Document:

Exhibit
10.2

 

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”),
is made and entered into as of January 17, 2008, by and between
Communications & Power Industries, Inc., a Delaware corporation
(hereinafter called the “Corporation”), and Joel A. Littman (hereinafter
called the “Executive”).

 

WITNESSETH THAT:

 

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

 

WHEREAS, the parties desire to amend and restate the
Original Employment Agreement pursuant to the terms and provisions set forth
herein;

 

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

 

1.                                       Employment
and Term.

 

(a)                                  Employment.  The Corporation shall employ the Executive as
the Chief Financial Officer of the Corporation, and the Executive shall so
serve, for the term set forth in Section 1(b).

 

(b)                                 Term.  The term of the Executive’s employment under
this Agreement commenced on April 27, 2006 (the “Commencement Date”)
and shall end on the third anniversary of the Commencement Date, subject to the
extension of such term as hereinafter provided and subject to earlier
termination as provided in Section 8.  The term of this Agreement shall be extended
automatically for one (1) additional year as of the third anniversary of
the Commencement Date, and each anniversary date thereafter unless, no later
than six (6) months prior to any such renewal date, either the Corporation
or 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, no
automatic extension of the term shall occur with respect to an anniversary date
if Executive has attained the age of sixty-five (65).

 

2.                                       Duties.  During the period of employment as provided
in Section 1(b) hereof, the Executive shall serve as Chief
Financial Officer of the Corporation and Chief Financial Officer of the Parent
and have all powers and duties consistent with such positions, subject to the
reasonable direction of the Chief Executive Officer.  The Executive shall devote substantially his
entire time during reasonable business hours (reasonable sick leave and
vacations excepted) and reasonable best efforts to fulfill faithfully, responsibly
and to the best of his ability his duties hereunder.

 

 

3.                                       Salary.

 

(a)                                  Base
Salary.  For services performed by
the Executive for the Corporation pursuant to this Agreement during the period
of employment as provided in Section 1(b) hereof, the Corporation
shall pay the Executive a base salary at the rate of Two Hundred Thirty
Thousand U.S. dollars ($230,000 U.S.) per year, payable in substantially equal
installments in accordance with the Corporation’s regular payroll
practices.  The Executive’s base salary
(with any increases under Section 3(b), below) shall not be subject
to reduction; provided, however, in connection with an across-the-board salary
reduction that applies to substantially all of the management executives of
Parent and its subsidiaries, Executive’s base salary may be reduced by a
percentage amount equal to the average amount of the percentage decrease
affecting such other management executives, but in no event more than 10%.  Any compensation which may be paid to the
Executive under any additional compensation or incentive plan of the
Corporation or Parent or which may be otherwise authorized from time to time by
the Board (or an appropriate committee thereof) shall be in addition to the
base salary to which the Executive shall be entitled under this Agreement.

 

(b)                                 Salary
Increases.  During the period of
employment as provided in Section 1(b) hereof, the base salary
of the Executive shall be reviewed no less frequently than annually by the
Board to determine whether or not the same should be increased in light of the
duties and responsibilities of the Executive and the performance thereof, and
if it is determined that an increase is merited, such increase shall be
promptly put into effect and the base salary of the Executive as so increased
shall constitute the base salary of the Executive for purposes of Section 3(a).

 

4.                                       Annual
Bonuses.  For each fiscal year during
the term of employment, the Executive shall be eligible to receive a bonus
payable in cash and/or in Parent’s common stock.  The amount of the bonus shall be based on the
achievement of certain operating and/or financial goals, in accordance with the
terms of a bonus plan adopted and administered by the Board for senior
executives of the Parent and its subsidiaries, which plan may be amended from
time to time by the Board in its discretion. 
Executive’s target annual bonus for fiscal year 2006 will be equal to
0.60 times his current annual salary.

 

5.                                       Equity
Incentive Compensation.  During the
term of employment hereunder the Executive shall be eligible to participate, in
an appropriate manner relative to other senior executives of the Parent and its
subsidiaries, in any equity-based incentive compensation plan or program
approved by the Board from time to time, including (but not by way of
limitation) any plan providing for the granting of (a) options to purchase
stock of the Parent, (b) restricted stock of the Parent or (c) similar
equity-based units or interests.

 

6.                                       Other
Benefits.  In addition to the
compensation described in Sections 3, 4 and 5, above, the Executive
shall also be entitled to the following:

 

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

 

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

 

(b)                                 Vacation
and Holidays.  The Executive shall be
entitled to the number of weeks of vacation during each year of this Agreement
per the formula determined by the existing policies of the Corporation, or such
greater period as the Board may approve, and to the paid holidays given by the
Corporation to its employees generally, without reduction in salary or other
benefits.

 

7.                                       Covenants
of the Executive.  In order to induce
the Corporation to enter into this Agreement, the Executive hereby agrees as
follows:

 

(a)                                  Confidentiality.  Except for and on behalf of the Corporation
with the consent of or as directed by the Board, the Executive shall keep
confidential and shall not divulge to any other person or entity, during the
term of employment or thereafter, any of the business secrets or other
confidential information regarding the Parent and its subsidiaries which has
not otherwise become public knowledge; provided, however, that nothing in this
Agreement shall preclude the Executive from disclosing information (i) to
an appropriate extent to parties retained to perform services for the Parent or
its subsidiaries or (ii) under any other circumstances to the extent such
disclosure is, in the reasonable judgment of the Executive, appropriate or
necessary to further the best interests of the Corporation or its subsidiaries
or (iii) as may be required by law, legal process or subpoena.

 

(b)                                 Records.  All papers, books and records of every kind
and description relating to the business and affairs of the Parent and its
subsidiaries, whether or not prepared by the Executive, other than personal
notes prepared by or at the direction of the Executive, shall be the sole and
exclusive property of the Corporation, and the Executive shall surrender them
to the Corporation at any time upon request by the Board.

 

(c)                                  Non-Competition.  The Executive hereby agrees with the Corporation
that during the term of his employment hereunder, and in certain instances, as
provided below, for a period following termination of his employment hereunder,
he shall not, directly or indirectly, engage in, or be employed by, or act as a
consultant to, or be a director, officer, owner or partner of, or acquire a
substantial interest in, any business activity or entity which competes
significantly with the Parent or any of its subsidiaries, provided, however,
that as to the period after termination of the Executive’s employment
hereunder, the restrictive covenants set forth in this Section 7(c) shall
apply only in the case of terminations without  Cause
or resignations for Good Reason and then only for a period beginning on the
Date of Termination and ending, 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);

 

(d)                                 Non-Solicitation.  During the time period after termination (if
any) during which the Executive is subject to the noncompetition covenants of Section 7(c) of
this 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 a
business relation with the Parent or its subsidiaries to cease doing business
with the Parent or its subsidiaries or in any way interfere with the
relationship between any such customer, supplier, licensee or other person and
the Parent or its subsidiaries.  In
addition, during the eighteen (18) month period following termination of
employment for any reason (or, if longer, the period during which the Executive
is subject to the non-competition covenants of Section 7(c) of
this Agreement), the Executive shall not solicit any employee of the Parent or
any of its subsidiaries to leave the employment thereof or in any way interfere
with the relationship of such employee with the Parent or its subsidiaries.

 

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

 

8.                                       Termination.  Unless earlier terminated in accordance with
the following provisions of this Section 8, the Corporation shall
continue to employ the Executive and the Executive shall remain employed by the
Corporation during the entire term of this Agreement as set forth in Section 1(b).  Section 9 hereof sets forth
certain obligations of the Corporation in the event that the Executive’s
employment is terminated.

 

(a)                                  Death
or Disability.  Except to the extent
otherwise provided in Section 9 with respect to certain post-Date
of Termination payment obligations of the Corporation, this Agreement shall
terminate immediately as of the Date of Termination in the event of the
Executive’s death or in the event that the Executive becomes disabled.  The Executive will be deemed to be disabled
when he is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, or begins receiving income replacement benefits
for a period of not less than three (3) months under an accident and health
plan of the Corporation or an affiliate by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months.  If any question arises as to whether the
Executive is disabled, upon reasonable request therefor by the Board, the
Executive shall submit to reasonable medical examination for the purpose of
determining the existence, nature and extent of any such disability.  In accordance with Section 14,
the Board shall promptly give the Executive written notice of any such
determination of the Executive’s disability. 
In the event of disability, until the Date of Termination, the base
salary payable to the Executive under Section 3 hereof shall be
reduced dollar-for-dollar by the amount of disability benefits, if any, paid to
the Executive in accordance with any disability policy or program of the
Corporation or its affiliates.

 

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

 

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Termination obligations of the Corporation, this Agreement shall
terminate immediately as of the Date of Termination in the event the Executive
is discharged for Cause.  Any discharge
of the Executive for Cause shall be communicated by a Notice of Termination to
the Executive given in accordance with Section 14 of this
Agreement.  For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated and (iii) if the Date of Termination is to be other than the
date of receipt of such notice, specifies the Date of Termination (which date
shall in all events be within thirty (30) days after the giving of such
notice).  In the case of a discharge of
the Executive for Cause, the Notice of Termination shall include a copy of a
resolution duly adopted by the Board at a meeting called and held for such
purpose (after reasonable notice to the Executive and reasonable opportunity
for 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
guilty of conduct constituting Cause.  No
purported termination of the Executive’s employment for Cause shall be
effective without a Notice of Termination.

 

(c)                                  Termination
for Other Reasons.  The Corporation
may discharge the Executive without Cause by giving written notice to the
Executive in accordance with Section 14 at least thirty (30) days
prior to the Date of Termination.  The
Executive may resign from his employment by giving written notice to the
Corporation in accordance with Section 14 at least thirty (30) days
prior to the Date of Termination.  Except
to the extent otherwise provided in Section 9 with respect to
certain post-Date of Termination obligations of the Corporation, this Agreement
shall terminate immediately as of the Date of Termination in the event the
Executive is discharged without Cause or resigns.

 

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

 

(i)                                     “Accrued
Obligations” shall mean, as of the Date of Termination, the sum of (A) the
Executive’s base salary hereunder through the Date of Termination to the extent
not theretofore paid, (B) the amount of any incentive compensation,
deferred compensation and other cash compensation accrued by the Executive as
of the Date of Termination to the extent not theretofore paid, (C) any
vacation pay, expense reimbursements and other cash entitlements accrued by the
Executive 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, if
Executive has been employed for at least six (6) months during such fiscal
year and has not been terminated for Cause or resigned without Good Reason, a
partial bonus for the fiscal year of termination equal to the bonus payable for
the 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’s termination.

 

(ii)                                  “Base
Salary” shall mean the annual base salary paid to Executive immediately
prior to the termination of employment, provided that such amount shall in no
event be less than the annual base salary payable to Executive during the one (1) year
period immediately prior to the termination.

