Document:

Exhibit
4.01

 

[FACE OF NOTE]

 

Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of The
Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.

 

	
  REGISTERED

  	
  CUSIP: 22541LBE2

  
	
   

  	
   

  
	
   

  	
   

  
	
  NO. 1

  	
  PRINCIPAL AMOUNT:
  $5,005,000

  

 

CREDIT SUISSE
FIRST BOSTON (USA), INC.

ProNotes Linked to the Value of a Global Basket of Indices

due March 31, 2009

 

CREDIT SUISSE FIRST BOSTON (USA), INC., a Delaware
corporation (the “Company”, which term includes any successor corporation under
the Indenture hereinafter referred to), for value received, hereby promises to
pay to Cede & Co., or registered assigns, at the office or agency of the
Company in New York, New York, the Redemption Amount (as defined on the reverse
hereof) on the Maturity Date (as defined on the reverse hereof).

 

Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

 

This Note shall not be valid or become obligatory for
any purpose until the certificate of authentication hereon shall have been
manually signed by the Trustee under the Indenture referred to on the reverse
hereof.

 

This
Note will not pay interest.

 

F-1

 

IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed under its
corporate seal.

 

	
   

  	
  CREDIT SUISSE FIRST BOSTON (USA), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  By:

  	
    /s/ Lori Panzarino

  	
   

  
	
   

  	
   

  	
  Name: Lori Panzarino

  
	
   

  	
   

  	
  Title: Authorized Person

  

 

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.

 

Dated:  June 30,
2005

 

	
   

  	
  JPMORGAN CHASE BANK,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     Tai B. Lee

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  	
   

  

 

F-2

 

[REVERSE OF NOTE]

 

CREDIT SUISSE
FIRST BOSTON (USA), INC.

ProNotes Linked to the Value of a Global Basket of Indices

due March 31, 2009

 

This Note is one of a
duly authorized issue of debentures, notes, bonds or other evidences of
indebtedness of the Company (the “Securities”) of the series hereinafter
specified, all issued or to be issued under and pursuant to a senior indenture,
dated as of June 1, 2001 (the “Indenture”), between the Company and JPMorgan
Chase Bank, as trustee (the “Trustee”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, and the Holders of the Securities.  The Securities may be issued in one or more
series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest (if any) at different
rates, may be subject to different redemption provisions (if any), may be
subject to different sinking, purchase or analogous funds (if any) and may
otherwise vary as provided in the Indenture. 
This Note is one of a series designated as the ProNotes Linked to the
Value of a Global Basket of Indices due March 31, 2009 (the “Note”).

 

This Note will not pay interest.

 

This Note is payable in the manner, with the effect
and subject to the conditions provided in the Indenture.

 

If a payment date is not a Business Day as defined in
the Indenture at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day, and no interest shall accrue for
the intervening period.

 

The Indenture provides that, without prior notice to
any Holders, the Company and the Trustee may amend the Indenture and the
Securities of any series with the written consent of the Holders of a majority
in principal amount of the outstanding Securities of all series affected by
such amendment (all such series voting as one class), and the Holders of a
majority in principal amount of the outstanding Securities of all series
affected thereby (all such series voting as one class) may waive future
compliance by the Company with any provision of the Indenture or the Securities
of such series by written notice to the Trustee; provided that, without the consent
of each Holder of the Securities of each series affected thereby, an amendment
or waiver, including a waiver of past defaults, may not: (i) extend the stated
maturity of the Principal of, or any sinking fund obligation or any installment
of interest on, such Holder’s Security, or reduce the principal amount thereof
or the rate of interest thereon (including any amount in respect of original
issue discount), or any premium payable with respect thereto, or adversely
affect the rights of such Holder under any mandatory redemption or repurchase
provision or any right of redemption or repurchase at the option of such
Holder, or reduce the amount of the Principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof or the amount thereof provable in bankruptcy, or change any place of
payment where, or the currency in which, any Security of such series or any
premium or the interest thereon is payable, or impair the right to institute
suit for the

 

R-1

 

enforcement of any such payment on or after the due
date therefor; (ii) reduce the percentage in principal amount of outstanding
Securities of the relevant series the consent of whose Holders is required for
any such supplemental indenture, for any waiver of compliance with certain
provisions of the Indenture or certain Defaults and their consequences provided
for in the Indenture; (iii) waive a Default in the payment of Principal of or
interest on any Security of such Holder; or (iv) modify any of the provisions
of the Indenture governing supplemental indentures with the consent of
Securityholders except to increase any such percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each outstanding Security affected thereby.

