--------------------------------------------------------------------------------

Exhibit 10.1
 
AGREEMENT
 
THIS AGREEMENT (this “Agreement”) is made and entered into as of November 29,
2010, by and between TL Investment GmbH (together with any affiliate thereof,
“TLI”) and Lantronix, Inc., a Delaware corporation (the “Company”).
 
RECITALS
 
WHEREAS, TLI has submitted a proposal to the Company to nominate three members
for election to the Company’s Board of Directors (the “Board”) at the 2010
Annual Meeting of Stockholders (the “2010 Meeting”) and has filed a Preliminary
Proxy Statement on Schedule 14A under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) in support of such proposal; and
 
WHEREAS, the Company has filed a Definitive Proxy Statement (the
“Schedule 14A”), which included the Company’s recommended slate of directors
among other matters; and
 
WHEREAS, each of TLI and the Company has expended substantial time and resources
in support of their respective nominees for election to the Board; and
 
WHEREAS, each of TLI and the Company believes it to be in their respective best
interests and in the best interests of the Company’s stockholders to agree upon
a mutually acceptable slate of nominees for election to the Board at the 2010
Meeting.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of these premises and the covenants contained
herein, the parties hereto, each intending to be legally bound, hereby agree as
follows:
 
 
1.           Nominations for 2010 Meeting.  In connection with the 2010 Meeting,
the Company agrees:
 
(a)           to include Bernhard Bruscha and Hoshi Printer or their respective
Replacements (as hereinafter defined) (each, a “TLI Nominee”) in its slate of
nominees for election to the Board at the 2010 Meeting;
 
(b)           that, if any TLI Nominee (or their respective Replacements) is
unable to serve as a nominee for election as director or to serve as a director
for any reason, TLI shall have the right to submit the name of a replacement
(the “Replacement”) to the Company for its approval (such determination to be
made in the sole discretion of the Company acting in good faith) and who shall
serve as the nominee for election as director or serve as director.  If the
proposed Replacement is not approved by the Company, TLI shall have the right to
continue submitting the name of a proposed Replacement to the Company for its
approval, until the Company approves that such Replacement may serve as a
nominee for election as director or to serve as a director whereupon such person
is appointed as the Replacement;
 

 
1

--------------------------------------------------------------------------------

 

 
(c)           that its slate of recommended nominees (the “Nominees”) for
election to the Board at the 2010 Meeting shall consist of Bernhard Bruscha,
Jerry D. Chase, Hoshi Printer, John Rehfeld, Larry Sanders, Howard T. Slayen and
Thomas Wittenschlaeger; and
 
(d)           that it shall, promptly after the date of this Agreement, amend
its Schedule 14A to reflect the inclusion of the Nominees on the Company’s slate
of recommended nominees for election to the Board at the 2010 Meeting.
 
2.           Standstill.
 
(a)           TLI agrees that during the term of this Agreement, it shall not,
alone or in conjunction with any third party, without the prior written consent
of the Company:  (i) acquire or agree to acquire, directly or indirectly, by
purchase or otherwise, any voting securities or direct or indirect rights to
acquire any voting securities of the Company such that TLI’s beneficial
ownership of the Company’s Common Stock would exceed 38% of the then currently
outstanding Common Stock; (ii) make, initiate or submit any proposal to the
Company’s stockholders not supported by a majority of the Board (and in no event
with respect to any recommended nominee or slate of nominees for election to the
Board except in accordance with the terms of this agreement), or in any way
participate, directly or indirectly, in any “solicitation” of “proxies” to vote
(as such terms are used in the rules of the Securities and Exchange Commission
(“SEC”)), or seek to advise or influence any person or entity with respect to
the voting of any voting securities of the Company except to vote in favor of
matters for which the Board has recommended a vote “for”; (iii) make any public
announcement with respect to, or submit a proposal for, or offer of (with or
without conditions) any merger, business combination, recapitalization,
restructuring or other extraordinary transaction involving the Company or any of
its securities or assets; (iv) form, join or in any way participate in a “group”
as defined in Section 13(d)(3) of the Exchange Act, in connection with any of
the foregoing; (v) enter into any voting agreement with respect to any Company
capital stock; or (vi) take any action that could reasonably be expected to
require the Company to make a public announcement regarding the possibility of
any of the events described in clauses (i) through (vi) above; provided that,
this Section 2(a) shall be suspended if the Company enters into any definitive
agreement for, or the Board approves or recommends, or there is otherwise
announced, any acquisition by any Person (other than TLI) or group of (x) more
than 50% of the Company’s outstanding voting securities (measured immediately
following the closing of the proposed transaction) with the purpose or effect of
changing control of the Company or (y) substantially all of the consolidated
assets of the Company (collectively, a “Change of Control Proposal”), including
by way of tender or exchange offer, merger, purchase of assets or otherwise
having that purpose or effect and any such suspension pursuant to this sentence
shall terminate and the obligations hereunder shall be reinstated upon the
termination of any Change of Control Proposal; provided, further, that nothing
contained in this Section 2(a) shall prevent or restrict TLI from making any
non-public proposal to the Board.  “Person” shall mean any individual,
corporation, limited liability company, partnership, association, trust, joint
venture, unincorporated organization, other entity.
 

