Document:

EXHIBIT
10.1

 

[CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED BY WJ COMMUNICATIONS, INC. CONFIDENTIAL PORTIONS
OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.]

 

WJ COMMUNICATIONS, INC.

401 RIVER OAKS PARKWAY

SAN JOSE, CALIFORNIA  95134

 

January 28, 2005

 

Richard
J. Swanson

7809
San Isabel Drive

Plano,
Texas 75025

 

 Re:         Employment Agreement

 

 Dear
Mr. Swanson:

 

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 first above written (the “Effective Date”).

 

1.             Employment and Services.  The
Company shall employ you as Vice President-RFID Development of WJ
Communications, Inc., for the period beginning on the Effective Date and ending
upon termination pursuant to paragraph 4 (the “Employment Period”). 
During the Employment Period, you shall be located at the Company’s offices in
Richardson, Texas, but you shall also be required to travel to the Company’s
principal headquarters from time to time. Your responsibilities include the
diligent and good faith pursuit of the RFID product plan and product roadmaps,
technical leadership for the Richardson, TX facility, strategic technology
development compliant with the Company’s roadmaps and assignments from the
Company’s Chief Executive Officer, and other special projects and assignments
as designated by the Chief Executive Officer. You will report directly to the
Richardson, TX site manager, Chuck Lau, and shall also render such services to
the Company and its affiliates and subsidiaries as the Chief Executive Officer
shall reasonably designate from time to time. 
You shall devote your best efforts and full time and attention to the
business of the Company.  You will also
be a member of the Company’s senior management staff and you will directly
participate in the weekly, senior management business, staff meetings and
decision making processes.  During the
Employment Period, you agree not to sit on any for-profit Boards (or comparable
bodies) without the consent of the Chief Executive Officer.

 

 

2.             Compensation.

 

a.             Annual Base Salary.  The Company shall pay you an annual
base salary (“Annual Base Salary”) of $175,000 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 on or about one year from the Effective Date.  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, but no
less frequently than monthly.

 

b.             Bonus.  In addition, you will be eligible to receive a quarterly bonus,
to be paid as soon as practicable but not later than the earlier of (i) one
hundred twenty (120) days after the end of such quarter or (ii) the date on
which other members of senior management receive their respective bonuses, if
any.  In order to determine the amount of such bonus, the Company shall
determine appropriate business and financial targets for each fiscal year for
the Company and for you and your annual bonus shall be based upon the extent to
which the Company and you attain such targets. 
Your maximum total annual bonus shall be 50% of your Annual Base
Salary.  The determination of the
appropriate business and financial targets with respect to each subsequent
fiscal year shall take place 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.

 

c.             Equity.  You will be eligible to
participate in the Company’s Restricted Stock Incentive Program (or any current
or future similar such program) (the “Stock Program”), pursuant to which the
Company rewards exceptional performance through grants of the Company’s
restricted stock to employees.  Also, in
the future, as approved by the Company’s Board of Directors, you may be
eligible for option grants based upon the Company’s and your individual
performance.

 

d.             Withholding.  Notwithstanding anything
herein to the contrary, there shall be deducted or withheld from all 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 for
its senior management staff, subject to and in accordance with applicable
eligibility requirements, such as medical, dental, tax preparation, 401(k)
(matching contributions of up to 3%), employee stock purchase program, life and
disability insurance plans and all other benefit plans generally available to
the Company’s senior executive officers, in each case, on terms and at a cost
to you, no less favorable than other members of the Company’s senior management
staff.  In addition, the Company will reimburse your reasonable
out-of-pocket expenses incurred in connection with the performance of your
duties hereunder, consistent with Company policy.  You shall be entitled
to take paid time off in accordance with the Company’s top management vacation,
holiday and illness policy.  As part of
the senior management staff, you will also be eligible for the executive
medical reimbursement program, which supplements the standard health plan available
to the Company’s employees and provides for payment of up to $5,000 per year
for yourself and your family.

 

2

 

4.             Termination.  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
if requested, but the Company may terminate your services sooner if it so
elects), (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
provided that the Company does not elect to terminate your employment sooner if
it so elects), (iii) your death or Disability, (iv) a vote of the Board of
Directors of the Company directing your termination for Cause, (v) a vote of
the Board of the Company directing your 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-year periods unless, at least thirty (30) 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 a series of monthly
payments over the next twelve (12) month period immediately following such
termination.  Each monthly payment shall
be paid periodically in accordance with the Company’s regular payroll practices
(but no less frequently than monthly) and be equal to one-twelfth (1/12th) of
your Annual Base Salary as in effect immediately prior to the termination of
the Employment Period (the “Severance Benefit”).

 

Except as otherwise set forth in this
paragraph 4 or pursuant to the terms of employee benefit plans in which you
participate pursuant to paragraph 3, you shall not be entitled to any
compensation or other payment from the Company in connection with the
termination of your employment hereunder.

 

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 forty
five (45) days following your delivery of notice of such occurrence to the
Company (it being understood that your failure to deliver such notice in a
timely manner shall waive your rights to allege Good Reason):  (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 current personal
residence 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, 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 any Company policy
or your failure to comply with the lawful directions of the President and Chief
Executive Officer or Board of Directors, in any material respect, in any such
case that is not cured within fifteen (15) days after you have received written
notice thereof from the President

 

3

 

and Chief Executive Officer or Board of Directors of the Company, or
(v) a willful and knowing material misrepresentation to the President and Chief
Executive Officer or the Board of Directors 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 paragraph 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.  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.             Maintaining Confidential Information.

