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Lantronix Inc – ‘10-Q’ for 12/31/01 – EX-10.2

On: Thursday, 2/14/02 · For: 12/31/01 · Accession #: 1021408-2-2433 · File #: 1-16027

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/14/02  Lantronix Inc                     10-Q       12/31/01    5:260K                                   Donnelley R… Fin’l/NY/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report Ended 12/31/2001                     26    179K 
 2: EX-10.1     Employment Agrmt./Fred Thiel                          25     59K 
 3: EX-10.2     Employment Agmt/ Steve Cotton                         23     60K 
 4: EX-10.3     Loan and Security Agreement                           30     99K 
 5: EX-18       Change in Accounting                                   1      8K

EX-10.2 — Employment Agmt/ Steve Cotton
Exhibit Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Agreement Confidential Information
1	1st Page - Filing Submission
"	Agreement
4	Confidential Information

EX-10.2 1st Page of 23 TOC ↑Top Previous Next ↓Bottom Just 1st
 
EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") made on December___, 2001, is 
between LANTRONIX, a California corporation ("Employer"), located at 15353      
Barranca Parkway, Irvine, California 92616 and STEVE COTTON, an individual      
("Employee") residing at _____________________________________________________  
by virtue of the following facts, events, circumstances and desires:            

RECITALS

    A.  WHEREAS, Employee desires to continue to work for Employer and receive
compensation and Employer desires to continue to employ Employee;               

B.  WHEREAS, Employer is engaged in the business of developing network
attached technology;                                                            

    C.  WHEREAS, Employee, in the course of employment, will obtain or develop
confidential information and trade secrets;                                     

D.  WHEREAS, Employee recognizes and acknowledges that Employer must  
maintain and preserve all such confidential information and trade secrets for   
the protection of its business, competitive position and goodwill; and,         

 E.  WHEREAS, Employer desires assurance that Employee will maintain and
preserve Employer's confidential information and trade secrets both during and  
after employment and Employee is willing to provide same.                       

NOW, THEREFORE, in consideration of the promises and mutual covenants 
contained in this Agreement and in consideration of Employee's employment and   
continued employment by Employer, it is agreed as follows:                      

 AGREEMENT

1.   TERM. Subject to this Agreement's terms and conditions, Employer agrees    
to employ Employee. The employment term shall commence on the date first written
above. The Employer shall employ the Employee until such time as either or both 
parties choose to discontinue the employment. The employment relationship shall 
be that of an Employee at-will.                                                 

1 

EX-10.2 2nd Page of 23 TOC 1st Previous Next ↓Bottom Just 2nd
2.  DUTIES. While employed by Employer, Employee shall devote his entire working
time, skill and attention exclusively to the interests and business of Employer,
shall perform such duties as may be assigned to him from time to time by        
Employer, shall comply to the best of his ability with all policies and         
directives issued by the Employer's Board of Directors, and shall in all        
respects do his utmost to further enhance and develop the best interests and    
welfare of the Employer. Employee's specific title, responsibility, authority   
and reporting shall be as detailed on Exhibit "1" attached hereto and           
incorporated herein.                                                            

3.    COMPENSATION                                                              

    3.1 Base Salary. The Employer shall pay to Employee as base compensation
-----------                                                 
the total sum of Two Hundred Sixty-Two Thousand Five Dollars ($262,500) per     
year, payable at those intervals as the Employer shall pay other Executives.    
Said Base Salary shall be subject to annual review by the Employer's Board of   
Directors.                                                                      

          3.2 Target Bonus. In addition to said Base Salary, Employee shall also
------------                                        
receive a bonus of up to 50% of Employee's Base Salary via standard management  
metrics ("Target Bonus"). The Target Bonus shall be calculated in accordance    
with the Lantronix MBO Incentive Program, revision 0.2x, attached hereto and    
incorporated herein as Exhibit "2." Bonus can be equal to 200% of Target Bonus, 
if appropriate metrics are obtained. Said bonus amount shall be paid quarterly. 

         3.3 Insurance Coverage. Employer shall make available to Employee and
------------------                                  
his dependents whatever coverage Employee shall elect under Employer's standard 
corporate medical, dental, life and disability insurance programs as each such  
respective benefit is made available to any other Executive employee of Employer
at a comparable level within the organization.                                  

