Document:

Exhibit 4.1

 

LANTRONIX, INC.  

2013 EMPLOYEE STOCK PURCHASE PLAN 

 

1. Purpose. The purpose of the Plan
is to provide employees of Lantronix, Inc. (the “Company”) and its Designated Subsidiaries with an opportunity
to purchase Common Stock of the Company through accumulated payroll deductions. It is the Company’s intention that this 2013
Employee Stock Purchase Plan (the “Plan”) qualify as an “Employee Stock Purchase Plan” under Section
423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan shall, accordingly, be construed so as to extend
and limit participation in a manner consistent with the requirements of that section of the Code. The terms herein that begin with
initial capital letters shall have the defined meaning set forth under Section 2 below, or elsewhere when the term first appears
and is defined.

 

This 2013 Employee Stock Purchase Plan
is effective as of the Company’s 2012 Annual Meeting of the Stockholders.

 

2. Definitions.

 

(a) “Authorization Form”
shall mean a form established by the Plan Administrator authorizing payroll deductions, as set forth in Section 6, and containing
such other terms and conditions as the Company from time to time may determine.

 

(b) “Board” shall mean
the Board of Directors of Lantronix, Inc.

 

(c) “Code” shall mean
the Internal Revenue Code of 1986, as amended. References to specific sections of the Code shall be taken to be references to corresponding
sections of any successor statute.

 

(d) “Committee” shall
mean the committee of members of the Board designated as the Committee in Section 14.

 

(e) “Common Stock” shall
mean the common stock of the Company.

 

(f) “Company” shall
mean Lantronix, Inc., or any successor by merger or otherwise, and any Designated Subsidiary of the Company.

 

(g) “Compensation” shall
mean all base gross earnings, commissions, overtime, and shift premium before giving effect to any compensation reductions made
in connection with plans described in section 401(k) or 125 of the Code, but exclusive of payments for any other compensation.

 

(h) “Designated Subsidiary”
shall mean any Subsidiary that has been designated by the Board from time to time in its sole discretion as eligible to participate
in the Plan. For purposes of the Plan, each of the following entities shall be deemed to have been designated by the Board as a
Designated Subsidiary: (i) Lantronix Europe GmbH; (ii) Lantronix Netherlands B.V.; (iii) Lantronix UK Ltd.; (iv) Lantronix Hong
Kong Limited; and (v) Japan Lantronix K.K.

 

(i) “Employee” shall
mean any individual whom the Company in its discretion classifies as an employee of the Company for tax purposes. For purposes
of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave
of absence approved by the Company. Where the period of leave exceeds 90 days and the individual’s right to reemployment
is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st
day of such leave.

 

(j) “Enrollment Date”
shall mean the first Trading Day of each Offering Period.

 

(k) “Exercise Date”
shall mean the last Trading Day of each Purchase Period.

 

(l) “Fair Market Value”
shall mean, as of any date, the value of Common Stock determined as follows:

 

(1) The per share closing price of the
Common Stock as reported on the NASDAQ Stock Market on that date (or if there was no reported closing price on such date, on the
last preceding date on which the closing price was reported);

 

    	1

    	 

    

 

 

(2) If the Common Stock is not then listed
on the NASDAQ Stock Market, the per share closing price of the Common Stock on such other principal U.S. national securities exchange
on which the Common Stock is listed (or if there was no reported closing price on such date, on the last preceding date on which
the closing price was reported);

 

(3) If the Common Stock is not listed
on any U.S. national securities exchange but is quoted in an inter-dealer quotation system on a last sale basis, the final ask
price of the Common Stock reported on such date (or, if there is no such sale on such date, then on the last preceding date on
which a sale was reported); or

 

(4) If the Common Stock is neither listed
on a U.S. national securities exchange nor quoted on an inter-dealer quotation system on a last sale basis, the Fair Market Value
shall be determined by the Committee in its sole discretion using appropriate criteria.

 

(m) “Offering Periods”
shall mean the periods established pursuant to Section 4.

 

(n) “Plan” shall mean
this Lantronix, Inc. 2013 Employee Stock Purchase Plan, as amended from time to time.

 

(o) “Plan Administrator”
shall mean the Company acting through its authorized officers.

 

(p) “Purchase Period”
shall mean, except as otherwise determined by the Committee, the six (6) month period commencing on the next Trading Day following
the preceding Exercise Date and ending with the next Exercise Date, except that the first Purchase Period of any Offering Period
shall commence on the Enrollment Date and end with the next Exercise Date.

 

(q) “Purchase Price”
shall mean 85% of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is
lower; provided however, that the Purchase Price may be adjusted by the Board pursuant to Section 20.

 

(r) “Reserves” shall
mean the number of shares of Common Stock covered by each option under the Plan that have not yet been exercised and the number
of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option.

 

(s) “Subsidiary” shall
mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

 

(t) “Trading Day” shall
mean a day on which the NASDAQ Stock Market (or such other principal U.S. national securities exchange Common Stock is listed)
is open for trading.

 

3. Eligibility.

 

(a) All Employees who are employed by the
Company at least one (1) day before a given Enrollment Date shall be eligible to participate in the Plan.

 

(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such
Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own
capital stock of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of the capital stock of the Company or of any parent or subsidiary corporation,
or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans of the Company and any parent
or subsidiary corporation accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at
the fair market value of the shares at the time such option is granted) for each calendar year in which such option is outstanding
at any time.

