Document:

Exhibit
10.2

 

WJ COMMUNICATIONS,
INC.

401 RIVER OAKS
PARKWAY

SAN JOSE,
CALIFORNIA  95134

 

July 26, 2002

 

Dr. Neil Morris,
Ph.D.

 

Re:                               Employment Agreement

 

Dear Dr. Morris:

 

This
letter agreement (this “Agreement”)
sets forth the terms and conditions of your employment with WJ Communications, Inc.
(the “Company”), effective as of August 12,
2002  (the “Effective Date”).  You acknowledge that if the Effective Date
does not occur on or before August 12, 2002, the Company shall have no
obligation to employ you and this Agreement shall terminate.

 

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

 

2.                                       Compensation.

 

a.                                       Annual
Base Salary.  The Company shall pay
you an annual base salary (“Annual Base
Salary”) of Two Hundred Fifteen Thousand Dollars ($215,000) 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 during or about December 2002.  Your Annual Base Salary may be increased in
years following the first year of employment but may not be decreased.  As used herein, the term “Annual Base Salary” refers to the Annual Base Salary as so
increased.  Such Annual Base Salary shall
be payable in installments in accordance with the Company’s regular payroll
practices.

 

b.                                      Bonus.  In addition, subject to the immediately
subsequent Section, you will be eligible to receive a bonus, calculated and
paid quarterly, to be paid as soon as practicable after each fiscal quarter,
but not later than ninety (90) days after the end of each such fiscal
quarter.  In order to determine the
amount of such bonus, the Company shall determine appropriate business targets
and certain individual objectives for you for each fiscal quarter, and your
bonus for each such fiscal quarter shall be based upon the extent to which the

 

1

 

Company
and you attain such targets and objectives. Your maximum bonus shall be 60% of
your Quarterly Base Salary. The determination of appropriate business targets
with respect to each fiscal quarter 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.                                       Notwithstanding
anything herein to the contrary, there shall be deducted or withheld from all
amounts payable to you under this Agreement 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.                                       Options.  You will be granted as of the Effective Date
a non-qualified stock option to purchase 600,000 shares of Common Stock of the
Company, with a per share exercise price equal to the per share fair market
value of the Common Stock of the Company as of the Effective Date (the “Option
Grant”).  The Option Grant will be in
accordance with WJ Communications, Inc. 2000 Employee Stock Incentive Plan
and shall be subject to the terms and conditions set forth in the attached
Executive Time Vesting Stock Option Agreement (the “Option Agreement”) to be
entered into between the Company and you simultaneously with entering into this
Agreement. Any of the foregoing and the terms and conditions of the Option
Agreement to the contrary notwithstanding, upon the earlier to occur of the
termination of your employment within six (6) months of the occurrence of
a Change in Control (as defined in the Executive Time Vesting Stock Option
Agreement), which termination is (i) by the Company other than for Cause
(as defined below), or (ii) by you with Good Reason (as defined below),
you shall be fully vested in any then unvested shares under the Option Grant
(it being understood that there shall not be accelerated vesting of the shares
under the Option Grant upon any other termination of your employment).

 

4.                                       Benefits.

 

a.                                       On-Going
Benefits. During the Employment Period, you shall be entitled to
participate in the Company’s fringe benefit plans for its executives, subject
to and in accordance with applicable eligibility requirements, such as group
medical, dental and vision care insurance, executive medical reimbursement, tax
preparation, 401(k), employee stock purchase program, life and disability
insurance plans and all other benefit plans (other than severance and
equity-based plans or arrangements) generally available to the Company’s
executive officers.  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 time off in accordance with the Company’s top management vacation policy.

 

b.                                      Relocation
Benefits.

 

(i) Relocation Differential. In addition
to your compensation, options and benefits as described in paragraphs 2, 3, and
4(a) above, the Company will pay you cost of living and relocation
differential support (the “Relocation Differential”) in the amount of $50,000
per year for for each completed year of full-time employment with the Company
up to a maximum of four (4) years. The annual Relocation Differential will
be paid in equal installments together with the installment payments of your
Annual Base Salary in accordance with the Company’s regular payroll practices.
The Relocation Differential will be subject to tax as ordinary income to you.

 

2

 

(ii) Reimbursement of Interim and Moving
Expenses. In addition, the Company will reimburse, in accordance with
Company policy and up to a maximum of $50,000, of certain relocation expenses
necessarily incurred by you such as your interim living accommodations in the
San Francisco Bay area, moving expenses, and closing costs on the sale of your
home in the Albuquerque area.

 

(iii) Trip Expenses. Further, the Company
will provide you with a reasonable number of fully paid trips from Albuquerque,
NM, to the San Francisco Bay area to assist you and your wife in finding a
residence in the San Francisco Bay area.