      3.4 Expenses. Employer shall reimburse Employee for all reasonable
--------                                            
entertainment, promotion or other expenses advanced by him in the scope of his  
employment in connection with the business of Employer on behalf of Employer.   
Each such expenditure shall be reimbursed only if it is of a nature qualifying  
it as a proper deduction on the federal and state income tax return of Employer.
In addition, each such expenditure shall be reimbursable only if Employee       
furnishes to Employer adequate records and other documentary evidence required  
by federal and state statutes for the substantiation of each such expenditure as
an income tax deduction.                                                        

EX-10.2 3rd Page of 23 TOC 1st Previous Next ↓Bottom Just 3rd
     3.5  Signing Bonus. In addition to Base Salary, Employee shall also
-------------                                       
receive a signing bonus in an amount equal to $144,722 and earned, due and      
payable January 2, 2002.                                                        

        3.6  Car  Allowance.  Employee shall receive a car allowance of $1,000
--------------                                      
per month in addition to the expense reimbursements in section 3.4.             

         3.7  Other Incentives. Employee shall be entitled to participate in any
----------------                                    
other employee incentive programs offered by Employer, including but not limited
to such programs as a section 401(k) plan.                                      

         3.8  Vacation. Employee will be entitled to accrue twenty (20) vacation
--------                                            
days each year in accordance with Employer's vacation policy.                   

 3.9  Stock Options. Employer shall grant Employee substantially
-------------                                       
concurrent with the execution of this Agreement stock options as indicated in   
the subparagraphs below:                                                        

           3.9.1     250,000 Non-Qualified Stock Options to vest according
to the following schedule:                                                      

     i.   45,000 options to vest on January 1, 2002.

                   ii.  135,000 options to vest ratably monthly over a period of
36 months commencing February 1, 2002.                                          

 iii. 17,500 options to vest on July 1, 2002

             iv.  52,500 options to vest ratably over a period of 36
months commencing August 1, 2002. The options shall be priced based on fair     
market at date of grant.                                                        

                   v.   Employee shall have the right to exercise vested options
for a period of ten years from the date of grant.                               

                  vi.  Employer agrees to lend Employee an amount equal to the
option exercise price and any tax liability associated with exercise of all     
options listed above on a full recourse with a pledge of the shares and on such 
other terms as are set forth on Exhibit 3C attached hereto and incorporated     
herein by reference. Proceeds from the market sale of any pledged shares shall  
be allocated to repayment of such loan proratably based on the number of shares 
sold to total number of shares pledged.                                         

EX-10.2 4th Page of 23 TOC 1st Previous Next ↓Bottom Just 4th
                        3.9.2     The Non-Statutory Stock Option Agreement, Note
and Pledge Agreement are attached hereto and incorporated herewith as Exhibits  
"3A, 3B and 3C."                                                                

                  3.10 Provisions. The foregoing compensation provisions shall
----------                      
remain in effect until June 30, 2003, unless Employee is terminated earlier as  
provided in section 4.                                                          

        TERMINATION. The Employer shall have the right to terminate employment
of Employee at any time, with or without cause. Employee shall have the         
advantage of certain severance benefits on termination provided in that certain 
Severance Agreement executed substantially concurrent with this Agreement       
attached hereto and incorporated herein as Exhibit "4."                         

CONFIDENTIAL INFORMATION                                      

                   5.1  Definition. "Confidential Information" means information
----------                      
that is proprietary to the Employer or proprietary to others and entrusted to   
the Employer, whether or not trade secrets. Confidential Information includes,  
but is not limited to, information relating to business plans and to business as
conducted or anticipated to be conducted, and to past, current or anticipated   
products. Confidential Information also includes, without limitation, Employer  
information concerning (a) price lists, (b) costs of production, and (c) raw    
material costs, (d) selling costs, (e) delivery costs, (f) information          
concerning new or proposed new products, including the nature and design of such
products and the plans for marketing such products, (g) international procedures
and policies, (h) customer lists, account names, contacts, addresses, buying    
habits and sales activity; (i) names and addresses of suppliers and vendors, (j)
tax and financial information, (k) reserves, (l) intellectual property owned or 
leased by the company, (m) banking relationships and arrangements, (n)          
Employees, (o) management personnel and policies, (p) quotation names,          
addresses, contacts and quote workups, (q) all mailing lists, (r) company       
product training materials and courses, and (s) company computer programs and   
printouts.                                                                      

                5.2  Prohibitions Against Use. During or subsequent to the
------------------------        
termination of Employee's employment, whether termination is voluntary or       
involuntary, Employee will not use or disclose, other than in connection with   
employment with the company, any Confidential Information to any person not     
employed by the company or not authorized by the company to receive such        

EX-10.2 5th Page of 23 TOC 1st Previous Next ↓Bottom Just 5th
Confidential Information without the prior written consent of the company.      
Employee will use reasonable and prudent care to safeguard an protect and       
prevent the unauthorized use and disclosure of Confidential Information. The    
obligations contained in this paragraph will survive for as long as the company,
in its sole judgment, considers the information to be Confidential Information. 

