EXHIBIT 10.19

 

WJ COMMUNICATIONS, INC.
401 River Oaks Parkway
San Jose, CA 95134

October 29, 2001

Mr. William R. Slakey
120 Moore Creek Road
Santa Cruz, CA 95060

                Re:          Employment Agreement

Dear Mr. Slakey:

This letter agreement (this “Agreement”) sets forth the terms and conditions of
your employment with WJ Communications, Inc. (the “Company”), effective as of
the date set forth above (the “Effective Date”).

1.             Employment and Services.  The Company shall employ you as Chief
Financial Officer of the Company, for the period beginning on the Effective Date
and ending upon termination pursuant to Section 4 (the “Employment Period”). 
During the Employment Period, you shall render such services to the Company and
its affiliates and subsidiaries as the Chief Executive Officer and the Board of
Directors of the Company shall reasonably designate from time to time, and you
shall devote your best efforts and full time and attention to the business of
the Company.

2.             Compensation.  The Company shall pay you an annual base salary
(“Annual Base Salary”) of $200,200 during the Employment Period, subject to
annual review in each year of the Employment Period thereafter (for any partial
year during the Employment Period, the Annual Base Salary shall be prorated
based on the number of days during such year on which you are employed by the
Company).  The first such annual review will occur during or about March 2002. 
Your Annual Base Salary may be increased in years following the first year of
employment but may not be decreased.  As used herein, the term “Annual Base
Salary” refers to the Annual Base Salary as so increased.  Such Annual Base
Salary shall be payable in installments in accordance with the Company’s regular
payroll practices.

In addition, subject to the immediately subsequent paragraph, commencing in
fiscal 2002 you will be eligible to receive an annual bonus to be awarded ninety
(90) days after the end of each fiscal year, to be paid as soon as practicable
but not later than one hundred twenty (120) days after the end of such fiscal
year.  In order to determine the amount of such bonus, the Company, acting in
good faith, shall determine appropriate business targets for each fiscal year;
your annual bonus shall be based upon the extent to which the Company attains
such targets.  The determination of appropriate business targets with respect to
each fiscal year shall take place

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not later than thirty (30) days following the receipt by the Board of Directors
of the Company from the Company’s senior management of the Company’s operating
budget with respect to such fiscal year.  The attached Exhibit A is for
reference purposes only to illustrate the relative relationship between business
targets and bonus percentages utilized by the Company in fiscal year 2001 and
the Company anticipates using a similar format in future years.  The final form
of bonus compensation is as approved on an annual basis by the Company’s Board
of Directors or its appropriate committee.

On or before the end of the 4th quarter of fiscal year 2001, you will be granted
an option to purchase 700,000 shares of our common stock at an exercise price
equal to the fair market value of our common stock on the date of the grant (the
“Option Grant”).  The Option Grant shall be in accordance with the WJ
Communications, Inc., 2001 Employee Stock Incentive Plan and shall be subject to
the terms and conditions contained in the Executive Time Vesting Stock Option
Agreement to be entered into between the parties (the “Option Agreement”).  In
the event of a change in control (as defined in the Executive Time Vesting Stock
Option Agreement), if you are not appointed Chief Financial Officer of the
combined companies, then that will be deemed a material diminution of your
position as referred to in the Executive Time Vesting Stock Option Agreement.

Notwithstanding anything herein to the contrary, there shall be deducted or
withheld from any amounts payable to you amounts for all federal, state, city or
other taxes required by applicable law to be so withheld or deducted and any
other amounts authorized for deduction by or required by law.

3.             Benefits.  During the Employment Period, you shall be entitled to
participate in the Company’s fringe benefit plans, subject to and in accordance
with applicable eligibility requirements, such as life and disability insurance
plans and all other benefit plans (other than severance and equity-based plans
or arrangements) generally available to the Company’s executive officers,
including relocation of personal residence benefits to the extent such
relocation request would otherwise constitute Good Reason within the meaning of
Section 4, in accordance with the terms of any such plans or policies as in
effect from time to time during the Employment Period.  In addition, the Company
will reimburse your reasonable out-of-pocket expenses incurred in connection
with the performance of your services hereunder, consistent with Company
policy.  You shall be entitled to take time off in accordance with the Company’s
top management vacation policy.