 

5.                                       Termination
and Severance.  The Employment Period
shall terminate on the first to occur of (i) ninety (90) days following
written notice by you to the Company of your resignation without Good Reason
(it being understood that you will continue to perform your services hereunder
during such ninety (90) day period 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 the Company directing such
termination for Cause, (v) a vote of the Board of the Company directing
such termination without Cause, or (vi) the third (3rd) anniversary of the
Effective Date (the “Scheduled Expiration
Date”); provided, however, that the Scheduled Expiration Date shall
be automatically extended for successive one-year periods unless, at least
ninety (90) days prior to the then-current Scheduled Expiration Date, either
the Company or you shall give written notice to the other of an intention not
to extend the Employment Period.  In the
event of termination of the Employment Period pursuant to clause (ii) or (v) above,
the Company shall pay to you an amount equal to your Annual Base Salary as in
effect immediately prior to the termination of the Employment Period, such
amount to be paid periodically in accordance with the Company’s regular payroll
practices over the twelve (12) month period immediately following such
termination (the “Severance Benefit”).  Notwithstanding the preceding sentence, the
Severance Benefit shall be computed as an amount equal to one hundred fifty
percent (150%) of your Annual Base Salary as in effect immediately prior to the
termination of the Employment Period and shall be paid periodically in
accordance with the Company’s regular payroll practices over the twelve (12)
month period immediately following such termination solely in a circumstance in
which there has occurred a Change in Control (as defined in the Option
Agreement) within three (3) months prior to any termination by you for
Good Reason or by the Company without Cause. Notwithstanding anything in this
Agreement to the contrary, in the event that payment of the Severance Benefit,
either alone or together with other payments (or the value of other benefits)
which you have the right to receive from the Company in connection with a
Change in Control, would not be deductible (in whole or in part) by the Company
as a result of the Severance Benefit or other payments or benefits constituting
a “parachute payment” within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”),
the Severance Benefit (or, at your election, such other payments and/or
benefits, or a combination of such other payments and/or benefit and/or the
Severance Benefit) shall be reduced to the largest amount as will result in no
portion of the Severance Benefit (or such other payments and/or benefits) not
being fully deductible by the Company as a result of Section 280G of the
Code.  The determination of the amount of
any such required reduction pursuant to the foregoing provision, and the
valuation of any non-cash benefits for purposes of such determination, shall be
made exclusively by the firm that was acting as the Company’s auditors prior to
the Change in Control (whose fees and expenses shall be borne by the Company,
and such determination shall be

 

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conclusive
and binding).

 

Except
as otherwise set forth in this Section 5 or pursuant to the terms of
employee benefit plans in which you participate pursuant to Section 4, you
shall not be entitled to any compensation or other payment from the Company in
connection with the termination of your employment hereunder.  In addition to the Severance Benefit, under
circumstances in which the Severance Benefit is payable, you shall also remain
eligible to receive group health insurance benefits under the Company’s benefit
plans for one year following the termination of your employment with the
Company so long as such benefit plans permit such continued participation (or
for three years following the termination of your employment with the Company
in the event that the enhanced Severance Benefits are payable in connection
with a Change in Control pursuant to the third sentence of the first paragraph
of this Section 5).

 

For
purposes of this Agreement, the following definitions will apply:  (a) “Good Reason”
shall mean the occurrence of any of the following without your consent which
shall remain uncured for a period of not less than thirty (30) days following
your delivery of notice of such occurrence to the Company (it being understood
that your failure to deliver such notice in a timely manner shall waive your
rights to allege Good Reason):  (i) the
transfer of your principal place of employment to a geographic location more
than 50 miles from the current location of the Company’s principal
headquarters, or (ii) any material breach of this Agreement by the Company
which is not cured or which the Company is not undertaking to cure within
thirty (30) 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 your duties under this Agreement (other than due to
Disability) or any Company policy or your failure to comply with the lawful
directions of the President, CEO or the Board of the Company, in any such case
that is not cured within fifteen (15) days after you have received written
notice thereof from the President, CEO or the Board of the Company, or (v) a
willful and knowing misrepresentation to the President, CEO or the Board of the
Company; and (c) “Disability”
shall mean that for a period of three (3) consecutive months or an
aggregate of four (4) months in any twelve (12) month period you are
incapable of substantially fulfilling the duties of your positions as set forth
in Section 1 because of physical, mental or emotional incapacity, injury,
sickness or disease.  With regard to the
definition of “Disability” in clause (c) above, 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.

