyregistration statement filed pursuant to Section 2.1, the Company shall pay thefollowing registration expenses incurred in connection with the registrationhereunder (the “Registration Expenses”): (i) all registration and filing fees, (ii) fees and expensesof compliance with securities or blue sky laws (including reasonable fees anddisbursements of counsel in connection with blue sky qualifications of theRegistrable Securities), (iii) printing expenses, (iv) the Company’sinternal expenses (including, without limitation, all salaries and expenses ofits officers and employees performing legal or accounting duties), (v) feesand expenses incurred in connection with the listing of the RegistrableSecurities, (vi) reasonable fees and disbursements of counsel for the Companyand not more than one counsel for the Selling Holders, as may be chosen by amajority of the Selling Holders, and customary fees and expenses forindependent certified public accountants retained by the Company (including theexpenses of any comfort letters or costs associated with the delivery byindependent certified public accountants of a comfort letter or comfort lettersrequested pursuant to Section 3.1(i) hereof) and (vii) reasonable fees andexpenses of any special experts retained by the Company in connection with suchregistration.  The Company shall have no

 

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obligation to pay any underwriting fees, discounts orcommissions attributable to the sale of Registrable Securities.

 

ARTICLE IVINDEMNIFICATION AND CONTRIBUTION

 

Section 4.1.            Indemnificationby the Company.  To the fullestextent permitted by law, the Company agrees to indemnify and hold harmless eachSelling Holder of Registrable Securities, its officers, directors, employeesand agents, and each person, if any, who controls such Selling Holder withinthe meaning of the Securities Act from and against any loss, claim, damage orliability, joint or several, or any action in respect thereof (including, butnot limited to, any loss, claim, damage, liability or action relating topurchases and sales of Common Stock) to which such Selling Holder, officer,director, employee or agent or controlling Person may become subject under theSecurities Act or otherwise, insofar as such loss, claim, damage, liability oraction arises out of, or is based upon, (i) any untrue statement oralleged untrue statement of a material fact contained in any registrationstatement, preliminary prospectus or final prospectus or any amendment orsupplement thereto relating to the Registrable Securities or (ii) anyomission or alleged omission to state therein a material fact required to bestated therein or necessary to make the statements therein not misleading andshall reimburse each Selling Holder and each such officer, director, employee,agent and controlling Person for any legal and other expenses reasonablyincurred by that Selling Holder, officer, director, employee, agent or controllingPerson in connection with investigating or defending or preparing to defendagainst any such loss, claim, damage, liability or action as such expenses areincurred, except insofar as the same are contained in any information furnishedin writing to the Company by such Selling Holder expressly for use therein; provided,however, that the Company shall not be liable to any Selling Holder orsuch Person’s directors, officers, agents or controlling Persons, in any such casefor any such loss, claim, damage or liability to the extent that it arises outof or is based upon an untrue statement or alleged untrue statement or omissionor alleged omission made in connection with such registration statement,preliminary prospectus, final prospectus or amendments or supplements thereto,in conformity with written information relating to such Selling Holder furnishedto the Company by such Selling Holder expressly for inclusion therein inconnection with such registration; and, provided, further, thatas to any preliminary prospectus or any final prospectus, this indemnityagreement shall not inure to the benefit of any Selling Holder or such Person’sdirectors, officers, agents or controlling Persons, on account of any loss, claim,damage or liability arising from the sale of Registrable Securities to anyPerson by such Selling Holder if such Selling Holder or its representativesfailed to send or give a copy of the final prospectus or a prospectussupplement, as the case may be (excluding documents incorporated by referencetherein), as the same may be amended or supplemented, to that Person within thetime required by the Securities Act, and the untrue statement or alleged untruestatement of a material fact or omission or alleged omission to state amaterial fact in such preliminary prospectus or final prospectus was correctedin the final prospectus or such prospectus supplement, as the case may be(excluding documents incorporated by reference therein), unless such failureresulted from the non-compliance by the Company with Section 3.1(f).  The Company also agrees to indemnify anyUnderwriters of the Registrable Securities, their officers and directors andeach Person who controls such Underwriters on substantially the same basis as

 

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that of the indemnification of the Selling Holdersprovided in this Section 4.1.  The indemnitiesprovided by this Section 4.1 shall remain in full force and effect regardlessof any investigation made by or on behalf of such Selling Holder orUnderwriter.

