Document:

lantronix_8k-ex1001.htm

    
      Exhibit
10.1

       

      LANTRONIX,
INC.

      15353
Barranca Parkway

      Irvine,
California  92618

      (949)
453-3990

       

      

       

      Mr. Jerry
D. Chase

      9608
Crosby Drive

      Pleasanton,
California  94588

       

      Re:           Employment at Lantronix
Inc.

       

      Dear
Jerry:

       

      This
letter ("Agreement") will confirm our understanding and agreement regarding your
employment with Lantronix Inc. ("Lantronix" or the "Company"), commencing
February 19, 2008 ("Commencement Date").  This Agreement completely
supersedes and replaces any existing or previous oral or written discussions,
understandings or agreements, express or implied, between you and the Company
regarding your employment.

       

      
        	
                 
      

              	
                1.

              	
                Position;
      Exclusivity.  The Company hereby agrees to employ you as
      its President and Chief Executive Officer and to appoint you as a member
      of the Company's Board of Directors (the "Board").  You accept
      such employment pursuant to the terms of this Agreement.  You
      shall perform such duties and responsibilities as may be determined from
      time to time by the Board, which shall be consistent with your position as
      a senior officer of the Company.  You agree to devote your full
      business time, attention and energy to performing your duties and
      responsibilities to the Company under this
  Agreement.

              

      

       

      
        	
                 
      

              	
                2.

              	
                Base
      Salary.  The Company shall pay you a base salary of
      $30,000 per month ($360,000 on an annualized basis), less applicable
      withholdings and deductions, paid on the Company's regular payroll
      dates.  The Board will review your base salary annually, and
      may, in its sole discretion, adjust it to reflect performance and other
      factors.

              

      

       

      
        	
                 
      

              	
                3.

              	
                Bonuses.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                The
      Company shall advance you a one-time sign-on/short-term retention bonus of
      $65,000, payable on the first regular payroll date after the Commencement
      Date.  The Sign-On Bonus is not earned until you have completed
      twelve (12) full months of employment with Lantronix.  In the
      event you voluntarily terminate your employment or are terminated for
      Cause (as defined in Attachment "A"
      hereto) by the Company within twelve (12) months from your Commencement
      Date, the Sign-On Bonus has not been earned, and you will be required to
      repay such amount in full within thirty (30) days of the date of
      termination of your employment.

              

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      
        	
                 
      

              	
                (b)

              	
                You
      shall be eligible to receive a cash incentive bonus of up to $250,000
      ("Incentive Bonus") for each full fiscal year during which this Agreement
      is in effect (this amount will be prorated for the remaining portion of
      the current fiscal year ending June 30, 2008), as
  follows:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                The
      Compensation Committee of the Board will define the plan for the Incentive
      Bonus annually, determining the objectives for the fiscal year that must
      be met to earn the Incentive Bonus.  Such objectives may include
      (but are not limited to) operating metrics, objective and subjective
      leadership dimensions and performance metrics in the operation of the
      Company, the achievement of financial objectives set forth in the
      Board-approved Annual Business Plan (the "Annual Business Plan") for a
      particular fiscal year, or such other objectives as the Compensation
      Committee of the Board, in its sole discretion, shall
      determine.

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                You
      must be employed by the Company on June 30th
      of each fiscal year to earn and become eligible to receive the Incentive
      Bonus as set forth in this Paragraph 2(b) for that fiscal
      year.  The actual Incentive Bonus for each fiscal year shall be
      paid to you by the 15th
      day of December following the end of the fiscal year to which the
      Incentive Bonus relates (or such earlier or later deadline as may be
      required for the bonus payment to be exempt from the requirements of
      Section 409A of the Internal Revenue Code as a "short-term deferral" under
      the applicable regulations).

              

      

       

      
        	
                 
      

              	
                4.

              	
                Stock Option and
      Restricted Stock Awards.  Subject to the terms of the
      Company's 2000 Stock Plan, as amended, and subject to formal approval of
      the Board, the Company will grant you (i) a nonstatutory stock option to
      purchase Nine Hundred Thousand (900,000) shares of the Company's common
      stock and (ii) a restricted stock award for One Hundred Thousand (100,000)
      shares of the Company's common stock.  None of these options or
      restricted shares shall vest until such time as you and the Company enter
      into a written stock option agreement with respect to the 900,000 options
      and a written restricted stock agreement with respect to the 100,000
      restricted shares.  The stock option agreement shall provide,
      among other things that none of these options shall vest until your
      employment with the Company has continued for one (1) year from your
      Commencement Date, at which time options to purchase two hundred seventy
      thousand (270,000) shares shall vest with an additional two hundred
      seventy thousand (270,000) shares vesting on the second anniversary of the
      Commencement Date and the remaining three hundred sixty thousand (360,000)
      shares vesting on the third anniversary of the Commencement
      Date.  The restricted stock agreement shall provide, among other
      things that none of the restricted shares shall vest until your employment
      with the Company has continued for one (1) year from your Commencement
      Date, at which time thirty thousand (30,000) shares shall vest with an
      additional thirty thousand (30,000) shares vesting on the second
      anniversary of the Commencement Date and the remaining forty thousand
      (40,000) shares vesting on the third anniversary of the Commencement
      Date.  The stock option agreement and the restricted stock
      agreement shall further provide that notwithstanding the foregoing vesting
      schedule, the options and shares shall immediately become vested as to the
      percentage of the total number of shares of Common Stock subject to the
      options and restricted stock award set forth on the table below (the
      "Vesting Percentage") at the end of any period of 120 consecutive days on
      which the Common Stock is actively listed, quoted or traded on a national
      securities exchange or NASDAQ, and the closing or last price in regular
      trading, as applicable, for a share of the Common Stock ("Stock Price") on
      each of such trading days equals or exceeds the applicable threshold
      amount set forth below (the "Stock Price Threshold").  For
      avoidance of doubt, options and shares may vest only once with respect to
      any Stock Price Threshold so that, for example, if the Stock Price equals
      or exceeds the $1.50 Stock Price Threshold for one hundred twenty (120)
      consecutive days and 30% of the shares subject to the option and
      restricted stock award vest accordingly, no additional shares subject to
      the option and restricted stock award shall vest if the Stock Price
      declines below the $1.50 Stock Price Threshold and subsequently increases
      above the $1.50 Stock Price Threshold.  Furthermore, the Vesting
      Percentages do not cumulate.

