Document:

lantronix_exim.htm

    Exhibit
10.27

    AMENDMENT

    TO

    LOAN
AND SECURITY AGREEMENT

    (EXIM
PROGRAM)

    

    THIS AMENDMENT to Loan and
Security Agreement (Exim Program) (this “Amendment”) is entered
into this 14 day of August 2008 by and between Silicon Valley Bank (“Bank”) and
Lantronix, Inc., a Delaware corporation (“Borrower”) whose address is 15353
Barranca Parkway, Irvine, California  92618.

     

    Recitals

     

    A.           Bank
and Borrower have entered into that certain Loan and Security Agreement (Exim
Program) with an Effective Date of May 23, 2006 (as the same may from time to
time be amended, modified, supplemented or restated, the “Loan
Agreement”).

     

    B.           Bank
has extended credit to Borrower for the purposes permitted in the Loan
Agreement.

     

    C.           Borrower
has requested that Bank amend the Loan Agreement, as herein set forth, and Bank
has agreed to the same, but only to the extent, in accordance with the terms,
subject to the conditions and in reliance upon the representations and
warranties set forth herein.

     

    Agreement

     

    Now,
Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

     

    1.           Definitions.  Capitalized
terms used but not defined in this Amendment shall have the meanings given to
them in the Loan Agreement.

     

    2.           Amendments
to Loan Agreement.

     

    2.1           Modified FX
Reserve.  The FX Reserve, as defined in Section 2.1.3 of the
Loan Agreement is hereby amended from “$2,000,000” to “$2,500,000.”

     

    2.2           Modified Cash Management Services
Sublimit.  The Cash Management Services Sublimit, as defined in
Section 2.1.4 of the Loan Agreement is hereby amended from “$2,000,000” to
“$2,500,000.”

     

    2.3           Modified Overall Aggregate
Sublimit.  The Overall Aggregate Sublimit, as set forth in
Section 2.1.5 of the Loan Agreement is hereby amended from “$2,000,000” to
“$2,500,000.”

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    2.4           Modified Interest
Rate.  Section 2.3(a) of the Loan Agreement is hereby amended
in its entirety to read as follows:

     

    (a)           Interest
Rate.

     

    (i)           Advances.  Subject
to Section 2.3(b), the principal amount outstanding under the Revolving Line
shall accrue interest at a per annum rate equal to the greater of 1.25%
percentage points above the Prime Rate or 6.25%, which interest shall be payable
monthly.  Notwithstanding the foregoing, and subject to Section
2.3(b), if Borrower achieves two consecutive fiscal quarters of EBITDAS greater
than $1.00 (commencing with the fiscal quarter ending September 30, 2009 or any
fiscal quarter ending thereafter), and only for so long as Borrower maintains
EBITDAS greater than $1.00 at the end of each subsequent fiscal quarter, then
the principal amount outstanding under the Revolving Line shall accrue interest
at a per annum rate equal to the greater of 0.75% percentage points above the
Prime Rate or 5.75%, which interest shall be payable monthly.

     

    

    2.5           Modified Interest
Computation.  The sentence in Section 2.3(g) of the Loan
Agreement that currently reads as follows:

     

    In
addition, so long as any principal or interest with respect to any Hard Credit
Extension (defined as Credit Extensions other than for Letters of Credit, FX
Forward Contracts or amounts utilized for Cash Management Services) remains
outstanding, Bank shall be entitled to charge Borrower a “float” charge in an
amount equal to three (3) Business Days interest, at the interest rate
applicable to the Advances, on all Payments received by Bank.

    

    is hereby
amended in its entirety to read as follows:

    

    In
addition, so long as any principal or interest with respect to any Credit
Extension remains outstanding, Bank shall be entitled to charge Borrower a
“float” charge in an amount equal to three (3) Business Days interest, at the
interest rate applicable to the Advances, on all Payments received by
Bank.

    

    2.6           Deletion of Unused Revolving Line
Facility Fee.  Section 2.4(d) of the Loan Agreement is hereby
amended in its entirety to read as follows:

     

    (d)           Unused Revolving Line
Facility Fee.  [Omitted].

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.7           Modified Anniversary
Fee.  Section 2.4(g) of the Loan Agreement is hereby amended in
its entirety to read as follows:

     

    (g)           Anniversary
Fee.  A fully earned, non-refundable fee of $10,000, on the
first anniversary of the August 2008 Amendment Effective Date; and if this
Agreement is terminated prior to the first anniversary of the August 2008
Amendment Effective Date, either by Borrower or Bank, Borrower shall pay such
Anniversary Fee to Bank in addition to any Termination Fee.

    

    2.8           Modified Termination Fee. The
sentence in Section 4.1 of the Loan Agreement that currently reads as
follows:

     

    If such
termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Revolving Line if termination
occurs on or before the first anniversary of the Effective Date, and 1.0% of the
Revolving Line if termination occurs after the first anniversary of the
Effective Date and on or before the second anniversary of the Effective Date;
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.

     

    is hereby
amended in its entirety to read as follows:

    

    If such
termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Maximum Revolving Line if
termination occurs on or before the first anniversary of the August 2008
Amendment Effective Date, and 1.0% of the Maximum Revolving Line if termination
occurs after the first anniversary of the August 2008 Amendment Effective Date;
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.

     

    2.9           Modified Transaction Report
Submission.  Section 6.2(a)(i) of the Loan Agreement is hereby
amended in its entirety to read as follows:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              (i) 

            	
              a
      Transaction Report weekly and at the time of each request for an Advance
      if Hard Credit Extensions are equal to or greater than $3,000,000;
      otherwise within thirty (30) days after the end of each
    month;

            

    

     

    2.10        Modified Collection of
Accounts.  The last sentence of Section 6.3(c) of the Loan
Agreement that currently reads as follows:

     

    All
collections shall be applied to against any outstanding Obligations (as provided
for in Section 9.4 hereof); provided, however, if Borrower’s outstanding Hard
Credit Extensions are less than $2,500,000 and no Default or Event of Default
has occurred and is continuing, the collections will be placed in Borrower’s
general operating account maintained with Bank.

