As filed with the Securities and Exchange Commission
on June 5, 2024
Registration No. __________________
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 |
|
33-0362767 |
| (State or other jurisdiction of |
|
(I.R.S. Employer |
| incorporation or organization) |
|
Identification No.) |
48 Discovery, Suite 250
Irvine, California 92618
(Address, including zip code, of Principal Executive Offices)
___________________
Restricted Stock Unit Award Agreement (Inducement
Grant) for Saleel Awsare
Performance Stock Unit Award Agreement (Inducement
Grant – Relative TSR) for Saleel Awsare
Performance Stock Unit Award Agreement (Inducement
Grant – Financial Measure) for Saleel Awsare
Restricted Stock Unit Award Agreement (Inducement
Grant) for Kurt Hoff
Performance Stock Unit Award Agreement (Inducement
Grant – Relative TSR) for Kurt Hoff
Restricted Stock Unit Award Agreement (Inducement
Grant) for Mathi Gurusamy
Performance Stock Unit Award Agreement (Inducement
Grant – Relative TSR) for Mathi Gurusamy
(Full title of the plan)
___________________
Jeremy Whitaker
Chief Financial Officer
Lantronix, Inc.
48 Discovery, Suite 250
Irvine, California 92618
(949) 453-3990
(Name, address and telephone number, including
area code, of agent for service)
___________________
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated Filer ☐ |
Accelerated Filer þ |
| Non-accelerated Filer ☐ |
Smaller reporting company þ |
| |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 7(a)(2)(B) of the Securities Act. o
EXPLANATORY NOTE
Lantronix, Inc. (the “Company” or the
“Registrant”) hereby files this Registration Statement on Form S-8 (the “Registration Statement”) to register
under the Securities Act of 1933, as amended (the “Securities Act”), a total of 1,765,370 shares of common stock, par value
$0.0001 per share, of the Company (“Common Stock”). Such shares consist of (i) 470,255 shares that may be issued upon the
settlement of an award of restricted stock units and 918,116 shares that may be issued upon the settlement of two awards of performance
stock units (assuming the maximum level of performance under each such award was achieved), each of which awards was granted to Saleel
Awsare on November 20, 2023 to induce him to accept employment with the Registrant; (ii) 62,404 shares that may be issued upon the settlement
of an award of restricted stock units and 86,408 shares that may be issued upon the settlement of an award of performance stock units
(assuming the maximum level of performance under such award was achieved), each of which awards was granted to Kurt Hoff on March 5, 2024
to induce him to accept employment with the Registrant; and (iii) 95,691 shares that may be issued upon the settlement of an award of
restricted stock units and 132,496 shares that may be issued upon the settlement of an award of performance stock units (assuming the
maximum level of performance under such award was achieved), each of which awards was granted to Mathi Gurusamy on June 1, 2024 to induce
him to accept employment with the Registrant (collectively, the “Inducement Awards”).
The Inducement Awards were granted outside of the
Company’s stock incentive plans. The Inducement Awards were approved by the Registrant’s Compensation Committee 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.
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The document(s) containing the information specified
in Part I of Form S-8 will be sent or given to participants as specified by Rule 428(b)(1) promulgated under the Securities Act.
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
| Item 3. | Incorporation of Certain Documents by Reference |
The following documents of the Company filed with
the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference:
| (a) | The Company’s Annual Report on Form 10-K for its fiscal year ended June 30, 2023, filed with the Commission on September 12,
2023 (Commission File No. 001-16027); |
| | | |
| (b) | The portions of the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Commission on October 2, 2023, that
are incorporated by reference in Part III of the Company’s Annual Report on Form 10-K for its fiscal year ended June 30, 2023 (Commission
File No. 001-16027); |
| | | |
| (c) | The Company’s Quarterly Reports on Form 10-Q for its fiscal quarters ended March 31, 2024, December 31, 2023 and September 30,
2023, filed with the Commission on May 2, 2024, February 8, 2024 and November 8, 2023, respectively (each, Commission File No. 001-16027); |
| | | |
| (d) | The Company’s Current Reports on Form 8-K, filed with the Commission on May 10, 2024, February 28, 2024, January 25, 2024 (with
respect to Item 5.02 only), November 21, 2023 (with respect to Item 5.02 only), November 7, 2023, November 6, 2023 (with respect to Item
5.02 only), August 7, 2023 (with respect to Item 5.02 only), July 5, 2023 and July 3, 2023 (each, Commission File No. 001-16027 and in
each case only as to the information “filed” with the Commission thereunder for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) and not as to information “furnished” thereunder); and |
| | | |
| (e) | The description of the Registrant’s Common Stock contained in Exhibit 4.1 of its Annual Report on Form 10-K for its fiscal year
ended June 30, 2019, filed with the Commission on September 11, 2019 (Commission File No. 001-16027), which updated the description thereof
contained in the Registrant’s Registration Statement on Form 8-A, filed with the Commission on August 2, 2000 (Commission File No.
001-16027), and any other amendment or report filed for the purpose of updating such description. |
All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of Exchange Act, prior to the filing of a post-effective amendment which indicates that
all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated
by reference into this Registration Statement and to be a part hereof from the date of filing of such documents; provided, however, that
documents or information deemed to have been furnished and not filed in accordance with Commission rules shall not be deemed incorporated
by reference into this Registration Statement. Any statement contained herein or in a document, all or a portion of which is 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 statement. Any such statement so modified or superseded shall not be deemed, except as
so modified or amended, to constitute a part of this Registration Statement.
| Item 4. | Description of Securities |
Not applicable.
| Item 5. | Interests of Named Experts and Counsel |
The validity of the issuance of Common Stock registered
hereby is passed on for the Company by Mayant Luk. Ms. Luk is the Director of Human Resources and Senior Corporate Counsel of the Company
and is compensated by the Company as an employee. Ms. Luk owns 15,531 shares of Common Stock and 13,114 restricted stock units that are
payable in an equivalent number of shares of Common Stock (with outstanding awards of restricted stock units that are subject to performance-based
vesting included at the target level of performance).
| 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
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.
See the attached Exhibit Index at page 8, which
is incorporated herein by reference.
(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;
(ii) To reflect in the prospectus
any facts or events arising after the effective date of this 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 this Registration Statement;
(iii) To include any material
information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
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 15(d) of the Exchange Act that are incorporated by reference
in 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 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 this 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.
(h) 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 provisions described in Item 6 above, 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.
EXHIBIT INDEX
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 Form S-8 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Irvine, State of California, on June 5, 2024.
| |
LANTRONIX, INC. |
| |
|
| |
By: /s/ Jeremy Whitaker |
| |
Jeremy Whitaker
Chief
Financial Officer |
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Saleel Awsare, Jeremy Whitaker and David Goren, and each of them, acting individually and without the other, as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name,
place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and
other documents in connection therewith) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either
of them individually, or their or his 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 below by the following persons in the capacities and on the dates indicated.
| Signature |
Title |
Date |
| |
|
|
|
/s/ Saleel Awsare
Saleel Awsare |
Chief Executive Officer, President and Director
(Principal Executive Officer) |
June 5, 2024 |
| |
|
|
|
/s/ Jeremy Whitaker
Jeremy Whitaker |
Chief Financial Officer
(Principal Financial and Accounting Officer) |
June 5, 2024 |
| |
|
|
|
/s/ Philip Brace
Philip Brace |
Director |
June 5, 2024 |
| |
|
|
|
/s/ Jason Cohenour
Jason Cohenour |
Director |
June 5, 2024 |
| |
|
|
|
/s/ Phu Hoang
Phu Hoang |
Director |
June 5, 2024 |
| |
|
|
|
/s/ Hoshi Printer
Hoshi Printer |
Director |
June 5, 2024 |
| |
|
|
|
/s/ Christa Steele
Christa Steele |
Director |
June 5, 2024 |
EXHIBIT 4.1
NOTICE OF GRANT OF RESTRICTED STOCK UNIT AWARD
(INDUCEMENT GRANT)
Name of Grantee:
Total Number of Stock Units Subject to this
Grant1:
Date of Grant:
This Notice evidences that
you have been granted an award of restricted stock units (the “Stock Units”) of Lantronix, Inc. (the “Company”)
as to the number of units set forth above. [The Award will become vested as to one-third of the total number of restricted stock
units subject to the Award on _________, and the remaining balance will become vested in eight (8) equal quarterly installments beginning
on __________.]
By your acceptance of the
award, you agree that this award of Stock Units is governed by the provisions of the Terms and Conditions of Restricted Stock Unit Award
(Inducement Grant) (the “Terms”), which are attached and incorporated herein by this reference, and constitutes the
“RSU Grant” contemplated by Section ____ of the Employment Agreement between you and the Company, dated ___________. This
Notice of Grant of Restricted Stock Unit Award, together with the Terms, is referred to as the “Agreement” applicable
to your award. The award has been granted to you in addition to, and not in lieu of, any other form of compensation otherwise payable
or to be paid to you.
By accepting this award, you
agree to execute any documents and take such further actions that the Company may reasonably request in order to establish and/or maintain
a brokerage account to hold the shares subject to this grant.
| LANTRONIX, INC. |
|
ACCEPTED AND AGREED BY GRANTEE |
| |
|
|
| By: |
|
|
By: |
|
| Name: |
Jeremy Whitaker |
|
Name: |
|
| Title: |
Chief Financial Officer |
|
|
__________________
1 Subject to adjustment under Section
8.1 of the Terms.
LANTRONIX, INC.
TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT
AWARD
(INDUCEMENT GRANT)
These Terms and Conditions
of Restricted Stock Unit Award (these “Terms”) apply to a particular grant of restricted stock units (the “Award”)
if incorporated by reference in the Notice of Grant of Restricted Stock Unit Award (the “Grant Notice”) corresponding
to that particular award. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.”
The effective date of grant of the Award as set forth in the Grant Notice is referred to as the “Award Date.” The number
of stock units covered by the Award is subject to adjustment under Section 8.1 of these Terms.
The
Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid
to the Grantee. The Grant Notice and these Terms are collectively referred to as the “Agreement”
applicable to the Award.
