**Exhibit10.1**

 

AMENDED AND RESTATEDEMPLOYMENT AGREEMENT

 

 

THIS AMENDED AND RESTATEDEMPLOYMENT AGREEMENT (this “Agreement”), is made and entered into as of January 17,2008, by and between Communications & Power Industries, Inc., aDelaware corporation (hereinafter called the “Corporation”), and RobertA. Fickett (hereinafter called the “Executive”).

 

WITNESSETH THAT:

 

WHEREAS, the Corporationand the Executive are party to an Employment Agreement, dated as of April 27,2006 (the “Original Employment Agreement”), providing for the employmentof the Executive as President and Chief Operating Officer of the Corporation;and

 

WHEREAS, the partiesdesire to amend and restate the Original Employment Agreement pursuant to theterms and provisions set forth herein;

 

NOW, THEREFORE, theCorporation and the Executive, each intending to be legally bound, herebymutually covenant and agree as follows (certain defined terms are set forth in Section 8(d) hereof):

 

# 1.             Employmentand Term.

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## (a)           Employment.  The Corporation shall employ the Executive asthe President and Chief Operating Officer of the Corporation, and the Executiveshall so serve, for the term set forth in Section 1(b).

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## (b)           Term.  The term of the Executive’s employment underthis Agreement commenced on April 27, 2006 (the “Commencement Date”)and shall end on the third anniversary of the Commencement Date, subject to theextension of such term as hereinafter provided and subject to earliertermination as provided in Section 8.  The term of this Agreement shall be extendedautomatically for one (1) additional year as of the third anniversary ofthe Commencement Date, and each anniversary date thereafter unless, no laterthan six (6) months prior to any such renewal date, either the Corporationor the Executive gives written notice to the other, in accordance with Section 14,that the term of this Agreement shall not be so extended; provided, however, noautomatic extension of the term shall occur with respect to an anniversary dateif Executive has attained the age of sixty-five (65).

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# 2.             Duties.  During the period of employment as providedin Section 1(b) hereof, the Executive shall serve as Presidentand Chief Operating Officer of the Corporation and President and ChiefOperating Officer of the Parent and have all powers and duties consistent withsuch positions, subject to the reasonable direction of the Chief ExecutiveOfficer.  The Executive shall devotesubstantially his entire time during reasonable business hours (reasonable sickleave and vacations excepted) and reasonable best efforts to fulfillfaithfully, responsibly and to the best of his ability his duties hereunder.

 

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# 3.             Salary.

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## (a)           BaseSalary.  For services performed bythe Executive for the Corporation pursuant to this Agreement during the periodof employment as provided in Section 1(b) hereof, theCorporation shall pay the Executive a base salary at the rate of Three HundredThousand U.S. dollars ($300,000 U.S.) per year, payable in substantially equalinstallments in accordance with the Corporation’s regular payrollpractices.  The Executive’s base salary(with any increases under Section 3(b), below) shall not be subjectto reduction; provided, however, in connection with an across-the-board salaryreduction that applies to substantially all of the management executives ofParent and its subsidiaries, Executive’s base salary may be reduced by apercentage amount equal to the average amount of the percentage decreaseaffecting such other management executives, but in no event more than 10%.  Any compensation which may be paid to theExecutive under any additional compensation or incentive plan of theCorporation or Parent or which may be otherwise authorized from time to time bythe Board (or an appropriate committee thereof) shall be in addition to thebase salary to which the Executive shall be entitled under this Agreement.

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## (b)           SalaryIncreases.  During the period ofemployment as provided in Section 1(b) hereof, the base salaryof the Executive shall be reviewed no less frequently than annually by theBoard to determine whether or not the same should be increased in light of theduties and responsibilities of the Executive and the performance thereof, andif it is determined that an increase is merited, such increase shall bepromptly put into effect and the base salary of the Executive as so increasedshall constitute the base salary of the Executive for purposes of Section 3(a).

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# 4.             AnnualBonuses.  For each fiscal year duringthe term of employment, the Executive shall be eligible to receive a bonuspayable in cash and/or in Parent’s common stock.  The amount of the bonus shall be based on theachievement of certain operating and/or financial goals, in accordance with theterms of a bonus plan adopted and administered by the Board for seniorexecutives of the Parent and its subsidiaries, which plan may be amended fromtime to time by the Board in its discretion. Executive’s target annual bonus for fiscal year 2006 will be equal to0.75 times his current annual salary.

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# 5.             EquityIncentive Compensation.  During theterm of employment hereunder the Executive shall be eligible to participate, inan appropriate manner relative to other senior executives of the Parent and itssubsidiaries, in any equity-based incentive compensation plan or programapproved by the Board from time to time, including (but not by way oflimitation) any plan providing for the granting of (a) options to purchasestock of the Parent, (b) restricted stock of the Parent or (c) similarequity-based units or interests.

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# 6.             OtherBenefits.  In addition to thecompensation described in Sections 3, 4 and 5, above, the Executiveshall also be entitled to the following:

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## (a)           Participationin Benefit Plans.  The Executiveshall be entitled to participate in all of the various retirement, welfare,disability, fringe benefit, executive perquisite and expense reimbursementplans, and any other programs and arrangements of the Corporation and Parent tothe extent the Executive is eligible for participation under the 

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## terms of such plans, programs and arrangements, with the participationlevels to be determined by Executive’s salary, position and tenure, and suchother factors as apply in such plans and programs.  Except as otherwise specifically provided inthis Agreement, the Executive shall also be entitled to all benefits providedto him under the practices of the Corporation as in effect immediately prior tothe Commencement Date.