 

4. Offering Periods.

 

(a) Plan Implementation. The Plan
shall be implemented by consecutive, overlapping Offering Periods with a new Offering Period commencing on May 16, 2013 and on
each subsequent November 16 and May 16, or on such other date or dates as the Board or the Committee shall determine, and continuing
thereafter until terminated in accordance with Section 20 hereof.

 

    	2

    	 

    

 

 

(b) Offering Period Duration. Each
Offering Period shall be for a period of twenty-four (24) months during which an option granted pursuant to the Plan may be exercised.

 

(c) Automatic Transfer to Lower Price
Offering Period. To the maximum extent reasonably permitted by any applicable laws, regulations, rules of the NASDAQ Stock
Market (or such other principal U.S. national securities exchange on which the Common Stock is listed), if the Fair Market Value
of the Common Stock on the Enrollment Date of a new Offering Period is lower than the Fair Market Value of the Common Stock on
the Enrollment Date of the immediately preceding Offering Period, then all participants in the immediately preceding Offering Period
shall be automatically withdrawn from such Offering Period immediately after the exercise of their option on the Exercise Date
immediately preceding the new Offering Period and automatically re-enrolled in the new Offering Period as of the first day thereof.

 

(d) Changes in Offering Period.
The Board or the Committee shall have the power to change the duration of Offering Periods (including the commencement dates thereof)
with respect to future offerings without stockholder approval if notice of such change is announced to Employees at least fifteen
(15) days prior to the scheduled beginning of the first Offering Period to be affected thereafter.

 

5. Participation.

 

(a) An Employee may become a participant
in the Plan by completing an Authorization Form and filing it with the Plan Administrator prior to the applicable Enrollment Date.

 

(b) Payroll deductions for a participant
shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which
such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof.

 

6. Payroll Deductions.

 

(a) At the time a participant files his
or her Authorization Form, he or she shall elect to have payroll deductions made on each payday during the Offering Period in an
amount not exceeding fifteen percent (15%) of the Compensation which he or she receives on each pay day during the Offering Period
(or such other percentage as may be established by the Board or the Committee from time to time in its sole discretion).

 

(b) All payroll deductions made for a participant
shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. A participant may not make
any additional payments into such account.

 

(c) A participant may discontinue his or
her participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions
during the Offering Period by filing with the Plan Administrator a new Authorization Form authorizing a change in payroll deduction
rate. The Board or the Committee may, in its discretion, limit the number of participation rate changes during any Offering Period.
Any such reduction or increase would be effective beginning with the first Purchase Period that begins no earlier than 5 business
days after the Plan Administrator’s receipt of a new Authorization Form from the participant, unless otherwise determined
by the Plan Administrator. A participant’s Authorization Form shall remain in effect for successive Offering Periods unless
terminated as provided in Section 10 hereof.

 

(d) Notwithstanding the foregoing, to the
extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant’s payroll deductions
may be decreased to zero percent (0%) at any time during a Purchase Period. Payroll deductions shall recommence at the rate provided
in such participant’s Authorization Form at the beginning of the first Purchase Period that is scheduled to end in the following
calendar year, unless terminated by the participant as provided in Section 10 hereof.

 

(e) At the time the option is exercised,
in whole or in part, or at the time some or all of the Company’s Common Stock issued under the Plan is disposed of, the participant
must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise
upon the exercise of the option. If the participant makes a disposition, within the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any shares of Common Stock issued to such participant pursuant to the exercise of an option, and such
disposition occurs within the two-year period commencing on the day after the Offering Date or within the one-year period commencing
on the day after the exercise date, such participant shall, within five (5) days of such disposition, notify the Company thereof.
In addition, in order to satisfy the requirement to withhold the amount (if any) of federal, state or local taxes that the Company
or Subsidiary determines is applicable, the Company and any Subsidiary may deduct such amount from any other compensation payable
to the Participant.

 

    	3

    	 

    

 

 

7. Grant of Option. On the Enrollment
Date of each Offering Period, each Employee participating in such Offering Period shall be granted an option to purchase on each
Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company’s Common
Stock determined by dividing such Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the
participant’s account as of the Exercise Date by the applicable Purchase Price; provided that any purchases shall be subject
to the limitations set forth in Sections 3(b) and 12 hereof. The Board or the Committee may, for future Offering Periods, increase
or decrease, in its absolute discretion, the maximum number of shares of the Company’s Common Stock an Employee may purchase
during each Purchase Period of such Offering Period. Exercise of the option shall occur as provided in Section 8 hereof, unless
the participant has withdrawn pursuant to Section 10 hereof. The option shall expire on the last day of the Offering Period.

 

8. Exercise of Option.

 

(a) Unless a participant withdraws from
the Plan as provided in Section 10 hereof, his or her option for the purchase of shares shall be exercised automatically on the
Exercise Date, and the maximum number of full shares subject to the option shall be purchased for such participant at the applicable
Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll
deductions accumulated in a participant’s account which are not sufficient to purchase a full share shall be retained in
the participant’s account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the participant
as provided in Section 10 hereof. Any other monies left over in a participant’s account after the Exercise Date shall be
returned to the participant. During a participant’s lifetime, a participant’s option to purchase shares hereunder is
exercisable only by him or her.