         PROTECTIVE COVENANT. It is specifically agreed that for a period of two
years after cessation of employment (the "Protective Period"), Employee shall   
not in any manner contact, solicit or cause to be solicited any of Employer's   
customers, suppliers or clients or former or prospective customers or suppliers 
for any purpose whatsoever, without the written consent of Employer. Employee   
further agrees that during the Protective Period he will not directly or        
indirectly, solicit any Employee of Employer to leave his employment with       
Employer, unless expressly authorized or instructed to do so in writing by      
Employer.                                                                       

      RETURN OF PROPERTY. All documents, drawings, lists, records or other
tangible or intangible thing relating to the business of Employer that Employee 
originates or comes into the Employee's possession in any way during the        
employment period shall remain the sole property of Employer. Any copies,       
abstracts or summaries of such items are likewise the sole property of Employer.
Employee shall not make copies or prepare abstracts or summaries of such items  
except for the sole use and account of Employer and with the consent and        
instruction of Employer's management. Upon termination of employment of         
Employee, he or she shall immediately return to Employer all such items in his  
or her possession, as well as all of Employer's property he or she has received 
for assistance in performing work duties, including but not limited to those    
items outlined above, as well as any of Employer's equipment or supplies.       
Employee shall be liable for damages to Employer for any such property not so   
returned.                                                                       

         ARBITRATION. If any dispute hereafter arises between the parties hereto
and/or their agents or employees relating to the terms and provisions of this   
Agreement or otherwise, including but not limited to any claim for breach of any
contract or covenant (express or implied), tort claims, claims for              
discrimination or harassment (including but not limited to race, sex, religion, 
national origin, age, handicap or disability), claims for compensation or       
benefits (except where a benefit plan or pension plan or insurance policy       
specifies a different claims procedure) and claims for violations of any federal
state or                                                                        

EX-10.2 6th Page of 23 TOC 1st Previous Next ↓Bottom Just 6th
other governmental law, statute, regulation or ordinance (except for claims     
involving worker's compensation benefits), then either party may initiate       
arbitration proceedings in accordance with the Employment Rules of JAMS         
ENDispute, as the exclusive remedy for such dispute and in lieu of any court    
action, which is hereby consent to such arbitration, and any arbitration award  
shall be final and binding. Neither party shall disclose the existence of any   
dispute or the terms of any arbitration decision to any third party, other than 
legal counsel, accountants and financial advisors, or as required by law. All   
fees relating to the arbitration, exclusive of Employee's attorney's fees, shall
be borne by Employer.                                                           

     ATTORNEY'S FEES. in the event of any arbitration arising out of the subject
matter hereof, the prevailing party shall be entitled to recover from the       
non-prevailing party its fees, costs and expenses (including reasonable         
attorney's fees) incurred in such arbitration.                                  

     REMEDY. Employee acknowledges and agrees that the confidential information,
trade secrets and special knowledge acquired by him during his employment with  
Employer is valuable and unique, and that breach by him of the provisions of    
this Agreement will cause Employer irreparable injury and damage. It cannot be  
reasonably or adequately compensated by money damages. Employee, therefore,     
expressly agrees that Employer shall be entitled to injunctive or other         
equitable relief in order to prevent a breach of this Agreement or any part     
thereof, in addition to such other remedies legally available to Employer and   
notwithstanding the provisions of paragraph 8 above. Employee expressly waives  
the claim or defense that Employer has an adequate remedy at law.               

     APPLICABLE LAW. This Agreement shall be governed, interpreted and construed
in accordance with the laws of the State of California.                         

SEVERABILITY. In the event that any portion of this Agreement shall be
deemed unenforceable or void, such invalidity or unenforceability shall not     
affect the validity or enforceability of any other provision of this Agreement. 

ENTIRE AGREEMENT. It is agreed that the provisions of this Agreement  
contain the entire agreement on the subject covered between the parties, and    
cannot be modified orally, and can only be modified by written agreement signed 
by Employee and Employer. This Agreement shall be binding upon the parties and  
their                                                                           

EX-10.2 7th Page of 23 TOC 1st Previous Next ↓Bottom Just 7th
respective heirs, administrators and assigns.                                   

