EXHIBIT 4.2
AMENDED AND RESTATED MANAGEMENT STOCKHOLDERS AGREEMENT
DATED AS OF _______, 2006
among
CPI INTERNATIONAL, INC.
(FORMERLY KNOWN AS CPI ACQUISITION CORP. AND CPI HOLDCO, INC.)
CYPRESS MERCHANT BANKING PARTNERS II L.P.
CYPRESS MERCHANT B II C.V.
55TH STREET PARTNERS II L.P.
CYPRESS SIDE-BY-SIDE LLC
and
THE MANAGEMENT STOCKHOLDERS NAMED HEREIN
AMENDED AND RESTATED MANAGEMENT STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED MANAGEMENT STOCKHOLDERS AGREEMENT dated as of
_________, 2006 (this "Agreement") among CPI International, Inc.
(formerly known
as CPI Acquisition Corp. and CPI Holdco, Inc.), a Delaware
corporation (the
"Company"), Cypress Merchant Banking Partners II L.P., a Delaware
limited
partnership ("Cypress Onshore"), Cypress Merchant B II C.V., a
Netherlands
limited partnership ("Cypress Offshore"), 55th Street Partners II
L.P., a
Delaware limited partnership ("Cypress 55th Street"), Cypress
Side-by-Side LLC,
a Delaware limited liability company ("Cypress Side-by-Side," and
together with
Cypress Onshore, Cypress Offshore, Cypress 55th Street, "Cypress"),
and certain
management stockholders of the Company listed on Schedule I hereto
(each such
management stockholder is hereinafter referred to as a "Management
Stockholder").
WITNESSETH:
WHEREAS, all of the parties hereto are parties to the Management
Stockholders Agreement, dated as of January 23, 2004 (the "Original
Agreement"),
which provided for certain restrictions on the sale, assignment,
transfer,
encumbrance or other disposition of the Shares, and certain rights,
obligations
and other agreements in respect of the Shares and the Company, all
as set forth
therein; and
WHEREAS, in connection with the contemplated Initial Public
Offering (as
defined below), and effective upon the consummation thereof, the
parties hereto
desire to amend and restate the Original Agreement in its entirety,
as
hereinafter provided;
NOW THEREFORE, in consideration of the mutual covenants and
agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following
terms
have the following meanings:
"Affiliate", as applied to any Person, shall mean any other Person
directly
or indirectly controlling, controlled by, or under common control
with, that
Person. For the purposes of this definition "control" (including,
with
correlative meanings, the terms "controlling", "controlled by" and
"under common
control with"), as applied to any Person, means the possession,
directly or
indirectly, of the power to direct or cause the direction of the
management and
policies of that Person, whether through the ownership of voting
securities (the
ownership of more than 50% of the voting securities of an entity
shall for
purposes of this definition be deemed to be "control"), by contract
or
otherwise.
"Agreement" shall have the meaning set forth in the preamble of
this
Agreement.
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"Business Day" shall mean any day that is not a Saturday or Sunday
or a day
on which banks located in New York City are authorized or required
to be closed.
"Cause" shall mean, unless otherwise defined in a Management
Stockholder's
Employment Agreement, (i) the Management Stockholder's continued
failure to
perform such Management Stockholder's duties (other than as a
result of total or
partial incapacity due to physical or mental illness) which is not
cured for a
period of 10 days following written notice by the Company or its
Affiliates to
the Management Stockholder of such failure, (ii) conviction or plea
of guilty or
no contest to a (x) felony, or (y) crime involving moral turpitude
or the
property or business of the Company or its Affiliates, (iii)
willful malfeasance
or willful misconduct in performance of duties to the Company or
its Affiliates,
or (iv) breach by the Management Stockholder of the material terms
of any
non-compete, non-solicitation or confidentiality provisions of this
Agreement.
"Common Stock" shall mean the common stock, par value $0.01 per
share, of
the Company.
"Company" shall have the meaning set forth in the preamble of this
Agreement.