 

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

 

(iv)                              “Cause”
shall mean (i) acts or omissions by the Executive which constitute
intentional material misconduct or a knowing violation of a material policy of
the Parent or any of its subsidiaries, (ii) the Executive personally
receiving a benefit in money, property or services from the Parent or any of
its subsidiaries or from another person dealing with the Parent or any of its
subsidiaries, in material violation of applicable law or policy of Parent or
any of its subsidiaries, (iii) an act of fraud, conversion,
misappropriation, or embezzlement by the Executive or his conviction of, or
entering a guilty plea or plea of no contest with respect to, a felony, or the
equivalent thereof (other than DUI), or (iv) any deliberate and material
misuse or deliberate and material improper disclosure of confidential or
proprietary information of Parent or any of its subsidiaries.  Notwithstanding the foregoing, no act or
omission by the Executive shall constitute Cause hereunder unless the
Corporation has given detailed written notice thereof to the Executive, and the
Executive has failed to remedy such act or omission within a reasonable time
after receiving such notice.

 

(v)                                 A
“Change of Control” shall be deemed to have occurred if:

 

(A)                              Any  individual  or  group  constituting  a  “person”,  as  such  term  is  used  in  Sections  l3(d)  and  l4(d)(2)  of  the  Securities  Exchange  Act  of  1934,  as  amended  (“Exchange  Act”)  (other  than  (A)  the  Parent  or  any  of  its  subsidiaries,  (B)  any  trustee  or  other  fiduciary  holding  securities  under  an  Executive  benefit  plan  of  the  Parent  or  of  any  of  its  subsidiaries  or  (C)  any  Cypress  Fund(s)),  is  or  becomes  the  beneficial  owner,  directly  or  indirectly,  of  securities  of  the  Parent  representing  fifty  percent  (50%)  or  more  of  the  combined  voting  power  of  the  Parent’s  outstanding  securities  then  entitled  ordinarily  (and  apart  from  rights  accruing  under  special  circumstances)  to  vote  for  the  election  of  directors;  or

 

(B)                                Continuing  Directors  cease  to  constitute  at  least  a  majority  of  the  Board;  or

 

(C)                                there  occurs  a  reorganization,  merger,  consolidation  or  other  corporate  transaction  involving  the  Parent  (a  “Transaction”),  in  each  case  with  respect  to  which  the  stockholders  of  the  Parent  immediately  prior  to  such  Transaction  do  not,  immediately  after  the  Transaction,  own  more  than  50%  of  the  combined  voting  power  of  the  Parent  or  other  corporation  resulting  from  such  Transaction;  or

 

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

 

(vi)                              “Continuing  Directors”  shall  mean  (A)  the  directors  of  the  Parent  in  office  on  the  date  hereof  and  (B)  any  successor  to  any  such  director  who  (x)  was  nominated  or  selected  by  a  majority  of  the  Continuing  Directors  in  office  at  the  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  any  Ten  Percent  Owner.

 

(vii)                           “Cypress  Fund”  shall  mean  any  investment  fund  which  is  an  “affiliate”  of  Cypress  Associates  II  LLC.

 

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(viii)                        “Date  of  Termination”  shall  mean  (A)  in  the  event  of  a  discharge  of  the  Executive  by  the  Board  for  Cause,  the  date  the  Executive  receives  a  Notice  of  Termination,  or  any  later  date  specified  in  such  Notice  of  Termination,  as  the  case  may  be,  (B)  in  the  event  of  a  discharge  of  the  Executive  without  Cause  or  a  resignation  by  the  Executive,  the  date  specified  in  the  written  notice  to  the  Executive  (in  the  case  of  discharge)  or  the  Corporation  (in  the  case  of  resignation),  which  date  shall  be  no  less  than  thirty  (30)  days  from  the  date  of  such  written  notice,  (C)  in  the  event  of  the  Executive’s  death,  the  date  of  the  Executive’s  death,  and  (D)  in  the  event  of  the  Executive’s  disability  pursuant  to  Section  8(a),  the  date  the  Executive  receives  written  notice  of  determination  of  disability  (or,  if  earlier,  twelve  (12)  months  from  the  date  the  Executive’s  disability  began).

 

(ix)                                “Good  Reason”  shall  mean  any  of  the  following  (A)  the  assignment  to  the  Executive  of  any  duties  inconsistent  in  any  respect  with  the  Executive’s  positions  with  the  Corporation  and  Parent  as  set  forth  in  this  Agreement  (including  status,  offices,  titles  and  reporting  requirements),  authority,  duties  or  responsibilities  as  contemplated  by  Section  2,  or  any  action  by  the  Corporation  or  Parent  which  results  in  diminution  in  such  positions,  authority,  duties  or  responsibilities,  excluding  for  this  purpose  any  action  not  taken  in  bad  faith  and  which  is  remedied  by  the  Corporation  or  Parent  promptly  after  receipt  of  written  notice  thereof  given  by  the  Executive  in  accordance  with  Section  14;  or  (B)  any  material  failure  by  the  Corporation  to  comply  with  any  of  the  provisions  of  this  Agreement,  other  than  any  failure  not  occurring  in  bad  faith  and  which  is  remedied  by  the  Corporation  promptly  after  receipt  of  written  notice  thereof  given  by  the  Executive  in  accordance  with  Section  14;  or  (C)  the  relocation  of  the  offices  where  Executive  is  required  to  report  to  a  location  that  is  50  miles  or  more  distant  from  the  Corporation’s  existing  location  in  Palo  Alto,  California;  or  (D)  the  failure  to  appoint  Executive  as  Chief  Financial  Officer  of  the  combined  or  acquiring  entity  in  connection  with  a  Change  of  Control,  reporting  to  its  Chief  Executive  Officer;  or  (E)  the  Corporation  giving  notice  to  the  Executive  in  accordance  with  Section  1(b)  that  the  term  of  this  Agreement  shall  not  be  extended  upon  the  expiration  of  the  then-current  term.

 

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

 

(xi)                                “Potential  Change  of  Control”  shall  mean  the  earliest  to  occur  of  (a)  the  execution  of  an  agreement  or  letter  of  intent,  the  consummation  of  the  transactions  described  in  which  would  result  in  a  Change  of  Control,  (b)  the  approval  by  the  Board  of  a  transaction  or  series  of  transactions,  the  consummation  of  which  would  result  in  a  Change  of  Control,  or  (c)  the  public  announcement  of  a  tender  offer  for  the  Parent’s  voting  stock,  the  completion  of  which  would  result  in  a  Change  of  Control;  provided,  that  no  such  event  shall  be  a  “Potential  Change  of  Control”  unless  (i)  in  the  case  of  any  agreement  or  letter  of  intent  described  in  clause  (a),  the  transaction  described  therein  is  subsequently  consummated  by  the  Parent  and  the  other  party  or  parties  to  such  agreement  or  letter  of  intent  and  thereupon  constitutes  a  “Change  of  Control”,  (ii)  in  the  case  of  any  Board-approved  transaction  described  in  clause  (b),  the  transaction  so  approved  is  subsequently  consummated  and  thereupon  constitutes  a  “Change  of  Control”  or  (iii)  in  the  case  of  any  tender  offer  described  in  clause  (c),  such  tender  offer  is  subsequently  completed  and  such  completion  thereupon  constitutes  a  “Change  of  Control.”

 

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

 

9.                                       Obligations  of  the  Corporation  Upon  Termination.  The  following  provisions  describe  the  obligations  of  the  Corporation  to  the  Executive  under  this  Agreement  upon  termination  of  his  employment.  However,  except  as  explicitly  provided  in  this  Agreement,  nothing  in  this  Agreement  shall  limit  or  otherwise  adversely  affect  any  rights  which  the  Executive  may  have  under  applicable  law,  under  any  other  agreement  with  the  Parent  or  any  of  its  subsidiaries,  or  under  any  compensation  or  benefit  plan,  program,  policy  or  practice  of  the  Parent  or  any  of  its  subsidiaries.

 

(a)                                  Death,  Disability,  Discharge  for  Cause,  or  Resignation  Without  Good  Reason.  In  the  event  this  Agreement  terminates  pursuant  to  Section  8(a)  by  reason  of  the  death  or  disability  of  the  Executive,  or  pursuant  to  Section  8(b)  by  reason  of  the  discharge  of  the  Executive  by  the  Corporation  for  Cause,  or  pursuant  to  Section  8(c)  by  reason  of  the  resignation  of  the  Executive  other  than  for  Good  Reason,  the  Corporation  shall  pay  to  the  Executive,  or  his  heirs  or  estate,  in  the  event  of  the  Executive’s  death,  all  Accrued  Obligations  in  a  lump  sum  in  cash  within  fifteen  (15)  days  after  the  Date  of  Termination;  provided,  however,  that  any  portion  of  the  Accrued  Obligations  which  consists  of  bonus,  deferred  compensation,  or  incentive  compensation,  shall  be  determined  and  paid  in  accordance  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.”

 

(b)                                 Discharge  Without  Cause  or  Resignation  with  Good  Reason.  In  the  event  that  this  Agreement  terminates  pursuant  to  Section  8(c)  by  reason  of  the  discharge  of  the  Executive  by  the  Corporation  other  than  for  Cause  or  disability  or  by  reason  of  the  resignation  of  the  Executive  for  Good  Reason,  and  subject  to  satisfaction  of  the  requirements  of  Section  9(d):

 

(i)                                     The  Corporation  shall  pay  all  Accrued  Obligations  to  the  Executive  in  a  lump  sum  in  cash  within  fifteen  (15)  days  after  the  Date  of  Termination;  provided,  however,  that  any  portion  of  the  Accrued  Obligations  which  consists  of  bonus,  deferred  compensation,  or  incentive  compensation  shall  be  determined  and  paid  in  accordance  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.”

 

(ii)                                  The  Corporation  shall  pay  to  the  Executive,  in  accordance  with  the  schedule  set  forth  in  the  next  sentence,  an  amount  equal  to  1.5  times  the  sum  of  (A)  the  Executive’s  Base  Salary  and  (B)  the  average  value  of  the  management  incentive  plan  and  other  performance  bonuses  (excluding  the  discretionary  bonus  announced  by  the  Board  in  December,  2005)  earned  by  the  Executive  with  respect  to  the  preceding  three  (3)  full  fiscal  years;  provided,  however,  notwithstanding  the  foregoing,  if  the  discharge  or  resignation  occurs  within  two  (2)  years  following  the  date  of  a  Change  of  Control  or  a  Potential  Change  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  incentive  plan  and  other  performance  bonus  earned  by  Executive  (excluding  the  discretionary  bonus  announced  by  the  Board  in  December,  2005)  with  respect  to  any  fiscal  year  during  the  preceding  three  full  fiscal  years  (rather  than  the  average  amount).  The  total  amount  set  forth  in  the  preceding  sentence  shall  be  paid  to  the  Executive  in  three  equal  installments,  with  the  first  installment  occurring  thirty  (30)  days  after  the  Date  of  Termination,  the  second  installment  occurring  six  (6)  months  after  the  Date  of  Termination,  and  the  third  installment  occurring  one  (1)  year  after  the  Date  of  Termination.