 

(b) If the Board or the Committee determines
that, on a given Exercise Date, the number of shares with respect to which options are to be exercised may exceed (i) the number
of shares of Common Stock that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period,
or (ii) the number of shares available for sale under the Plan on such Exercise Date, the Board may in its sole discretion (x)
provide that the Company shall make a pro rata allocation of the shares of Common Stock available for purchase on such Enrollment
Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion
to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering
Periods then in effect, or (y) provide that the Company shall make a pro rata allocation of the shares available for purchase on
such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine
in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date,
and terminate any or all Offering Periods then in effect pursuant to Section 20 hereof. The Company may make pro rata allocations
of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding
any authorization of additional shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment
Date.

 

9. Delivery. As promptly as practicable
after each Exercise Date on which a purchase of shares occurs, the Company shall arrange the delivery to each participant, as appropriate,
the shares purchased upon exercise of his or her option in a certificate or uncertificated form.

 

10. Withdrawal.

 

(a) A participant may withdraw all but
not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the
Plan at any time by giving written notice to Plan Administrator which is received at least ten (10) days prior to the Exercise
Date (or such other notice period as may be established by the Plan Administrator from time to time in its sole discretion). All
of the participant’s payroll deductions credited to his or her account shall be paid to such participant promptly after receipt
of notice of withdrawal and such participant’s option for the Offering Period shall be automatically terminated, and no further
payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering
Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers
to the Plan Administrator a new Authorization Form.

 

    	4

    	 

    

 

 

(b) A participant’s withdrawal from
an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan that may hereafter
be adopted by the Company or in succeeding Offering Periods that commence after the termination of the Offering Period from which
the participant withdraws.

 

11. Termination of Employment. Upon
a participant’s ceasing to be an Employee, for any reason, he or she shall be deemed to have elected to withdraw from the
Plan and the payroll deductions credited to such participant’s account during the Offering Period but not yet used to exercise
the option shall be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto
under Section 15 hereof, and such participant’s option shall be automatically terminated.

 

12. Interest. No interest shall
accrue on the payroll deductions of a participant in the Plan.

 

13. Stock.

 

(a) Subject to adjustment upon changes
in capitalization of the Company as provided in Section 19 hereof, the maximum number of shares of the Company’s Common Stock
which shall be made available for future sale under the Plan with respect to Exercise Dates shall be One Million Three Hundred
Thousand (1,300,000) shares, effective as of the effective date of the amendment of the Plan (as provided in Section 1).

 

(b) The participant shall have no interest
or voting rights in shares covered by his or her option until such option has been exercised.

 

(c) Shares to be delivered to a participant
under the Plan shall be registered in the name of the participant or in the name of the participant and his or her spouse.

 

14. Administration. The “Committee”
shall mean the Compensation Committee of the Board, a subcommittee thereof formed by the Compensation Committee to act as the Committee
hereunder or such other committee of members of the Board as delegated by the Board. The Board or the Committee shall administer
the Plan. The Board or the Committee shall have full and exclusive discretionary authority to construe, interpret and apply the
terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or the Committee shall, to the full extent permitted by law, be final and binding upon all
parties. The Company will pay all expenses incurred in the administration of the Plan. No member of the Committee or individual
acting on behalf of the Plan Administrator shall be personally liable for any action, determination, or interpretation made in
good faith with respect to the Plan, and all members of the Committee and individuals acting on behalf of the Plan Administrator
shall be fully indemnified by the Company with respect to any such good faith action, determination or interpretation.

 

15. Designation of Beneficiary.

 

(a) A participant may file with the Plan
Administrator a written designation of a beneficiary who is to receive any shares and cash from the participant’s account
under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but
prior to delivery to such participant of such shares and cash. In addition, a participant may file with the Plan Administrator
a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event
of such participant’s death prior to the exercise of the option. If a participant is married and the designated beneficiary
is not the spouse, spousal consent shall be required for such designation to be effective.

 

(b) Such designation of beneficiary may
be changed by the participant at any time by written notice to the Plan Administrator. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death,
the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may designate.

 

16. Transferability. Neither payroll
deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares
under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent
and distribution or as provided in Section 15 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering
Period in accordance with Section 10 hereof.

 

17. Use of Funds. All payroll deductions
received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.

 

18. Reports. Individual accounts
shall be maintained for each participant in the Plan. Statements of account shall be given to participating Employees at least
annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased
and the remaining cash balance, if any.

 

19. Adjustments Upon Changes in Capitalization,
Dissolution, Liquidation, Merger or Asset Sale.

 

(a) Changes in Capitalization. Subject
to any required action by the stockholders of the Company, the Reserves, the maximum number of shares each participant may purchase
each Purchase Period (pursuant to Section 7), as well as the price per share and the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, extraordinary cash
dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common
Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities
of the Company shall not be deemed to have been “effected without receipt of consideration”. Such adjustment shall
be made by the Board or the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an option.

 

(b) Dissolution or Liquidation.
In the event of a proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by
setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the consummation of
such proposed dissolution or liquidation, unless provided otherwise by the Board. The New Exercise Date shall be before the date
of the Company’s proposed dissolution or liquidation. The Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the
New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior
to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof.

 

(c) Merger or Asset Sale. In the
event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another
corporation, each outstanding option shall be assumed or an equivalent option substituted by the successor corporation or a parent
or subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the
option, any Purchase Periods then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”)
and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of
the Company’s proposed sale or merger. The Board shall notify each participant in writing, at least ten (10) business days
prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise
Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date
the participant has withdrawn from the Offering Period as provided in Section 10 hereof.

