Document:

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                                                                   EXHIBIT 10.19

                             EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made on March 7, 2001, is between Lantronix, a Delaware
corporation, ("Employer"), located at 15353 Barranca Parkway, Irvine, California
92618, and Debbie Ures, an individual, ("Employee"), residing at 7351 El Fuerte
Street, Carlsbad, California, 92009, by virtue of the following facts, events,
circumstances and desires:

                                   RECITALS

     A.   WHEREAS, Employee desires to work for Employer and receive
compensation and Employer desires 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 not compete
with it for a reasonable period of time after termination of employment, and
Employee is willing to refrain from competition.

     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 for a period of three (3) years. The employment term
shall commence April 2, 2001. Notwithstanding the foregoing term of employment,
either the Employer or Employee may terminate this Agreement at any time, for
any reason, or no reason, on three (3) days written notice to the other. In such
event, Employee shall be entitled to severance as set forth herein and no other
compensation.

     2.   Duties. While employed by Employer, Employee shall devote her entire
working time, skill and attention exclusively to the interests and business of
Employer, shall perform such duties as may be assigned to her from time to time
by Employer, shall comply to the best of her ability with all policies and
directives issued by the Chief Executive Officer or the Employer's Board of
Directors, and shall in all respects do her 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.

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     3.   Compensation.

          3.1  Base Salary. The Employer shall pay to the Employee as base
               -----------
compensation the total sum of Two Hundred Twenty Five Thousand Dollars
($225,000.00) 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  Commission. In addition to said base salary, Employee shall also
               ----------
receive a commission amount calculated in accordance with the commission
structure outlined in Exhibit 2. Said commission structure is subject to review
on an annual basis or as other business conditions warrant. Modification to the
commission structure shall require the consent of Employee and Employer. The
commission structure shall be based on the revenue and gross margin plan as
contained in the Board of Director approved Annual Operating Plan (AOP). The
Employee shall significantly contribute to the development of the AOP as is
appropriate to her position in the Company. The AOP may be revised as business
conditions warrant.

          3.3  Insurance Coverage. Employer shall make available to Employee and
               ------------------
her 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 her on behalf of
Employer, in accordance with Company policy.

          3.5  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 and a Section 125 Plan.

          3.6  Vacation. Employee will initially be entitled to twenty (20) days
              --------
of vacation per year accrued ratably on a bi-weekly basis. Vacation time may be
accrued and used in accordance with the Employer's Vacation Policy.

          3.7  Car Allowance. Employee shall be paid a $650.00 per month car
               -------------
allowance to cover all auto-related expenses including gasoline.

          3.8  Stock Options. Employer shall grant to Employee stock options as
               -------------
indicated in the subparagraph(s) below:

               3.8.1   259,870 Non-Qualified Stock Options to vest according to
the following schedule.

               (i)     64,968 options to vest on Employee's first anniversary of
                       Employee's date of employment.
               (ii)    The remaining 194,902 options to vest ratably per month
                       thereafter for a period of 36 months.

               3.8.2   The Non-Statutory Stock Option Agreement for the above
options is attached hereto and incorporated herewith as Exhibit "3."

Stock options shall permit exercise by broker-assisted simultaneous exercise and
sale, in addition to exercise by cash.

          3.9  Special Additional Options. Employer shall grant to Employee Non-
               --------------------------
Qualified Stock Options equal to $100,000.00 based on the stock's closing price
as quoted on NASDAQ the business day immediately prior to Employee's start date,
in lieu of covering relocation costs and a signing

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bonus. The strike price shall be $.10 per share. One half of said options shall
be fully vested and tradable upon Employee's first day of employment. The
remaining options shall vest on the first anniversary of Employee's date of
employment, or upon sale of her residence, whichever occurs first. The Non-
Statutory Stock Option Agreement for the above options is attached hereto and
incorporated herewith as Exhibit "4." The parties agree that the transaction
described in this Section 3.9 will be treated for tax purposes as a grant of
non-qualified options, and that taxable income to the Employee will be reported
only upon exercise of such option, but not upon its grant.

     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 attached hereto and incorporated herein as Exhibit "5."