              

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      

      
        	
                Vesting
      Percentage/ Number of Shares

              	
                Stock
      Price Threshold

              
	
                30%/Initial
      270,000 Options and 30,000 Restricted Shares

              	
                $1.50

              
	
                60%/Additional
      270,000 Options and Additional 30,000 Restricted Shares

              	
                $2.50

              
	
                100%/Additional
      360,000 Options and 40,000 Restricted Shares

              	
                $4.00

              

      

       

      
        	
                 
      

              	 	
                In
      the event that you file a Section 83(b) election with the Internal Revenue
      Service no later than thirty (30) days after the transfer of the 100,000
      restricted shares to you, the Company shall pay you a bonus equal to the
      lesser of:  (i) $35,000, or (ii) amount equal to the product of
      (A) 41.66%, multiplied by (B) the Fair Market Value (as defined in the
      Company's 2000 Stock Plan, as amended) of the 100,000 shares on the date
      of transfer (which bonus shall be timely paid over by the Company as
      withholding with respect to the shares on your behalf) (the "Tax Bonus").
      You acknowledge that the Tax Bonus will be taxable compensation income to
      you and that the Company will not be obligated to pay your federal or
      state income or employment taxes on the Tax Bonus.  You agree
      that the Company may withhold any such required federal and state income
      and employment taxes on the Tax Bonus from your other
      compensation.  Notwithstanding anything to the contrary
      contained herein, in the event you voluntarily terminate your employment
      or are terminated for Cause (as defined in Attachment "A"
      hereto) by the Company prior to the date on which all shares granted under
      the 100,000 share restricted stock award are fully vested, you will be
      required to repay such Tax Bonus amount in full within thirty (30) days of
      the date of termination of your employment.  If you do not
      timely file a Section 83(b) election with the Internal Revenue Service for
      the 100,000 restricted shares, the Company shall have no obligation to pay
      you any Tax Bonus.

              

      

       

      
        	
                 
      

              	
                5.

              	
                Employee
      Benefits.  You shall be entitled to the benefits and
      perquisites which the Company generally provides to its other senior
      executives under the applicable Company plans and policies (including, in
      your case, a monthly automobile allowance of $833.33), and to future
      benefits and perquisites made generally available to senior executives of
      the Company.  Your participation in such benefit plans shall be
      on the same basis as applies to other senior executive of the
      Company.  All such benefits and perquisites are subject to
      modification and/or elimination in the Company's
      discretion.  You shall pay any contributions which are generally
      required of senior executives to receive any such
  benefits.

              

      

       

      
        	
                 
      

              	
                6.

              	
                Employment Taxes and
      Withholding.  You recognize that the compensation,
      benefits and other amounts provided by the Company under this Agreement
      may be subject to federal, state or local income taxes.  It is
      expressly understood and agreed that all such taxes shall be your sole
      responsibility.  To the extent that federal, state or local law
      requires withholding of taxes on compensation, benefits or other amounts
      provided under this Agreement, the Company shall withhold the necessary
      amounts from the amounts payable to you under this
    Agreement.

              

      

       

      
        	
                 
      

              	
                7.

              	
                Expenses.  During
      the term of your employment hereunder, you shall be entitled to receive
      prompt reimbursement from the Company (in accordance with the policies and
      procedures in effect for the Company's employees) for all reasonable
      travel and other expenses incurred by you in connection with your services
      hereunder.

              

      

       

      
        	
                 
      

              	
                8.

              	
                Relocation.  As
      of the Commencement Date, it is anticipated that you will commute to the
      Company's offices in Southern California from your home in Northern
      California for some period of time, following which you intend to relocate
      to Southern California.  To assist you in this regard, the
      Company agrees to reimburse you for your documented actual and reasonable
      out-of-pocket costs for (i) temporary housing and travel, (ii) packing and
      moving costs, and (iii) closing costs incident to the sale of your home in
      Northern California, in a total amount not to exceed
      $150,000.  Of this amount, the Company shall reimburse you no
      more than $35,000 for temporary housing and travel expenses; provided,
      however, the Company shall reimburse you for such temporary housing and
      travel expenses only to the extent that they are incurred by you on or
      before the expiration of twelve (12) months after the Commencement
      Date.

              

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      
        	
                 
      

              	
                9.

              	
                Unspecified Term,
      At-Will Employment and
Termination.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                This
      Agreement (and your employment) is commenced and will continue for an
      unspecified term on an "at-will" basis and may be terminated by the
      Company or by you at will at any time with or without Cause (as defined in
      Attachment
      "A" hereto) or notice; provided,
      however, that if your employment is terminated by the Company without
      Cause or by you for Good Reason (as defined in Attachment "A"
      hereto), in exchange for a full general release of claims against the
      Company in a form reasonably acceptable to the Company, the Company will
      pay you severance pay in the total amount of one hundred percent (100%) of
      the then current total of your annualized base salary and Incentive Bonus
      target, less required tax deductions and withholdings, payable on the
      Company's regular payroll dates for a period of twelve (12) months
      following the date of termination.  The amount of severance pay
      will be increased to one hundred fifty percent (150%) of your then total
      base salary and Incentive Bonus target if such termination without Cause
      or for Good Reason occurs within six (6) months after a "Change in
      Control" (as defined in Attachment "A"
      hereto).  The timing of the payments shall be made in accordance
      with the foregoing provisions of this Paragraph 9(a) if the sum of the
      payments to which you are entitled under this Paragraph 9(a) do not exceed
      the lesser of two (2) times your "annualized compensation" (within the
      meaning of Treasury Regulations Section 1.409A-1(b)(9)(iii)(A)(1)) or two
      (2) times the compensation limit set forth in Section 401(a)(17) of the
      Internal Revenue Code, for the calendar year prior to the calendar year in
      which you are terminated without Cause or resign for Good
      Reason.  If the sum of such payments to you under this Paragraph
      9(a) would exceed the lesser of two (2) times your annualized compensation
      (as defined above) or two (2) times the compensation limit set forth in
      Section 401(a)(17) of the Internal Revenue Code, then such excess amount
      shall be paid to you prior to later of:  (i) the 15th
      day of March following the end of the calendar year in which you were
      terminated without Cause or you resigned for Good Reason, or (ii) the
      15th
      day of third month following the end of the Company's taxable year in
      which you were terminated by the Company without Cause or you resigned for
      Good Reason.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                This
      Agreement (and your employment) may be terminated immediately and without
      notice for Cause without further liability or obligation to you other than
      payment of compensation earned by you through the date of
      termination.