"Competitive Business" shall have the meaning set forth in Section
3.4(b).
"Confidential Information" shall have the meaning set forth in
Section
3.5(c).
"Cypress" shall have the meaning set forth in the preamble of this
Agreement.
"Cypress Onshore" shall have the meaning set forth in the preamble
of this
Agreement.
"Cypress Offshore" shall have the meaning set forth in the preamble
of this
Agreement.
"Cypress Side-by-Side" shall have the meaning set forth in the
preamble of
this Agreement.
"Cypress 55th Street" shall have the meaning set forth in the
preamble of
this Agreement.
"Employment Agreement" shall mean an employment agreement between a
Management Stockholder and the Company or any of its Subsidiaries
that is in
effect as of the date hereof or that becomes effective at the time
of the
Initial Public Offering and continues to be effective thereafter in
accordance
with its terms.
"Employment" shall mean (i) a Management Stockholder's employment
if the
Management Stockholder is an employee of the Company or any of its
Affiliates,
(ii) a Management Stockholder's services as an non-employee
director, if the
Management Stockholder is a non-employee member of the board of
directors of the
Company or an Affiliate or (iii) a Management Stockholder's
services as an
independent contractor, vendor or third-party service provider, if
the
Management Stockholder is an independent contractor, vendor or
third-party
service provider to the Company or any of its Affiliates; provided,
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however, that unless otherwise determined by a committee of the
board of
directors of the Company, a change in a Management Stockholder's
status from
employee to a consultant shall constitute a termination of
employment hereunder.
"Exchange Act" shall mean the United States Securities and Exchange
Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
"Initial Public Offering" shall mean the initial Public Offering
(other
than pursuant to a registration statement on Form S-8 (or
comparable form for a
private issuer or otherwise relating to equity securities issuable
under any
employee benefit plan)) of the Common Stock.
"Majority Management Stockholders" shall mean, at any time,
Management
Stockholders and their Permitted Transferees holding a majority of
the number of
Shares (including any Shares issuable upon the conversion, exchange
or exercise
of Share Equivalents) then outstanding and held by the Management
Stockholders
and their Permitted Transferees.
"Management Stockholder" shall have the meaning set forth in the
preamble
of this Agreement.
"Original Agreement" shall have the meaning set forth in the
recitals of
this Agreement.
"Permitted Transferee" shall mean, with respect to any Management
Stockholder, (a) in the event of such Management Stockholder's
death, the heirs,
executors, administrators, testamentary trustees, legatees or
beneficiaries of
such Management Stockholder (or their Permitted Transferees), (b)
such
Management Stockholder's spouse and lineal descendants and (c)
trusts,
partnerships, limited liability companies or other entities of
which such
Management Stockholder and/or such Management Stockholder's spouse
or lineal
descendants are the sole owners and beneficiaries.
"Person" shall mean an individual, partnership, corporation,
business
trust, joint stock company, limited liability company,
unincorporated
association, joint venture or other entity of whatever nature.
"Public Offering" shall mean any public offering of equity
securities of
the Company pursuant to an effective registration statement under
the Securities
Act.
"Restricted Period" shall have the meaning set forth in Section
3.4(a).
"Securities Act" shall mean the United States Securities Act of
1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Manager" shall mean each of the persons listed on Schedule
II
hereto.
"Share Equivalents" shall mean securities of any kind (including
"phantom"
securities) issued by the Company convertible into or exchangeable
for Shares or
options,
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warrants or other rights to purchase or subscribe for Shares or
securities
convertible into or exchangeable for Shares.
"Shares" shall mean, with respect to any Stockholder, any and all
shares of
Common Stock, whether now owned or hereafter acquired (including
upon exercise
of options, preemptive rights or otherwise), held by such
Stockholder.
"Stockholder" shall mean each of Cypress and the Management
Stockholders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or
other entity of which a majority of the capital stock or other
ownership
interests having ordinary voting power to elect a majority of the
board of
directors or other persons performing similar function at the time
directly or
indirectly owned by such Person.