     VOLUNTARY AGREEMENT. Employee acknowledges he understands that he will have
access to Confidential Information and customer accounts while employed by      
Employer. Employee further acknowledges that he understands the nature of the   
burdens imposed by the restrictive covenants contained in this Agreement.       
Employee acknowledges and represents that such covenants are reasonable and     
proper in scope and effect. Employee acknowledges that Lantronix has provided   
him adequate consideration for his agreements herein.                           

     ADVICE OF COUNSEL. Employee acknowledges he has had the opportunity and has
consulted with independent counsel with respect to Employee's rights and        
obligations hereunder.                                                          

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
identified at the beginning of this Agreement.                                  

                  "Employee"

                                            ____________________________________
                    Steve Cotton

                  "Employer"

                 Lantronix

                                         By:______________________________

                                         Its:_____________________________

Approved as to Form and Content:                                                

______________________________                                                  
Susan Roos                                                                      
Attorney for Steve Cotton                                                       

______________________________                                                  
Marla Merhab Robinson                                                           
Attorney for Lantronix                                                          

EX-10.2 8th Page of 23 TOC 1st Previous Next ↓Bottom Just 8th
 EXHIBIT "1"

TITLE:               Chief Financial Officer and Chief Operating Officer        

RESPONSIBILITIES:    The responsibilities of the Chief Financial Officer are as 
follows:                              

                   .   Manage the entire range of financial activity for the
                     Company, including both the treasury and accounting
functions                     

                  .   Formulate and recommend policies on banking, receipt
                      and disbursement of funds, and fiscal and accounting
matters;                      

                  .   Develop procedures for standard accounting, analysis
              and reporting and overall financial controls

AUTHORITY:           The Chief Financial Officer is empowered, regarding the    
                     financial and accounting activities, to make all decisions,
                 create all policies and authorize all engagements that,
            upon the Chief Executive Officer's request, he can
        demonstrate to be consistent with a reasonable
     interpretation of the Company's objectives.

REPORTING:           The Chief Financial officer reports to the President and   
 Chief Executive Officer of the Company.

RESPONSIBILITIES:    The responsibilities of the Chief Operating Officer are as 
follows:                              

[to be inserted]                      

EX-10.2 9th Page of 23 TOC 1st Previous Next ↓Bottom Just 9th
 EXHIBIT "2"

EXECUTIVE INCENTIVE COMPENSATION PROGRAM
----------------------------------------

The purpose of the Executive Incentive Compensation Plan is to enhance and      
reinforce the goals of Lantronix (the "Company") for profitable growth and      
continuance of a sound overall condition by providing selected employees with   
additional financial rewards for attainment of such growth and stable financial 
an operating condition. Final approval of the payment of any awards made under  
the Plan is subject to the discretion of the Board of Directors.                

The Plan will take into account two major categories in determining incentive   
compensation:                                                                   

.        Corporate Financial Goals                                            
-------------------------                                     
.        Individual Objectives                                                
---------------------                                         

The following is a matrix of the mix of annual incentive elements for selected  
management levels:                                                              

                                                                [Download Table]

---------------------------------------------------------------------------
    LEVEL              FINANCIAL         MBO'S        % OF TOTAL COMP.     
---------------------------------------------------------------------------
                                                                           
Vice-President           60%              40%              23.1%           
---------------------------------------------------------------------------

The details of the MBO portion of the compensation plan are contained in the    
LANTRONIX MBO INCENTIVE PROGRAM, Revision 0.2x, attached as Exhibit 2.          
-------------------------------                                                 

EX-10.2 10th Page of 23 TOC 1st Previous Next ↓Bottom Just 10th
 EXHIBIT "2"

 LANTRONIX MBO INCENTIVE PROGRAM
 -------------------------------

Author:    Fred Thiel                                                           

Date:      October 1, 1999                                                      

Revision:  0.2x                                                                 

[to be attached]

EX-10.2 11th Page of 23 TOC 1st Previous Next ↓Bottom Just 11th
EXHIBIT "3A"

 Lantronix Non-Statutory Stock Option Plan

[To be Attached]

EX-10.2 12th Page of 23 TOC 1st Previous Next ↓Bottom Just 12th
EXHIBIT "3B"

Note
[to be attached]

EX-10.2 13th Page of 23 TOC 1st Previous Next ↓Bottom Just 13th
EXHIBIT "3C"

Pledge Agreement

[to be attached]

EX-10.2 14th Page of 23 TOC 1st Previous Next ↓Bottom Just 14th
 EXHIBIT "4"

 SEVERANCE AGREEMENT

    This Severance Agreement ("Agreement") is made and entered into by
LANTRONIX, a California corporation ("Company") and STEVE COTTON ("Employee").  