 

a.             Company Information.  You
agree at all times during the term of your employment and thereafter to hold in
confidence, and not to use, except for the benefit of the Company, or to
disclose to any person, firm or corporation without written authorization of
the Chief Executive Officer of the Company, any trade secrets, confidential
knowledge, data or other proprietary information relating to products,
processes, know-how, designs, formulas, developmental or experimental work,
computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining
to any business of the Company or any of its clients, consultants, or
licensees. We agree that it shall not be a breach of this paragraph if you
disclose information which becomes generally known to and available for use by
the public (other than as a result of your acts or omissions to act).  The restrictive covenants contained in this Section 5
shall not apply after the Employment Period if and to the extent the Company
fails to make any payment of Annual Base Salary, bonus, or Severance Benefit to
you then due, provided, further, that this limitation shall not apply unless
the Employment Period ends on or after the fourth anniversary of the Effective
Date; accordingly, you acknowledge and agree that the restrictive covenants
contained in the Non-Competition Agreement dated on the Effective Date (the “Non-Competition
Agreement”) will apply on the terms contained therein without regard to the
terms of this Agreement as the Non-Competition Agreement was entered into in
connection with the acquisition of your ownership interest in Telenexus, Inc.
and consideration was paid by us therefor.

 

b.             Former Employer Information.  You
agree that you will not, during your employment with the Company, improperly
use or disclose any proprietary information or trade secrets of your former or
concurrent employers or companies, if any, and that you will not bring onto the
premises of the Company any unpublished document or any property belonging to
your former or concurrent employers or companies, if any, unless consented to
in writing by such employers or companies.

 

c.             Third Party Information.  You
recognize that the Company has received and in the future will receive from
third parties their confidential or proprietary information subject to a duty
on the Company’s part to maintain the confidentiality of such information and
to use it only for certain limited purposes. 
You agree that you owe the Company and such third parties, during the
term established by such third parties, a duty to hold all such confidential or
proprietary information conveyed to you and which has been expressly described
as being confidential pursuant to contract, in confidence and not to disclose
it to any person, firm or corporation (except as necessary in

 

4

 

carrying
out your work for the Company consistent with the Company’s agreement with such
third party) or to use it for the benefit of anyone other than for the Company
or such third party (consistent with the Company’s agreement with such third
party) without the express written authorization of the Chief Executive Officer
of the Company.  The Company agrees to
provide you with a copy of any agreement with a third party, or any redacted
portion of such agreement relating to confidentiality, that does, or could
reasonably be deemed to, restrict your disclosures and activities hereunder.

 

6.             Retaining and Assigning Inventions and
Original Works.

 

a.             Inventions and Original Works Retained by You.  You
have attached hereto, as Exhibit A, a list describing all inventions, original
works of authorship, developments, improvements, and trade secrets which were
made by you prior to your employment with the Company, which belong to you,
which reasonably relate to the Company’s business and products, and which are
not assigned to the Company.  If you have
no such inventions or original works, you will so indicate on the attached
list.

 

b.             Inventions and Original Works Assigned to the
Company.  You agree that you will promptly make full
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and will assign to the Company all your right, title,
and interest in and to any and all inventions, original works of authorship,
developments, improvements or trade secrets which you have solely or jointly
conceived or developed or reduced to practice, or caused to be conceived or
developed or reduced to practice, during the period of time you have been in
the employ of the Company or which you may solely or jointly conceive or
develop or reduce to practice, during the period of time you shall be in the
employ of the Company.  You and the
Company recognize, however, this provision does not apply to any invention as
to which you can prove the following (an “Excluded Invention”):

 

i.              It was developed entirely on your own time;
and

 

ii.             No equipment, supplies, facility or trade secret
of the Company was used in its development; and

 

iii.            It neither

 

(1)           relates at the time of its conception or
reduction to practice to the business of the Company or to the Company’s actual
or demonstrably anticipated research and development; nor

 

(2)           results from any work performed by you for
the Company.

 

You acknowledge that all original works of
authorship which have been and will be made by you (solely or jointly with
others) within the scope of your employment and which are protectable by copyright
are “works made for hire,” as that term is defined in the United States
Copyright Act (17 USCA Section 101).

 

c.             Maintenance of Records.  You
agree to keep and maintain adequate and current written records of all
inventions and original works of authorship made by you (solely or jointly with
others) during the term of your employment with the Company.  The records will be in

 

5

 

the
form of notes, sketches, drawings, and any other format that may be specified
by the Company in writing.  The records
will be available to and remain the sole property of the Company at all times.

 

d.             Inventions Assigned to the United States.  You
agree to assign to the United States government all your right, title, and
interest in and to any and all inventions, original works of authorship,
developments, improvements or trade secrets, other than with respect to
Excluded Inventions, whenever such full title is required to be in the United
States by a contract between the Company and the United States or any of its
agencies.

 

e.             Obtaining Letters Patent and Copyright
Registrations.  You agree that your obligation to assist the
Company to obtain United States or foreign letters patent and copyright
registrations covering inventions and original works of authorship assigned
hereunder to the Company shall continue beyond the termination of your
employment, but the Company shall compensate you at a reasonable rate for time
actually spent by you at the Company’s request on such assistance.  If the Company is unable because of your
mental or physical incapacity or for any other reason to secure your signature
(after making a good faith and reasonable attempt to do so) to apply for or to
pursue any application for any United States or foreign letters patent or
copyright registrations covering inventions or original works of authorship
assigned to the Company as above, than you hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as your agent and
attorney in fact, to act for and in your behalf and stead, to execute and
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by
you.  You hereby waive and quitclaim to
the Company any and all claims, of any nature whatsoever, which you now or may
hereafter have for infringement of any patents or copyright resulting from any
such application for letters patent or copyright registration assigned
hereunder to the Company.

 

f.              Exception to Assignments.  You
will advise the Company promptly in writing of any inventions, original works
of authorship, developments, improvements or trade secrets that you believe
meet the criteria in Subparagraphs 6b(i), (ii), and (iii) above for Excluded
Inventions; and you will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. 
You understand that the Company will keep in confidence and will not
disclose to third parties without your consent any confidential information
disclosed in writing to the Company relating to Excluded Inventions that
qualify under the foregoing Subparagraphs.