 

The Indenture provides that, subject to certain
conditions, the Holders of at least a majority in principal amount (or, if any
Securities are Original Issue Discount Securities, such portion of the
Principal as is then accelerable) of the outstanding Securities of all series
affected (voting as a single class), by notice to the Trustee, may waive an
existing Default or Event of Default with respect to the Securities of such
series and its consequences, except a Default in the payment of Principal of or
interest on any Security or in respect of a covenant or provision of the
Indenture which cannot be modified or amended without the consent of the Holder
of each outstanding Security affected. 
Upon any such waiver, such Default shall cease to exist, and any Event
of Default with respect to the Securities of such series arising therefrom
shall be deemed to have been cured, for every purpose of the Indenture; but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereto.

 

The Indenture provides that a series of Securities may
include one or more tranches (each a “tranche”) of Securities, including Securities
issued in a Periodic Offering.  The
Securities of different tranches may have one or more different terms,
including authentication dates and public offering prices, but all the
Securities within each such tranche shall have identical terms, including
authentication date and public offering price. 
Notwithstanding any other provision of the Indenture, subject to certain
exceptions, with respect to sections of the Indenture concerning the execution,
authentication and terms of the Securities, redemption of the Securities,
Events of Default of the Securities, defeasance of the Securities and amendment
of the Indenture, if any series of Securities includes more than one tranche,
all provisions of such sections applicable to any series of Securities shall be
deemed equally applicable to each tranche of any series of Securities in the
same manner as though originally designated a series unless otherwise provided
with respect to such series or tranche pursuant to a board resolution or a
supplemental indenture establishing such series or tranche.

 

No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the Redemption Amount of
this Note in the manner, at the place, at the time and in the coin or currency
herein prescribed.

 

The Securities are issuable initially only in
registered form without coupons in denominations of $10,000 or any integral
multiples of $1,000 in excess of that amount at the office or agency of the
Company in the Borough of Manhattan, The City of New York, and in the manner
and subject to the limitations provided in the Indenture.

 

R-2

 

The Securities will not be redeemable at the option of
the Company prior to maturity.

 

The Company will not be required to pay any Additional
Amounts on the Securities.

 

Maturity Date

 

The Maturity Date of the Securities is March 31, 2009 (the “Maturity Date”);
however, if a Market Disruption Event exists on any valuation date, as
determined by the Calculation Agent, the Maturity Date will be the later of March 31, 2009 and the fifth Business
Day following the date on which the final share price is calculated.

 

Redemption Amount

 

The Company will redeem the Securities at maturity for
a redemption amount in cash that will equal the principal amount of the
Securities multiplied by the sum of 1 plus the basket return (the “redemption
amount”).  The basket return is based on
the difference between the final basket level and the initial basket level,
expressed as a percentage.  How the
basket return will be calculated depends on whether the final basket level is
greater than, less than, or equal to the initial basket level:

 

•                  If the final
basket level is greater than the initial basket level, then the basket return
will equal:

 

	
  final basket level — initial basket level

  	
   

  
	
  initial basket
  level

  	
   

  

 

Thus,
if the final basket level is greater than the initial basket level, the basket
return will be a positive number and you will receive more than the principal
amount of your securities at redemption.

 

•                  If the final
basket level is less than or equal to the initial basket level, then the basket
return will equal zero and the redemption amount will equal the principal
amount of the securities.

 

For purposes of calculating the basket return, the
basket level on any valuation date will be equal to the sum of:

 

(i)                                     the product of (x)
..30, the weighting of the FTSE 100 Index in the basket, and (y) the closing
level of the FTSE 100 Index on that valuation date divided by 5079.00, the
closing level of the FTSE 100 Index on the index business day immediately
following the date the securities are priced for initial sale to the public;

 

(ii)                                  the product of (x)
..35, the weighting of the EURO STOXX 50 Index in the basket, and (y) the
closing level of the EURO STOXX 50 Index on that valuation date divided by
3161.00, the closing level of the EURO STOXX 50 Index on the index

 

R-3

 

business day immediately following the date the securities are priced
for initial sale to the public;

 

(iii)                               the product of (x) .22,
the weighting of the Nikkei 225 Index in the basket, and (y) the closing level
of the Nikkei 225 Index on that valuation date divided by 11537.03, the closing
level of the Nikkei 225 Index on the index business day immediately following
the date the securities are priced for initial sale to the public; and

 

(iv)                              the product of (x) .13,
the weighting of the S&P/ASX 200 Index in the basket, and (y) the closing
level of the S&P/ASX 200 Index on that valuation date divided by 4245.60,
the closing level of the S&P/ASX 200 Index on the index business day
immediately following the date the securities are priced for initial sale to
the public.

 

The “initial basket level”
equals 1.0.

 

The
“final level” for each reference index will equal the closing level of such
reference index on a valuation date.

 

The “final basket level”
will equal the arithmetic average of the basket levels on the valuation dates.