RECITALS

    WHEREAS, Employee is employed as Chief Financial Officer and Chief
Operating Officer of the Company; and,                                          

         WHEREAS, the Company desires to provide certain benefits to Employee as
described herein as an incentive for Employee to continue to serve as an officer
of the Company.                                                                 

 AGREEMENT

    NOW, THEREFORE, in consideration of the promises and covenants set
forth in this Agreement and for other valuable consideration, the parties agree 
as follows:                                                                     

1.         Termination or Resignation following a Change in Control. If a       
--------------------------------------------------------  
"Change in Control" (as hereinafter defined) of the Company occurs after the    
date hereof and after such Change in Control either (i) the Company terminates  
Employee without "Cause" (as hereinafter defined) on or before the two year     
anniversary of the date of the Change in Control or, (ii) Employee resigns with 
"Good Reason" (as hereinafter defined) on or before the two year anniversary of 
the date of the Change in Control, then as a severance benefit and in lieu of   
all other compensation or damages (except as set forth in section 4 hereof) the 
Company shall:                                                                  

a.            Continue to pay Employee his current Base Salary as in effect on  
the date of such termination or resignation through the end of the month in     
which the applicable termination or resignation occurred and continuing for a   
period of twenty-four months, payable monthly in accordance with Employer's then
payroll practice.                                                               

b.            Pay Employee to Employee's Target Bonus. Such amount shall be     
calculated based on the two full months prior to cessation of employment        
compared to the MBO Incentive Plan projected forward for a period of twenty-four
months. Said amount shall be paid quarterly.                                    

EX-10.2 15th Page of 23 TOC 1st Previous Next ↓Bottom Just 15th
c.            Continue to provide Employee, at Company's expense, all medical,  
disability and life insurance benefits provided to him immediately prior to the 
date of such termination or resignation (or at the option of Employee,          
immediately prior to the date of the Change in Control) for a period of         
twenty-four months following the date of such termination or resignation, or, if
any of such benefits cannot be provided to Employee for such twenty-four month  
period under the Company's policies as then in effect or under applicable law,  
then the Company shall pay Employee an amount equal to the monthly premiums paid
on behalf of Employee for such benefits at the time of such termination or      
resignation for a period beginning on the date the Employee's participation in  
such benefits is prohibited and ending on the date that is twenty-four months   
following the date of such termination or resignation, payable in monthly       
installments within five days after the end of each month.                      

d.            Accelerate  the vesting of all unvested stock options  granted to 
Employee under the Company's stock option or other benefit plan; and,           

e.            Reimburse Employee for third party out placement services actually
incurred by Employee in an amount not to exceed $10,000 provided such expenses  
are accounted for by Employee in accordance with the policies and procedures of 
the Company.                                                                    

f.            In the  event of the  imposition  of an excise  tax on  Employee, 
Employer agrees to gross-up the above compensation to cover such tax liability. 

2.       Termination For Reasons Not associated with a "Change in Control." If  
    ------------------------------------------------------------------
the Company terminates Employee without "Cause," or for reasons not associated  
with a "Change on Control," or Employee resigns with "Good Reason" (as          
hereinafter defined) then as a severance benefit and in lieu of all other       
compensation or damages (except as set forth in section 4 hereof) the Company   
shall:                                                                          

a.            Continue to pay employee his current Base Salary as in effect on  
the date of such termination or resignation through the end of the month in     
which the applicable termination or resignation occurred and continuing for a   
period of twelve months, payable monthly in accordance with Employer's then     
payroll practice.                                                               

b.            Pay Employee to Employee's Target Bonus. Such amount shall be     
calculated based on the two full months prior to                                

EX-10.2 16th Page of 23 TOC 1st Previous Next ↓Bottom Just 16th
cessation of employment compared to the MBO Incentive Plan projected forward for
a period of twenty-four months. Said amount shall be paid quarterly.            

c.            Continue to provide Employee, at Company's expense, all medical,  
disability and life insurance benefits provided to him immediately prior to the 
date of such termination or resignation (or at the option of Employee,          
immediately prior to the date of the Change in Control) for a period of twelve  
months following the date of such termination or resignation, or, if any of such
benefits cannot be provided to Employee for such twelve month period under the  
Company's policies as then in effect or under applicable law, then the Company  
shall pay Employee an amount equal to the monthly premiums paid on behalf of    
Employee for such benefits at the time of such termination or resignation for a 
period beginning on the date the Employee's participation in such benefits is   
prohibited and ending on the date that is twelve months following the date of   
such termination or resignation, payable in monthly installments within five    
days after the end of each month; and                                           

d.            Accelerate  the vesting of all unvested stock options  granted to 
Employee under the Company's stock option and other benefit plan.               

