CONSULTING,
SEVERANCE AND RELEASE AGREEMENT
This
Consulting, Severance and Release Agreement
(“Agreement”), is made effective as of January 22,
2007, by and between LANTRONIX, a California corporation
(“Lantronix”), located at 15353 Barranca Parkway,
Irvine, California 92618 and JAMES KERRIGAN, an individual
(“Kerrigan”) residing at 2 Cherry Hills Lane, Newport
Beach, California 92660.
RECITALS
A.
WHEREAS, Kerrigan was employed by
Lantronix;
B.
WHEREAS, Lantronix has hired a
successor for Kerrigan;
C.
WHEREAS, Lantronix desires to
engage Kerrigan as a consultant for the services described herein
and to provide the benefits to Kerrigan described
herein.
NOW, THEREFORE,
in consideration of the promises and mutual covenants contained in
this Agreement, it is agreed as follows:
AGREEMENT
1.
CONSULTING SERVICES. Kerrigan
agrees to provide consulting services to Lantronix to assist in the
successful transition of the Chief Financial Officer duties to
Kerrigan’s successor and for other services as determined by
the Lantronix CEO or Board of Directors, for a period of twelve
(12) months. Such services shall be on an as needed “on
call” basis but in no event will Kerrigan be required to
provide services in excess of eighty (80) hours per month. Kerrigan
shall not be entitled to any 401(k) matching contributions after
the date of this Agreement or any other employee benefit offered by
Lantronix to its employees.
Kerrigan will
provide the services consistent with prevailing standards of
professional practice. At all times Kerrigan shall conduct himself
in accordance with the ethical standards of his
profession.
2.
CONSIDERATION FOR AGREEMENT TO
PROVIDE SERVICES. For the agreement to provide services hereunder,
Lantronix agrees to pay Kerrigan:
a)
A monthly fee of $6,250 payable in
18 equal installments on the 1 st day of each month
commencing August 1, 2007. The total fee of $112,500 is deemed
earned on the date of execution of this Agreement and the agreement
to provide services. In the event of Kerrigan’s disability
and inability to perform the services, the monthly fee will
nonetheless continue to be payable to Kerrigan. In the event of the
death of Kerrigan, the monthly fee will continue to be due to
Kerrigan’s heirs and assign.
b)
A monthly amount equal to
Kerrigan’s cost to purchase COBRA coverage for up to twelve
(12) months at Lantronix's cost for medical and dental benefits for
Kerrigan and/or his eligible dependents. Said benefits, and costs
associated therewith, will be equivalent to those group health
benefits provided to Lantronix regular, full-time
employees.
c) Reimbursement for expenses reasonably incurred
by Kerrigan in providing his services under this Agreement which
are approved by an officer of Lantronix and for which Kerrigan
provides reasonable documentation to Lantronix.
Kerrigan is
responsible for paying, when due, all income taxes, including
estimated taxes, incurred as a result of the compensation paid to
him. Kerrigan agrees to indemnify and hold Lantronix harmless for
any claims, costs, losses, or damages suffered by it resulting from
Kerrigan’s failure to comply with this provision. Kerrigan
agrees to hold harmless and indemnify Lantronix from any and all
claims arising out of any injury, disability or death of
contractor.
3.
OTHER CONSIDERATION. For the
covenants of Kerrigan herein, the parties agree:
a)
Kerrigan shall be eligible to
receive a Senior Vice President-level (CFO) bonus based on the Team
Incentive Plan, as described on Exhibit “1" attached hereto
and incorporated herein by reference, if/when paid based on
Lantronix performance through the period ending June
2007.
b)
Kerrigan’s right to vest in
those certain stock options granted to him and described on Exhibit
“2” shall continue through July 22, 2007, and the
period in which to exercise those options which have not been
exercised shall be extended to 24 months from January 22,
2007.
4.
RELEASE. In consideration of the
consideration in paragraphs 2 and 3 above, Kerrigan, for himself
and his heirs, legal representatives, successors and assigns,
hereby releases, acquits and forever discharges Lantronix and all
of Lantronix affiliate and subsidiary corporations, and their
present and former, principals, officers, agents, associates,
representatives, directors, employees, predecessors, successors and
assigns and all persons acting by, through, under or in concert
with them, or any of them, jointly and individually, of and from
any and all claims, demands, causes of action, obligations, damages
and liabilities, whether known or unknown, which Kerrigan has or
may hereafter obtain or accrue on account of Kerrigan's employment,
the termination of employment and/or any fact, matter, incident,
claim, injury, event, circumstance, happening, occurrence and/or
thing of any kind or nature whatsoever which arose or occurred at
any time prior to the date of Kerrigan's execution of this
Agreement, including but not limited to emotional distress; any and
all claims for wrongful discharge; breach of any implied or
expressed employment contract; negligent or intentional infliction
of emotional distress; defamation; fraud; unlawful discrimination
based upon age, race, sex, marital status, religion, national
origin, medical condition, disability, handicap or otherwise;
breach of any implied covenant of good faith and fair dealing;
violation of any section of the Labor Code of the State of
California, the California Fair Employment and Housing Act
("FEHA"), Title VII of the Civil Rights Act of 1964 ("Title VII"),
the Age Discrimination in Employment Act of 1967, as amended
("ADEA"), the Americans With Disabilities Act (ADA), or any other
federal, state or local law(s) or regulation(s); unpaid wages,
salary, bonuses, commissions or other compensation of any sort;
damages of any nature, including compensatory, general, special or
punitive; and/or costs, fees or other expenses, including
attorney's fees, incurred in any of these matters. Nothing
contained herein shall release Lantronix from its obligations under
its Articles of Incorporation, Bylaws, any written indemnification
agreement or California law, to indemnify Kerrigan for his actions
as an employee director or officer of Lantronix or release any
rights Kerrigan has with respect to any claims made against him
under any director and officer or any other insurance policy of
Lantronix.
Kerrigan understands and expressly waives any
and all rights and benefits conferred by the provisions of Section
1542 of the Civil Code of the State of California, which reads as
follows:
“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WIT
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