CONSULTING, SEVERANCE AND RELEASE AGREEMENT
Exhibit
10.1
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 00000 Xxxxxxxx Xxxxxxx, Xxxxxx, Xxxxxxxxxx 00000 and
XXXXX XXXXXXXX, an individual (“Xxxxxxxx”) residing at 0 Xxxxxx Xxxxx Xxxx,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
RECITALS
A. WHEREAS,
Xxxxxxxx was employed by Lantronix;
B. WHEREAS,
Lantronix has hired a successor for Xxxxxxxx;
C. WHEREAS,
Lantronix desires to engage Xxxxxxxx as a consultant for the services described
herein and to provide the benefits to Xxxxxxxx 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. Xxxxxxxx agrees to provide consulting services to Lantronix to assist
in the successful transition of the Chief Financial Officer duties to Xxxxxxxx’x
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 Xxxxxxxx be required to provide
services in excess of eighty (80) hours per month. Xxxxxxxx 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.
Xxxxxxxx
will provide the services consistent with prevailing standards of professional
practice. At all times Xxxxxxxx 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 Xxxxxxxx:
a) A
monthly
fee of $6,250 payable in 18 equal installments on the 1st
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 Xxxxxxxx’x disability and inability to perform the
services, the monthly fee will nonetheless continue to be payable to Xxxxxxxx.
In the event of the death of Xxxxxxxx, the monthly fee will continue to be
due
to Xxxxxxxx’x heirs and assign.
b) A
monthly
amount equal to Xxxxxxxx’x cost to purchase COBRA coverage for up to twelve (12)
months at Lantronix's cost for medical and dental benefits for Xxxxxxxx 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 Xxxxxxxx in providing his services under
this Agreement which are approved by an officer of Lantronix and for which
Xxxxxxxx provides reasonable documentation to Lantronix.
Xxxxxxxx
is responsible for paying, when due, all income taxes, including estimated
taxes, incurred as a result of the compensation paid to him. Xxxxxxxx agrees
to
indemnify and hold Lantronix harmless for any claims, costs, losses, or damages
suffered by it resulting from Xxxxxxxx’x failure to comply with this provision.
Xxxxxxxx agrees to hold harmless and indemnify Lantronix from any and all claims
arising out of any injury, disability or death of contractor.
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3. OTHER
CONSIDERATION. For the covenants of Xxxxxxxx herein, the parties
agree:
a) Xxxxxxxx
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) Xxxxxxxx’x
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, Xxxxxxxx,
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 Xxxxxxxx has or may hereafter
obtain or accrue on account of Xxxxxxxx'x 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 Xxxxxxxx'x
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 Xxxxxxxx for his actions as an employee director
or
officer of Lantronix or release any rights Xxxxxxxx has with respect to any
claims made against him under any director and officer or any other insurance
policy of Lantronix.
Xxxxxxxx
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 WITH THE DEBTOR.”
Xxxxxxxx
understands and acknowledges that the significance and consequence of the
foregoing waiver of Section 1542 of the Civil Code is that even if Xxxxxxxx
should eventually suffer additional damages arising out of his employment with
Lantronix, he will not be permitted to make any claim for those damages.
Furthermore, Xxxxxxxx acknowledges that Xxxxxxxx intends these consequences
even
as to claims for injury or damages that may exist as of the date of the
Agreement but which Xxxxxxxx does not know exists, and which, if known, would
materially affect Xxxxxxxx'x decision to execute the Agreement, regardless
of
whether Xxxxxxxx'x lack of knowledge is a result of ignorance, oversight, error,
negligence, or any other cause.
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5. CONFIDENTIAL
INFORMATION.