 

20. Amendment or Termination.

 

(a) The Board may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no such termination can affect options previously
granted, provided that an Offering Period may be terminated by the Board on any Exercise Date if the Board determines that the
termination of the Offering Period or the Plan is in the best interests of the Company and its stockholders. Except as provided
in Section 19 and this Section 20 hereof, no amendment may make any change in any option theretofore granted which adversely affects
the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision
or any other applicable law, regulation or rule of the NASDAQ Stock Market or such other principal U.S. national securities exchange
Common Stock is listed), the Company shall obtain stockholder approval in such a manner and to such a degree as required.

 

    	5

    	 

    

 

 

(b) Without stockholder approval and without
regard to whether any participant rights may be considered to have been “adversely affected,” the Board or the Committee
shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an
Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s
processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond
with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Board
or the Committee determines in its sole discretion advisable which are consistent with the Plan.

 

(c) In the event the Board determines that
the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion
and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequences including,
but not limited to:

 

(1) altering the Purchase Price for any
Offering Period including an Offering Period underway at the time of the change in Purchase Price;

 

(2) shortening any Offering Period so
that the Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Board action; and

 

(3) allocating shares.

 

Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.

 

21. Notices. All notices or other
communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

22. Conditions Upon Issuance of Shares.
Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities
Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and
the requirements of the NASDAQ Stock Market (or any other principal U.S. national securities exchange on which the Common Stock
may then be listed), and shall be further subject to the approval of counsel for the Company with respect to such compliance. As
a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at
the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell
or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned
applicable provisions of law.

 

23. Term of Plan. On September 18,
2012, the Board approved the 2013 Employee Stock Purchase Plan, as amended, subject to and effective upon stockholder approval
at the Company’s 2013 Annual Meeting of Stockholders. The Plan shall continue in effect for a period of ten (10) years following
the Effective Date unless earlier terminated by the Board.

 

24. Miscellaneous.

 

(a) Administrative Costs. The Company
shall pay the administrative expenses associated with the operation of the Plan (other than brokerage commissions resulting from
sales of Common Stock directed by Employees).

 

    	6

    	 

    

 

 

(b) No Employment Rights. Participation
in the Plan shall not give an Employee any right to continue in the employment of the Company, and shall not affect the right of
the Company to terminate the Employee’s employment at any time, with or without cause.

 

(c) Repurchase of Stock. The Company
shall not be required to purchase or repurchase from any Employee any of the shares of Common Stock that the Employee acquires
under the Plan.

 

(d) Internal Revenue Code and ERISA
Considerations. The Plan is intended to constitute an “employee stock purchase plan” within the meaning of section
423 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder. The provisions of the Plan, accordingly,
shall be construed so as to comply with the requirements of that section of the Code or any successor provision, and the regulations
thereunder. The Plan is not intended and shall not be construed as constituting an “employee benefit plan,” within
the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

 

(e) Headings, Captions, Gender.
The headings and captions herein are for convenience of reference only and shall not be considered as part of the text. The masculine
shall include the feminine, and vice versa.

 

(f) Severability of Provisions, Prevailing
Law. The provisions of the Plan shall be deemed severable. If any provision of the Plan shall be held unlawful or otherwise
invalid or unenforceable in whole or in part by a court of competent jurisdiction or by reason of a change in a law or regulation,
such provision shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or
enforceable and as so limited shall remain in full force and effect, and (b) not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect. The Plan shall be governed by the laws of the State of Delaware to
the extent such laws are not in conflict with, or superseded by, federal law.

 

 

 

    	7Exhibit 4.2

 

LANTRONIX, INC.

 

AMENDED AND RESTATED 2010 STOCK INCENTIVE
PLAN

 

1.Purposes of
the Plan. The purposes of this Plan are:

 

		·	to attract and retain the best available personnel for positions of substantial responsibility,

 

		·	to provide incentives to individuals who perform services to the Company, and

 

		·	to promote the success of the Company’s business.

 

The Plan permits the
grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units
and Performance Shares as the Administrator may determine.

 

2.Definitions.
As used herein, the following definitions will apply:

 

(a)“Administrator”
means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

 

(b)“Applicable
Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

 

(c)“Award”
means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units and Performance Shares as the Administrator may determine.

 

(d)“Award
Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award
granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

 

(e)“Board”
means the Board of Directors of the Company.

 

(f)“Change
in Control” means the occurrence of any of the following events:

 

(i)A change in
the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group, (“Person”)
acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of
the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), the acquisition
of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock of the Company
will not be considered a Change in Control; or

 

    	-1-

    	 

    

(ii)A change in
the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve
(12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to effectively control the
Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

 

(iii)A change
in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has
acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets
from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all
of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this
subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets:
(A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer
of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect
to the Company’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly,
by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding
stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly,
by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the
value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities
associated with such assets.

 

For purposes of this
Section 2(f), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction with the Company. 

 

Notwithstanding the
foregoing, a transaction shall not be deemed a Change in Control unless the transaction qualifies as a change in the ownership
of the Company, change in the effective control of the Company or a change in the ownership of a substantial portion of the Company’s
assets, each within the meaning of Section 409A of the Code and any proposed or final Treasury Regulations and Internal Revenue
Service guidance that has been promulgated or may be promulgated thereunder from time to time (“Section 409A”).

 

(g) “Code”
means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will
be a reference to any successor or amended section of the Code.