e.            Reimburse Employee for third party out placement services actually
incurred by Employee in an amount not to exceed $10,000, provided such expenses 
are accounted for by Employee in accordance with the policies and procedures of 
the Company.                                                                    

3.       Definitions                                                            
-----------                                                   

a.            Change in Control. For purposes of this Agreement, the term"      
-----------------                                   
Change in Control" shall be deemed to have occurred if (i) any transaction (or  
series of transactions) is consummated whereby all, or substantially all, of the
assets of the Company are sold, leased, exchanged or transferred, (ii) any      
person or entity, or group or affiliated persons or entities (other than any    
person who on the date of this Agreement is a director or officer of the        
Company, or their heirs, family members or trusts) becomes, directly or         
indirectly, the owner of securities of the Company which represent 50% or more  
of the combined voting power or equity of the Company's then outstanding        
securities, (iii) any transaction is consummated whereby the Company merges or  
consolidates with or into another entity and the owners of the Company          
immediately prior to such merger or consolidation do not own, directly or       
indirectly, 50% or more of the combined voting power and equity of the surviving
entity, or                                                                      

EX-10.2 17th Page of 23 TOC 1st Previous Next ↓Bottom Just 17th
(iv)  the shareholders of the Company approve the dissolution or liquidation of 
the Company.                                                                    

b.               Termination Without Cause. The Company, in its sole discretion,
-------------------------                     
may terminate Employee's employment at any time, with or without Cause. For     
purposes of this Agreement, the Company shall be deemed to have terminated      
Employee's employment without "Cause" if Employee's employment is terminated for
other than just and reasonable cause including, without limitation, the         
following: (i) Employee commits a felony or possesses, uses or sells illegal    
drugs; (ii) Employee significantly neglects or materially inadequately performs 
his duties as an employee of the Company; (iii) Employee breaches a fiduciary   
duty to the Company, or its shareholders, involving personal profit to Employee;
(iv) Employee is deceased; or (v) Employee is disabled. Notwithstanding the     
foregoing, Employee shall be deemed to have been terminated without Cause       
(except in the case of death) unless the Company delivers to the Employee a copy
of a resolution duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Company's Board of Directors finding that, in   
the opinion of the Board, Employee engaged in the applicable conduct set forth  
in subjection (i), (ii) or (iii) above or Employee is disabled. For purposes of 
this Agreement, Employee shall be considered disabled if he has been physically 
or mentally incapable of performing his essential job duties hereunder for (i) a
continuous period of at least ninety days, or (ii) a total of one hundred twenty
(120) days during any one hundred and fifty (150) day period.                   

c.               Resignation With Good Reason. Employee may resign at any time, 
----------------------------                  
with or without Good Reason. For purposes of this Agreement, Employee shall be  
deemed to have resigned with "Good Reason" following a Change in Control if he  
resigns within ninety days after the Company has taken any of the following     
actions without Employee's express written consent: (i) The Company             
"Substantially Lessens Employee's Title" (as defined on Exhibit 4A attached     
hereto); (ii) The Company has substantially reduced Employee's Senior Authority 
(as defined on Exhibit 4A attached hereto); (iii) The Company assigns material  
duties to Employee which are materially inconsistent with Employee's status as  
an officer of the Company; (iv) the Company reduces Employee's base salary or   
benefits from that in effect at the time of the Change in Control (unless such  
reduction is in connection with a salary or benefit reduction program of general
application to officers of the Company); (v) The Company requires Employee to be
based more than fifty (50) miles from his present office location, except for   
required travel consistent with Employee's business travel obligations; or (vi) 
the Company fails to obtain the                                                 

EX-10.2 18th Page of 23 TOC 1st Previous Next ↓Bottom Just 18th
assumption of this Agreement by any successor or assign of the Company.         