 

6.                                       Confidential
Information.  You acknowledge that
information obtained by you while employed by the Company or any affiliate
thereof concerning the business or affairs of (i) the Company, its
affiliates and subsidiaries or (ii) any enterprise which is the subject of
an actual or potential transaction (“Potential Transaction”),considered,
evaluated, reviewed or otherwise, made known to Fox Paine & Company,
LLC, the Company, its affiliates or subsidiaries, or you (“Confidential Information”) is the property
of the Company. You shall not, without the prior written consent of the Board
of the Company, disclose to any person or use for your own account any
Confidential Information except (i) in the normal course of performance of
your

 

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duties hereunder, (ii) to
the extent necessary to comply with applicable laws (provided that you shall
give the Company prompt notice [providing a reasonable time for the Company to
seek a protective order] prior to any such disclosure), or (iii) to the
extent that such information becomes generally known to and available for use
by the public other than as a result of your acts or omissions to act.  Upon termination of your employment or at the
request of the President, CEO or the Board of the Company at any time, you
shall deliver to the President, CEO or the Board all documents containing
Confidential Information or relating to the business or affairs of the Company,
its affiliates and subsidiaries that you may then possess or have under your
control.

 

7.               Non-Solicitation.

 

a.                                       Non-Solicitation.  As a means reasonably designed to protect the
Company’s Confidential Information, you agree that, for a period of twelve (12)
months from the conclusion of the Employment Period, you will not directly,
indirectly or as an agent on behalf of or in conjunction with any person, firm,
partnership, corporation or other entity, (i) hire, solicit, or encourage
the resignation of or in any other manner seek to engage or employ any person
who is then, or during the Employment Period had been, an employee of the
Company, whether or not for compensation and whether or not as an officer,
consultant, adviser, independent sales representative, independent contractor
or participant, or (ii) contact, solicit, service or otherwise have any
dealings with a direct competitor of the Company related to the sale,
manufacture, distribution, marketing or provision of products, components,
equipment, hardware, other technology or services (of any sort) in the wireless
communications industry or any other industry or business or prospective
industry or business in which the Company participates or contemplates
participating in as of such conclusion, with any person or entity with whom the
Company has a current or known prospective business relationship or who is or
was at any time during his employment with the Company (including any
predecessor or successor entity) a customer, vendor or client or strategic
alliance partner of the Company, or a known prospective customer, vendor or
client or strategic alliance partner of the Company.

 

b.                                      Scope
of Restriction.  If, at the time of
enforcement of this Section 7, a court shall hold that the duration, scope
or area restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum duration, scope or area
reasonable under such circumstances shall be substituted for the stated duration,
scope or area.

 

c.                                       Works
Made For Hire.  You agree that all
intellectual property rights, developments, designs, computer software,
inventions, applications and improvements, including but not limited to trade
names, assumed names, service names, service marks, trademarks, logos, patents,
copyrights, licenses, formulas, trade secrets and technology, whether in
design, methods, processes, formulae, machines or devices and all other
applications (collectively, “Inventions”),
whether made, created, invented, devised, acquired, succeeded to (whether by
devise, estate, testamentary disposition or otherwise), or developed for the
Company by you during the Employment Period or prior to the date of this
Agreement, other than Inventions made, created, invented, devised or developed
by you (i) on your own personal time, (ii) without the use of the
Company’s equipment, supplies, facilities and resources and (iii) which
are not related to the sale, manufacture, distribution, marketing development
or provision of products, components, equipment, hardware, other technology or
services (of any sort) in the wireless communications industry (collectively, “Unrelated Inventions”), are works made for
hire and shall be the exclusive property of the Company without separate compensation
to you.  You will, at the request and
expense of the Company made at any time, execute and deliver to the Company or
its nominee such applications and

 

5

 

instruments
as may be desirable and appropriate for obtaining for the Company or its
nominee, patents, copyrights, trademarks, know-how and other intellectual
property protection of the United States and all other countries for vesting in
the Company or its nominee, all of your claim, right, title and interest in
said Inventions and for maintaining, enforcing and funding the same, and to
otherwise vest in or evidence the Company’s or its nominee’s exclusive
ownership of all of the rights referred to herein. In the event that, for
whatever reason, the results of your past or future work for the Company should
not be deemed to be works made for hire, you agree to assign, and you hereby do
assign, to the Company or its nominee all claim, right, title and interest, in
any country, to each and every of the inventions that is the result of work
done in the course of your past or future employment by the Company, or that
you create or develop, or that you acquire by whatever means that was created
or developed, in whole or in part by using the Company’s equipment, supplies,
resources or facilities.  Each and every
such assignment is and shall be in consideration of this Agreement with the
Company, and no further consideration therefor is or shall be provided to you
by the Company.  You hereby waive
enforcement of any moral or legal rights which might limit the Company’s rights
to exploit any of the foregoing materials in any manner.