As
used in this Agreement, the term “stock unit” means a non-voting unit of measurement
which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Company’s common stock (“Common
Stock”) solely for purposes of this Agreement. The Stock Units shall be used solely as a device for the determination of the payment
to eventually be made to the Grantee if such Stock Units vest pursuant to this Agreement. The Stock Units shall not be treated as property
or as a trust fund of any kind.
The Award is subject to the
vesting schedule set forth in the Grant Notice (the “Vesting Schedule”) and the terms and conditions set forth herein.
| 3. | Effect of Termination of Employment or Services. |
3.1
In General. Except as otherwise expressly provided below in this Section 3, if the Grantee ceases to be employed by or ceases to
provide services to the Company or any corporation or other entity a majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company (a “Subsidiary”, and the last day that the Grantee is
employed by or provides services as a consultant or director to the Company or one of its Subsidiaries prior to a period in which
the Grantee is not employed by, and does not have any such service relationship with, any such entity is referred to as the
Grantee’s “Severance Date”), the Grantee’s Stock Units shall terminate to the extent such units have
not become vested pursuant to Section 2 or this Section 3 as of the Severance Date (regardless of the reason for such termination of
employment or services, whether with or without cause, voluntarily or involuntarily).
If any unvested Stock Units
are terminated pursuant to this Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination
date without payment of any consideration by the Company and without any other action by the Grantee, or the Grantee’s beneficiary
or personal representative, as the case may be.
In the event of any conflict
or inconsistency between this Agreement, on the one hand, and any employment, severance or similar agreement between the Grantee and the
Company entered into before the Award Date, on the other hand, regarding the treatment of the Award in connection with a termination of
the Grantee’s employment or services or a change in control or similar event (including, without limitation, whether and the extent
to which there is any accelerated vesting of the Award in any such circumstances), this Agreement shall control.
3.2
Certain Terminations. Subject to Section 3.3, if the Grantee’s Severance Date occurs as a result of a termination of the
Grantee’s employment by the Company without Cause, a termination by the Grantee for Good Reason or a termination due to the
Grantee’s death or Disability, and (other than in the case of a termination due to the Grantee’s death) if the Grantee
satisfies the Release Requirement set forth below, any portion of the Award that is then outstanding and scheduled to vest pursuant
to the Vesting Schedule during the period of twelve (12) months following the Severance Date shall be fully vested as of the
Severance Date. Any remaining Stock Units that are not vested after giving effect to the foregoing sentence shall terminate as of
the Grantee’s Severance Date.
3.3
Termination In Connection with a Change in Control. If the Grantee’s Severance Date occurs within sixty (60) days prior
to, or upon or after, a Change in Control, as a result of a termination of the Grantee’s employment by the Company without
Cause or a termination by the Grantee for Good Reason, or due to the Grantee’s death or Disability upon or after a Change in
Control, and (other than in the case of a termination due to the Grantee’s death) if the Grantee satisfies the Release
Requirement set forth below, any portion of the Award that is then outstanding and unvested shall be fully vested as of the
Severance Date.
3.4
Defined Terms; Release Requirement. For the purposes of the Award, the following definitions will apply:
“Cause”
shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the
Grantee and the Company in effect on the Grantee’s Severance Date or, if there is no such agreement or such agreement does not include
a definition of such term, shall mean: (i) gross negligence or willful misconduct in the performance of the Grantee’s duties to
the Company; (ii) intentional and continual failure to substantially perform the Grantee’s reasonably assigned duties for the Company;
(iii) the Grantee’s intentional conduct that is demonstrably and materially injurious to the Company, including but not limited
to committing or cooperating in an act of fraud, theft, or dishonesty against the Company; (iv) the Grantee’s breach of a fiduciary
duty to the Company or its shareholders; (v) the Grantee’s conviction for, or plea of guilty or nolo contendere to, the commission
of any felony or any crime involving deceit, material dishonesty, fraud, embezzlement, theft, any crime that results in or is intended
to result in personal enrichment at the expense of the Company, any crime that involves the use or sale of a controlled substance, or
any other offense that will adversely affect in any material respect the Company’s reputation or the Grantee’s ability to
perform the Grantee’s obligations or duties to the Company; or (vi) the Grantee’s violation of a material written policy of
the Company or breach of a written agreement with Company, including but not limited to a breach of any written employment, confidentiality
or similar agreement between the Grantee and the Company. Notwithstanding the foregoing, Cause shall not exist under (i), (ii), (iii),
(iv) or (vi) unless the Company provides the Grantee with written notice of the existence of one or more of the actions, conditions or
events set forth above in such definition of Cause, and if such action, event or condition is curable, the Grantee fails to cure such
action, event or condition within thirty (30) days after receipt of such notice.
“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 definition of Change
in Control, 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 U.S. Internal Revenue Code (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”).
“Disability”
means total and permanent disability of the Grantee as defined in Section 22(e)(3) of the Code.
“Good Reason”
shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the
Grantee and the Company in effect on the Grantee’s Severance Date or, if there is no such agreement or such agreement does not include
a definition of such term, shall mean the Grantee’s resignation within one hundred and twenty (120) days after the Company has taken
any of the following actions without the Grantee’s express written consent: (i) a material reduction in the Grantee’s base
salary, the Grantee’s target annual bonus opportunity or benefits (unless, outside of a Change in Control context, such reduction
is in connection with a salary or benefit reduction program of general application at the senior level executives of the Company); (ii)
a material breach by the Company of any written agreement with the Grantee, including the Company’s failure to obtain an agreement
from any successor to the Company to assume and agree to perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform, except where such assumption occurs by operation of law; (iii) a material adverse
change in the Grantee’s title, duties or responsibilities (other than temporarily while the Grantee is disabled or as otherwise
permitted by applicable law); or (iv) relocation of the Grantee’s principal workplace by more than forty-five (45) miles, which
change results in a material increase in the Grantee’s one-way commute. Notwithstanding the foregoing, Good Reason shall not exist
unless the Grantee provides the Company written notice of the existence of the one or more of the actions, conditions or events set forth
above in this definition of Good Reason within ninety (90) days after the initial existence or occurrence of such action, condition or
event, and if such action, event or condition is curable, the Company fails to cure such action, event or condition within thirty (30)
days after its receipt of such notice.
The “Release Requirement”
means that the Grantee timely executes and delivers to the Company a release of claims in a form acceptable to the Company (a “Release”)
and the Grantee does not revoke such Release within any revocation period provided by applicable law. In any circumstances where the Release
Requirement is applicable pursuant to this Agreement, the Company shall provide the final form of Release to the Grantee not later than
seven (7) days following the Grantee’s Severance Date, and the Grantee shall be required to execute and return the Release to the
Company within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable
under applicable law) after the Company provides the form of Release to the Grantee.
| 4. | Continuance of Employment/Service Required; No Employment Commitment. |
Except as expressly provided
in Section 3 above, the Vesting Schedule requires continued employment or service through each applicable vesting date as a condition
to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Except as expressly provided
in Section 3 above, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the
Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment
or services as provided in Section 3 above.
Nothing contained in this
Agreement constitutes an employment or service commitment by the Company, affects the Grantee’s status as an employee at will who
is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Company or any
of its Subsidiaries, interferes in any way with the right of the Company or any of its Subsidiaries at any time to terminate such employment
or services, or affects the right of the Company or any of its Subsidiaries to increase or decrease the Grantee’s other compensation
or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Grantee without
his consent thereto.
5.
Timing and Manner of Payment of Stock Units.
On or as soon as administratively
practical (and in all events not later than two and one-half months) following the date on which any Stock Units vest pursuant to any
provision of this Agreement, the Company shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or
more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion) equal
(subject to adjustment pursuant to Section 8.1 of these Terms) to the number of Stock Units subject to this Award that vested on such
date. The Company’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is
subject to the condition precedent that the Grantee or other person entitled hereunder to receive any shares with respect to the vested
Stock Units deliver to the Company any representations or other documents or assurances required pursuant to Section 13 hereof. The Grantee
shall have no further rights with respect to any Stock Units that are so paid or that terminate pursuant to the terms hereof.
6.
Dividend and Voting Rights.
6.1
Limitations on Rights Associated with Units. The Grantee shall have no rights as a stockholder of the Company, no dividend
rights (except as expressly provided in Section 6.2 with respect to Dividend Equivalent Rights) and no voting rights, with respect
to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common
Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a
holder for which the record date is prior to the date of issuance of the stock certificate.
6.2
Dividend Equivalent Rights Distributions. As of any date that the Company pays an ordinary cash dividend on its Common Stock,
the Company shall credit the Grantee with an additional number of Stock Units equal to (i) the per share cash dividend paid by the
Company on its Common Stock on such date, multiplied by (ii) the Total Target Number of Stock Units (including any dividend
equivalents previously credited hereunder) (with such Target Number adjusted pursuant to Section 8.1 of these Terms) outstanding and
subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of a share of Common
Stock (as determined under Section 9 hereof) on the date of payment of such dividend. Any Stock Units credited pursuant to the
foregoing provisions of this Section 6.2 shall be subject to the same vesting, payment and other terms, conditions and restrictions
as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 6.2 with
respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 5 or terminated pursuant to the
terms hereof.
7.
Non-Transferability.
Neither the Award, nor any
interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of,
alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a)
transfers to the Company, or (b) transfers by will or the laws of descent and distribution.
8.
Adjustments; Change in Control.
8.1
Adjustments. Subject to Section 8.2, upon (or, as may be necessary to effect the adjustment, immediately prior to): any
reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split;
any merger, combination, consolidation, conversion or other reorganization; any spin-off, split-up, or extraordinary
dividend distribution in respect of the Common Stock; or any exchange of Common Stock or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction in respect of the Common Stock; then the Company’s Board of Directors
(the “Board”) or a committee of the Board appointed by the Board to administer the Award (the Board or such
committee, the “Administrator”) shall equitably and proportionately adjust: (1) the number and type of
shares of Common Stock (or other securities) that thereafter may be made the subject of the Award; and/or (2) the securities,
cash or other property deliverable upon payment of the Award, in each case to the extent necessary to preserve (but not increase)
the level of incentives intended by the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which
dividend equivalents are credited pursuant to Section 6.2.