 
2

--------------------------------------------------------------------------------

 

(b)           So long as the Company has complied and is complying with its
obligations set forth in this Agreement, TLI shall cause all shares of Common
Stock owned of record and beneficially (as defined in Rule 13d-3 promulgated by
the SEC under the Exchange Act) to be present for quorum purposes and to be
voted at each of the 2010 Meeting and 2011 Annual Meeting of Stockholders or at
any adjournments or postponements thereof, in accordance with the
recommendations of the Board; provided, that the only matter TLI shall be
required to vote in accordance with the Board’s recommendation at the 2011
Annual Meeting of Stockholders is the election of directors provided that such
proposal is made in accordance with the terms of this Agreement.
 
3.           Board Matters.  Unless otherwise unanimously agreed to by the
Board, the authorized number of directors of the Company shall be seven (7)
during the term of this Agreement.  At the 2011 Annual Meeting of stockholders
in connection with any election of directors to the Board, the Company shall
nominate seven (7) persons for election to the Board, of which TLI shall be
entitled to nominate three (3) members; provided, however, that in the event
TLI’s beneficial ownership of the Company’s Common Stock is less than 31% but
greater than 28% of the outstanding Common Stock, TLI shall be entitled to
nominate two (2) members; if TLI’s beneficial ownership is equal to or less than
28% but greater than 14% TLI shall be entitled to nominate one (1) member and if
TLI’s beneficial ownership is equal to or less than 14%, TLI shall not be
entitled to nominate a member to the Board.  If any TL Investment nominee is not
approved by the Company (such determination to be made in the sole discretion of
the Company acting in good faith), TL Investment shall have the right to
continue submitting the name of a Replacement to the Company for its approval
until the Company approves such Replacement(s).  The Company shall use its
commercially reasonable efforts to cause the election or appointment of such
nominees at any election of stockholders, including, but not limited to, the
recommendation of such nominees in any proxy statement or related
materials.  TLI shall not be required to comply with time periods provided in
the advance notice provisions of the Company’s bylaws or certificate of
incorporation with respect to the nominees it is entitled to nominate hereunder;
provided, however, that TLI shall inform the Company in a reasonable time and
manner of its nominees to enable the Company to file its annual report and proxy
and proceed with its annual meeting in a customary time and manner.  None of the
parties hereto and no officer, director, stockholder, partner, employee or agent
of any party makes any representation or warranty as to the fitness or
competence of the nominee of any party hereunder to serve on the Board by virtue
of such party’s execution of this Agreement or by the act of such party in
voting for such nominee pursuant to this Agreement.  None of TLI, the Company,
nor any officer or director thereof, shall call a special meeting of
stockholders of the Company to be held regarding any election of directors
within six months after the 2011 Annual Meeting of Stockholders.
 
4.           Consents.  For the purposes of this Agreement, any action taken by
the Company or the Board pursuant to Sections 1(b), 2(a)(ii), 7, 9 and 16 of
this Agreement shall require the approval of a majority of the non-TLI Nominee
directors then serving on the Board.
 
5.           Publicity.
 

 
3

--------------------------------------------------------------------------------

 

 
(a)           The Company and TLI shall announce this Agreement and the material
terms hereof by means of a joint press release as soon as practicable on or
after the date hereof.  Neither the Company nor TLI shall make or cause to be
made, directly or indirectly, any public announcement or statement regarding
this Agreement or the subject matter hereof without the consent of the other
party, except as required by applicable law (in which case such statements shall
not be inconsistent with or contrary to the statements made in the Press
Release).
 
(b)           During the term of this Agreement, neither the Company nor TLI
shall publicly disparage the other party or its officers, directors or members.
 
6.           Representations and Warranties.  Each of the parties hereto
represents and warrants to the other party that:
 
(a)           such party has all requisite company authority and power to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby;
 
(b)           the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all required corporate or other action on the part of such party and no other
proceedings on the part of such party are necessary to authorize the execution
and delivery of this Agreement or to consummate the transactions contemplated
hereby;
 
(c)           this Agreement has been duly and validly executed and delivered by
such party and constitutes the valid and binding obligation of such party
enforceable against such party in accordance with its terms; and
 
(d)           this Agreement will not result in a violation of any terms or
provisions of any agreements to which such person is a party or by which such
party may otherwise be bound or of any law, rule, license, regulation, judgment,
order or decree governing or affecting such party.
 
7.           Term and Termination.
 
(a)           Unless earlier terminated in accordance herewith, this Agreement
shall terminate on the earlier of (i) the date immediately following the
Company’s 2011 Annual Meeting of Stockholders, (ii) the fifteen month
anniversary of the date of this Agreement, (iii) the mutual agreement of TLI and
the Company, or (iv) in the event Bernhard Bruscha ceases to own or control a
majority in interest of TLI.  No provisions of this Agreement shall survive the
termination or expiration of this Agreement with the exception of the final
sentence of Section 3, which shall survive until six months after the 2011
Annual Meeting of Stockholders, and Section 4, 6 through 15, inclusive, which
shall survive indefinitely.
 