 

d.                                      Equitable
Relief.  You acknowledge that the
provisions contained in Sections 6 and 7 of this Agreement are reasonable and
necessary to protect the legitimate interests of the Company, that any breach
or threatened breach of such provisions will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate.  Accordingly, in the
event of the breach by you of any of the provisions of Sections 6 and 7 of this
Agreement, 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 and have
the right to injunctive relief against any act that would violate any of the
provisions of this Agreement (without being required to post a bond).  You further agree that injunctive relief may
be sought and obtained for any breach or threatened breach of Section 6 or
Section 7 without a showing of irreparable injury, in order to prevent any
such breach or threatened breach.  Such
right to obtain injunctive relief may be exercised, at the option of the
Company, concurrently with, prior to, after, or in lieu of, the exercise of any
other rights or remedies that the Company may have as a result of any such
breach or threatened breach.

 

8.                                       Survival.  Any termination of your employment or of this
Agreement shall have no effect on the continuing operation of Sections 5, 6, or
7 for the periods specified therein.

 

9.                                       Waiver
of Claims.  As a condition to your
receipt of any termination or severance benefits pursuant to Section 5
hereof, you will agree, as of the date of such termination, to waive, discharge
and release any and all claims, demands and causes of action, whether known or
unknown, against the Company, its affiliates and subsidiaries, and their
respective current and former directors, officers, employers, attorneys and
agents arising out of, connected with or incidental to your employment or other
dealings with the Company, its affiliates or subsidiaries, which you or anyone
acting on your behalf might otherwise have had or asserted and any claim to any
compensation or benefits from your employment with the Company or its
affiliates (other than employee benefits to be provided pursuant to the terms
of Section 5 hereof or of any employee benefit plans as set forth in Section 4
hereof). Notwithstanding anything contained herein to the contrary, no
termination or severance payments shall be made under this Agreement or
otherwise until such time as you have delivered an executed release of claims
and any applicable revocation periods under state or federal law have
expired.  The Company agrees, as further
consideration for your waiver, to concurrently execute a waiver of unknown
claims against you on terms and conditions substantially identical to the waiver

 

6

 

provided by you (it being
understood that the Company may specifically reserve claims identified in
writing by the Company at the time that such waiver is provided).

 

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

 

11.                                 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:

  	
  Dr. Neil Morris,
  Ph.D.

  
	
   

  	
  649 Baltic Avenue

  
	
   

  	
  Rio Rancho, NM 87124

  
	
   

  	
   

  
	
  If to the Company:

  	
  WJ
  Communications, Inc.

  
	
   

  	
  401 River Oaks Parkway

  
	
   

  	
  San Jose, CA 95134

  
	
   

  	
  Attention: Chief
  Executive Officer

  
	
   

  	
   

  
	
  With a copy to:

  	
  Shumaker,
  Loop & Kendrick, LLP

  
	
   

  	
  101 E. Kennedy
  Boulevard, Suite 2800

  
	
   

  	
  Tampa, Florida 33602

  
	
   

  	
  Attention: Darrell C.
  Smith, Esq.

  

 

Either party
may change the address to which said notices are to be sent or given by written
notice of such change to the other parties in the manner set forth above.

 

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

 

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

 

14.                                 Waiver.  The failure of any party to insist upon
strict performance of a covenant hereunder or of any obligation hereunder,
irrespective of the length of time for which such failure continues, shall not
be a waiver of such party’s right to demand strict compliance in the future.

 

7

 

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 this
Agreement may be waived unless such waiver is in writing and signed by the
party against whom such waiver is sought to be enforced.

 

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

 

16.                                 Captions.  Titles or captions of Sections and 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.

 

17.                                 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.

 

18.                                 Arbitration.  Any dispute, controversy or claim arising
under or in connection with this Agreement, or the alleged breach hereof, shall
be settled exclusively by private and confidential arbitration conducted by the
American Arbitration Association in accordance with the Rules of the
Commercial Panel of the American Arbitration Association then in effect (and
not the Employment Dispute Resolution Rules). 
Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. 
Any arbitration held hereunder shall take place in Palo Alto,
California.  In addition, any dispute,
controversy or claim arising under or in connection with your rights or
obligations pursuant to any stock option or other equity arrangements between
you and the Company, shall be settled exclusively as provided for by the terms
of the applicable Company plans.

 

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

 

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

 

[THE BALANCE OF THIS PAGE
WAS INTENTIONALLY LEFT BLANK]

 

8

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  WJ COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael R. Farese

  	
   

  
	
   

  	
  Name:

  	
  Michael R. Farese

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
  Accepted and agreed to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Neil Morris, Ph.D.

  	
   

  	
   

  	
   

  
	
  Neil
  Morris, Ph.D.

  	
   

  	
   

  
	
  Effective as of 8/12/02.