4.               The Company's Obligations Under This Agreement. Employee shall 
----------------------------------------------
not be entitled to any of the benefits of sections 1 and 2 if the Company       
terminated Employee's employment with Cause or if Employee resigns under        
circumstances other than as specifically set forth in sections 1 and 2. The     
Benefits set forth in sections 1 and 2 constitute the sole obligations of the   
Company to Employee upon any termination or resignation and are in lieu of any  
damages or other compensation that Employee may claim under other Company       
policies or otherwise except for Employee's salary which has been earned up the 
date of termination or resignation, compensation for any accrued and unused     
vacation up to the date of termination or resignation, reimbursement for        
business expenses incurred up to the date of termination or resignation (in     
accordance with the customary policies of the Company), and any benefits that   
the Company is required to provide to Employee after the date of termination or 
resignation under COBRA or pursuant to any ERISA plans of the Company. The      
benefits on termination or resignation provided in this Agreement are in        
substitution for any severance or termination benefits otherwise available under
Company policies of general application. The benefits on termination or         
resignation provided in this Agreement shall not be reduced by any compensation 
or benefits received by Employee from any subsequent employer or any other third
party.                                                                          

5.               Withholding of Taxes; Tax Reporting. The Company may withhold  
-----------------------------------           
from any amounts payable under this Agreement all such federal, state, city and 
other taxes and may file with appropriate governmental authorities all such     
information, returns or other reports with respect to the tax consequences of   
any amounts payable under this Agreement, as may, in its judgment be required by
laws.                                                                           

     6.        Payment-Timing. The Company will not be obligated to make any
--------------                                
payment to Employee hereunder until such time as the Company has received a     
signed release from Employee in the form of Exhibit "B" attached hereto and     
incorporated herein by reference.                                               

     7.        Assignment.  This  Agreement may not be assigned by Employee.
----------                                    
The Company shall be entitled to assign this Agreement to any                   
successor-in-interest to its business. The Company will obtain an assumption of 
this Agreement by any successor or assign to all or substantially all of the    
business and/or assets of the Company (whether direct or indirect, by           
acquisition, merger,                                                            

EX-10.2 19th Page of 23 TOC 1st Previous Next ↓Bottom Just 19th
consolidation or otherwise), but the failure to obtain such assumption shall not
prevent or delay such acquisition, merger, consolidation or other transaction or
relieve the Company of its obligations under the Agreement. This Agreement shall
bind and inure to the benefit of the Company's successors and assigns, as well  
as Employee's heirs, executors, administrators and legal representatives.       

     8.      Notices. Any notice, request, demand or other communication
-------                                       
required or permitted hereunder shall be deemed to be properly given when       
personally served or three (3) days after deposit in the United States mail,    
registered or certified, postage prepaid, return receipt requested, addressed to
the Company at its principal office or to Employee at his last known address.   

       9.      Entire Agreement. This Agreement, together with the documents
----------------                              
referenced herein, contain the entire agreement of the parties hereto with      
respect to the subject matter hereof, it supersedes any and all other           
agreements, either oral or in writing, between the parties hereto with respect  
to the subject matter hereof. Each party to this Agreement acknowledges that no 
representations, inducements, promises or agreements, written, oral or          
otherwise, have been made by any party, or anyone acting on behalf of any party,
which are not embodied herein, and that no other agreement, statement or promise
not contained in this Agreement shall be valid or binding. This Agreement may   
not be modified or amended by oral agreement but only by an agreement in writing
signed by the Company and Employee.                                             

        10.     Attorney's  Fees. In the event of any arbitration  arising out
----------------                              
The Company shall be entitled to assign this Agreement to be entitled to recover
from the non-prevailing party, its costs and expenses, (including reasonable    
attorney's fees) incurred in such arbitration.                                  

  11.     Arbitration. If any dispute hereafter arises between the
-----------                                   
parties hereto and/or their agents or employees relating to the terms and       
provisions of this Agreement or otherwise, including but not limited to any     
claim for breach of any contract or covenant (express or implied), tort claims, 
claims for discrimination or harassment (including but not limited to race, sex,
religion, national origin, age, handicap or disability), claims for compensation
or benefits (except where a benefit plan or pension plan or insurance policy    
specifies a different claims procedure) and claims for violations of any federal
state or other governmental law, statute, regulation or ordinance (except for   
claims involving worker's compensation benefits), then either                   

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party may initiate arbitration proceedings in accordance with the Employment    
Rules of JAMS ENDispute, as the exclusive remedy for such dispute and in lieu of
any court action, which is hereby consent to such arbitration, and any          
arbitration award shall be final and binding. Neither party shall disclose the  
existence of any dispute or the terms of any arbitration decision to any third  
party, other than legal counsel, accountants and financial advisors, or as      
required by law.                                                                

  12.     Advice of Counsel.  Employee acknowledges he has had the
-----------------                             
opportunity and has consulted with independent counsel with respect to          
Employee's rights and obligations hereunder.                                    

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date identified at the beginning of the Employment Agreement.                   