 

Section 4.2.            Indemnificationby Holders of Registrable Securities.  To the fullest extent permitted by law, eachSelling Holder agrees, severally but not jointly, to indemnify and holdharmless the Company its officers, directors and agents and each Person, ifany, who controls the Company within the meaning of the Securities Act to thesame extent as the indemnity from the Company to such Selling Holder pursuantto clauses (i) and (ii) of Section 4.1, but only with reference to informationrelated to such Selling Holder furnished in writing by such Selling Holder oron such Selling Holder’s behalf expressly for use in any registration statementor prospectus relating to the Registrable Securities, or any amendment orsupplement thereto, or any preliminary prospectus; provided that theobligation to indemnify will be individual to each Selling Holder and will belimited to the net amount of proceeds received by such Selling Holder from thesale of Registrable Securities pursuant to such Registration Statement. EachSelling Holder also agrees to indemnify and hold harmless Underwriters of the RegistrableSecurities, their officers and directors and each Person who controls such Underwriterson substantially the same basis as that of the indemnification of the Company providedin this Section 4.2, subject to the proviso in the first sentence of thisSection 4.2.  Notwithstanding theforegoing, the indemnity set forth in this Section 4.2, shall not apply to amountspaid in settlements effected without the consent of such Selling Holder (whichconsent shall not be unreasonably withheld or delayed).

 

Section 4.3.            Conductof Indemnification Proceedings.  Promptly after receipt by any person inrespect of which indemnity may be sought pursuant to Section 4.1 or 4.2 (an “IndemnifiedParty”) of notice of any claim or the commencement of any action, theIndemnified Party shall, if a claim in respect thereof is to be made againstthe person against whom such indemnity may be sought (an “Indemnifying Party”)notify the Indemnifying Party in writing of the claim or the commencement ofsuch action, provided that the failure to notify the Indemnifying Partyshall not relieve it from any liability which it may have to an Indemnified Partyotherwise than under Section 4.1 or 4.2, except to the extent of any actualprejudice resulting therefrom.  If anysuch claim or action shall be brought against an Indemnified Party, and itshall notify the Indemnifying Party thereof, the Indemnifying Party shall beentitled to participate therein, and, to the extent that it wishes, jointlywith any other similarly notified Indemnifying Party, to assume the defensethereof with counsel satisfactory to the Indemnified Party.  After notice from the Indemnifying Party tothe Indemnified Party of its election to assume the defense of such claim oraction, the Indemnifying Party shall not be liable to the Indemnified Party forany legal or other expenses subsequently incurred by the Indemnified Party inconnection with the defense thereof other than reasonable costs ofinvestigation; provided that the Indemnified Party shall have the rightto employ separate counsel to represent the Indemnified Party and itscontrolling Persons who may be subject to liability arising out of any claim inrespect of which indemnity may be sought by the Indemnified Party against the IndemnifyingParty, but the fees and expenses of such counsel shall be for the account ofsuch Indemnified Party unless (i) the Indemnifying Party and theIndemnified Party shall have mutually agreed to the retention of such counselor (ii) in the reasonable judgment of such Indemnified Partyrepresentation of both parties by the same counsel would be inappropriate due toactual or

 

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potential differing interests between them.  No Indemnifying Party shall, without the priorwritten consent of the Indemnified Party, effect any settlement of any claim orpending or threatened proceeding in respect of which the Indemnified Party isor could have been a party and indemnity could have been sought hereunder bysuch Indemnified Party, unless such settlement includes an unconditionalrelease of such Indemnified Party from all liability arising out of such claimor proceeding.

 

Section 4.4.            Contribution. If the indemnification provided for inthis Article IV is unavailable to the Indemnified Parties in respect of anylosses, claims, damages, liabilities or expenses referred to herein, then eachsuch Indemnifying Party, in lieu of indemnifying such Indemnified Party, shallcontribute to the amount paid or payable by such Indemnified Party as a resultof such losses, claims, damages, liabilities or expenses (i) as betweenthe Company and the Selling Holders on the one hand and the Underwriters on theother, in such proportion as is appropriate to reflect the relative benefitsreceived by the Company and the Selling Holders on the one hand and theUnderwriters on the other from the offering of the Registrable Securities, or ifsuch allocation is not permitted by applicable law, in such proportion as isappropriate to reflect not only the relative benefits but also the relativefault of the Company and the Selling Holders on the one hand and of theUnderwriters on the other in connection with the statements or omissions whichresulted in such losses, claims, damages or liabilities, as well as any other relevantequitable considerations and (ii) as between the Company on the one handand each Selling Holder on the other, in such proportion as is appropriate toreflect the relative fault of the Company and of each Selling Holder in connectionwith such statements or omissions, as well as any other relevant equitableconsiderations.  The relative benefitsreceived by the Company and the Selling Holders on the one hand and theUnderwriters on the other shall be deemed to be in the same proportion as thetotal proceeds from the offering (net of underwriting discounts and commissionsbut before deducting expenses) received by the Company and the Selling Holders bearto the total underwriting discounts and commissions received by theUnderwriters, in each case as set forth in the table on the cover page of theprospectus.  The relative fault of the Companyand the Selling Holders on the one hand and of the Underwriters on the othershall be determined by reference to, among other things, whether the untrue oralleged untrue statement of a material fact or the omission or alleged omissionto state a material fact relates to information supplied by the Company and theSelling Holders or by the Underwriters.  Therelative fault of the Company on the one hand and of each Selling Holder on theother shall be determined by reference to, among other things, whether theuntrue or alleged untrue statement of a material fact or the omission oralleged omission to state a material fact relates to information supplied bysuch party, and the parties’ relative intent, knowledge, access to informationand opportunity to correct or prevent such statement or omission.