 

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

 

(iv)                              All  long-term  incentive  compensation  awards  to  the  Executive,  including  (but  not  by  way  of  limitation)  all  equity-based  incentive  compensation  awards  (such  as  (A)  options  to  purchase  stock  of  Parent,  (B)  restricted  stock  of  Parent,  or  (C)  similar  equity-based  units  or  interests)  shall,  if  not  otherwise  vested,  vest  in  full  upon  such  termination  of  this  Agreement.

 

(c)                                  Required  Delay  For  Certain  Deferred  Compensation  and  Section  409A.  In  the  event  that  any  compensation  with  respect  to  the  Executive’s  termination  is  “deferred  compensation”  within  the  meaning  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  an  established  securities  market  or  otherwise,  and  the  Executive  is  determined  to  be  a  “specified  employee,”  as  defined  in  Section  409A(a)(2)(B)(i),  payment  of  such  compensation  shall  be  delayed  as  required  by  Section  409A.  Such  delay  shall  last  six  (6)  months  from  the  Date  of  Termination,  except  in  the  even  of  the  Executive’s  death.  Within  thirty  (30)  days  following  the  end  of  such  six  (6)  month  period,  or,  if  earlier,  the  Executive’s  death,  the  Corporation  will  make  a  catch-up  payment  to  the  Executive  equal  to  the  total  amount  of  such  payments  that  would  have  been  made  during  the  six  (6)  month  period  but  for  this  Section  9(c).  Wherever  payments  under  this  Section  9  are  to  be  made  in  installments,  each  such  installment  shall  be  deemed  to  be  a  separate  payment  for  purposes  of  Section  409A.

 

(d)                                 Release  as  Condition  to  Payment.  As  a  condition  to  receiving  the  benefits  and  payments  under  Section  9(b),  the  Executive  shall  be  required  to  execute  a  release  of  any  claims  and  potential  claims  against  the  Corporation  and  its  affiliates  and  directors  that  the  Executive  might  have  related  to  his  employment.  In  addition,  in  connection  with  any  such  release,  the  Executive  and  the  Corporation  shall  enter  into  reasonable  mutual  non-disparagement  covenants.  The  timing  of  the  payments  under  Section  9(b)  upon  execution  of  the  release  shall  be  governed  by  the  following  provisions:

 

9

 

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

 

(ii)                                  The  Executive  must  execute  the  release  within  forty  five  (45)  days  from  its  delivery  to  him.

 

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

 

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

 

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

 

10.                                 Certain  Additional  Payments  by  the  Corporation.  The  Corporation  agrees  that:

 

(a)                                  Anything  in  this  Agreement  to  the  contrary  notwithstanding,  in  the  event  it  shall  be  determined  that  any  payment  or  distribution  by  the  Corporation  or  Parent  to  or  for  the  benefit  of  the  Executive  (whether  paid  or  payable  or  distributed  or  distributable  pursuant  to  the  terms  of  this  Agreement  or  otherwise,  but  determined  without  regard  to  any  additional  payments  required  under  this  Section  10)  (a  “Payment”)  would  be  subject  to  the  excise  tax  imposed  by  Section  4999  of  the  Code  or  if  any  interest  or  penalties  are  incurred  by  the  Executive  with  respect  to  such  excise  tax  (such  excise  tax,  together  with  any  such  interest  and  penalties,  being  hereinafter  collectively  referred  to  as  the  “Excise  Tax”),  then  the  Executive  shall  be  entitled  to  receive  an  additional  payment  (a  “Gross-Up  Payment”)  in  an  amount  such  that,  after  payment  by  the  Executive  of  all  taxes  (including  interest  or  penalties  imposed  with  respect  to  such  taxes,  but  not  including  interest  and  penalties  imposed  by  reason  of  the  Executive’s  failure  to  file  timely  tax  returns  or  to  pay  taxes  shown  due  on  such  returns  and  any  interest,  additions,  increases  or  penalties  unrelated  to  the  Excise  Tax  or  the  Gross-Up  Payment),  including,  without  limitation,  the  Excise  Tax  imposed  upon  

 

10

 

the  Gross-Up  Payment,  the  Executive  retains  an  amount  of  the  Gross-Up  Payment  equal  to  the  Excise  Tax  imposed  upon  the  Payment;  provided,  however,  if  a  10%  or  smaller  reduction  in  the  amounts  payable  to  Executive  pursuant  to  Section  9(b)(ii)  above  would  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  the  Excise  Tax.

 

(b)                                 Subject  to  the  provisions  of  Section  10(c),  below,  all  determinations  required  to  be  made  under  this  Section  10,  including  whether  and  when  a  Gross-Up  Payment  is  required  and  the  amount  of  such  Gross-Up  Payment  and  the  assumptions  to  be  utilized  in  arriving  at  such  determination,  shall  be  made  by  Ernst  &  Young  (the  “Accounting  Firm”),  which  shall  provide  detailed  supporting  calculations  both  to  the  Corporation  and  the  Executive  within  fifteen  (15)  business  days  of  the  receipt  of  notice  from  the  Executive  that  there  has  been  a  Payment,  or  such  earlier  time  as  is  requested  by  the  Corporation.  In  the  event  that  the  Accounting  Firm  is  serving  as  accountant  or  auditor  for  the  individual,  entity  or  group  effecting  the  Change  of  Control  in  question,  the  Executive  shall  appoint  another  nationally  recognized  accounting  firm  to  make  the  determinations  required  hereunder  (which  accounting  firm  shall  then  be  referred  to  as  the  Accounting  Firm  hereunder).  All  fees  and  expenses  of  the  Accounting  Firm  shall  be  borne  solely  by  the  Corporation.  Any  Gross-Up  Payment,  as  determined  pursuant  to  this  Section  10,  shall  be  paid  by  the  Corporation  to  the  Executive  within  five  (5)  days  of  the  receipt  of  the  Accounting  Firm’s  determination.  If  the  Accounting  Firm  determines  that  no  Excise  Tax  is  payable  by  the  Executive,  it  shall  furnish  the  Executive  with  a  written  opinion  that  failure  to  report  the  Excise  Tax  on  the  Executive’s  applicable  federal  income  tax  return  would  not  result  in  the  imposition  of  a  negligence  or  similar  penalty.  Any  good  faith  determination  by  the  Accounting  Firm  shall  be  binding  upon  the  Corporation  and  the  Executive.  As  a  result  of  the  uncertainty  in  the  application  of  Section  4999  of  the  Code  at  the  time  of  the  initial  determination  by  the  Accounting  Firm  hereunder,  it  is  possible  that  Gross-Up  Payments  which  will  not  have  been  made  by  the  Corporation  should  have  been  made  (“Underpayment”),  consistent  with  the  calculations  required  to  be  made  hereunder.  In  the  event  that  the  Corporation  exhausts  its  remedies  pursuant  to  Section  10(c),  below,  and  the  Executive  thereafter  is  required  to  make  a  payment  of  any  Excise  Tax,  the  Accounting  Firm  shall  determine  the  amount  of  the  Underpayment  that  has  occurred  and  any  such  Underpayment  shall  be  promptly  paid  by  the  Corporation  to  or  for  the  benefit  of  the  Executive.

 

(c)                                  The  Executive  shall  notify  the  Corporation  in  writing  of  any  claim  by  the  Internal  Revenue  Service  that,  if  successful,  would  require  the  payment  by  the  Corporation  of  a  Gross-Up  Payment.  Such  notification  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  and  shall  apprise  the  Corporation  of  the  nature  of  such  claim  and  the  date  on  which  such  claim  is  requested  to  be  paid.  The  Executive  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  the  Corporation  (or  such  shorter  period  ending  on  the  date  that  any  payment  of  taxes  with  respect  to  such  claim  is  due).  If  the  Corporation  notifies  the  Executive  in  writing  prior  to  the  expiration  of  such  period  that  it  desires  to  contest  such  claim,  the  Executive  shall:

 

11

 

(i)            Give the
Corporation any information reasonably requested by the Corporation relating to
such claim,

 

(ii)           Take such
action in connection with contesting such claim as the Corporation shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Corporation,

 

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

 

(iv)          Permit the
Corporation to participate in any proceedings relating to such claim;

 

provided,
however, that the Corporation shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.  Without
limiting the foregoing provisions of this Section 10(c), the
Corporation shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner; and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Corporation shall
determine; provided, however, that if the Corporation directs the Executive to
pay such claim and sue for a refund, the Corporation shall (to the extent
permitted by law) advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the Corporation’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

 

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

 

12

 

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

 

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

 

11.           No Set-Off or
Mitigation.  The Corporation’s
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Corporation may have against the Executive or others.  In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive obtains
other employment; provided, however, if Executive is employed during any
portion of the period covered by Section 9(b)(iii) above and
receives benefits in connection with such employment, the Corporation shall not
be required to provide any benefits pursuant to Section 9(b)(iii) to
the extent duplicative benefits are provided by such new employer.

 

12.           Payment of Certain
Expenses.  The prevailing party in
any dispute under this Agreement shall be entitled, to the extent permitted by
law, to reimbursement from the other party for all of the prevailing party’s
costs (including but not limited to the arbitrator’s compensation), expenses,
and attorneys’ fees.

 

13.           Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the heirs and representatives of the Executive 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) to all or a substantial portion of its
assets, by agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
this Agreement if no such succession had taken place.  Regardless of whether such an agreement is
executed, this Agreement shall be binding upon any successor of the Corporation
in accordance with the operation of law, and such successor shall be deemed the
“Corporation” for purposes of this Agreement.

 

13

 

14.           Notices.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand, reputable overnight courier or mailed within
the continental United States by first class certified mail, return receipt
requested, postage prepaid, addressed as follows:

 

(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:

 

Joel A. Littman 

c/o Communications & Power Industries, Inc.

811 Hansen Way

Palo Alto, California 94303-1110

 

Such
addresses may be changed by written notice sent to the other party at the last
recorded address of that party.