8.2
Certain Corporate Transactions. Upon any event in which the Company does not survive, or does not survive as a public company in
respect of its Common Stock (including, without limitation, a dissolution, merger, combination, consolidation, conversion, exchange
of securities, or other reorganization, or a sale of all or substantially all of the business, stock or assets of the Company, in
any case in connection with which the Company does not survive or does not survive as a public company in respect of its Common
Stock), then the Administrator may make provision for a cash payment in settlement of, or for the termination, assumption,
substitution or exchange of the Award or the cash, securities or property deliverable to the holder of the Award, based upon, to the
extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Stock upon or in respect
of such event. Upon the occurrence of any event described in the preceding sentence in connection with which the Administrator has
made provision for the Award to be terminated (and the Administrator has not made a provision for the substitution, assumption,
exchange or other continuation or settlement of the Award), the Award shall vest on the Change of Control as to the number of Stock
Units provided above in this Section 8.2. Without limiting the foregoing, in connection with any event referred to in this
paragraph, the Administrator may, in its discretion, provide for the accelerated vesting of the Award as and to the extent
determined by the Administrator in the circumstances. For purposes of this paragraph, the Award shall be deemed to have been
“assumed” if the Award continues after an event referred to above in this paragraph, and/or is assumed and continued by
the surviving entity following such event (including, without limitation, an entity that, as a result of such event, owns the
Company or all or substantially all of the Company’s assets directly or through one or more subsidiaries (a
“Parent”)), and confers the right to receive, subject to vesting and the other terms and conditions of the Award,
for each share of Common Stock subject to the Award immediately prior to the event, the consideration (whether cash, shares, or
other securities or property) received in the event by the stockholders of the Company for each share of Common Stock sold or
exchanged in such event (or the consideration received by a majority of the stockholders participating in such event if the
stockholders were offered a choice of consideration); provided, however, that if the consideration offered for a share of Common
Stock in the event is not solely the ordinary common stock of a successor corporation or a Parent, the Administrator may provide for
the consideration to be received upon payment of the Award, for each share subject to the Award, to be solely ordinary common stock
of the successor corporation or a Parent equal in fair market value to the per share consideration received by the stockholders
participating in the event.
9.
Tax Withholding.
The Company shall reasonably
determine the amount of any federal, state, local or other income, employment, or other taxes which the Company or any of its Subsidiaries
may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. The Grantee
shall be solely responsible for the satisfaction of such withholding requirements. If such withholding event occurs in connection with
the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Company
shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then Fair Market Value, to satisfy
any withholding obligations of the Company or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs
with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units,
or if the Company cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above,
the Company shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable
to the Grantee the amount of any such withholding obligations.
As used herein, “Fair
Market Value” shall mean, unless otherwise determined or provided by the Administrator in the circumstances, the closing price
(in regular trading) for a share of Common Stock on the NASDAQ Stock Market (the “Market”) for the date in question
or, if no sales of Common Stock were reported on the Market on that date, the closing price (in regular trading) for a share of Common
Stock on the Market for the next preceding day on which sales of Common Stock were reported on the Market. The Administrator may, however,
provide that the Fair Market Value for purposes of the Award shall equal the closing price (in regular trading) for a share of Common
Stock on the Market on the last trading day preceding the date in question or the average of the high and low trading prices of a share
of Common Stock on the Market for the date in question or the most recent trading day. If the Common Stock is no longer listed or is no
longer actively traded on the Market as of the applicable date, the Fair Market Value of the Common Stock shall be the value as reasonably
determined by the Administrator for purposes of the Award in the circumstances.
10.
Notices.
Any notice to be given under
the terms of this Agreement shall be in writing and addressed to the Company at its principal office to the attention of the Secretary,
and to the Grantee at the Grantee’s last address reflected on the Company’s employment records. Any notice shall be delivered
in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage
and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government
or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer
a Service Provider, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing
provisions of this Section 10.
11.
Entire Agreement.
This Agreement constitutes
the entire agreement and supersedes all prior understandings and agreements, written or oral, of the parties hereto with respect to the
subject matter hereof.
This Agreement may be amended
only by a written instrument that expressly refers to this Agreement and is signed by the parties. The Company may, however, unilaterally
waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but
no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.
The Administrator will have
the exclusive discretion and authority to establish administrative rules, forms and procedures for the administration of the Award, to
construe and interpret this Agreement and to decide any and all questions of fact, interpretation, definition, computation or administration
arising in connection with the operation of this Agreement, including, but not limited to, the amount of benefits paid hereunder. The
rules, interpretations, computations and other actions of the Administrator will be binding and conclusive on all persons.
12.
Limitation on Grantee’s Rights.
The Award confers no rights
or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts
payable and shall not be construed as creating a trust. The Grantee shall have only the rights of a general unsecured creditor of the
Company with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the
right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.
13.
Compliance with Laws.
The Award, the offer, issuance
and delivery of shares of Common Stock, and/or the payment of money under this Agreement are subject to compliance with all applicable
federal, state, local and foreign laws, rules and regulations (including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for
the Company, be necessary or advisable in connection therewith. The person acquiring any securities hereunder will, if requested by the
Company one of its Subsidiaries, provide such assurances and representations to the Company or one of its Subsidiaries as the Administrator
may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.
14.
Counterparts.
This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one
and the same instrument.
15.
Section Headings.
The section headings of this
Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
16.
Governing Law.
This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.
17.
Construction.
It is intended that the terms
of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be construed
and interpreted consistent with the foregoing intents.
18.
Clawback Policy.
The Stock Units are subject
to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar
provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares
of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of
the shares acquired upon payment of the Stock Units). The Grantee hereby agrees to promptly repay to the Company any amounts that are
required to be repaid pursuant to such policy.
19.
Section 280G.
Notwithstanding anything contained
in this Agreement to the contrary, to the extent that any payments and benefits provided under this Agreement to or for the benefit of
the Grantee, together with any payments and benefits provided to or for the benefit of the Grantee under any other plan or agreement of
the Company or any of its Subsidiaries or affiliates (such payments or benefits are collectively referred to as the “Benefits”),
would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Grantee’s Benefits
shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in the Grantee retaining a larger
amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Grantee received
all of the Benefits (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). If a reduction
in the Grantee’s Benefits is required pursuant to the preceding sentence, in order to effectuate the Limited Benefit Amount, the
Company shall reduce or eliminate (if and to the extent necessary) the Grantee’s Benefits by first reducing or eliminating amounts
which are payable from any cash severance, then from any payment or benefit in respect of any equity award that is treated as contingent
on the change in ownership or control but is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any payment or benefit
in respect of an equity award that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). A determination as to
whether a reduction in the Grantee’s Benefits to the Limited Benefit Amount pursuant to this Section 19, and the amount of such
Limited Benefit Amount (the “Determination”), shall be made by the Company’s independent public accountants or
another certified public accounting firm or executive compensation consulting firm of national reputation designated by the Company at
the Company’s expense.
* * * * *
EXHIBIT 4.2
NOTICE OF GRANT OF PERFORMANCE STOCK UNIT AWARD
(INDUCEMENT GRANT—RELATIVE TSR)
Name of Grantee:
Total Number of Stock Units Subject to this
Grant1:
Date of Grant:
This Notice evidences that
you have been granted an award of restricted stock units (the “Stock Units”) of Lantronix, Inc. (the “Company”)
as to the “total target” number set forth above. Between zero percent (0%) and two hundred percent (200%) of the “total
target” number of Stock Units will vest and become nonforfeitable in accordance with the performance-based vesting requirements
set forth in the Terms (as defined below).
By your acceptance of the
award, you agree that this award of Stock Units is governed by the provisions of the Terms and Conditions of Performance Stock Unit Award
(Inducement Grant—Relative TSR) (the “Terms”), which are attached and incorporated herein by this reference,
and constitutes the “TSR Grant” contemplated by Section ____ of the Employment Agreement between you and the Company, dated
___________. This Notice of Grant of Performance Stock Unit Award, together with the Terms, is referred to as the “Agreement”
applicable to your award. The award has been granted to you in addition to, and not in lieu of, any other form of compensation otherwise
payable or to be paid to you.
By accepting this award, you
agree to execute any documents and take such further actions that the Company may reasonably request in order to establish and/or maintain
a brokerage account to hold the shares subject to this grant.
| LANTRONIX, INC. |
|
ACCEPTED AND AGREED BY GRANTEE |
| |
|
|
| By: |
|
|
By: |
|
| Name: |
Jeremy Whitaker |
|
Name: |
|
| Title: |
Chief Financial Officer |
|
|
__________________
1 Subject to adjustment under Section
8.1 of the Terms.
LANTRONIX, INC.
TERMS AND CONDITIONS OF PERFORMANCE STOCK UNIT
AWARD
(INDUCEMENT GRANT—RELATIVE TSR)
These Terms and Conditions
of Performance Stock Unit Award (these “Terms”) apply to a particular grant of stock units under the Plan (the “Award”)
if incorporated by reference in the Notice of Grant of Performance Stock Unit Award (the “Grant Notice”) corresponding
to that particular grant. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.”
The effective date of grant of the Award as set forth in the Grant Notice is referred to as the “Award Date.” The number
of stock units covered by the Award is subject to adjustment under Section 8.1 of these Terms.
The Award has been granted
to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The
Grant Notice and these Terms are collectively referred to as the “Agreement” applicable to the Award.
As used in the Agreement,
the term “stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be the equivalent
to one outstanding share of the Company’s common stock (“Common Stock”) solely for purposes of this Agreement.
The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Grantee if such Stock
Units vest pursuant to Section 2 of the Terms. The Stock Units shall not be treated as property or as a trust fund of any kind.
The Award is subject to the
vesting terms and conditions set forth in Exhibit A hereto, incorporated herein by this reference. References to this Section 2
include Exhibit A. For clarity, except as expressly provided herein, the vesting date for the Stock Units shall be the date on
which the Company’s Board of Directors (the “Board”) or a committee of the Board appointed by the Board to administer
the Award (the Board or such committee, the “Administrator”) determines the vesting of such Stock Units in accordance
with Exhibit A.
| 3. | Effect of Termination of Employment or Services. |
3.1
In General. Except as otherwise expressly provided below in this Section 3, if the Grantee ceases to be employed by or ceases to
provide services to the Company or any corporation or other entity a majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company (a “Subsidiary”, and the last day that the Grantee is
employed by or provides services as a consultant or director to the Company or one of its Subsidiaries prior to a period in which
the Grantee is not employed by, and does not have any such service relationship with, any such entity is referred to as the
Grantee’s “Severance Date”), the Grantee’s Stock Units shall terminate to the extent such units have
not become vested pursuant to Section 2 or Section 8.2 hereof as of the Severance Date (regardless of the reason for such
termination of employment or services, whether with or without cause, voluntarily or involuntarily).
