Form S-8 LANTRONIX INC

As filed with the Securities and Exchange Commission on April 28, 2016

 

Registration No. 333-         

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-8

REGISTRATION STATEMENT UNDER THE

SECURITIES ACT OF 1933

 

LANTRONIX, INC.

(Exact name of registrant as specified in its charter)

 

Delaware (State or other jurisdiction of incorporation or organization)

33-0362767 (I.R.S. Employer Identification No.)

 

7535 Irvine Center Drive, Suite 100

Irvine, CA 92618

(949) 453-3990

(Address of principal executive offices,

including zip code)

 

Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as Amended

New Employee Inducement Restricted Stock Unit Award

New Employee Stock Option Awards

(Full titles of the plans)

 

Jeremy Whitaker

Chief Financial Officer

Lantronix, Inc.

7535 Irvine Center Drive, Suite 100

Irvine, CA 92618

(949) 453-3990

(Name, address and telephone number,

including area code, of agent for service)

 

Copies to:

Kurt E. Scheuerman

Vice President & General Counsel

Lantronix, Inc.

7535 Irvine Center Drive, Suite 100

Irvine, CA 92618

(949) 453-3990

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer    ☐		Accelerated filer   ☐		Non-accelerated filer   ☐		Smaller reporting company   ☒
				(Do not check if a smaller reporting company)

 

 

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of securities to be registered			Amount to be registered (1)			Proposed maximum offering price per share				Proposed maximum aggregate offering price				Amount of registration fee
Common Stock, par value $0.0001 per share:
—	To be issued under the Amended and Restated 2010 Stock Incentive Plan, as amended		1,500,000 shares (2)			$1.03 (3)			$	1,545,000			$	155.58
—	To be issued under new employee inducement restricted stock unit award		450,000 shares (4)			$1.03 (3)			$	463,500			$	46.67
—	To be issued under new employee inducement stock option awards		350,000 shares (5)			$0.86 (6)			$	301,000			$	30.31
Total			2,300,000 shares						$	2,309,500			$	232.56

 

(1)		In accordance with Rule 416(a) under the Securities Act of 1933, as amended (the “Securities Act”), this Registration Statement shall be deemed to cover any additional shares of the Registrant’s Common Stock, par value $0.0001 per share (“Common Stock”), that may become issuable under the Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as amended (the “2010 Plan”), an inducement restricted stock unit award to the Registrant’s Chief Executive Officer (the “Inducement RSUs”), or the inducement stock options (the “Inducement Options”) to prevent dilution resulting from stock splits, stock dividends or similar transactions. In addition, pursuant to Rule 416(c) under the Securities Act, this Registration Statement also covers an indeterminate amount of interests to be offered or sold pursuant to the 2010 Plan, the Inducement RSUs, and the Inducement Options.
(2)		Represents additional shares of Common Stock added to the number of shares of Common Stock reserved for issuance under the 2010 Plan as a result of the approval of an amendment to the 2010 Plan in November 2015.
(3)		In accordance with Rule 457(h), the offering price for the shares to be registered has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) as $1.03 per share, which is the average of the high and low prices of the Common Stock as reported on the NASDAQ Capital Market on April 25, 2016 (a date within five business days of the date on which this Registration Statement was filed).
(4)		Represents shares of Common Stock reserved for issuance upon the settlement of the Inducement RSUs.
(5)		Represents shares of Common Stock reserved for issuance upon the exercise of the Inducement Options, which were granted on April 1, 2016.
(6)		In accordance with Rule 457(h), the offering price for these shares to be registered has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) on the basis of the weighted average exercise price of the outstanding options.

 

 

 

 

 

EXPLANATORY NOTE

 

This Registration Statement is filed with respect to an additional 1,500,000 shares of the Registrant’s Common Stock, par value $0.0001 per share (“Common Stock”), that are available for issuance pursuant to the Lantronix, Inc. 2010 Amended and Restated Stock Incentive Plan, as amended (the “2010 Plan”) as a result of the approval of an amendment to the 2010 Plan in November 2015. The shares being registered pursuant to this Registration Statement are in addition to (i) the 2,743,094 shares of Common Stock previously reserved for issuance under the 2010 Plan, which were previously registered on a registration statement on Form S-8 (File No. 333-188490), filed with the Securities and Exchange Commission (the “Commission”) on May 9, 2013, and (ii) the 2,000,000 shares of Common Stock previously reserved for issuance under the 2010 Plan (which included 50,155 shares previously reserved for issuance under the Lantronix, Inc. 2000 Stock Plan), which were previously registered on a registration statement on Form S-8 (File No. 333-172117), filed with the Commission on February 8, 2011.

 

To induce Jeffrey Benck to accept employment as the Registrant’s Chief Executive Officer, the Registrant agreed to grant Mr. Benck 450,000 restricted stock units (the “Inducement RSUs”) . The Inducement RSUs will be awarded outside of the 2010 Plan. One-third (150,000) of the Inducement RSUs shall vest on December 1, 2016, and the remaining Inducement RSUs shall vest ratably each quarter thereafter for a period of 24 months, subject to Mr. Benck’s continued employment with the Registrant through each such vesting date. The Inducement RSUs were approved by the Registrant’s Board of Directors in compliance with, and in reliance on, NASDAQ Listing Rule 5635(c)(4), which exempts employment inducement grants from the general requirement of the NASDAQ Listing Rules that equity-based compensation plans and arrangements be approved by stockholders. This Registration Statement registers shares of the Common Stock that may be issued upon the settlement of the Inducement RSUs.