              

      

       

      
        	
                 
      

              	
                10.

              	
                Change in
      Control.  If a "Change in Control" of the Company occurs
      after your Commencement Date, then, subject to the terms of this
      Agreement, as an additional benefit, the Company shall accelerate the
      vesting of 100% of all unvested stock options granted to you under the
      Company's stock option or other benefit
plan.

              

      

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                11.

              	
                Confidentiality/Non-Solicitation.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                In
      consideration of the promises and covenants contained in this Agreement,
      you acknowledge and agree that you shall continue to be bound by and
      comply with each and every term and condition of the Company's Employment,
      Confidential Information and Invention Assignment Agreement and any other
      proprietary or confidentiality agreement(s) between you and the
      Company.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                In
      consideration of the promises and covenants contained in this Agreement,
      you agree that for a period of one (1) year following your date of
      termination or resignation, you will not, either directly or indirectly,
      or either on your own behalf or on behalf of any other person, recruit or
      solicit for hire any individual who is then employed by the
      Company.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                You
      acknowledge and agree that the restrictions contained in this Paragraph
      11(a) and (b) are reasonable and appropriate.  You further
      acknowledge and agree that the restrictions contained in this Paragraph
      11(a) and (b) will not preclude you from engaging in any trade, business
      or profession that you are qualified to engage
  in.

              

      

       

      
        	
                 
      

              	
                12.

              	
                Mutual Agreement to
      Arbitrate.  To the fullest extent allowed by law, any
      controversy, claim or dispute between you and the Company (and/or any of
      its affiliates, owners, shareholders, directors, officers, employees,
      volunteers or agents) relating to or arising out of your employment or the
      cessation of that employment will be submitted to final and binding
      arbitration as provided in Attachment "B"
      hereto.

              

      

       

      
        	
                 
      

              	
                13.

              	
                Successors and
      Assigns.  This Agreement will be assignable by the
      Company to any successor or to any other company owned or controlled by
      the Company, and will be binding upon any successor to the business of the
      Company, whether direct or indirect, by purchase of securities, merger,
      consolidation, purchase of all or substantially all of the assets of the
      Company or otherwise.

              

      

       

      
        	
                 
      

              	
                14.

              	
                Withholding of Taxes;
      Tax Reporting. The Company may withhold from any amounts payable
      under this Agreement all such federal, state, city and other taxes, and
      may file with appropriate governmental authorities all such information,
      returns or other reports with respect to the tax consequences of any
      amounts payable under this Agreement, as may, in its judgment, be required
      by law.

              

      

       

      
        	
                 
      

              	
                15.

              	
                Sections 280G, 162(m)
      and Compliance with Section
409A.

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                In
      the event that any payment or benefit received by you pursuant to this
      Agreement (a “Payment”) would constitute a “parachute payment” within the
      meaning of Section 280G of the Internal Revenue Code, and but for this
      sentence, be subject to the excise tax imposed by Section 4999 of the
      Internal Revenue Code (the “Excise Tax”), then such Payment shall be equal
      to a reduced amount.  Such reduced amount shall be calculated as
      either (i) the largest portion of the Payment that would result in no
      portion of the Payment being subject to the Excise Tax or (ii) the largest
      portion, up to and including the total, of the Payment, whichever amount,
      after taking into account all applicable federal, state and local
      employment taxes, income taxes, and the Excise Tax (all computed at the
      highest applicable marginal rate), results in your receipt, on an
      after-tax basis, of the greater amount of the Payment notwithstanding that
      all or some portion of the Payment may be subject to the Excise
      Tax.  If a reduction in payments or benefits constituting
      “parachute payments” is necessary so that the Payment equals the reduced
      amount, the reduction shall occur in the following
      order:  reduction of cash payments; cancellation of accelerated
      vesting of stock awards, if applicable; reduction of employee
      benefits.

              

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                Notwithstanding
      anything in this Agreement to the contrary, if the Board determines that
      any acceleration, extension or other modification of your stock options
      pursuant to this Agreement could reasonably be expected to cause such
      options to lose their status as "qualified performance-based compensation"
      under Code Section 162(m) and Treasury Regulation Section 1.162-27(e),
      such accelerations, extensions or other modifications may be modified to
      the extent deemed necessary by the Company's Board to prevent such options
      from losing their status as qualified performance-based
      compensation.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                This
      Agreement is intended to be exempt to the extent possible from the
      requirements of Internal Revenue Code Section 409A, including current and
      future guidance and regulations interpreting such provisions. To the
      extent that any provision of this Agreement fails to satisfy a requirement
      for such an exemption, the provision shall automatically be modified in a
      manner that, in the good-faith opinion of the Company, brings the
      provisions into compliance with such requirement while preserving as
      closely as possible the original intent of the provision and this
      Agreement. If it is determined by the Company that any payment under this
      Agreement is subject to the requirements of Code Section 409A
      notwithstanding the preceding sentences, then the provisions of the
      Agreement shall be automatically modified in such manner as brings the
      Agreement into compliance with such requirements. In particular, and
      without limiting the preceding sentence, while any stock of the Company is
      or is treated as publicly traded and you are a "specified employee" under
      Code Section 409A(a)(2)(B)(i), then any payment under this Agreement that
      is treated as deferred compensation under Code Section 409A shall be
      delayed until the date which is six months after the date of separation
      from service (without interest or
earnings).