  	
   

  	
   

  
							

 

9

 

Annex 1

 

REPRESENTATIONS
AND WARRANTIES

 

In
connection with the purchase and sale of WJ Communications Stock hereunder, you
represent and warrant to the Company that:

 

(a)                                  The
WJ Communications Stock to be acquired by you pursuant to this Agreement shall
be acquired for your own account and not with a view to, or intention of,
distribution thereof in violation of the Securities Act, or any applicable
state securities laws, and the WJ Communications Stock shall not be disposed of
in contravention of the Securities Act or any applicable state securities laws.

 

(b)                                 You
are an officer of the Company, are sophisticated in financial matters and are
able to evaluate the risks and benefits of the
investment in the WJ Communications Stock. 
You are an “accredited investor”, as defined in Regulation D promulgated
under the Securities Act.

 

(c)                                  To
the extent that any of the securities being purchased by you are not subject to
an effective registration statement, you are able to bear the economic risk of
your investment in such WJ Communications Stock for an indefinite period of
time and you understand that such securities cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.

 

(d)                                 You
have had an opportunity to ask questions and receive answers concerning the
terms and conditions of the offering of WJ Communications Stock and have had
full access to such other information concerning the Company as you have
requested.  You have reviewed, or have
had an opportunity to review, a copy of the Stockholders’ Agreement.

 

(e)                                  This
Agreement constitutes a legal, valid and binding obligation of yours,
enforceable in accordance with its terms, and the execution, delivery and performance
of this Agreement by you does not and shall not conflict with, violate or cause
a breach of any agreement, contract or instrument to which you are a party or
any judgment, order or decree to which you are subject.

 

(f)                                    You
are not a party to or bound by any employment agreement, noncompete agreement
or confidentiality agreement with any person or entity other than the Company.

 

(g)                                 You
have consulted with independent legal counsel regarding your rights and
obligations under this Agreement and you fully understand the terms and
conditions contained herein.  You have
obtained advice from persons other than the Company and its counsel regarding
the tax effects of the transaction contemplated hereby.

 

10Exhibit
10.3

 

 

WJ COMMUNICATIONS,
INC.

401 RIVER OAKS
PARKWAY

SAN JOSE,
CALIFORNIA  95134

 

October 8,
2003

 

Mr. Robert Bayruns

 

Re: Employment
Agreement

 

Dear Mr. Bayruns:

 

This
letter agreement (this “Agreement”)
sets forth the terms and conditions of your employment with WJ Communications, Inc.
(the “Company”), effective on your
first date of employment (the “Effective Date”) with the Company. You
acknowledge that if your employment start date does not occur on or before October 27,
2003, the Company shall have no obligation to employ you and this Agreement
shall terminate.

 

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

 

2.                                       Compensation.

 

a.                                       Annual
Base Salary.  The Company shall pay
you an annual base salary (“Annual Base
Salary”) of Two Hundred Thousand Dollars ($200,000) 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 during or about March,
2004.  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.

 

1

 

b.                                      Performance
Bonus.  In addition, subject to the
immediately subsequent Section, you will be eligible to receive an performance
bonus to be awarded ninety (90) days after the end of each fiscal year, to be
paid as soon as practicable but not later than one hundred twenty (120) days
after the end of such fiscal year. Alternatively the performance bonus may be
awarded and paid quarterly In order to determine the amount of such bonus, the
Company shall determine appropriate business targets for each fiscal year, and
your annual bonus shall be based upon the extent to which the Company attains
such targets. Your maximum annual bonus target shall be 60% of your Annual Base
Salary (or 15% is earned and paid quarterly). 
The determination of appropriate business targets with respect to each
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.                                       Notwithstanding
anything herein to the contrary, there shall be deducted or withheld from all
amounts payable to you under this Agreement 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.                                       a.                                       Restricted
Stock.  You will be granted options
to purchase Fifty Thousand (50,000) shares of the Company’s restricted common
stock at the commencement of the Employment Period for a purchase price equal
to the par value of the common stock of $0.01 per share. These shares of
restricted stock will vest over a two-year period from the Effective Date, with
25,000 vesting after one year of employment and then Two Thousand Eighty Three (2,083)
shares vesting at the end of each consecutive month following the one year
anniversary of your employment date; provided that you must be employed as of
any vesting date and if you are terminated for any reason (except in certain
events involving a Change in Control as provided below), all unvested stock
will be forfeited and cancelled; and provided further that upon the earlier to
occur of in the event of the termination of your employment within six (6) months
of the occurrence of a Change in Control (as defined in the Executive Time
Vesting Stock Option Agreement) by the Company other than for Cause (as defined
below), or by you with Good Reason (as defined below) you shall be fully vested
in any then unvested restricted stock (it being understood that there shall not
be accelerated vesting of the Restricted Stock upon any other termination of
your employment).  These shares of
restricted stock will not be transferable by you until they are vested.  Unvested shares will be subject to repurchase
by the Company at $0.01 per share upon termination of your employment for any
reason.  Unless you elect to be taxed
upon receipt of the restricted stock (by filing a special election under Section 83(b) of
the Internal Revenue Code of 1986, as amended (the “Code”), with the Internal Revenue Service within 30 days), you
will be taxed (and subject to income tax withholding) on the value of the
restricted stock as the shares vest.  You
should consult with your tax advisor regarding the federal, state and local
income tax consequences of receiving the grant of restricted stock
hereunder.  In connection with this grant
of options to purchase restricted stock, you represent and warrant as provided
for in Annex 1 hereto.