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## (b)           Vacationand Holidays.  The Executive shall beentitled to the number of weeks of vacation during each year of this Agreementper the formula determined by the existing policies of the Corporation, or suchgreater period as the Board may approve, and to the paid holidays given by theCorporation to its employees generally, without reduction in salary or otherbenefits.

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# 7.             Covenantsof the Executive.  In order to inducethe Corporation to enter into this Agreement, the Executive hereby agrees asfollows:

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## (a)           Confidentiality.  Except for and on behalf of the Corporationwith the consent of or as directed by the Board, the Executive shall keepconfidential and shall not divulge to any other person or entity, during theterm of employment or thereafter, any of the business secrets or otherconfidential information regarding the Parent and its subsidiaries which hasnot otherwise become public knowledge; provided, however, that nothing in thisAgreement shall preclude the Executive from disclosing information (i) toan appropriate extent to parties retained to perform services for the Parent orits subsidiaries or (ii) under any other circumstances to the extent suchdisclosure is, in the reasonable judgment of the Executive, appropriate ornecessary to further the best interests of the Corporation or its subsidiariesor (iii) as may be required by law, legal process or subpoena.

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## (b)           Records.  All papers, books and records of every kindand description relating to the business and affairs of the Parent and itssubsidiaries, whether or not prepared by the Executive, other than personalnotes prepared by or at the direction of the Executive, shall be the sole andexclusive property of the Corporation, and the Executive shall surrender themto the Corporation at any time upon request by the Board.

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## (c)           Non-Competition.  The Executive hereby agrees with theCorporation that during the term of his employment hereunder, and in certaininstances, as provided below, for a period following termination of hisemployment hereunder, he shall not, directly or indirectly, engage in, or beemployed by, or act as a consultant to, or be a director, officer, owner orpartner of, or acquire a substantial interest in, any business activity orentity which competes significantly with the Parent or any of its subsidiaries,provided, however, that as to the period after termination of the Executive’semployment hereunder, the restrictive covenants set forth in this Section 7(c) shallapply only in the case of terminations without Cause or resignations for GoodReason and then only for a period beginning on the Date of Termination andending, as applicable, eighteen (18) months or twenty-four (24) months later(which period will be based the applicable multiplier pursuant to subsection(ii) of Section 9(b) of this Agreement);

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## (d)           Non-Solicitation.  During the time period after termination (ifany) during which the Executive is subject to the noncompetition covenants of Section 7(c) ofthis Agreement, he shall not induce or attempt to induce any customer,supplier, licensee or 

 

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## other individual, corporation or other business organization having abusiness relation with the Parent or its subsidiaries to cease doing businesswith the Parent or its subsidiaries or in any way interfere with therelationship between any such customer, supplier, licensee or other person andthe Parent or its subsidiaries.  Inaddition, during the eighteen (18) month period following termination ofemployment for any reason (or, if longer, the period during which the Executiveis subject to the non-competition covenants of Section 7(c) ofthis Agreement), the Executive shall not solicit any employee of the Parent orany of its subsidiaries to leave the employment thereof or in any way interferewith the relationship of such employee with the Parent or its subsidiaries.

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## (e)           Enforcement.  The Executive recognizes that the provisionsof this Section 7 are vitally important to the continuing welfareof the Corporation and its subsidiaries and that money damages would constitutean inadequate remedy for any violation thereof. Accordingly, in the event of any such violation by the Executive, theCorporation and its subsidiaries, in addition to any other remedies they mayhave, shall have the right to institute and maintain a proceeding to compelspecific performance thereof or to seek an injunction restraining any action bythe Executive in violation of this Section 7.

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# 8.             Termination.  Unless earlier terminated in accordance withthe following provisions of this Section 8, the Corporation shallcontinue to employ the Executive and the Executive shall remain employed by theCorporation during the entire term of this Agreement as set forth in Section 1(b).  Section 9 hereof sets forthcertain obligations of the Corporation in the event that the Executive’semployment is terminated.

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## (a)           Deathor Disability.  Except to the extentotherwise provided in Section 9 with respect to certain post-Dateof Termination payment obligations of the Corporation, this Agreement shallterminate immediately as of the Date of Termination in the event of theExecutive’s death or in the event that the Executive becomes disabled.  The Executive will be deemed to be disabledwhen he is unable to engage in any substantial gainful activity by reason ofany medically determinable physical or mental impairment that can be expectedto result in death or can be expected to last for a continuous period of notless than twelve (12) months, or begins receiving income replacement benefitsfor a period of not less than three (3) months under an accident andhealth plan of the Corporation or an affiliate by reason of any medicallydeterminable physical or mental impairment that can be expected to result indeath or can be expected to last for a continuous period of not less thantwelve (12) months.  If any questionarises as to whether the Executive is disabled, upon reasonable requesttherefor by the Board, the Executive shall submit to reasonable medicalexamination for the purpose of determining the existence, nature and extent ofany such disability.  In accordance with Section 14,the Board shall promptly give the Executive written notice of any suchdetermination of the Executive’s disability. In the event of disability, until the Date of Termination, the basesalary payable to the Executive under Section 3 hereof shall bereduced dollar-for-dollar by the amount of disability benefits, if any, paid tothe Executive in accordance with any disability policy or program of theCorporation or its affiliates.