4.             Termination and Severance.  The Employment Period shall terminate
on the first to occur of (i) ninety (90) days following written notice by you to
the Company of your resignation without Good Reason, (it being understood that
you will continue to perform your services hereunder during such ninety (90) day
period), (ii) thirty (30) days following written notice by you to the Company of
your resignation with Good Reason (it being understood that you will continue to
perform your services hereunder during such thirty (30) day period), (iii) your
death or Disability, (iv) a vote of the Board of the Company directing such
termination for Cause, (v) a vote of the Board of the Company directing such
termination without Cause, or (vi) the third (3rd) anniversary of the Effective
Date (the “Scheduled Expiration Date”); provided, however, that the Scheduled
Expiration Date shall be automatically extended for successive one-

 

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year periods unless, at least ninety (90) days prior to the then-current
Scheduled Expiration Date, either the Company or you shall give written notice
to the other of an intention not to extend the Employment Period.  In the event
of termination of the Employment Period pursuant to clause (ii) or (v) above,
the Company shall pay to you an amount equal to your Annual Base Salary as in
effect immediately prior to the termination of the Employment Period, such
amount to be paid periodically in accordance with the Company’s regular payroll
practices over the twelve (12) month period immediately following such
termination (the “Severance Benefit”).  Notwithstanding the preceding sentence,
the Severance Benefit shall be computed as an amount equal to one hundred fifty
percent (150%) of your Annual Base Salary as in effect immediately prior to the
termination of the Employment Period and shall be paid periodically in
accordance with the Company’s regular payroll practices over the twelve (12)
month period immediately following such termination, solely in a circumstance in
which there has occurred a Change of Control (as defined in the Option Agreement
between the parties) within three (3) months prior to such termination. 
Notwithstanding anything in this Agreement to the contrary, in the event that
payment of the Severance Benefit, either alone or together with other payments
(or the value of other benefits) which you have the right to receive from the
Company in connection with a change of control, would not be deductible (in
whole or in part) by the Company as a result of the Severance Benefit or other
payments or benefits constituting a “parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the
Severance Benefit (or, at your election, such other payments and/or benefits, or
a combination of such other payments and/or benefits and/or the Severance
Benefit) shall be reduced to the largest amount as will result in no portion of
the Severance Benefit (or such other payments and/or benefits) not being fully
deductible by the Company as a result of Section 280G of the Code.  The
determination of the amount of any such required reduction pursuant to the
foregoing provision, and the valuation of any non-cash benefits for purposes of
such determination, shall be made exclusively by the firm that was acting as the
Company’s auditors prior to the change in control (whose fees and expenses shall
be borne by the Company, and such determination shall be conclusive and
binding).

Except as otherwise set forth in this Section 4 or pursuant to the terms of
employee benefit plans in which you participate pursuant to Section 3, you shall
not be entitled to any compensation or other payment from the Company in
connection with the termination or expiration of your employment hereunder.  In
addition to the Severance Benefit, under circumstances in which the Severance
Benefit is payable, you shall also remain eligible to receive benefits under the
Company’s benefit plans for one year following the termination of your
employment with the Company.  In the case of benefit plans that do not permit
such continued participation, in lieu thereof you shall be entitled to receive a
cash payment from the Company sufficient to enable you to purchase comparable
benefits for the applicable period.

For purposes of this Agreement, the following definitions will apply: (a) “Good
Reason” shall mean the occurrence of any of the following without your consent
which shall remain uncured for a period of not less than thirty (30) days
following your delivery of notice of such occurrence to the Company: (i) the
assignment of you by the Company to any duties materially inconsistent with, or
a material diminution of, your position, including duties, title, offices, or
responsibilities; (ii) the transfer of your principal place of employment to a
geographic location more than 50 miles from both your residence in the San
Francisco / Silicon Valley area of

 