 

7.             Conflicting Employment.  You
agree that, during the term of your employment with the Company, you will not
engage in any other employment, occupation, consulting or other business
activity directly or indirectly related to the business in which the Company is
now involved or becomes involved during the term of your employment, nor will
you engage in any other activities that conflict with your obligations to the
Company.  If you wish to engage in any
other employment during the time you are engaged by the Company, you will first
obtain the Company’s written consent before accepting such additional
employment.

 

8.             No Breach of Duty.  You
represent that your performance of all the terms of this Agreement and as an
employee of the Company does not, and to the best of your present knowledge and
belief, will not breach any agreement or duty to keep in confidence proprietary
information acquired by you in confidence or in trust prior to your employment
by the Company.  You have not entered
into, and you agree you will not enter into, any agreement either written or
oral in conflict herewith.  You are not
at the present time restricted from being employed by the Company or entering
into this Agreement.

 

6

 

9.             Returning Company Documents.  You
agree that, at the time of leaving the employ of the Company, you will deliver
to the Company (and will not keep in your possession or deliver to anyone else)
any and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to the Company, its successors, affiliates or assigns.  In the event of the termination of your
employment, you agree to sign and deliver the “Termination Certification”
attached hereto as Exhibit B.

 

10.           Non-Solicitation; Non-Competition.

 

a.             Non-Solicitation.  As a means reasonably designed to
protect the Company’s proprietary information, you agree that, during the term
of this Agreement and for a period of twelve (12) months from the conclusion of
the Employment Period, you will not directly or indirectly, either as an
individual on his own account or as a partner, joint venturer, officer,
director, stockholder, employee, agent, independent contractor, or otherwise:

 

(i)            counsel, solicit, or attempt to induce any
person employed by the Company, whether that person is a full-time employee,
part-time employee, or independent contractor, to terminate his or her
employment or independent contractor relationship with the Company;

 

(ii)           employ any person formerly employed by the
Company, whether that person was a full-time employee, part-time employee, or
independent contractor; or

 

(iii)          solicit to provide, or provide, any of the
Company’s customers or prospective customers with any product or service that
competes with any product or service sold or provided by the Company.

 

The restrictive covenants contained in this Section 10
shall not apply after the Employment Period if and to the extent the Company
fails to make any payment of Annual Base Salary, bonus, or Severance Benefit to
you then due, provided, further, that this limitation shall not apply unless
the Employment Period ends on or after the fourth anniversary of the Effective
Date; accordingly, you acknowledge and agree that the restrictive covenants
contained in the Non-Competition Agreement will apply on the terms contained
therein without regard to the terms of this Agreement as the Non-Competition
Agreement was entered into in connection with the acquisition of your ownership
interest in Telenexus, Inc. and consideration was paid by us therefor.

 

b.             Non-Competition. 
During the term of your employment by the Company and for a period of
twelve (12) months after the conclusion of the Employment Period, you shall
not, directly or indirectly, either as an individual on his own account or as a
partner, joint venturer, officer, director, stockholder, employee, agent,
independent contractor, or otherwise:

 

(i)            engage in a Competitive Business (as
hereinafter defined);

 

(ii)           have any interest in any person, firm,
partnership, joint venture, or other business entity (collectively, an “Entity”)
which is engaged in a Competitive Business (except as a stockholder holding
less than one

 

7

 

percent of the aggregate number of issued and
outstanding shares of a publicly traded company’s capital stock); or

 

(iii)          provide financial or other assistance or act
as an agent of, consultant for or advisor to any Entity which is or is about to
become engaged in a Competitive Business.

 

The restrictive covenants contained in this Section 10
shall not apply after the Employment Period if and to the extent the Company
fails to make any payment of Annual Base Salary, bonus, or Severance Benefit to
you then due, provided, further, that this limitation shall not apply unless
the Employment Period ends on or after the fourth anniversary of the Effective
Date; accordingly, you acknowledge and agree that the restrictive covenants
contained in the Non-Competition Agreement will apply on the terms contained
therein without regard to the terms of this Agreement as the Non-Competition
Agreement was entered into in connection with the acquisition of your ownership
interest in Telenexus, Inc. and consideration was paid by us therefor.

 

“Competitive Business” shall mean the
business of the sale, manufacture or distribution of (i) any RFID product, (ii)
any product set forth on Exhibit C hereto (or any products that are
substantially similar to those on such Exhibit C) or which compete with those
set forth on Exhibit C hereto, or (iii) any integrated circuit, electronic
component or semiconductor module product in the field of wireless
communications infrastructure, cable television networks and distribution
plant, RF identification readers and programmers, and wireless networking for
use in equipment used by telecommunications service providers to receive and
transmit information by electrical, electronic, optical, or electro-optic means
to and from other telecommunication service providers or telecommunication
service users in any industry and for any application.

 

c.             Scope of Restriction.  If, at the time of enforcement of
this paragraph 10, 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.

 

d.             Equitable Relief.  You acknowledge that the provisions
contained in paragraphs 5, 6 and 10 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 paragraphs 5, 6 and 10 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 than would
violate any of the provisions of this Agreement.  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.

 

11.           Survival.  Any termination of your employment or of this Agreement shall
have no effect on the continuing operation of paragraphs 4, 5, 6, or 10 for the
periods specified therein.

 

12.           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 Texas.

 

8

 

13.           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:

  	
   

  	
  Richard J. Swanson

  
	
   

  	
   

  	
  7809 San Isabel Drive

  
	
   

  	
   

  	
  Plano, Texas 75025

  
	
   

  	
   

  	
   

  
	
  If to the Company:

  	
   

  	
  WJ Communications, Inc.

  
	
   

  	
   

  	
  401 River Oaks Parkway

  
	
   

  	
   

  	
  San Jose, CA 95134

  
	
   

  	
   

  	
  Attention: Michael R. Farese

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Shumaker, Loop & Kendrick, LLP

  
	
   

  	
   

  	
  101 East Kennedy Blvd.

  
	
   

  	
   

  	
  Suite 2800

  
	
   

  	
   

  	
  Tampa, Florida

  
	
   

  	
   

  	
  Attention: W. Thompson Thorn, III, Esquire

  

 

14.           Severability.  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.

 

15.           Successors and Assigns; Assignment of
Agreement.  This
Agreement shall bind and inure to the benefit of and be enforceable by 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.