(b)           Notwithstanding Section 7(a), if a party violates or fails to
perform any material term of this Agreement, then the other party may give
written notice of the default (“Notice of Default”) to the defaulting party.  If
the first party does not repair the default within twenty (20) days after the
effective date of the Notice of Default, then the other party has the right to
terminate this Agreement by a second written notice (“Notice of
Termination”).  If the other party sends a Notice of Termination to the first
party, then this Agreement automatically terminates on the effective date of the
Notice of Termination.
 

 
4

--------------------------------------------------------------------------------

 

 
8.           Governing Law.  The parties hereto shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement exclusively in the Court
of Chancery or other federal or state courts of the State of Delaware, in
addition to any other remedy to which they are entitled at law or in
equity.  Furthermore, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of the Court of Chancery or other federal or state
courts of the State of Delaware in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, (b) agrees that it
shall not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (c) agrees that it shall not bring
any action relating to this Agreement or the transactions contemplated by this
Agreement in any court other than the Court of Chancery or other federal or
state courts of the State of Delaware, and each of the parties irrevocably
waives the right to trial by jury, (d) agrees to waive any bonding requirement
under any applicable law, in the case any other party seeks to enforce the terms
by way of equitable relief and (e) each of the parties irrevocably consents to
service of process by a reputable overnight mail delivery service, signature
requested, to the address of such parties’ principal place of business (as set
forth in Section 11) or as otherwise provided by applicable law.  This Agreement
shall be governed in all respects by the laws of the State of Delaware, without
giving effect to the choice of law principles of such state that would compel
the application of the law of another jurisdiction.
 
9.           Entire Agreement.  This Agreement, including the preamble and
recitals above, contains the entire understanding of the parties with respect to
the subject matter hereof and may be amended only by an agreement in writing
executed by the parties hereto.
 
10.           Fees and Expenses.  Each party will be responsible for its fees or
expenses in connection with this Agreement; provided, that TLI agrees that it
will reimburse the Company for fifty percent of the out of pocket costs and
expenses, including legal fees, of amending the Schedule 14A and re-soliciting
the Company stockholders; provided, further such reimbursement shall not exceed
$10,000.
 
11.           Notices.  All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be in writing and shall be deemed validly given, made or served, if
(a) given by facsimile, when such facsimile is transmitted to the facsimile
number set forth below and the appropriate confirmation is received or (b) if
given by any other means, when actually received during normal business hours at
the address specified in this subsection:
 

 
5

--------------------------------------------------------------------------------

 

if to the Company:

Lantronix, Inc.
167 Technology Drive
Irvine, California 92618
Attention: General Counsel
Facsimile: (949) 271-5691

with a copy to:

Wilson Sonsini Goodrich & Rosati, PC
650 Page Mill Road
Palo Alto, CA 94304
Attention: Jack Sheridan
Facsimile: (650) 493-6811

if to TLI:

TL Investment GmbH
Biesingerstrasse 27
Tuebingen 72070, Germany
Attention:  Manfred Rubin-Schwarz
Facsimile:

with a copy to:

K&L Gates LLP
1900 Main Street, Suite 600
Irvine, CA 92614
Attention: Michael A. Hedge
Facsimile: (949) 623-4454

12.           Severability.  If at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court of competent jurisdiction
to be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability of such provision shall have no
effect upon the legality or enforceability of any other provision of this
Agreement.
 
13.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same instrument.
 
14.           Further Assurances.  The parties agree to execute and deliver
immediately upon request such other documents or instruments as may be necessary
to evidence the agreements hereunder.
 
15.           Successors and Assigns.  This Agreement shall not be assignable by
any of the parties to this Agreement but  shall be binding on successors of the
parties hereto.
 

 
6

--------------------------------------------------------------------------------

 

16.           Transfers.  Unless otherwise approved by the Board, TL Investment
shall not transfer or sell any shares of Company capital stock held by it prior
to the completion of the 2011 Annual Meeting of Stockholders except pursuant
customary open market broker transactions.  In the event TLI desires to purchase
additional shares of the Company’s Common Stock, subject to the limitations in
this Agreement, in open market or private transactions, the Company shall, upon
request by TLI, use its commercially reasonable efforts to assist TLI in
effecting such purchases which shall include lifting any trading restrictions
established by the Company’s internal policies so long as in compliance with
applicable law.
 
 
 
 
 
 
 
 
 
 
 

 
7

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or
caused the same to be executed by its duly authorized representative as of the
date first above written.
 
 

 
Lantronix, Inc.

/s/ Jerry D. Chase                               
Jerry D. Chase
Chief Executive Officer

TL Investment GmbH
 

/s/ Manfred Rubin-Schwarz
Manfred Rubin-Schwarz
Managing Director

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8

--------------------------------------------------------------------------------