 

(h)“Committee”
means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board
in accordance with Section 4 hereof.

 

(i)“Common
Stock” means the common stock of the Company.

 

    	-2-

    	 

    

(j)“Company”
means Lantronix, Inc., a Delaware corporation, or any successor thereto.

 

(k)“Consultant”
means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

 

(l)“Determination
Date” means the latest possible date that will not jeopardize the qualification of an Award granted under the Plan as
“performance-based compensation” under Section 162(m) of the Code.

 

(m)“Director”
means a member of the Board.

 

(n)“Disability”
means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that
in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent
and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time
to time.

 

(o) “Employee”
means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment”
by the Company.

 

(p)“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

(q)“Fair
Market Value” means, as of any date, the value of the Common Stock as the Administrator may
determine in good faith by reference to the price of such stock on any established stock exchange or a national market system on
the day of determination if the Common Stock is so listed on any established stock exchange or a national market system. If the
Common Stock is not listed on any established stock exchange or a national market system, the value of the Common Stock will be
determined as the Administrator may determine in good faith.

 

(r)“Fiscal
Year” means the fiscal year of the Company.

 

(s)“Incentive
Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

(t)“Nonstatutory
Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock
Option.

 

(u)“Officer”
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

 

(v) “Option”
means a stock option granted pursuant to Section 6 of the Plan.

 

    	-3-

    	 

    

(w)“Parent”
means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(x)“Participant”
means the holder of an outstanding Award.

 

(y)“Performance
Goals” will have the meaning set forth in Section 11 of the Plan.

 

(z)“Performance
Period” means any Fiscal Year of the Company or such other period as determined by the Administrator in its sole discretion.

 

(aa)“Performance
Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals
or other vesting criteria as the Administrator may determine pursuant to Section 10.

 

(bb)“Period
of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions
and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time,
the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

 

(cc)“Plan”
means this Amended and Restated 2010 Stock Incentive Plan.

 

(dd) “Restricted
Stock” means Shares issued pursuant to an Award of Restricted Stock under Section 8 of
the Plan, or issued pursuant to the early exercise of an Option.

 

(ee)“Restricted
Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant
to Section 9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

(ff) “Rule
16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.

 

(gg)“Section 16(b)”
means Section 16(b) of the Exchange Act.

 

(hh)“Service
Provider” means an Employee, Director, or Consultant.

 

(ii)“Share”
means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

 

(jj)“Stock
Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 7 is
designated as a Stock Appreciation Right.

 

(kk)“Subsidiary”
means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

    	-4-

    	 

    

3.Stock Subject to the Plan.

 

(a)Subject
to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be awarded and sold under the
Plan is Three Million Fifty Thousand (3,050,000) Shares plus any Shares subject to equity compensation
awards granted under the 2000 Stock Plan or 1998 Stock Option Plan that expire or otherwise terminate without having been exercised
in full or that are forfeited to or repurchased by the Company by virtue of their failure to vest, with the maximum number of Shares
to be added to the Plan equal to Two Million One Hundred Thousand shares (2,100,000) Shares. The Shares may be authorized,
but unissued, or reacquired Common Stock.

 

(b)Full
Value Awards. Any Shares subject to Awards other than Options or Stock Appreciation Rights will be counted against the numerical
limits of this Section 3 as 1.52 Shares for every one (1) Share subject thereto. Further,
if Shares acquired pursuant to any such Award are forfeited or repurchased by the Company and would otherwise return to the Plan
pursuant to Section 3(c), 1.52 times the number of Shares so forfeited or repurchased will return to the Plan and will again become
available for issuance. 

 

(c)Lapsed
Awards. If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted
Stock, Restricted Stock Units or Performance Shares, is forfeited to or repurchased by the Company, the unpurchased Shares (or
for Awards other than Options and Stock Appreciation Rights, the forfeited or repurchased Shares) which were subject thereto will
become available for future grant or sale under the Plan (unless the Plan has terminated). Upon exercise
of a Stock Appreciation Right settled in Shares, the gross number of Shares covered by the portion of the Award so exercised will
cease to be available under the Plan. Shares that have actually been issued under the Plan under any Award will not be returned
to the Plan and will not become available for future distribution under the Plan; provided, however, that if unvested Shares of
Restricted Stock, Restricted Stock Units or Performance Shares are repurchased by the Company or are forfeited to the Company,
such Shares will become available for future grant under the Plan. Shares used to pay the withholding tax related to an Award or
to pay for the exercise price of an Award will not become available for future grant or sale under the Plan. To the extent an Award
under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available
for issuance under the Plan. Notwithstanding the foregoing provisions of this Section 3(c), subject
to adjustment provided in Section 14, the maximum number of Shares that may be issued upon the exercise of Incentive Stock
Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422
of the Code, any Shares that become available for issuance under the Plan under this Section 3(c). 

 

(d)Share
Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of the Plan.

 

    	-5-

    	 

    

4.Administration
of the Plan.

 

(a)Procedure.

 

(i)Multiple
Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

 

(ii)Section 162(m).
To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two
(2) or more “outside directors” within the meaning of Section 162(m) of the Code.

 

(iii)Rule 16b-3.
To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will
be structured to satisfy the requirements for exemption under Rule 16b-3.

 

(iv)Other Administration.
Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will
be constituted to satisfy Applicable Laws.