 

16.           Waiver; Amendment.  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. 
This Agreement shall not be modified except in writing executed by all
parties hereto.

 

17.           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
contemplated herein and supersedes all prior

 

9

 

agreements,
whether written or oral, between the parties, relating to the subject matter
hereof.  Notwithstanding the foregoing, the parties acknowledge that they
are parties to the Non-Competition Agreement executed on the Effective Date and
that the Non-Competition Agreement applies to your activities as well and could
apply for a period longer than the restrictions on your activities set forth in
this Agreement.

 

18.           Captions.  Titles or captions of paragraphs 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.

 

19.           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.

 

20.           Arbitration.  The parties to this Agreement acknowledge and agree that any
claim arising out of or relating to this Agreement or the breach of this
Agreement, including, without limitation, any claims sounding in contract,
tort, breach of contract, violation of statute, or otherwise and including
claims for which a party seeks an injunction or other equitable relief, must be
submitted and resolved by binding arbitration. 
All questions pertaining to the arbitrability of a particular claim or
defense shall be determined by the arbitrator or arbitrators.  Judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof.  Any such arbitration will be
administered in Dallas, Texas by the American Arbitration Association under its
Rules of the Commercial Panel of the American Arbitration Association then in
effect (and not the Employment Dispute Resolution Rules).  The parties agree that if it becomes
necessary to arbitrate any claim arising out of or relating to this Agreement
or the breach of this Agreement after the date hereof, that they will not argue
at that time that resolution of any claims in such forum will cause an undue hardship
on them or their witnesses.  The award
entered by the arbitrator will be final and binding in all respects.

 

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:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael R. Farese

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Accepted and agreed to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Richard J. Swanson

  	
   

  	
   

  

 

10

 

EXHIBIT
A

 

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF
AUTHORSHIP

 

	
  TITLE

  	
   

  	
  DATE

  	
   

  	
  IDENTIFYING NUMBER

  OR BRIEF DESCRIPTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1.             Intellectual property
associated with previously filed patent applications benefiting Advanced IP
Communications, Inc. and all modifications, extensions or supplements thereto.

 

11

 

EXHIBIT B

WJ COMMUNICATIONS, INC.

TERMINATION CERTIFICATION

 

This
is to certify that I do not have in my possession, nor have I failed to return,
any devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other documents
or property, or reproductions of any aforementioned items belonging to WJ
Communications, Inc., its subsidiaries, affiliates, successors or assigns
(together, the “Company”).

 

I
also agree, in compliance with the Employment Agreement, that for a period of
12 months after the date my employment with the Company concludes, I shall
comply with the restrictive covenants contained in paragraph 10 of the
Employment Agreement.

 

I
further agree that, in compliance with the Employment Agreement, I will preserve
as confidential all trade secrets, confidential knowledge, data or other
proprietary information relating to products, processes, know-how, designs,
formulas, developmental or experimental work, computer programs, data bases,
other original works of authorship, customer lists, business plans, financial
information or other subject matter pertaining to any business of the Company
or any of its clients, consultants or licensees in accordance with Section 5
of the Employment Agreement.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Employee’s Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name of Employee (typed or printed)

  

 

12

 

EXHIBIT C

 

LIST OF RESTRICTED PRODUCTS

 

1.             Existing
Customer Products (under any product name whatsoever) developed by Telenexus,
Inc. including, without limitation, the following:

 

Area Antenna (***)

Stationary Reader (***)

Handheld Reader (***)

Advanced Reader (***)

*** Indicator (***)

RF Module (***)

Japanese Reader (***)

Rugged Reader (with PA) (***)

Multiplexer (***)

*** Reader (***)

RF Module with retrofit (***)

Specialty Reader (***)

Direct Sequence Reader (***)

Drop Box Antenna (***)

European Reader (***)

Junction Card/Highway System (***)

Tag 21 (***)

*** Reader (***)

*** Reader (***)

Service Center Programmer (***)

RF Module (with Antenna) (***)

RF Module (9 volt)/Class 0 Antenna (***)

Interface Board/Box (***)

Low Cost Reader (***)

Multiprotocol RF Module (***)

Antenna Interface Boards and Cables (***)

SCA Reader, Tag, and Antenna (***)

Tag-ItTM Reader (***)

Multiprotocol Reader (***)

Digital Control Board (***)

Wave Reader (***)

DSP Module (***)

7/eleven Reader (***)

SMU Reader (***)

 

***         CONFIDENTIAL
MATERIAL REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

13

 

Brazil Development (***)

Tracking Device (***)

*** Reader (***)

TaxMedCS (***)

*** Reader (***)

PCMCIA Multiprotocol Reader

Application software for above

 

2.             Existing
Telenexus Developed Products (under any product name whatsoever) including,
without limitation, the following:

 

IR 1000

IR 1500

RM 1000

DR 1000

AN 125

AN 110

AN 120

 

3.             Telenexus
Products Currently Under Development (under any product name whatsoever)
including, without limitation, the following:

 

Class 3 Tags and Reader (***)

*** Products

IR 2000

IR 2500

SR 2000

RM 2000

DR 2000

DP 2000

 

4.             Future
RFID-Based Products (under any product name whatsoever) including, without
limitation, the following:

 

IR 3000

IR 3500

SR 3000

RM 3000

DR 3000

DP 3000

 

***         CONFIDENTIAL
MATERIAL REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

14EXHIBIT 10.2

 

[CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED BY WJ COMMUNICATIONS, INC. CONFIDENTIAL PORTIONS OF THIS DOCUMENT
HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.]

 

WJ COMMUNICATIONS, INC.