ARTICLE II
PERMITTED TRANSFEREES
No Management Stockholder shall Transfer any Shares to a Permitted
Transferee of such Management Stockholder, unless, as a condition
precedent to
such Transfer, the Permitted Transferee executes an instrument in
the form of
Exhibit B hereto or otherwise reasonably satisfactory to the
Company agreeing to
be bound hereby as a Permitted Transferee of such Management
Stockholder;
provided, however, the foregoing restriction shall not apply after
the
Piggy-Back Termination Date (as defined in Exhibit C); provided,
further, the
foregoing restriction shall not apply to Transfers to parties that
are not
Permitted Transferees.
ARTICLE III
RIGHTS AND OBLIGATIONS
OF MANAGEMENT STOCKHOLDERS AND THE COMPANY
Section 3.1. [Intentionally Omitted]
Section 3.2. Registration Rights. The Company hereby grants to the
Management Stockholders (and their Permitted Transferees) the
registration and
other rights set forth in, and the Management Stockholders (and
their Permitted
Transferees) agree to comply with the terms and conditions
contained in, Exhibit
C hereto.
Section 3.3. [Intentionally Omitted]
Section 3.4. Covenant Not to Compete; Non-Solicitation. Each Senior
Manager
acknowledges and recognizes the highly competitive nature of the
businesses of
the Company and its Subsidiaries and accordingly agrees that, if
such Senior
Manager is subject to an Employment Agreement, he/she will abide by
the
non-competition and non-solicitation covenants contained therein,
which are
incorporated herein by reference with respect to such Senior
Manager. If no such
covenants are contained in the Employment Agreement or if
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there is no such agreement, then each Senior Manager agrees,
subject to Section
3.4(f), as follows:
(a) During the term of Employment by the Company or any of its
Subsidiaries and for the period of time set forth on Schedule II
opposite such
Senior Manager's name following the date such Senior Manager ceases
to be
employed by the Company for any reason (the "Restricted Period"),
such Senior
Manager will not, whether on his/her own behalf or on behalf of or
in
conjunction with any Person, directly or indirectly solicit or
assist in
soliciting in competition with the Company or any of its
Subsidiaries, the
business of any client or prospective client:
(i) with whom such Senior Manager had personal contact or
dealings on behalf of the Company or its Subsidiaries during the
one year
period preceding such Senior Manager's termination of Employment;
(ii) with whom employees reporting to such Senior Manager have
had personal contact or dealings on behalf of the Company or any of
its
Subsidiaries during the one year immediately preceding such Senior
Manager's termination of Employment; or
(iii) for whom such Senior Manager had direct or indirect
responsibility during the one year immediately preceding such
Senior
Manager's termination of Employment.
(b) During the Restricted Period, such Senior Manager will not
directly or indirectly:
(i) engage in any business that competes with the business of the
Company or its Subsidiaries (including, without limitation,
businesses
which the Company or its Subsidiaries have specific plans to
conduct in the
future and as to which such Senior Manager is aware of such
planning) in
any geographic area in which the Company or its Subsidiaries
conducts such
business (a "Competitive Business");
(ii) enter the employ of, or render any services to, any Person
(or any division or controlled or controlling Affiliate of any
Person) who
or which engages in a Competitive Business;
(iii) acquire a financial interest in, or otherwise become
actively involved with, any Competitive Business, directly or
indirectly,
as an individual, partner, shareholder, officer, director,
principal,
agent, trustee or consultant; or
(iv) interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the date of this
Agreement) between the Company or any of its Subsidiaries, on the
one hand,
and customers, clients, suppliers partners, members or investors of
the
Company or its Subsidiaries, on the other hand.