              

      

       

      

      
        	
                 
      

              	
                (d)

              	
                The
      costs of all legal and accounting fees required to make the Company's
      determinations and estimates for purposes of this Paragraph 15 will be
      paid for by the Company.  To the extent the services of an
      accountant are to be utilized in connection with the making of such
      determinations and/or estimates, such services shall be performed by an
      independent certified public accountant selected by the Company or a firm
      of independent certified public accountants selected by the Company
      provided that such firm or independent accountant shall not be (or have
      been) otherwise engaged by the Company for any other corporate purposes.
      The accounting firm engaged to make the determinations hereunder shall
      provide its calculations, together with detailed supporting documentation,
      to you and the Company within fifteen (15) calendar days after the date on
      which your right to a Payment is triggered (if requested at that time by
      you or  the Company) or such other time as
      requested.  Any good faith determinations of the accounting firm
      made hereunder shall be final, binding and conclusive upon you and the
      Company.

              

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      
        	
                 
      

              	
                16.

              	
                Legal Fees.  The Company
      shall pay your actual and reasonable legal fees and costs associated with
      entering into this Agreement in an amount not to exceed four thousand
      dollars ($4,000.00) upon presentation of documentation thereof that is
      reasonably acceptable to the Company.  You will be responsible
      for paying any legal fees and costs over such
  amount.

              

      

       

      
        	
                 
      

              	
                17.

              	
                Entire
      Agreement.  This Agreement, its attachments, and any
      stock option, restricted stock, stock appreciation rights or other similar
      agreements the Company may enter into with you contain the entire
      integrated agreement between you and the Company regarding these issues,
      and no modification or amendment to this Agreement will be valid unless
      set forth in writing and signed by both you and an authorized member of
      the Board.

              

      

       

      

       

      [SIGNATURES
APPEAR ON FOLLOWING PAGE]

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      We are
excited to have you join Lantronix, and we look forward to your Commencement
Date next week.  Please sign, date and return the enclosed copy of
this Agreement to me for our files to acknowledge your agreement with the
above.

       

      

         

        
          	 	      
                  Very
      truly yours,

                   

                  LANTRONIX,
      INC.

                   

                  

                   

                  By:      /s/ Howard
      Slayen   

                          Howard
      Slayen

                          Chairman,
      Board of Directors

                   

                

        

         

      

       

      

       

      ACKNOWLEDGED
AND AGREED:

       

      /s/ Jerry D.
Chase                                                         

      Jerry D.
Chase

      Dated:      
Feb.19         ,
2008

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ATTACHMENT
"A"

       

       

      "Cause" shall include, but not
be limited to, the following:  (i) your commission of a crime or your
possession, use or sale of a controlled substance (other than the use or
possession of legally prescribed medication used for its prescribed purpose);
(ii) your significant neglect, or materially inadequate performance of, your
duties as an employee of the Company; (iii) your breach of a fiduciary duty to
the Company or its shareholders; (iv) your willful breach of duty in the course
of your employment; (v) your violation of the Company's personnel or business
policies; (vi) your willful misconduct; (vii) your death; or (viii) your
disability.  For purposes of this Agreement, you shall be considered
disabled if you have been physically or mentally unable to perform your
essential job duties hereunder for (x) a continuous period of at least one
hundred twenty (120) days or (y) a total of one hundred fifty (150) days during
any one hundred and eighty (180) day period, and you have not recovered and
returned to the full time performance of your duties within thirty (30) days
after written notice is given to you by the Company following such 120 day
period or 180 day period, as the case may be.  Notwithstanding the
foregoing, Cause shall not exist under any definition set out in subsection
(ii), (iii), (iv), (v) or (vi) unless the Company provides you with written
notice of the existence of the one or more of the actions, conditions or events
set forth above in such definition of Cause, and if such action, event or
condition is curable, you fail to cure such action, event or condition within
thirty (30) days after its receipt of such notice.

       

      "Change in Control" means the
occurrence of any of the following events:

       

      
        	
                 
      

              	
                (a)

              	
                Any
      "person" (as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as amended (the "Exchange Act")) becomes
      the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
      Exchange Act), directly or indirectly, of securities of the Company
      representing fifty percent (50%) or more of the total voting power
      represented by the Company's then outstanding voting securities;
      or

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      consummation of the sale or disposition by the Company of all or
      substantially all of the Company's assets;
or

              

      

       

      
        	
                 
      

              	
                (c)

              	
                The
      consummation of a merger or consolidation of the Company with any other
      corporation, other than a merger or consolidation which would result in
      the voting securities of the Company outstanding immediately prior thereto
      continuing to represent (either by remaining outstanding or by being
      converted into voting securities of the surviving entity or its parent) at
      least seventy percent (70%) of the total voting power represented by the
      voting securities of the Company or such surviving entity or its parent
      outstanding immediately after such merger or
  consolidation.