401 RIVER OAKS PARKWAY

SAN JOSE,
CALIFORNIA 95134

January 28, 2005

 

Wilfred K. Lau

2215 Red Oak Lane

Richardson, Texas 75082

 

 Re:                            Employment Agreement

 

 Dear Mr. Lau:

 

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 first above written (the “Effective Date”).

 

1.                                       Employment and Services.  The Company shall employ you as Senior Vice
President-RFID of WJ Communications, Inc., for the period beginning on the
Effective Date and ending upon termination pursuant to paragraph 4 (the “Employment
Period”).  During the Employment Period, you shall be located at the
Company’s offices in Richardson, Texas, but you shall also be required to
travel to the Company’s principal headquarters from time to time. Your
responsibilities include the diligent and good faith pursuit of the RFID
business plan, operational site management for the Richardson, TX facility,
strategic RFID business development, and other special projects and assignments
as designated by the Company’s Chief Executive Officer. You will report
directly to the Chief Executive Officer and shall render such services to the
Company and its affiliates and subsidiaries as the Chief Executive Officer
shall reasonably designate from time to time. 
You shall devote your best efforts and full time and attention to the
business of the Company.  You will also
be a member of the Company’s senior management staff and you will directly
participate in the weekly, senior management business, staff meetings and
decision making processes.  During the
Employment Period, you agree not to sit on any for-profit Boards (or comparable
bodies) without the consent of the Chief Executive Officer.

 

2.                                       Compensation.

 

a.                                       Annual Base Salary.  The Company
shall pay you an annual base salary (“Annual Base Salary”) of $175,000 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 on or about one year from the Effective Date.  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, but no
less frequently than monthly.

 

b.                                      Bonus.  In addition,
you will be eligible to receive a quarterly bonus, to be paid as soon as
practicable but not later than the earlier of (i) one hundred twenty (120) days
after the end of such quarter or (ii) the date on which other members of senior
management receive their respective bonuses, if any.  In order to
determine the amount of such bonus, the Company shall determine appropriate
business and financial targets for each fiscal year for the Company and for you
and your annual bonus shall be based upon the extent to which the Company and
you attain such targets.  Your maximum
total annual bonus shall be 50% of your Annual Base Salary.  The determination of the appropriate business
and financial targets with respect to each subsequent fiscal year shall take
place 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.

 

c.                                       Equity.  You will be eligible to participate in the
Company’s Restricted Stock Incentive Program (or any current or future similar
such program) (the “Stock Program”), pursuant to which the Company rewards
exceptional performance through grants of the Company’s restricted stock to
employees.  Also, in the future, as
approved by the Company’s Board of Directors, you may be eligible for option
grants based upon the Company’s and your individual performance.

 

d.                                      Withholding.  Notwithstanding anything herein to the
contrary, there shall be deducted or withheld from all 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 for its senior
management staff, subject to and in accordance with applicable eligibility
requirements, such as medical, dental, tax preparation, 401(k) (matching
contributions of up to 3%), employee stock purchase program, life and
disability insurance plans and all other benefit plans generally available to
the Company’s senior executive officers, in each case, on terms and at a cost
to you, no less favorable than other members of the Company’s senior management
staff.  In addition, the Company will reimburse your reasonable
out-of-pocket expenses incurred in connection with the performance of your duties
hereunder, consistent with Company policy.  You shall be entitled to take
paid time off in accordance with the Company’s top management vacation, holiday
and illness policy.  As part of the
senior management staff, you will also be eligible for the executive medical
reimbursement program, which supplements the standard health plan available to
the Company’s employees and provides for payment of up to $5,000 per year for
yourself and your family.

 

4.                                       Termination.  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 if requested, but the Company may terminate your
services sooner if it so elects), (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

 

2

 

services hereunder
during such thirty (30) day period provided that the Company does not elect to
terminate your employment sooner if it so elects), (iii) your death or
Disability, (iv) a vote of the Board of Directors of the Company directing your
termination for Cause, (v) a vote of the Board of the Company directing your
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-year periods
unless, at least thirty (30) 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 a series of monthly payments over the next
twelve (12) month period immediately following such termination.  Each monthly payment shall be paid
periodically in accordance with the Company’s regular payroll practices (but no
less frequently than monthly) and be equal to one-twelfth (1/12th) of your
Annual Base Salary as in effect immediately prior to the termination of the
Employment Period (the “Severance Benefit”).

 

Except as otherwise set
forth in this paragraph 4 or pursuant to the terms of employee benefit plans in
which you participate pursuant to paragraph 3, you shall not be entitled to any
compensation or other payment from the Company in connection with the
termination of your employment hereunder.

 

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 forty-five (45) days
following your delivery of notice of such occurrence to the Company (it being
understood that your failure to deliver such notice in a timely manner shall
waive your rights to allege Good Reason): 
(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 current personal residence 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, 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 any
Company policy or your failure to comply with the lawful directions of the
President and Chief Executive Officer or Board of Directors, in any material
respect, in any such case that is not cured within fifteen (15) days after you
have received written notice thereof from the President and Chief Executive
Officer or Board of Directors of the Company, or (v) a willful and knowing
material misrepresentation to the President and Chief Executive Officer or the
Board of Directors 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 paragraph
1 because of physical, mental or emotional incapacity, injury, sickness or
disease. Any question as to the existence or

 

3

 

extent of the Disability upon which you and the Company cannot agree
shall be determined by a qualified, independent physician selected by the
Company.  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.                                       Maintaining Confidential Information.