     

    is hereby
amended in its entirety to read as follows:

    

    All
collections shall be applied against any outstanding Obligations (as provided
for in Section 9.4 hereof); provided, however, if Borrower’s outstanding Hard
Credit Extensions are less than $3,000,000 and no Default or Event of Default
has occurred and is continuing, the collections will be placed in Borrower’s
general operating account maintained with Bank.

     

    2.11        Modified Deposit
Requirement.  Section 6.8(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:

     

    (a)           Maintain
its primary depository and operating accounts and securities accounts with Bank
and Bank’s affiliates which accounts shall represent at least 85% of the dollar
value of Borrower’s accounts at all financial institutions maintained in the
United States. 

     

    

    2.12        Modified Tangible Net Worth Financial
Covenant. Section 6.9(a) of the Loan Agreement is hereby amended in its
entirety to read as follows:

     

    (a)           Tangible Net
Worth.  A Tangible Net Worth of at least $5,250,000 (“Minimum Tangible Net
Worth”) plus (i) 50% of all consideration received after the date hereof
for equity securities and subordinated debt of the Borrower, plus (ii) 50% of
the Borrower’s net income in each fiscal quarter ending after the date
hereof.  Increases in the Minimum Tangible Net Worth based on
consideration received for equity securities and subordinated debt of the
Borrower shall be effective as of the end of the month in which such
consideration is received, and shall continue effective thereafter. Increases in
the Minimum Tangible Net Worth based on net income shall be effective on the
last day of the fiscal quarter in which said net income is realized, and shall
continue effective thereafter. In no event shall the Minimum Tangible Net Worth
be decreased.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.13        Modified
Definitions.  In Section 13.1 of the Loan Agreement, the
following definitions are, as applicable, either hereby (i) amended in their
entirety to read as follows or (ii) added to read as follows:

     

    “Credit Extension” is any
Advance, Term Loan, Letter of Credit, FX Forward Contract, amount utilized for
Cash Management Services, or any other extension of credit by Bank for
Borrower’s benefit.

     

    “EBITDAS” shall mean (a) Net
Income, plus (b) Interest Expense, plus (c) to the extent deducted in the
calculation of Net Income, depreciation expense and amortization expense, plus
(d) income tax expense, plus (e) stock compensation expense.

    

    “Hard Credit Extensions” means
Credit Extensions other than Credit Extensions for Letters of Credit, FX Forward
Contracts or amounts utilized for Cash Management Services.

    

    “Interest Expense” means for
any fiscal period, interest expense (whether cash or non-cash) determined in
accordance with GAAP for the relevant period ending on such date, including, in
any event, interest expense with respect to any Credit Extension and other
Indebtedness of Borrower and its Subsidiaries, including, without limitation or
duplication, all commissions, discounts, or related amortization and other fees
and charges with respect to letters of credit and bankers’ acceptance financing
and the net costs associated with interest rate swap, cap, and similar
arrangements, and the interest portion of any deferred payment obligation
(including leases of all types).

     

    “Maximum Revolving Line” is
$2,000,000.

    

    “Net Income” means, as
calculated on a consolidated basis for Borrower and its Subsidiaries for any
period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower and its Subsidiaries for such period taken as a
single accounting period.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Revolving Line” is an Advance
or Advances in an aggregate amount of up to $2,000,000 outstanding at any
time.

     

    “Revolving Line Maturity Date”
August ___, 2010 [the date that is two years from the date of this
Amendment].

    

    2.14           Modified Definition of Exim Borrower
Agreement.  The definition of the term “Exim Borrower
Agreement,” set forth in Section 14.2 of the Loan Agreements is hereby amended
to mean that certain Borrower Agreement, in the form specified by the Exim Bank,
in favor of Bank and the Exim Bank being executed by Borrower approximately
concurrently herewith and any subsequent Borrower Agreement executed by Borrower
in favor of Bank and Exim Bank.

     

    2.15           Modified Exhibit
E.  Exhibit E to the Loan Agreement is hereby amended in its
entirety to read as set forth in Exhibit E attached hereto.

     

    3.           Limitation
of Amendments.

     

    3.1           The
amendments set forth in Section 2, above, are
effective for the purposes set forth herein and shall be limited precisely as
written and shall not be deemed to (a) be a consent to any amendment,
waiver or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may
have in the future under or in connection with any Loan Document.

     

    3.2           This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

     

    4.           Representations and
Warranties.  To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:

     

    4.1           Immediately
after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (b) no Event of Default has occurred
and is continuing;

     

    4.2           Borrower
has the power and authority to execute and deliver this Amendment and to perform
its obligations under the Loan Agreement, as amended by this
Amendment;

     

    4.3           The
organizational documents of Borrower delivered to Bank on the Effective Date
remain true, accurate and complete and have not been amended, supplemented or
restated and are and continue to be in full force and effect;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    4.4           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;

     

    4.5           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation binding
on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding
on Borrower, or (d) the organizational documents of Borrower;

     

    4.6           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
either Borrower, except as already has been obtained or made; and

     

    4.7           This
Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.

     

    5.           Counterparts.  This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.

     

    6.           Effectiveness.  This
Amendment shall be deemed effective upon (a) the due execution and delivery to
Bank of this Amendment by each party hereto, (b) Borrower’s payment of an
amendment fee in an amount equal to $10,000, (c) Bank’s receipt of the
executed Amendment to Loan and Security Agreement by and between Bank and
Borrower of even date herewith with respect to the non-Exim Loan and Security
Agreement by and between Bank and Borrower and (d) Borrower’s payment of all
fees required by Exim Bank. The date that this Amendment is deemed effective is
referred to herein as the “August 2008 Amendment Effective Date.”