 

On April 1, 2016, the Registrant granted inducement stock options (the “Inducement Options”) to two recently-appointed officers – Sanjeev Datla, the Registrant’s Chief Technology Officer, and Kevin Yoder, the registrant’s Vice President of Worldwide Sales. The Inducement Options were granted as an inducement to the new executives entering into employment with the Registrant, in compliance with NASDAQ Listing Rule 5635(c)(4).

 

Mr. Datla received two option grants: (i) an option to purchase 100,000 shares of the Registrant’s common stock that shall vest according to the following schedule: 25% of the options shall vest on April 1, 2017 and the remaining options shall vest ratably each month thereafter for a period of 36 months, assuming Mr. Datla remains continuously employed by the Registrant; and (ii) an option to purchase 50,000 shares of the Registrant’s common stock that shall vest according to the following schedule: 25% of the options shall vest on September 1, 2017 and the remaining options shall vest ratably each month thereafter for a period of 36 months, assuming Mr. Datla remains continuously employed by the Registrant.

 

Mr. Yoder also received two option grants: (i) an option to purchase 100,000 shares of the Registrant’s common stock that shall vest according to the following schedule: 25% of the options shall vest on April 1, 2017 and the remaining options shall vest ratably each month thereafter for a period of 36 months, assuming Mr. Yoder remains continuously employed by the Registrant; and (ii) an option to purchase 100,000 shares of the Registrant’s common stock that shall vest according to the following schedule: 25% of the options shall vest on September 1, 2017 and the remaining options shall vest ratably each month thereafter for a period of 36 months, assuming Mr. Yoder remains continuously employed by the Registrant.

 

 

 

 

PART I

 

INFORMATION REQUIRED IN THE PROSPECTUS

 

The information specified in Item 1 and Item 2 of Part I of Form S-8 is omitted from this Registration Statement in accordance with the provisions of Rule 428 under the Securities Act of 1933, as amended (the “Securities Act”), and the introductory note to Part I of Form S-8. The documents containing the information specified in Item 1 and Item 2 of Form S-8 will be sent or given to the participants in the 2010 Plan, the recipient of the Inducement RSUs, and the recipients of the Inducement Options, as specified by Rule 428(b)(1) under the Securities Act. In accordance with the rules and regulations of the Commission and the instructions to Form S-8, such documents are not being filed with the Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act.

 

 

 

 

 

 

 

 

 

 

PART II

 

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

 

ITEM 3.

INCORPORATION OF DOCUMENTS BY REFERENCE.

 

There are hereby incorporated by reference into this Registration Statement the following documents and information previously filed with the Commission:

 

	1.	Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2015, as filed with the Commission on August 21, 2015 (the “Annual Report”).
	2.	Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2015, as filed with the Commission on October 30, 2015.
	3.	Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015, as filed with the Commission on February 16, 2016.
	3.	Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed with the Commission on April 28, 2016.
	4.	Registrant's Current Reports on Form 8-K as filed with the Commission on August 20, 2015, September 8, 2015, October 29, 2015, November 19, 2015, November 25, 2015, December 7, 2015, December 10, 2015, February 5, 2016, February 16, 2016, and April 27, 2016; provided, however, that the Registrant specifically excludes from incorporation such information that has been furnished and not filed pursuant to Item 2.02 and/or Item 7.01 of the Registrant’s Current Reports on Form 8-K.
	5.	The portions of the Registrant’s Definitive Proxy Statement on Schedule 14A, as filed with the Commission on October 7, 2015, which were incorporated by reference into the Annual Report.
	6.	The description of the Common Stock contained in the Registrant's Registration Statement on Form 8-A (File No. 001-16027), as filed with the Commission on August 2, 2000 pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any amendment or report filed for the purpose of updating such description.

 

All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered under this Registration Statement have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement from the date of filing of such documents.

 

Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such earlier statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

 

 

 

 

ITEM 4.

DESCRIPTION OF SECURITIES.

 

Not applicable.

 

ITEM 5.

INTERESTS OF NAMED EXPERTS AND COUNSEL.

 

Kurt E. Scheuerman, who has given his opinion about certain legal matters affecting the shares of the Common Stock covered by this Registration Statement, is Vice President and General Counsel of the Registrant and has the right to participate in the 2010 Plan.

 

ITEM 6.

INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

The Registrant's Certificate of Incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Section 145 of the Delaware General Corporation Law (“DGCL”) empowers a Delaware corporation to indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer or director of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, and, for criminal proceedings, had no reasonable cause to believe his conduct was illegal. A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation in the performance of his duty. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director actually and reasonably incurred.

 

The Registrant's Bylaws provide that the Registrant shall indemnify its officers and directors and may indemnify its employees and other agents to the fullest extent permitted by law. The Registrant's Bylaws also permit it to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether the Bylaws would permit indemnification.

 

The Registrant has entered into agreements to indemnify its directors and officers, in addition to the indemnification provided for in the Registrant's Bylaws. These agreements, among other things, indemnify the Registrant's directors and officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Registrant, arising out of such person's services as a director or officer of the Registrant, any subsidiary of the Registrant or any other company or enterprise to which the person provides services at the request of the Registrant. The Registrant believes that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.

 

ITEM 7.

EXEMPTION FROM REGISTRATION CLAIMED.

 

Not applicable.

ITEM 8.

EXHIBITS.

 

A list of exhibits filed with this Registration Statement is set forth in the Exhibit Index hereto and is incorporated herein by reference.

 

ITEM 9.

UNDERTAKINGS.

 

(a) The undersigned Registrant hereby undertakes:

 

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

 

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

 

(ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

 

 

 

 

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;

 

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference into this Registration Statement.