5.1 Definition.
“Confidential Information” means information that is proprietary to Lantronix or
proprietary to others and entrusted to Lantronix. Confidential Information
includes, but is not limited to, information relating to business plans and
to
business as conducted or anticipated to be conducted, and to past, current
or
anticipated products. Confidential Information also includes, without
limitation, Lantronix information concerning (a) price lists, (b) costs of
production, and (c) raw material costs, (d) selling costs, (e) delivery costs,
(f) information concerning new or proposed new products, including the nature
and design of such products and the plans for marketing such products, (g)
international procedures and policies, (h) customer lists, account names,
contacts, addresses, buying habits and sales activity; (i) names and addresses
of suppliers and vendors, (j) tax and financial information, (k) reserves,
(l)
intellectual property owned or leased by the company, (m) banking relationships
and arrangements, (n) employees, (o) management personnel and policies, (p)
quotation names, addresses, contacts and quote workups, (q) all mailing lists,
(r) company product training materials and courses, and (s) company computer
programs and printouts.
5.2 Prohibitions
Against Use. Xxxxxxxx will not use or disclose, other than in connection with
employment with Lantronix, or to provide his services under this Agreement,
any
Confidential Information to any person not employed by Lantronix or not
authorized by Lantronix to receive such Confidential Information without the
prior written consent of Lantronix. Xxxxxxxx will use reasonable and prudent
care to safeguard and protect and prevent the unauthorized use and disclosure
of
Confidential Information. The obligations contained in this paragraph will
survive for as long as the company, in its sole judgment, considers the
information to be Confidential Information. Confidential Information does not
include any information which is generally known by the public or any
competitors of Lantronix. This paragraph does not restrict a disclosure or
use
of information required by law or as required for compliance with government
agencies and authorities, or a reasonable disclosure of information to
Xxxxxxxx’x spouse, bank or legal or tax advisor provided such person agrees or
is legally obligated to maintain the confidentiality of such
information.
6. RETURN
OF
LANTRONIX PROPERTY. All documents, drawings, lists, records or other tangible
or
intangible thing relating to the business of Lantronix that Xxxxxxxx originates
or comes into Xxxxxxxx’x possession in any way during the employment or
consulting periods shall remain the sole property of Lantronix. Any copies
of
such items are likewise the sole property of Lantronix. Xxxxxxxx shall not
make
copies of such items except for the sole use and account of Lantronix and with
the consent and instruction of Lantronix’s management. At the end of the
consulting period, Xxxxxxxx shall immediately return to Lantronix all such
items
in his possession or control, as well as all of Lantronix’s property in his
possession or control he has received for assistance in performing work duties,
except that Xx. Xxxxxxxx may keep his laptop computer and copies of information
reasonably related to his personal income tax filings. In lieu of physical
return, Xxxxxxxx may destroy all such electronic information in any and all
formats and shall provide an affirmative declaration in a form acceptable to
Lantronix as to its destruction.
7. ARBITRATION.
All disputes between Lantronix, its officers, directors, owners, and agents
on
the one hand (jointly, Lantronix) and Xxxxxxxx on the other relating in any
manner whatsoever to the employment or termination of Xxxxxxxx, including
without limitation disputes arising under this Agreement, shall be resolved
by
binding arbitration. By way of example and not limitation of the foregoing,
arbitrable claims shall include any claims arising under Title (8) of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Americans
with
Disabilities Act, and the California Fair Employment and Housing Act, as well
as
any claims asserting wrongful termination, breach of contract, breach of the
covenant of good faith and fair dealing, negligent or intentional infliction
of
emotional distress or defamation and claims related to disability. Arbitration
shall be final and binding upon the parties and shall be the exclusive remedy
for all arbitrable claims. The parties hereby waive any rights they may have
to
trial by jury in regard to arbitrable claims.
7.1 Arbitration
of claims shall be in accordance with the Rules for the resolution of employment
disputes of JAMS, as amended from time-to-time ("JAMS’ Rules"), and augmented by
this Agreement. Written notice to the other party initiating arbitration shall
also include a statement of the claims asserted and all the facts upon which
the
claims are based. Either party may bring an action in court to compel
arbitration under this Agreement and to enforce an arbitration award. Otherwise,
neither party shall initiate or prosecute any lawsuit nor administrative action
in any way related to any claim. Any arbitration hearing under this Agreement
shall be conducted in Orange County, California.