          4.1  Termination without Cause. For purposes of this Agreement, the
               -------------------------
Company shall be deemed to have terminated Executive's employment without
"Cause" if Executive's employment is terminated for any reason other then the
following: (i) Executive commits a felony or possesses, uses or sells illegal
drugs; (ii) Executive significantly neglects, or materially inadequately
performs, her duties as an employee of the Company; (iii) Executive breaches a
fiduciary duty to the Company or its shareholders involving personal profit to
Executive; (iv) Executive is deceased; or (v) Executive is disabled.
Notwithstanding the foregoing, Executive shall be deemed to have been terminated
without Cause (except in the case of death) unless the Company delivers to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less a majority of the entire membership of the Company's Board of Directors
finding that, in the opinion of the Board, Executive engaged in the applicable
conduct set forth in subsection (i), (ii) or (iii) above or Executive is
disabled. For purposes of this Agreement, Executive shall be considered disabled
if she has been physically or mentally incapable of performing her essential job
duties hereunder for (i) a continuous period of at least one hundred twenty
(120) days or (ii) a total of one hundred fifth (150) days during any one
hundred and eighty (180) day period, and Executive has not recovered and
returned to the full time performance of her duties within thirty days after
written notice is given to her by the Company following such 120 day period or
180 day period, as the case may be.

     5.   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) internal procedures and
policies, (h) customer lists, account names, contacts, addresses and sales
activity, (i) names and addresses of suppliers and vendors, (j) tax and
financial information, (k) reserves, (1) 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 confidential
information without the prior written consent of the company. Employee will use
reasonable and prudent care to safeguard and 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
reasonable judgment considers the information to be confidential information.

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     6.  Protective Covenant/Non-Solicitation. While employed by Employer and
for a period of eighteen (18) months after cessation of employment, whether
termination is voluntary or involuntary, Employee shall not in any manner
solicit or cause to be solicited any of Employer's customers, clients or former
or prospective customers for the purpose of soliciting business from them,
without the written consent of Employer, unless Employee can establish that she
did so without use of any Confidential Information. Employee further agrees that
during her employment and for one (1) year after termination of her employment,
she will not directly or indirectly, in any manner, request or induce any
Employee of Employer to leave her/his employment with Employer, unless expressly
authorized or instructed to do so in writing by Employer.

     It is understood by both parties to this Agreement that the protective
covenants meant for the reasonable protection of the business of Employer and
not to impair the ability of Employee to earn a living. Should any portion of
this covenant be construed by a court of law or equity as less than reasonable,
the parties agree to the establishment by such court of an obligation for the
protection of Employer's business that it deems reasonable.

     7.   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, s/he shall immediately return to Employer all such items in her or his
possession, as well as all of Employer's property s/he 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.

     8.   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 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.

     9.   Attorneys' 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 costs and expenses (including reasonable attorney's
fees) incurred in such arbitration.

     10.  Remedy. Employee acknowledges and agrees that the confidential
information, trade secrets and special knowledge acquired by her during her
employment with Employer is valuable and unique, and that breach by her 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.
Employee expressly waives the claim or defense that Employer has an adequate
remedy at law.

     11.  Applicable Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of California.

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     12.  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.

     13.  Entire Agreement. It is agreed that the provisions of the 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 respective heirs, administrators and assigns.

     14.  Voluntary Agreement. I understand I will have access to confidential
information and customer accounts while employed by Employer. I further
acknowledge that I have freely and voluntarily entered into this Agreement,
which contains restrictions on my ability to compete with Lantronix for any
reason. I recognize that Lantronix has provided me adequate consideration for my
agreement herein.

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

                                       "EMPLOYEE"

                                       /s/ DEBBIE URES
                                       ---------------------------
                                       Debbie Ures

                                       LANTRONIX

                                       By: /s/ FREDERICK G. THIEL
                                           -----------------------
                                            Frederick G. Thiel
                                       Its: President and C.E.O.

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                                  EXHIBIT "1"

TITLE:             Vice President of Worldwide Sales

RESPONSIBILITIES:  The responsibilities of the V.P. of Worldwide Sales are as
                   follows:

                       .  Manage the entire range of sales activities for the
                          Company, including both domestic and international, to
                          achieve the targeted growth rate;

                       .  Formulate and recommend policies and procedures on all
                          sales matters; and

                       .  Other duties as required.