If any unvested Stock Units
are terminated pursuant to this Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination
date without payment of any consideration by the Company and without any other action by the Grantee, or the Grantee’s beneficiary
or personal representative, as the case may be.
In the event of any conflict
or inconsistency between this Agreement, on the one hand, and any employment, severance or similar agreement between the Grantee and the
Company entered into before the Award Date, on the other hand, regarding the treatment of the Award in connection with a termination of
the Grantee’s employment or services or a change in control or similar event (including, without limitation, whether and the extent
to which there is any accelerated vesting of the Award in any such circumstances), this Agreement shall control.
3.2
Termination Due to Death or Disability. If the Grantee’s Severance Date occurs prior to the last day of the TSR
Measurement Period as a result of the Grantee’s death or Disability, and (other than in the case of a termination due to the
Grantee’s death) if the Grantee satisfies the Release Requirement set forth below, the TSR Measurement Period shall end on the
Severance Date, the Ending Price for the TSR Measurement Period shall be the closing price (in regular trading) for a share of
Common Stock on the principal exchange on which such stock is traded on the last trading day before the Severance Date, and the
Award shall vest on the Severance Date as to a number of Stock Units determined in accordance with Exhibit A hereto. Any
remaining Stock Units shall terminate as of the Grantee’s Severance Date.
3.3
Involuntary Termination. Subject to Section 3.4, if the Grantee’s Severance Date occurs both (i) more than twelve (12)
months after the Grantee’s Start Date and prior to the last day of the TSR Measurement Period and (ii) as a result of a
termination of the Grantee’s employment by the Company without Cause or a termination by the Grantee for Good Reason, and if
the Grantee satisfies the Release Requirement set forth below, the TSR Measurement Period shall end on the Severance Date, the
Ending Price for the TSR Measurement Period shall be the closing price (in regular trading) for a share of Common Stock on the
principal exchange on which such stock is traded on the last trading day before the Severance Date, and the Award shall vest on the
Severance Date as to (x) a number of Stock Units determined in accordance with Exhibit A hereto, multiplied by (y) a
fraction, the numerator of which is the number of days in the period commencing on the Start Date and ending on the Severance Date
and the denominator of which is the total number of days in the TSR Measurement Period. Any remaining Stock Units shall terminate as
of the Grantee’s Severance Date.
3.4
Termination In Connection with a Change in Control. If the Grantee’s Severance Date occurs within sixty (60) days prior
to, or upon or after, a Change in Control, as a result of a termination of the Grantee’s employment by the Company without
Cause or a termination by the Grantee for Good Reason, or due to the Grantee’s death or Disability upon or after a Change in
Control, and in any such case both (i) the Severance Date occurs before the last day of the TSR Measurement Period and (ii) (other
than in the case of a termination due to the Grantee’s death) the Grantee satisfies the Release Requirement set forth below,
any Stock Units that remain outstanding and eligible to vest following a Change in Control pursuant to Section 8.2 (to the extent
not theretofore vested or terminated and after giving effect to the crediting of the Stock Units provided under Section 8.2) shall
accelerate and vest as of the Grantee’s Severance Date (or, if later, the date of the Change in Control). If this Section 3.4
and either Section 3.2 or Section 3.3 would apply in the circumstances, this Section 3.4 controls. In addition, if the
Grantee’s Severance Date occurs within sixty (60) days prior to a Change in Control as a result of a termination of the
Grantee’s employment by the Company without Cause or a termination by the Grantee for Good Reason, the timing requirements set
forth in the Release Requirement shall be measured from the date of the Change in Control and not from the Severance Date.
3.5
Defined Terms; Release Requirement. For the purposes of the Award, the following definitions will apply:
“Cause”
shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the
Grantee and the Company in effect on the Grantee’s Severance Date or, if there is no such agreement or such agreement does not include
a definition of such term, shall mean: (i) gross negligence or willful misconduct in the performance of the Grantee’s duties to
the Company; (ii) intentional and continual failure to substantially perform the Grantee’s reasonably assigned duties for the Company;
(iii) the Grantee’s intentional conduct that is demonstrably and materially injurious to the Company, including but not limited
to committing or cooperating in an act of fraud, theft, or dishonesty against the Company; (iv) the Grantee’s breach of a fiduciary
duty to the Company or its shareholders; (v) the Grantee’s conviction for, or plea of guilty or nolo contendere to, the commission
of any felony or any crime involving deceit, material dishonesty, fraud, embezzlement, theft, any crime that results in or is intended
to result in personal enrichment at the expense of the Company, any crime that involves the use or sale of a controlled substance, or
any other offense that will adversely affect in any material respect the Company’s reputation or the Grantee’s ability to
perform the Grantee’s obligations or duties to the Company; or (vi) the Grantee’s violation of a material written policy of
the Company or breach of a written agreement with Company, including but not limited to a breach of any written employment, confidentiality
or similar agreement between the Grantee and the Company. Notwithstanding the foregoing, Cause shall not exist under (i), (ii), (iii),
(iv) or (vi) unless the Company provides the Grantee with written notice of the existence of one or more of the actions, conditions or
events set forth above in such definition of Cause, and if such action, event or condition is curable, the Grantee fails to cure such
action, event or condition within thirty (30) days after receipt of such notice.
“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 definition of Change
in Control, 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 U.S. Internal Revenue Code (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”).
“Disability”
means total and permanent disability of the Grantee as defined in Section 22(e)(3) of the Code.
“Good Reason”
shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the
Grantee and the Company in effect on the Grantee’s Severance Date or, if there is no such agreement or such agreement does not include
a definition of such term, shall mean the Grantee’s resignation within one hundred and twenty (120) days after the Company has taken
any of the following actions without the Grantee’s express written consent: (i) a material reduction in the Grantee’s base
salary, the Grantee’s target annual bonus opportunity or benefits (unless, outside of a Change in Control context, such reduction
is in connection with a salary or benefit reduction program of general application at the senior level executives of the Company); (ii)
a material breach by the Company of any written agreement with the Grantee, including the Company’s failure to obtain an agreement
from any successor to the Company to assume and agree to perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform, except where such assumption occurs by operation of law; (iii) a material adverse
change in the Grantee’s title, duties or responsibilities (other than temporarily while the Grantee is disabled or as otherwise
permitted by applicable law); or (iv) relocation of the Grantee’s principal workplace by more than forty-five (45) miles, which
change results in a material increase in the Grantee’s one-way commute. Notwithstanding the foregoing, Good Reason shall not exist
unless the Grantee provides the Company written notice of the existence of the one or more of the actions, conditions or events set forth
above in this definition of Good Reason within ninety (90) days after the initial existence or occurrence of such action, condition or
event, and if such action, event or condition is curable, the Company fails to cure such action, event or condition within thirty (30)
days after its receipt of such notice.
The “Release Requirement”
means that the Grantee timely executes and delivers to the Company a release of claims in a form acceptable to the Company (a “Release”)
and the Grantee does not revoke such Release within any revocation period provided by applicable law. In any circumstances where the Release
Requirement is applicable pursuant to this Agreement, the Company shall provide the final form of Release to the Grantee not later than
seven (7) days following the Grantee’s Severance Date, and the Grantee shall be required to execute and return the Release to the
Company within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable
under applicable law) after the Company provides the form of Release to the Grantee.
| 4. | Continuance of Employment/Service Required; No Employment Commitment. |
Except as expressly provided
in Section 3 above, the vesting schedule requires continued employment or service through each applicable vesting date as a condition
to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Except as expressly provided
in Section 3 above, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the
Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment
or services as provided in Section 3 above.
Nothing contained in this
Agreement constitutes an employment or service commitment by the Company, affects the Grantee’s status as an employee at will who
is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Company or any
of its Subsidiaries, interferes in any way with the right of the Company or any of its Subsidiaries at any time to terminate such employment
or services, or affects the right of the Company or any of its Subsidiaries to increase or decrease the Grantee’s other compensation
or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Grantee without
his consent thereto.
| 5. | Timing and Manner of Payment of Stock Units. |
On or as soon as administratively
practical (and in all events not later than two and one-half months) following the date on which any Stock Units vest pursuant to any
provision of this Agreement, the Company shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or
more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion) equal
(subject to adjustment pursuant to Section 8.1 of these Terms) to the number of Stock Units subject to this Award that vested on such
date. The Company’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is
subject to the condition precedent that the Grantee or other person entitled hereunder to receive any shares with respect to the vested
Stock Units deliver to the Company any representations or other documents or assurances required pursuant to Section 13 hereof. The Grantee
shall have no further rights with respect to any Stock Units that are so paid or that terminate pursuant to the terms hereof.
| 6. | Dividend and Voting Rights. |
6.1
Limitations on Rights Associated with Units. The Grantee shall have no rights as a stockholder of the Company, no dividend
rights (except as expressly provided in Section 6.2 with respect to Dividend Equivalent Rights) and no voting rights, with respect
to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common
Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a
holder for which the record date is prior to the date of issuance of the stock certificate.
6.2
Dividend Equivalent Rights Distributions. As of any date that the Company pays an ordinary cash dividend on its Common Stock,
the Company shall credit the Grantee with an additional number of Stock Units equal to (i) the per share cash dividend paid by the
Company on its Common Stock on such date, multiplied by (ii) the Total Target Number of Stock Units (including any dividend
equivalents previously credited hereunder) (with such Target Number adjusted pursuant to Section 8.1 of these Terms) outstanding and
subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of a share of Common
Stock (as determined under Section 9 hereof) on the date of payment of such dividend. Any Stock Units credited pursuant to the
foregoing provisions of this Section 6.2 shall be subject to the same vesting, payment and other terms, conditions and restrictions
as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 6.2 with
respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 5 or terminated pursuant to the
terms hereof.