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California and from the location of your current principal place of employment;
or (iii) any material breach of this Agreement by the Company which is not cured
within fifteen (15) days after the Company has received written notice from you
identifying the breach in reasonable detail; (b) “Cause” shall mean any of the
following acts or circumstances: (i) willful destruction by you of Company
property having a material value to the Company; (ii) fraud, embezzlement, theft
of property having more than nominal value to the Company, or comparable
dishonest activity committed by you against the Company; (iii) your conviction
of or entering a plea of guilty or nolo contendere to any crime constituting a
felony or any misdemeanor involving fraud, dishonesty or moral turpitude; (iv)
your breach, neglect, refusal, or failure to discharge, in each case in any
material respect, your duties under this Agreement (other than due to
Disability) commensurate with your title and function or your failure to comply
with the lawful directions of the Board, in any such case that is not cured
within fifteen (15) days after you have received written notice thereof from the
Board of the Company; or (v) a willful and knowing material misrepresentation to
the Board of the Company; and (c) “Disability” shall mean that for a period of
three (3) consecutive months or an aggregate of four (4) months in any twelve
(12) month period you are incapable of substantially fulfilling the duties of
your positions as set forth in Section 1 because of physical, mental or
emotional incapacity, injury, sickness or disease.  Any question as to the
existence or extent of the Disability upon which you and the Company cannot
agree shall be determined by a qualified, independent physician selected by the
Company and reasonably acceptable to you.  The determination of any such
physician shall be final and conclusive for all purposes; provided, however,
that you or your legal representatives shall have the right to present to such
physician such information as to such Disability as you or they may deem
appropriate, including the opinion of your personal physician.

5.             Confidential Information.  You acknowledge that any and all
information and trade secrets obtained by you while employed by the Company or
any affiliate thereof concerning the business or affairs of (i) the Company, its
affiliates and subsidiaries or (ii) any enterprise which is the subject of an
actual or potential transaction (a “Potential Transaction”), considered,
evaluated, reviewed or otherwise made known to Fox Paine & Company, LLC, the
Company, its affiliates or subsidiaries, or you (“Confidential Information”) is
the property of the Company.  During and following the Employment Period, you
shall not, without the prior written consent of the Board of the Company,
disclose to any person or use for your own account any Confidential Information
except (i) in the normal course of performance of your duties hereunder, (ii) to
the extent necessary to comply with applicable laws (provided that you shall
give the Company prompt notice prior to any such disclosure), or (iii) to the
extent that such information becomes generally known to and available for use by
the public other than as a result of your acts or omissions to act.  Upon
termination of your employment or at the request of the Board of the Company at
any time, you shall deliver to the Board all documents containing Confidential
Information or relating to the business or affairs of the Company, its
affiliates and subsidiaries that you may then possess or have under your
control.

6.             Non-Solicitation.

a.             Non-Solicitation.  As a means reasonably designed to protect the
Company’s Confidential Information, you agree that, for a period of twelve (12)
months from the conclusion of the Employment Period, you will not directly,
indirectly or as an agent on behalf of

 

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or in conjunction with any person, firm, partnership, corporation or other
entity, (i) hire, solicit, encourage the resignation of, or in any other manner
seek to engage or employ any person who is then, or during the Employment Period
had been, an employee of the Company, whether or not for compensation and
whether or not as an officer, consultant, adviser, independent sales
representative, independent contractor or participant, or (ii) engage as a
director, officer, or employee of any company that is a direct competitor or
material customer of the Company at the conclusion of your employment or during
the three months following the conclusion of your employment.  In the event the
Company elects not to renew this Agreement pursuant to Section 4(vi) above,
Subsection (ii) of this Section 6(a), to the extent it prohibits you from
competing with the Company, shall expire and be of no force or effect.

 b.            Scope of Restriction.  If, at the time of enforcement of this
Section 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.

c.             Works Made For Hire.  You agree that all intellectual property
rights, developments, designs, computer software, inventions, applications and
improvements, including but not limited to trade names, assumed names, service
names, service marks, trademarks, logos, patents, copyrights, licenses,
formulas, trade secrets and technology, whether in design, methods, processes,
formulae, machines or devices and all other applications (collectively,
“Inventions”), whether made, created, invented, devised, acquired, succeeded to
(whether by devise, estate, testamentary disposition or otherwise), or developed
prior to the date of this Agreement for the Company by you, other than
Inventions made, created, invented, devised or developed by you (i) on your own
personal time, (ii) without the use of the Company’s equipment, supplies,
facilities and resources and (iii) which are not related to the sale,
manufacture, distribution, marketing development or provision of products,
components, equipment, hardware, other technology or services (of any sort) in
the wireless communications industry (collectively, “Unrelated Inventions”), are
works made for hire and shall be the exclusive property of the Company without
separate compensation to you.  You will, at the request and expense of the
Company made at any time, execute and deliver to the Company or its nominee such
applications and instruments as may be desirable and appropriate for obtaining
for the Company or its nominee, patents, copyrights, trademarks, know-how and
other intellectual property protection of the United States and all other
countries for vesting in the Company or its nominee, all of your claim, right,
title and interest in said Inventions and for maintaining, enforcing and
defending the same, and to otherwise vest in or evidence the Company’s or its
nominee’s exclusive ownership of all of the rights referred to herein.  In the
event that for whatever reason the results of your past or future work for the
Company should not be deemed to be works made for hire, you agree to assign, and
you hereby do assign, to the Company or its nominee all claim, right, title and
interest, in any country, to each and every of the Inventions that is the result
of work done in the course of your past or future employment by the Company, or
that you create or develop, or that you acquire by whatever means that was
created or developed, in whole or in part by using the Company’s equipment,
supplies, resources or facilities.  Each and every such assignment is and shall
be in consideration of this Agreement with the Company, and no further
consideration therefor is or shall be provided to you by the Company.  You
hereby waive enforcement of any