 

15.           Tax Withholding.  The Corporation shall provide 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 of stock and/or other
property made by or on behalf of the Corporation to or for the benefit of the
Executive under this Agreement or otherwise. 
The Corporation may, at its option: (a) withhold such taxes from
any cash payments owing from the Corporation to the Executive, (b) require
the Executive to pay to the Corporation in cash such amount as may be required
to satisfy such withholding obligations and/or (c) make other satisfactory
arrangements 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 the
formation, interpretation, performance or breach of this Agreement shall be
settled exclusively by arbitration, before a single arbitrator, in accordance
with this Section 16 and the then most applicable rules of the
American Arbitration Association. 
Judgment upon any award rendered by the arbitrator may be entered by any
state or federal court having jurisdiction thereof.  Such arbitration shall be administered by the
American Arbitration Association. 
Arbitration shall be the exclusive remedy for determining any such
dispute, regardless of its nature. 
Notwithstanding the foregoing, either party may in an appropriate matter
apply to a court for provisional relief, including a temporary restraining
order or a preliminary injunction, on the ground that the award to which the
applicant may be entitled in arbitration may be rendered ineffectual without
provisional relief.  Unless mutually
agreed by the parties otherwise, any arbitration shall take place in the City
of Palo Alto, California.

 

(b)           Selection of
Arbitrator.  In the event the parties
are unable to agree upon an arbitrator, the parties shall select a single
arbitrator from a list of nine arbitrators (which shall be retired judges or
corporate or litigation attorneys experienced in executive employment
agreements) provided by the office of the American Arbitration Association
having jurisdiction over Palo Alto, California. 
If the parties are unable to agree upon an arbitrator from the list so
drawn, then the parties shall each strike names alternately from the list, with
the first to strike being determined by lot. 
After each party has used four strikes, the remaining name on the list
shall be the arbitrator.  If such person
is unable to serve for any reason, the parties shall repeat this process until
an arbitrator is selected.

 

14

 

(c)           Applicability
of Arbitration; Remedial Authority. 
This agreement to resolve any disputes by binding arbitration shall
extend 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 as
well to claims arising out of state and federal statutes and local ordinances
as well as to claims arising under the common law.  In the event of a dispute subject to this
paragraph the parties shall be entitled to reasonable discovery subject to the
discretion of the arbitrator.  The
remedial authority of the arbitrator (which shall include the right to grant
injunctive or other equitable relief) shall be the same as, but no greater
than, would be the remedial power of a court having jurisdiction over the
parties and their dispute.  The
arbitrator shall, upon an appropriate motion, dismiss any claim without an
evidentiary hearing if the party bringing the motion establishes that he or it
would be entitled to summary judgment if the matter had been pursued in court
litigation.  In the event of a conflict
between the applicable rules of the American Arbitration Association and
these procedures, the provisions of these procedures shall govern.

 

(d)           Fees
and Costs.  Any filing or
administrative fees shall be borne initially by the party requesting arbitration.  The Corporation shall be responsible for the
costs and fees of the arbitration, unless the Executive wishes to contribute
(up to 50%) of the costs and fees of the arbitration.

 

(e)           Award
Final and Binding.  The arbitrator
shall render an award and written opinion, and the award shall be final and
binding upon the parties.  If any of the
provisions of this paragraph, or of this Agreement, are determined to be
unlawful or otherwise unenforceable, in whole or in part, such determination
shall not affect the validity of the remainder of this Agreement, and this
Agreement shall be reformed to the extent necessary to carry out its provisions
to the greatest extent possible and to insure that the resolution of all
conflicts between the parties, including those arising out of statutory claims,
shall be resolved by neutral, binding arbitration.  If a court should find that the arbitration
provisions of this Agreement are not absolutely binding, then the parties
intend any arbitration decision and award to be fully admissible in evidence in
any subsequent action, given great weight by any finder of fact, and treated as
determinative to the maximum extent permitted by law.

 

17.           No Assignment.  Except as otherwise expressly provided
herein, this Agreement is not assignable by any party and no payment to be made
hereunder shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or other charge.

 

18.           Execution in
Counterparts.  This Agreement may be
executed by the parties hereto in two (2) or more counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
constitute one and the same instrument, and all signatures need not appear on
any one counterpart.

 

15

 

19.           Governing Law.  This Agreement shall be construed and
interpreted in accordance with and governed by the laws of the State of
California, other than the conflict of laws provisions of such laws.

 

20.           Severability.  If any provision of this Agreement shall be
adjudged by any court of competent jurisdiction to be invalid or unenforceable
for any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement. 
Furthermore, if the scope of any restriction or requirement contained in
this Agreement is too broad to permit enforcement of such restriction or
requirement to its full extent, then such restriction or requirement shall be
enforced to the maximum extent permitted by law, and the Executive consents and
agrees that any court of competent jurisdiction may so modify such scope in any
proceeding brought to enforce such restriction or requirement.

 

21.           Prior Understandings.  This Agreement amends and restates the
Original Employment Agreement in its entirety. 
This Agreement embodies the entire understanding of the parties hereto
and supersedes all other oral or written agreements or understandings between
them regarding the subject matter hereof. 
No change, alteration or modification hereof may be made except in a writing,
signed by each of the parties hereto. 
The headings in this Agreement are for convenience and reference only
and shall not be construed as part of this Agreement or to limit or otherwise
affect the meaning hereof.

 

16

 

IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.

 

	
   

  	
  CORPORATION

  
	
   

  	
  Communications &
  Power Industries, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT A. FICKETT

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Robert A. Fickett, COO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ JOEL A. LITTMAN

  
	
   

  	
  Joel A. LittmanExhibit
10.3

 

First Amendment and Restatement of 

 

the Communications & Power Industries, Inc.

 

Non-Qualified Deferred Compensation Plan

 

Effective As Of December 1, 2004

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
   

  	
  Account

  	
   

  	
  1

  
	
   

  	
  1.2.

  	
   

  	
  Affiliate

  	
   

  	
  2

  
	
   

  	
  1.3.

  	
   

  	
  Base Salary

  	
   

  	
  2

  
	
   

  	
  1.4.

  	
   

  	
  Beneficiary

  	
   

  	
  2

  
	
   

  	
  1.5.

  	
   

  	
  Code

  	
   

  	
  2

  
	
   

  	
  1.6.

  	
   

  	
  Compensation

  	
   

  	
  2

  
	
   

  	
  1.7.

  	
   

  	
  Corporation Contribution

  	
   

  	
  2

  
	
   

  	
  1.8.

  	
   

  	
  Disability

  	
   

  	
  2

  
	
   

  	
  1.9.

  	
   

  	
  Effective Date

  	
   

  	
  2

  
	
   

  	
  1.10.

  	
   

  	
  Election of Deferral

  	
   

  	
  2

  
	
   

  	
  1.11.

  	
   

  	
  Eligible Employee

  	
   

  	
  2

  
	
   

  	
  1.12.

  	
   

  	
  ERISA

  	
   

  	
  3

  
	
   

  	
  1.13.

  	
   

  	
  Key Employee

  	
   

  	
  3

  
	
   

  	
  1.14.

  	
   

  	
  MIP Bonus

  	
   

  	
  3

  
	
   

  	
  1.15.

  	
   

  	
  Participant

  	
   

  	
  3

  
	
   

  	
  1.16.

  	
   

  	
  Participant Annual Deferral

  	
   

  	
  3

  
	
   

  	
  1.17.

  	
   

  	
  Plan

  	
   

  	
  3

  
	
   

  	
  1.18.

  	
   

  	
  Plan Administrator

  	
   

  	
  3

  
	
   

  	
  1.19.

  	
   

  	
  Plan Year

  	
   

  	
  3

  
	
   

  	
  1.20.

  	
   

  	
  Trust

  	
   

  	
  3

  
	
   

  	
  1.21.

  	
   

  	
  Valuation Date

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
  ELIGIBILITY AND PARTICIPATION

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
   

  	
  Eligibility

  	
   

  	
  3

  
	
   

  	
  2.2.

  	
   

  	
  Participation

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
  CONTRIBUTIONS AND CREDITS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
   

  	
  Deferral Election

  	
   

  	
  4

  
	
   

  	
  3.2.

  	
   

  	
  Corporation Contributions

  	
   

  	
  5

  
	
   

  	
  3.3.

  	
   

  	
  Withholding of Taxes

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
  ACCOUNTS AND ALLOCATION OF FUNDS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
   

  	
  Account Allocations

  	
   

  	
  5

  
	
   

  	
  4.2.

  	
   

  	
  Investment Election and Declared Rates

  	
   

  	
  6

  
	
   

  	
  4.3.

  	
   

  	
  Determination of Accounts

  	
   

  	
  7

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
  ENTITLEMENT TO BENEFITS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
   

  	
  Vesting of Benefits

  	
   

  	
  7

  
	
   

  	
  5.2.

  	
   

  	
  Disability or Termination of Employment Benefits

  	
   

  	
  7

  
	
   

  	
  5.3.

  	
   

  	
  Death Benefits

  	
   

  	
  7

  
	
   

  	
  5.4.

  	
   

  	
  Hardship Distribution

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
  RIGHTS ARE LIMITED

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
   

  	
  Benefits Payable
  Only From General Corporate Assets: Unsecured General Creditor Status of
  Participant

  	
   

  	
  8

  
	
   

  	
  6.2.

  	
   

  	
  No Contract of Employment

  	
   

  	
  9

  
	
   

  	
  6.3.

  	
   

  	
  Benefits Not Transferable

  	
   

  	
  9

  
	
   

  	
  6.4.

  	
   

  	
  No Trust Created

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
  BENEFICIARIES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
   

  	
  Beneficiary Designation

  	
   

  	
  9

  
	
   

  	
  7.2.

  	
   

  	
  Spouse’s Interest

  	
   

  	
  9

  
	
   

  	
  7.3.

  	
   

  	
  Facility of Payment

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
  PLAN ADMINISTRATION

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
   

  	
  Responsibility of Administration of the Plan

  	
   

  	
  10

  
	
   

  	
  8.2.

  	
   

  	
  Claims Procedure

  	
   

  	
  10

  
	
   

  	
  8.3.

  	
   

  	
  Arbitration

  	
   

  	
  15

  
	
   

  	
  8.4.

  	
   

  	
  Notice

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
  AMENDMENT OR TERMINATION

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
   

  	
  Amendment or Termination

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
  THE TRUST

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
   

  	
  Establishment of Trust

  	
   

  	
  17

  
	
   

  	
  10.2.

  	
   

  	
  Interrelationship of the Plan and the Trust

  	
   

  	
  17

  
	
   

  	
  10.3.

  	
   

  	
  Contribution to the Trust

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
   

  	
  Governing Law

  	
   

  	
  18

  

 

3

 

FIRST AMENDMENT AND
RESTATEMENT OF THE

COMMUNICATIONS & POWER INDUSTRIES, INC.