Neither the Award, nor any
interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of,
alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a)
transfers to the Company, or (b) transfers by will or the laws of descent and distribution.
| 8. | Adjustments; Change in Control. |
8.1
Adjustments. Subject to Section 8.2, upon (or, as may be necessary to effect the adjustment, immediately prior to): any
reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split;
any merger, combination, consolidation, conversion or other reorganization; any spin-off, split-up, or extraordinary
dividend distribution in respect of the Common Stock; or any exchange of Common Stock or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction in respect of the Common Stock; then the Administrator shall equitably and
proportionately adjust: (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the
subject of the Award; and/or (2) the securities, cash or other property deliverable upon payment of the Award, in each case to
the extent necessary to preserve (but not increase) the level of incentives intended by the Award. No such adjustment shall be made
with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 6.2. For purposes of
clarity, Exhibit A controls as to any adjustment of the performance goals, criteria or metrics.
8.2
Change in Control. If, at any time after the Award Date and before the last day of the TSR Measurement Period, a Change in
Control occurs, the following rules shall apply:
| · | The TSR Measurement Period shall end on the date
of the Change in Control, the Ending Price for the TSR Measurement Period shall be the closing price (in regular trading) for a share
of Common Stock on the last trading day before the Change in Control, and the Award shall be eligible to vest as to a number of Stock
Units determined in accordance with Exhibit A hereto (the “Credited Stock Units”). Any remaining Stock Units
shall terminate as of the Change in Control date. |
| | | |
| · | The Credited Stock Units shall remain outstanding
and shall vest on the third anniversary of the Start Date, subject to (except as otherwise expressly provided in Section 3) the Grantee’s
continued employment or service with the Company or any of its Subsidiaries through such vesting date. |
| · | Upon any event in which the Company does not
survive, or does not survive as a public company in respect of its Common Stock (including, without limitation, a dissolution, merger,
combination, consolidation, conversion, exchange of securities, or other reorganization, or a sale of all or substantially all of the
business, stock or assets of the Company, in any case in connection with which the Company does not survive or does not survive as a public
company in respect of its Common Stock), then the Administrator may make provision for a cash payment in settlement of, or for the termination,
assumption, substitution or exchange of the Award or the cash, securities or property deliverable to the holder of the Award, based upon,
to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Stock upon or in respect
of such event. Upon the occurrence of any event described in the preceding sentence in connection with which the Administrator has made
provision for the Award to be terminated (and the Administrator has not made a provision for the substitution, assumption, exchange or
other continuation or settlement of the Award), the Award shall vest on the Change of Control as to the number of Stock Units provided
above in this Section 8.2. Without limiting the foregoing, in connection with any event referred to in this paragraph, the Administrator
may, in its discretion, provide for the accelerated vesting of the Award as and to the extent determined by the Administrator in the circumstances.
For purposes of this paragraph, the Award shall be deemed to have been “assumed” if the Award continues after an event referred
to above in this paragraph, and/or is assumed and continued by the surviving entity following such event (including, without limitation,
an entity that, as a result of such event, owns the Company or all or substantially all of the Company’s assets directly or through
one or more subsidiaries (a “Parent”)), and confers the right to receive, subject to vesting and the other terms and
conditions of the Award, for each share of Common Stock subject to the Award immediately prior to the event, the consideration (whether
cash, shares, or other securities or property) received in the event by the stockholders of the Company for each share of Common Stock
sold or exchanged in such event (or the consideration received by a majority of the stockholders participating in such event if the stockholders
were offered a choice of consideration); provided, however, that if the consideration offered for a share of Common Stock in the event
is not solely the ordinary common stock of a successor corporation or a Parent, the Administrator may provide for the consideration to
be received upon payment of the Award, for each share subject to the Award, to be solely ordinary common stock of the successor corporation
or a Parent equal in fair market value to the per share consideration received by the stockholders participating in the event. |
The Company shall reasonably
determine the amount of any federal, state, local or other income, employment, or other taxes which the Company or any of its Subsidiaries
may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. The Grantee
shall be solely responsible for the satisfaction of such withholding requirements. If such withholding event occurs in connection with
the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Company
shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then Fair Market Value, to satisfy
any withholding obligations of the Company or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs
with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units,
or if the Company cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above,
the Company shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable
to the Grantee the amount of any such withholding obligations.
As used herein, “Fair
Market Value” shall mean, unless otherwise determined or provided by the Administrator in the circumstances, the closing price
(in regular trading) for a share of Common Stock on the NASDAQ Stock Market (the “Market”) for the date in question
or, if no sales of Common Stock were reported on the Market on that date, the closing price (in regular trading) for a share of Common
Stock on the Market for the next preceding day on which sales of Common Stock were reported on the Market. The Administrator may, however,
provide that the Fair Market Value for purposes of the Award shall equal the closing price (in regular trading) for a share of Common
Stock on the Market on the last trading day preceding the date in question or the average of the high and low trading prices of a share
of Common Stock on the Market for the date in question or the most recent trading day. If the Common Stock is no longer listed or is no
longer actively traded on the Market as of the applicable date, the Fair Market Value of the Common Stock shall be the value as reasonably
determined by the Administrator for purposes of the Award in the circumstances.
Any notice to be given under
the terms of this Agreement shall be in writing and addressed to the Company at its principal office to the attention of the Secretary,
and to the Grantee at the Grantee’s last address reflected on the Company’s employment records. Any notice shall be delivered
in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage
and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government
or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer
a Service Provider, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing
provisions of this Section 10.
This Agreement constitutes
the entire agreement and supersedes all prior understandings and agreements, written or oral, of the parties hereto with respect to the
subject matter hereof.
This Agreement may be amended
only by a written instrument that expressly refers to this Agreement and is signed by the parties. The Company may, however, unilaterally
waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but
no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.
The Administrator will have
the exclusive discretion and authority to establish administrative rules, forms and procedures for the administration of the Award, to
construe and interpret this Agreement and to decide any and all questions of fact, interpretation, definition, computation or administration
arising in connection with the operation of this Agreement, including, but not limited to, the amount of benefits paid hereunder. The
rules, interpretations, computations and other actions of the Administrator will be binding and conclusive on all persons.
| 12. | Limitation on Grantee’s Rights. |
The Award confers no rights
or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts
payable and shall not be construed as creating a trust. The Grantee shall have only the rights of a general unsecured creditor of the
Company with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the
right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.
The Award, the offer, issuance
and delivery of shares of Common Stock, and/or the payment of money under this Agreement are subject to compliance with all applicable
federal, state, local and foreign laws, rules and regulations (including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for
the Company, be necessary or advisable in connection therewith. The person acquiring any securities hereunder will, if requested by the
Company one of its Subsidiaries, provide such assurances and representations to the Company or one of its Subsidiaries as the Administrator
may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.
This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one
and the same instrument.
The section headings of this
Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.
It is intended that the terms
of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be construed
and interpreted consistent with the foregoing intents.
The Stock Units are subject
to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar
provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares
of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of
the shares acquired upon payment of the Stock Units). The Grantee hereby agrees to promptly repay to the Company any amounts that are
required to be repaid pursuant to such policy.
Notwithstanding anything contained
in this Agreement to the contrary, to the extent that any payments and benefits provided under this Agreement to or for the benefit of
the Grantee, together with any payments and benefits provided to or for the benefit of the Grantee under any other plan or agreement of
the Company or any of its Subsidiaries or affiliates (such payments or benefits are collectively referred to as the “Benefits”),
would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Grantee’s Benefits
shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in the Grantee retaining a larger
amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Grantee received
all of the Benefits (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). If a reduction
in the Grantee’s Benefits is required pursuant to the preceding sentence, in order to effectuate the Limited Benefit Amount, the
Company shall reduce or eliminate (if and to the extent necessary) the Grantee’s Benefits by first reducing or eliminating amounts
which are payable from any cash severance, then from any payment or benefit in respect of any equity award that is treated as contingent
on the change in ownership or control but is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any payment or benefit
in respect of an equity award that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). A determination as to
whether a reduction in the Grantee’s Benefits to the Limited Benefit Amount pursuant to this Section 19, and the amount of such
Limited Benefit Amount (the “Determination”), shall be made by the Company’s independent public accountants or
another certified public accounting firm or executive compensation consulting firm of national reputation designated by the Company at
the Company’s expense.
EXHIBIT A
VESTING TERMS AND CONDITIONS
[To be determined at time of grant]
EXHIBIT 4.3
NOTICE OF GRANT OF PERFORMANCE STOCK UNIT AWARD
(INDUCEMENT GRANT—FINANCIAL PERFORMANCE)
Name of Grantee:
Total Target Number of Stock Units Subject
to this Grant1:
Target Number of [Non-GAAP EPS] Stock
Units Subject to this Grant1:
Target Number of [Revenue] Stock
Units Subject to this Grant1:
Date of Grant:
This Notice evidences that
you have been granted an award of restricted stock units (the “Stock Units”) of Lantronix, Inc. (the “Company”)
as to the “total target” number set forth above. Between zero percent (0%) and two hundred percent (200%) of the “total
target” number of Stock Units will vest and become nonforfeitable in accordance with the performance-based vesting requirements
set forth in the Terms (as defined below).
By your acceptance of the
award, you agree that this award of Stock Units is governed by the provisions of the Terms and Conditions of Performance Stock Unit Award
(Inducement Grant—Financial Performance) (the “Terms”), which are attached and incorporated herein by this reference,
and constitutes the “First PSU Grant” contemplated by Section ____ of the Employment Agreement between you and the Company,
dated _____________. This Notice of Grant of Performance Stock Unit Award, together with the Terms, is referred to as the “Agreement”
applicable to your award. The award has been granted to you in addition to, and not in lieu of, any other form of compensation otherwise
payable or to be paid to you.
By accepting this award, you
agree to execute any documents and take such further actions that the Company may reasonably request in order to establish and/or maintain
a brokerage account to hold the shares subject to this grant.
| LANTRONIX, INC. |
|
ACCEPTED AND AGREED BY GRANTEE |
| |
|
|
| By: |
|
|
By: |
|
| Name: |
Jeremy Whitaker |
|
Name: |
|
| Title: |
Chief Financial Officer |
|
|
__________________
1 Subject to adjustment under Section
8.1 of the Terms.
LANTRONIX, INC.
