lantronix_10qex1001.htm


    LANTRONIX,
INC.

    


    AMENDMENT
TO LETTER AGREEMENT

    


     

    This
Amendment to the Letter Agreement (the “Amendment”) is made effective as of the
last date signed below by and between Lantronix, Inc. (the “Company”), and Jerry
D. Chase (“Executive”).

     

    RECITALS

     

    WHEREAS, the
Company and Executive are parties to a Letter Agreement dated
February 13, 2008 (the “Agreement”); and

     

    WHEREAS, the
Company and Executive desire to amend certain provisions of the Agreement in
order to come into compliance with Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), and any final regulations and official
guidance promulgated thereunder (together, “Section 409A”), as set forth
below.

     

    NOW, THEREFORE, BE IT
RESOLVED, the Company and Executive agree that in consideration of the
foregoing and the promises and covenants contained herein, the parties agree as
follows:

     

    AGREEMENT

     

    1. Tax
Bonus.  The following sentence shall be added to Section 4 of
the Agreement entitled “Stock Option and Restricted Stock Awards,” immediately
following the last sentence of Section 4 of the Agreement:

     

    “Any Tax
Bonus will be paid no later than March, 15, 2009.”

     

    2. Relocation
Reimbursement.  A new last two sentences of Section 8 entitled
“Relocation,” shall be added as follows:

     

    “Any
reimbursements pursuant to the preceding sentence shall be paid to you no later
than March 15, 2009.  To the extent that any other taxable
reimbursements of expenses are provided under section 8, they shall be made in
accordance with Internal Revenue Code Section 409A, including the following
provisions:

     

    
      	
              i)  

            	
              The
      amount of any such expense reimbursement provided during one of your US
      tax years shall not affect any expenses eligible for reimbursement in any
      other taxable year;

            


    

     

     

    
      	
              ii)  

            	
              The
      reimbursement of the eligible expense shall be made no later than the last
      day of your US tax year that immediately follows the US tax year in which
      the expense was incurred; and

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              iii)  

            	
              Your
      right to any reimbursement shall not be subject to liquidation or exchange
      for another benefit or payment.”

            


    

     

     

    3. Release of
Claims.  The last two (2) sentences of Section 9(a) of the
Agreement, beginning with the phrase “The timing of the payments,” shall be
amended and restated in their entirety to provide as follows:

     

    “In order
to receive any severance payments or benefits set forth in this Agreement, the
general release of claims set forth above (the “Release”) must become effective
within fifty-two (52) days following your employment termination date or such
earlier date as required by the Release (such deadline, the “Release
Deadline”).  No severance payments or benefits pursuant to this
Agreement will be paid or provided until the Release becomes
effective.  Any severance payments or benefits to which you are
entitled during such fifty-two (52) day period shall be paid by the Company to
you in cash and in full arrears on the fifty-third (53rd) day following your
employment termination date or such later date as is required to avoid the
imposition of additional taxes under Internal Revenue Code Section
409A.”

     

    4. Internal Revenue Code
Section 409A.  Section 15(c) of the Agreement shall be amended
and restated in its entirety to provide as follows:

     

    
      	
               
      

            	
              “(c)

            	
              Notwithstanding
      anything to the contrary in this Agreement, no severance payments or
      benefits payable to you, if any, pursuant to this Agreement that, when
      considered together with any other severance payments or separation
      benefits, is considered deferred compensation under Section 409A
      (together, the “Deferred Payments”) will be payable until you have a
      “separation from service” within the meaning of
      Section 409A.  Similarly, no severance payable to you, if
      any, pursuant to this Agreement that otherwise would be exempt from
      Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)
      will be payable until you have a “separation from service” within the
      meaning of Section 409A.

            


    

     

    Further,
if you are a “specified employee” within the meaning of Section 409A at the
time of your separation from service (other than due to death), any Deferred
Payments that otherwise are payable within the first six (6) months following
your separation from service will become payable on the first payroll date that
occurs on or after the date six (6) months and one (1) day following the date of
your separation from service.  All subsequent Deferred Payments, if
any, will be payable in accordance with the payment schedule applicable to each
payment or benefit.  Notwithstanding anything herein to the contrary,
in the event of your death following your separation from service but prior to
the six (6) month anniversary of your separation from service (or any later
delay date), then any payments delayed in accordance with this paragraph will be
payable in a lump sum as soon as administratively practicable after the date of
your death and all other Deferred Payments will be payable in accordance with
the payment schedule applicable to each payment or benefit.  Each
payment and benefit payable under the Agreement is intended to constitute a
separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations.

    
       

      
        
          
          

        

        
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    Any
severance payment that satisfies the requirements of the “short-term deferral”
rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not
constitute Deferred Payments for purposes of the Agreement.  Any
severance payment that qualifies as a payment made as a result of an involuntary
separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury
Regulations that does not exceed the Section 409A Limit will not constitute
Deferred Payments for purposes of the Agreement.  For purposes of this
paragraph, “Section 409A Limit” will mean the lesser of two (2) times: (i) your
annualized compensation based upon the annual rate of pay paid to you during the
Company’s taxable year preceding the Company’s taxable year of your separation
from service as determined under Treasury Regulation Section
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with
respect thereto; or (ii) the maximum amount that may be taken into account under
a qualified plan pursuant to Section 401(a)(17) of the Code for the year in
which your employment is terminated.

     

    The
foregoing provisions are intended to comply with the requirements of
Section 409A so that none of the severance payments and benefits to be
provided under the Agreement will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted to so
comply.  You and the Company agree to work together in good faith to
consider amendments to the Agreement and to take such reasonable actions
which are necessary, appropriate or desirable to avoid imposition of any
additional tax or income recognition prior to actual payment to you under
Section 409A.”

     

    5. Legal
Fees.  The following sentence shall be added to Section 16 of
the Agreement entitled “Legal Fees,” immediately following the last sentence of
Section 16:

     

    “Payments
of your actual and reasonable legal fees and costs associated with entering into
this Agreement, as set forth in this Section 16, will be made no later than
March 15, 2009.”

     

    6. Full Force and
Effect.  To the extent not expressly amended hereby, the
Agreement shall remain in full force and effect.

     

    7. Entire
Agreement.  This Amendment and the Agreement constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof.

     

    8. Counterparts.  This
Amendment may be executed in counterparts, all of which together shall
constitute one instrument, and each of which may be executed by less than all of
the parties to this Amendment.

     

    9. Amendment.  Any
provision of this Amendment may be amended, waived or terminated by a written
instrument signed by the Company and Executive.

     

    
      
        
        

      

      
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    10. Governing
Law.  This Amendment shall be governed by the laws of the State
of California (with the exception of its conflict of laws
provisions).

     

    IN WITNESS WHEREOF, the
undersigned parties have caused this Amendment to be executed.

     

     

    
      	
              JERRY
      D. CHASE

            	 	
              LANTRONIX,
      INC.

            
	 	 	 
	/s/
      Jerry D. Chase 	 	/s/ Allison K.
      Garcia 
	Signature	 	Signature
	 	 	 
	Jerry
      D. Chase 	 	Allison
      K. Garcia 
	Print
      Name	 	Print
      Name
	 	 	 
	December
      26, 2008	 	VP of Human
      Resources 
	 	 	Print
      Title
	 	 	 
	 	 	December
      26, 2008


    

     

     

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