 

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on April 28, 2016.

 

	LANTRONIX, INC.
	By:	/s/ Jeremy Whitaker
		Jeremy Whitaker
		Chief Financial Officer

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jeremy Whitaker as his/her attorney-in-fact for him/her in any and all capacities, to sign any amendments (including post-effective amendments) to this Registration Statement on Form S-8, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorney-in-fact, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated below.

 

Signature		Title	Date
/s/ Jeff Benck   Jeff Benck		President, Chief Executive Officer and Director (Principal Executive Officer)	April 28, 2016
/s/ Jeremy Whitaker   Jeremy Whitaker		Chief Financial Officer (Principal Financial and Accounting Officer)	April 28, 2016
/s/ Bernhard Bruscha   Bernhard Bruscha		Director	April 28, 2016
/s/ Bruce Edwards   Bruce Edwards		Director	April 28, 2016
/s/ Paul Folino   Paul Folino		Director	April 28, 2016
/s/ Hoshi Printer   Hoshi Printer		Director	April 28, 2016

 

 

 

 

EXHIBIT INDEX

Exhibit
Number		Description
4.1		Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as amended
4.2	(1)	Form of Stock Option Agreement under the Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as amended
4.3	(2)	Form of Restricted Stock Unit Award Agreement under the Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as amended
4.4		Form of Inducement Restricted Stock Unit Award Agreement by and between Lantronix, Inc. and Jeffrey Benck
4.5		Form of Inducement Stock Option Agreement by and between Lantronix, Inc. and Kevin Yoder
4.6		Form of Inducement Stock Option Agreement by and between Lantronix, Inc. and Sanjeev Datla
5.1		Opinion of Legal Counsel
23.1		Consent of Squar Milner, LLP
23.2		Consent of Legal Counsel (included in Exhibit 5.1)
24.1		Power of Attorney (included on the signature page of this Registration Statement)

________________

 

(1)	Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (File No. 333-188490) filed with the SEC on May 9, 2013.
(2)	Incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (File No. 333-188490) filed with the SEC on May 9, 2013.

 

 

 

 

Exhibit 4.1

 

LANTRONIX, INC.

 

AMENDED AND RESTATED 2010 STOCK INCENTIVE PLAN

 

(as amended on November 19, 2015)

 

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

 

·

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

 

·

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

 

·

to promote the success of the Company’s business.

 

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

 

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

 

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

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

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

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

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

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

 

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

 

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

 

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

 

 

 

 

 

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

 

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

(t)    “Non-Management Director” means a Director who is not employed by the Company or a consolidated subsidiary of the Company.

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

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

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

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

 

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

3.               Stock Subject to the Plan.

 

(a)   Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be awarded and sold under the Plan is Four Million Five Hundred Fifty Thousand (4,550,000) Shares plus any Shares subject to equity compensation awards granted under the 2000 Stock Plan or 1998 Stock Option Plan that expire or otherwise terminate without having been exercised in full or that are forfeited to or repurchased by the Company by virtue of their failure to vest, with the maximum number of Shares to be added to the Plan equal to Two Million One Hundred Thousand shares (2,100,000) Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

 

(b)   Full Value Awards. Any Shares subject to Awards other than Options or Stock Appreciation Rights will be counted against the numerical limits of this Section 3 as 1.50 Shares for every one (1) Share subject thereto. Further, if Shares acquired pursuant to any such Award are forfeited or repurchased by the Company and would otherwise return to the Plan pursuant to Section 3(c), 1.50 times the number of Shares so forfeited or repurchased will return to the Plan and will again become available for issuance.

 

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

 

 

(d)   Limits on Awards to Non-Management Directors. No Non-Management Director may be granted an Award denominated in Shares with respect to a number of Shares in any one Fiscal Year which, when added to the Shares subject to all equity and equity-based awards granted to the Non-Management Director under the Plan or any other equity incentive plans of the Company denominated in Shares in the same Fiscal Year, would exceed a Share value of $100,000; provided, however, that if the Performance Period applicable to a Plan Award granted to a Non-Management Director exceeds twelve months, the $100,000 limit shall apply to each 12-month period in the Performance Period. The foregoing limit (i) shall apply in addition to any other limitations that may apply under the Plan, but (ii) shall not apply to any Award or Shares granted pursuant to a Non-Management Drector’s election (if and to the extent such an election is permitted by the Committee) to receive an Award or Shares in lieu of cash retainers or other fees (to the extent such Award or Shares have a Fair Market Value equal to the value of such cash retainers or other fees). In applying the dollar limitation on Awards imposed by this Section 3(d), the dollar value of an Award (or of any award under another plan of the Company) shall be deemed to be the Fair Market Value of the Sharres subject to the Award (or of any award under another plan of the Company) as of the date of grant of the Award.

 

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

 

4.               Administration of the Plan.

 

(a)   Procedure.

 

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

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

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

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

 

                                                            

 

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

 

(i)          to determine the Fair Market Value;

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

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

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

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

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

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

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

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

 

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

 

 

 

 

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

 

6.               Stock Options.

 

(a)   Limitations.

 

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

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

 

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

 

(c)   Option Exercise Price and Consideration.

 

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

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

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

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

 

(d)   Exercise of Option.