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(c) During the Restricted Period, such Senior Manager will not,
whether on such Senior Manager's own behalf or on behalf of or in
conjunction
with any Person, directly or indirectly:
(i) solicit or encourage any employee of the Company or its
Subsidiaries to leave the Employment of the Company or its
Subsidiaries
(except in cases during a Senior Manager's Employment where such
Senior
Manager reasonably believes such action to be in the best interests
of the
Company or its Subsidiaries); or
(ii) hire any such employee who was employed by the Company or
its Subsidiaries as of the date of such Senior Manager's
termination of
Employment with the Company or who left the Employment of the
Company or
its Subsidiaries coincident with, or within one year prior to, the
termination of such Senior Manager's Employment with the Company
(other
than any such employee whose Employment with the Company is
terminated by
the Company without Cause).
(d) During the Restricted Period, such Senior Manager will not,
directly or indirectly, encourage or solicit to cease to work with
the Company
or its Subsidiaries any consultant then under contract with the
Company or its
Subsidiaries.
(e) Notwithstanding anything to the contrary in this Agreement, any
Senior Manager may, directly or indirectly own, solely as an
investment,
securities of any Person engaged in the business of the Company or
its
Subsidiaries which are publicly traded on a national or regional
stock exchange
or on the over-the-counter market if the Senior Manager (i) is not
a controlling
person of, or a member of a group which controls, such person and
(ii) does not,
directly or indirectly, own 5% or more of any class of securities
of such
Person.
(f) It is expressly understood and agreed that although the Senior
Managers and the Company consider the restrictions contained in
this Section 3.4
to be reasonable, if a final judicial determination is made by a
court of
competent jurisdiction that the time or territory or any other
restriction
contained in this Agreement is an unenforceable restriction against
the relevant
Senior Manager, the provisions of this Agreement will not be
rendered void but
will be deemed amended to apply as to such maximum time and
territory and to
such maximum extent as such court may judicially determine or
indicate to be
enforceable. Alternatively, if any court of competent jurisdiction
finds that
any restriction contained in this Agreement is unenforceable, and
such
restriction cannot be amended so as to make it enforceable, such
finding will
not affect the enforceability of any of the other restrictions
contained herein.
Section 3.5. Confidential Information. (a) No Management
Stockholder will
at any time (whether during or after such Management Stockholder's
employment
with the Company) (i) retain or use for the benefit, purposes or
account of such
Management Stockholder or any other Person; or (ii) disclose,
divulge, reveal,
communicate, share, transfer or provide access to any Person
outside the Company
(other than its professional advisers who are bound by
confidentiality
obligations), any non-public, proprietary or
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confidential information - including without limitation trade
secrets, know-how,
research and development, software, databases, inventions,
processes, business
strategies, formulae, technology, designs and other intellectual
property,
information concerning finances, investments, profits, pricing,
costs, products,
services, vendors, customers, clients, partners, investors,
personnel,
compensation, recruiting, training, advertising, sales, marketing,
promotions,
government and regulatory activities and approval - concerning the
past, current
or future business, activities and operations of the Company, its
subsidiaries,
Affiliates or any third party that has disclosed or provided any of
same to the
Company on a confidential basis ("Confidential Information")
without the prior
written authorization of the board of directors of the Company.
(b) "Confidential Information" will not include any information
that
is (i) generally known to the industry or the public other than as
a result of
such Management Stockholder's breach of this covenant or any breach
of other
confidentiality obligations by third parties; (ii) made
legitimately available
to the Management Stockholder by a third party without breach of
any
confidentiality obligation; or (iii) required by law or a court of
competent
jurisdiction to be disclosed; provided that such Management
Stockholder will
give prompt written notice to the Company of such requirement,
disclose no more
information than is so required, and cooperate with any attempts by
the Company
to obtain a protective order or similar treatment.