AUTHORITY:         The V.P. of Worldwide Sales is empowered to make decisions,
                   create policies, and authorize engagements that, upon the
                   CEO's request, she can demonstrate to be consistent with a
                   reasonable interpretation of the Company's objectives.

REPORTING:         The V.P. of Worldwide Sales reports to the President and
                   Chief Executive Officer of the Company. The Company's
                   Directors of Sales and all other sales personnel (whether
                   employees or independent) will report directly or indirectly
                   to the V.P. of Worldwide Sales.

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                                  EXHIBIT "2"

                   EXECUTIVE COMMISSION COMPENSATION PROGRAM
                   -----------------------------------------

The Employee's annual target commission shall be $125,000.00. The commission
shall be calculated and paid out on a pro rata basis each quarter, in accordance
with the Company's regularly scheduled commission payments.

In order to be eligible for a commission payment, at least 80% of the quarterly
weighted average revenue and gross margin plan must be achieved.

The quarterly weighting between revenue and gross margin shall be 60% gross
margin dollar plan and 40% revenue plan. The quarterly payment will be increased
or decreased by taking the quarterly percentage of the revenue and gross margin
plan achieved and multiplying it by the quarterly targeted commission amount.

Examples:

If 110% of the quarterly revenue and gross margin plans were achieved, then the
commission payment would be $34,375.00 ($125,000/4 x 110%).

If 80% of the quarterly revenue and gross margin plans were achieved, then the
commission payment would be $25,000.00 ($125,000/4 x 80%).

If less than 80% of the quarterly revenue and gross margin plans were achieved,
then the commission payment would be zero.

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                                  EXHIBIT "3"

                   Lantronix Non-Statutory Stock Option Plan

                               [To Be Attached]

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                                  EXHIBIT "4"

                   Lantronix Non-Statutory Stock Option Plan
                                 Bonus Options

                               [To Be Attached]

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                                  EXHIBIT "5"

                              SEVERANCE AGREEMENT

     This Severance Agreement ("Agreement") is made and entered into by
LANTRONIX, a Delaware corporation ("Company"), and Debbie Ures ("Executive").

                                   RECITALS

     WHEREAS, Executive is employed as V.P. of Worldwide Sales of the Company;
and

     WHEREAS, the Company desires to provide certain benefits to Executive as
described herein as an incentive for Executive 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 or in connection with such Change in Control either (i) the
Company terminates Executive without "Cause" (as hereinafter defined) on or
before the two year anniversary of the date of the Change in Control, or (ii)
Executive 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 Executive her 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 eighteen (18) months, payable either in monthly installments within
five days after the end of each month, or at the option of Executive (i) 50% in
a lump sum within 45 days after the date of termination or resignation and (ii)
50% in eighteen (18) equal monthly installments, commencing within fifteen days
following termination or resignation and continuing thereafter on the same day
of each month;

          b.  Pay Executive an amount equal to 100% of her commission for the
quarter in which the separation of employment takes place;

          c.  Continue to provide Executive, at Company expense, all medical,
disability and life insurance benefits provided to her immediately prior to the
date of such termination or resignation (or,

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at the option of Executive, immediately prior to the date of the Change in
Control) for a period of eighteen (18) months following the date of such
termination or resignation, or, if any of such benefits cannot be provided to
Executive for such eighteen (18) month period under the Company's policies as
then in effect or under applicable law, then the Company shall pay Executive an
amount equal to the monthly premiums paid on behalf of Executive for such
benefits at the time of such termination or resignation for a period beginning
on the date the Executive's participation in such benefits is prohibited and
ending on the date that is eighteen (18) 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 50% of all unvested stock options
granted to Executive under the Company's stock option or other benefit plan;