 

The “valuation dates” are
the 24th day of each month from and including October 24, 2008
through and including March 24, 2009, which will be the final valuation date,
subject to a postponement if a market disruption event occurs on a valuation
date.

 

The “initial level” for each reference index will
equal the closing level of such reference index on the index business day
immediately following the date the securities are priced for initial sale.

 

The “closing level” for
any reference index will be, on any relevant index business day, the level of
that reference index determined by the calculation agent at the “valuation time”
for that reference index, which is the time at which the index sponsor for that
reference index calculates the closing level of that reference index on such
index business day, as such level is calculated and published by such index
sponsor, subject to an adjustment to the calculation of a reference index,
described below.

 

A “business day” is any
day, other than a Saturday, Sunday or a day on which banking institutions in
New York, New York are generally authorized or obligated by law or executive
order to close.

 

An “index business day”
is any day that is (or, but for the occurrence of a market disruption event,
would have been) a day on which trading is generally conducted on the exchanges
and related exchanges (each as defined below), other than a day on which one or
more of the exchanges or related exchanges is scheduled to close prior to its
regular weekday closing time.  “Exchange”
means the principal exchange on which any stock underlying any reference index
is

 

R-4

 

traded.  “Related exchange” means any exchange on
which futures or options contracts relating to the reference indices are
traded.

 

A “market disruption
event” is, in respect of any reference index, the occurrence or existence on
any index business day during the one-half hour period that ends at the
relevant valuation time, of any suspension of or limitation imposed on trading
(by reason of movements in price exceeding limits permitted by the relevant
exchange or otherwise) on:

 

(a) the exchanges in
securities that comprise 20% or more of the level of the relevant reference
index based on a comparison of (1) the portion of the level of the reference
index attributable to each security in which trading is, in the determination
of the calculation agent, materially suspended or materially limited relative
to (2) the overall level of the reference index, in the case of (1) or (2)
immediately before that suspension or limitation;

 

(b) a related exchange in
options contracts on the relevant reference index; or

 

(c) a related exchange in
futures contracts on the relevant reference index;

 

in the case of (a), (b)
or (c) if, in the determination of the calculation agent, such suspension or
limitation is material.

 

Market
Disruption Events

 

If the
calculation agent determines that a market disruption event exists in respect
of a reference index on a valuation date, then the valuation date for such
reference index will be postponed to the first succeeding index business day on
which the calculation agent determines that no market disruption event exists
in respect of such reference index, unless in respect of the final valuation
date the calculation agent determines that a market disruption event exists in
respect of such reference index on each of the five index business days
immediately following the scheduled final valuation date.  In that case, (a) the fifth succeeding index
business day following the scheduled final valuation date will be deemed to be
the final valuation date for such reference index, notwithstanding the market
disruption event in respect of such reference index, and (b) the calculation
agent will determine the index level for that reference index on that deemed
final valuation date in accordance with the formula for and method of
calculating that reference index last in effect prior to the commencement of
the market disruption event in respect of such reference index using exchange
traded prices on the relevant exchanges (as determined by the calculation agent
in its sole and absolute discretion) or, if trading in any security or
securities comprising such reference index has been materially suspended or
materially limited, its good faith estimate of the prices that would have
prevailed on the exchanges (as determined by the calculation agent in its sole
and absolute discretion) but for the suspension or limitation, as of the
valuation time on that deemed final valuation date, of each such security
comprising such reference index (subject to the provisions described under “-Adjustments
to the calculation of the reference indices” below).  The valuation date for each reference index
not affected by a market disruption event shall be the scheduled valuation
date.

 

In the
event that a market disruption event exists in respect of a reference index on
the final valuation date, the maturity date of the securities will be postponed
to the fifth business day

 

R-5

 

following the day as of which the closing level on the
final valuation date for each reference index has been calculated.  No interest or other payment will be payable
because of any such postponement of the maturity date.

 

Adjustments to the
calculation of the reference indices

 

If any
of the reference indices is (a) not calculated and announced by its sponsor but
is calculated and announced by a successor acceptable to the calculation agent
or (b) replaced by a successor index using, in the determination of the
calculation agent, the same or a substantially similar formula for and method
of calculation as used in such reference index, then such reference index will
be deemed to be the index so calculated and announced by that successor sponsor
or that successor index, as the case may be.

 

Upon
any selection by the calculation agent of a successor index, the calculation
agent will cause notice to be furnished to us and the trustee, which will
provide notice of the selection of the successor index to the registered
holders of the securities in the manner set forth below.

