Exhibit
10.1
SEPARATION AGREEMENT AND GENERAL RELEASE OF
CLAIMS
This
Separation Agreement and General Release of Claims
("Agreement") is entered into by and between Marc H. Nussbaum
("Executive"), and Lantronix, Inc., a Delaware corporation
("Company"), and is intended by the parties hereto to resolve
and conclude any and all issues arising out of Executive's
employment or the termination of such employment.
R E C I T A L S
:
WHEREAS,
Executive has been employed by the Company as its President,
Chief Executive Officer; and
WHEREAS,
the parties now mutually desire to terminate their employment
relationship on the terms set forth herein.
A G R E E M E N T :
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the recitals set forth above,
which are incorporated herein by reference, and other good and
valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound, the
parties hereto agree as follows:
1.
Separation of Employment .
Executive's employment shall end effective September 24, 2007 (the
"Separation Date"). On the Separation Date, Executive will be paid
his final paycheck, including any accrued but unused vacation
through the Separation Date. In addition, Executive will be
reimbursed for all outstanding customary business expenses incurred
through the Separation Date. Executive shall submit a business
expense report to the Company within sixty (60) days of the
Separation Date and the Company will issue a reimbursement check
within seven (7) business days of receipt thereof. In the event
that after the 60-day period, Executive discovers any additional
charges on Executive's American Express card that have been made by
any employee, director or agent of the Company, on the Company's
behalf, and that have not previously been reimbursed by the
Company, Executive shall promptly submit a request for
reimbursement to the Company, which shall be approved and paid to
Executive within seven (7) business days of receipt
thereof.
2.
Severance Payments .
Provided the occurrence of the "Effective Date" of this Agreement
(as defined below in Paragraph 16), and Executive's compliance with
the terms and conditions set forth in the Agreement, Executive
shall be eligible for the following:
2.1.
Separation Pay .
Payment of $435,000, less legally required withholdings and
deductions ("Separation Pay"). The Separation Pay shall be paid to
Executive in equal installments on the Company's normal payroll
dates during the period between the Effective Date and September
15, 2008. The Company, in its sole discretion, may accelerate any
installment payment of the Separation Pay or pay it (or a portion
of it) in a lump sum;
2.2.
COBRA Pay .
Provided Executive timely elects COBRA health-care continuation
coverage, and notifies Company of same (including the amount of the
monthly COBRA premium), the Company will pay the cost of
Executive's COBRA premiums through the first to occur of (i)
eighteen (18) months following the Separation Date, and (ii)
Executive's eligibility for health insurance coverage pursuant to
another employer's plan, in the same amount as if Executive had
remained an active employee of the Company. All amounts paid on
Executive's behalf towards COBRA premiums will be reported to
Executive as income on a Form 1099 and Executive agrees to be
responsible for the payment of Executive's income taxes based on
the receipt thereof. Executive agrees to notify the Company within
ten (10) days of Executive's receipt of health-care insurance
coverage from another employer which would trigger (ii) immediately
above;
2.3.
Car Payment .
Payment of $13,500, less legally required withholdings and
deductions, representing the amount the Company would have paid on
behalf of Executive for executive automobile benefits had Executive
remained employed for the eighteen (18) month period following the
Separation Date ("Car Payment"). The Car Payment shall be paid to
Executive in equal installments on the Company's normal payroll
dates during the period between the Effective Date and September
15, 2008. The Company, in its sole discretion, may accelerate any
installment payment of the Car Payment or pay it (or a portion of
it) in a lump sum;
2.4.
Options .
The right to exercise any and all stock options that were granted
to Executive and vested as of the Separation Date. Subject to the
provisions of the Company's stock option plan(s) and the agreements
pursuant to which the options were granted (each of which is
incorporated herein by reference), Executive shall have until the
earlier of the following three dates to exercise each of
Executive's vested options: (i) twenty-four (24) months after the
Separation Date; (ii) for each option, the latest date on which
such option could have expired by its original terms under any
circumstances; or (iii) for each option, ten (10) years after the
original grant date of such option. Notwithstanding anything to
contrary contained in this Agreement or the Company's stock option
plan(s) and the agreements pursuant to which the options were
granted, the parties hereto agree that Executive shall cease to be
a "Service Provider" (as defined in the Company's 2000 Stock Plan
(the "Plan")) as of the Separation Date and all of Executive's
unvested stock options as of the Separation Date shall
automatically terminate and revert to the Plan. Attached hereto
as
Exhibit "A "
is a complete schedule of Executive's vested stock options under
all Company stock option plans as of the date of this Agreement;
and
2.5.
Bonus .
A pro-rated portion of any bonus, less legally required
withholdings and deductions, that Executive would have been
entitled to, if any, under the Team Incentive Plan for fiscal year
July 1, 2007, through June 30, 2008, had Executive remained
employed through the time of payout ("Bonus Pay"). The pro-rata
calculation shall be based on the portion of that fiscal year
period that Executive was actively employed by the Company. The
Bonus Pay shall be paid to Executive in accordance with the
Company's regular bonus payment schedule, but in no event later
than September 15, 2008.
3.
Health Insurance Benefits .
Executive's health insurance benefits will continue through
September 30, 2007, after which it will be necessary for Executive
to convert or continue such plans and coverage at his sole option,
cost and expense, except as specifically provided in Paragraph 2.2
above. The Company, or its third party administrator, will provide
Executive with the notice and election forms required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
and any applicable state law.
4.
The Company's Obligations Under This Agreement
.
The benefits set forth in Paragraphs 1 and 2 constitute the sole
obligations of the Company to Executive under this Agreement and
are in lieu of any damages or other compensation that Executive may
claim under other Company policies or otherwise, except for
Executive's base salary which has been earned up to the Separation
Date, compensation for any accrued and unused vacation up to the
Separation Date, reimbursement for business expenses incurred up to
the Separation Date (in accordance with the customary policies of
the Company), and any benefits that the Company is required to
provide to Executive after the Separation Date under COBRA or
pursuant to any ERISA plan(s) of the Company. The benefits provided
in this Agreement are in substitution for any severance or
termination benefits otherwise available under Company policies of
general application. The benefits provided in this Agreement shall
not be reduced by any compensation or benefits received by
Executive from any subsequent employer or any other third
party.
5.
Confidential Information and Non-Solicitation of
Employees .
5.1.
Confidentiality Obligations. Executive
acknowledges and agrees that he shall continue to be bound by and
comply with each and every term and condition of the Company's
Employment, Confidential Information and Invention Assignment
Agreement ("Confidentiality Agreement"), which is specifically
incorporated herein by reference, and any other proprietary or
confidentiality agreement(s) between Executive and the Company. In
the event any provision of the Confidentiality Agreement conflicts
with any provision in this Agreement, the latter shall control.
Further, Executive shall have no obligation to complete
Exhibit "C "
to the Confidentiality Agreement or, following the Separation Date,
to further comply with the Conflict of Interest Guidelines
identified in
Exhibit "D "
thereto.
5.2.
Non-Solicitation Obligations .
Executive further agrees that for a period of one (1) year
following the Separation Date, he will not, either directly or
indirectly, or either on his own behalf or on behalf of any other
person, recruit or solicit for hire any indi