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## (b)           Dischargefor Cause.  In accordance with theprocedures hereinafter set forth, the Board may discharge the Executive fromhis employment hereunder for Cause. Except to the extent otherwise provided in Section 9with respect to certain post-Date of 

 

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## Termination obligations of the Corporation, this Agreement shallterminate immediately as of the Date of Termination in the event the Executiveis discharged for Cause.  Any dischargeof the Executive for Cause shall be communicated by a Notice of Termination tothe Executive given in accordance with Section 14 of thisAgreement.  For purposes of thisAgreement, a “Notice of Termination” means a written notice which (i) indicatesthe specific termination provision in this Agreement relied upon, (ii) setsforth in reasonable detail the facts and circumstances claimed to provide abasis for termination of the Executive’s employment under the provision soindicated and (iii) if the Date of Termination is to be other than thedate of receipt of such notice, specifies the Date of Termination (which dateshall in all events be within thirty (30) days after the giving of suchnotice).  In the case of a discharge ofthe Executive for Cause, the Notice of Termination shall include a copy of aresolution duly adopted by the Board at a meeting called and held for suchpurpose (after reasonable notice to the Executive and reasonable opportunityfor the Executive to be heard before the Board prior to such vote), finding that,in the reasonable and good faith opinion of the Board, the Executive was guiltyof conduct constituting Cause.  Nopurported termination of the Executive’s employment for Cause shall beeffective without a Notice of Termination.

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## (c)           Terminationfor Other Reasons.  The Corporationmay discharge the Executive without Cause by giving written notice to theExecutive in accordance with Section 14 at least thirty (30) daysprior to the Date of Termination.  TheExecutive may resign from his employment by giving written notice to theCorporation in accordance with Section 14 at least thirty (30) daysprior to the Date of Termination.  Exceptto the extent otherwise provided in Section 9 with respect tocertain post-Date of Termination obligations of the Corporation, this Agreementshall terminate immediately as of the Date of Termination in the event theExecutive is discharged without Cause or resigns.

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## (d)           Definitions.  For purposes of this Agreement, the followingcapitalized terms shall have the meanings set forth below:

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### (i)            “AccruedObligations” shall mean, as of the Date of Termination, the sum of (A) theExecutive’s base salary hereunder through the Date of Termination to the extentnot theretofore paid, (B) the amount of any incentive compensation,deferred compensation and other cash compensation accrued by the Executive asof the Date of Termination to the extent not theretofore paid, (C) anyvacation pay, expense reimbursements and other cash entitlements accrued by theExecutive as of the Date of Termination to the extent not theretofore paid, and(D) with respect to any bonus plans for the fiscal year of termination, ifExecutive has been employed for at least six (6) months during such fiscalyear and has not been terminated for Cause or resigned without Good Reason, apartial bonus for the fiscal year of termination equal to the bonus payable forthe full fiscal year in accordance with the applicable plan, program or policy,multiplied by a fraction equal to the fraction of the fiscal year preceding Executive’stermination.

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### (ii)           “BaseSalary” shall mean the annual base salary paid to Executive immediatelyprior to the termination of employment, provided that such amount shall in noevent be less than the annual base salary payable to Executive during the one (1) yearperiod immediately prior to the termination.

 

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### (iii)          “Board”means the board of directors of Parent.

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### (iv)          “Cause”shall mean (i) acts or omissions by the Executive which constituteintentional material misconduct or a knowing violation of a material policy ofthe Parent or any of its subsidiaries, (ii) the Executive personallyreceiving a benefit in money, property or services from the Parent or any ofits subsidiaries or from another person dealing with the Parent or any of itssubsidiaries, in material violation of applicable law or policy of Parent orany of its subsidiaries, (iii) an act of fraud, conversion,misappropriation, or embezzlement by the Executive or his conviction of, orentering a guilty plea or plea of no contest with respect to, a felony, or theequivalent thereof (other than DUI), or (iv) any deliberate and materialmisuse or deliberate and material improper disclosure of confidential orproprietary information of Parent or any of its subsidiaries.  Notwithstanding the foregoing, no act oromission by the Executive shall constitute Cause hereunder unless theCorporation has given detailed written notice thereof to the Executive, and theExecutive has failed to remedy such act or omission within a reasonable timeafter receiving such notice.

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### (v)           A “Changeof Control” shall be deemed to have occurred if:

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#### (A)          Anyindividual or group constituting a “person”, as such term is used in Sectionsl3(d) and l4(d)(2) of the Securities Exchange Act of 1934, as amended(“Exchange Act”) (other than (A) the Parent or any of itssubsidiaries, (B) any trustee or other fiduciary holding securities underan Executive benefit plan of the Parent or of any of its subsidiaries or (C) anyCypress Fund(s)), is or becomes the beneficial owner, directly or indirectly,of securities of the Parent representing fifty percent (50%) or more of thecombined voting power of the Parent’s outstanding securities then entitledordinarily (and apart from rights accruing under special circumstances) to votefor the election of directors; or

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#### (B)           ContinuingDirectors cease to constitute at least a majority of the Board; or

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#### (C)           thereoccurs a reorganization, merger, consolidation or other corporate transactioninvolving the Parent (a “Transaction”), in each case with respect towhich the stockholders of the Parent immediately prior to such Transaction donot, immediately after the Transaction, own more than 50% of the combinedvoting power of the Parent or other corporation resulting from suchTransaction; or

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#### (D)          allor substantially all of the assets of the Corporation or Parent are sold,liquidated or distributed.

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### (vi)          “ContinuingDirectors” shall mean (A) the directors of the Parent in office on thedate hereof and (B) any successor to any such director who (x) wasnominated or selected by a majority of the Continuing Directors in office atthe time of the director’s nomination or selection, and (y) who is not an “affiliate”or “associate” (as defined in rule 12b-2 under the Exchange Act) of anyTen Percent Owner.