              

      

       

      "Good Reason" for you to resign
means only if you resign within ninety (90) days after the Company has taken any
of the following actions without your express written consent:  (i)
the Company "Substantially Lessens Your Title" (as defined herein); (ii) the
Company Substantially reduces Your Senior Authority (as defined herein); (iii)
the Company assigns material duties to you which are materially inconsistent
with your then-current status; (iv) the Company reduces your base salary or
benefits from that in effect at the Commencement Date (unless such reduction is
in connection with a salary or benefit reduction program of general application
at the senior level executives of the Company); (v) the Company requires you to
be based more than fifty (50) miles from your office location, as of the
Commencement Date, except for the relocation identified in Paragraph 8 of the
Agreement or for required travel consistent with your business travel
obligations or the Company requires you to be based more than fifty (50) miles
from your home prior to your relocation as described in Paragraph 8; or (vi) the
Company fails to obtain the assumption of this Agreement by any successor or
assign of the Company.  Notwithstanding the foregoing, Good Reason
shall not exist unless you provide the Company written notice of the existence
of the one or more of the actions, conditions or events set forth above in this
definition of Good Reason within ninety (90) days after the initial existence or
occurrence of such action, condition or event, and if such action, event or
condition is curable, the Company fails to cure such action, event or condition
within thirty (30) days after its receipt of such notice.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      "Substantially Lessens Your
Title" shall mean that you do not have the title of President, Chief
Executive Officer of the Company or an enterprise equivalent to the
Company.

       

      "Substantially Reduces Your Senior
Authority" shall mean that you no longer have substantially similar
authority, scope of responsibility, functions or duties as President and Chief
Executive Officer of the Company or an enterprise equivalent to the
Company.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      ATTACHMENT
"B"

       

      MUTUAL AGREEMENT TO
ARBITRATE

       

      To the
fullest extent allowed by law, any controversy, claim or dispute between you,
Jerry D. Chase, and the Company (and/or any of its affiliates, owners,
shareholders, directors, officers, employees, volunteers or agents) relating to
or arising out of your employment or the cessation of that employment will be
submitted to final and binding arbitration in Orange County, California, for
determination in accordance with the American Arbitration Association's ("AAA")
Employment Arbitration Rules, as the exclusive remedy for such controversy,
claim or dispute.  A copy of the most current Employment Arbitration
Rules may be found at www.adr.org/Employment.  In any such
arbitration, the parties may conduct discovery to the same extent as would be
permitted in a court of law.  The arbitrator shall issue a written
decision, and shall have full authority to award all remedies which would be
available in court.  The Company shall pay the arbitrator's fees and
any AAA administrative expenses.  The arbitrator may, but need not,
award the prevailing party in any dispute its or his legal fees and
expenses.  Any judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. Possible disputes
covered by the above include (but are not limited to) unpaid wages, breach of
contract (including this Agreement), torts, violation of public policy,
discrimination, harassment, or any other employment-related claims under laws
including but not limited to, Title VII of the Civil Rights Act of 1964, the
Americans With Disabilities Act, the Age Discrimination in Employment Act, the
California Fair Employment and Housing Act, the California Labor Code and any
other statutes or laws relating to an employee's relationship with his/her
employer, regardless of whether such dispute is initiated by the employee or the
Company.  Thus, this bilateral arbitration agreement fully applies to
any and all claims that the Company may have against you, including (but not
limited to) claims for misappropriation of Company property, disclosure of
proprietary information or trade secrets, interference with contract, trade
libel, gross negligence, or any other claim for alleged wrongful conduct or
breach of the duty of loyalty.  Nevertheless, claims for workers'
compensation benefits or unemployment insurance, those arising under the
National Labor Relations Act, and any other claims where mandatory arbitration
is prohibited by law, are not covered by this arbitration agreement, and such
claims may be presented by either the Company or you to the appropriate court or
government agency.  BY AGREEING TO THIS BINDING ARBITRATION PROVISION,
BOTH YOU AND THE COMPANY GIVE UP ALL RIGHTS TO TRIAL BY JURY.  This
mutual arbitration agreement is to be construed as broadly as is permissible
under applicable law.

      

      
        	
                JERRY
      D. CHASE

              	
                LANTRONIX
      INC. (the "Company")

              
	
                /s/
      Jerry D. Chase

                 

                Jerry
      D. Chase

                Dated:      Feb.
      19   , 2008.

              	
                 

                By:          
       /s/ Howard
      Slayen

                Name:     
      Howard Slayen

                Title:       Chairman of the Board of
      Directors

                Dated:     February
      19         ,
      2008.exv10w12

 

EXHIBIT 10.12

[Series _]

FORM OF

LIBERTY GLOBAL, INC.

2005 NONEMPLOYEE DIRECTOR INCENTIVE PLAN

RESTRICTED SHARE UNITS AGREEMENT

     THIS RESTRICTED SHARE UNITS AGREEMENT (“Agreement”) is made as of April 20, 2007 (the
“Effective Date”), by and between LIBERTY GLOBAL, INC., a Delaware corporation (the “Company”), and
the individual whose name, address, and social security/payroll number appear on the signature page
hereto (the “Grantee”).

     The Company has adopted the Liberty Global, Inc. 2005 Nonemployee Director Incentive Plan (the
“Plan”), a copy of which is attached to this Agreement as Exhibit A and by this reference made a
part hereof, for the benefit of eligible Nonemployee Directors of the Company. Capitalized terms
used and not otherwise defined herein will have the meaning given thereto in the Plan.

     Pursuant to the Plan, the Board has determined that it would be in the best interest of the
Company and its stockholders to award restricted share units to Grantee, subject to the conditions
and restrictions set forth herein and in the Plan, in connection with an amendment to Grantee’s
outstanding option to purchase 21,550 shares of the Company’s Series ___common stock (Grant No. M
                    ) to increase the exercise price thereof.

     The Company and the Grantee therefore agree as follows:

     1. Definitions. The following terms, when used in this Agreement, have the following meanings:

          “Business Day” means any day other than Saturday, Sunday or a day on which banking
institutions in Denver, Colorado, are required or authorized to be closed.

          “Cause” has the meaning specified for “cause” in Section 10.2(b) of the Plan.

          “Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.

          “Company” has the meaning specified in the preamble to this Agreement.

          “Direct Registration System” means the book-entry registration system maintained by the
Company’s stock transfer agent, pursuant to which shares of LBTY___are held in non-certificated form
for the benefit of the registered holder thereof.

          “Effective Date” has the meaning specified in the preamble to this Agreement.

          “Grantee” has the meaning specified in the preamble to this Agreement.