 

b.                                      Options.  You will be granted as of the Effective Date
a non-qualified stock option to purchase 600,000 shares of Common Stock of the
Company, with a per share exercise price equal to the per share fair market
value of the Common Stock of the Company as of the Effective Date (the “Option
Grant”). The option strike price will be set on the effective

 

2

 

date.
The Option Grant will be in accordance with the WJ Communications, Inc.
2000 Employee Stock Incentive Plan and shall be subject to the terms and conditions
set forth in the attached Executive Time Vesting Stock Option Agreement (the “Option
Agreement”) to be entered into between the Company and you simultaneously with
entering into this Agreement. Any of the foregoing and the terms and conditions
of the Option Agreement to the contrary notwithstanding, upon the earlier to
occur of the termination of your employment within six (6) months of the
occurrence of a Change in Control (as defined in the Executive Time Vesting
Stock Option Agreement), which termination is (i) by the Company other
than for Cause (as defined below), or (ii) by you with Good Reason (as
defined below), you shall be fully vested in any then unvested shares under the
Option Grant (it being understood that there shall not be accelerated vesting
of the shares under the Option Grant upon any other termination of your
employment).

 

4.                                       Benefits.  During the Employment Period, you shall be
entitled to participate in the Company’s fringe benefit plans for its
executives, subject to and in accordance with applicable eligibility
requirements, such as executive medical reimbursement, tax preparation, 401(k),
employee stock purchase program, life and disability insurance plans and all
other benefit plans (other than severance and equity-based plans or
arrangements) generally available to the Company’s executive officers.  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 time off in
accordance with the Company’s top management vacation policy.

 

5.                                       Termination
and Severance.  The Employment Period
shall terminate on the first to occur of (i) ninety (90) days following
written notice by you to the Company of your resignation without Good Reason
(it being understood that you will continue to perform your services hereunder
during such ninety (90) day period 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 the Company directing such
termination for Cause, (v) a vote of the Board of the Company directing
such termination without Cause, or (vi) the third (3rd) anniversary of the
Effective Date (the “Scheduled Expiration
Date”); provided, however, that the Scheduled Expiration Date shall
be automatically extended for successive one-year periods unless, at least
ninety (90) days prior to the then-current Scheduled Expiration Date, either
the Company or you shall give written notice to the other of an intention not
to extend the Employment Period.  In the
event of termination of the Employment Period pursuant to clause (ii) or (v) above,
the Company shall pay to you an amount equal to your Annual Base Salary as in
effect immediately prior to the termination of the Employment Period, such
amount to be paid periodically in accordance with the Company’s regular payroll
practices over the twelve (12) month period immediately following such
termination (the “Severance Benefit”).  Notwithstanding the preceding sentence, the
Severance Benefit shall be computed as an amount equal to one hundred fifty
percent (150%) of your Annual Base Salary as in effect immediately prior to the
termination of the Employment Period and shall be paid periodically in
accordance with the Company’s regular payroll practices over the twelve (12)
month period immediately following such termination solely in a circumstance in
which there has occurred a Change in Control (as defined in the Option
Agreement) within three (3) months prior to any termination by

 

3

 

you for Good Reason or by
the Company without Cause. Notwithstanding anything in this Agreement to the
contrary, in the event that payment of the Severance Benefit, either alone or
together with other payments (or the value of other benefits) which you have
the right to receive from the Company in connection with a Change in Control, would
not be deductible (in whole or in part) by the Company as a result of the
Severance Benefit or other payments or benefits constituting a “parachute
payment” within the meaning of Section 280G of the Code, the Severance
Benefit (or, at your election, such other payments and/or benefits, or a
combination of such other payments and/or benefit and/or the Severance Benefit)
shall be reduced to the largest amount as will result in no portion of the
Severance Benefit (or such other payments and/or benefits) not being fully
deductible by the Company as a result of Section 280G of the Code.  The determination of the amount of any such
required reduction pursuant to the foregoing provision, and the valuation of
any non-cash benefits for purposes of such determination, shall be made
exclusively by the firm that was acting as the Company’s auditors prior to the
Change in Control (whose fees and expenses shall be borne by the Company, and
such determination shall be conclusive and binding).