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### (vii)         “CypressFund” shall mean any investment fund which is an “affiliate” of CypressAssociates II LLC.

 

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### (viii)        “Dateof Termination”  shall mean (A) inthe event of a discharge of the Executive by the Board for Cause, the date theExecutive receives a Notice of Termination, or any later date specified in suchNotice of Termination, as the case may be, (B) in the event of a dischargeof the Executive without Cause or a resignation by the Executive, the datespecified in the written notice to the Executive (in the case of discharge) orthe Corporation (in the case of resignation), which date shall be no less thanthirty (30) days from the date of such written notice, (C) in the event ofthe Executive’s death, the date of the Executive’s death, and (D) in theevent of  the Executive’s disabilitypursuant to Section 8(a), the date the Executive receives writtennotice of determination of disability (or, if earlier, twelve (12) months fromthe date the Executive’s disability began).

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### (ix)           “GoodReason”  shall mean any of thefollowing (A) the assignment to the Executive of any duties inconsistentin any respect with the Executive’s positions with the Corporation and Parentas set forth in this Agreement (including status, offices, titles and reportingrequirements), authority, duties or responsibilities as contemplated by Section 2,or any action by the Corporation or Parent which results in diminution in suchpositions, authority, duties or responsibilities, excluding for this purposeany action not taken in bad faith and which is remedied by the Corporation orParent promptly after receipt of written notice thereof given by the Executivein accordance with Section 14; or (B) any material failure bythe Corporation to comply with any of the provisions of this Agreement, otherthan any failure not occurring in bad faith and which is remedied by theCorporation promptly after receipt of written notice thereof given by theExecutive in accordance with Section 14; or (C) the relocationof the offices where Executive is required to report to a location that is50 miles or more distant from the Corporation’s existing location in PaloAlto, California; or (D) the failure to appoint Executive as President andChief Operating Officer of the combined or acquiring entity in connection witha Change of Control, reporting to its Chief Executive Officer; or (E) theCorporation giving notice to the Executive in accordance with Section 1(b) thatthe term of this Agreement shall not be extended upon the expiration of thethen-current term.

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### (x)            “Parent”shall mean CPI International, Inc.

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### (xi)           “PotentialChange of Control” shall mean the earliest to occur of (a) theexecution of an agreement or letter of intent, the consummation of thetransactions described in which would result in a Change of Control, (b) theapproval by the Board of a transaction or series of transactions, theconsummation of which would result in a Change of Control, or (c) thepublic announcement of a tender offer for the Parent’s voting stock, thecompletion of which would result in a Change of Control; provided, that no suchevent shall be a “Potential Change of Control” unless (i) in the case ofany agreement or letter of intent described in clause (a), the transactiondescribed therein is subsequently consummated by the Parent and the other partyor parties to such agreement or letter of intent and thereupon constitutes a “Changeof Control”, (ii) in the case of any Board-approved transaction describedin clause (b), the transaction so approved is subsequently consummated andthereupon constitutes a “Change of Control” or (iii) in the case of anytender offer described in clause (c), such tender offer is subsequentlycompleted and such completion thereupon constitutes a “Change of Control.”

 

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### (xii)          “TenPercent Owner” shall mean any person who is the beneficial owner, directlyor indirectly, of securities representing ten percent (10%) or more of thecombined voting power of Parent’s outstanding securities then entitledordinarily to vote for the election of directors; provided, however, sharesheld as of the date hereof by any Cypress Fund shall not be counted forpurposes of determining whether any such fund is a “Ten Percent Owner.”

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# 9.             Obligationsof the Corporation Upon Termination. The following provisions describe the obligations of the Corporation tothe Executive under this Agreement upon termination of his employment.  However, except as explicitly provided inthis Agreement, nothing in this Agreement shall limit or otherwise adverselyaffect any rights which the Executive may have under applicable law, under anyother agreement with the Parent or any of its subsidiaries, or under anycompensation or benefit plan, program, policy or practice of the Parent or anyof its subsidiaries.

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## (a)           Death,Disability, Discharge for Cause, or Resignation Without Good Reason.  In the event this Agreement terminates pursuantto Section 8(a) by reason of the death or disability of theExecutive, or pursuant to Section 8(b) by reason of thedischarge of the Executive by the Corporation for Cause, or pursuant to Section 8(c) byreason of the resignation of the Executive other than for Good Reason, theCorporation shall pay to the Executive, or his heirs or estate, in the event ofthe Executive’s death, all Accrued Obligations in a lump sum in cash withinfifteen (15) days after the Date of Termination; provided, however, that anyportion of the Accrued Obligations which consists of bonus, deferredcompensation, or incentive compensation, shall be determined and paid inaccordance with the terms of the relevant plan as applicable to the Executive,subject to the partial bonus provisions of clause (D) of the definition of“Accrued Obligations.”

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## (b)           DischargeWithout Cause or Resignation with Good Reason.  In the event that this Agreement terminatespursuant to Section 8(c) by reason of the discharge of theExecutive by the Corporation other than for Cause or disability or by reason ofthe resignation of the Executive for Good Reason, and subject to satisfactionof the requirements of Section 9(d):

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### (i)            TheCorporation shall pay all Accrued Obligations to the Executive in a lump sum incash within fifteen (15) days after the Date of Termination; provided, however,that any portion of the Accrued Obligations which consists of bonus, deferredcompensation, or incentive compensation shall be determined and paid inaccordance with the terms of the relevant plan as applicable to the Executive,subject to the partial bonus provisions of clause (D) of the definition of“Accrued Obligations.”