 

If (x)
on or prior to a valuation date any index sponsor makes, in the determination
of the calculation agent, a material change in the formula for or the method of
calculating a reference index or in any other way materially modifies a
reference index (other than a modification prescribed in that formula or method
to maintain such reference index in the event of changes in constituent stocks
and capitalization and other routine events) or (y) on any valuation date an
index sponsor (or a successor sponsor) fails to calculate and announce a
reference index, then the calculation agent will calculate the redemption
amount using, in lieu of a published level for such reference index, the level
for such reference index as at the valuation time on the valuation date as
determined by the calculation agent in accordance with the formula for and
method of calculating such reference index last in effect prior to that change
or failure, but using only those securities that comprised such reference index
immediately prior to that change or failure. 
Notice of adjustment of such reference index will be provided by the
trustee in the manner set forth below.

 

All determinations made by the calculation agent will
be at the sole discretion of the calculation agent and will be conclusive for
all purposes and binding on us and the beneficial owners of the securities,
absent manifest error.

 

Adjustments to the
calculation of the reference indices

 

If any
of the reference indices is (a) not calculated and announced by its sponsor but
is calculated and announced by a successor acceptable to the calculation agent
or (b) replaced by a successor index using, in the determination of the
calculation agent, the same or a substantially similar formula for and method
of calculation as used in such reference index, then such reference index will
be deemed to be the index so calculated and announced by that successor sponsor
or that successor index, as the case may be.

 

Upon
any selection by the calculation agent of a successor index, the calculation
agent will cause notice to be furnished to us and the trustee, which will
provide notice of the selection of the successor index to the registered
holders of the securities in the manner set forth below.

 

R-6

 

If (x)
on or prior to a valuation date any index sponsor makes, in the determination
of the calculation agent, a material change in the formula for or the method of
calculating a reference index or in any other way materially modifies a
reference index (other than a modification prescribed in that formula or method
to maintain such reference index in the event of changes in constituent stocks
and capitalization and other routine events) or (y) on any valuation date an
index sponsor (or a successor sponsor) fails to calculate and announce a
reference index, then the calculation agent will calculate the redemption
amount using, in lieu of a published level for such reference index, the level
for such reference index as at the valuation time on the valuation date as
determined by the calculation agent in accordance with the formula for and
method of calculating such reference index last in effect prior to that change
or failure, but using only those securities that comprised such reference index
immediately prior to that change or failure. 
Notice of adjustment of such reference index will be provided by the
trustee in the manner set forth below.

 

All determinations made by the calculation agent will
be at the sole discretion of the calculation agent and will be conclusive for
all purposes and binding on us and

 

Events of Default and Acceleration

 

In case an Event of Default (as defined in the
Indenture) with respect to the Securities shall have occurred and be
continuing, the amount declared due and payable upon any acceleration of the
Securities (in accordance with the acceleration provisions set forth in the
Indenture) will be determined by the Calculation Agent and will equal, for each
Note, the arithmetic average, as determined by the Calculation Agent, of the
fair value of the Securities as determined by at least three but not more than
five broker-dealers (which may include Credit Suisse First Boston LLC or any of
the Company’s other subsidiaries or affiliates) as will make such fair value
determination available to the Calculation Agent.

 

The Company, the Trustee and any agent of the Company
or the Trustee may deem and treat the registered Holder hereof as the absolute
owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon) for the
purpose of receiving payment of, or on account of, the Redemption Amount hereof,
and for all other purposes, and neither the Company nor the Trustee nor any
agent of the Company or the Trustee shall be affected by any notice to the
contrary.

 

No recourse under or upon any obligation, covenant or
agreement contained in the Indenture or any indenture supplemental thereto or
in any Note, or because of any indebtedness evidenced thereby, shall be had
against any incorporator as such, or against any past, present or future
stockholder, officer, director or employee, as such, of the Company or of any
successor, either directly or through the Company or any successor, under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof.

 

The calculation agent for the Securities (the “Calculation
Agent”) is Credit Suisse First Boston International.  The calculations and determinations of the
Calculation Agent

 

R-7

 

will be final and binding upon all parties (except in
the case of manifest error).  The
Calculation Agent will have no responsibility for good faith errors or omissions
in its calculations and determinations, whether caused by negligence or
otherwise.

 

Terms used herein that are defined in the Indenture
and not otherwise defined herein shall have the respective meanings assigned
thereto in the Indenture.

 

The laws of the State of
New York (without regard to conflicts of laws principles thereof) shall govern
this Note.

 

R-8

 

	
  FOR VALUE RECEIVED, the undersigned hereby sell(s),
  assign(s) and transfer(s) unto

  
	
   

  
	
  [PLEASE INSERT SOCIAL
  SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE]

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  [PLEASE PRINT OR TYPE
  NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

  
	
   

  
	
   

  
	
  the within Note and all
  rights thereunder, hereby irrevocably constituting and appointing

  
	
   

  
	
   

  	
  Attorney to

  
	
  transfer such Note on
  the books of the Issuer, with full power of substitution in the premises.