     2.  Termination For Reasons Not Associated with a "Change in Control". If
         -----------------------------------------------------------------
the Company terminates Executive without "Cause," for reasons not associated
with a "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 Executive her 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 nine (9) months, payable either in monthly installments within five
days after the end of each month, or at the option of Executive (i) 50% in a
lump sum within 45 days after the date of termination or resignation and (ii)
50% in nine (9) equal monthly installments, commencing within fifteen days
following termination or resignation and continuing thereafter on the same day
of each month;

         b.  Pay Executive an amount equal to 100% of her commission for the
quarter in which the separation of employment takes place;

         c.  Continue to provide Executive at Company expense all medical,
disability and life insurance benefits provided to her immediately prior to the
date of such termination or resignation (or, at the option of Executive,
immediately prior to the date of the Change in Control) for a period of nine (9)
months following the date of such termination or resignation, or, if any of such
benefits cannot be provided to Executive for such nine (9) month period under
the Company's policies as then in effect or under applicable law, then the
Company shall pay Executive an amount equal to the monthly premiums paid on
behalf of Executive for such benefits at the time of such termination or
resignation for a period beginning on the date the Executive's participation in
such benefits is prohibited and ending on the date that is nine (9) months
following the date of such termination or resignation, payable in monthly
installments within five days after the end of each month; and

         d.  Extend the vesting period of all unvested stock options for a
period of three years beyond the date of termination. Extend the post-
termination exercise period for all vested stock options to coincide with this
three-year extension.

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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 (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 Executive's employment at any time with or without Cause. For purposes
of this Agreement, the Company shall be deemed to have terminated Executive's
employment without "Cause" if Executive's employment is terminated for any
reason other then the following: (i) Executive commits a felony or possesses,
uses or sells illegal drugs; (ii) Executive significantly neglects, or
materially inadequately performs, her duties as an employee of the Company;
(iii) Executive breaches a fiduciary duty to the Company or its shareholders
involving personal profit to Executive; (iv) Executive is deceased; or (v)
Executive is disabled. Notwithstanding the foregoing, Executive shall be deemed
to have been terminated without Cause (except in the case of death) unless the
Company delivers to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less a majority of the entire membership of the
Company's Board of Directors finding that, in the opinion of the Board,
Executive engaged in the applicable conduct set forth in subsection (i), (ii) or
(iii) above or Executive is disabled. For purposes of this Agreement, Executive
shall be considered disabled if he has been physically or mentally incapable of
performing her essential job duties hereunder for (i) a continuous period of at
least one hundred twenty (120) days or (ii) a total of one hundred fifth (150)
days during any one hundred and eighty (180) day period, and Executive has not
recovered and returned to the full time performance of her duties within thirty
days after written notice is given to her by the Company following such 120 day
period or 180 day period, as the case may be.

          c.  Resignation with Good Reason. Executive may resign at any time
              ----------------------------
with or without Good Reason. For purposes of the Agreement, Executive shall be
deemed to have resigned with "Good Reason" following a Change in Control if she
resigns within ninety days after the Company has taken any of the following
actions without Executive's express written consent; (i) the Company
"Substantially Lessens Executive's Title" (as defined on Exhibit 5A attached
hereto); (ii) the Company Substantially Reduces Executive's Senior Authority (as
defined on Exhibit 5A attached hereto); (ii) the Company assigns material duties
to Executive which are materially inconsistent with Executive's status as an
officer of the Company; (iii) the Company reduces Executive'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); (iv) the Company requires Executive to
be based more than fifty (50) miles from her present office location, except for
required travel consistent with

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Executive's business travel obligations; or (v) the Company fails to obtain the
assumption of this Agreement by any successor or assign of the Company.

     4.  The Company's Obligations Under This Agreement. Executive shall not be
         ----------------------------------------------
entitled to any of the benefits of Sections 1 and 2 if the Company terminates
Executive's employment or if Executive 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 Executive upon any
termination or resignation and are in lieu of any damages or other compensation
that Executive may claim under other Company policies or otherwise, except for
Executive's salary which has been earned up to 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 Executive 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
Executive 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 law.

     6.  Assignment. Executive may not assign this Agreement. 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, 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
Executive heirs, executors, administrators, and legal representatives.

     7.  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 Executive at her last known address.

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     8.   Entire Agreement. This Agreement, together with the documents
          ----------------
referenced herein, contains 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 Executive.

     9.   Attorneys' 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 costs and expenses (including reasonable attorney's
fees) incurred in such arbitration.

     10.  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 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.