 

(b)Powers
of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

 

(i)to determine
the Fair Market Value;

 

(ii)to select
the Service Providers to whom Awards may be granted hereunder;

 

(iii)to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder;

 

(iv)to construe
and interpret the terms of the Plan and Awards granted pursuant to the Plan;

 

(v)to prescribe,
amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established
for the purpose of satisfying applicable foreign laws;

 

(vi)to modify
or amend each Award (subject to Section 19(c) of the Plan);

 

(vii)to authorize
any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the
Administrator;

 

(viii)to allow
a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant
under an Award pursuant to such procedures as the Administrator may determine; and

 

    	-6-

    	 

    

(ix)to make all
other determinations deemed necessary or advisable for administering the Plan.

 

(c)Effect
of Administrator’s Decision. The Administrator’s decisions, determinations, and interpretations will be final
and binding on all Participants and any other holders of Awards.

 

5.Eligibility.
Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares may be granted
to Service Providers. Incentive Stock Options may be granted only to Employees.

 

6.Stock Options.

 

(a)Limitations.

 

(i)Each Option
will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares
will be determined as of the time the Option with respect to such Shares is granted.

 

(ii)The Administrator
will have complete discretion to determine the number of Shares subject to an Option granted to any Participant, provided that
during any Fiscal Year, no Participant will be granted Option or Stock Appreciation Rights covering more than, in the aggregate,
Two Million Five Hundred Thousand (2,500,000) Shares.

 

(b)Term
of Option. The Administrator will determine the term of each Option in its sole discretion;
provided, however, that the term will be no more than seven (7) years from the date of grant
thereof. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock
Option is granted, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter
term as may be provided in the Award Agreement.

 

(c)Option
Exercise Price and Consideration.

 

(i)Exercise
Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the
Administrator, but will be no less than 100% of the Fair Market Value per Share on the date of grant.
In addition, in the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option
is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. Notwithstanding
the foregoing provisions of this Section 6(c), Options may be granted with a per Share exercise price of less than 100% of the
Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a)
of the Code. 

 

    	-7-

    	 

    

(ii)Waiting
Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option
may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

 

(iii)No Repricing.
The exercise price for an Option may not be reduced without the consent of the Company’s stockholders. This shall include,
without limitation, a repricing of the Option as well as an Option exchange program whereby the Participant agrees to cancel an
existing Option in exchange for an Option, Stock Appreciation Right, other Award or cash.

 

(iv)Form of
Consideration. The Administrator will determine the acceptable form(s) of consideration for exercising an Option, including
the method of payment, to the extent permitted by Applicable Laws (and, in the case of an Incentive Stock Option, shall be determined
at the time of grant). Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note,
to the extent permitted by Applicable Laws, (4) other vested Shares, provided that such Shares have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised and provided that
accepting such Shares, in the sole discretion of the Administrator, shall not result in any adverse accounting consequences to
the Company, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection
with the Plan, (6) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable
Laws, or (7) any combination of the foregoing methods of payment. In making its determination as to the type of consideration
to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

 

(d)Exercise
of Option.

 

(i)Procedure
for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option
may not be exercised for a fraction of a Share.

 

An Option will be deemed
exercised when the Company receives: (i) notice of exercise (in such form as the Administrator specifies from time to time)
from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is
exercised (together with any applicable withholding taxes). No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.

 

(ii)Termination
of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s
termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within
such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but
in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified
time in the Award Agreement, the Option will remain exercisable for ninety (90) days following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant
does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered
by such Option will revert to the Plan.

 

    	-8-

    	 

    

(iii)Disability
of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant
may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested
on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).
In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following
the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant
is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan.
If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate,
and the Shares covered by such Option will revert to the Plan.

 

(iv)Death of
Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s
death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of
death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award
Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s
death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option
may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred
pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified
time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless
otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within
the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(v)Other Termination.
A Participant’s Award Agreement may also provide that if the exercise of the Option following the termination of Participant’s
status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section
16(b), then the Option will terminate on the earlier of (A) the expiration of the term of the Option set forth in the Award Agreement,
or (B) the 10th day after the last date on which such exercise would result in such liability under Section 16(b), but in no event
later than the original full term of the Option. Finally, a Participant’s Award Agreement may also provide that if the exercise
of the Option following the termination of the Participant’s status as a Service Provider (other than upon the Participant’s
death or Disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements
under the Securities Act, then the Option will terminate on the earlier of (A) the expiration of the term of the Option, or (B)
the expiration of a period of ninety (90) days after the termination of the Participant’s status as a Service Provider during
which the exercise of the Option would not be in violation of such registration requirements.

 

    	-9-

    	 

    

7.Stock Appreciation
Rights.

 

(a)Grant
of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to
Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

 

(b)Number
of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to
any Participant, provided that during any Fiscal Year, no Participant will be granted Options or Stock Appreciation Rights covering
more than, in the aggregate, two million five hundred (2,500,000) Shares.

 

(c)Exercise
Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine
the terms and conditions of Stock Appreciation Rights granted under the Plan, provided, however, that the
exercise price will be not less than 100% of the Fair Market Value of a Share on the date of grant. 

 

(d)Stock
Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify
the exercise price (which may not be less than 100% of the Fair Market Value of the underlying Shares on the grant date), the term
of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole
discretion, will determine.

 

(e)Expiration
of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award Agreement; provided, however, that
the term will be no more than seven (7) years from the date of grant thereof. Notwithstanding the foregoing, the rules of
Section 6(d) also will apply to Stock Appreciation Rights.

