EXHIBIT 4.1


 


LOCK-UP AGREEMENT


 


WJ
Communications, Inc.


401 River Oaks
Parkway


San Jose, CA
95134


 


Re:          Agreement
and Plan of Merger dated as of January 19, 2005 (as amended, supplemented
or otherwise modified from time to time, the “Agreement”), between WJ
Communications, Inc. (the “Company”), WJ Newco, LLC (“WJ LLC”), Telenexus, Inc.
(“Telenexus”) and Wilfred K. Lau, Richard J. Swanson, Kurt Christensen and
David Fried (“Shareholders” and together with the Company, WJ LLC and
Telenexus, the “Parties”)


 


Ladies and
Gentlemen:


 


1.             In
order to induce the Company to consummate the transactions provided for in the
Agreement, each of the undersigned agrees that it will not, without the Company’s
prior written consent, directly or indirectly, offer, offer to sell, sell,
loan, pledge, grant any rights, contract to sell or grant any option to
purchase or otherwise dispose or transfer (collectively, “Dispose,” or a “Disposition”)
any shares of Company common stock (“Common Stock”) issued or distributed to
the undersigned pursuant to the Agreement except as set forth on Schedule A
with respect to the issuance of Common Stock to the Shareholders at Closing or
deposited into escrow as part of the Escrow Amount, as defined in the Agreement
(the “Closing Consideration Shares”), and Schedule B with respect
to the issuance of Common Stock to the Shareholders as part of the Earnout
Payment, as defined in the Agreement (the “Earnout Payment Shares”).  The Closing Consideration Shares and Earnout
Payment Shares are hereinafter collectively referred to as the “Shares.”


 


2.             The foregoing
restrictions are also expressly intended to preclude the undersigned from
engaging in any hedging or other transaction which is designed to or is
reasonably expected to lead to or result in a Disposition of Shares during the
lock-up periods reflected on the Schedules attached hereto even if such
securities would be Disposed of by someone other than the undersigned.  Such prohibited hedging or other transactions
include without limitation any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including


 





















 


without
limitation any put or call option) with respect to any securities that include,
relate to or derive any significant part of their value from the Shares.


 


3.             Each of the
undersigned hereby agrees and consents to the entry of stock transfer
instructions with the Company’s transfer agent against the transfer of the
Shares except those transferred in compliance with this agreement and the
placement of the following legends on the Shares:


 


“THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY ONLY BE
SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND
APPLICABLE SECURITIES LAWS.


 


TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY A LOCKUP AGREEMENT.”


 


4.             Each of the
undersigned confirms that they understand that the Parties will rely upon the
representations set forth in this agreement in proceeding with the consummation
of the transactions provided for in the Agreement.  This agreement shall be binding on each of
the undersigned and their respective successors, heirs, personal
representatives and assigns.


 


5.             The
Parties hereto acknowledge and agree that nothing contained herein shall be
construed (a) to preclude or restrict the Disposition of any shares of Company
Common Stock acquired by the undersigned outside of the transactions
contemplated by the Agreement or (b) to preclude or restrict the undersigned from
making a Qualifying Disposition (as defined in the Agreement), as long as the
transferor has received the written agreement of the proposed transferee
(satisfactory in form and substance to the Company) that such transferee will
be bound by, and the shares of Company Common Stock proposed to be transferred
will be subject to, the transfer restrictions of this Lock-Up Agreement.


 


6.             Notwithstanding
any other provision contained herein, the Parties agree that upon a Change in
Control (as hereinafter defined), each of the restrictions, limitations and
covenants against Disposition contained in this Lock-Up Agreement shall lapse
and be without further force or effect with respect to any of the undersigned
provided, if (but only if) the undersigned is also an employee of the Company,
that the undersigned is terminated without Cause or terminates with Good Reason
(each as defined in the respective employment agreement of the undersigned)
within three (3) months following such Change in Control; provided, further, if the members of
senior management of the Company are requested by the acquirors in a Change in
Control to execute a lock-up agreement as part of the transactions leading up
to the Change in Control and such members of senior management actually do execute
such a lock-up agreement, then the undersigned agree to similarly execute that
form of lock-up agreement whereupon this Lock-Up Agreement shall
terminate.  As used herein, “Change in
Control” shall mean the happening of any of the following events:


 


(i)            Any
“Person” or “Group” (as such terms are defined in Section 13(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and
regulations


 





















 


promulgated thereunder), other than the
Company or a person that directly or indirectly controls, is controlled by, or
is under common control with, the Company, becomes the “Beneficial Owner”
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company, or of any entity resulting from a
merger or consolidation involving the Company, representing more than fifty
percent (50%) of the combined voting power of the then outstanding securities
of the Company or such entity.


 


(ii)           The
consummation of (x) a merger, consolidation or reorganization to which the
Company is a party, whether or not the Company is the Person surviving or
resulting therefrom, or (y) a sale, assignment, lease, conveyance or other
disposition of all or substantially all of the assets of the Company, in one
transaction or a series of related transactions, to any Person other than the
Company, where any such transaction or series of related transactions as is
referred to in clause (x) or clause (y) above in this subparagraph (ii) (singly
or collectively, a “Transaction”) does not otherwise result in a “Change in
Control” pursuant to subparagraph (i) of this definition of “Change in Control”;
provided, however, that no such Transaction shall constitute a “Change in
Control” under this subparagraph (ii) if the Persons who were the stockholders
of the Company immediately before the consummation of such Transaction are the
Beneficial Owners, immediately following the consummation of such Transaction,
of fifty percent (50%) or more of the combined voting power of the then
outstanding voting securities of the Person surviving or resulting from any
merger, consolidation or reorganization referred to in clause (x) above in this
subparagraph (ii) or the Person to whom the assets of the Company are sold,
assigned, leased, conveyed or disposed of in any transaction or series of
related transactions referred in clause (y) above in this subparagraph (ii), in
substantially the same proportions in which such Beneficial Owners held voting
stock in the Company immediately before such Transaction.


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
  Date: January 28,
  2005

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Wilfred K.
  Lau

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Richard J.
  Swanson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Kurt
  Christensen

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  David Fried

  	
   

  



 





















 


SIGNATURE PAGE TO LOCK-UP AGREEMENT


 





















 


Schedule A


 


Closing Consideration Shares


 


The Company will issue to the Shareholders
2,333,333 Closing Consideration Shares on the Closing Date.  Notwithstanding that the Shareholders would
otherwise be eligible to Dispose of the Closing Consideration Shares under Rule
144 after the first anniversary of the Closing Date, no individual Shareholder
shall Dispose of more than that number of Closing Consideration Shares
specified in the table below for Q5 through Q10 in any 90-day period after the
first anniversary of the Closing Date, provided, however, that (a) at any time after
the first anniversary of the Closing Date if the Company’s senior management
staff is permitted to register (other than pursuant to a Form S-8 or any
successor form for employee benefit plans) shares of the Company’s Common Stock
for resale in a public offering filed by the Company, the Shareholders shall be
able to include a proportionate number of the Closing Consideration Shares in
that offering based on the total number of shares the senior management staff
is allowed to register at that time, provided, further that if the Shareholders
are unable to or choose not to register all of their Closing Consideration
Shares at that time, then the restrictions in this agreement shall continue
until they expire or no longer apply on their terms; and (b) these restrictions
shall expire 18 months from the first anniversary of the Closing Date, after
which there shall be no restrictions on the Disposition by the Shareholders of
the Closing Consideration Shares except that the Shareholders (acting
collectively) shall not Dispose of more than 1,055,555 Shares in any 90-day
period thereafter.


 


The following table illustrates the foregoing and assumes that the
periods correspond to fiscal quarters, but the periods below shall be
interpreted as 90-day periods and not fiscal quarters.