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<PAGE>

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

                                            EXECUTIVE:

                                            /s/ DEBBIE URES
                                            ---------------------------
                                            Debbie Ures

                                            COMPANY:

                                            LANTRONIX,
                                            A Delaware Corporation

                                            By: /s/ FREDERICK G. THIEL
                                                -----------------------
                                                  Frederick G. Thiel
                                            Its:  President and C.E.O.

                                       15
<PAGE>

                                 EXHIBIT "5A"

                                 (Debbie Ures)

     "Substantially Lessens Executive's Title" shall mean that the Executive
does not have the title of V.P. Worldwide Sales or some higher title.

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

                                       16<PAGE>

                                                                   EXHIBIT 10.20

                             EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made on May 31, 2001, is between Lantronix, a Delaware
corporation, ("Employer"), located at 15353 Barranca Parkway, Irvine, California
92618, and Curtis D. Brown an individual, ("Employee"), residing at 6029 Indian
Road, Boulder, Colorado 80301, by virtue of the following facts, events,
circumstances and desires:

                                   RECITALS

     A.  WHEREAS, Employee desires to work for Employer and receive compensation
and Employer desires 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 not complete
with it for a reasonable period of time after termination of employment, and
Employee is willing to refrain from competition.

     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 for a period of three (3) years. The employment term shall
commence June 4, 2001. Not withstanding the foregoing term of employment, either
the Employer or Employee may terminate this Agreement at any time, for any
reason, or no reason, on three (3) days written notice to the other. In such
event, Employee shall be entitled to severance as set forth herein and no other
compensation.

     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 Chief Executive Officer or 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 herein and incorporated herein.

                                       1

<PAGE>

     3.  Compensation.

         3.1  Base Salary. The Employer shall pay the Employee as base
              -----------
compensation the total sum of Two Hundred Fifty Thousand Dollars ($250,000) 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  Management Based Objectives. In addition to said base salary,
              ---------------------------
Employee shall also receive a bonus amount calculated in accordance with the
Lantronix MBO Incentive Program, revision 0.2x, incorporated by reference and
attached to Exhibit "2." Said bonus amount shall be paid quarterly and in an
amount up to 30% of the annual base salary referenced in Paragraph 3.1 above.
Employee shall be eligible to receive a bonus beginning with the fiscal quarter
beginning July 1, 2001.

         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 on behalf of
Employer, in accordance with Company policy.

         3.5  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, Employee Stock Purchase Plan and a
Section 125 Plan.

         3.6  Vacation. Employee will initially be entitled to twenty (20) days
              --------
of vacation per year accrued ratably on a bi-weekly basis. Vacation time may be
accrued and used in accordance with the Employer's Vacation Policy.

         3.7  Stock Options. Employer shall grant to Employee stock options as
              -------------
indicated in the subparagraph(s) below:

              3.7.1  150,000 Non-Qualified Stock Options to vest according to
                     the following schedule.

                    (i)    37,5000 options to vest on Employee's first
                           anniversary of Employee's date of employment.

                    (ii)   the remaining options to vest ratably per month
                           thereafter for a period of 36 months.

              3.7.2  The Non-statutory Stock Option Agreement for the above
                     options is attached hereto and incorporated herewith as
                     Exhibit "3."

Stock options shall permit exercise by broker-assisted simultaneous exercise and
sale, in addition to exercise by cash.

         3.8  Special Additional Options. The Employer shall grant to Employee
              --------------------------
additional 10,000 shares of stock options. The strike price shall be $.10 per
share. The Non-Statutory Stock Option Agreement for the above options is
attached hereto and incorporated herewith as Exhibit "4."

     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 attached hereto and incorporated herein as Exhibit "5."