     

     [Signature
page follows.]

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    In Witness
Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

    

    

    
      	
              BANK

            	
              BORROWER

            
	
               

              Silicon
      Valley Bank

               

               

              By:
      /s/ Robert Anderson        

              Name: Robert
      Anderson

              Title:
      SRM

               

            	
               

              Lantronix,
      Inc.

               

               

              
                By:
      /s/ Reagan Y. Sakai        

                Name: Reagan
      Y. Sakai

                Title: CFO

              

               

            

    

    

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      Non-Exim

       

      
        AMENDMENT

        TO

        LOAN
AND SECURITY AGREEMENT

        

        THIS AMENDMENT to Loan and
Security Agreement (this “Amendment”) is entered
into this 14 day of August 2008 by and between Silicon Valley Bank (“Bank”) and
Lantronix, Inc., a Delaware corporation (“Borrower”) whose address is 15353
Barranca Parkway, Irvine, California  92618.

         

        Recitals

         

        A.           Bank
and Borrower have entered into that certain Loan and Security Agreement with an
Effective Date of May 23, 2006 (as the same may from time to time be amended,
modified, supplemented or restated, the “Loan Agreement”).

         

        B.           Bank
has extended credit to Borrower for the purposes permitted in the Loan
Agreement.

         

        C.           Borrower
has requested that Bank amend the Loan Agreement, as herein set forth, and Bank
has agreed to the same, but only to the extent, in accordance with the terms,
subject to the conditions and in reliance upon the representations and
warranties set forth herein.

         

        Agreement

         

        Now,
Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

         

        1.           Definitions.  Capitalized
terms used but not defined in this Amendment shall have the meanings given to
them in the Loan Agreement.

         

        2.           Amendments
to Loan Agreement.

         

        2.1           Modified FX
Reserve.  The FX Reserve, as defined in Section 2.1.3 of the
Loan Agreement is hereby amended from “$2,000,000” to “$2,500,000.”

         

        2.2           Modified Cash Management Services
Sublimit.  The Cash Management Services Sublimit, as defined in
Section 2.1.4 of the Loan Agreement is hereby amended from “$2,000,000” to
“$2,500,000.”

         

        2.3           Modified Overall Aggregate
Sublimit.  The Overall Aggregate Sublimit, as set forth in
Section 2.1.5 of the Loan Agreement is hereby amended from “$2,000,000” to
“$2,500,000.”

         

        2.4           Addition of Term
Loan.  The following language is hereby added to the Loan
Agreement as Section 2.1.6 and shall read as follows:

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

         

        2.1.6                      Term
Loan.

         

        (a)           Availability.  Bank
shall make one (1) term loan available to Borrower in an amount up to the Term
Loan Amount on or before August 31, 2008, subject to the satisfaction of the
terms and conditions of this Agreement.

         

        (b)           Repayment.  Borrower
shall repay the Term Loan in (i) thirty-six (36) equal installments of
principal, plus (ii) monthly payments of accrued interest (the “Term Loan
Payment”).  Beginning on the first day of the month following the
month in which the Funding Date occurs, each Term Loan Payment shall be payable
on the first day of each month.  Borrower’s final Term Loan Payment,
due on the Term Loan Maturity Date, shall include all outstanding principal and
accrued and unpaid interest under the Term Loan.

        

        2.5           Modified Interest
Rate.  Section 2.3(a) of the Loan Agreement is hereby amended
in its entirety to read as follows:

         

        (a)           Interest
Rate.

         

        (i)           Advances.  Subject
to Section 2.3(b), the principal amount outstanding under the Revolving Line
shall accrue interest at a per annum rate equal to the greater of 1.25%
percentage points above the Prime Rate or 6.25%, which interest shall be payable
monthly.  Notwithstanding the foregoing, and subject to Section
2.3(b), if Borrower achieves two consecutive fiscal quarters of EBITDAS greater
than $1.00 (commencing with the fiscal quarter ending September 30, 2009 or any
fiscal quarter ending thereafter), and only for so long as Borrower maintains
EBITDAS greater than $1.00 at the end of each subsequent fiscal quarter, then
the principal amount outstanding under the Revolving Line shall accrue interest
at a per annum rate equal to the greater of 0.75% percentage points above the
Prime Rate or 5.75%, which interest shall be payable monthly.

        

        (ii)           Term
Loan.  Subject to Section 2.3(b), the principal amount
outstanding under the Term Loan shall accrue interest at a per annum rate equal
to the greater of 1.25% percentage points above the Prime Rate or 6.25%, which
interest shall be payable monthly.  Notwithstanding the foregoing, and
subject to Section 2.3(b), if Borrower achieves two consecutive fiscal quarters
of EBITDAS greater than $1.00 (commencing with the fiscal quarter ending
September 30, 2009 or any fiscal quarter ending thereafter), and only for so
long as Borrower maintains EBITDAS greater than $1.00 at the end of each
subsequent fiscal quarter, then the principal amount outstanding under the Term
Loan shall accrue interest at a per annum rate equal to the greater of 0.75%
percentage points above the Prime Rate or 5.75%, which interest shall be payable
monthly.

         

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        2.6           Modified Interest
Computation.  The sentence in Section 2.3(g) of the Loan
Agreement that currently reads as follows:

         

        In
addition, so long as any principal or interest with respect to any Hard Credit
Extension (defined as Credit Extensions other than for Letters of Credit, FX
Forward Contracts or amounts utilized for Cash Management Services) remains
outstanding, Bank shall be entitled to charge Borrower a “float” charge in an
amount equal to three (3) Business Days interest, at the interest rate
applicable to the Advances, on all Payments received by Bank.