NON-QUALIFIED DEFERRED COMPENSATION PLAN

 

THIS FIRST
AMENDMENT AND RESTATEMENT OF THE COMMUNICATIONS & POWER INDUSTRIES,
INC. NON-QUALIFIED DEFERRED COMPENSATION PLAN is adopted as
of the 1st day of December, 2004, by Communications & Power Industries, Inc.,
a Delaware corporation (the “Corporation”), as follows:

 

RECITALS

 

WHEREAS,
the Corporation has established the Communications & Power Industries, Inc.
Non-Qualified Deferred Compensation Plan (the “Plan”), as of December 1,
1995, to provide additional retirement benefits and income tax deferral
opportunities for a select group of management and highly compensated
employees;

 

WHEREAS,
the Corporation intends that the Plan shall at all times be administered and
interpreted in such a manner as to constitute an unfunded nonqualified deferred
compensation plan for a select group of management or highly compensated
employees and to qualify for all available exemptions from the provisions of
ERISA; and

 

WHEREAS,
the Corporation wished to amend and restate the Plan, in its entirety, to
comply with the provisions of the American Jobs Creation Act of 2004 applicable
to deferred compensation plans, effective for deferral of compensation that is
earned (i.e., the services that earned such compensation are performed) or
vested after December 31, 2004, while retaining the original provisions of
the Plan for deferral of compensation that is earned (i.e., the services that
earned such compensation are performed) and vested before January 1, 2005.

 

NOW,
THEREFORE, the Corporation hereby adopts the following First
Amendment and Restatement of the Communications & Power Industries, Inc.
Non-Qualified Deferred Compensation Plan (the “First Amendment and Restatement”),
effective for deferral of compensation that is earned (i.e., the services that
earned such compensation are performed) or vested after December 31, 2004,
while retaining the original provisions of the Plan for deferral of
compensation that is earned (i.e., the services that earned such compensation
are performed) and vested before January 1, 2005.

 

ARTICLE 1

 

DEFINITIONS

 

DEFINITION
OF TERMS.  Certain words and phrases are defined when
first used in later sections of this plan. 
In addition, the following words and phrases when used herein, unless
the context clearly requires otherwise, shall have the following respective
meanings.

 

1.1.          Account.  Book
entries maintained by the Corporation, reflecting the sum of all amounts
deferred hereunder by or on behalf of a Participant, including (i) all
Corporation Contributions, and (ii)  any earnings, gains, losses, and
changes in value credited to the Participant or his or her Beneficiaries
pursuant to the Plan, provided, however, that the existence of such book
entries and the Account shall not create, and shall not be deemed to create, a
trust of any kind, or a fiduciary relationship between the Corporation and the
Participant, his or her Beneficiaries.

 

1

 

1.2.          Affiliate.  Any
corporation, partnership, joint venture, association, or similar organization
or entity, which is a member of a controlled group of companies which includes,
or which is under common control with, the Corporation under Section 414
of the Code.

 

1.3.          Base Salary.  The
annual compensation (excluding bonuses, commissions, overtime, incentive
payments, non-monetary awards, directors fees and other fees, stock options and
grants, and car allowances) paid to a Participant for services rendered to the
Corporation, before reduction for compensation deferred pursuant to all
qualified, non-qualified and Code Section 125 plans of the Corporation.

 

1.4.          Beneficiary.  The
Beneficiary designated by a Participant under Article 7, or, if the
Participant has not designated a Beneficiary under Article 7, the person
or persons entitled to receive distributions of benefits under Section 5.3.

 

1.5.          Code.  The Internal
Revenue Code of 1986, as amended from time to time.

 

1.6.          Compensation.  The
Base Salary and MIP Bonus paid by the Corporation to an employee for a calendar
year.

 

1.7.          Corporation Contribution.  A contribution to the Plan made by the
Corporation under Section 3.2.

 

1.8.          Disability.  Inability
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or receipt of income replacement benefits for a period of not less than
three months under an accident and health plan of the Corporation or an
Affiliate by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months.

 

1.9.          Effective
Date.  December 1, 1995 for the Plan as
originally adopted, the provisions of which shall remain in effect for deferral
of Compensation that is earned (i.e., the services that earned such
Compensation are performed) and vested before January 1, 2005, and December 1,
2004 for the First Amendment and Restatement, the provisions of which shall
apply to deferral of Compensation that is earned (i.e., the services that
earned such Compensation are performed) or vested after December 31, 2004.

 

1.10.        Election
of Deferral.  A written notice filed by the Participant
with the Plan Administrator in form prescribed by the Plan Administrator,
specifying the amount (if any) of Base Salary and MIP Bonus to be deferred.

 

1.11.        Eligible
Employee.  Any employee of the Corporation or an
Affiliate who is one of a select group of management or highly compensated
employees, as defined by ERISA.

 

2

 

1.12.        ERISA.  The
Employee Retirement Income Security Act of 1974, as amended from time to time.

 

1.13.        Key
Employee.  A key employee of the Corporation or any
Affiliate, as defined in Section 416(i) of the Code without regard to
paragraph (5) thereof, who is a participant in this Plan.

 

1.14.        MIP Bonus.  The
annual bonus payable to a participant under the Corporation’s annual Management
Incentive Program.

 

1.15.        Participant.  An
Eligible Employee designated as a participant by the Plan Administrator.

 

1.16.        Participant
Annual Deferral.  The portion of a Participant’s Compensation,
which he or she elects to defer for the Plan Year in question.

 

1.17.        Plan.  This
Plan, together with any and all amendments or supplements thereto.

 

1.18.        Plan
Administrator.  The Board of Directors of Communications &
Power Industries, Inc. (a Delaware corporation) or its designee.

 

1.19.        Plan Year.  The calendar
Year.

 

1.20.        Total Deferrals.  The sum of a Participant’s
deferrals of Compensation and Corporation Contributions made for such
Participant.

 

1.21.        Trust.  A
grantor trust of the type commonly referred to as a “rabbi trust” established
under Article 10 of this Plan.

 

1.22.        Valuation
Date.  The last day of each quarter during the Plan
Year, or such other dates as the Plan Administrator may establish in its
discretion.

 

ARTICLE 2

 

ELIGIBILITY AND PARTICIPATION

 

2.1.          Eligibility.

 

(a)              An Eligible Employee
shall become a Participant in the Plan if such Employee is designated as a Participant
by the Corporation, in writing.

 

(b)              Once an employee
becomes a Participant, he or she shall remain a Participant until his or her
termination of employment with the Corporation and all Affiliates, and
thereafter until all benefits to which he or she (or his or her Beneficiaries)
is entitled under the Plan have been paid.

 

3

 

2.2.          Participation.

 

(a)              The Participant may
elect a Participant Annual Deferral hereunder by filing an Election of
Deferral.  Except as provided in Sections
2.2(b) and (c), any Election of Deferral, to be effective, must be filed
before the beginning of the Plan Year to which it applies, and shall be
effective only for Base Salary and MIP Bonus which the Participant earns (i.e.,
the Participant performs the services that earn such Base Salary and MIP Bonus)
in the Plan Year to which the Election of Deferral applies.  The Plan Administrator may, in its discretion,
require that Elections of Deferral be filed a stated number of days before the
beginning of the Plan Year to which the Elections of Deferral apply.

 

(b)              Any employee who
becomes an Eligible Employee and is designated as a Participant by the Plan
Administrator during a Plan Year may elect to participate and commence deferrals
by filing an Election of Deferral within 30 days following his designation as a
Participant, in which case the Election of Deferral shall be effective for Base
Salary and MIP Bonus earned (i.e., the Participant performs the services that
earn such Base Salary and MIP Bonus) after the date of the filing of such
Election of Deferral in such Plan Year.

 

(c)              In the case of any MIP
Bonus which is “performance-based compensation,” within the meaning of
regulations promulgated by the U.S. Treasury Department under Section 409A
of the Code, based on services performed over a period of at least 12 months,
the Plan Administrator may permit a Participant to file an Election of Deferral
applying to such MIP Bonus not later than six months before the end of such period.

 

(d)              Each Election of
Deferral shall, and shall be irrevocable during the Plan Year to which it
relates, or, if it relates to a MIP Bonus which is “performance-based
compensation,” within the meaning of regulations promulgated by the U.S.
Treasury Department under Section 409A of the Code, based on services
performed over a period of at least 12 months, during such 12 month period.

 

ARTICLE 3

 

CONTRIBUTIONS AND CREDITS

 

3.1.          Deferral
Election.

 

(a)              Commencing on the
Effective Date, and continuing through the date on which the Participant’s
employment terminates because of his or her death, Retirement, Disability, or
any other cause, each Participant shall be entitled to elect to defer into his
or her Account, by filing with the Plan Administrator an Election of Deferral, in
the form prescribed by the Plan Administrator, at the times specified in Section 2.2,
a portion of the Base Salary and MIP Bonus that the Participant will earn for
the period for which the Election of Deferral will be effective as set forth in
Section 2.2.  Such deferrals shall
be accomplished by payroll deduction.

 

(b)              In the Election of
Deferral, the Participant shall specify the amount to be deferred, which such
specification may be separate for the Base Salary and the MIP Bonus, and may be
expressed as a percentage of the Base Salary or MIP Bonus or as a fixed dollar
amount.  Subject to the provisions of Section 3.3,
the Participant may elect to defer up to 100% of his Base Salary and up to 100%
of his MIP Bonus.

 

4

 

3.2.          Corporation
Contributions.

 

The
Corporation shall make Corporation Contributions for each Plan Year for each
Participant in an amount equal to the sum of:

 

(a)              4.75% of the
Participant’s Base Salary paid in such Plan Year in excess of the Social
Security Taxable Wage Base in effect for such Plan Year, up to and including the
dollar limit in Section 401(a)(17) of the Code (which is $210,000 for
2005, and which will be indexed by the Internal Revenue Service for future changes
in the cost of living), plus

 

(b)              9.5% of the
Participant’s Base Salary paid in such Plan Year in excess of the dollar limit
in Section 401(a)(17) of the Code (which is $210,000 for 2005, and which
will be indexed by the Internal Revenue Service for future changes in the cost
of living).

 

3.3.          Withholding
of Taxes.

 

(a)             Annual
Withholding from Compensation. 
For any Plan Year in which contributions are made to the Plan, the
Corporation shall withhold the Participant’s share of FICA, FUTA and other employment
taxes from the Participant’s Base Salary or MIP Bonus other than Total
Deferrals.  If deemed appropriate by the
Corporation, the amount of a Participant’s Participant Annual Deferral elected
on the Participant’s Election of Deferral may be reduced where necessary to
facilitate compliance with applicable withholding requirements.  If any taxes, including but not limited to,
FICA, FUTA and other employment taxes with respect to the Account, are required
to be withheld before the time of payment, the Corporation may withhold such
amounts for other compensation paid to the Participant.