TERMS AND CONDITIONS OF PERFORMANCE STOCK UNIT
AWARD
(INDUCEMENT GRANT—FINANCIAL PERFORMANCE)
These Terms and Conditions
of Performance Stock Unit Award (these “Terms”) apply to a particular grant of stock units (the “Award”)
if incorporated by reference in the Notice of Grant of Performance Stock Unit Award (the “Grant Notice”) corresponding
to that particular grant. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.”
The effective date of grant of the Award as set forth in the Grant Notice is referred to as the “Award Date.” The number
of stock units covered by the Award is subject to adjustment under Section 8.1 of these Terms.
The Award has been granted
to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The
Grant Notice and these Terms are collectively referred to as the “Agreement” applicable to the Award.
As used in the Agreement,
the term “stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be the equivalent
to one outstanding share of the Company’s common stock (“Common Stock”) solely for purposes of this Agreement.
The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Grantee if such Stock
Units vest pursuant to Section 2 of the Terms. The Stock Units shall not be treated as property or as a trust fund of any kind.
The Award is subject to the
vesting terms and conditions set forth in Exhibit A hereto, incorporated herein by this reference. References to this Section 2
include Exhibit A. For clarity, except as expressly provided herein, the vesting date for any Stock Units allocated to a particular
Performance Period shall be the date on which the Company’s Board of Directors (the “Board”) or a committee of
the Board appointed by the Board to administer the Award (the Board or such committee, the “Administrator”) determines
the vesting of such Stock Units for that Performance Period in accordance with Exhibit A.
| 3. | Effect of Termination of Employment or Services. |
3.1
In General. Except as otherwise expressly provided below in this Section 3, if the Grantee ceases to be employed by or ceases to
provide services to the Company or any corporation or other entity a majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company (a “Subsidiary”, and the last day that the Grantee is
employed by or provides services as a consultant or director to the Company or one of its Subsidiaries prior to a period in which
the Grantee is not employed by, and does not have any such service relationship with, any such entity is referred to as the
Grantee’s “Severance Date”), the Grantee’s Stock Units shall terminate to the extent such units have
not become vested pursuant to Section 2 or Section 8.2 hereof as of the Severance Date (regardless of the reason for such
termination of employment or services, whether with or without cause, voluntarily or involuntarily).
If any unvested Stock Units
are terminated pursuant to this Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination
date without payment of any consideration by the Company and without any other action by the Grantee, or the Grantee’s beneficiary
or personal representative, as the case may be.
In the event of any conflict
or inconsistency between this Agreement, on the one hand, and any employment, severance or similar agreement between the Grantee and the
Company entered into before the Award Date, on the other hand, regarding the treatment of the Award in connection with a termination of
the Grantee’s employment or services or a change in control or similar event (including, without limitation, whether and the extent
to which there is any accelerated vesting of the Award in any such circumstances), this Agreement shall control.
3.2
Termination Due to Death or Disability. If the Grantee’s Severance Date occurs prior to the last day of the FY26
Performance Period as a result of the Grantee’s death or Disability, and (other than in the case of a termination due to the
Grantee’s death) if the Grantee satisfies the Release Requirement set forth below, the portion of the Award allocated to the
Performance Period in which the Severance Date occurs shall remain outstanding and shall vest as to the number of Stock Units for
that Performance Period as determined in accordance with Exhibit A hereto as though the Grantee’s Severance Date did
not occur on or before the date of such determination (with any such vested Stock Units to be paid within two and one-half months
after the end of that Performance Period). Any remaining Stock Units allocated to that Performance Period and any Stock Units
allocated to any subsequent Performance Period shall terminate as of the Grantee’s Severance Date.
In addition, if the Grantee’s
Severance Date occurs as a result of the Grantee’s death or Disability, any Stock Units subject to the Award credited to the Grantee
pursuant to Exhibit A for a Performance Period that ended on or before the Severance Date (to the extent such credited Stock Units
are outstanding and have not previously vested) will vest as of the Severance Date (subject, however, other than in the case of a termination
due to the Grantee’s death, to the Grantee’s satisfying the Release Requirement set forth below).
3.3
Termination In Connection with a Change in Control. If the Grantee’s Severance Date occurs within sixty (60) days prior
to, or upon or after, a Change in Control, as a result of a termination of the Grantee’s employment by the Company without
Cause or a termination by the Grantee for Good Reason, or due to the Grantee’s death or Disability upon or after a Change in
Control, and in any such case both (i) the Severance Date occurs before the last day of the FY26 Performance Period and (ii) (other
than in the case of a termination due to the Grantee’s death) the Grantee satisfies the Release Requirement set forth below,
any Stock Units that remain outstanding and eligible to vest following a Change in Control pursuant to Section 8.2 (to the extent
not theretofore vested or terminated and after giving effect to the Change in Control Vesting Percentage determined under Section
8.2) shall accelerate and vest as of the Grantee’s Severance Date (or, if later, the date of the Change in Control) and any
Stock Units subject to the Award credited to the Grantee pursuant to Exhibit A for a Performance Period that ended on or
before the Change in Control (to the extent such credited Stock Units are outstanding and have not previously vested) will vest as
of the Severance Date (or, if later, the date of the Change in Control). If both Section 3.2 and this Section 3.3 would apply in the
circumstances, this Section 3.3 controls. In addition, if the Grantee’s Severance Date occurs within sixty (60) days prior to
a Change in Control as a result of a termination of the Grantee’s employment by the Company without Cause or a termination by
the Grantee for Good Reason, the timing requirements set forth in the Release Requirement shall be measured from the date of the
Change in Control and not from the Severance Date.
3.4
Defined Terms; Release Requirement. For the purposes of the Award, the following definitions will apply:
“Cause”
shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the
Grantee and the Company in effect on the Grantee’s Severance Date or, if there is no such agreement or such agreement does not include
a definition of such term, shall mean: (i) gross negligence or willful misconduct in the performance of the Grantee’s duties to
the Company; (ii) intentional and continual failure to substantially perform the Grantee’s reasonably assigned duties for the Company;
(iii) the Grantee’s intentional conduct that is demonstrably and materially injurious to the Company, including but not limited
to committing or cooperating in an act of fraud, theft, or dishonesty against the Company; (iv) the Grantee’s breach of a fiduciary
duty to the Company or its shareholders; (v) the Grantee’s conviction for, or plea of guilty or nolo contendere to, the commission
of any felony or any crime involving deceit, material dishonesty, fraud, embezzlement, theft, any crime that results in or is intended
to result in personal enrichment at the expense of the Company, any crime that involves the use or sale of a controlled substance, or
any other offense that will adversely affect in any material respect the Company’s reputation or the Grantee’s ability to
perform the Grantee’s obligations or duties to the Company; or (vi) the Grantee’s violation of a material written policy of
the Company or breach of a written agreement with Company, including but not limited to a breach of any written employment, confidentiality
or similar agreement between the Grantee and the Company. Notwithstanding the foregoing, Cause shall not exist under (i), (ii), (iii),
(iv) or (vi) unless the Company provides the Grantee with written notice of the existence of one or more of the actions, conditions or
events set forth above in such definition of Cause, and if such action, event or condition is curable, the Grantee fails to cure such
action, event or condition within thirty (30) days after receipt of such notice.
“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 definition of Change
in Control, 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 U.S. Internal Revenue Code (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”).
“Disability”
means total and permanent disability of the Grantee as defined in Section 22(e)(3) of the Code.
“Good Reason”
shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the
Grantee and the Company in effect on the Grantee’s Severance Date or, if there is no such agreement or such agreement does not include
a definition of such term, shall mean the Grantee’s resignation within one hundred and twenty (120) days after the Company has taken
any of the following actions without the Grantee’s express written consent: (i) a material reduction in the Grantee’s base
salary, the Grantee’s target annual bonus opportunity or benefits (unless, outside of a Change in Control context, such reduction
is in connection with a salary or benefit reduction program of general application at the senior level executives of the Company); (ii)
a material breach by the Company of any written agreement with the Grantee, including the Company’s failure to obtain an agreement
from any successor to the Company to assume and agree to perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform, except where such assumption occurs by operation of law; (iii) a material adverse
change in the Grantee’s title, duties or responsibilities (other than temporarily while the Grantee is disabled or as otherwise
permitted by applicable law); or (iv) relocation of the Grantee’s principal workplace by more than forty-five (45) miles, which
change results in a material increase in the Grantee’s one-way commute. Notwithstanding the foregoing, Good Reason shall not exist
unless the Grantee provides the Company written notice of the existence of the one or more of the actions, conditions or events set forth
above in this definition of Good Reason within ninety (90) days after the initial existence or occurrence of such action, condition or
event, and if such action, event or condition is curable, the Company fails to cure such action, event or condition within thirty (30)
days after its receipt of such notice.
The “Release Requirement”
means that the Grantee timely executes and delivers to the Company a release of claims in a form acceptable to the Company (a “Release”)
and the Grantee does not revoke such Release within any revocation period provided by applicable law. In any circumstances where the Release
Requirement is applicable pursuant to this Agreement, the Company shall provide the final form of Release to the Grantee not later than
seven (7) days following the Grantee’s Severance Date, and the Grantee shall be required to execute and return the Release to the
Company within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable
under applicable law) after the Company provides the form of Release to the Grantee.
| 4. | Continuance of Employment/Service Required; No Employment Commitment. |
Except as expressly provided
in Section 3 above, the vesting schedule requires continued employment or service through each applicable vesting date as a condition
to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Except as expressly provided
in Section 3 above, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the
Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment
or services as provided in Section 3 above.
Nothing contained in this
Agreement constitutes an employment or service commitment by the Company, affects the Grantee’s status as an employee at will who
is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Company or any
of its Subsidiaries, interferes in any way with the right of the Company or any of its Subsidiaries at any time to terminate such employment
or services, or affects the right of the Company or any of its Subsidiaries to increase or decrease the Grantee’s other compensation
or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Grantee without
his consent thereto.
| 5. | Timing and Manner of Payment of Stock Units. |
On or as soon as administratively
practical (and in all events not later than two and one-half months) following the date on which any Stock Units vest pursuant to any
provision of this Agreement, the Company shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or
more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion) equal
(subject to adjustment pursuant to Section 8.1 of these Terms) to the number of Stock Units subject to this Award that vested on such
date. The Company’s obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is
subject to the condition precedent that the Grantee or other person entitled hereunder to receive any shares with respect to the vested
Stock Units deliver to the Company any representations or other documents or assurances required pursuant to Section 13 hereof. The Grantee
shall have no further rights with respect to any Stock Units that are so paid or that terminate pursuant to the terms hereof.
| 6. | Dividend and Voting Rights. |
6.1
Limitations on Rights Associated with Units. The Grantee shall have no rights as a stockholder of the Company, no dividend
rights (except as expressly provided in Section 6.2 with respect to Dividend Equivalent Rights) and no voting rights, with respect
to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common
Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a
holder for which the record date is prior to the date of issuance of the stock certificate.