 

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

 

 

 

 

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

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

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

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

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

 

7.               Stock Appreciation Rights.

 

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

 

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

 

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

 

 

 

 

 

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

 

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

 

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

 

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

 

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

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

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

 

8.               Restricted Stock.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

 

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

 

9.               Restricted Stock Units.

 

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

 

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

 

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

 

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

 

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

 

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

 

10.            Performance Shares.

 

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

 

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

 

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

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

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

 

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

 

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

 

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

 

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

 

15.            Tax Withholding

 

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

 

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

 

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

 

 

 

 

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

 

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

 

19.            Amendment and Termination of the Plan.

 

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

 

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

 

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

 

20.            Conditions Upon Issuance of Shares.

 

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

 

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

 

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

 

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

 

 

 

 

Exhibit 4.4

 

FORM OF

 

INDUCEMENT RESTRICTED STOCK UNIT AWARD AGREEMENT

 

As an inducement material to the hiring of Jeffrey W. Benck (the “Grantee”) as President and Chief Executive Officer, Lantronix, Inc., a Delaware corporation (the “Company”), hereby grants to the Grantee an award (the “Award”) of the number of restricted stock units set forth below (the “RSUs”). This Award is subject to all of the terms and conditions set forth herein and in this Inducement Restricted Stock Unit (the “Inducement Agreement”). This Award is not issued pursuant to the Company’s Amended & Restated 2010 Stock Incentive Plan or any other equity incentive plan of the Company.

 

1.               Grant of Restricted Stock Unit. Effective as of _________ (the “Grant Date”), the Company hereby grants to the Grantee an award of 450,000 RSUs, subject to the terms and conditions in this Inducement Agreement.

 

2.               Company’s Obligation. Each RSU represents the right to receive one share of the Company’s common stock (each, a “Share”) on the applicable vesting date. Unless and until the RSUs vest, the Grantee will have no right to receive Shares under such RSUs. Prior to actual distribution of Shares pursuant to any vested RSUs, such RSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

 

3.               Vesting Schedule. The RSUs awarded by this Agreement shall vest in accordance with the following schedule: (a) 150,000 RSUs shall vest on December 5, 2016; and (b) the remaining RSUs shall vest in 8 equal quarterly installments of 37,500 each beginning on March 5, 2017, so that the RSUs will be fully vested on December 5, 2018.

 

4.               Forfeiture and Acceleration on Certain Terminations of Employment. If the Grantee’s employment with the Company terminates for any or no reason prior to vesting, the unvested RSUs awarded by this Inducement Agreement will thereupon be forfeited at no cost to the Company except as otherwise provided in this Section 4.

 

(a)   If the Grantee’s employment with the Company is terminated by the Company without Cause (as defined in the Offer Letter dated December 5, 2015 between the Grantee and the Company, which is referred to herein as the “Offer Letter”) or by the Grantee for Good Reason (as defined in the Offer Letter) before December 6, 2017, then (i) the number of RSUs that would have vested within the 12 months immediately following the date of termination of the Grantee’s employment will immediately vest; and (ii) any RSUs subject to the Award that are not vested after giving effect to the foregoing clause (i) shall terminate.

 

(b)   In addition, the RSUs, to the extent then outstanding and unvested, will vest in full if a Change in Control (as defined in the Offer Letter) occurs and, at any time within sixty (60) days before or one (1) year after the Change in Control, the Grantee’s employment is terminated by the Company without Cause or by the Grantee for Good Reason.

 

5.               Payment after Vesting. Any RSUs that vest in accordance with paragraph 3 will be paid to the Grantee (or in the event of the Grantee’s death, to his estate) in Shares no later than March 15th of the calendar year following the calendar year in which such RSUs vest.

 

6.               Tax Liability and Withholding. The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to this Inducement Agreement, the amount of any required withholding taxes in respect of the RSUs and to take all such other action as the Administrator deems necessary to satisfy all obligations for the payment of such withholding taxes. The Administrator may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

 

(a)   tendering a cash payment.

 

(b)   authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the Restricted Stock Units; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law.

 

(c)   delivering to the Company previously owned and unencumbered shares of Common Stock.

 

7.               Payments after Death. Any distribution or delivery to be made to the Grantee under this Agreement will, if the Grantee is then deceased, be made to the administrator or executor of the Grantee’s estate. Any such administrator or executor must furnish the Company with (i) written notice of his or her status as transferee, and (ii) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

 

 

 

 

8.               Rights as Stockholder. Neither the Grantee nor any person claiming under or through the Grantee will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Grantee or Grantee’s broker.

 

9.               Administration of RSUs. Subject to the provisions of this Inducement Agreement, the Compensation Committee of the Board of Directors of the Company (the “Administrator”) will have the authority, in its discretion: (i) to construe and interpret the terms of this Inducement Agreement; (ii) to modify or amend each Award (subject to Section 15 of this Inducement Agreement); and (iii) to make all other determinations deemed necessary or advisable for administering this Inducement Agreement.

 

10.            Adjustments; Merger or Change in Control.

 

(a)             Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under this Inducement Agreement, will adjust the number and class of Shares that may be delivered upon vesting of the RSUs.

 

(b)             Dissolution or Liquidation. To the extent not previously settled, this Award shall terminate immediately prior to the dissolution or liquidation of the Company.

 

(c)             Change in Control. Subject to Section 4(b), in the event of a Change in Control, the Award will be treated as the Administrator determines in accordance with the authorizations presented herein, including, without limitation, that the Award will be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation (the “Successor Corporation”). In the event that the Successor Corporation does not assume or substitute for the Award, the RSUs will fully vest. For the purposes of this subsection (b), the Award will be considered assumed if, following the Change in Control, the Award confers the right to receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of the Company’s common stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon vesting of the RSUs, for each Share subject to such Award, to be solely common stock of the Successor Corporation equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. If the Company is a party to a Change in Control, then the RSUs will be subject to the provisions of this paragraph, provided that any action such taken must either (a) preserve the exemption of Award from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or (b) comply with Code Section 409A (by way of example, if the Award is determined to be nonqualified deferred compensation subject to Section 409A, the settlement described above in connection with a Change in Control shall be made on the settlement date specified in this Inducement Agreement, provided that settlement may be accelerated in accordance with Treasury Regulation Section 1.409A-3(j)(4)).