 

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moral or legal rights which might limit the Company’s rights to exploit any of
the foregoing materials in any manner.

d.             Equitable Relief.  You acknowledge that the provisions contained
in Sections 5 and 6 hereof are reasonable and necessary to protect the
legitimate interests of the Company, that any breach or threatened breach of
such provisions will result in irreparable injury to the Company and that the
remedy at law for such breach or threatened breach would be inadequate. 
Accordingly, in the event of the breach by you of any of the provisions of
Sections 5 and 6 hereof, the Company, in addition and as a supplement to such
other rights and remedies as may exist in its favor, may apply to any court of
law or equity having jurisdiction to enforce this Agreement, and/or may apply
for injunctive relief against any act that would violate any of the provisions
of this Agreement (without being required to post a bond or other security). 
You further agree that injunctive relief may be sought for any breach or
threatened breach of Section 5 or Section 6 without a showing of irreparable
injury, in order to prevent any such breach or threatened breach.  Such right to
obtain injunctive relief may be exercised, at the option of the Company,
concurrently with, prior to, after, or in lieu of, the exercise of any other
rights or remedies that the Company may have as a result of any such breach or
threatened breach.

7.             Survival.  Except as otherwise provided herein, any termination
of your employment or of this Agreement shall have no effect on the continuing
operation of Section 4, 5 or 6 for the periods specified therein.

8.             Waiver of Claims.  You agree as a condition to your receipt of
any termination or severance benefits pursuant to Section 4 hereof, you will
agree, as of the date of such termination, to waive, discharge and release any
and all claims, demands and causes of action, whether known or unknown, against
the Company, its affiliates and subsidiaries, and their respective current and
former directors, officers, employees, attorneys and agents arising out of,
connected with or incidental to your employment or other dealings with the
Company, its affiliates or subsidiaries, which you or anyone acting on your
behalf might otherwise have had or asserted and any claim to any compensation or
benefits from your employment with the Company or its affiliates (other than
employee benefits to be provided pursuant to the terms of Section 4 hereof). 
Notwithstanding anything contained herein to the contrary, no termination or
severance payments shall be made under this Agreement or otherwise until such
time as you have delivered an executed release of claims and any applicable
revocation periods under state or federal law have expired.  The Company agrees,
as further consideration for your waiver, to concurrently execute a waiver of
unknown claims against you on terms and conditions substantially identical to
the waiver provided by you (it being understood that the Company may
specifically reserve claims identified in writing by the Company at the time
that such waiver is provided).

9.             Governing Law.  This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of California.

 

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10.           Notices.  All demands, notices and communications hereunder shall
be in writing and shall be deemed to have been duly given, if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address set forth herein, or such other
address as may hereafter be furnished to the other party by like notice.  Notice
or communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of mail, three days after the depositing of the
same in the United States mail as above stated (or, in the case of registered or
certified mail, by the date noted on the return receipt).  Notices shall be
addressed as follows:

If to the Executive:                                             Mr. William R.
Slakey
120 Moore Creek Road

Santa Cruz, CA 95060

If to the Company:                                             WJ
Communications, Inc.
401 River Oaks Parkway
San Jose, CA 95134
Attention:  Chief Executive Officer

                                                                                                                                               
Shumaker, Loop & Kendrick, LLP

                                                                                                                                               
101 E. Kennedy Boulevard, Suite 2800

                                                                                                                                               
Tampa, Florida 33602

                                                                                                                                               
Attention:  Darrell C. Smith, Esquire

 

11.           Separability Clause.  Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.

12.           Successors and Assigns; Assignment of Agreement.  This Agreement
shall bind and inure to the benefit of and be enforceable by the parties hereto
and the respective successors and assigns of the parties hereto.  As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successors to its businesses and/or assets as aforesaid which assume and agree
to perform this Agreement by operation of law, or otherwise.  This Agreement is
personal to you and without the prior written consent of the Company shall not
be assignable by you otherwise than by will or the laws of descent and
distribution.