6.2
Dividend Equivalent Rights Distributions. As of any date that the Company pays an ordinary cash dividend on its Common Stock,
the Company shall credit the Grantee with an additional number of Stock Units equal to (i) the per share cash dividend paid by the
Company on its Common Stock on such date, multiplied by (ii) the Total Target Number of Stock Units (including any dividend
equivalents previously credited hereunder) (with such Target Number adjusted pursuant to Section 8.1 of these Terms) outstanding and
subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of a share of Common
Stock (as determined under Section 9 hereof) on the date of payment of such dividend. Any Stock Units credited pursuant to the
foregoing provisions of this Section 6.2 shall be subject to the same vesting, payment and other terms, conditions and restrictions
as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 6.2 with
respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 5 or terminated pursuant to the
terms hereof.
Neither the Award, nor any
interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of,
alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a)
transfers to the Company, or (b) transfers by will or the laws of descent and distribution.
| 8. | Adjustments; Change in Control. |
8.1
Adjustments. Subject to Section 8.2, upon (or, as may be necessary to effect the adjustment, immediately prior to): any
reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split;
any merger, combination, consolidation, conversion or other reorganization; any spin-off, split-up, or extraordinary
dividend distribution in respect of the Common Stock; or any exchange of Common Stock or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction in respect of the Common Stock; then the Administrator shall equitably and
proportionately adjust: (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the
subject of the Award; and/or (2) the securities, cash or other property deliverable upon payment of the Award, in each case to
the extent necessary to preserve (but not increase) the level of incentives intended by the Award. No such adjustment shall be made
with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 6.2. For purposes of
clarity, Exhibit A controls as to any adjustment of the performance goals, criteria or metrics.
8.2
Change in Control. If, at any time after the Award Date and before the last day of the FY26 Performance Period, a Change in
Control occurs, the performance-based vesting terms and conditions set forth in Exhibit A hereto shall no longer apply to the
portion of the Award allocated to the Performance Period in which the Change in Control occurs and each subsequent Performance
Period (if any), and the following rules shall apply with respect to such portion:
| · | With respect to the Performance Period in which
the Change in Control occurs, the Award shall remain outstanding with respect to a number of Stock Units to be credited for that Performance
Period as determined in accordance with Exhibit A hereto, with the Applicable Percentage for that Performance Period (referred
to as the “Change in Control Vesting Percentage”) to be equal to the greater of: (i) one hundred percent (100%); or
(ii) the Applicable Percentage for that Performance Period determined in accordance with Exhibit A hereto as though such Performance
Period ended as of the last day of the fiscal quarter of the Company coinciding with or last preceding the date on which such Change in
Control occurs (the “Short Period End Date”) and with the performance levels set forth in Exhibit A hereto pro-rated
(except as expressly otherwise set forth in Exhibit A hereto) for the portion of such Performance Period occurring through the
Short Period End Date (for example, if the Change in Control occurred during the second fiscal quarter during the Performance Period and
before the last day of that quarter, such performance levels would be pro-rated for the 25% of the Performance Period coinciding with
the first quarter of the Performance Period, and performance against those goals would be assessed based on actual performance for such
first quarter and after taking into account any adjustments pursuant to Exhibit A), provided that if the Change in Control occurs
in the first quarter of the Performance Period, the vesting percentage pursuant to this clause (ii) shall be deemed to be one hundred
percent (100%) (the vesting percentage so determined pursuant to this clause (ii), the “Change in Control Applicable Percentage”). |
| | | In the event the Change in Control
occurs during the FY26 Performance Period, the Change in Control Vesting Percentage for the FY26 Performance Period shall be equal to
the greater of (i) one hundred percent (100%), or (ii) the Change in Control Applicable Percentage determined as set forth above but adjusted
in accordance with Exhibit A based on the Company’s Relative TSR Ranking (with the TSR Measurement Period to be deemed to
end for this purpose on the Short Period End Date and the TSRs for the Company and each of the Index Companies to be determined based
on this shortened TSR Measurement Period). |
| | | |
| | | The number of Stock Units credited
for the Performance Period in which the Change in Control occurs that remain outstanding, determined as set forth above in this clause,
shall vest on the last day of such Performance Period, subject to (except as otherwise expressly provided in Section 3) the Grantee’s
continued employment or service with the Company or any of its Subsidiaries through such vesting date. |
| | | |
| · | With respect to any Performance Period that has
not commenced as of the date of the Change in Control, the Award shall remain outstanding with respect to a number of Stock Units to be
credited for that Performance Period as determined in accordance with Exhibit A hereto, based on the number of Stock Units allocated
to that Performance Period (as provided in the Grant Notice and Exhibit A hereto) and applying, except as provided in the following
paragraph, the Change in Control Vesting Percentage determined as set forth above (for clarity, the Change in Control Vesting Percentage
determined for the Performance Period in which the Change in Control occurs shall also apply to any Performance Period that had not commenced
as of the date of the Change in Control except as provided in the following paragraph). |
| | | |
| | | In the event the Change in Control
occurs prior to the start of the FY26 Performance Period, the Change in Control Vesting Percentage as to the FY26 Performance Period shall
be equal to the greater of (i) one hundred percent (100%), or (ii) the Change in Control Applicable Percentage determined as set forth
above (as determined for the Performance Period in which the Change in Control occurs) but adjusted in accordance with Exhibit A
based on the Company’s Relative TSR Ranking (with the TSR Measurement Period to be deemed to end for this purpose on the Short Period
End Date and the TSRs for the Company and each of the Index Companies to be determined based on this shortened TSR Measurement Period). |
| | | |
| | | The number of Stock Units credited
with respect to any such Performance Period, determined as set forth above in this clause, shall vest on the last day of such Performance
Period, subject to (except as otherwise expressly provided in Section 3) the Grantee’s continued employment or service with the
Company or any of its Subsidiaries through such vesting date. |
| | | |
| · | Upon any event in which the Company does not
survive, or does not survive as a public company in respect of its Common Stock (including, without limitation, a dissolution, merger,
combination, consolidation, conversion, exchange of securities, or other reorganization, or a sale of all or substantially all of the
business, stock or assets of the Company, in any case in connection with which the Company does not survive or does not survive as a public
company in respect of its Common Stock), then the Administrator may make provision for a cash payment in settlement of, or for the termination,
assumption, substitution or exchange of the Award or the cash, securities or property deliverable to the holder of the Award, based upon,
to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Stock upon or in respect
of such event. Upon the occurrence of any event described in the preceding sentence in connection with which the Administrator has made
provision for the Award to be terminated (and the Administrator has not made a provision for the substitution, assumption, exchange or
other continuation or settlement of the Award), the Award shall vest on the Change of Control as to the number of Stock Units provided
above in this Section 8.2. Without limiting the foregoing, in connection with any event referred to in this paragraph, the Administrator
may, in its discretion, provide for the accelerated vesting of the Award as and to the extent determined by the Administrator in the circumstances.
For purposes of this paragraph, the Award shall be deemed to have been “assumed” if the Award continues after an event referred
to above in this paragraph, and/or is assumed and continued by the surviving entity following such event (including, without limitation,
an entity that, as a result of such event, owns the Company or all or substantially all of the Company’s assets directly or through
one or more subsidiaries (a “Parent”)), and confers the right to receive, subject to vesting and the other terms and
conditions of the Award, for each share of Common Stock subject to the Award immediately prior to the event, the consideration (whether
cash, shares, or other securities or property) received in the event by the stockholders of the Company for each share of Common Stock
sold or exchanged in such event (or the consideration received by a majority of the stockholders participating in such event if the stockholders
were offered a choice of consideration); provided, however, that if the consideration offered for a share of Common Stock in the event
is not solely the ordinary common stock of a successor corporation or a Parent, the Administrator may provide for the consideration to
be received upon payment of the Award, for each share subject to the Award, to be solely ordinary common stock of the successor corporation
or a Parent equal in fair market value to the per share consideration received by the stockholders participating in the event. |
For purposes of clarity, the determination of
the number of Stock Units to be credited for a Performance Period in accordance with the first and second bullet points above shall take
into account, and give effect to, the maximum vesting level applicable to the Performance Period pursuant to Exhibit A as well
as the offsets provided for in Exhibit A for any Stock Units subject to the Award that vested for a prior Performance Period. For
purposes of clarity, the provisions of this Section 8.2 shall not apply as to any Stock Units that relate to a Performance Period that
ended prior to the date of the Change in Control or any Stock Units that have terminated or were accelerated pursuant to Section 3 (except
as otherwise expressly provided in Section 3.3) prior to the occurrence of such Change in Control.
The Company shall reasonably
determine the amount of any federal, state, local or other income, employment, or other taxes which the Company or any of its Subsidiaries
may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. The Grantee
shall be solely responsible for the satisfaction of such withholding requirements. If such withholding event occurs in connection with
the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Company
shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then Fair Market Value, to satisfy
any withholding obligations of the Company or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs
with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units,
or if the Company cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above,
the Company shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable
to the Grantee the amount of any such withholding obligations.
As used herein, “Fair
Market Value” shall mean, unless otherwise determined or provided by the Administrator in the circumstances, the closing price
(in regular trading) for a share of Common Stock on the NASDAQ Stock Market (the “Market”) for the date in question
or, if no sales of Common Stock were reported on the Market on that date, the closing price (in regular trading) for a share of Common
Stock on the Market for the next preceding day on which sales of Common Stock were reported on the Market. The Administrator may, however,
provide that the Fair Market Value for purposes of the Award shall equal the closing price (in regular trading) for a share of Common
Stock on the Market on the last trading day preceding the date in question or the average of the high and low trading prices of a share
of Common Stock on the Market for the date in question or the most recent trading day. If the Common Stock is no longer listed or is no
longer actively traded on the Market as of the applicable date, the Fair Market Value of the Common Stock shall be the value as reasonably
determined by the Administrator for purposes of the Award in the circumstances.