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### (ii)           TheCorporation shall pay to the Executive, in accordance with the schedule setforth in the next sentence, an amount equal to 1.5 times the sum of (A) theExecutive’s Base Salary and (B) the average value of the managementincentive plan and other performance bonuses (excluding the discretionary bonusannounced by the Board in December, 2005) earned by the Executive with respectto the preceding three (3) full fiscal years; provided, however,notwithstanding the foregoing, if the discharge or resignation occurs withintwo (2) years following the date of a Change of Control or a PotentialChange of Control, then the applicable multiple shall be 2.0, and the amount in

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clause (B) shall be based upon the highest management incentiveplan and other performance bonus earned by Executive (excluding thediscretionary bonus announced by the Board in December, 2005) with respect toany fiscal year during the preceding three full fiscal years (rather than theaverage amount).  The total amount setforth in the preceding sentence shall be paid to the Executive in three equalinstallments, with the first installment occurring thirty (30) days after theDate of Termination, the second installment occurring six (6) months afterthe Date of Termination, and the third installment occurring one (1) yearafter the Date of Termination.

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### (iii)          Fora period of eighteen (18) months after the Date of Termination, the Corporationshall continue to provide benefits to the Executive and/or the Executive’sfamily at least equal to those which would have been provided to them inaccordance with the plans, programs and arrangements referred to in Section 6(a) ofthis Agreement; provided, however, notwithstanding the foregoing, if thedischarge or resignation occurs within two (2) years following the date ofa Change of Control or a Potential Change of Control, then the applicable timeperiod shall be twenty-four (24) months; provided, however, any benefits (suchas ongoing contributions and participation in a 401(k) plan) which may notbe provided pursuant to applicable law or regulations shall not be providedduring the foregoing period; provided, further, Executive agrees to elect COBRAcoverage to the extent available under the Corporation’s health insurance plans(and the Corporation shall reimburse the cost of any premiums for such coverageon an after-tax basis).  Any payment orreimbursement under this Section 9(b)(iii) that is taxable tothe Executive shall be made by December 31 of the calendar year followingthe calendar year in which Executive or family member incurred the expense.

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### (iv)          Alllong-term incentive compensation awards to the Executive, including (but not byway of limitation) all equity-based incentive compensation awards (such as (A) optionsto purchase stock of Parent, (B) restricted stock of Parent, or (C) similarequity-based units or interests) shall, if not otherwise vested, vest in fullupon such termination of this Agreement.

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## (c)           RequiredDelay For Certain Deferred Compensation and Section 409A.  In the event that any compensation withrespect to the Executive’s termination is “deferred compensation” within themeaning of Section 409A of the Internal Revenue Code of 1986, as amended(the “Code”) and the regulations thereunder (“Section 409A”),the stock of the Corporation, Parent, or any affiliate is publicly traded on anestablished securities market or otherwise, and the Executive is determined tobe a “specified employee,” as defined in Section 409A(a)(2)(B)(i), paymentof such compensation shall be delayed as required by Section 409A.  Such delay shall last six (6) monthsfrom the Date of Termination, except in the even of the Executive’s death.  Within thirty (30) days following the end ofsuch six (6) month period, or, if earlier, the Executive’s death, theCorporation will make a catch-up payment to the Executive equal to the totalamount of such payments that would have been made during the six (6) monthperiod but for this Section 9(c). Wherever payments under this Section 9 are to be made ininstallments, each such installment shall be deemed to be a separate paymentfor purposes of  Section 409A.

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## (d)           Releaseas Condition to Payment.  As acondition to receiving the benefits and payments under Section 9(b),the Executive shall be required to execute a 

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## release of any claims and potential claims against the Corporation andits affiliates and directors that the Executive might have related to hisemployment.  In addition, in connectionwith any such release, the Executive and the Corporation shall enter intoreasonable mutual non-disparagement covenants. The timing of the payments under Section 9(b) upon executionof the release shall be governed by the following provisions:

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### (i)            TheCorporation must deliver the release to the Executive for execution no laterthan fourteen (14) days after the Date of Termination.  If the Corporation fails to deliver therelease to the Executive within such fourteen (14) day period, then theExecutive will be deemed to have satisfied the release requirement and willreceive payments conditioned on execution of the release as though theExecutive had executed the release and all revocation rights had lapsed at theend of such fourteen (14) day period.

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### (ii)           TheExecutive must execute the release within forty five (45) days from itsdelivery to him.

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### (iii)          Ifthe Executive has revocation rights, the Executive shall exercise such rights,if at all, not later than seven (7) days after executing the release.

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### (iv)          Inany case in which the release (and the expiration of any revocation rights)could only become effective in one (1) particular tax year of theExecutive, with respect to any cash payments that are conditioned on executionof the release, the first of any such cash payments shall begin within thirty(30) days after the release becomes effective and revocation rights havelapsed.

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### (v)           Inany case in which the release (and the expiration of any revocation rights)could become effective in one (1) of two (2) taxable years of theExecutive depending on when the Executive executes the release, with respect toany cash payments conditioned on execution of the release, the first of any suchcash payments shall not begin before the first business day of the later ofsuch tax years.