 

11.            No Effect on Employment. The Grantee’s employment with the Company is on an at-will basis only. Accordingly, nothing in this Inducement Agreement confers upon Grantee any right with respect to continuing the Grantee’s relationship as an employee of the Company, nor will this Inducement Agreement interfere in any way with the Grantee’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by applicable laws.

 

12.            Grant is Not Transferable. Except to the limited extent provided in paragraph 6, this grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.

 

13.            Binding Agreement. Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

 

14.            Amendment. The Administrator may at any time amend this Inducement Agreement; provided, however, that no amendment of this Inducement Agreement will impair the rights of the Grantee, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and signed by the Grantee and the Company.

 

 

 

 

 

15.            Additional Conditions to Issuance of Stock. If at any time the Company will determine, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to the Grantee (or his estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company. The Company will make all reasonable efforts to meet the requirements of any such state or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority.

 

16.            Code Section 409A. Notwithstanding anything in this Inducement Agreement to the contrary, this Inducement Agreement is intended to comply with the “short-term deferral” rule set forth in Treasury Regulation Section 1.409A-1(b)(4), promulgated under Section 409A of the Code. Notwithstanding the foregoing, if it is determined that the Award fails to satisfy the requirements of the short-term deferral rule and is otherwise determined to be nonqualified deferred compensation subject to Section 409A, and if the Grantee is a “Specified Employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of his “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h) and without regard to any alternative definition thereunder), then the issuance of any shares that would otherwise be made upon the date of the separation from service or within the first six (6) months thereafter will not be made on the originally scheduled date(s) and will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the separation from service, with the balance of the shares issued thereafter in accordance with the original vesting and issuance schedule set forth above, but if and only if such delay in the issuance of the shares is necessary to avoid the imposition of adverse taxation in respect of the shares under Section 409A of the Code. Each installment of shares that vests is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).

 

17.            Governing Law. This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions).

 

[Signature page follows.]

 

 

 

 

 

 

 

 

 

 

By your signature and the signature of the Company’s representative below, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan and this Agreement. Grantee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan and this Agreement. Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and this Agreement. Grantee further agrees to notify the Company upon any change in the residence address indicated below.

 

 

GRANTEE			LANTRONIX, INC.
Signature:			Signature:
Print Name:	Jeffrey W. Benck		Print Name:
Date:			Title:
			Date:

 

 

 

 

 

 

 

 

 

 

Exhibit 4.5

 

LANTRONIX, INC.

 

INDUCEMENT STOCK OPTION AGREEMENT

 

As an inducement material to the hiring of Kevin Yoder (the “Optionee”) as Vice President of Worldwide Sales, Lantronix, Inc., a Delaware corporation (the “Company”), hereby grants to the Optionee an award (the “Award”) of the number of non-qualified stock options set forth below. This Award is subject to all of the terms and conditions set forth herein and in this Inducement Stock Option Agreement (the “Inducement Agreement”). This Award is not issued pursuant to the Company’s Amended & Restated 2010 Stock Incentive Plan or any other equity incentive plan of the Company.

 

1.               Grant of Option. The Company hereby grants to the Optionee an option (the “Option”) to purchase the number of shares (the “Shares”) of the Corporation’s common stock (the “Common Stock”) set forth below, at the exercise price per share set forth below (the “Exercise Price”), subject to the terms and conditions of this Inducement Agreement, as follows:

 

Grant Date:
Vesting Commencement Date:
Exercise Price per Share:
Total Number of Shares Granted:
Total Exercise Price:
Type of Option:	Nonqualified Stock Option
Term/Expiration Date:	7 Years From the Grant Date
Vesting Schedule:	Subject to accelerated vesting as set forth in duly authorized written agreements by and between Optionee and the Company, this Option may be exercised, in whole or in part, in accordance with the following schedule:   Subject to the Optionee remaining a Service Provider, the shares subject to the Option (the “Shares”) shall vest such that: (i) Twenty-five Percent (25%) of the Shares vest on the one (1) year anniversary of the Vesting Commencement Date; and (ii) 1/48 of the Shares vest on each monthly anniversary of the Vesting Commencement Date thereafter, such that One Hundred Percent (100%) of the Shares will be fully vested on the four (4) year anniversary of the Vesting Commencement Date.

 

2.               Exercise of Option.

 

(a)             Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set out in Section 1 and the applicable provisions of this Inducement Agreement, subject to Optionee’s remaining an employee of the Company on each vesting date.

 

(b)             Post-Termination Exercise Period. If Optionee ceases to be an employee of the Company, then this Option may be exercised to the extent vested as of the date of termination until the earlier of (i) ninety (90) days after the date upon which Optionee ceases to be an employee of the Company, or (ii) the original seven-year Option term. If on the date of termination the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will terminate. If after termination the Optionee does not exercise his or her Option within ninety (90) days, the Option will terminate.

 

(c)             Death or Disability. If the Optionee ceases to be an employee of the Company as a result of the Optionee’s death or disability, the Optionee or the Optionee’s beneficiary may exercise the Option to the extent vested as of the date of termination within twelve (12) months following the termination of Optionee’s employment.