        

        is hereby
amended in its entirety to read as follows:

        

        In
addition, so long as any principal or interest with respect to any Credit
Extension remains outstanding, Bank shall be entitled to charge Borrower a
“float” charge in an amount equal to three (3) Business Days interest, at the
interest rate applicable to the Advances, on all Payments received by
Bank.

        

        2.7           Deletion of Unused Revolving Line
Facility Fee.  Section 2.4(d) of the Loan Agreement is hereby
amended in its entirety to read as follows:

         

        (d)           Unused Revolving Line
Facility Fee.  [Omitted].

        

        2.8           Modified Collateral Monitoring
Fee.  Section 2.4(e) of the Loan Agreement is hereby amended in
its entirety to read as follows:

         

        (e)           Collateral Monitoring
Fee.  A monthly collateral monitoring fee of $2,000, payable in
arrears on the last day of each month (prorated for any partial month at the
beginning and upon termination of this Agreement) in which Borrower has Hard
Credit Extensions outstanding equal to or greater than $3,000,000; otherwise, a
monthly collateral monitoring fee of $500, payable in arrears on the last day of
each month (prorated for any partial month at the beginning and upon termination
of this Agreement); and

         

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

        
 

        2.9           Modified Anniversary
Fee.  Section 2.4(g) of the Loan Agreement is hereby amended in
its entirety to read as follows:

         

        (g)           Anniversary
Fee.  A fully earned, non-refundable fee of $25,000, on the
first anniversary of the August 2008 Amendment Effective Date; and if this
Agreement is terminated prior to the first anniversary of the August 2008
Amendment Effective Date, either by Borrower or Bank, Borrower shall pay such
Anniversary Fee to Bank in addition to any Termination Fee.

        

        2.10        Modified Termination Fee. The
sentence in Section 4.1 of the Loan Agreement that currently reads as
follows:

         

        If such
termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Revolving Line if termination
occurs on or before the first anniversary of the Effective Date, and 1.0% of the
Revolving Line if termination occurs after the first anniversary of the
Effective Date and on or before the second anniversary of the Effective Date;
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.

         

        is hereby
amended in its entirety to read as follows:

        

        If such
termination is at Borrower’s election or at Bank’s election due to the
occurrence and continuance of an Event of Default, Borrower shall pay to Bank,
in addition to the payment of any other expenses or fees then-owing, a
termination fee in an amount equal to 2.0% of the Maximum Revolving Line if
termination occurs on or before the first anniversary of the August 2008
Amendment Effective Date, and 1.0% of the Maximum Revolving Line if termination
occurs after the first anniversary of the August 2008 Amendment Effective Date;
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.

         

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

         

         

        2.11        Modified Transaction Report
Submission.  Section 6.2(a)(i) of the Loan Agreement is hereby
amended in its entirety to read as follows:

         

        
          	
                   
      

                	
                  (i) 

                	
                  a
      Transaction Report weekly and at the time of each request for an Advance
      if Hard Credit Extensions are equal to or greater than $3,000,000;
      otherwise within thirty (30) days after the end of each
    month;

                

        

         

        2.12        Modified Collection of
Accounts.  The last sentence of Section 6.3(c) of the Loan
Agreement that currently reads as follows:

         

        All
collections shall be applied to against any outstanding Obligations (as provided
for in Section 9.4 hereof); provided, however, if Borrower’s outstanding Hard
Credit Extensions are less than $2,500,000 and no Default or Event of Default
has occurred and is continuing, the collections will be placed in Borrower’s
general operating account maintained with Bank.

         

        is hereby
amended in its entirety to read as follows:

        

        All
collections shall be applied against any outstanding Obligations (as provided
for in Section 9.4 hereof); provided, however, if Borrower’s outstanding Hard
Credit Extensions are less than $3,000,000 and no Default or Event of Default
has occurred and is continuing, the collections will be placed in Borrower’s
general operating account maintained with Bank.

         

        2.13        Modified Deposit
Requirement.  Section 6.8(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:

         

         

        (a)           Maintain
its primary depository and operating accounts and securities accounts with Bank
and Bank’s affiliates which accounts shall represent at least 85% of the dollar
value of Borrower’s accounts at all financial institutions maintained in the
United States. 

         

        

        2.14        Modified Tangible Net Worth Financial
Covenant. Section 6.9(a) of the Loan Agreement is hereby amended in its
entirety to read as follows:

         

        (a)           Tangible Net
Worth.  A Tangible Net Worth of at least $5,250,000 (“Minimum Tangible Net
Worth”) plus (i) 50% of all consideration received after the date hereof
for equity securities and subordinated debt of the Borrower, plus (ii) 50% of
the Borrower’s net income in each fiscal quarter ending after the date
hereof.  Increases in the Minimum Tangible Net Worth based on
consideration received for equity securities and subordinated debt of the
Borrower shall be effective as of the end of the month in which such
consideration is received, and shall continue effective thereafter. Increases in
the Minimum Tangible Net Worth based on net income shall be effective on the
last day of the fiscal quarter in which said net income is realized, and shall
continue effective thereafter. In no event shall the Minimum Tangible Net Worth
be decreased.

         

         

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

         

        2.15        Modified
Definitions.  In Section 13.1 of the Loan Agreement, the
following definitions are, as applicable, either hereby (i) amended in their
entirety to read as follows or (ii) added to read as follows:

         

        Availability Amount” is at any
time (a) the lesser of (i) the Revolving Line or (ii) the Borrowing Base minus
(b) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) minus (c) an amount equal to the Letter of
Credit Reserves, minus (d) the FX Reserve, minus (e) the outstanding principal
balance of any Advances (including any amounts used for Cash Management
Services), and minus (f) the principal balance then outstanding of the Term
Loan.

         

        “Credit Extension” is any
Advance, Term Loan, Letter of Credit, FX Forward Contract, amount utilized for
Cash Management Services, or any other extension of credit by Bank for
Borrower’s benefit.