 

(b)             Withholding
from Benefit Distributions. 
The Corporation (or the trustee of the Trust, as applicable), shall
withhold from any payments made to a Participant or Beneficiary under this Plan
all federal, state and local income, FICA, FUTA and other employment and other
taxes required to be withheld by the Corporation (or the trustee of the Trust,
as applicable), in connection with such payments, in amounts and in a manner to
be determined in the sole discretion of the Corporation (or the trustee of the
Trust, as applicable).

 

ARTICLE 4

 

ACCOUNTS AND ALLOCATION OF FUNDS

 

4.1.          Account
Allocations.

 

(a)              Compensation which
is deferred under the Plan shall be deemed to be added to the Account on the
first day of the following month in which the Compensation would otherwise have
been paid.

 

5

 

(b)              Corporation
Contributions shall be credited to the Participant’s Account at such time as
directed by the Plan Administrator.

 

(c)              All amounts paid
from an Account shall be deemed to be paid on the first day of the month in
which such payments are made.

 

(d)              Based on the
Investment Elections of a Participant made under Section 4.2, the Participant’s
Account shall be credited with investment earnings, gains, losses or changes in
value effective at the end of each calendar quarter during the Plan Year,
except as otherwise provided in this Plan.

 

(e)              The Plan
Administrator may, at any time, change the timing or methods for crediting or
debiting earnings, gains, losses, and changes in value of investment options,
deferrals of Compensation, Corporation Contributions, and payments of benefits
and withdrawals under this Plan; provided, however, that the times and methods
for crediting or debiting such items in effect at any particular time shall be
uniform among all Participants and Beneficiaries.

 

4.2.          Investment
Election and Declared Rates.

 

(a)              Investment Elections
may be made from any of the various investment alternatives selected by the
Participant from among those made available by the Corporation from time to
time.

 

(b)              A Participant (or,
in the event of the Participant’s death, the Participant’s Beneficiary) shall
make Investment Elections for the Participant’s Account by filing a form prescribed
by the Plan Administrator with the Plan Administrator.  A Participant may elect to have his or her
Account deemed to be invested in up to 10 investment alternatives, provided,
however, that such investment alternative must be applied to at least 10% of
the total balance in his or her Account and must be in a whole percentage
amount.  Investment Elections shall
remain in effect until changed and may be changed once during each calendar
quarter, with such change to be effective on the first day of the succeeding
calendar quarter.  The Plan Administrator
may in its discretion modify the timing of changes of Investment Elections,
provided that any such modification applies uniformly to all Participants and Beneficiaries.

 

(c)              At the end of each
calendar quarter (or such shorter period as the Plan Administrator may
determine), the Corporation shall compute the total return for the quarter (or
such shorter period) as to each Participant’s Investment Elections and reduce
such returns for that quarter’s (or shorter period’s) money management fees,
mortality charges, cost of insurance and investment expenses associated
specifically with each investment alternative. 
The total return for each investment alternative shall be that
investment alternative’s total return for that quarter (or shorter period)
reduced for expenses as described above.

 

(d)              From time to time,
and at its sole discretion, the Corporation may change the investment
alternatives which it makes available to the Participant.  However, notwithstanding the provisions of
this Section 4.2, the Corporation may invest contributions in investments other
than the investments selected by such Participant but the Participant’s return
will solely be based on the results of his or her Investment Election reduced
for expenses as described in Section 4.2(c) above.  Nothing in this Plan shall require the
Corporation actually to acquire or hold any particular investment.

 

6

 

4.3.          Determination of Accounts.  A
Participant’s Account balance as of each Valuation Date shall consist of the Total
Deferrals, and investment earnings, gains, losses, and changes in value in his
or her Account determined in accordance with this Section 4.  The Plan Administrator shall keep
sub-accounts within the Account of each person who was a Participant before the
Effective Date of this First Amendment and Restatement to reflect the portion
of such Participant’s Account attributable to Total Deferrals that are earned
(i.e., the services that earned such Total Deferrals are performed) and vested
before January 1, 2005 (which shall continue to be governed by the
original provisions of this Plan) and the portion of such Participant’s Account
attributable to Total Deferrals that are earned (i.e., the services that earned
such Total Deferrals are performed) or vested after December 31, 2004
(which shall be governed by the terms and provisions of this First Amendment
and Restatement).

 

ARTICLE 5

 

ENTITLEMENT TO BENEFITS

 

5.1.          Vesting
of Benefits.  Subject to the provisions of Section 5.2(b),
a Participant shall be 100% vested in his Account balance at all times.

 

5.2.          Disability
or Termination of Employment Benefits.

 

(a)              In the event of the
Participant’s Disability, or termination of employment with the Corporation or
an Affiliate for any reason, including but not limited to retirement or death,
the Corporation shall pay to the Participant a termination benefit equal to the
balance of the Participant’s Account in one lump sum within 2-1/2 months after
such Disability or termination of employment. 
Notwithstanding the foregoing, if any stock of this Corporation is
publicly traded on established securities market or otherwise, no payment shall
be made to a Key Employee within six months after such Key Employee’s separation
from service (or, if earlier, the date of his or her death).

 

5.3.          Death
Benefits.  In
the event of the Participant’s death before payment of benefits under Section 5.2,
a death benefit equal to the balance of the Participant’s Account shall be paid
to the Participant’s beneficiary in one lump sum within 2-1/2 months after the
Participant’s death.  If no designation of
a Beneficiary has been received by the Corporation, such payment shall be made
to the Participant’s surviving legal spouse. 
If the Participant is not survived by a legal spouse, the said payment
shall be made to the then living children of the Participant, if any, in equal
shares.  If there are no surviving
children, the balance of the Account balance shall be paid to the estate of the
Participant.

 

7

 

5.4.          Hardship
Distribution.

 

(a)              Hardship
Withdrawal.  In the event
that the Plan Administrator, upon the written request of a Participant,
determines, in its sole discretion, that the Participant has suffered an
unforeseeable financial emergency, the Corporation shall pay to the
Participant, as soon as practicable following such determination, an amount
necessary to meet the emergency (the “Hardship Withdrawal”), but not exceeding
the vested balance of such Participant’s Account as of the date of such
payment.  For purposes of this Section 5.4(a),
an “unforeseeable financial emergency” shall mean a severe financial hardship
to the Participant resulting from an illness or accident of the Participant,
the Participant’s spouse, or a dependent (as defined in Section 152(a) of
the Code) of the Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.  The amounts of a Hardship Withdrawal may not
exceed the amount the Plan Administrator reasonably determines, under
regulations issued by the U.S. Treasury Department under Section 409A of
the Code, to be necessary to meet such emergency needs (including taxes
incurred by reason of a taxable distribution), after taking into account the
extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s
assets (to the extent that the liquidation of such assets would not itself
cause severe financial hardship).

 

(b)              Rules Adopted
by Plan Administrator. 
The Plan Administrator shall have the authority to adopt additional rules relating
to hardship distributions.  In
administering these rules, the Plan Administrator shall act in accordance with
the principle that the primary purpose of this Plan is to provide additional
retirement income, not additional funds for current consumption.

 

ARTICLE 6

 

RIGHTS ARE LIMITED

 

6.1.          Benefits
Payable Only From General Corporate Assets: Unsecured General Creditor Status
of Participant.

 

(a)              Payment to the
Participant or any Beneficiary hereunder shall be made from assets which shall
continue, for all purposes, to be part of the general, unrestricted assets of
the Corporation; no person shall have any interest in any such asset by virtue
of any provision of this Plan.  The
Corporation’s obligation hereunder shall be an unfunded and unsecured promise
to pay money in the future.  To the
extent that any person acquires a right to receive payments from the
Corporation under the provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Corporation; no such person
shall have or acquire any legal or equitable right, interest or claim in or to
any property or assets of the Corporation.

 

(b)              In the event that,
in its discretion, the Corporation purchases an insurance policy or policies
insuring the life of a Participant, or any employee of the Corporation, to
allow the Corporation to recover or meet the cost of providing benefits in
whole or in part, hereunder, no Participant or Beneficiary shall have any rights
whatsoever therein or in said policy or the proceeds therefrom.  The Corporation shall be the sole owner and
beneficiary of any such insurance policy or property and shall possess and may
exercise all incidents of ownership therein.

 

8

 

6.2.          No Contract of Employment.  Nothing
contained herein shall be construed to be a contract of employment for any term
of years, nor as conferring upon the Participant the right to continue to be
employed by the Corporation in his or her present capacity or in any
capacity.  It is expressly understood
that this Plan relates only to the payment of deferred compensation for the
Participant’s services.

 

6.3.          Benefits Not Transferable.  No Participant
or Beneficiary under this Plan shall have any power or right to transfer,
assign, anticipate, hypothecate or otherwise encumber any part of all the
amounts payable hereunder.  No part of
the amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency, or dissolution of marriage. Any such attempted
assignment shall be void.

 

6.4.          No Trust Created.  Except as set
forth in Article 10, nothing contained in this Plan, and no action taken
pursuant to its provisions by any person shall create, or be construed to
create, a trust of any kind, or a fiduciary relationship between the
Corporation and any other person.

 

ARTICLE 7

 

BENEFICIARIES

 

7.1.          Beneficiary Designation.  The
Participant shall have the right, at any time, to submit in a form prescribed
by the Plan Administrator, a written designation of primary and secondary
beneficiaries to whom payment under this Plan shall be made in the event of his
or her death prior to complete distribution of the benefits payable.  Each Beneficiary designation shall become
effective only when receipt thereof is acknowledged in writing by the Plan
Administrator.  The Plan Administrator
shall have the right, in its sole discretion, to reject any Beneficiary
designation, which is not in a form satisfactory to the Plan Administrator.  Any attempt to designate a Beneficiary,
otherwise than as provided in this Section 7.1, shall be ineffective.

 

7.2.          Spouse’s Interest.  A Participant’s
Beneficiary designation shall be deemed automatically revoked if the
Participant names a spouse as Beneficiary and the marriage is later dissolved
or the spouse dies.  Without limiting the
generality of the foregoing, the interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant or whose marriage with the
Participant has been dissolved shall automatically pass to the Participant and
shall not be transferable by such spouse in any manner, including but not
limited to such spouse’s will, nor shall such interest pass under the laws of
intestate succession.

 

 

9

 

7.3.          Facility of Payment.  If a
distribution is to be made to a minor, or to a person who is otherwise
incompetent, then the Plan Administrator may, in its discretion, make such
distribution (i) to the legal guardian, or if none, to a parent of a minor
payee with whom the payee maintains his or her residence, or (ii) to the
conservator or committee or, if none, to the person having custody of an
incompetent payee.  Any such distribution
shall fully discharge the Plan Administrator, the Corporation and Plan from further
liability on account thereof.