 

(d)             Method of Exercise. This option may be exercised with respect to all or any part of any vested Shares by giving the Company or any stock option plan administrator designated by the Company written or electronic notice of such exercise, in the form designated by the Company or the Company’s designated third-party stock option plan administrator, specifying the number of shares as to which this option is exercised and accompanied by payment of the aggregate Exercise Price as to all exercised shares. This Option shall be deemed to be exercised upon receipt by the Company or any third-party stock option plan administrator designated by the Company of such fully executed exercise notice accompanied by such aggregate Exercise Price. No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with applicable laws. Assuming such compliance, for income tax purposes the exercised shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such exercised shares.

 

 

 

 

(e)             Payment of Exercise Price. Payment of the aggregate exercise price shall be by any of the following, or a combination thereof, at the election of the Optionee: (i) cash; or (ii) check; or (iii) delivery of a properly executed exercise notice together with such other documentation as the Administrator and a broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale proceeds required to pay the exercise price.

 

3.               Term of Option. This Option may be exercised only within the term set out in Section 1, and may be exercised during such term only in accordance with the terms of this Inducement Agreement.

 

4.               Administration of Award; Fair Market Value. Subject to the provisions of this Inducement Agreement, the Compensation Committee of the Board of Directors of the Company (the “Administrator”) will have the authority, in its discretion: (i) to construe and interpret the terms of this Inducement Agreement; (ii) to modify or amend each Award (subject to Section 11 of this Inducement Agreement); and (iii) to make all other determinations deemed necessary or advisable for administering this Inducement Agreement. For purposes of this Agreement, “Fair Market Value” means, as of any date, the value of the Common Stock as the Administrator may determine in good faith by reference to the price of such stock on any established stock exchange or a national market system on the day of determination if the Common Stock is so listed on any established stock exchange or a national market system. If the Common Stock is not listed on any established stock exchange or a national market system, the value of the Common Stock will be determined as the Administrator may determine in good faith.

 

5.               Tax Consequences. Some of the federal tax consequences relating to this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

(a)             Exercising the Option. The Optionee may incur regular federal income tax liability upon exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the exercised shares on the date of exercise over their aggregate Exercise Price. If the Optionee is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

 

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

 

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

 

6.               Payments after Death. Any distribution or delivery to be made to the Optionee under this Agreement will, if the Optionee is then deceased, be made to the administrator or executor of the Optionee’s estate. Any such administrator or executor must furnish the Company with (i) written notice of his or her status as transferee, and (ii) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

 

7.               Rights as Stockholder. Neither the Optionee nor any person claiming under or through the Optionee will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Optionee or Optionee’s broker.

 

8.               Adjustments; Merger or Change in Control; Acceleration.

 

(a)             Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under this Inducement Agreement, will adjust the number and class of Shares that may be delivered upon exercise of the Options.

 

 

 

 

(b)             Dissolution or Liquidation. To the extent not previously settled, this Award shall terminate immediately prior to the dissolution or liquidation of the Company.

 

(c)             Change in Control. Pursuant to the terms of the Offer Letter dated as of January 26, 2016 between the Optionee and the Company (the “Offer Letter”), if within five years of the commencement date of the Optionee’s employment, the Optionee’s employment with the Company is terminated by the Optionee for Good Reason (as defined in the Offer Letter) or by the Company without Cause (as defined in the Offer Letter) within 60 days prior to or 12 months following a Change in Control (as defined in the Offer Letter), then, subject to the Optionee’s execution and non-revocation of a release of claims in a form provided by the Company and resignation by the Optionee from any Company-affiliated board positions, all unvested Options under this Inducement Agreement shall fully vest and be become exercisable.

 

9.               No Effect on Employment. The Optionee’s employment with the Company is on an at-will basis only. Accordingly, nothing in this Inducement Agreement confers upon Optionee any right with respect to continuing the Optionee’s relationship as an employee of the Company, nor will this Inducement Agreement interfere in any way with the Optionee’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by applicable laws.

 

10.            Non-Transferability of Option. This Option may not be transferred in any manner except by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Inducement Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. Upon any attempt to transfer the Award, the Award and the rights and privileges conferred hereby immediately will become null and void.

 

11.            Amendment. The Administrator may at any time amend this Inducement Agreement; provided, however, that no amendment of this Inducement Agreement will impair the rights of the Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company.

 

12.            Additional Conditions to Issuance of Stock. If at any time the Company will determine, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to the Optionee (or his estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company. The Company will make all reasonable efforts to meet the requirements of any such state or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority.

 

13.            Code Section 409A. Notwithstanding anything in this Inducement Agreement to the contrary, this Inducement Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and shall be interpreted in a manner consistent with such intention.

 

14.            Governing Law. This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions).

 

By your signature and the signature of the Company’s representative below, you and the Company agree that this Award is granted under and governed by the terms and conditions of this Inducement Agreement. Optionee has reviewed this Inducement Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Inducement Agreement and fully understands all provisions of this Inducement Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to this Inducement Agreement. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

 

OPTIONEE			LANTRONIX, INC.
Signature:			Signature:
Print Name:	Kevin Yoder		Print Name:	Jeremy Whitaker
Date:			Title:	Chief Financial Officer
			Date:

 

 

 

 

Exhibit 4.6

 

LANTRONIX, INC.

 

INDUCEMENT STOCK OPTION AGREEMENT

 

As an inducement material to the hiring of Sanjeev Datla (the “Optionee”) as Chief Technology Officer, Lantronix, Inc., a Delaware corporation (the “Company”), hereby grants to the Optionee an award (the “Award”) of the number of non-qualified stock options set forth below. This Award is subject to all of the terms and conditions set forth herein and in this Inducement Stock Option Agreement (the “Inducement Agreement”). This Award is not issued pursuant to the Company’s Amended & Restated 2010 Stock Incentive Plan or any other equity incentive plan of the Company.