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# 10.           CertainAdditional Payments by the Corporation. The Corporation agrees that:

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## (a)           Anythingin this Agreement to the contrary notwithstanding, in the event it shall bedetermined that any payment or distribution by the Corporation or Parent to orfor the benefit of the Executive (whether paid or payable or distributed ordistributable pursuant to the terms of this Agreement or otherwise, butdetermined without regard to any additional payments required under this Section 10)(a “Payment”) would be subject to the excise tax imposed by Section 4999of the Code or if any interest or penalties are incurred by the Executive withrespect to such excise tax (such excise tax, together with any such interestand penalties, being hereinafter collectively referred to as the “Excise Tax”),then the Executive shall be entitled to receive an additional payment (a “Gross-UpPayment”) in an amount such that, after payment by the Executive of alltaxes (including interest or penalties imposed with respect to such taxes, butnot including interest and penalties imposed by reason of the Executive’sfailure to file timely tax returns or to pay taxes shown due on such returnsand any interest, additions, increases or penalties unrelated to the Excise Taxor the Gross-Up Payment), including, without limitation,  the Excise Tax imposed upon 

 

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## the Gross-Up Payment, the Executive retains an amount of the Gross-UpPayment equal to the Excise Tax imposed upon the Payment; provided, however, ifa 10% or smaller reduction in the amounts payable to Executive pursuant to Section 9(b)(ii) abovewould result in no amounts owing by Executive in respect of such Excise Tax,then the payments in Section 9(b)(ii) above shall be reduced(but in no event by more than 10%), by an amount sufficient to eliminate theExcise Tax.

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## (b)           Subjectto the provisions of Section 10(c), below, all determinations requiredto be made under this Section 10, including whether and when aGross-Up Payment is required and the amount of such Gross-Up Payment and theassumptions to be utilized in arriving at such determination, shall be made byErnst & Young (the “Accounting Firm”), which shall providedetailed supporting calculations both to the Corporation and the Executivewithin fifteen (15) business days of the receipt of notice from the Executivethat there has been a Payment, or such earlier time as is requested by the Corporation.  In the event that the Accounting Firm isserving as accountant or auditor for the individual, entity or group effectingthe Change of Control in question, the Executive shall appoint anothernationally recognized accounting firm to make the determinations requiredhereunder (which accounting firm shall then be referred to as the AccountingFirm hereunder).  All fees and expensesof the Accounting Firm shall be borne solely by the Corporation.  Any Gross-Up Payment, as determined pursuantto this Section 10, shall be paid by the Corporation to theExecutive within five (5) days of the receipt of the Accounting Firm’sdetermination.  If the Accounting Firmdetermines that no Excise Tax is payable by the Executive, it shall furnish theExecutive with a written opinion that failure to report the Excise Tax on theExecutive’s applicable federal income tax return would not result in theimposition of a negligence or similar penalty. Any good faith determination by the Accounting Firm shall be bindingupon the Corporation and the Executive. As a result of the uncertainty in the application of Section 4999of the Code at the time of the initial determination by the Accounting Firmhereunder, it is possible that Gross-Up Payments which will not have been madeby the Corporation should have been made (“Underpayment”), consistentwith the calculations required to be made hereunder.  In the event that the Corporation exhaustsits remedies pursuant to Section 10(c), below, and the Executivethereafter is required to make a payment of any Excise Tax, the Accounting Firmshall determine the amount of the Underpayment that has occurred and any suchUnderpayment shall be promptly paid by the Corporation to or for the benefit ofthe Executive.

##  

## (c)           TheExecutive shall notify the Corporation in writing of any claim by the InternalRevenue Service that, if successful, would require the payment by theCorporation of a Gross-Up Payment.  Suchnotification shall be given as soon as practicable but no later than fifteen (15)business days after the Executive is informed in writing of such claim andshall apprise the Corporation of the nature of such claim and the date on whichsuch claim is requested to be paid.  TheExecutive shall not pay such claim prior to the expiration of the thirty (30)day period following the date on which Executive gives such notice to theCorporation (or such shorter period ending on the date that any payment oftaxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to theexpiration of such period that it desires to contest such claim, the Executiveshall:

###  

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### (i)            Givethe Corporation any information reasonably requested by the Corporationrelating to such claim,

###  

### (ii)           Takesuch action in connection with contesting such claim as the Corporation shallreasonably request in writing from time to time, including, without limitation,accepting legal representation with respect to such claim by an attorney reasonablyselected by the Corporation,

###  

### (iii)          Cooperatewith the Corporation in good faith in order effectively to contest such claim,and

###  

### (iv)          Permitthe Corporation to participate in any proceedings relating to such claim;

###  

provided,however, that the Corporation shall bear and pay directly all costs andexpenses (including additional interest and penalties) incurred in connectionwith such contest and shall indemnify and hold the Executive harmless, on anafter-tax basis, for any Excise Tax or income tax (including interest andpenalties with respect thereto) imposed as a result of such representation andpayment of costs and expenses.  Withoutlimiting the foregoing provisions of this Section 10(c), theCorporation shall control all proceedings taken in connection with such contestand, at its sole option, may pursue or forego any and all administrativeappeals, proceedings, hearings and conferences with the taxing authority inrespect of such claim and may, at its sole option, either direct the Executiveto pay the tax claimed and sue for a refund or contest the claim in anypermissible manner; and the Executive agrees to prosecute such contest to adetermination before any administrative tribunal, in a court of initialjurisdiction and in one or more appellate courts, as the Corporation shalldetermine; provided, however, that if the Corporation directs the Executive topay such claim and sue for a refund, the Corporation shall (to the extentpermitted by law) advance the amount of such payment to the Executive on aninterest-free basis and shall indemnify and hold the Executive harmless, on anafter-tax basis, from any Excise Tax or income tax (including interest orpenalties with respect thereto) imposed with respect to such advance or withrespect to any imputed income with respect to such advance; and furtherprovided that any extension of the statute of limitations relating to paymentof taxes for the taxable year of the Executive with respect to which suchcontested amount is claimed to be due is limited solely to such contestedamount.  Furthermore, the Corporation’scontrol of the contest shall be limited to issues with respect to which aGross-Up Payment would be payable hereunder and the Executive shall be entitledto settle or contest, as the case may be, any other issue raised by theInternal Revenue Service or any other taxing authority.