(c) [Intentionally Omitted]
(d) Upon termination of such Management Stockholder's employment
for
any reason, the Management Stockholder will (i) cease and not
thereafter
commence use of any Confidential Information or intellectual
property (including
without limitation, any patent, invention, copyright, trade secret,
trademark,
trade name, logo, domain name or other source indicator) owned or
used by the
Company or its Affiliates; (ii) immediately destroy, delete, or
return to the
Company, at the Company's option, all originals and copies in any
form or medium
(including memoranda, books, papers, plans, computer files, letters
and other
data) in such Management Stockholder's possession or control
(including any of
the foregoing stored or located in the Management Stockholder's
office, home,
laptop or other computer, whether or not Company property) that
contain
Confidential Information or otherwise relate to the business of the
Company and
its Affiliates, except that such Management Stockholder may retain
only those
portions of any personal notes, notebooks and diaries that do not
contain any
Confidential Information; and (iii) notify and fully cooperate with
the Company
regarding the delivery or destruction of any other Confidential
Information of
which the Management Stockholder is or becomes aware
Section 3.6. [Intentionally Omitted]
ARTICLE IV
MISCELLANEOUS
Section 4.1. [Intentionally Omitted]
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Section 4.2. [Intentionally Omitted]
Section 4.3. Employment by the Company. Nothing contained in this
Agreement
or any option agreement entered into by the Company and any
Management
Stockholder (a) obligates the Company or any Subsidiary or
Affiliate of the
Company to employ any Management Stockholder or his/her Permitted
Transferees in
any capacity whatsoever or (b) prohibits or restricts the Company
(or any such
Subsidiary or Affiliate) from terminating the Employment of any
Management
Stockholder at any time or for any reason whatsoever, with or
without Cause, and
each of the Management Stockholders and their Permitted Transferees
hereby
acknowledges and agrees that neither the Company nor any other
Person has made
any representations or promises in this Agreement or in any option
agreement to
such Management Stockholder or Permitted Transferee concerning such
person's
Employment or continued Employment by the Company or any Subsidiary
or Affiliate
of the Company.
Section 4.4. [Intentionally Omitted]
Section 4.5. Successors and Assigns. This Agreement shall be
binding upon
and shall inure to the benefit of the parties hereto, and their
respective
successors and permitted assigns.
Section 4.6. No Waivers, Amendments.
(a) Except as expressly set forth herein, no failure or delay by
any
party in exercising any right, power or privilege hereunder shall
operate as a
waiver thereof, nor shall any single or partial exercise thereof
preclude any
other or further exercise thereof or the exercise of any other
right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not
exclusive of any rights or remedies provided by law.
(b) Any amendment, modification or supplement to this Agreement
shall
not be enforced against any party hereto unless such amendment,
modification or
supplement is signed by the Company and the Majority Management
Stockholders,
provided, however that notwithstanding the foregoing, any
amendment,
modification or supplement to this Agreement with respect to a
matter that does
not directly or indirectly adversely affect the rights of any of
the Management
Stockholders shall be enforceable without requiring that such
amendment,
modification or supplement be signed by the Majority Management
Stockholders.
(c) Any provision of this Agreement may be waived if, but only if,
such waiver is in writing and is signed by the party against whom
the
enforcement of such waiver is sought.
Section 4.7. Notices. All notices, requests and other
communications to any
party hereunder shall be in writing (including telex, telecopier or
similar
writing) and shall be given to such party at its address or
telecopier number
set forth below, or such other address or telecopier number as such
party may
hereinafter specify for the purpose to the party giving such
notice. Each such
notice, request or other communication shall be effective (a) if
given by
telecopy, when such telecopy is transmitted to the telecopy number
specified
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in this Section and the appropriate answerback is received or, (b)
if given by
overnight courier or express mail service, when delivery is
confirmed or, (c) if
given by any other means, when delivered at the address specified
in this
Section 4.7. In each case, notice shall be sent to the parties at
the following
addresses (or at such other address for a party as shall be
specified by like
notice):
(i)
if to the Company:
CPI International, Inc.
811 Hansen Way, Mail Stop A-028
Palo Alto, California 94303
Attention: Joel A. Littman
Telecopier: (650) 846-3276
with a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attention: Richard C. Wirthlin
Telecopier: (310) 203-7199
(ii)
if to Cypress:
c/o The Cypress Group L.L.C.