13.           Waiver.  The failure of any party to insist upon strict
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such party’s right to demand strict compliance in the future.  No consent or
waiver, express or implied, to or of any breach or default in the performance of
any obligation hereunder, shall constitute a consent or waiver to or of any
other breach or default in the performance of the same or any other obligation
hereunder.  No term or provision of the Agreement may be waived unless such
waiver is in writing and signed by the party against whom such waiver is sought
to be enforced.

 

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14.           Entire Agreement.  This Agreement constitutes the entire Agreement
between the parties hereto with respect to the subject matter contemplated
herein and supersedes all prior agreements, whether written or oral, between the
parties, relating to the subject matter hereof.  This Agreement shall not be
modified except in writing executed by all parties hereto.

15.           Captions.  Titles or captions of Sections contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.

16.           Counterparts.  For the purpose of facilitating proving this
Agreement, and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts.  Each counterpart shall be deemed to be an
original, and all such counterparts shall constitute one and the same
instrument.

17.           No Obligation to Mitigate.  You shall not be required to mitigate
damages or the amount of any payment provided for hereunder by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by you as a result of
employment by another employer, or by earnings as a consultant, or by retirement
or other benefits paid after the date of termination.

18.           Arbitration.  Any dispute, controversy or claim arising under or
in connection with this Agreement, or the alleged breach hereof, shall be
settled exclusively by the American Arbitration Association in accordance with
the Employment Dispute Resolution Rules of the American Arbitration Association
then in effect.  Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.  Any arbitration held
hereunder shall take place in Palo Alto, California.  In addition, any dispute,
controversy or claim arising under or in connection with your rights or
obligations pursuant to any stock option or other equity arrangements between
you and the Company, shall be settled exclusively by arbitration as described in
this Section 18.

 19.          Legal Fees.  In the event of any dispute hereunder or the
enforcement of any right hereunder that requires recourse to arbitration or
litigation, the prevailing party therein shall be entitled, in addition to other
remedies, to recover legal fees and costs from the non-prevailing party, as
determined by the arbitrator(s) or the court.

 20.          Certain Conditions to Employment.  Notwithstanding anything herein
to the contrary, your employment and the Company’s obligations hereunder are
conditioned upon your successful passage of a drug and alcohol screening test,
the Company’s verification of your past employment and educational experience
and the Company’s satisfaction in its sole discretion as to the results of any
criminal background investigation or reference inquiry performed by it.

[signatures page follows]

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Please execute a copy of this letter Agreement in the space below and return it
to the undersigned at the address set forth above to confirm your understanding
and acceptance of the agreements contained herein.

 

Very truly yours,

 

 

 

 

WJ COMMUNICATIONS, INC.

 

 

 

 

 

 

 

By:

/s/ MALCOLM J. CARABALLO

 

 

 

 

Name:

Malcolm J. Caraballo

 

Title:

Chief Executive Officer

 

 

 

Accepted and agreed to

 

 

 

 

 

/s/ WILLIAM R. SLAKEY

 

 

William R. Slakey

 

 

 

 

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Exhibit A

FY 2001 Exec VP, CFO Plan

 

% of  Revenue Plan

 

% Bonus Payable

 

% of  EPS Plan

 

% Bonus Payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.0%

 

 

 

0.0%

 

 

 

 

0.0%

 

0%

 

7.5%

 

 

<80%

 

0.0%

 

25%

 

13.1%

 

 

80%

 

18.8%

 

50%

 

18.8%

 

 

90%

 

24.4%

 

75%

 

24.4%

 

 

100%

 

30.0%

 

100%

 

30.0%

 

 

110%

 

35.6%

 

125%

 

35.6%

 

 

120%

 

41.3%

 

150%

 

41.3%

 

 

130%

 

46.9%

 

175%

 

46.9%

 

 

140%

 

52.5%

 

200%

 

52.5%

 

 

This Exhibit A is for reference purposes only to illustrate the relative
relationship between business targets and bonus percentages utilized by the
Company in fiscal year 2001 and the Company anticipates using a similar format
in future years.

 

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