  
	
   

  	
   

  
	
   

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE: The signature
  to this assignment must correspond with the name as written upon the face of
  the within Note in every particular without alteration or enlargement or any
  change whatsoever.

  
					

 

R-9Exhibit 10.1

 

WJ Communications, Inc.

401
River Oaks Parkway

San Jose, CA 95134

 

June 28, 2005

 

Personal
and Confidential

 

Dear Michael:

 

This letter agreement (the “Agreement”), effective as of the date set
forth above (the “Effective Date”), sets forth all of the terms and conditions
regarding your resignation and separation from employment with WJ
Communications, Inc. (the “Company”), subject to your non-revocation of this
Agreement.  Reference is made to the
amended and restated letter agreement between you and the Company dated November 11,
2004 (the “Employment Agreement”).  The
term “Company” shall mean WJ Communications, Inc. and any other affiliated
entities.

 

1.                                       Your separation of employment is effective as of the close of business
on June 27, 2005 (the “Separation Date”), pursuant to your executed
Resignation Letter, annexed hereto as Exhibit 1.  You agree not to stand for reelection to the
Board of Directors of the Company either at its 2005 Annual Meeting, or
thereafter, and if you are reelected to the Board of Directors, you agree to
decline to serve in such position.  You
hereby confirm that, as of the date hereof, you have returned to the Company
all property, files, and other Company material in your possession (including
any computers, pagers, Blackberry, cellular phones, etc.), and all copies of
computerized databases and related materials, including any and all materials
currently in your possession or control.

 

2.                                       The parties acknowledge that, subject to the terms and conditions set
forth herein, you shall be entitled to the following:

 

a.                                       In addition to any unpaid but accrued base salary through the
Separation Date and payment for accrued, unused vacation time (which the
parties agree shall total twenty (20) days) (which amounts shall be paid as of
the Effective Date), no later than thirty (30) days following the Separation
Date (and conditioned on your execution and non-revocation of this
Agreement), you will be eligible to receive: 
(i) one hundred fifty percent (150%) of your annual base salary (in the
aggregate amount of $525,000); (ii) a one-time payment of $7,500 in full
satisfaction of any amounts otherwise due to you in connection with Section 2(c)
of the Employment

 

 

Agreement;
and (iii) 328,500 shares of Company stock pursuant to a customary form of
Restricted Stock Agreement issued under the Company’s 2000 Stock Incentive Plan
(the “Plan”) which shares shall be fully vested and non-forfeitable as of the
date of grant.  The certificates
representing such shares of stock shall be delivered to you without restrictive
legends (to the extent permitted by applicable law).

 

b.                                      You shall be entitled to the following benefits:  (i) continued group health insurance benefits
under the Company’s benefit plans for one year following the Separation Date
(or such lesser period if you become eligible to participate under another
employer’s plan) and, following the termination of such coverage, the
opportunity to elect applicable COBRA continuation coverage at your expense;
(ii) executive outplacement and job assistance services for the six-month
period following the Separation Date, at a level to be determined by the
Company; and (iii) reimbursement for cellular phone service in an amount not to
exceed $200 per month for the six-month period following the Separation Date
(it being understood that you shall be allowed to continue to use your current
cellular telephone number through such period and that you shall be responsible
for any monthly payment obligations in excess of $200).

 

The parties acknowledge
that, as of the Separation Date, 1.5 million of the options granted to you
pursuant to the Executive Time Vesting Stock Option Agreement dated March 4,
2002 are fully vested and the time period during which these vested options can
be exercised following the Separation Date shall be eighteen (18) months.  All unvested options awarded to you by the
Company shall expire and be forfeited as of the Separation Date.

 

Besides
the foregoing, you have no other entitlement to payment, compensation, grant of
equity, grant of restricted stock units, or any other benefits from the Company
upon your resignation as of the Separation Date.  You also hereby agree to relinquish, and
consent to the cancellation by the Company of, the grant of options to acquire
1.4 million shares of the Company’s stock made to you in March 2004, which
grant shall be cancelled and terminated as of the Effective Date.  You understand that the payments, stock and
benefits you receive pursuant to this Agreement are subject to (i) your execution
of this Agreement and (ii) your compliance with your obligations hereunder.

 

3.                                       You acknowledge that as of the Separation Date, except as expressly
provided in this Agreement and as set forth in Section 2, you will not be
entitled to any other payments, distributions, bonuses, severance, benefits or
perquisites from the Company or any of its respective affiliates including but
not limited to, salary, bonus, and group health benefits (other than COBRA
rights to continue group medical coverage at your expense and any conversion
rights to which you may be entitled under law with respect to continuing
long-term disability insurance

 

2

 

coverage
at your expense); provided, nothing contained herein shall be deemed a waiver
by you of any vested benefits under any employee retirement or welfare benefit
plan maintained by the Company.  Any
conversion rights you may have with respect to group life and/or disability
insurance plans and policies shall remain subject to the terms and conditions
of such plans and policies.