 

a.                                       Company Information.  You
agree at all times during the term of your employment and thereafter to hold in
confidence, and not to use, except for the benefit of the Company, or to
disclose to any person, firm or corporation without written authorization of
the Chief Executive Officer of the Company, any trade secrets, confidential
knowledge, data or other proprietary information relating to products,
processes, know-how, designs, formulas, developmental or experimental work,
computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining
to any business of the Company or any of its clients, consultants, or
licensees. We agree that it shall not be a breach of this paragraph if you
disclose information which becomes generally known to and available for use by
the public (other than as a result of your acts or omissions to act).  The restrictive covenants contained in this Section 5
shall not apply after the Employment Period if and to the extent the Company
fails to make any payment of Annual Base Salary, bonus, or Severance Benefit to
you then due, provided, further, that this limitation shall not apply unless
the Employment Period ends on or after the fourth anniversary of the Effective
Date; accordingly, you acknowledge and agree that the restrictive covenants
contained in the Non-Competition Agreement dated on the Effective Date (the “Non-Competition
Agreement”) will apply on the terms contained therein without regard to the
terms of this Agreement as the Non-Competition Agreement was entered into in
connection with the acquisition of your ownership interest in Telenexus, Inc.
and consideration was paid by us therefor.

 

b.                                      Former Employer Information.  You
agree that you will not, during your employment with the Company, improperly
use or disclose any proprietary information or trade secrets of your former or
concurrent employers or companies, if any, and that you will not bring onto the
premises of the Company any unpublished document or any property belonging to
your former or concurrent employers or companies, if any, unless consented to
in writing by such employers or companies.

 

c.                                       Third Party Information.  You
recognize that the Company has received and in the future will receive from
third parties their confidential or proprietary information subject to a duty
on the Company’s part to maintain the confidentiality of such information and
to use it only for certain limited purposes. 
You agree that you owe the Company and such third parties, during the
term established by such third parties, a duty to hold all such confidential or
proprietary information conveyed to you and which has been expressly described
as being confidential pursuant to contract, in confidence and not to disclose
it to any person, firm or corporation (except as necessary in carrying out your
work for the Company consistent with the Company’s agreement with such third
party) or to use it for the benefit of anyone other than for the Company or
such third party (consistent with the Company’s agreement with such third
party) without the express written authorization of the Chief Executive Officer
of the Company.  The Company agrees to
provide you with a copy of any agreement with a third party, or any redacted
portion of such agreement relating to confidentiality, that does, or could
reasonably be deemed to, restrict your disclosures and activities hereunder.

 

4

 

6.                                       Retaining and Assigning Inventions and
Original Works.

 

a.                                       Inventions and Original Works Retained by You.  You
have attached hereto, as Exhibit A, a list describing all inventions, original
works of authorship, developments, improvements, and trade secrets which were
made by you prior to your employment with the Company, which belong to you,
which reasonably relate to the Company’s business and products, and which are
not assigned to the Company.  If you have
no such inventions or original works, you will so indicate on the attached
list.

 

b.                                      Inventions and Original Works Assigned to the
Company.  You agree that you will promptly make full
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and will assign to the Company all your right, title,
and interest in and to any and all inventions, original works of authorship,
developments, improvements or trade secrets which you have solely or jointly
conceived or developed or reduced to practice, or caused to be conceived or
developed or reduced to practice, during the period of time you have been in
the employ of the Company or which you may solely or jointly conceive or
develop or reduce to practice, during the period of time you shall be in the
employ of the Company.  You and the
Company recognize, however, this provision does not apply to any invention as to
which you can prove the following (an “Excluded Invention”):

 

i.                                          It was developed entirely on your own time;
and

 

ii.                                       No equipment, supplies, facility or trade
secret of the Company was used in its development; and

 

iii.                                    It neither

 

(1)                                  relates at the time of its conception or
reduction to practice to the business of the Company or to the Company’s actual
or demonstrably anticipated research and development; nor

 

(2)                                  results from any work performed by you for
the Company.

 

You acknowledge that all
original works of authorship which have been and will be made by you (solely or
jointly with others) within the scope of your employment and which are
protectable by copyright are “works made for hire,” as that term is defined in
the United States Copyright Act (17 USCA Section 101).

 

c.                                       Maintenance of Records.  You
agree to keep and maintain adequate and current written records of all
inventions and original works of authorship made by you (solely or jointly with
others) during the term of your employment with the Company.  The records will be in the form of notes,
sketches, drawings, and any other format that may be specified by the Company
in writing.  The records will be
available to and remain the sole property of the Company at all times.

 

d.                                      Inventions Assigned to the United States.  You
agree to assign to the United States government all your right, title, and
interest in and to any and all inventions, original works of authorship,
developments, improvements or trade secrets, other than with respect to
Excluded Inventions, whenever such full title is required to be in the United
States by a contract between the Company and the United States or any of its
agencies.

 

5

 

e.                                       Obtaining Letters Patent and Copyright
Registrations.  You agree that your obligation to assist the
Company to obtain United States or foreign letters patent and copyright
registrations covering inventions and original works of authorship assigned
hereunder to the Company shall continue beyond the termination of your
employment, but the Company shall compensate you at a reasonable rate for time
actually spent by you at the Company’s request on such assistance.  If the Company is unable because of your
mental or physical incapacity or for any other reason to secure your signature
(after making a good faith and reasonable attempt to do so) to apply for or to
pursue any application for any United States or foreign letters patent or
copyright registrations covering inventions or original works of authorship
assigned to the Company as above, than you hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as your agent
and attorney in fact, to act for and in your behalf and stead, to execute and
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by
you.  You hereby waive and quitclaim to
the Company any and all claims, of any nature whatsoever, which you now or may
hereafter have for infringement of any patents or copyright resulting from any
such application for letters patent or copyright registration assigned
hereunder to the Company.

 

f.                                         Exception to Assignments.  You
will advise the Company promptly in writing of any inventions, original works
of authorship, developments, improvements or trade secrets that you believe
meet the criteria in Subparagraphs 6b(i), (ii), and (iii) above for Excluded
Inventions; and you will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. 
You understand that the Company will keep in confidence and will not
disclose to third parties without your consent any confidential information
disclosed in writing to the Company relating to Excluded Inventions that
qualify under the foregoing Subparagraphs.