65 East 55th Street
New York, New York 10022
Attention: Michael F. Finley
Telecopier: (212) 705-0199
with a copy to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Marni J. Lerner
Telecopier: (212) 455-2502
(iii) if to a Management Stockholder, at the address for such
Management Stockholder listed below such Management Stockholder's
signature
hereto.
Section 4.8. Term of Agreement. This Agreement shall terminate (a)
in full
on the earlier to occur of (i) January 23, 2014 (provided that the
registration
rights in Exhibit C hereto shall survive any such termination until
such time as
all Management Stockholders hold no Registrable Securities) and
(ii) when all
Management Stockholders cease to beneficially own any Shares, and,
if earlier,
(b) with respect to any Management Stockholder, when such
Management Stockholder
ceases to beneficially own any Shares;
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provided that any termination pursuant to this Section 4.8 will not
relieve any
party for any liability arising from a breach of representation,
warranty,
covenant or agreement occurring prior to such termination.
Notwithstanding the
foregoing, Section 5.3 (Holdback Agreements) of Exhibit C shall
terminate on the
second anniversary of the date of the Initial Public Offering.
Section 4.9. Inspection. So long as this Agreement shall be in
effect, this
Agreement and any amendments hereto shall be made available for
inspection by
any Management Stockholder at the principal offices of the Company.
Section 4.10. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF
DELAWARE. Each of the parties hereto hereby (a) submits to the
jurisdiction of
the courts of the State of Delaware and the United States District
Court for the
District of Delaware with respect to matters arising out of or
relating hereto,
(b) agrees that all claims with respect to such matters may be
heard and
determined in an action or proceeding in such Delaware courts, and
(c) agrees
that a final judgment in any such action or proceeding will be
conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other
manner provided by law.
Section 4.11. Section Headings. The section headings contained in
this
Agreement are for reference purposes only and shall not affect the
meaning or
interpretation of this Agreement.
Section 4.12. Entire Agreement. This Agreement (including the
Exhibits
hereto) constitutes the entire agreement and understanding among
the parties
hereto and supersedes any and all prior agreements and
understandings, written
or oral, relating to the subject matter hereof.
Section 4.13. Severability. Any term or provision of this Agreement
which
is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction,
be ineffective to the extent of such invalidity or unenforceability
without
rendering invalid or unenforceable the remaining terms and
provisions of this
Agreement or affecting the validity or enforceability of any of the
terms or
provisions of this Agreement in any other jurisdictions, it being
intended that
all rights and obligations of the parties hereunder shall be
enforceable to the
fullest extent permitted by law.
Section 4.14. Counterparts. This Agreement may be signed in
counterparts,
each of which shall constitute an original and which together shall
constitute
one and the same agreement.
Section 4.15. Parties in Interest. This Agreement and all the
provisions
hereof shall be binding upon and inure to the benefit of the
parties hereto and
their respective successors and Permitted Transferees. Except as
expressly set
forth herein, neither this Agreement nor any of their rights
hereunder shall be
assigned by any of the parties hereto who are not Permitted
Transferees without
the prior written consent of the other parties.
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Section 4.16. Enforcement; Further Assurances.
(a) The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not
performed in
accordance with their specific terms. It is accordingly agreed that
the parties
shall be entitled to specific performance of the terms hereof, this
being in
addition to any other remedy to which they are entitled at law or
in equity.
(b) The parties hereto agree to execute, acknowledge, deliver, file
and record such further certificates, amendments, instruments,
agreements and
documents, and to do all such other acts and things, as may be
required by law
or as may be necessary or advisable to carry out the intent and
purposes of this
Agreement.
Section 4.17. Advice of Counsel. Each Management Stockholder and
Permitted
Transferee of a Management Stockholder acknowledges that, in
executing this
Agreement, he or she has had the opportunity to seek the advice of
independent
legal counsel, and has read and understood all of the terms and
provisions of
this Agreement.
Section 4.18. Amendment and Restatement of Original Agreement;
Effectiveness of