-1-

 

          “LBTY_” means the Series ___common stock, par value $.01 per share, of the Company.

          “Plan” has the meaning specified in the recitals to this Agreement.

          “Required Withholding Amount” has the meaning specified in Section 14 of this Agreement.

          “Restricted Share Units” has the meaning specified in Section 2 of this Agreement. Restricted
Share Units represent an Award of Restricted Shares that provides for the shares of Common Stock
subject to the Award to be issued at or following the end of the Restriction Period within the
meaning of Article VIII of the Plan.

          “RSU Dividend Equivalents” means, to the extent specified by the Board only, an amount equal
to all dividends and other distributions (or the economic equivalent thereof) which are payable to
stockholders of record during the Restriction Period on a like number and kind of shares of Common
Stock as the shares represented by the Restricted Share Units.

     2. Grant of Restricted Share Units. Subject to the terms and conditions herein, pursuant to
the Plan, the Company grants to the Grantee effective as of the Effective Date the number of
restricted share units set forth on the signature page hereto (the “Restricted Share Units”), each
representing the right to receive one share of LBTY___subject to the conditions and restrictions set
forth below and in the Plan.

     3. Settlement of Restricted Share Units. Settlement of Restricted Share Units shall be made on
January 5, 2008 (the “Settlement Date”) in the form of shares of LBTY_, together with any related
RSU Dividend Equivalents, in accordance with Section 7.

     4. Stockholder Rights; RSU Dividend Equivalents. The Grantee shall have no rights of a
stockholder with respect to any shares of LBTY___represented by any Restricted Share Units unless
and until such time as shares of LBTY___represented by vested Restricted Share Units have been
delivered to the Grantee in accordance with Section 7. Grantee will have the right to receive and
retain such RSU Dividend Equivalents, if any, as the Board may in its sole discretion designate.
Grantee will have no right to receive, or otherwise with respect to, any RSU Dividend Equivalents
until the Settlement Date and, if the Restricted Share Units are forfeited for any reason in
accordance with Section 6 of this Agreement, the related RSU Dividend Equivalents will be
automatically forfeited. RSU Dividend Equivalents shall not bear interest or be segregated in a
separate account.

     5. Vesting. Unless the Board otherwise determines in its sole discretion, subject to earlier
vesting in accordance with Section 6(a)(i) of this Agreement or Section 10.1(b) of the Plan and
subject to the last sentence of this Section 5, the Restricted Share Units shall become vested, and
the restrictions with respect thereto shall lapse, on the Settlement Date. On the Settlement Date,
any RSU Dividend Equivalents with respect to the Restricted Share Units will become vested to the
extent that the related Restricted Share Units shall have become vested in accordance with this
Agreement. Notwithstanding the foregoing, Grantee will not vest, pursuant to this Section 5, in
Restricted Share Units as to which Grantee would otherwise vest on the Settlement Date if Grantee’s
service as a Nonemployee Director terminates for any reason

-2-

 

specified in Section 6(a)(i) or (ii), or a breach of any applicable restrictions, terms or
conditions with respect to such Restricted Share Units has occurred, at any time after the
Effective Date and prior to the Settlement Date (the vesting or forfeiture of such shares to be
governed instead by Section 6).

     6. Early Vesting or Forfeiture.

     (a) Unless otherwise determined by the Board in its sole discretion:

	 	(i)	 	If Grantee’s service as a Nonemployee Director terminates by reason of
Grantee’s death or Disability, the Restricted Share Units, to the extent not
theretofore vested, and any RSU Dividend Equivalents with respect to the Restricted
Share Units, will immediately become fully vested; provided that the settlement of
such vested Restricted Share Units and the related RSU Dividend Equivalents shall, in
any event, occur on the Settlement Date.
	 
	 	(ii)	 	If Grantee’s service as a Nonemployee Director terminates prior to the
Settlement Date as a result of Cause (as determined by the Board) or the resignation
by Grantee, then the Restricted Share Units, to the extent not theretofore vested,
together with any related RSU Dividend Equivalents, will be forfeited immediately.
	 
	 	(iii)	 	If Grantee breaches any restrictions, terms or conditions provided in or
established by the Board pursuant to the Plan or this Agreement with respect to the
Restricted Share Units prior to the Settlement Date (including any attempted or
completed transfer of any such unvested Restricted Share Units contrary to the terms
of the Plan or this Agreement), the unvested Restricted Share Units, together with any
related RSU Dividend Equivalents, will be forfeited immediately.

          (b) Upon forfeiture of any unvested Restricted Share Units and any related RSU Dividend
Equivalents, such Restricted Share Units and any related RSU Dividend Equivalents will be
immediately cancelled, and Grantee will cease to have any rights with respect thereto.

     7. Delivery by Company. On the Settlement Date following the vesting of Restricted Share Units
and the related RSU Dividend Equivalents pursuant to Sections 5 or 6 hereof or Section 10.1(b) of
the Plan, and subject to the withholding referred to in Section 13 of this Agreement, the Company
will deliver or cause to be delivered to or at the direction of the Grantee (i) (a) a certificate
or certificates issued in Grantee’s names for the shares of LBTY___represented by such vested
Restricted Share Units, (b) a statement of holdings reflecting that the shares of LBTY___represented
by such vested Restricted Share Units are held through the Direct Registration Statement, or (c) a
confirmation of deposit of such vested Restricted Share Units, in book-entry form, into the
broker’s account designated by Grantee, (ii) any securities constituting any related vested RSU
Dividend Equivalents by any applicable method specified in clause (i)

-3-

 

above, and (iii) any cash payment constituting related vested RSU Dividend Equivalents. Any delivery of securities will be deemed effected for all purposes when (1) a certificate
representing or statement of holdings reflecting such securities and, in the case of RSU Dividend
Equivalents, any other documents necessary to reflect ownership thereof by Grantee has been
delivered personally to the Grantee or, if delivery is by mail, when the Company or its stock
transfer agent has deposited the certificate or statement of holdings and/or such other documents
in the United States mail, addressed to the Grantee, or (2) confirmation of deposit into the
designated broker’s account of such securities, in written or electronic format, is first made
available to Grantee. Any cash payment will be deemed effected when a check from the Company,
payable to or at the direction of the Grantee and in the amount equal to the amount of the cash
payment, has been delivered personally to or at the direction of the Grantee or deposited in the
United States mail, addressed to the Grantee or his or her nominee.