         

        “EBITDAS” shall mean (a) Net
Income, plus (b) Interest Expense, plus (c) to the extent deducted in the
calculation of Net Income, depreciation expense and amortization expense, plus
(d) income tax expense, plus (e) stock compensation expense.

        

        “Hard Credit Extensions” means
Credit Extensions other than Credit Extensions for Letters of Credit, FX Forward
Contracts or amounts utilized for Cash Management Services.

        

        “Interest Expense” means for
any fiscal period, interest expense (whether cash or non-cash) determined in
accordance with GAAP for the relevant period ending on such date, including, in
any event, interest expense with respect to any Credit Extension and other
Indebtedness of Borrower and its Subsidiaries, including, without limitation or
duplication, all commissions, discounts, or related amortization and other fees
and charges with respect to letters of credit and bankers’ acceptance financing
and the net costs associated with interest rate swap, cap, and similar
arrangements, and the interest portion of any deferred payment obligation
(including leases of all types).

         

         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

         

        “Maximum Revolving Line” is
$5,000,000.

        

        “Net Income” means, as
calculated on a consolidated basis for Borrower and its Subsidiaries for any
period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrower and its Subsidiaries for such period taken as a
single accounting period.

         

        “Revolving Line Maturity Date”
August ___, 2010 [the date that is two years from the date of this
Amendment].

        

        “Term Loan” is a loan made by
Bank pursuant to the terms of Section 2.1.6 hereof.

         

        “Term Loan Amount” is an
amount equal to Two Million Dollars ($2,000,000).

         

        “Term Loan Maturity Date” is
the earlier of the following dates: (i) August 1, 2011, (ii) the Revolving Line
Maturity Date or (iii) the date this Agreement terminates by its terms or is
terminated by either party in accordance with its terms.

         

        “Term Loan Payment” is defined
in Section 2.1.6(b).

         

        2.16           Modified Exhibit
E.  Exhibit E to the Loan Agreement is hereby amended in its
entirety to read as set forth in Exhibit E attached hereto.

         

        3.           Limitation
of Amendments.

         

        3.1           The
amendments set forth in Section 2, above, are
effective for the purposes set forth herein and shall be limited precisely as
written and shall not be deemed to (a) be a consent to any amendment,
waiver or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may
have in the future under or in connection with any Loan Document.

         

        3.2           This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

         

        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        

         

        4.           Representations and
Warranties.  To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:

         

        4.1           Immediately
after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (b) no Event of Default has occurred
and is continuing;

         

        4.2           Borrower
has the power and authority to execute and deliver this Amendment and to perform
its obligations under the Loan Agreement, as amended by this
Amendment;

         

        4.3           The
organizational documents of Borrower delivered to Bank on the Effective Date
remain true, accurate and complete and have not been amended, supplemented or
restated and are and continue to be in full force and effect;

         

        4.4           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;

         

        4.5           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation binding
on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding
on Borrower, or (d) the organizational documents of Borrower;

         

        4.6           The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
either Borrower, except as already has been obtained or made; and

         

        4.7           This
Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.

         

        5.           Counterparts.  This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.

         

        6.           Effectiveness.  This
Amendment shall be deemed effective upon (a) the due execution and delivery to
Bank of this Amendment by each party hereto, (b) Borrower’s payment of an
amendment fee in an amount equal to $25,000, and (c) Bank’s receipt of the
executed Amendment to Loan and Security Agreement (Exim Program) by and between
Bank and Borrower of even date herewith.  The date that this Amendment
is deemed effective is referred to herein as the “August 2008 Amendment
Effective Date.”

         

        [Signature
page follows.]

         

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        

         

        In Witness
Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

        

        

        
          	
                  BANK

                	
                  BORROWER

                
	
                   

                  Silicon
      Valley Bank

                   

                   

                  By: /s/ Robert Anderson        

                  Name: Robert
      Anderson

                  Title: SRM

                   

                	
                   

                  Lantronix,
      Inc.

                   

                   

                  By: /s/ Reagan Y. Sakai        

                  Name: Reagan
      Y. Sakai

                  Title: CFO                                  

                   

                

        

        

         

         

         

         

         

         

        17exh10_1.htm

    2008
      NON-EMPLOYEE DIRECTOR LONG-TERM INCENTIVE PLAN

    

    Section
      1.    Establishment and Purposes of the
      Plan.

    

    (a)           Purpose.  The
      purposes of this ePlus
      inc. 2008 Non-Employee Director Long-Term Incentive Plan (the
“Plan”) are to attract,
      retain and compensate for service as members of the Board of Directors of ePlus inc. (the “Company”)
      highly qualified
      individuals who are not current employees of the Company and to enable them
      to
      increase their ownership in the Company’s Common Stock.  The Plan will
      be beneficial to the Company and its stockholders since it will allow these
      Directors to have a greater personal financial stake in the Company through
      the
      ownership of Common Stock, in addition to underscoring their common interest
      with stockholders in increasing the long-term value of the Common
      Stock.

    

    (b)           Effective
      Date; Shareholder Approval.  The Plan is effective September 15, 2008,
      subject to the approval by the Company’s shareholders.

    

    Section
      2.    Definitions.

    

    As
      used
      herein, the following definitions shall apply:

    

    “Affiliate”
shall
      mean (i) any
      entity that, directly or through one or more intermediaries, is controlled
      by
      the Company and (ii) any entity in which the Company has a significant equity
      interest, as determined by the Committee.

    

    “Applicable
      Laws” means the
      requirements relating to the administration of equity plans 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 Restricted
      Shares are, or will be, granted under the Plan.

    

    “Board”
means
      the Board of
      Directors of the Company.