 

Except
as otherwise set forth in this Section 5 or pursuant to the terms of
employee benefit plans in which you participate pursuant to Section 4, you
shall not be entitled to any compensation or other payment from the Company in
connection with the termination of your employment hereunder.  In addition to the Severance Benefit, under
circumstances in which the Severance Benefit is payable, you shall also remain
eligible to receive group health insurance benefits under the Company’s benefit
plans for one year following the termination of your employment with the
Company so long as such benefit plans permit such continued participation (or
for three years following the termination of your employment with the Company
in the event that the enhanced Severance Benefits are payable in connection
with a Change in Control pursuant to the third sentence of the first paragraph
of this Section 5).

 

For
purposes of this Agreement, the following definitions will apply:  (a) “Good Reason”
shall mean the occurrence of any of the following without your consent which
shall remain uncured for a period of not less than thirty (30) days following
your delivery of notice of such occurrence to the Company (it being understood
that your failure to deliver such notice in a timely manner shall waive your rights
to allege Good Reason):  (i) the
transfer of your principal place of employment to a geographic location more
than 50 miles from the current location of the Company’s principal
headquarters, or (ii) any material breach of this Agreement by the Company
which is not cured or which the Company is not undertaking to cure within
thirty (30) 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 your duties under this Agreement (other than due to
Disability) or any Company policy or your failure to comply with the lawful
directions of the President, CEO or the Board of the Company, in any such case
that is not cured within fifteen (15) days after you have received written
notice thereof from the President, CEO or the Board of the Company, or (v) a
willful and knowing misrepresentation to the President, CEO or the Board of the
Company; and (c) “Disability”
shall mean that for a period of three (3) consecutive

 

4

 

months or an aggregate
of four (4) months in any twelve (12) month period you are incapable of
substantially fulfilling the duties of your positions as set forth in Section 1
because of physical, mental or emotional incapacity, injury, sickness or
disease.  With regard to the definition
of “Disability” in clause (c) above, 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.

 

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

 

7.                                       Non-Solicitation.

 

a.                                       Non-Solicitation.  As a means reasonably designed to protect the
Company’s Confidential Information, you agree that, for a period of eighteen
(18) months from the conclusion of the Employment Period, you will not
directly, indirectly or as an agent on behalf of or in conjunction with any
person, firm, partnership, corporation or other entity, (i) hire, solicit,
encourage the resignation of or in any other manner seek to engage or employ
any person who is then, or within the prior three (3) months had been, an
employee of the Company, whether or not for compensation and whether or not as
an officer, consultant, adviser, independent sales representative, independent
contractor or participant, or (ii) contact, solicit, service or otherwise
have any dealings related to the sale, manufacture, distribution, marketing or
provision of products, components, equipment, hardware, other technology or
services (of any sort) in the wireless communications industry or any other
industry or business or prospective industry or business in which the Company
participates or contemplates participating in as of such conclusion, with any
person or entity with whom the Company has a current or known prospective
business relationship or who is or was at any time during his employment with
the Company (including any predecessor or successor entity) a customer, vendor
or client of the Company, or a known prospective customer, vendor or client of
the Company, provided in each case described in this clause (ii) that such
activity by you does or could reasonably be expected

 

5

 

to have
a material adverse effect on the relationship between the Company and any such
third party.

 

b.                                      Scope
of Restriction.  If, at the time of
enforcement of this Section 7, a court shall hold that the duration, scope
or area restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum duration, scope or area reasonable
under such circumstances shall be substituted for the stated duration, scope or
area.

 

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

 

d.                                      Equitable
Relief.  You acknowledge that the
provisions contained in Sections 6 and 7 of this Agreement are reasonable and
necessary to protect the legitimate interests of the Company, that any breach
or threatened breach of such provisions will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach would
be inadequate.  Accordingly, in the event
of the breach by you of any of the provisions of Sections 6 and 7 of this
Agreement, 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

 

6

 

equity
having jurisdiction to enforce this Agreement, and/or may apply for and have
the right to injunctive relief against any act that would violate any of the
provisions of this Agreement (without being required to post a bond).  You further agree that injunctive relief may
be sought and obtained for any breach or threatened breach of Section 6 or
Section 7 without a showing of irreparable injury, in order to prevent any
such breach or threatened breach.  Such
right to obtain injunctive relief may be exercised, at the option of the
Company, concurrently with, prior to, after, or in lieu of, the exercise of any
other rights or remedies that the Company may have as a result of any such
breach or threatened breach.

 

8.                                       Survival.  Any termination of your employment or of this
Agreement shall have no effect on the continuing operation of Sections 5, 6, or
7 for the periods specified therein.