 

1.               Grant of Option. The Company hereby grants to the Optionee an option (the “Option”) to purchase the number of shares (the “Shares”) of the Corporation’s common stock (the “Common Stock”) set forth below, at the exercise price per share set forth below (the “Exercise Price”), subject to the terms and conditions of this Inducement Agreement, as follows:

 

Grant Date:
Vesting Commencement Date:
Exercise Price per Share:
Total Number of Shares Granted:
Total Exercise Price:
Type of Option:	Nonqualified Stock Option
Term/Expiration Date:	7 Years From the Grant Date
Vesting Schedule:	Subject to accelerated vesting as set forth in duly authorized written agreements by and between Optionee and the Company, this Option may be exercised, in whole or in part, in accordance with the following schedule:   Subject to the Optionee remaining a Service Provider, the shares subject to the Option (the “Shares”) shall vest such that: (i) Twenty-five Percent (25%) of the Shares vest on the one (1) year anniversary of the Vesting Commencement Date; and (ii) 1/48 of the Shares vest on each monthly anniversary of the Vesting Commencement Date thereafter, such that One Hundred Percent (100%) of the Shares will be fully vested on the four (4) year anniversary of the Vesting Commencement Date.

 

2.               Exercise of Option.

 

(a)             Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set out in Section 1 and the applicable provisions of this Inducement Agreement, subject to Optionee’s remaining an employee of the Company on each vesting date.

 

(b)             Post-Termination Exercise Period. If Optionee ceases to be an employee of the Company, then this Option may be exercised to the extent vested as of the date of termination until the earlier of (i) ninety (90) days after the date upon which Optionee ceases to be an employee of the Company, or (ii) the original seven-year Option term. If on the date of termination the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will terminate. If after termination the Optionee does not exercise his or her Option within ninety (90) days, the Option will terminate.

 

(c)             Death or Disability. If the Optionee ceases to be an employee of the Company as a result of the Optionee’s death or disability, the Optionee or the Optionee’s beneficiary may exercise the Option to the extent vested as of the date of termination within twelve (12) months following the termination of Optionee’s employment.

 

(d)             Method of Exercise. This option may be exercised with respect to all or any part of any vested Shares by giving the Company or any stock option plan administrator designated by the Company written or electronic notice of such exercise, in the form designated by the Company or the Company’s designated third-party stock option plan administrator, specifying the number of shares as to which this option is exercised and accompanied by payment of the aggregate Exercise Price as to all exercised shares. This Option shall be deemed to be exercised upon receipt by the Company or any third-party stock option plan administrator designated by the Company of such fully executed exercise notice accompanied by such aggregate Exercise Price. No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with applicable laws. Assuming such compliance, for income tax purposes the exercised shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such exercised shares.

 

 

 

 

(e)             Payment of Exercise Price. Payment of the aggregate exercise price shall be by any of the following, or a combination thereof, at the election of the Optionee: (i) cash; or (ii) check; or (iii) delivery of a properly executed exercise notice together with such other documentation as the Administrator and a broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale proceeds required to pay the exercise price.

 

3.               Term of Option. This Option may be exercised only within the term set out in Section 1, and may be exercised during such term only in accordance with the terms of this Inducement Agreement.

 

4.               Administration of Award; Fair Market Value. Subject to the provisions of this Inducement Agreement, the Compensation Committee of the Board of Directors of the Company (the “Administrator”) will have the authority, in its discretion: (i) to construe and interpret the terms of this Inducement Agreement; (ii) to modify or amend each Award (subject to Section 11 of this Inducement Agreement); and (iii) to make all other determinations deemed necessary or advisable for administering this Inducement Agreement. For purposes of this Agreement, “Fair Market Value” means, as of any date, the value of the Common Stock as the Administrator may determine in good faith by reference to the price of such stock on any established stock exchange or a national market system on the day of determination if the Common Stock is so listed on any established stock exchange or a national market system. If the Common Stock is not listed on any established stock exchange or a national market system, the value of the Common Stock will be determined as the Administrator may determine in good faith.

 

5.               Tax Consequences. Some of the federal tax consequences relating to this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

(a)             Exercising the Option. The Optionee may incur regular federal income tax liability upon exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the exercised shares on the date of exercise over their aggregate Exercise Price. If the Optionee is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

 

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

 

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

 

6.               Payments after Death. Any distribution or delivery to be made to the Optionee under this Agreement will, if the Optionee is then deceased, be made to the administrator or executor of the Optionee’s estate. Any such administrator or executor must furnish the Company with (i) written notice of his or her status as transferee, and (ii) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

 

7.               Rights as Stockholder. Neither the Optionee nor any person claiming under or through the Optionee will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Optionee or Optionee’s broker.

 

8.               Adjustments; Merger or Change in Control; Acceleration.

 

(a)             Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under this Inducement Agreement, will adjust the number and class of Shares that may be delivered upon exercise of the Options.

 

 

 

 

(b)             Dissolution or Liquidation. To the extent not previously settled, this Award shall terminate immediately prior to the dissolution or liquidation of the Company.

 

(c)             Change in Control. In the event of a Change in Control (as defined below), the Award will be treated as the Administrator determines in accordance with the authorizations presented herein, including, without limitation, that the Award will be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation (the “Successor Corporation”). In the event that the Successor Corporation does not assume or substitute for the Award, the Option will fully vest. For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of the Company’s common stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon vesting of the Options, for each Share subject to such Award, to be solely common stock of the Successor Corporation equal in Fair Market Value to the per share consideration received by holders of Common Stock in the Change in Control.