         4.1  Termination without Cause. For purposes of this Agreement, the
              -------------------------
Company shall

                                       2
<PAGE>

be deemed to have terminated Executive's employment without "Cause" if
Executive's employment is terminated for any reason other then the following:
(i) Executive commits a felony or possesses, uses or sells illegal drugs; (ii)
Executive significantly neglects, or materially inadequately performs, her
duties as an employee of the Company; (iii) Executive breaches a fiduciary duty
to the Company or its shareholders involving personal profit to Executive; (iv)
Executive is deceased; or (v) Executive is disabled. Notwithstanding the
foregoing, Executive shall be deemed to have been terminated without Cause
(except in the case of death) unless the Company delivers to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less a majority
of the entire membership of the Company's Board of Directors finding that, in
the opinion of the Board, Executive engaged in the applicable conduct set forth
in subsection (i), (ii) or (iii) above or Executive is disabled. For purposes of
this Agreement, Executive shall be considered disabled if she has been
physically or mentally incapable of performing her essential job duties
hereunder for (i) a continuous period of at least one hundred twenty (120) days
or (ii) a total of one hundred fifth (150) days during any one hundred and
eighty (180) day period, and Executive has not recovered and returned to the
full time performance of her duties within thirty days after written notice is
given to her by the Company following such 120 day period or 180 day period, as
the case may be.

     5.   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) internal procedures and
policies, (h) customer lists, account names, contacts, addresses 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
confidential information without the prior written consent of the company.
Employee will use reasonable and prudent care to safeguard and 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 reasonable judgment considers the information to be confidential
information.

     6.   Protective Covenant/Non-Solicitation.  While employed by Employer and
for a period of eighteen (18) months after cessation of employment, whether
termination is voluntary or involuntary, Employee shall not in any manner
solicit or cause to be solicited any of Employer's customers, clients or former
or prospective customers for the purpose of soliciting business from them,
without the written consent of Employer, unless Employee can establish that she
did so without use of any Confidential Information. Employee further agrees that
during her employment and for one (1) year after termination of her employment,
she will not directly or indirectly, in any manner, request or induce any
Employee of Employer to leave her/his employment with Employer, unless expressly
authorized or instructed to do so in writing by Employer.

     It is understood by both parties to this Agreement that the protective
covenants meant for the reasonable protection of the business of Employer and
not to impair the ability of Employee to earn a living. Should any portion of
this covenant be construed by a court of law or equity as less than reasonable,
the parties agree to the establishment by such court of an obligation for the
protection of

                                       3
<PAGE>

Employer's business that it deems reasonable.

     7.   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, s/he shall immediately return to Employer all such items in her or his
possession, as well as all of Employer's property s/he 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.

     8.   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 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.

     9.   Attorneys' 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 costs and expenses (including reasonable attorney's
fees) incurred in such arbitration.

     10.  Remedy.  Employee acknowledges and agrees that the confidential
information, trade secrets and special knowledge acquired by her during her
employment with Employer is valuable and unique, and that breach by her 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.
Employee expressly waives the claim or defense that Employer has an adequate
remedy at law.

     11.  Applicable Law.  This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of California.

     12.  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.

     13.  Entire Agreement.  It is agreed that the provisions of the 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 respective heirs, administrators and assigns.

     14.  Voluntary Agreement.  I understand I will have access to confidential
information and customer accounts while employed by Employer. I further
acknowledge that I have freely and voluntarily entered into this Agreement,
which contains restrictions on my ability to compete with Lantronix for any
reason. I recognize that Lantronix has provided me adequate consideration for my
agreement herein.

                                       4
<PAGE>

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

                                       "EMPLOYEE"

                                       /s/ CURTIS D. BROWN
                                       --------------------------------
                                       Curtis D. Brown

                                       LANTRONIX

                                       By: /s/ FREDERICK G. THIEL
                                          -----------------------------
                                            Frederick G. Thiel
                                       Its: President and C.E.O.

                                       5
<PAGE>

                                  EXHIBIT "1"

TITLE:                 Executive Vice President, Research and Development

RESPONSIBILITIES:      The E.V.P. will be responsible for a balanced blend of
                       general management and related technical expertise
                       combining strategic planning skills with the ability to
                       effectively implement those strategies on time and within
                       budget. Key deliverables include developing, enhancing
                       and delivering on the product road map, developing and
                       managing relationships with key internal and external
                       constituents ( the CEO and other members of the
                       executive team, strategic partners, vendors, customers,
                       etc.) and building and directing a global team capable of
                       realizing the Company's strategic vision and goals.

AUTHORITY:             The E.V.P. of R&D is empowered to make decisions, create
                       policies, and authorize engagements that, upon the CEO's
                       request, he can demonstrate to be consistent with a
                       reasonable interpretation of the Company's objectives.