 

7.                                       Conflicting Employment.  You
agree that, during the term of your employment with the Company, you will not
engage in any other employment, occupation, consulting or other business
activity directly or indirectly related to the business in which the Company is
now involved or becomes involved during the term of your employment, nor will
you engage in any other activities that conflict with your obligations to the
Company.  If you wish to engage in any other
employment during the time you are engaged by the Company, you will first
obtain the Company’s written consent before accepting such additional
employment.

 

8.                                       No Breach of Duty.  You
represent that your performance of all the terms of this Agreement and as an
employee of the Company does not, and to the best of your present knowledge and
belief, will not breach any agreement or duty to keep in confidence proprietary
information acquired by you in confidence or in trust prior to your employment
by the Company.  You have not entered
into, and you agree you will not enter into, any agreement either written or
oral in conflict herewith.  You are not
at the present time restricted from being employed by the Company or entering
into this Agreement.

 

9.                                       Returning Company Documents.  You
agree that, at the time of leaving the employ of the Company, you will deliver
to the Company (and will not keep in your possession or deliver to anyone else)
any and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to the Company, its successors, affiliates or assigns.  In the event of the termination of your
employment, you agree to sign and deliver the “Termination Certification”
attached hereto as Exhibit B.

 

6

 

10.                                 Non-Solicitation;
Non-Competition.

 

a.                                       Non-Solicitation.  As a means
reasonably designed to protect the Company’s proprietary information, you agree
that, during the term of this Agreement and for a period of twelve (12) months
from the conclusion of the Employment Period, you will not directly or indirectly, either as an
individual on his own account or as a partner, joint venturer, officer,
director, stockholder, employee, agent, independent contractor, or otherwise:

 

(i)                                     counsel, solicit, or attempt to induce any
person employed by the Company, whether that person is a full-time employee,
part-time employee, or independent contractor, to terminate his or her
employment or independent contractor relationship with the Company;

 

(ii)                                  employ any person formerly employed by the
Company, whether that person was a full-time employee, part-time employee, or
independent contractor; or

 

(iii)                               solicit to provide, or provide, any of the
Company’s customers or prospective customers with any product or service that
competes with any product or service sold or provided by the Company.

 

The restrictive covenants contained in this Section 10
shall not apply after the Employment Period if and to the extent the Company
fails to make any payment of Annual Base Salary, bonus, or Severance Benefit to
you then due, provided, further, that this limitation shall not apply unless
the Employment Period ends on or after the fourth anniversary of the Effective
Date; accordingly, you acknowledge and agree that the restrictive covenants
contained in the Non-Competition Agreement will apply on the terms contained
therein without regard to the terms of this Agreement as the Non-Competition
Agreement was entered into in connection with the acquisition of your ownership
interest in Telenexus, Inc. and consideration was paid by us therefor.

 

b.                                      Non-Competition.  During the term of your employment by the
Company and for a period of twelve (12) months after the conclusion of the
Employment Period, you shall not, directly or indirectly, either as an individual on his own account or
as a partner, joint venturer, officer, director, stockholder, employee, agent,
independent contractor, or otherwise:

 

(i)                                     engage in a Competitive Business (as
hereinafter defined);

 

(ii)                                  have any interest in any person, firm,
partnership, joint venture, or other business entity (collectively, an “Entity”)
which is engaged in a Competitive Business (except as a stockholder holding
less than one percent of the aggregate number of issued and outstanding shares
of a publicly traded company’s capital stock); or

 

(iii)                               provide financial or other assistance or act
as an agent of, consultant for or advisor to any Entity which is or is about to
become engaged in a Competitive Business.

 

7

 

The restrictive covenants contained in this Section 10
shall not apply after the Employment Period if and to the extent the Company
fails to make any payment of Annual Base Salary, bonus, or Severance Benefit to
you then due, provided, further, that this limitation shall not apply unless
the Employment Period ends on or after the fourth anniversary of the Effective
Date; accordingly, you acknowledge and agree that the restrictive covenants
contained in the Non-Competition Agreement will apply on the terms contained
therein without regard to the terms of this Agreement as the Non-Competition
Agreement was entered into in connection with the acquisition of your ownership
interest in Telenexus, Inc. and consideration was paid by us therefor.

 

“Competitive Business” shall mean the business of the sale,
manufacture or distribution of (i) any RFID product, (ii) any product set forth
on Exhibit C hereto (or any
products that are substantially similar to those on such Exhibit C) or
which compete with those set forth on Exhibit C hereto, or (iii) any integrated
circuit, electronic component or semiconductor module product in
the field of wireless communications infrastructure, cable television networks
and distribution plant, RF identification readers and programmers, and wireless
networking for use in equipment used by
telecommunications service providers to receive and transmit information by
electrical, electronic, optical, or electro-optic means to and from other
telecommunication service providers or telecommunication service users in any
industry and for any application.

 

c.                                       Scope of Restriction.  If, at the time
of enforcement of this paragraph 10, 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.

 

d.                                      Equitable Relief.  You acknowledge
that the provisions contained in paragraphs 5, 6 and 10 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 paragraphs 5, 6 and 10 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
than would violate any of the provisions of this Agreement.  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.

 

11.                                 Survival.  Any termination
of your employment or of this Agreement shall have no effect on the continuing
operation of paragraphs 4, 5, 6, or 10 for the periods specified therein.

 

12.                                 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 Texas.

 

13.                                 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

 

8

 

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:

  	
   

  	
  Wilfred
  K. Lau

  
	
   

  	
   

  	
   

  	
  2215
  Red Oak Lane

  
	
   

  	
   

  	
   

  	
  Richardson,
  Texas 75082

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If
  to the Company:

  	
   

  	
  WJ
  Communications, Inc.