7.2 A
single
arbitrator shall decide all claims and shall provide a detailed written
arbitration decision. The arbitrator shall be secured by mutual agreement of
the
parties within (30) days of the effective date of the notice initiating the
arbitration. If the parties cannot agree upon an arbitrator, then the
complaining party shall notify JAMS and request selection of an arbitrator
in
accordance with JAMS rules. The arbitrator shall have only such authority to
award equitable relief, damages, costs and fees as a court would have for the
particular claims asserted and any action of the arbitrator in contravention
of
this limitation may be the subject of an appeal by the aggrieved party. The
fees
of the arbitrator and the costs of the arbitration, exclusive of Xxxxxxxx’x
attorney’s fees, shall be paid by Lantronix. The arbitrator shall have exclusive
authority to resolve all claims, including, but not limited to whether any
particular claim is arbitrable and whether all or any part of this Agreement
is
void or unenforceable. The Arbitrator shall award the prevailing party
attorneys’ fees and costs.
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7.3 All
proceedings and all documents prepared in connection with any arbitrated claim
shall be confidential and, unless otherwise required by law, the subject matter
thereof shall not be disclosed to any person other than the parties to the
proceedings, their counsel, witnesses and experts, the arbitrator, and if
involved, the court and court staff. All documents filed with the arbitrator
or
with a court shall be filed under seal. The parties shall stipulate to all
arbitration and court orders necessary to effectuate fully the provisions of
his
subsection concerning confidentiality.
8. APPLICABLE
LAW. This Agreement shall be governed, interpreted and construed in accordance
with the laws of the State of California.
9. SEVERABILITY.
In the event that any portion of this Agreement shall be deemed unenforceable
or
void, such invalidity or unenforceability shall not affect the validity or
enforceability of any other provision of this Agreement.
10. ENTIRE
AGREEMENT. It is agreed that the provisions of this Agreement contain the entire
agreement on the subject covered between the parties, and cannot be modified
orally, and can only be modified by written agreement signed by Xxxxxxxx and
Lantronix. This Agreement shall be binding upon the parties and their respective
heirs, administrators and assigns.
11.
In
accordance with the Older Workers Benefit Protection Act of 1990, Xxxxxxxx
expressly acknowledges Xxxxxxxx’x awareness and understanding of the
following:
a) Xxxxxxxx
has the right to and should consult with an attorney before signing this
Agreement;
b) Xxxxxxxx
has twenty-one (21) days from the date on which Xxxxxxxx receives this Agreement
(to ________________) to consider Xxxxxxxx’x release of Xxxxxxxx’x age
discrimination claims and claims under the Older Workers Benefit Protection
Act
of 1990 (“Age Discrimination Claims”), ONLY; and
c) Xxxxxxxx
has seven (7) days after signing this Agreement to revoke Xxxxxxxx’x release of
any Age Discrimination Claims only. The revocation must be in writing, must
specifically revoke the release of any Age Discrimination Claims, and must
be
received by Employer prior to the eighth calendar day following the execution
of
this Agreement. The release of Age Discrimination Claims shall become effective,
enforceable and irrevocable on the eighth calendar day following execution
of
this Agreement, at which time, if Xxxxxxxx has not revoked this Agreement,
then
Xxxxxxxx shall receive the consideration described in paragraph 3 in addition
to
the payment described in paragraph 2 above as consideration for the release
of
any Age Discrimination Claims.
IN
WITNESS WHEREOF, the parties have executed this Agreement on the date set forth
below.
“Xxxxxxxx”
/s/
Xxxxx
Xxxxxxxx
XXXXX
XXXXXXXX
“Lantronix”
LANTRONIX
By:
/s/
Xxxx X.
Xxxxxxxx
Its:
Chief
Executive Officer
[Title]
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Exhibit
“1"
Team
Incentive Plan
Exhibit
2
Stock
Options eligible for vesting
All
Grants, whether fully vested or not are listed:
00-1018
00-1039
04-106
05-69
06-1978
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