REPORTING:             The E.V.P. of R&D reports to the President and Chief
                       Executive Officer of the Company.

                                       6
<PAGE>

                                  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
and 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 compensation elements
for selected management levels:

--------------------------------------------------------------------------------
LEVEL                  FINANCIAL        INDIVIDUAL OBJS.        % OF TOTAL COMP.
--------------------------------------------------------------------------------
Vice President         100%             0%                     25%
--------------------------------------------------------------------------------

The details of the MBO portion of the compensation plan are contained in the
separate document titled LANTRONIX MBO INCENTIVE PROGRAM, revision 0.2x,
attached and incorporated by reference as Exhibit "2A."

                                       7
<PAGE>

                                  EXHIBIT "3"

                   Lantronix Non-Statutory Stock Option Plan

                               [To Be Attached]

                                       8
<PAGE>

                                  EXHIBIT "4"

                  Lantronix Non-Statutory Stock Option Plan
                                 Bonus Options

                               [To Be Attached]

                                       9
<PAGE>

                                  EXHIBIT "5"

                              SEVERANCE AGREEMENT

     This Severance Agreement ("Agreement") is made and entered into by
LANTRONIX, a Delaware corporation ("Company"), and Curtis D. Brown
("Executive").

                                   RECITALS

     WHEREAS, Executive is employed a E.V.P. of Research & Development of the
Company; and

     WHEREAS, the Company desires to provide certain benefits to Executive as
described herein as an incentive for Executive 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 or in connection with such Change in Control either (i) the
Company terminates Executive without "Cause" (as hereinafter defined) on or
before the two year anniversary of the date of the Change in Control, or (ii)
Executive 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 Executive her/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 nine (9) months, payable either in monthly installments within five
days after the end of each month, or at the option of Executive (i) 50% in a
lump sum within 45 days after the date of termination or resignation and (ii)
50% in nine (9) equal monthly installments, commencing within fifteen days
following termination or resignation and continuing thereafter on the same day
of each month;

          b.  Pay Executive an amount equal to 100% of her/his incentive bonus
for the quarter in which the separation of employment takes place;

          c.  Continue to provide Executive, at Company expense, all medical,
disability and life insurance benefits provided to her/him immediately prior to
the date of such termination or resignation

                                       10
<PAGE>

(or, at the option of Executive, immediately prior to the date of the Change in
Control) for a period of nine (9) months following the date of such termination
or resignation, or, if any of such benefits cannot be provided to Executive for
such nine (9) month period under the Company's policies as then in effect or
under applicable law, then the Company shall pay Executive an amount equal to
the monthly premiums paid on behalf of Executive for such benefits at the time
of such termination or resignation for a period beginning on the date the
Executive's participation in such benefits is prohibited and ending on the date
that is nine (9) 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 50% of all unvested stock options
granted to Executive under the Company's stock option or other benefit plan;

     2.  Termination For Reasons Not Associated with a "Change in Control". If
         -----------------------------------------------------------------
the Company terminates Executive without "Cause," for reasons not associated
with a "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 Executive her/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 six (6) months, payable either in monthly installments within five
days after the end of each month, or at the option of Executive (i) 50% in a
lump sum within 45 days after the date of termination or resignation and (ii)
50% in six (6) equal monthly installments, commencing within fifteen days
following termination or resignation and continuing thereafter on the same day
of each month;

          b.  Pay Executive an amount equal to 100% of her/his incentive bonus
for the quarter in which the separation of employment takes place;

          c.  Continue to provide Executive at Company expense all medical,
disability and life insurance benefits provided to her/his immediately prior to
the date of such termination or resignation (or, at the option of Executive,
immediately prior to the date of the Change in Control) for a period of six (6)
months following the date of such termination or resignation, or, if any of such
benefits cannot be provided to Executive for such six (6) month period under the
Company's policies as then in effect or under applicable law, then the Company
shall pay Executive an amount equal to the monthly premiums paid on behalf of
Executive for such benefits at the time of such termination or resignation for a
period beginning on the date the Executive's participation in such benefits is
prohibited and ending on the date that is six (6) months following the date of
such termination or resignation, payable in monthly installments within five
days after the end of each month; and

          d.  Extend the vesting period of all unvested stock options for a
period of three years beyond the date of termination. Extend the post-
termination exercise period for all vested stock options to coincide with this
three-year extension.