 

(f)No
Repricing. The exercise price for a Stock Appreciation Right may not be reduced without the consent of the Company’s
stockholders. This shall include, without limitation, a repricing of the Stock Appreciation Right as well as a Stock Appreciation
Right exchange program whereby the Participant agrees to cancel an existing Stock Appreciation Right in exchange for an Option,
Stock Appreciation Right or other Award.

 

(g)Payment
of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive
payment from the Company in an amount determined by multiplying:

 

(i)The difference
between the Fair Market Value of a Share on the date of exercise over the exercise price; times

 

(ii)The number
of Shares with respect to which the Stock Appreciation Right is exercised.

 

    	-10-

    	 

    

(iii)At the discretion
of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some
combination thereof, as specified in the Award Agreement.

 

8.Restricted
Stock.

 

(a)Grant
of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time,
may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

 

(b)Restricted
Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
Notwithstanding the foregoing sentence, during any Fiscal Year no Participant will be granted more than
an aggregate of one million (1,000,000) Shares of Restricted Stock, Restricted Stock Units and
Performance Shares. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company
as escrow agent until the restrictions on such Shares have lapsed.

 

(c)Transferability.
Except as provided in this Section 8, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.

 

(d)Other
Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as
it may deem advisable or appropriate.

 

(e)Removal
of Restrictions. Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction.
The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or
be removed.

 

(f)Voting
Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the Administrator determines otherwise.

 

(g)Dividends
and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled
to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.Any
such dividends or distributions will be subject to the same vesting restrictions as the Shares of Restricted Stock with respect
to which they were paid.

 

(h)Return
of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have
not lapsed will revert to the Company and again will become available for grant under the Plan.

 

(i)Section
162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock as “performance-based compensation”
under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted
Stock which is intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined
by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code
(e.g., in determining the Performance Goals).

 

    	-11-

    	 

    

9.Restricted
Stock Units.

 

(a)Grant.
Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. Each Restricted Stock
Unit grant will be evidenced by an Award Agreement that will specify such other terms and conditions as the Administrator, in its
sole discretion, will determine, including all terms, conditions, and restrictions related to the grant, the number of Restricted
Stock Units and the form of payout, which, subject to Section 9(d), may be left to the discretion of the Administrator. Notwithstanding
anything to the contrary in this subsection (a), during any Fiscal Year no Participant will be granted more than an aggregate
of one million (1,000,000) Shares of Restricted Stock, Restricted Stock Units and Performance
Shares.

 

(b)Vesting
Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to
which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator
may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited
to, continued employment or status as a Service Provider), or any other basis determined by the Administrator in its discretion.
After the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or
waive any restrictions for such Restricted Stock Units. Each Award of Restricted Stock Units will be evidenced by an Award
Agreement that will specify the vesting criteria, and such other terms and conditions as the Administrator, in its sole discretion
will determine. The Administrator, in its discretion, may accelerate the time at which any restrictions
will lapse or be removed.

 

(c)Earning
Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout
as specified in the Award Agreement.

 

(d)Form
and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) set forth
in the Award Agreement. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a
combination thereof. Shares represented by Restricted Stock Units that are fully paid in cash again will be available for grant
under the Plan.

 

(e)Cancellation.
On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.

 

(f)Section
162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation”
under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted
Stock Units which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined
by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code
(e.g., in determining the Performance Goals).

 

    	-12-

    	 

    

10.Performance
Shares.

 

(a)Grant
of Performance Shares. Performance Shares may be granted to Service Providers at any time and from time to time, as will be
determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number
of Performance Shares granted to each Participant provided that during any Fiscal Year, for Performance Shares intended to qualify
as “performance-based compensation” within the meaning of Section 162(m) of the Code, no
Participant will be granted more than an aggregate of one million (1,000,000) Shares of Restricted
Stock, Restricted Stock Units and Performance Shares.

 

(b)Value
of Performance Shares. Each Performance Share will be granted with a fixed dollar payout price. Upon vesting, the Participant
shall receive Shares with a Fair Market Value on the vesting date that is equal to the fixed dollar payout price, rounded down
to the nearest whole Share.

 

(c)Performance
Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions. The Administrator
may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited
to, continued employment or status as a Service Provider), or any other basis determined by the Administrator in its discretion.

 

(d)Earning
of Performance Shares. After the applicable Performance Period has ended, the holder of Performance Shares will be entitled
to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined
as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After
the grant of a Performance Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or
other vesting provisions for such Performance Share.

 

(e)Form
and Timing of Payment of Performance Shares. Payment of earned Performance Shares will be made as soon as practicable after
the expiration of the applicable Performance Period in Shares (which have an aggregate Fair Market Value equal to the fixed dollar
payout value on the vesting date, rounded down to the nearest whole Share).

 

(f)Cancellation
of Performance Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Shares will be forfeited
to the Company, and again will be available for grant under the Plan.

 

(g)Section
162(m) Performance Restrictions. For purposes of qualifying grants of Performance Shares as “performance-based compensation”
under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Performance
Shares which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined
by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code
(e.g., in determining the Performance Goals).