    

    “Change
      in Control” means the
      occurrence of any of the following events with respect to the
      Company:

    

    (i)
      the
      consummation of any consolidation or merger of the Company in which the Company
      is not the continuing or surviving corporation or pursuant to which Common
      Stock
      would be converted into cash, securities or other property, other than a merger
      of the Company in which the holders of Common Stock immediately prior to the
      merger own more than fifty percent (50%) of the outstanding common stock of
      the
      surviving corporation immediately after the merger; or

    

    (ii)
      the
      consummation of any sale, lease, exchange or other transfer (in one transaction
      or a series of related transactions) of all, or substantially all, of the assets
      of the Company, other than to a subsidiary or affiliate; or

    

    (iii)
      any
      action pursuant to which any person (as such term is defined in Section 13(d)
      of
      the Exchange Act), corporation or other entity shall become the “beneficial
      owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly
      or indirectly, of shares of capital stock entitled to vote generally for the
      election of directors of the Company (“Voting Securities”)
      representing more than fifty (50%) percent of the combined voting power of
      the
      Company’s then outstanding Voting Securities (calculated as provided in Rule
      13d-3(d) in the case of rights to acquire any such securities); or

    

    (iv)
      the
      individuals (x) who, as of the Effective Date, constitute the Board (the “Original Directors”) and (y)
      who thereafter are elected to the Board and whose election, or nomination for
      election, to the Board was approved by a vote of a majority of the Original
      Directors then still in office (such Directors being called “Additional Original
      Directors”) and (z) who thereafter are elected to the Board and whose
      election or nomination for election to the Board was approved by a vote of
      a
      majority of the Original Directors and Additional Original Directors then still
      in office, cease for any reason to constitute a majority of the members of
      the
      Board; or

     

    (v)
      the
      dissolution or liquidation of the Company.

    

    “Code”
means
      the Internal
      Revenue Code of 1986, as amended.

    

    “Committee”
means
      a committee
      designated by the Board and composed of not less than two “Non-Employee
      Directors” as defined in Rule 16b-3 under the Exchange Act, or any successor
      rule or definition adopted by the Securities and Exchange
      Commission.

    

    “Common
      Stock” means the
      common stock, par value $0.01 per share, of the Company.

    

    “Director”
means
      a member of
      the Board.

    

    “Disability”
means
      any illness
      or other physical or mental condition of a Participant which renders the
      Participant incapable of performing his or her customary and usual duties for
      the Company, or any medically determinable illness or other physical or mental
      condition resulting from a bodily injury, disease, or mental disorder that
      in
      the judgment of the Committee is permanent and continuous in nature. The
      Committee may require such medical or other evidence as it deems necessary
      to
      judge the nature and permanency of the Participant’s condition.

    

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

    

    “Fair
      Market Value” means, as
      of any date, the value of Common Stock determined as follows:

    

    (i)
      if
      the Common Stock is listed on any established stock exchange or a national
      market system, including without limitation the Nasdaq Global Market or The
      Nasdaq Capital Market of The Nasdaq Stock Market, the fair market value of
      a
      share of Common Stock shall be the closing sales price of a share of Common
      Stock as quoted on such exchange or system for such date (or the most recent
      trading day preceding such date if there were no trades on such date), as
      reported in The Wall
      Street Journal or such other source as the Committee deems
      reliable;

    

    (ii)
      if
      the Common Stock is regularly quoted by a recognized securities dealer but
      is
      not listed in the manner contemplated by clause (i) above, the Fair Market
      Value
      of a Share of Common Stock shall be the mean between the high bid and low asked
      prices for the Common Stock on the day of determination, as reported in The Wall Street
      Journal or such other source as the Committee deems reliable;
      or

    

    (iii)
      if
      neither clause (i) above nor clause (ii) above applies, the fair market value
      of
      a share of Common Stock shall be determined in good faith by the Committee
      based
      on the reasonable application of a reasonable valuation method.

    

    “Outside
      Director” means any
      Director who, on the date such person is to receive a grant of Restricted Shares
      hereunder is not a current employee of the Company or any of the Company’s
      subsidiaries.

    

    “Participant”
shall
      mean any
      Outside Director who holds a Restricted Stock Award granted or issued pursuant
      to the Plan.

    

    “Plan”
means
      this ePlus inc. 2008 Non-Employee
      Director Long-Term Incentive Plan.

    

    “Restricted
      Shares” means
      Shares subject to a Restricted Stock Award.

    

    “Restricted
      Stock Agreement”
means any written agreement, contract, or other instrument or document,
      including an electronic communication, evidencing the terms and conditions
      of a
      Restricted Stock Award.

    

    “Restricted
      Stock Award” means
      a grant of Restricted Shares pursuant to Section 7 of the Plan.

    

    “Share”
means
      a share of
      Common Stock, as adjusted in accordance with Section 9 of the Plan.

    

    Section
      3.    Stock Subject to the
      Plan.

    

    Subject
      to the provisions of Section 9 of the Plan, the maximum aggregate number of
      Shares that may be issued as Restricted Shares under the Plan is two hundred
      fifty thousand (250,000) Shares.  The Shares may be authorized, but
      unissued, or treasury Shares.  Restricted Shares that have been
      transferred back to the Company shall be available for future grants of
      Restricted Shares under the Plan.

    

    Section
      4.    Administration of
      the
      Plan.

    

    (a)        
         Administration.  The
      Plan shall be administered by the Committee.  The Committee shall have
      the authority, in its discretion:

    

    (i)         
         to determine the Fair Market Value of Common
      Stock;

    

    (ii)       
          to approve forms of agreement for use under the
      Plan;

    

    (iii)           to
      determine the number of Shares that may be issued as Restricted Shares and
      the
      terms and conditions of such Restricted Shares;

    

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

    

    (v)         
        to prescribe, amend and rescind rules and regulations relating to
      the Plan;

    

    (vi)           to
      allow Participants to satisfy withholding tax obligations by having the Company
      withhold from the shares of Common Stock to be issued upon vesting of Restricted
      Shares that number of Shares having a Fair Market Value equal to the amount
      required to be withheld, provided that withholding is calculated at the minimum
      statutory withholding level.  The Fair Market Value of the Shares to
      be withheld shall be determined on the date that the amount of tax to be
      withheld is to be determined.  All determinations to have Shares
      withheld for this purpose shall be made by the Committee in its
      discretion;

    

    (vii)    
           to instruct a corporate officer to execute on
      behalf of the Company any instrument required to effect the grant of a
      Restricted Stock Award granted by the Committee; and

    

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

    

    (b)           Effect
      of Committee’s
      Decision.  The Committee’s decisions, determinations and
      interpretations shall be final and binding on all Participants and anyone else
      who may claim an interest in Restricted Shares.