                          "Employee"

                                                --------------------------------
                            Steve Cotton

"Company"                                                                       

Lantronix                                                                       

By:  ______________________________                                             

Its: ______________________________                                             

Approved as to Form and Content:                                                

________________________________                                                
Susan Roos                                                                      
Attorney for Steve Cotton                                                       

________________________________                                                
Marla Merhab Robinson                                                           
Attorney for Lantronix                                                          

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EXHIBIT "4A"

(Steve Cotton)

       "Substantially Lessens Employee's Title" shall mean that the Employee
does not have the title of Chief Financial Officer and Chief Operating Officer, 
or some equal or higher title.                                                  

     The Company will be deemed to have Substantially Reduced Employee's
Senior Authority if Employee no longer has authority for the entire range of    
financial activity of the Company on a day-to-day basis.                        

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 EXHIBIT "B"

         Release. In consideration of the payments to be made under that certain
-------                                                       
Severance Agreement dated December ___ 2001, Employee, for Employee, and        
Employee's heirs, legal representatives, successors and assigns, hereby         
releases, acquits and forever discharges Employer and all of Employer's         
affiliate and subsidiary corporations, and their present and former, principals,
officers, agents, associates, representatives, directors, employees,            
predecessors, successors and assigns and all persons acting by, through, under  
or in concert with them, or any of them, jointly and individually, of and from  
any and all claims, demands, causes of action, obligations, damages and         
liabilities, whether known or unknown, which Employee has or may hereafter      
obtain or accrue on account of Employee's employment, the termination of        
employment and/or any fact, matter, incident, claim, injury, event,             
circumstance, happening, occurrence and/or thing of any kind or nature          
whatsoever which arose or occurred at any time prior to the date of Employee`s  
execution of this Agreement, including but not limited to emotional distress;   
any and all claims for wrongful discharge; breach of any implied or expressed   
employment contract; negligent or intentional infliction of emotional distress; 
defamation; fraud; unlawful discrimination based upon age, race, sex, marital   
status, religion, national origin, medical condition, disability, handicap or   
otherwise; breach of any implied covenant of good faith and fair dealing;       
violation of any section of the Labor Code of the State of California, the      
                     -------------------------------------
California Fair Employment and Housing Act ("FEHA"), Title VII of the Civil     
------------------------------------------   ----    ----------------------     
Rights Act of 1964 ("Title VII"), the Age Discrimination in Employment Act of   
------------------   ---------        ---------------------------------------   
1967, as amended ("ADEA"), the Americans With Disabilities Act (ADA), or any    
----------------   ----        -------------------------------  ---             
other federal, state or local law(s) or regulation(s); unpaid wages, salary,    
bonuses, commissions or other compensation of any sort; damages of any nature,  
including compensatory, general, special or punitive; and/or costs, fees or     
other expenses, including attorney's fees, incurred in any of these matters.    

  Employee understands and expressly waives any and all rights and
benefits conferred by the provisions of Section 1542 of the Civil Code of the   
State of California, which reads as follows:                                    

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

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 Employee understands and acknowledges that the significance and
consequence of the foregoing waiver of Section 1542 of the Civil Code is that   
even if Employee should eventually suffer additional damages arising out of his 
employment with Employer, he will not be permitted to make any claim for those  
damages. Furthermore, Employee acknowledges that Employee intends these         
consequences even as to claims for injury or damages that may exist as of the   
date of the Agreement but which Employee does not know exists, and which, if    
known, would materially affect Employee's decision to execute the Agreement,    
regardless of whether Employee's lack of knowledge is a result of ignorance,    
oversight, error, negligence, or any other Employee cause.                      

                "Employee"

________________________________________________                                
Dated: December __, 2001                   Steve Cotton

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	6/30/03	4		10-K
	8/1/02	3
	7/1/02	3
	2/15/02
Filed on:	2/14/02			SC 13G/A
	2/1/02	3
	1/2/02	3
	1/1/02	3
For Period End:	12/31/01			10-Q/A
	10/1/99	10
				List all Filings

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Filing Submission 0001021408-02-002433 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Lantronix Inc – ‘10-Q’ for 12/31/01 – EX-10.2

On: Thursday, 2/14/02 · For: 12/31/01 · Accession #: 1021408-2-2433 · File #: 1-16027

Previous ‘10-Q’: ‘10-Q’ on 11/14/01 for 9/30/01 · Next: ‘10-Q’ on 6/25/02 for 3/31/02 · Latest: ‘10-Q’ on 5/2/24 for 3/31/24

Quarterly Report — Form 10-QFiling Table of Contents

EX-10.2 — Employment Agmt/ Steve CottonExhibit Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q
Filing Table of Contents

EX-10.2 — Employment Agmt/ Steve Cotton
Exhibit Table of Contents