 

(d)             Definition of Change in Control. As used in this Inducement Agreement, “Change in Control” means the occurrence of any of the following events:

 

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

 

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

 

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

 

For purposes of this Section 8(d), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

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

 

9.               No Effect on Employment. The Optionee’s employment with the Company is on an at-will basis only. Accordingly, nothing in this Inducement Agreement confers upon Optionee any right with respect to continuing the Optionee’s relationship as an employee of the Company, nor will this Inducement Agreement interfere in any way with the Optionee’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by applicable laws.

 

10.            Non-Transferability of Option. This Option may not be transferred in any manner except by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Inducement Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. Upon any attempt to transfer the Award, the Award and the rights and privileges conferred hereby immediately will become null and void.

 

 

 

 

11.            Amendment. The Administrator may at any time amend this Inducement Agreement; provided, however, that no amendment of this Inducement Agreement will impair the rights of the Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company.

 

12.            Additional Conditions to Issuance of Stock. If at any time the Company will determine, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to the Optionee (or his estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company. The Company will make all reasonable efforts to meet the requirements of any such state or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority.

 

13.            Code Section 409A. Notwithstanding anything in this Inducement Agreement to the contrary, this Inducement Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and shall be interpreted in a manner consistent with such intention.

 

14.            Governing Law. This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions).

 

By your signature and the signature of the Company’s representative below, you and the Company agree that this Award is granted under and governed by the terms and conditions of this Inducement Agreement. Optionee has reviewed this Inducement Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Inducement Agreement and fully understands all provisions of this Inducement Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to this Inducement Agreement. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

 

OPTIONEE			LANTRONIX, INC.
Signature:			Signature:
Print Name:	Sanjeev Datla		Print Name:	Jeremy Whitaker
Date:			Title:	Chief Financial Officer
			Date:	April 4, 2016

 

 

 

 

Exhibit 5.1

 

April 28, 2016

 

Lantronix, Inc.

7535 Irvine Center Drive, Suite 100

Irvine, CA 92602

Attention: Board of Directors

 

	Re:	Registration Statement on Form S-8
		Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as Amended
		Inducement Restricted Stock Unit Award for Jeffrey Benck
		Inducement Stock Options

 

Gentlemen:

 

I am Vice President and General Counsel of Lantronix, Inc., a Delaware corporation (the “Company"), and am delivering this opinion in connection with the filing by the Company of a Registration Statement on Form S-8 (the “Registration Statement”) registering under the Securities Act of 1933, as amended (the “Securities Act”), an aggregate of (i) 1,500,000 shares of Common Stock, par value $0.0001 per share, of the Company (the “Common Stock”), that may be issued and sold from time to time pursuant to the Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as amended (the “2010 Plan”), (ii) 450,000 shares of Common Stock that may be issuable upon settlement of an Inducement Restricted Stock Unit Award to be granted to Jeffrey Benck (the “Inducement RSUs”), and (iii) 350,000 shares of Common Stock that may be issuable upon exercise of Inducement Stock Options granted on April 1, 2016 (the “Inducement Options” and together with the 2010 Plan and the Inducement RSUs, the “Plans”). The shares being registered pursuant to the Registration Statement are collectively referred to herein as the “Common Shares”).

 

In connection with this opinion, and in my capacity as an attorney admitted to practice in the State of California, I have examined the Registration Statement, the Company’s Amended and Restated Certificate of Incorporation as in effect on the date hereof, the Company’s Amended and Restated Bylaws as in effect on the date hereof, the Plans, the forms of award agreements related thereto, and certain corporate proceedings of the stockholders and Board of Directors of the Company as reflected in the corporate records of the Company. In such examination, I have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals and the conformity to the originals or certified copies of all documents submitted to me as copies thereof. In addition, I have made such other examinations of law and fact as I have deemed necessary or appropriate for the purposes of this opinion. I have also assumed for purposes of this opinion that: (i) the Common Shares will be delivered through the Depository Trust Company’s automated system for deposits and withdrawals of securities, (ii) the issuance of the Common Shares will be recorded in the books of the Company, and (iii) the Company will comply with all applicable notice requirements of Section 151 of the General Corporation Law of the State of Delaware.

 

Based on the foregoing, and in reliance thereon, I am of the opinion that the Common Shares, when issued in accordance with the terms of the Plans, and the award agreements related thereto, will be validly issued, fully paid and nonassessable.

 

I render this opinion only with respect to the General Corporation Law of the State of Delaware, and I express no opinion herein concerning the application or effect of the laws of any other jurisdiction.

 

I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, I do not admit that I am within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.

 

 

Best Regards,

 

 

/s/ Kurt E. Scheuerman                                    

Kurt E. Scheuerman

Vice President & General Counsel

Lantronix, Inc.

 

 

 

 

Exhibit 23.1

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the incorporation by reference in this Registration Statement on Form S-8 (which is expected to be filed with the Securities and Exchange Commission on or about April 28, 2016) of our report dated August 21, 2015, relating to our audit of the consolidated financial statements of Lantronix, Inc. included in the Annual Report on Form 10-K of Lantronix, Inc. for the year ended June 30, 2015.

 

/s/ Squar Milner, LLP (formerly Squar, Milner, Peterson, Miranda & Williamson, LLP)

 

Newport Beach, California

April 28, 2016

 

 

 

 

 

 

 

 

 

 

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