    

    Section
      5.    Eligibility.

    

    The
      only
      persons who shall be eligible to receive Restricted Stock Awards under the
      Plan
      shall be persons who, on the date such Awards are granted, are Outside
      Directors.

    

    Section
      6.    Term of the Plan.

    

    No
      Restricted Stock Award may be granted under the Plan after September 15,
      2018.

     

    
      Section
        7.    Grants of Restricted
        Stock
        Awards.

       

      (a)           Initial
        Grant.  Each individual who first becomes an Outside Director
        on or after the date of the approval of this Plan by the stockholders of
        the
        Company shall, upon first qualifying as an Outside Director, automatically
        be
        granted a number of Restricted Shares, on the terms and conditions set forth
        in
        Section 8 below, having a Fair Market Value on the date of grant (determined
        without regard to the restrictions applicable thereto) equal to the product
        of the amount of cash compensation earned by an individual Outside Director
        during the twelve months immediately prior to his becoming an Outside
        Director multiplied by the quotient of the number of days until the next
        Annual Grant Date (as defined below) divided by 365; provided,
        however, that grants of Restricted Shares under this Plan shall not be
        made until a Form S-8 registration statement in respect of the Shares is
        filed
        with, and declared effective by, the Securities and Exchange
        Commission.

       

      (b)           
        Annual
        Grant.  On September 25th
        of each year (the “Annual
        Grant
        Date”), beginning with September 25, 2008, or the next following business
        day if September 25th
        is not a business day, each Outside Director shall automatically be granted
        a
        number of Restricted Shares, on the terms and conditions set forth in Section
        8
        below, having a Fair Market Value on the date of grant (determined without
        regard to the restrictions applicable thereto) equal to the aggregate dollar
        amount of cash compensation earned by an individual Outside Director who
        served
        on the board  during the Company’s entire fiscal year ended
        immediately prior to the respective Annual Grant Date; provided, however,
        that
        grants of Restricted Shares under this Plan shall not be made until a Form
        S-8
        registration statement in respect of the Shares is filed with, and declared
        effective by, the Securities and Exchange Commission.
       

       

      (c)           
        Special
        Grant.  On the date which is two business days after the date
        that a Form S-8 registration statement in respect of the Shares is filed
        with,
        and declared effective by, the Securities and Exchange Commission, each Outside
        Director who was serving as an Outside Director on the day prior to the date
        of
        the approval of this Plan by the stockholders of the Company shall automatically
        be granted a number of Restricted Shares, on the terms and conditions set
        forth
        in Section 8 below, having a Fair Market Value on the date of grant (determined
        without regard to the restrictions applicable thereto) equal to thirty-five
        thousand dollars ($35,000).

       

      (d)           
        Stock
        Fee
        Election.   An Outside Director may make an election (a
        "Stock Fee Election") to receive Restricted Shares in lieu of all or any
        part of
        the cash compensation payable to him or her for service on the Board for
        a
        calendar year.  Any Stock Fee Election and any change or revocation
        thereof shall be made by delivering written notice thereof to the Committee
        prior to the end of the calendar year preceding the calendar year of service
        for
        which it is to be effective.   Such Stock Fee Election shall
        remain in effect for each subsequent calendar year of service unless
        changed.  An Outside Director may not elect to change his or her Stock
        Fee Election for a calendar year after the last day of the calendar year
        preceding the calendar year of service for which the election is
        made.  Any Restricted Stock that relates to a Stock Fee Election shall
        be treated as a Restricted Stock Award for purposes of this Plan.  The
        number of shares shall be determined by dividing the cash compensation deferred
        for a calendar quarter of service by the Fair Market Value as of the first
        business day of the following calendar quarter, and each such first business
        day
        shall be considered the grant date of the Restricted Stock
        Award.

    

     

    Section
      8.    Terms of Restricted Stock Awards.

    

    Except
      as
      provided herein, Restricted Shares shall be subject to restrictions (“Restrictions”) prohibiting
      such Restricted Shares from being sold, transferred, assigned, pledged or
      otherwise encumbered or disposed of.  The Restrictions with respect to
      each award of Restricted Shares shall lapse as to one-half of such Restricted
      Shares on each of the one-year and second-year anniversary date of the grant
      of
      such award; provided,
however,
      that the
      Restrictions with respect to such Restricted Shares shall lapse immediately
      in
      the event that (i) the Participant is nominated for a new term as an Outside
      Director but is not elected by stockholders of the Company, or (ii) the
      Participant ceases to be a member of the Board due to death, disability or
      mandatory retirement (if any). Notwithstanding the foregoing, the Restrictions
      with respect to all of a Participant's Restricted Shares shall lapse immediately
      prior to a Change in Control provided that the Participant is a member of the
      Board immediately prior to such Change in Control.