 


	
   

  	
   

  	
  Period in which Disposition of
  Closing Payment Shares May be Made after the Closing 

  Date and Number of Shares which may be Disposed in such Period

  	
   

  
	
  Name of Seller

  	
   

  	
  Q1-Q4

  	
   

  	
  Q5

  	
   

  	
  Q6

  	
   

  	
  Q7

  	
   

  	
  Q8

  	
   

  	
  Q9

  	
   

  	
  Q10

  	
   

  	
  Q11 and thereafter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wilfred K.
  Lau

  	
   

  	
  —

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  363,443

  	
   

  
	
  Richard J.
  Swanson

  	
   

  	
  —

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  181,722

  	
   

  	
  363,443

  	
   

  
	
  Kurt
  Christensen

  	
   

  	
  —

  	
   

  	
  18,243

  	
   

  	
  18,243

  	
   

  	
  18,243

  	
   

  	
  18,243

  	
   

  	
  18,243

  	
   

  	
  18,243

  	
   

  	
  36,488

  	
   

  
	
  David Fried

  	
   

  	
  —

  	
   

  	
  7,202

  	
   

  	
  7,202

  	
   

  	
  7,202

  	
   

  	
  7,202

  	
   

  	
  7,202

  	
   

  	
  7,202

  	
   

  	
  14,404

  	
   

  



 





















 


Schedule B


 


Earnout Payment Shares


 


The Company will issue to the Shareholders Earnout Payment Shares after
the Closing Date to the extent earned by the Shareholders pursuant to the
Agreement and at the time set forth in the Agreement.  Notwithstanding that the Shareholders would
otherwise be eligible to Dispose of the Earnout Payment Shares under Rule 144,
no individual Shareholder shall Dispose of more than one sixth of the Earnout
Payment Shares distributed to him in any 90-day period after such shares are
earned by and issued to the Shareholders, provided, however, that (a) at any
time after the Earnout Payment Shares are earned by and issued to the Shareholders,
if the Company’s senior management staff is permitted to register (other than
pursuant to a Form S-8 or any successor form for employee benefit plans) shares
of the Company’s Common Stock for resale in a public offering filed by the
Company, the Shareholders shall be able to include a proportionate number of
the Earnout Payment Shares in that offering based on the total number of shares
the senior management staff is allowed to register at that time, provided,
further that if the Shareholders are unable to or choose not to register all of
their Earnout Payment Shares at that time, then the restrictions in this
agreement shall continue until they expire or no longer apply on their terms;
and (b) these restrictions shall expire 18 months from the date of the issuance
of the Earnout Payment Shares to the Shareholders, after which there shall be
no restrictions on the Disposition by the Shareholders of the Earnout Payment
Shares except that the Shareholders (acting collectively) shall not Dispose of more
than 1,055,555 Shares in any 90-day period thereafter.


 


The following table illustrates the foregoing and assumes that all of
the Earnout Payment Shares will be earned pursuant to the Agreement. The
following table assumes that the periods correspond to fiscal quarters, but the
periods below shall be interpreted as 90-day periods and not fiscal quarters.


 


	
   

  	
   

  	
  Period in which Disposition of
  Earnout Payment Shares may be made 

  and percentage of Shares which may be Disposed in such Period

  	
   

  
	
  Name of Seller

  	
   

  	
  Q1-Q6

  	
   

  	
  Q7

  	
   

  	
  Q8

  	
   

  	
  Q9

  	
   

  	
  Q10

  	
   

  	
  Q11

  	
   

  	
  Q12

  	
   

  	
  Q13 and

  thereafter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wilfred K.
  Lau

  	
   

  	
  —

  	
   

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  15.58

  	
  %

  
	
  Richard J.
  Swanson

  	
   

  	
  —

  	
   

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  7.79

  	
  %

  	
  15.58

  	
  %

  
	
  Kurt
  Christensen

  	
   

  	
  —

  	
   

  	
  0.78

  	
  %

  	
  0.78

  	
  %

  	
  0.78

  	
  %

  	
  0.78

  	
  %

  	
  0.78

  	
  %

  	
  0.78

  	
  %

  	
  1.56

  	
  %

  
	
  David Fried

  	
   

  	
  —

  	
   

  	
  0.31

  	
  %

  	
  0.31

  	
  %

  	
  0.31

  	
  %

  	
  0.31

  	
  %

  	
  0.31

  	
  %

  	
  0.31

  	
  %

  	
  0.62

  	
  %