 

ARTICLE 8

 

PLAN
ADMINISTRATION

 

8.1.          Responsibility of Administration of the Plan.

 

(a)             The Plan Administrator shall be responsible for the
management, operation and administration of the Plan.  The Plan Administrator may employ others to
render advice with regard to its responsibilities under this Plan.  It may also allocate its responsibilities to
others and may exercise any other powers necessary for the discharge of its
duties.  The Plan Administrator shall be
entitled to rely conclusively upon all tables, valuations, certifications,
opinions and reports furnished by any actuary, accountant, controller, counsel
or other person employed or engaged by the Plan Administrator with respect to
the Plan.

 

(b)             The primary responsibility of the Plan Administrator
is to administer the Plan for the benefit of the Participants and their
beneficiaries, subject to the specific terms of the Plan.  The Plan Administrator shall administer the
Plan in accordance with its terms and shall have the power to determine all
questions arising in connection with the administration, interpretation, and
application of the Plan.  Any such
determination shall be conclusive and binding upon all persons and their heirs,
executors, beneficiaries, successors and assigns.  The Plan Administrator shall have all powers
necessary or appropriate to accomplish its duties under the Plan.  The Plan Administrator shall also have the discretion
and authority to make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan and decide or resolve any and
all questions, including but not limited to, interpretations of this Plan and
entitlement to or amount of benefits under this Plan, as may arise in
connection with the Plan.

 

8.2.          Claims Procedure.

 

(a)             Claim.  A person who believes that he or she is being
denied a benefit to which he or she is entitled under the Plan or such person’s
authorized representative (hereinafter collectively referred to as a “Claimant”)
may file a written request for such benefit with the Vice President of Human
Resources, setting forth his or her claim. 
The request must be addressed to the Vice President of Human Resources
at his then principal place of business. 
Neither the Corporation, the Plan Administrator nor the Plan shall
charge a Claimant a fee or any costs in connection with making a claim or
appealing an adverse benefit determination pursuant to this Section 8.2;
provided, however, that, except as provided in Section 8.3(c), the Claimant
shall pay the fees, costs and expenses of his own attorneys, accountants, or
other professionals or representatives that he retains to make a claim or
appeal under this Article 8.

 

10

 

(b)             Claim Decision.  Upon receipt
of a claim, the Vice President of Human Resources shall advise the Claimant
that a reply will be forthcoming within 90 days and that the Vice President of
Human Resources shall, in fact, deliver such reply within such period. The Vice
President of Human Resources may, however, extend the reply period for an
additional 90 days for reasonable cause, provided that the Vice President of
Human Resources provides the Claimant with a written or electronic Notice of
Extension, as defined in Section 8.2(c) of this Plan, within the
initial 90 day period.  In no event shall
an extension exceed a period of 180 days from the date the claim was initially
received by the Vice President of Human Resources.  Upon receipt of a Disability claim, the Vice
President of Human Resources shall advise the Claimant that a reply will be
forthcoming within 45 days and that the Vice President of Human Resources
shall, in fact, deliver such reply within such period.  This period may be extended by the Vice
President of Human Resources for up to 30 days, provided that the Vice
President of Human Resources (i) determines that such extension is
necessary due to matters beyond his control, and (ii) provides a written
or electronic Notice of Extension to the Claimant prior to the termination of
the initial 45-day period.  If, prior to
the end of the first 30-day extension period, the Vice President of Human
Resources determines that, due to matters beyond his control, he cannot make a
determination within the extension period, the period for making a
determination may be extended for an additional 30 days, provided that the Vice
President of Human Resources provides the Claimant with a Notice of Extension
prior to the expiration of the initial extension period.  In the event the Vice President of Human
Resources extends the determination period of any claim due to a Claimant’s
failure to submit information necessary to decide the claim, the period for
making the determination shall be tolled from the date the Notice of Extension
is sent to the Claimant until the date the Vice President of Human Resources
receives the information.  If a claim is
denied in whole or in part, the Vice President of Human Resources shall adopt a
written opinion, using language calculated to be understood by the Claimant,
setting forth to the extent applicable:

 

(i)            The specific reasons for such denial;

 

(ii)           Specific reference to pertinent provisions of this
Plan on which such denial is based;

 

(iii)          A description of any additional material or
information necessary for the Claimant to perfect his or her claim and an
explanation why such material or such information is necessary;

 

(iv)          Appropriate information as to the steps to be taken if
the Claimant wishes to submit the claim for review;

 

(v)           The time limits for requesting a review under Section 8.2(d) and
for review under Section 8.2(e) of this Plan;

 

11

 

(vi)          A statement that the Claimant has the right to
arbitrate under Section 8.3 of this Plan and to bring a civil action under
Section 502(a) of ERISA following an adverse determination on review;

 

(vii)         The date by which an appeal must be filed with respect
to the adverse determination; and

 

(viii)        If the adverse determination is in connection with a
Disability claim and if the Vice President of Human Resources relied on an
internal rule, guideline, protocol, or other similar criterion in making the
adverse determination, the Notice shall either (i) state the specific
rule, guideline, protocol, or other similar criterion, or (ii) include a
statement that such internal rule, guideline, protocol, or other similar
criterion was relied upon in making the adverse determination and that a copy
of such internal rule, guideline, protocol, or other similar criterion shall be
provided free of charge to the Claimant upon request.

 

(c)             Notice of Extension.  For purposes
of this Section 8.2, a “Notice of Extension” means a notice provided to a
Claimant that indicates (i) the date the notice is sent to the Claimant, (ii) the
special circumstances requiring an extension of time, and (iii) the date
by which the Vice President of Human Resources or the Plan Administrator, as
the case may be, expects to render the determination.  In the case of a Disability claim, the Notice
shall also (i) explain the standards on which entitlement to benefits is
based, (ii) explain the unresolved issues that prevent a decision on the
claim, (iii) specify the additional information needed to resolve those
issues, if any, and (iv) provide the Claimant with at least 45 days to
provide the specified information.  If
the Notice of Extension is in connection with a Claimant’s failure to submit
information necessary to decide the claim, the Notice shall also state that the
determination period is tolled from the date the Notice is sent until the date
the Vice President of Human Resources or the Plan Administrator, as the case
may be, receives the information.

 

(d)             Request for Review.  The Claimant
may request in writing no later than 60 days from the date the notice provided
under Section 8.2(b) of this Plan is sent to the Claimant that the
Plan Administrator review the determination of the Vice President of Human
Resources.  Such request must be
addressed to the Plan Administrator at its then principal place of
business.  The date an appeal is filed
shall be the date the Plan Administrator receives the written request from the
Claimant, without regard to whether all the information necessary to make a
benefit determination is filed with such request.  The Plan Administrator shall issue its
written decision on each appeal no later than the date of the regularly
scheduled meeting of the Plan Administrator that immediately follows the
Claimant’s request for a review, unless the request for review is filed within
30 days preceding the date of such meeting, in which event the Plan
Administrator shall make a determination no later than the date of the second
regularly scheduled meeting of the Plan Administrator following the receipt of
the request for review by the Plan Administrator.  If special circumstances (such as the need to
hold a hearing or obtain additional information) require an extension of the
time for processing the appeal, the Plan Administrator shall issue its decision
as soon as possible but not later than the Board of Director’s third regularly
scheduled meeting after the date on which the appeal is filed.  The Plan Administrator shall provide a
Claimant with a written Notice of Extension prior

 

12

 

to the commencement of the extension.  If the Vice President of Human Resources
denies a Disability claim in whole or in part, a request for review must be
filed with the Plan Administrator no later than 180 days from the date the
notice provided under Section 8.2(b) is sent to the Claimant.  The Plan Administrator shall issue its
written decision on each appeal of a Disability claim within 45 days after the
receipt thereof, unless special circumstances (such as the need to hold a
hearing or obtain additional information) require an extension of the time for
processing the appeal, in which event the Plan Administrator shall issue its
decision as soon as possible but not later than 90 days from the date the
appeal is filed.  If the Plan
Administrator determines that an extension of time for processing is required,
a Notice of Extension shall be provided to the Claimant prior to the
termination of the 45-day period.  In the
event the Plan Administrator requires an extension of time to make its
determination due to a Claimant’s failure to submit information necessary to
decide a claim, the period for making a benefit determination shall be tolled
from the date the Notice of Extension is sent to the Claimant until the date
the Plan Administrator receives the information.  If the Claimant does not request a review of
the adverse determination within the applicable time limitations, he or she
shall be barred and estopped from challenging the determination.

 

(e)             Review of Decision.  The Plan
Administrator shall provide the Claimant an opportunity to submit written
comments, documents, records, and other information relating to the claim for
benefits.  The Plan Administrator shall
review and take into account all comments, documents, records, and other
information submitted by the Claimant relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination.  The Claimant shall be
provided upon request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the Claimant’s claim for
benefits.  A document, record, or other
information shall be considered relevant for purposes of the preceding sentence
if such document, record, or information was (i) relied upon by the Vice
President of Human Resources in making the benefit determination, (ii) was
submitted, considered, or generated in the course of making the benefit
determination, without regard to whether such document, record, or other
information was relied upon by the Vice President of Human Resources in making
the benefit determination, or (iii) demonstrates compliance with the
administrative processes and safeguards required under Department of Labor
Regulation Section 2560.501-1.  In
addition, in the event of an adverse determination of a Disability claim, (i) any
member of the Plan Administrator who is either the Vice President of Human
Resources who issued the initial adverse determination or a subordinate of such
individual shall not participate with the Plan Administrator for purposes of
the review of such claim, and (ii) the Plan Administrator shall not
provide any deference to the initial adverse determination of the Vice
President of Human Resources.  If the
appeal of a Disability claim is based in whole or in part on a medical
judgment, the Plan Administrator shall consult with a health care professional
who has appropriate training and experience in the field of medicine involved
in the medical judgment.  Any health care
professional the Plan Administrator engages for purposes of such consultation
shall be an individual who is neither an individual who was consulted in
connection with the adverse benefit determination that is the subject of the
appeal nor the subordinate of any such individual.  The Vice President of Human Resources shall
provide the identification of the medical or vocational experts whose advice
was obtained on behalf of the Plan in connection with the Claimant’s adverse
benefit determination, without regard to whether the advice was relied upon by
the Vice President of Human Resources in making the adverse determination.

 

13

 

(f)              Adverse Benefit Determination on
Appeal-Information Access.  In the event
of an adverse benefit determination by the Plan Administrator, the Plan
Administrator shall provide the Claimant access to, and copies of, documents,
records, and other information relating to the adverse benefit determination on
appeal, whether or not such information was relied on by the Plan Administrator
in reaching a determination on the claim.