 

4.                                       You shall be allowed to purchase the laptop computer issued to you by
the Company at its current “book value” which the parties agree shall be $200,
provided you first deliver such laptop to the Company so that any and all
Company materials and information, including any “Confidential Information” (as
defined in Section 6 of the Employment Agreement), can be removed from
such computer’s files and hard drive.

 

5.                                       You represent and warrant to the Company that as of the Effective
Date:  (a) you have not disclosed to any
third parties (other than legal counsel and your spouse) any “Confidential
Information” of the Company or its affiliates, as prohibited under Section 6
of the Employment Agreement; and (b) you are in full compliance with the terms
and conditions of the Employment Agreement, including the provisions regarding “Confidential
Information” set forth in Section 6 thereof.

 

6.                                       a.                                       In consideration of the payments provided for herein, and the Company
release set forth in Section 7 below, you on behalf of yourself, your
heirs, beneficiaries and assigns, voluntarily, knowingly and willingly release
and forever discharge the Company, Fox Paine & Company, LLC, Fox Paine
Capital Fund, L.P., FPC Investors, L.P., Fox Paine Capital, LLC, Fox Paine
Capital Fund II GP, LLC, Fox Paine Capital Fund II, L.P., Fox Paine Capital
Fund II International, L.P., Fox Paine Capital Fund II Co-Investors
International, L.P., FPC Investment GP, and their respective subsidiaries,
affiliates, divisions, parents, members, shareholders and related entities
(including all entities that are partners or members in any such related
entities) and each of their past and present directors, members, managers,
officers, employees, attorneys, agents, divisions, owners, shareholders and
successors (all collectively referred to hereinafter for purposes of this Section 6
and Sections 8 and 9 herein as “WJ Communications”) from any and all claims,
charges, complaints, liens, demands, causes of action, obligations, damages and
liabilities (including legal expenses) (all hereinafter referred to as “Claims”),
known or unknown, that you or anyone acting on your behalf ever had, now have
or may hereafter claim to have against WJ Communications as of the Effective
Date with respect to any matter whatsoever, including, without limitation, any
Claims arising directly or indirectly out of, or in any way connected with,
based upon, incidental or related to, your association with WJ Communications
(and the separation of such association) or any claim to compensation or
benefits resulting from your association with WJ

 

3

 

Communications,
including any claim to post-separation base salary or compensation for the 2005
year under the Employment Agreement, and including any Claims, under local,
state, or federal law based on:

 

(i)                                     claims
of discrimination on the basis of race, age, religion, sex, sexual harassment,
sexual orientation, national origin, marital status, or disability
(including, without limitation, any claims arising under the Federal Age
Discrimination in Employment Act (ADEA), and the California Fair Employment and
Housing Act, each as amended);

 

(ii)                                  infliction
of any tort (including wrongful discharge);

 

(iii)                               breach
of contract, whether actual or implied, written or oral; 

 

(iv)                              any
violation of any pension or welfare plans or any other benefit plan or
arrangement (including without limitation, ERISA); and

 

(v)                                 any
claims to additional compensation (including, without limitation, any claims
arising under the California Labor Code and any Wage Order promulgated
by the California Industrial Welfare Commission).

 

b.                                      You
further represent that you have not, at any time up to and including the date
on which you sign this Agreement, commenced, and will not in the future
commence, to the full extent permitted by law, any action or proceeding, or
file any charge or complaint, of any nature that occurred on or before the
Effective Date of this Agreement and you waive to the full extent permitted by
law, any right to any monetary or equitable relief in any proceeding that may
relate to the matters released by Section 6(a).

 

c.                                       Notwithstanding
the foregoing, nothing in this paragraph shall prevent you from filing a charge
with any federal, state or local administrative agency, but you hereby agree
not to participate in, and waive your rights with respect to, any monetary or
other financial relief arising from any such administrative proceeding (to the
full extent permitted by law) unless required to so participate by force of
law.

 

d.                                      You
agree that in the event that you (or your heirs or assigns) have committed a
breach of any material provision of this Agreement:  (i) WJ Communications will be irreparably
damaged and will have no adequate remedy at law, and will be entitled to an
injunction as a matter of right from any court of competent jurisdiction
restraining any further breach of this Agreement; and (ii) WJ Communications’
remaining obligations under this Agreement shall immediately terminate.  You further agree that this

 

4

 

Agreement may and shall be
pleaded as a full and complete defense to any action, suit or other proceeding
covered by the terms of this Agreement which is or may be instituted,
prosecuted or maintained by you, your heirs and assigns.  Notwithstanding the foregoing, you understand
and confirm that you are entering into this Agreement (with its covenant not to
sue and waiver and release) voluntarily and knowingly, and the covenant not to
sue shall not affect your right to claim otherwise with respect to your rights
under the ADEA.  In addition, you
understand and confirm that provision (ii) of the first sentence of this
paragraph shall not apply to any action challenging the validity of a waiver or
release in this Agreement of a claim under the ADEA.