                                       11
<PAGE>

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 (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 Executive's employment at any time with or without Cause. For purposes
of this Agreement, the Company shall be deemed to have terminated Executive's
employment without "Cause" if Executive's employment is terminated for any
reason other then the following: (i) Executive commits a felony or possesses,
uses or sells illegal drugs; (ii) Executive significantly neglects, or
materially inadequately performs, her/his duties as an employee of the Company;
(iii) Executive breaches a fiduciary duty to the Company or its shareholders
involving personal profit to Executive; (iv) Executive is deceased; or (v)
Executive is disabled. Notwithstanding the foregoing, Executive shall be deemed
to have been terminated without Cause (except in the case of death) unless the
Company delivers to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less a majority of the entire membership of the
Company's Board of Directors finding that, in the opinion of the Board,
Executive engaged in the applicable conduct set forth in subsection (i), (ii) or
(iii) above or Executive is disabled. For purposes of this Agreement, Executive
shall be considered disabled if he has been physically or mentally incapable of
performing her/his essential job duties hereunder for (i) a continuous period of
at least one hundred twenty (120) days or (ii) a total of one hundred fifth
(150) days during any one hundred and eighty (180) day period, and Executive has
not recovered and returned to the full time performance of her/his duties within
thirty days after written notice is given to her/his by the Company following
such 120 day period or 180 day period, as the case may be.

     c.  Resignation with Good Reason. Executive may resign at any time
         ----------------------------
with or without Good Reason. For purposes of the Agreement, Executive shall be
deemed to have resigned with "Good Reason" following a Change in Control if she
resigns within ninety days after the Company has taken any of the following
actions without Executive's express written consent; (i) the Company
"Substantially Lessens Executive's Title" (as defined on Exhibit 5A attached
hereto); (ii) the Company Substantially Reduces Executive's Senior Authority (as
defined on Exhibit 5A attached hereto); (ii) the Company assigns material duties
to Executive which are materially inconsistent with Executive's status as an
officer of the Company; (iii) the Company reduces Executive'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); (iv) the Company requires Executive to
be based more than fifty (50) miles from her/his present office location, except
for required travel consistent

                                       12
<PAGE>

with Executive's business travel obligations; or (v) the Company fails to obtain
the assumption of this Agreement by any successor or assign of the Company.

     4.   The Company's Obligations Under This Agreement. Executive shall not be
          ----------------------------------------------
entitled to any of the benefits of Sections 1 and 2 if the Company terminates
Executive's employment or if Executive 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 Executive upon any
termination or resignation and are in lieu of any damages or other compensation
that Executive may claim under other Company policies or otherwise, except for
Executive's salary which has been earned up to 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 Executive 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
Executive 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 law.

     6.   Assignment. Executive may not assign this Agreement. 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, 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
Executive heirs, executors, administrators, and legal representatives.

     7.   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 Executive at her/his last known address.

                                       13
<PAGE>

     8.   Entire Agreement. This Agreement, together with the documents
          ----------------
referenced herein, contains 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 Executive.

     9.   Attorneys' 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 costs and expenses (including reasonable attorney's
fees) incurred in such arbitration.

     10.  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 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.

                                       14
<PAGE>

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

                                       EXECUTIVE:

                                       /s/ CURTIS D. BROWN
                                       ---------------------------
                                       Curtis D. Brown

                                       COMPANY:

                                       LANTRONIX
                                       A Delaware Corporation

                                       By:  /s/ FREDERICK G. THIEL
                                           -----------------------
                                            Frederick G. Thiel
                                       Its: President and C.E.O.

                                      15
<PAGE>

                                 EXHIBIT "5A"

                               (Curtis D. Brown)

     "Substantially Lessens Executive's Title" shall mean that the Executive
does not have the title of E.V.P., Research and Development or some higher
title.

     The Company will be deemed to have Substantially Reduced Executive's Senior
Authority if Executive no longer has authority for the entire range of R&D
activities of the Company on a day-to-day basis.

                                      16

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