    

    The
      Company shall issue, in the name of each Participant to whom Restricted Shares
      have been granted, stock certificates (in tangible or electronic form)
      representing the total number of Restricted Shares granted to such Participant
      as soon as reasonably practicable after the grant.  However, the
      Company or its transfer agent shall hold such certificates, properly endorsed
      for transfer, for the Participant’s benefit until such time as the Restriction
      Period applicable to such Restricted Shares lapses.  Upon the
      expiration or termination of the Restricted Period, the restrictions applicable
      to the Restricted Shares shall lapse and a stock certificate for the number
      of
      Restricted Shares with respect to which the restrictions have lapsed shall
      be
      delivered, free of all such restrictions, to the Participant or his or her
      beneficiary or estate, as the case may be.  Except as described in the
      above paragraph, in the event that a Participant ceases to be a member of the
      Board before the applicable Restriction Period has expired or under
      circumstances in which the Restriction Period does not otherwise lapse, the
      Restricted Shares granted to such Participant shall thereupon be forfeited
      and
      transferred back to the Company.

     

    During
      the Restriction Period, a Participant shall have the right to vote his or her
      Restricted Shares and shall have the right to receive any cash dividends with
      respect to such Restricted Shares.  All distributions, if any,
      received by a Participant with respect to Restricted Shares as a result of
      any
      stock split, stock distribution, combination of shares, or other similar
      transaction shall be subject to the same restrictions as are applicable to
      the
      Restricted Shares to which such distributions relate.

    

    Section
      9.    Adjustments Upon Changes in
      Capitalization.

    

    Subject
      to any required action by the stockholders of the Company, the number of shares
      of Common Stock covered by each outstanding Restricted Stock Award, and the
      number of shares of Common Stock which have been authorized for issuance under
      the Plan but as to which no Restricted Stock Awards have yet been granted or
      which have been returned to the Plan upon cancellation or expiration of a
      Restricted Stock Award, 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, combination or reclassification
      of
      the Common Stock, or any other increase or decrease in the number of issued
      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 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 a Restricted Stock Award.

    

    Section
      10.    Grant Agreement.

    

    Each
      grant of a Restricted Stock Award under the Plan will be evidenced by a
      Restricted Stock Agreement.  Such document will contain such
      provisions as the Committee may in its discretion deem advisable, provided that such provisions
      are not inconsistent with any of the provisions of the Plan.

    

    Section
      11.    Amendment and Termination
      of the
      Plan.

    

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

    

    (b)           Shareholder
      Approval.  The Company shall obtain shareholder approval of any
      Plan amendment to the extent necessary to comply with Applicable
      Laws.

    

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

    

    Section
      12.    Conditions Upon Issuance
      of
      Shares.

    

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

    

    (b)           Investment
      Representations.  As a condition to the issuance of Restricted
      Shares, the Company may require the Participant to represent and warrant at
      the
      time of any such issuance 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.  Not in limitation of any of the foregoing, in any such case
      referred to in the preceding sentence the Committee may also require the
      Participant to execute and deliver documents containing such representations
      (including the investment representations described in this Section 12(b) of
      the
      Plan), warranties and agreements as the Committee or counsel to the Company
      shall deem necessary or advisable to comply with any exemption from registration
      under the Securities Act of 1933, as amended, any applicable State securities
      laws, and any other applicable law, regulation or rule.

    

    (c)           Additional
      Conditions.  The Committee shall have the authority to
      condition the grant of any Restricted Shares in such other manner that the
      Committee determines to be appropriate, provided that such condition is not
      inconsistent with the terms of the Plan.

    

    Section
      13.    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, shall relieve the
      Company of any liability in respect of the failure to issue or sell such Shares
      as to which such requisite authority shall not have been obtained.

    

    Section
      14.    Reservation of
      Shares.

    

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

    

    Section
      15.    Stockholder
      Approval.

    

    The
      Plan
      shall be subject to approval by the stockholders of the Company.  Such
      stockholder approval shall be obtained in the manner and to the degree required
      under Applicable Laws.

    

    Section
      16.    Withholding; Notice
      of
      Sale.

    

    Each
      Participant shall, no later than the date as of which the value of a Restricted
      Stock Award or of any Shares or other amounts received thereunder first becomes
      includable in the gross income of the Participant for Federal income tax
      purposes, pay to the Company, or make arrangements satisfactory to the Committee
      regarding payment of, any Federal, state, or local taxes of any kind required
      by
      law to be withheld with respect to such income.  The Company shall, to
      the extent permitted by law, have the right to deduct any such taxes from any
      payment of any kind otherwise due to the Participant.  The Company’s
      obligation to deliver stock certificates to any Participant is subject to and
      conditioned on any such tax obligations being satisfied by the
      Participant.  Subject to approval by the Committee, a Participant may
      elect to have the minimum required tax withholding obligation satisfied, in
      whole or in part, by (i) authorizing the Company to withhold from Shares to
      be
      issued pursuant to any Restricted Stock Award a number of Shares with an
      aggregate Fair Market Value (as of the date the withholding is effected) that
      would satisfy the withholding amount due, or (ii) transferring to the Company
      Shares owned by the Participant with an aggregate Fair Market Value (as of
      the
      date the withholding is effected) that would satisfy the minimum withholding
      amount due.

    

    Section
      17.      Code Section 83(b) Elections

    

    Neither
      the Company, any Affiliate, nor the Committee shall have any responsibility
      in
      connection with a Participant’s election, or attempt to elect, under Code
      section 83(b) to include the value of a Restricted Stock Award in the
      Participant’s gross income for the year of payment.  Any Participant
      who makes a Code section 83(b) election with respect to any such Restricted
      Stock Award shall promptly notify the Committee of such election and provide
      the
      Committee with a copy thereof.

     

    Section
      18.       No Right to Continue as a
      Director

    

    Neither
      this Plan, nor the granting of a Restricted Stock Award under this Plan, nor
      any
      other action taken pursuant to this Plan shall constitute or be evidence of
      any
      agreement or understanding, express or implied, that the Company will retain
      a
      director for any period of time, or at any particular rate of
      compensation.

    

    Section
      19.    Governing Law.

    

    This
      Plan
      shall be governed by the laws of the State of Delaware.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]