 

7.                                       In consideration of the obligations set forth herein, the Company and
its respective subsidiaries, affiliates, divisions, parents, members, shareholders
and related entities (including all entities that are partners or members in
any such related entities) and each of their past and present directors,
members, managers, officers, employees, servants, divisions, owners,
shareholders and successors voluntarily, knowingly and willingly
release and forever discharge you, your heirs, beneficiaries and assigns, from
any and all known Claims (as defined above) that the Company ever had, now has
or may hereafter claim to have against you as of the Effective Date with
respect to any matter whatsoever, including, without limitation, any Claims
arising directly or indirectly out of, or in any way connected with, based
upon, or related to, your association with the Company (and the separation of
such association) or any claim of breach of any obligation under the Employment
Agreement, statute or common law.

 

8.                                       You intend to release WJ Communications as broadly as permitted under
applicable law and do so under Section 1542 of the California Civil Code
as follows:

 

You acknowledge that you
have been advised by legal counsel and/or are familiar with the provision of Section 1542
of the California Civil Code, which provides as follows:

 

A GENERAL RELEASE DOES
NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR
HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTORS.

 

Being aware of said Code
section, you hereby expressly waive and relinquish any rights or benefits you
may have thereunder, as well as under any other state or federal statutes or
common law principles of similar effect.

 

5

 

9.                                       At no time on or after the Effective Date will you make any statement,
publicly or privately, which would disparage WJ Communications or their businesses; provided, however, that nothing
contained in any provision of this Agreement shall preclude you from making any
statement in good faith which is required by any applicable law or regulation
or the order of a court or other governmental body, or in good faith in order
to enforce the terms and conditions of this Agreement.

 

10.                                 At no time on or after the Effective Date will the Company’s “Control
Group” make any statement, publicly or privately, which would disparage you; provided, however, that nothing
contained in any provision of this Agreement shall preclude the WJ
Communication’s “Control Group” from making any statement in good faith which
is required by any applicable law or regulation or the order of a court or
other governmental body, or in good faith in order to enforce the terms and
conditions of this Agreement or for other business purposes.  For purposes of this paragraph, the term “Control
Group” shall mean any member of the Board of the Company and the Company’s CEO,
CFO and executives of the senior vice president level.  The Company press release announcing your
separation of employment shall include a statement substantially similar to the
following:

 

Mr.
Farese resigned in order to pursue other opportunities.  In a statement, W. Dexter Paine, III, the
Company’s Chairman said, “We are grateful for all of Mike’s hard work and
commitment to WJ Communications.  We
thank him for his contributions and wish him well in the future.”

 

11.                                 You will continue to be subject to the obligations set forth in
Sections 6 and 7 of the Employment Agreement, including the provisions
regarding confidentiality and non-solicitation contained therein.

 

12.                                 The parties to this Agreement agree to keep the existence and terms of
this Agreement completely confidential; provided
that you may disclose it under confidential conditions to members of your
immediate family, legal counsel, or accountant, who in turn shall agree to keep
such existence and terms confidential; and provided further, that nothing contained in any provision of
this Agreement shall preclude either you or the Company from making any
statement in good faith which is required by any applicable law or regulation
or the order of a court or other governmental body, or in good faith in order
to enforce the terms and conditions of this Agreement.

 

13.                                 In the event a dispute or controversy arises in connection with this
Agreement, such dispute or controversy shall be submitted for binding
arbitration in accordance with Section 18 of the Employment
Agreement.  Notwithstanding anything
herein to the contrary, (a) the parties shall be entitled to seek full
injunctive and equitable relief in any court of competent jurisdiction as a
result of

 

6

 

any
alleged violation of the terms of this Agreement and (b) any claim for
arbitration hereunder must be initiated within one hundred eighty (180) days
after the party seeking arbitration has knowledge (or should have knowledge) of
the act or occurrence giving rise to such claim.

 

14.                                 The terms described in this Agreement (and the terms of any other
agreements referenced herein) constitute the entire agreement between you and
the Company and may not be altered or modified other than in a writing signed
by you and the Company.  No promise,
inducement or agreement not expressed herein has been made to you in connection
with this Agreement.  The Employment
Agreement is terminated in all respects other than the provisions set forth in
Sections 6, 7, 9, 11 and 18 which shall survive such
termination.  Accordingly, except where
expressly provided otherwise herein, this Agreement supersedes all prior
arrangements, communications, commitments or obligations between yourself and
the Company (including, without limitation, the Employment Agreement and the
arbitration provision of such agreement shall be terminated, without any
further effect).  Notwithstanding anything
to the contrary contained elsewhere herein, in the event of any conflict
between this Agreement and the terms of any other agreements or any related
documentation, between you and the Company, this Agreement will control.