     8. Nontransferability of Restricted Share Units Before Vesting.

          (a) Before vesting and during Grantee’s lifetime, the Restricted Share Units and related RSU
Dividend Equivalents are not transferable (voluntarily or involuntarily) other than pursuant to a
Domestic Relations Order. In the event of transfer pursuant to a Domestic Relations Order, the
unvested Restricted Share Units and related RSU Dividend Equivalents so transferred shall be
subject to all the restrictions, terms and provisions of this Agreement and the Plan, and the
transferee shall be bound by all applicable provisions of this Agreement and the Plan in the same
manner as Grantee.

          (b) The Grantee may designate a beneficiary or beneficiaries to whom the Restricted Share
Units, to the extent then vesting, and any related RSU Dividend Equivalents will pass upon the
Grantee’s death and may change such designation from time to time by filing a written designation
of beneficiary or beneficiaries with the Company on the form annexed hereto as Exhibit B or such
other form as may be prescribed by the Board, provided that no such designation will be effective
unless so filed prior to the death of Grantee. If no such designation is made or if the designated
beneficiary does not survive Grantee’s death, the Restricted Share Units, to the extent then
vesting, and any related RSU Dividend Equivalents will pass by will or the laws of descent and
distribution. Following Grantee’s death, the person to whom such vested Restricted Share Units and
any related RSU Dividend Equivalents pass according to the foregoing will be deemed the Grantee for
purposes of any applicable provisions of this Agreement.

     9. Adjustments. The Restricted Share Units and any related RSU Dividend Equivalents will be
subject to adjustment in the sole discretion of the Board and in such manner as the Board may deem
equitable and appropriate in connection with the occurrence following the Effective Date of any of
the events described in Section 4.2 of the Plan.

     10. Company’s Rights. The existence of this Agreement will not affect in any way the right or
power of the Company or its stockholders to accomplish any corporate act, including, without
limitation, the acts referred to in Section 10.15 of the Plan.

     11. Limitation of Rights. Nothing in this Agreement or the Plan will be construed to give
Grantee any right to be granted any future Award other than in the sole discretion of the

-4-

 

Board or the Grantee or any other person any interest in any fund or in any specified asset or
assets of the Company or any of its Subsidiaries. Neither Grantee nor any person claiming
through Grantee will have any right or interest in the shares of LBTY___represented by any
Restricted Share Units or any related RSU Dividend Equivalents unless and until there shall have
been full compliance with all the terms, conditions and provisions of this Agreement and the Plan
which affect Grantee or such other person.

     12. Restrictions Imposed by Law. Without limiting the generality of Section 10.7 of the Plan,
the Company shall not be obligated to deliver any shares of LBTY___represented by vested Restricted
Share Units or securities constituting any RSU Dividend Equivalents if counsel to the Company
determines that the issuance or delivery thereof would violate any applicable law or any rule or
regulation of any governmental authority or any rule or regulation of, or agreement of the Company
with, any securities exchange upon which shares of LBTY___or such other securities are listed or
quoted. The Company will in no event be obligated to take any affirmative action in order to cause
the delivery of shares of LBTY___represented by vested Restricted Share Units or securities
constituting any RSU Dividend Equivalents to comply with any such law, rule, regulation, or
agreement. Any certificates representing, any such securities issued or delivered under this
Agreement may bear such legend or legends as the Company deems appropriate in order to assure
compliance with applicable securities laws.

     13. Withholding. To the extent that the Company is subject to withholding tax requirements
under any national, state, local or other governmental law with respect to the award of the
Restricted Share Units to Grantee or the vesting thereof, or the designation of any RSU Dividend
Equivalents as payable or distributable or the payment or distribution thereof, the Grantee must
make arrangement satisfactory to the Company to make payment to the Company of the amount required
to be withheld under such tax laws, as determined by the Company (collectively, the “Required
Withholding Amount”). To the extent such withholding is required because the Grantee vests in some
or all of the Restricted Share Units, the Company shall withhold (i) from the shares of LBTY_
represented by vested Restricted Share Units and otherwise deliverable to the Grantee a number of
shares of LBTY___and/or (ii) from any related RSU Dividend Equivalents otherwise deliverable to the
Grantee an amount of such RSU Dividend Equivalents, which collectively have a value (or, in the
case of securities withheld, a Fair Market Value), equal to the Required Withholding Amount, unless
Grantee remits the Required Withholding Amount to the Company in cash in such form and by such time
as the Company may require or other provisions for withholding such amount satisfactory to the
Company have been made. Notwithstanding any other provisions of this Agreement, the issuance or
delivery of any Restricted Share Units and related RSU Dividend Equivalents, whether or not vested,
may be postponed until any required withholding taxes have been paid to the Company.

     14. Notice. Unless the Company notifies the Grantee in writing of a different procedure, any
notice or other communication to the Company with respect to this Agreement will be in writing and
will be delivered personally or sent by United States first class mail, postage prepaid, sent by
overnight courier, freight prepaid or sent by facsimile and addressed as follows:

-5-

 

Liberty Global, Inc.

12300 Liberty Boulevard

Englewood, CO 80112

Attn: General Counsel

Fax: 303-220-6691

     Any notice or other communication to the Grantee with respect to this Agreement will be in
writing and will be delivered personally, or will be sent by United States first class mail,
postage prepaid, to the Grantee’s address as listed in the records of the Company on the Effective
Date, unless the Company has received written notification from the Grantee of a change of address.