 

9.                                       Waiver
of Claims.  As a condition to your
receipt of any termination or severance benefits pursuant to Section 5
hereof, you will agree, as of the date of such termination, to waive, discharge
and release any and all claims, demands and causes of action, whether known or
unknown, against the Company, its affiliates and subsidiaries, and their
respective current and former directors, officers, employers, attorneys and
agents arising out of, connected with or incidental to your employment or other
dealings with the Company, its affiliates or subsidiaries, which you or anyone
acting on your behalf might otherwise have had or asserted and any claim to any
compensation or benefits from your employment with the Company or its
affiliates (other than employee benefits to be provided pursuant to the terms
of Section 5 hereof or of any employee benefit plans as set forth in Section 4
hereof). Notwithstanding anything contained herein to the contrary, no
termination or severance payments shall be made under this Agreement or
otherwise until such time as you have delivered an executed release of claims
and any applicable revocation periods under state or federal law have
expired.  The Company agrees, as further
consideration for your waiver, to concurrently execute a waiver of unknown
claims against you on terms and conditions substantially identical to the
waiver provided by you (it being understood that the Company may specifically
reserve claims identified in writing by the Company at the time that such
waiver is provided).

 

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

 

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

 

	
  If to the Executive:

  	
  Mr. Robert Bayruns

  
	
   

  	
  104 Griffith Place

  
	
   

  	
  Los Gatos, CA 95030

  

 

7

 

	
  If to the Company:

  	
  WJ
  Communications, Inc.

  
	
   

  	
  401 River Oaks Parkway

  
	
   

  	
  San Jose, CA 95134

  
	
   

  	
  Attention: Michael
  Farese

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  With a copy to:

  	
  Shumaker,
  Loop & Kendrick, LLP

  
	
   

  	
  101 E. Kennedy
  Boulevard, Suite 2800

  
	
   

  	
  Tampa, Florida 33602

  
	
   

  	
  Attention: Darrell C.
  Smith, Esq.

  

 

 

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

 

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

 

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

 

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

 

16.                                 Captions.  Titles or captions of Sections and 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.

 

17.                                 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.

 

8

 

18.                                 Arbitration.  Any dispute, controversy or claim arising
under or in connection with this Agreement, or the alleged breach hereof, shall
be settled exclusively by private and confidential arbitration conducted by the
American Arbitration Association in accordance with the Rules of the
Commercial Panel of the American Arbitration Association then in effect (and
not the Employment Dispute Resolution Rules). 
Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. 
Any arbitration held hereunder shall take place in Palo Alto,
California.  In addition, any dispute,
controversy or claim arising under or in connection with your rights or
obligations pursuant to any stock option or other equity arrangements between
you and the Company, shall be settled exclusively as provided for by the terms
of the applicable Company plans.

 

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

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  WJ COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Michael R. Farese

  	
   

  
	
   

  	
  Name:

  	
  Michael R. Farese

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted and agreed to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Robert J. Bayruns

  	
   

  	
   

  	
   

  
	
  Robert
  J. Bayruns

  	
   

  	
   

  
							

 

9

 

Annex
1

 

REPRESENTATIONS
AND WARRANTIES

 

In
connection with the purchase and sale of WJ Communications Stock hereunder, you
represent and warrant to the Company that:

 

(a)                                  The
WJ Communications Stock to be acquired by you pursuant to this Agreement shall be
acquired for your own account and not with a view to, or intention of,
distribution thereof in violation of the Securities Act, or any applicable
state securities laws, and the WJ Communications Stock shall not be disposed of
in contravention of the Securities Act or any applicable state securities laws.

 

(b)                                 You
are an officer of the Company, are sophisticated in financial matters and are
able to evaluate the risks and benefits of the investment in the WJ
Communications Stock.  You are an “accredited
investor”, as defined in Regulation D promulgated under the Securities Act.

 

(c)                                  To
the extent that any of the securities being purchased by you are not subject to
an effective registration statement, you are able to bear the economic risk of
your investment in such WJ Communications Stock for an indefinite period of
time and you understand that such securities cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.

 

(d)                                 You
have had an opportunity to ask questions and receive answers concerning the
terms and conditions of the offering of WJ Communications Stock and have had
full access to such other information concerning the Company as you have
requested.  You have reviewed, or have
had an opportunity to review, a copy of the Stockholders’ Agreement.

 

(e)                                  This
Agreement constitutes a legal, valid and binding obligation of yours,
enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement by you does not and shall not conflict with,
violate or cause a breach of any agreement, contract or instrument to which you
are a party or any judgment, order or decree to which you are subject.

 

(f)                                    You
are not a party to or bound by any employment agreement, noncompete agreement
or confidentiality agreement with any person or entity other than the Company.

 

(g)                                 You
have consulted with independent legal counsel regarding your rights and
obligations under this Agreement and you fully understand the terms and
conditions contained herein.  You have
obtained advice from persons other than the Company and its counsel regarding
the tax effects of the transaction contemplated hereby.

 

10

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