 

15.                                 This Agreement shall not become effective, and no payments shall be due
you hereunder, until such time as it has been signed by you and delivered to
the Company and the Revocation Period has expired without any revocation by you
of this Agreement.

 

16.                                 Notwithstanding anything herein to the contrary, there shall be deducted
or withheld from all amounts payable to you hereunder such minimum amounts as
are required by law to be withheld for federal, state, city or other taxes and
any other amounts authorized for deduction by or required by law.  The minimum withholding obligations that
arise with respect to shares of Company stock under Section 2 may be
settled with stock that is part of the grant that gives rise to such minimum
withholding obligations, in accordance with such procedures established under
the Plan.

 

17.                                 You acknowledge that you:  (a)
have carefully read the Agreement in its entirety; (b) have had an opportunity
of up to twenty-one (21) days to consider it and to consult with independent
legal counsel about it (if you wished to do so), but may execute it at any time
during that time period; (c) fully understand the terms and conditions of this
Agreement; and (d) are signing this Agreement knowingly and voluntarily.

 

18.                                 You hereby waive all notice of time, place and purpose of a special
meeting of the Company’s Board of Directors, held on or about 7:30 a.m.
(P.S.T.) on June 28,

 

7

 

2005,
by telephonic conference, and consent to the conduct at such meeting of all
business of any nature whatsoever that lawfully came before the meeting.

 

19.                                 You acknowledge that you were advised that you could take up to
twenty-one (21) days from the date this Agreement was given to you to review
this Agreement and decide whether you would enter into this Agreement.  To the extent that you have elected to enter
into this Agreement prior to such time, you have done so voluntarily, and have
knowingly waived such twenty-one (21) day review period.

 

20.                                 You may revoke this Agreement for a period of seven (7) calendar days
after its execution (the “Revocation Period”), by delivery of a notarized
written notice of revocation (the “Revocation Notice”) prior to 5:00 p.m. on
the last day comprising the Revocation Period to Fox Paine & Company, LLC,
950 Tower Lane, Suite 1150, Foster City, CA 94404, Attn: Samuel Hines.  This Agreement shall become irrevocable
automatically upon the expiration of the Revocation Period if you do not revoke
it in the aforesaid manner; provided that the foregoing shall not apply to your
separation of association from the Company, which shall be effective as of the
Separation Date.

 

21.                                 This Agreement shall be construed and enforced pursuant to the laws of
the State of California (applicable to contracts to be performed wholly within
such state).  You hereby consent to personal
jurisdiction in any state or federal court located in Santa Clara, County in
the State of California for the purpose of any legal proceeding relating to or
arising under this Agreement.

 

22.                                 In the event that any one or more of the provisions of this Agreement
shall be deemed illegal or unenforceable for any reason, such provision or
other portion thereof shall be modified or deleted in such manner as to make
this Agreement, as modified, legal and enforceable to the fullest extent
permitted under applicable law.

 

Please
acknowledge your agreement and acceptance of the terms and conditions provided
for herein effective as of the date set forth above by signing and dating
below.

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WJ COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ W. DEXTER PAINE III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  W. Dexter Paine, III

  
	
   

  	
   

  	
  Title:

  	
  Chairman

  
						

 

8

 

Agreed to and accepted:

 

 

	
  /s/
  MICHAEL R. FARESE

  	
   

  
	
  Michael R. Farese

  
	
   

  
	
  Date executed: June 28,
  2005

  

 

9

 

Exhibit 1

 

June 28, 2005

 

W. Dexter Paine, III, Chairman

WJ Communications, Inc.

401 River Oaks Parkway

San Jose, CA 95134

 

Re: Resignation Letter

 

Dear Dexter:

 

This letter serves to inform you that effective as of June 27,
2005, I hereby resign from my employment with WJ Communications, Inc. (the “Company”)
and from the Board of Directors of the Company.

 

Accordingly, I no longer hold the position of President, Chief
Executive Officer, Director, and/or any other position that in any way
affiliates me with the Company and/or the Company’s affiliates.  I also agree not to stand for reelection to
the Board of Directors of the Company either at its 2005 Annual Meeting, or
thereafter, and if I am reelected to the Board of Directors, I agree to decline
to serve in such position.

 

Further, all rights and obligations attendant to my resignation are set
forth in the attached letter agreement, dated June 27, 2005, and in the
relevant provisions of my Employment Agreement, dated November 11, 2004,
which constitute the full, final, and complete understanding with respect to
the terms and conditions of my separation from employment.

 

Sincerely,

 

 

Michael R. Farese

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