 

(g)             Notice of an Adverse Benefit Determination on
Appeal.  If the claim is granted on review, the Plan
Administrator shall provide the Claimant written notice of such determination
and the appropriate distribution, adjustment, or other action shall be made or
taken within a reasonable period of time. 
If the Plan Administrator denies the claim in whole or in part, the Plan
Administrator shall provide the Claimant with written notification of its
determination as soon as possible, but no later than 5 days after the adverse
benefit determination is made.  The
written notice issued by the Plan Administrator shall set forth, in a manner
calculated to be understood by the Claimant, the following:

 

(i)            The specific reasons for the adverse
determination;

 

(ii)           The specific references to the pertinent
Plan provisions on which the decision is based;

 

(iii)          A
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the Claimant’s claim for benefits; and

 

(iv)          A statement of the Claimant’s right to
arbitrate under Section 8.3 of this Plan and to bring a civil action under
Section 502(a) of ERISA.

 

If the adverse benefit
determination is in connection with a Disability claim, the notice shall also
provide the following:

 

(v)           If the Plan Administrator relied on an internal rule,
guideline, protocol, or other similar criterion in making the adverse
determination, the notice shall either (i) state the specific rule,
guideline, protocol, or other similar criterion, or (ii) include a
statement that such internal rule, guideline, protocol, or other similar
criterion was relied upon in making the adverse determination and that a copy
of such internal rule, guideline, protocol, or other similar criterion shall be
provided free of charge to the Claimant upon request; and

 

(vi)          The following statement: “You and your plan may have
other voluntary alternative dispute resolution options, such as mediation.  One way to find out what may be available is
to contact your local U.S. Department of Labor Office and your State insurance
regulatory agency.”

 

14

 

8.3.          Arbitration.  Any claim or
controversy between the parties which the parties are unable to resolve
themselves, and which is not resolved through the claims procedure set forth in
Section 8.2, including any claim arising out of a Participant’s employment
or the termination of that employment, and including any claim arising out of,
connected with, or related to the formation, interpretation, performance or
breach of any provision of this Plan, and any claim or dispute as to whether a
claim is subject to arbitration, shall be submitted to and resolved exclusively
by expedited arbitration by a single arbitrator in accordance with the
following procedures:

 

(a)             In the event of a claim or controversy subject to this
arbitration provision, the complaining party shall promptly send written notice
to the other party identifying the matter in dispute and the proposed
remedy.  Following the giving of such
notice, the parties shall meet and attempt in good faith to resolve the
matter.  In the event the parties are
unable to resolve the matter within 21 days, the parties shall meet and attempt
in good faith to select a single arbitrator acceptable to both parties.  If a single arbitrator is not selected by
mutual consent within 10 business days following the giving of the written
notice of dispute, an arbitrator shall be selected from a list of nine persons
each of whom shall be an attorney who is either engaged in the active practice
of law or a recognized arbitrator and who, in either event, is experienced in serving
as an arbitrator in disputes between employers and employees, which list shall
be provided by the main office of the American Arbitration Association (“AAA”)
having jurisdiction over Palo Alto, California or of the Federal Mediation and
Conciliation Service. If, within three business days of the parties’ receipt of
such list, the parties are unable to agree upon an arbitrator from the list,
then the parties shall each strike names alternatively from the list, with the
first to strike being determined by the flip of a coin.  After each party has had four strikes, the
remaining name on the list shall be the arbitrator.  If such person is unable to serve for any
reason, the parties shall repeat this process until an arbitrator is selected.

 

(b)             Unless the parties agree otherwise, within 60 days of
the selection of the arbitrator, a hearing shall be conducted before such
arbitrator at a time and a place in Palo Alto, California agreed upon by the
parties.  In the event the parties are
unable to agree upon the time or place of the arbitration, the time and place
within Palo Alto, California shall be designated by the arbitrator after
consultation with the parties.  Within 30
days of the conclusion of the arbitration hearing, the arbitrator shall issue
an award, accompanied by a written decision explaining the basis for the
arbitrator’s award.

 

(c)             In any arbitration hereunder, the Corporation shall
pay all administrative fees of the arbitration and all fees of the arbitrator,
except that the Participant or Beneficiary may, if he wishes, pay up to
one-half of those amounts.  Each party
shall pay its own attorneys’ fees, costs, and expenses, unless the arbitrator
orders otherwise.  The prevailing party
in such arbitration, as determined by the arbitrator, and in any enforcement or
other court proceedings, shall be entitled, to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party’s costs
(including but not limited to the arbitrator’s compensation), expenses, and
attorneys’ fees.  The arbitrator shall
have no authority to add to or to modify this Plan, shall apply all applicable
law, and shall have no lesser and no greater remedial authority than would a
court of law resolving the same claim or controversy. The arbitrator shall,
upon an appropriate motion, dismiss any claim without an evidentiary hearing if
the party bringing the motion establishes that it would be entitled to summary
judgment if the matter had been pursued in court litigation.  The parties shall be entitled to reasonable
discovery subject to the discretion of the arbitrator.

 

15

 

(d)             The decision of the arbitrator shall be final,
binding, and non-appealable, and may be enforced as a final judgment in any
court of competent jurisdiction.

 

(e)             This arbitration provision of the Plan shall extend to
claims against any parent, subsidiary, or affiliate of each party, and, when
acting within such capacity, any officer, director, shareholder, Participant,
Beneficiary, or agent of each party, or of any of the above, and shall apply as
well to claims arising out of state and federal statutes and local ordinances
as well as to claims arising under the common law or under this Plan.

 

(f)              Notwithstanding the foregoing, and unless otherwise
agreed between the parties, either party may, in an appropriate matter, apply
to a court for provisional relief, including a temporary restraining order or
preliminary injunction, on the ground that the arbitration award to which the
applicant may be entitled may be rendered ineffectual without provisional
relief.

 

(g)             Any arbitration hereunder shall be conducted in
accordance with the employee benefit plan claims rules and procedures of
the AAA then in effect; provided, however, that, (i) all evidence
presented to the arbitrator shall be in strict conformity with the legal rules of
evidence, and (ii) in the event of any inconsistency between the employee
benefit plan claims rules and procedures of the AAA and the terms of this
Plan, the terms of this Plan shall prevail.

 

(h)             If any of the provisions of this Section 8.3 are
determined to be unlawful or otherwise unenforceable, in whole or in part, such
determination shall not affect the validity of the remainder of this Section 8.3,
and this Section 8.3 shall be reformed to the extent necessary to carry
out its provisions to the greatest extent possible and to insure that the
resolution of all conflicts between the parties, including those arising out of
statutory claims, shall be resolved by neutral, binding arbitration.  If a court should find that the provisions of
this Section 8.3 are not absolutely binding, then the parties intend any
arbitration decision and award to be fully admissible in evidence in any
subsequent action, given great weight by any finder of fact, and treated as
determinative to the maximum extent permitted by law.

 

(i)              In the case of a Disability claim, the timeframes
provided for an appeal under Section 8.2 of this Plan shall apply for
purposes of this Section 8.3.  Arbitration
of a Disability claim under this Section 8.3 shall (i) be considered
one of the two levels of mandatory appeals permitted under Department of Labor
Regulation Section 2560.503-1 and (ii) shall not preclude the
Claimant from challenging the decision of the arbitrator under Section 502(a) of
ERISA.

 

8.4.          Notice.  Any notice,
consent or demand required or permitted to be given under the provisions of
this Plan shall be in writing and shall be signed by the party giving or making
the same.  If such notice, consent or
demand is mailed, it shall be sent by United States certified mail, postage
prepaid, addressed to the addressee’s last known address as shown on the
records of the Corporation.  The date of
such mailing shall be deemed the date of notice consent or demand.  Any person may change the address to which
notice is to be sent by giving notice of the change of address in the manner
aforesaid.

 

16

 

ARTICLE 9

 

AMENDMENT OR TERMINATION

 

9.1.          Amendment or Termination.

 

(a)             This Plan may be amended or terminated by the
Corporation at any time, without notice to or consent of any person, pursuant
to resolutions adopted by its Board of Directors.  Any such amendment or termination shall take
effect as of the date specified therein and, to the extent permitted by law.

 

However,
no such amendment or termination shall reduce:

 

(i)            the amount then credited to the Participant’s Account,
or

 

(ii)           his or her vested percentage under Section 5.1.

 

If the Plan is terminated,
(A) the portion of such Participant’s Account attributable to Total
Deferrals that are earned (i.e., the services that earned such Total Deferrals
are performed) and vested before January 1, 2005 (which shall continue to
be governed by the original provisions of this Plan) will be distributed in one
lump sum, and (B) the portion of such Participant’s Account attributable
to Total Deferrals that are earned (i.e., the services that earned such Total
Deferrals are performed) or vested after December 31, 2004 (which shall be
governed by the terms and provisions of this First Amendment and Restatement)
shall be distributed as and when such portion of such Account would have been
distributed if the Plan had not terminated.

 

(b)             Any other provision of this Plan to the contrary
notwithstanding, the Plan may be amended by the Corporation at any time, to the
extent that, in the opinion of the Corporation, such amendment shall be
necessary in order to ensure that the Plan will be characterized as a plan
maintained for a select group of management or highly compensated employees, as
described in sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or to
conform the Plan to the requirements of any applicable law, including ERISA and
the Code.  No such amendment shall be
considered prejudicial to any interest of a Participant or Beneficiary
hereunder.

 

ARTICLE 10

 

THE TRUST

 

10.1.        Establishment of Trust.  The Corporation shall establish a grantor
trust, of which the Corporation is the grantor, within the meaning of subpart
E, part I, subchapter J, subtitle A of the Code, to pay benefits under this
Plan.

 

10.2.        Interrelationship of the Plan and the Trust.  The provisions
of the Plan shall govern the rights of a Participant to receive distributions
pursuant to the Plan.  The provisions of the
Trust shall govern the rights of the Participant and the creditors of the
Corporation to the assets transferred to the Trust.  The Corporation shall at all times remain
liable to carry out its obligations under the Plan.  The Corporation’s obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of the
Trust.

 

17

 

10.3.        Contribution to the Trust.  Amounts may be contributed by the Corporation
to the Trust in the sole discretion of the Corporation.

 

ARTICLE 11

 

MISCELLANEOUS

 

11.1.        Governing Law.  The Plan and the rights and obligations of
all persons hereunder shall be governed by and construed in accordance with the
laws of the State of California, other than its laws regarding choice of law,
to the extent that such state law is not preempted by federal law.

 

IN
WITNESS WHEREOF,
the Corporation has executed this First Amendment and Restatement as of the day
and year above first written.

 

	
   

  	
  The “Corporation”

  
	
   

  	
   

  
	
   

  	
  COMMUNICATIONS & POWER
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOEL A. LITTMAN

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
					

 

18

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