 

    	-13-

    	 

    

11.Performance
Goals. The granting and/or vesting of Awards of Restricted Stock, Restricted Stock Units and Performance Shares may be made
subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of
the Code and may provide for a targeted level or levels of achievement (“Performance Goals”) including (a) earnings
per share, (b) operating cash flow, (c) operating income, (d) profit metrics (such as EBIDA profitability or Non-GAAP
profitability) (e) return on assets, (f) return on equity, (g) return on sales, (h)  revenue, (i) stock price, (j) growth
in stockholder value relative to the moving average of the S&P 500 Index or another index, (k) gross margin, (l) operating
expenses or operating expenses as a percentage of revenue, (m) earnings (which may include earnings before interest and taxes,
earnings before taxes and net earnings), (n) return on capital, (o) return on assets or net assets, (p) return on
investment, (q) operating margin, (r) market share, (s) contract awards or backlog, (t) overhead or other expense
reduction, (u) objective customer indicators, (v) new product invention or innovation, (w) attainment of research and
development milestones, (x) total stockholder return, and (y) working captial. Any Performance
Goals may be used to measure the performance of the Company as a whole or a Subsidiary or other business unit or segment of the
Company and may be measured relative to a peer group or index. Any criteria used may be measured, as applicable (i) in absolute
terms, (ii) against another company or companies, on a per-share basis, and/or (iii) on a pre-tax or post-tax basis (if applicable).
The Performance Goals may differ from participant to participant and from Award to Award. In establishing the Performance Goals,
the Administrator shall determine whether to determine such goals in accordance with United States Generally Accepted Accounting
Principles (“GAAP”), in accordance with accounting principles established by the International Accounting Standards
Board (“IASB Principles”) or which may be adjusted when established to either exclude any items otherwise includable
under GAAP or under IASB Principles or include any items otherwise excludable under GAAP or under IASB Principles.

 

12.Leaves of
Absence; Transfer Between Locations. Unless the Administrator provides otherwise, vesting of Awards
granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in
the case of (i) any leave of absence approved by the Company, or (ii) transfers between locations of the Company or between
the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3) months,
unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, then six (6) months and one day following the commencement of such leave
any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for
tax purposes as a Nonstatutory Stock Option.

 

13.Transferability
of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime
of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional
terms and conditions as the Administrator deems appropriate; provided, however, that in no event may an Award be transferred to
a third party for value.

 

    	-14-

    	 

    

14.Adjustments;
Dissolution or Liquidation; Merger or Change in Control.

 

(a)Adjustments.
In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase,
or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the
number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits set forth in Sections 3,
6, 7, 8, 9, and 10. 

 

(b)Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each
Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of such proposed action.

 

(c)Change
in Control. In the event of a merger or Change in Control, each outstanding Award will be treated
as the Administrator determines in accordance with the authorizations presented herein, including, without limitation, that each
Award will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation (the “Successor Corporation”). The Administrator will not be required to treat all Awards
similarly in the transaction, but may only exercise such discretion (with respect to any outstanding Awards, whenever granted)
in a manner specifically authorized in the remainder of this Section 14 (c).

 

In the event that the
Successor Corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise
all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise
be vested or exercisable, all restrictions on Restricted Stock will lapse, and, with respect to Restricted Stock Units and Performance
Shares, all Performance Goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions
met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted for in the event of a Change in Control,
the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be
fully vested and exercisable for a period of time determined by the Administrator in its sole discretion (but in no event longer
than the original full term), and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

 

    	-15-

    	 

    

For the purposes of this
subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase
or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash,
or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines
to pay cash or a Performance Share which the Administrator can determine to pay in cash, the fair market value of the consideration
received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the Successor
Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received
upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit or Performance Share,
for each Share subject to such Award, to be solely common stock of the Successor Corporation equal in fair market value to the
per share consideration received by holders of Common Stock in the Change in Control.

 

Notwithstanding anything
in this Section 14(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance
Goals or other performance criteria will not be considered assumed if the Company or its successor modifies any of such Performance
Goals or other performance criteria without the Participant’s consent; provided, however, a modification to such Performance
Goals or other performance criteria only to reflect the Successor Corporation’s post-Change in Control corporate structure
will not be deemed to invalidate an otherwise valid Award assumption.

 

15.Tax Withholding

 

(a)Withholding
Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have
the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

 

(b)Withholding
Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without
limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair
Market Value equal to the minimum amount required to be withheld, (iii) delivering to the Company already-owned Shares having a
Fair Market Value equal to the amount required to be withheld, or (iv) selling a sufficient number of Shares otherwise deliverable
to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise)
equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount which
the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum
federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the
amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered will be determined
as of the date that the taxes are required to be withheld.

 

    	-16-

    	 

    

16.No
Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing
the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s
right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.

 

17.Date of Grant.
The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such
Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant
within a reasonable time after the date of such grant.

 

18.Term of Plan.
Subject to Section 22 of the Plan, the Plan will become effective upon its approval by the Company’s stockholders.
It will continue in effect for a term of ten (10) years from the date of the initial Board action unless terminated earlier under
Section 19 of the Plan.

 

19.Amendment
and Termination of the Plan.

 

(a)Amendment
and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.

 

(b)Stockholder
Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

 

(c)Effect
of Amendment or Termination. No amendment, alteration, suspension, or termination of the Plan will impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing
and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise
the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

20.Conditions
Upon Issuance of Shares.

 

(a)Legal
Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance
and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company
with respect to such compliance.

 

(b)Investment
Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent
and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

    	-17-

    	 

    

21.Inability
to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve
the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not
have been obtained.

 

22.Stockholder
Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date
the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.

 

 

 

 

 

 

 

 

 

 

 

    	-18-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00217-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00217-of-00352.parquet"}]]