  
	
   

  	
   

  	
   

  	
  401
  River Oaks Parkway

  
	
   

  	
   

  	
   

  	
  San
  Jose, CA 95134

  
	
   

  	
   

  	
   

  	
  Attention: 
  Michael R. Farese

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
   

  	
  Shumaker,
  Loop & Kendrick, LLP 

  
	
   

  	
   

  	
   

  	
  101
  East Kennedy Blvd.

  
	
   

  	
   

  	
   

  	
  Suite
  2800

  
	
   

  	
   

  	
   

  	
  Tampa,
  Florida

  
	
   

  	
   

  	
   

  	
  Attention: 
  W. Thompson Thorn, III, Esquire

  

 

14.                                 Severability.  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.

 

15.                                 Successors and Assigns;
Assignment of Agreement.  This Agreement shall bind and inure to the
benefit of and be enforceable by 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.

 

16.                                 Waiver; Amendment.  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.  This Agreement shall not be modified except
in writing executed by all parties hereto.

 

17.                                 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.  Notwithstanding the foregoing, the parties acknowledge that they
are parties to the Non-Competition Agreement executed on the Effective Date and
that the Non-Competition Agreement applies to your activities as well and could
apply for a period longer than the restrictions on your activities set forth in
this Agreement.

 

9

 

18.                                 Captions.  Titles or
captions of paragraphs 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.

 

19.                                 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.

 

20.                                 Arbitration.  The parties to this
Agreement acknowledge and agree that any claim arising out of or relating to
this Agreement or the breach of this Agreement, including, without limitation,
any claims sounding in contract, tort, breach of contract, violation of statute,
or otherwise and including claims for which a party seeks an injunction or
other equitable relief, must be submitted and resolved by binding
arbitration.  All questions pertaining to
the arbitrability of a particular claim or defense shall be determined by the
arbitrator or arbitrators.  Judgment upon
the award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof.  Any such
arbitration will be administered in Dallas, Texas by the American Arbitration
Association under its Rules of the Commercial Panel of the American Arbitration
Association then in effect (and not the Employment Dispute Resolution
Rules).  The parties agree that if it
becomes necessary to arbitrate any claim arising out of or relating to this
Agreement or the breach of this Agreement after the date hereof, that they will
not argue at that time that resolution of any claims in such forum will cause
an undue hardship on them or their witnesses. 
The award entered by the arbitrator will be final and binding in all
respects.

 

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:

  	
   

  
	
   

  	
  Name:

  	
  Michael
  R. Farese

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Accepted
  and agreed to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Wilfred
  K. Lau

  	
   

  	
   

  

 

10

 

EXHIBIT A

 

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP

 

	
  TITLE

  	
   

  	
  DATE

  	
   

  	
  IDENTIFYING NUMBER

  OR BRIEF DESCRIPTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Intellectual property associated with
previously filed patent applications benefiting Advanced IP Communications,
Inc. and all modifications, extensions or supplements thereto.

 

 

EXHIBIT B

WJ COMMUNICATIONS, INC.

TERMINATION CERTIFICATION

 

This is to certify that I do not have in my
possession, nor have I failed to return, any devices, records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings,
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any aforementioned items belonging to WJ Communications, Inc.,
its subsidiaries, affiliates, successors or assigns (together, the “Company”).

 

I also agree, in compliance with the
Employment Agreement, that for a period of 12 months after the date my
employment with the Company concludes, I shall comply with the restrictive
covenants contained in paragraph 10 of the Employment Agreement.

 

I further agree that, in compliance with the
Employment Agreement, I will preserve as confidential all trade secrets,
confidential knowledge, data or other proprietary information relating to
products, processes, know-how, designs, formulas, developmental or experimental
work, computer programs, data bases, other original works of authorship,
customer lists, business plans, financial information or other subject matter
pertaining to any business of the Company or any of its clients, consultants or
licensees in accordance with Section 5 of the Employment Agreement.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Employee’s Signature

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name of Employee (typed or
  printed)

  

 

 

EXHIBIT C

 

LIST OF RESTRICTED PRODUCTS

 

1.                                       Existing Customer Products (under any product name
whatsoever) developed by Telenexus, Inc. including, without limitation, the
following:

 

Area Antenna (***)

Stationary Reader (***)

Handheld Reader (***)

Advanced Reader (***)

*** Indicator (***)

RF Module (***)

Japanese Reader (***)

Rugged Reader (with PA) (***)

Multiplexer (***)

*** Reader (***)

RF Module with retrofit (***)

Specialty Reader (***)

Direct Sequence Reader (***)

Drop Box Antenna (***)

European Reader (***)

Junction Card/Highway System (***)

Tag 21 (***)

*** Reader (***)

*** Reader (***)

Service Center Programmer (***)

RF Module (with Antenna) (***)

RF Module (9 volt)/Class 0 Antenna (***)

Interface Board/Box (***)

Low Cost Reader (***)

Multiprotocol RF Module (***)

Antenna Interface Boards and Cables (***)

SCA Reader, Tag, and Antenna (***)

Tag-ItTM Reader (***)

Multiprotocol Reader (***)

Digital Control Board (***)

Wave Reader (***)

DSP Module (***)

7/eleven Reader (***)

SMU Reader (***)

 

***                           CONFIDENTIAL
MATERIAL REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

Brazil Development (***)

Tracking Device (***)

*** Reader (***)

TaxMedCS (***)

*** Reader (***)

PCMCIA Multiprotocol Reader

Application software for above

 

2.                                       Existing Telenexus Developed Products (under any
product name whatsoever) including, without limitation, the following:

 

IR 1000

IR 1500

RM 1000

DR 1000

AN 125

AN 110

AN 120

 

3.                                       Telenexus Products Currently Under Development (under
any product name whatsoever) including, without limitation, the following:

 

Class 3 Tags and Reader (***)

*** Products

IR 2000

IR 2500

SR 2000

RM 2000

DR 2000

DP 2000

 

4.                                       Future RFID-Based Products (under any product name
whatsoever) including, without limitation, the following:

 

IR 3000

IR 3500

SR 3000

RM 3000

DR 3000

DP 3000

 

***                        CONFIDENTIAL
MATERIAL REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

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