Any notice to be given under
the terms of this Agreement shall be in writing and addressed to the Company at its principal office to the attention of the Secretary,
and to the Grantee at the Grantee’s last address reflected on the Company’s employment records. Any notice shall be delivered
in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage
and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government
or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer
a Service Provider, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing
provisions of this Section 10.
This Agreement constitutes
the entire agreement and supersedes all prior understandings and agreements, written or oral, of the parties hereto with respect to the
subject matter hereof.
This Agreement may be amended
only by a written instrument that expressly refers to this Agreement and is signed by the parties. The Company may, however, unilaterally
waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but
no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.
The Administrator will have
the exclusive discretion and authority to establish administrative rules, forms and procedures for the administration of the Award, to
construe and interpret this Agreement and to decide any and all questions of fact, interpretation, definition, computation or administration
arising in connection with the operation of this Agreement, including, but not limited to, the amount of benefits paid hereunder. The
rules, interpretations, computations and other actions of the Administrator will be binding and conclusive on all persons.
| 12. | Limitation on Grantee’s Rights. |
The Award confers no rights
or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts
payable and shall not be construed as creating a trust. The Grantee shall have only the rights of a general unsecured creditor of the
Company with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the
right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.
The Award, the offer, issuance
and delivery of shares of Common Stock, and/or the payment of money under this Agreement are subject to compliance with all applicable
federal, state, local and foreign laws, rules and regulations (including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for
the Company, be necessary or advisable in connection therewith. The person acquiring any securities hereunder will, if requested by the
Company one of its Subsidiaries, provide such assurances and representations to the Company or one of its Subsidiaries as the Administrator
may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.
This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one
and the same instrument.
The section headings of this
Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.
It is intended that the terms
of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be construed
and interpreted consistent with the foregoing intents.
The Stock Units are subject
to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar
provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares
of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of
the shares acquired upon payment of the Stock Units). The Grantee hereby agrees to promptly repay to the Company any amounts that are
required to be repaid pursuant to such policy.
Notwithstanding anything contained
in this Agreement to the contrary, to the extent that any payments and benefits provided under this Agreement to or for the benefit of
the Grantee, together with any payments and benefits provided to or for the benefit of the Grantee under any other plan or agreement of
the Company or any of its Subsidiaries or affiliates (such payments or benefits are collectively referred to as the “Benefits”),
would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Grantee’s Benefits
shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in the Grantee retaining a larger
amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Grantee received
all of the Benefits (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). If a reduction
in the Grantee’s Benefits is required pursuant to the preceding sentence, in order to effectuate the Limited Benefit Amount, the
Company shall reduce or eliminate (if and to the extent necessary) the Grantee’s Benefits by first reducing or eliminating amounts
which are payable from any cash severance, then from any payment or benefit in respect of any equity award that is treated as contingent
on the change in ownership or control but is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any payment or benefit
in respect of an equity award that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). A determination as to
whether a reduction in the Grantee’s Benefits to the Limited Benefit Amount pursuant to this Section 19, and the amount of such
Limited Benefit Amount (the “Determination”), shall be made by the Company’s independent public accountants or
another certified public accounting firm or executive compensation consulting firm of national reputation designated by the Company at
the Company’s expense.
EXHIBIT A
VESTING TERMS AND CONDITIONS
[To be determined at time of grant]
EXHIBIT 5
June 5, 2024
Lantronix, Inc.
48 Discovery, Suite 250
Irvine, California 92618
| |
Re: |
Registration of Securities of Lantronix, Inc. |
Ladies and Gentlemen:
In connection with the registration of up to 1,765,370
shares of Common Stock of Lantronix, Inc., a Delaware corporation (the “Company”), par value $0.0001 per share (the “Shares”),
under the Securities Act of 1933, as amended, pursuant to a Registration Statement on Form S-8 (the “Registration Statement”),
filed with the Securities and Exchange Commission on or about the date hereof, such Shares to be issued or delivered pursuant to inducement
restricted stock unit and performance stock unit awards granted to Saleel Awsare, Kurt Hoff and Mathi Gurusamy (collectively, the “Inducement
Awards”), you have requested my opinion set forth below.
In my capacity as counsel, I have examined originals
or copies of those corporate and other records of the Company I considered appropriate.
On the basis of such examination and our consideration
of those questions of law I considered relevant, and subject to the limitations and qualifications in this opinion, I am of the opinion
that the Shares have been duly authorized by all necessary corporate action on the part of the Company and, when issued in accordance
with such authorization and the provisions of the agreements evidencing the Inducement Awards, and upon payment for and delivery of the
Shares as contemplated in accordance with the agreements evidencing the Inducement Awards and either (a) the countersigning of the certificate
or certificates representing the Shares by a duly authorized signatory of the registrar for the Company’s Common Stock, or (b) the
book-entry of the Shares by the transfer agent for the Company’s Common Stock in the name of The Depository Trust Company or its
nominee, the Shares will be validly issued, fully paid and non-assessable.
I consent to your filing this opinion as an exhibit
to the Registration Statement.
| |
Respectfully submitted, |
| |
|
| |
/s/ Mayant Luk |
| |
|
| |
Mayant Luk |
| |
Director of Human Resources and Senior Corporate Counsel |
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 of our report dated September 12, 2023, relating to the consolidated financial statements of Lantronix, Inc. (the “Company”)
and the effectiveness of the Company’s internal control over financial reporting (which report expresses an adverse opinion on the
effectiveness of the Company’s internal control over financial reporting because of a material weakness) as of and for
the year ended June 30, 2023 appearing in the Annual Report on Form 10-K of Lantronix, Inc.
/s/ Baker Tilly US, LLP
Irvine, California
June 5, 2024
EXHIBIT 107
CALCULATION OF FILING FEE TABLE
Form S-8
(Form Type)
Lantronix, Inc.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered Securities
| Security
Type |
Security
Class Title |
Fee
Calculation Rule |
Amount
Registered(1) |
Proposed
Maximum Offering Price Per Unit(2) |
Maximum
Aggregate Offering Price(2) |
Fee
Rate |
Amount
of Registration Fee |
| Equity |
Common
Stock, par value of $0.0001 per share(3) |
Rule 457(c)
and Rule 457(h) |
470,255 |
$3.75 |
$1,763,456 |
$0.0001476 |
$260 |
| Equity |
Common
Stock, par value of $0.0001 per share(4) |
Rule 457(c)
and Rule 457(h) |
447,862 |
$3.75 |
$1,679,483 |
$0.0001476 |
$248 |
| Equity |
Common
Stock, par value of $0.0001 per share(5) |
Rule 457(c)
and Rule 457(h) |
470,254 |
$3.75 |
$1,763,453 |
$0.0001476 |
$260 |
| Equity |
Common
Stock, par value of $0.0001 per share(6) |
Rule 457(c)
and Rule 457(h) |
62,404 |
$3.75 |
$234,015 |
$0.0001476 |
$35 |
| Equity |
Common
Stock, par value of $0.0001 per share(7) |
Rule 457(c)
and Rule 457(h) |
86,408 |
$3.75 |
$324,030 |
$0.0001476 |
$48 |
| Equity |
Common
Stock, par value of $0.0001 per share(8) |
Rule 457(c)
and Rule 457(h) |
95,691 |
$3.75 |
$358,841 |
$0.0001476 |
$53 |
| Equity |
Common
Stock, par value of $0.0001 per share(9) |
Rule 457(c)
and Rule 457(h) |
132,496 |
$3.75 |
$496,860 |
$0.0001476 |
$73 |
| Total
Offering Amounts |
1,765,370 |
|
$6,620,138 |
|
$977 |
| Total
Fee Offsets |
|
|
|
|
$0 |
| Net
Fee Due |
|
|
|
|
$977 |
(1) This Registration Statement covers,
in addition to the number of shares of Lantronix, Inc., a Delaware corporation (the “Company” or the “Registrant”),
common stock, par value $0.0001 per share (the “Common Stock”), stated above, options and other rights to purchase or acquire
the shares of Common Stock covered by this Registration Statement and, pursuant to Rule 416 under the Securities Act of 1933, as amended
(the “Securities Act”), an additional indeterminate number of shares, options and rights that may be offered or issued pursuant
to the awards listed in the table above, as a result of one or more adjustments under the applicable award agreement to prevent dilution
resulting from one or more stock splits, stock dividends or similar transactions. See the “Explanatory Note” above for more
information regarding these awards.
(2) Estimated solely for the purpose
of calculating the amount of the registration fee pursuant to Rule 457(h) and Rule 457(c) promulgated under the Securities Act. The offering
price per share and the aggregate offering price are based upon the average of the high and low prices of the Registrant’s common
stock as reported on the Nasdaq Stock Market on June 4, 2024, in accordance with Rule 457(c) of the Securities Act.
(3) Consists of shares available for
issuance under the Restricted Stock Unit Award Agreement (Inducement Grant) for Saleel Awsare.
(4) Consists of shares available for
issuance under the Performance Stock Unit Award Agreement (Inducement Grant – Relative TSR) for Saleel Awsare.
(5) Consists of shares available for
issuance under the Performance Stock Unit Award Agreement (Inducement Grant – Financial Measure) for Saleel Awsare.
(6) Consists of shares available for
issuance under the Restricted Stock Unit Award Agreement (Inducement Grant) for Kurt Hoff.
(7) Consists of shares available for
issuance under the Performance Stock Unit Award Agreement (Inducement Grant – Relative TSR) for Kurt Hoff.
(8) Consists of shares available for
issuance under the Restricted Stock Unit Award Agreement (Inducement Grant) for Mathi Gurusamy.
(9) Consists of shares available for
issuance under the Performance Stock Unit Award Agreement (Inducement Grant – Relative TSR) for Mathi Gurusamy.
Lantronix (NASDAQ:LTRX)
過去 株価チャート
から 5 2024 まで 6 2024
Lantronix (NASDAQ:LTRX)
過去 株価チャート
から 6 2023 まで 6 2024