 

## (d)           If,after the receipt by the Executive of an amount advanced by the Corporationpursuant to Section 10(c), above, the Executive becomes entitled toreceive any refund with respect to such claim, the Executive shall (subject tothe Corporation’s complying with the requirements of said Section 10(c))promptly pay to the Corporation the amount of such refund (together with anyinterest paid or credited thereon, after taxes applicable thereto).  If, after the receipt by the Executive of anamount advanced by the Corporation pursuant to said Section 10(c),a determination is made that the Executive shall not be entitled to any refundwith respect to such claim and the Corporation does not notify 

 

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##  

## the Executive in writing of its intent to contest such denial of refundprior to the expiration of thirty (30) days after such determination, then suchadvance shall be forgiven and shall not be required to be repaid; and theamount of such advance shall offset, to the extent thereof, the amount of theGross-Up Payment required to be paid.

##  

## (e)           Any Gross-Up Payment shall be paid to or for thebenefit of the Executive by December 31 of the calendar year following thecalendar year in which the Excise Tax is remitted, or, if no Excise Tax isremitted, by December 31 of the calendar year following the calendar yearin which there is a final and nonappealable settlement or other resolution ofan audit or litigation relating to the Excise Tax.

##  

# 11.           NoSet-Off or Mitigation.  TheCorporation’s obligation to make the payments provided for in this Agreementand otherwise to perform its obligations hereunder shall not be affected by anyset-off, counterclaim, recoupment, defense or other claim, right or actionwhich the Corporation may have against the Executive or others.  In no event shall the Executive be obligatedto seek other employment or take any other action by way of mitigation of theamounts payable to the Executive under any of the provisions of this Agreementand such amounts shall not be reduced whether or not the Executive obtainsother employment; provided, however, if Executive is employed during anyportion of the period covered by Section 9(b)(iii) above andreceives benefits in connection with such employment, the Corporation shall notbe required to provide any benefits pursuant to Section 9(b)(iii) tothe extent duplicative benefits are provided by such new employer.

#  

# 12.           Paymentof Certain Expenses.  The prevailingparty in any dispute under this Agreement shall be entitled, to the extentpermitted by law, to reimbursement from the other party for all of theprevailing party’s costs (including but not limited to the arbitrator’scompensation), expenses, and attorneys’ fees.

#  

# 13.           BindingEffect.  This Agreement shall bebinding upon and inure to the benefit of the heirs and representatives of theExecutive and the successors and assigns of the Corporation.  The Corporation shall require any successor(whether direct or indirect, by purchase, merger, reorganization,consolidation, acquisition of property or stock, liquidation, or otherwise) toall or a substantial portion of its assets, by agreement in form and substancereasonably satisfactory to the Executive, expressly to assume and agree toperform this Agreement in the same manner and to the same extent that theCorporation would be required to perform this Agreement if no such successionhad taken place.  Regardless of whethersuch an agreement is executed, this Agreement shall be binding upon anysuccessor of the Corporation in accordance with the operation of law, and suchsuccessor shall be deemed the “Corporation” for purposes of this Agreement.

#  

# 14.           Notices. All notices, requests, demands and othercommunications hereunder shall be in writing and shall be deemed to have beenduly given if delivered by hand, reputable overnight courier or mailed withinthe continental United States by first class certified mail, return receiptrequested, postage prepaid, addressed as follows:

 

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##  

| (a)    | If to the Corporation, to:                                 |
|--------|------------------------------------------------------------|
|   |                                                       |
|   | Communications & Power  Industries, Inc.     |
|   | 811 Hansen Way                                             |
|   | Palo Alto, California 94303-1110                           |
|   | Attn: Chief Executive Officer                              |
|   |                                                       |
| (b)    | If to the  Executive, to:                                  |
|   |                                                       |
|   | Robert A.  Fickett                                         |
|   | c/o  Communications & Power Industries, Inc. |
|   | 811 Hansen Way                                             |
|   | Palo Alto,  California 94303-1110                          |

 

Suchaddresses may be changed by written notice sent to the other party at the lastrecorded address of that party.

 

# 15.           TaxWithholding.  The Corporation shallprovide for the withholding of any taxes required to be withheld by federal,state, provincial or local law with respect to any payment in cash, shares ofstock and/or other property made by or on behalf of the Corporation to or forthe benefit of the Executive under this Agreement or otherwise.  The Corporation may, at its option: (a) withholdsuch taxes from any cash payments owing from the Corporation to the Executive, (b) requirethe Executive to pay to the Corporation in cash such amount as may be requiredto satisfy such withholding obligations and/or (c) make other satisfactoryarrangements with the Executive to satisfy such withholding obligations.

#  

# 16.           Arbitration.

#  

## (a)           General.  Except as to (a) actions described in Section 7(e),any controversy, dispute, or claim between the parties to this Agreement,including any claim arising out of, in connection with, or in relation to theformation, interpretation, performance or breach of this Agreement shall besettled exclusively by arbitration, before a single arbitrator, in accordancewith this Section 16 and the then most applicable rules of theAmerican Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered by anystate or federal court having jurisdiction thereof.  Such arbitration shall be administered by theAmerican Arbitration Association. Arbitration shall be the exclusive remedy for determining any suchdispute, regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matterapply to a court for provisional relief, including a temporary restrainingorder or a preliminary injunction, on the ground that the award to which theapplicant may be entitled in arbitration may be rendered ineffectual withoutprovisional relief.  Unless mutuallyagreed by the parties otherwise, any arbitration shall take place in the Cityof Palo Alto, California.