     15. Amendment. Notwithstanding any other provision hereof, this Agreement may be supplemented
or amended from time to time as approved by the Board as contemplated in Section 10.6(b) and
Section 10.17 of the Plan. Without limiting the generality of the foregoing, without the consent of
the Grantee,

          (a) this Agreement may be amended or supplemented from time to time as approved by the Board
(i) to cure any ambiguity or to correct or supplement any provision herein which may be defective
or inconsistent with any other provision herein, or (ii) to add to the covenants and agreements of
the Company for the benefit of the Grantee or surrender any right or power reserved to or conferred
upon the Company in this Agreement, subject to any required approval of the Company’s stockholders
and, provided, in each case, that such changes will not adversely affect the rights of the Grantee
with respect to the Award evidenced hereby, or (iii) to make such other changes as the Company,
upon advice of counsel, determines are necessary or advisable because of the adoption or
promulgation of, or change in or of the interpretation of, any law or governmental rule or
regulation, including any applicable federal or state securities laws; and

          (b) subject to any required action by the Board or the stockholders of the Company, the
Restricted Share Units granted under this Agreement may be canceled by the Company and a new Award
made in substitution therefor, provided that the Award so substituted will satisfy all of the
requirements of the Plan as of the date such new Award is made and no such action will adversely
affect any Restricted Share Units that are then vested.

     16. Status as Director. Nothing contained in this Agreement, and no action of the Company or
the Board with respect hereto, will confer or be construed to confer on the Grantee any right to
continue as a director of the Company or interfere in any way with the right of the Company or its
shareholders to terminate the Grantee’s status as a director at any time, with or without cause.

     17. Nonalienation of Benefits. Except as provided in Section 9 of this Agreement, (i) no right
or benefit under this Agreement will be subject to anticipation, alienation, sale, assignment,
hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same will
be void, and (ii) no right or benefit hereunder will in any manner be liable for or

-6-

 

subject to the debts, contracts, liabilities or torts of the Grantee or other person entitled to such benefits.

     18. Governing Law. This Agreement will be governed by, and construed in accordance with, the
internal laws of the State of Colorado. Each party irrevocably submits to the general jurisdiction
of the state and federal courts located in the State of Colorado in any action to interpret or
enforce this Agreement and irrevocably waives any objection to jurisdiction that such party may
have based on inconvenience of forum.

     19. Construction. References in this Agreement to “this Agreement” and the words “herein,”
“hereof,” “hereunder” and similar terms include all Exhibits and Schedules appended hereto. This
Agreement is entered into, and the Award evidenced hereby is granted, pursuant to the Plan and
shall be governed by and construed in accordance with the Plan and the administrative
interpretations adopted by the Board thereunder. The word “include” and all variations thereof are
used in an illustrative sense and not in a limiting sense. All decisions of the Board upon
questions regarding this Agreement will be conclusive. Unless otherwise expressly stated herein, in
the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the
Plan will control. The headings of the sections of this Agreement have been included for
convenience of reference only, are not to be considered a part hereof and will in no way modify or
restrict any of the terms or provisions hereof.

     20. Duplicate Originals. The Company and the Grantee may sign any number of copies of this
Agreement. Each signed copy will be an original, but all of them together represent the same
agreement.

     21. Rules by Board. The rights of the Grantee and the obligations of the Company hereunder
will be subject to such reasonable rules and regulations as the Board may adopt from time to time.

     22. Entire Agreement. This Agreement is in satisfaction of and in lieu of all prior
discussions and agreements, oral or written, between the Company and the Grantee regarding the
subject matter hereof. The Grantee and the Company hereby declare and represent that no promise or
agreement not herein expressed has been made and that this Agreement contains the entire agreement
between the parties hereto with respect to the Award and replaces and makes null and void any prior
agreements between the Grantee and the Company regarding the Award. This Agreement will be binding
upon and inure to the benefit of the parties and their respective heirs, successors and assigns.

     23. Grantee Acceptance. The Grantee will signify acceptance of the terms and conditions of
this Agreement by signing in the space provided at the end hereof and returning a signed copy to
the Company.

[Signature Page Follows]

-7-

 

Signature Page to Restricted Share Units Agreement

dated as of April 20, 2007, between Liberty Global, Inc. and Grantee

	 	 	 	 	 	 	 
	 	 	LIBERTY GLOBAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:
	 	Elizabeth M. Markowski	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	ACCEPTED:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Grantee Name:	 	 
	 	 	Address:	 	 

	 	 	 	 	 	 	 
	 

	 	Social Security Number:	 	 	 	 
	 

	 	 	 	 

	 	 

Grant No.    R-    

Number of Restricted Share Units (LBTY_) awarded:       
                
                
      

-8-

 

Exhibit A

to

Restricted Share Units Agreement

dated as of April 20, 2007, between Liberty Global, Inc. and Grantee

A-1

 

Exhibit B

to

Restricted Share Units Agreement (Series   )

dated as of April 20, 2007, between Liberty Global, Inc. and Grantee

Designation of Beneficiary

     I,     
     
                   
             (the “Grantee”), hereby declare that upon my
death                 
      
         (the “Beneficiary”) of

          
        
        
     
        
          Name

	 
	,

     Street Address       
              
              
          City     
         
     
             
             
   State         
             
             
          Zip
Code

who is my 
     
     
     
              
              
                 , will be entitled to the

     
     
     

               Relationship to Grantee

Restricted Share Units vesting upon my death and all other rights accorded the Grantee by the
above-referenced grant agreement (the “Agreement”).

     It is understood that this Designation of Beneficiary is made pursuant to the Agreement and is
subject to the conditions stated herein, including the Beneficiary’s survival of the Grantee’s
death. If any such condition is not satisfied, such rights will devolve according to the Grantee’s
will or the laws of descent and distribution.

     It is further understood that all prior designations of beneficiary under the Agreement are
hereby revoked and that this Designation of Beneficiary may only be revoked in writing, signed by
the Grantee, and filed with the Company prior to the Grantee’s death.

	 	 	 
	 

	 	 
	Date

	 	Grantee

B-1

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