 

TheCompany and the Selling Holders agree that it would not be just and equitableif contribution pursuant to this Section 4.4 were determined by pro rataallocation (even if the Underwriters were treated as one entity for suchpurpose) or by any other method of allocation which does not take account ofthe equitable considerations referred to in the immediately precedingparagraph.  The amount paid or payable byan Indemnified Party as a result of the losses, claims, damages or liabilitiesreferred to in the immediately preceding paragraph shall be deemed to include,subject to the limitations set forth above, any legal or

 

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other expenses reasonably incurred by such IndemnifiedParty in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section4.4, no Underwriter shall be required to contribute any amount in excess of theamount by which the total price at which the Registrable Securitiesunderwritten by it and distributed to the public were offered to the publicexceeds the amount of any damages which such Underwriter has otherwise beenrequired to pay by reason of such untrue or alleged untrue statement oromission or alleged omission, and no Selling Holder shall be required tocontribute any amount in excess of the amount by which the total price at whichthe Registrable Securities of such Selling Holder were offered to the public(less underwriting discounts and commissions) exceeds the amount of any damageswhich such Selling Holder has otherwise been required to pay by reason of such untrueor alleged untrue statement or omission or alleged omission.  No person guilty of fraudulentmisrepresentation (within the meaning of Section 11(f) of the Securities Act)shall be entitled to contribution from any person who was not guilty of suchfraudulent misrepresentation.  EachSelling Holder’s obligations to contribute pursuant to this Section 4.4 areseveral in proportion to the proceeds of the offering received by such SellingHolder and not joint.

 

ARTICLE VMISCELLANEOUS

 

Section 5.1.            Participationin Underwritten Registrations.  NoPerson may participate in any underwritten registration hereunder unless suchPerson (a) agrees to sell such Person’s securities on the basis providedin any underwriting arrangements approved by the Persons entitled hereunder toapprove such arrangements and (b) completes and executes all questionnaires,powers of attorney, indemnities, underwriting agreements and other documents reasonablyrequired under the terms of such underwriting arrangements and theseRegistration Rights.

 

Section 5.2.            Rule144.  The Company covenants that itwill file any reports required to be filed by it under the Securities Act andthe Exchange Act and that it will take such further action as any Holder mayreasonably request, all to the extent required from time to time to enableHolders to sell Registrable Securities without registration under theSecurities Act within the limitation of the exemptions provided by (a) Rule144 under the Securities Act, as such Rules may be amended from time to time,or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder, theCompany will deliver to such Holder a written statement as to whether it hascomplied with such requirements.

 

Section 5.3.            HoldbackAgreements.  If any registrationstatement shall be in connection with a Public Offering to be underwritten on afirm commitment basis, then each Holder of Registrable Securities agrees not toeffect any sale or distribution of the securities being registered or of asimilar security of the Company or any securities convertible into orexchangeable or exercisable for such securities, including a sale pursuant toRule 144 under the Securities Act, during the 14 days prior to, and during the90-day period beginning on, the effective date of such Public Offering (exceptas part of such underwritten registration), unless the investment banks orunderwriters managing the public offering otherwise agree.  Notwithstanding anything to the contrarycontained in the Management Stockholders Agreement or in this Exhibit C,this Section 5.3 shall not apply with respect to any

 

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registrationstatements initially filed after the Piggy-Back Termination Date with respectto a Holder (or offerings made after such Piggy-Back Termination Date pursuantto shelf registration statements previously on file).

 

Section 5.4.            OtherRegistration Rights.  Notwithstandinganything contained in this Exhibit C or the Management StockholdersAgreement to the contrary, no provision herein or therein shall be interpretedto limit (i) the right of the Company to grant Cypress or any other Personany right of registration in respect of any securities of the Company (provided,however, that the Company shall not enter into any agreement withrespect to the Registrable Securities which would prevent the Company fromcomplying with its obligations under this Agreement or (ii) the number oftimes the Company may grant any such right of registration under the SecuritiesAct to any Person (including Cypress).

 

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EXHIBIT D

 

[Intentionally Omitted]

 

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**Schedules**

** **

ScheduleI             ManagementStockholders

ScheduleII            Senior Managers

 

**Exhibits**

 

ExhibitA                [IntentionallyOmitted]

ExhibitB                PermittedTransferee Form of Agreement to be Bound

ExhibitC                RegistrationRights

ExhibitD                [IntentionallyOmitted]

 

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