##  

## (b)           Selectionof Arbitrator.  In the event theparties are unable to agree upon an arbitrator, the parties shall select asingle arbitrator from a list of nine arbitrators (which shall be retiredjudges or corporate or litigation attorneys experienced in executive employmentagreements) provided by the office of the American Arbitration Associationhaving jurisdiction over Palo Alto, California. If the parties are unable to agree upon an arbitrator from the list sodrawn, then the parties shall each strike names alternately from the 

 

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##  

## list, with the first to strike being determined by lot.  After each party has used four strikes, theremaining name on the list shall be the arbitrator.  If such person is unable to serve for anyreason, the parties shall repeat this process until an arbitrator is selected.

##  

## (c)           Applicabilityof Arbitration; Remedial Authority. This agreement to resolve any disputes by binding arbitration shallextend to claims against any parent, subsidiary or affiliate of each party,and, when acting within such capacity, any officer, director, shareholder,employee or agent of each party, or of any of the above, and shall apply aswell to claims arising out of state and federal statutes and local ordinancesas well as to claims arising under the common law.  In the event of a dispute subject to thisparagraph the parties shall be entitled to reasonable discovery subject to thediscretion of the arbitrator.  The remedialauthority of the arbitrator (which shall include the right to grant injunctiveor other equitable relief) shall be the same as, but no greater than, would bethe remedial power of a court having jurisdiction over the parties and theirdispute.  The arbitrator shall, upon anappropriate motion, dismiss any claim without an evidentiary hearing if theparty bringing the motion establishes that he or it would be entitled tosummary judgment if the matter had been pursued in court litigation.  In the event of a conflict between theapplicable rules of the American Arbitration Association and theseprocedures, the provisions of these procedures shall govern.

##  

## (d)           Feesand Costs.  Any filing oradministrative fees shall be borne initially by the party requestingarbitration.  The Corporation shall beresponsible for the costs and fees of the arbitration, unless the Executivewishes to contribute (up to 50%) of the costs and fees of the arbitration.

##  

## (e)           AwardFinal and Binding.  The arbitratorshall render an award and written opinion, and the award shall be final andbinding upon the parties.  If any of theprovisions of this paragraph, or of this Agreement, are determined to beunlawful or otherwise unenforceable, in whole or in part, such determinationshall not affect the validity of the remainder of this Agreement, and thisAgreement shall be reformed to the extent necessary to carry out its provisionsto the greatest extent possible and to insure that the resolution of allconflicts between the parties, including those arising out of statutory claims,shall be resolved by neutral, binding arbitration.  If a court should find that the arbitrationprovisions of this Agreement are not absolutely binding, then the partiesintend any arbitration decision and award to be fully admissible in evidence inany subsequent action, given great weight by any finder of fact, and treated asdeterminative to the maximum extent permitted by law.

##  

# 17.           NoAssignment.  Except as otherwiseexpressly provided herein, this Agreement is not assignable by any party and nopayment to be made hereunder shall be subject to anticipation, alienation,sale, transfer, assignment, pledge, encumbrance or other charge.

#  

# 18.           Executionin Counterparts.  This Agreement maybe executed by the parties hereto in two (2) or more counterparts, each ofwhich shall be deemed to be an original, but all such counterparts shallconstitute one and the same instrument, and all signatures need not appear onany one counterpart.

 

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#  

# 19.           GoverningLaw.  This Agreement shall beconstrued and interpreted in accordance with and governed by the laws of theState of California, other than the conflict of laws provisions of such laws.

#  

# 20.           Severability.  If any provision of this Agreement shall beadjudged by any court of competent jurisdiction to be invalid or unenforceablefor any reason, such judgment shall not affect, impair or invalidate theremainder of this Agreement. Furthermore, if the scope of any restriction or requirement contained inthis Agreement is too broad to permit enforcement of such restriction orrequirement to its full extent, then such restriction or requirement shall beenforced to the maximum extent permitted by law, and the Executive consents andagrees that any court of competent jurisdiction may so modify such scope in anyproceeding brought to enforce such restriction or requirement.

#  

# 21.           PriorUnderstandings.  This Agreementamends and restates the Original Employment Agreement in its entirety.  This Agreement embodies the entireunderstanding of the parties hereto and supersedes all other oral or writtenagreements or understandings between them regarding the subject matterhereof.  No change, alteration ormodification hereof may be made except in a writing, signed by each of the partieshereto.  The headings in this Agreementare for convenience and reference only and shall not be construed as part ofthis Agreement or to limit or otherwise affect the meaning hereof.

 

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INWITNESS WHEREOF, the parties hereto have executed and delivered this Agreementas of the day and year first above written.

 
|   | CORPORATION                                            |
|--------|--------------------------------------------------------|
|   | Communications &  Power Industries, Inc. |
|   |                                                   |
|   |                                                   |
|   | By:                                                    | /s/ JOEL A. LITTMAN |   |
|   |                                                   |
|   | Title:                                                 | Joel A. Littman, CFO |   |
|   |                                                   |
|   |                                                   |
|   | EXECUTIVE                                              |
|   |                                                   |
|   |                                                   |
|   | /s/  ROBERT A. FICKETT                                 |   |
|   |                                                   |
|   | Robert A. Fickett                                      |
|        |                                                        |  |  |  |

 

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