lantronix_8k-112007.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported): November 14,
2007
LANTRONIX,
INC.
(Exact
Name of Registrant as Specified in Its Charter)
|
Delaware
|
|
1-16027
|
|
33-0362767
|
|
(State
or Other Jurisdiction of
Incorporation)
|
|
(Commission
File Number)
|
|
(IRS
Employer Identification No.)
|
15353
Barranca Parkway, Irvine, California 92618
(Address
of Principal Executive Offices) (Zip
Code)
Registrant’s
telephone number, including area code: (949)
453-3990
Not
Applicable
(Former
Name or Former Address, if Changed since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
5.02
|
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
|
(e)
On
November 17, 2007, the Board of Directors of Lantronix, Inc. (the “Company”),
approved the issuance of nonqualified stock options to purchase an aggregate
of
199,750 shares of the Company’s common stock under the 2000 Stock
Plan. All employees as of October 1, 2007 are eligible for the
company-wide program. Under the program, Reagan Y. Sakai, Interim
Chief Executive Officer and Chief Financial Officer, was granted nonqualified
stock options to purchase up to 13,000 shares. The awards have an
exercise price of $0.98, which represents the closing price of the Company’s
common stock on November 19, 2007 the first trading day following the grant
approval date of November 17, 2007.
Shares
subject to the option shall vest
upon the attainment of one of the three performance milestones in accordance
with the following vesting provisions:
The
first
milestone shall mean the determination by the Company that it has attained
certain quarterly net revenues targets and quarterly net income targets as
disclosed in the initial filing of the Company’s Form 10-Q for the second fiscal
quarter ended December 31, 2007. If the first milestone is attained,
then 25% of the shares subject to the option shall vest immediately and 25%
of
the shares subject to the option shall vest on the last day of each fiscal
quarter thereafter beginning on June 30, 2008 and subject, in each case, to
the
optionee’s continued employment with the Company through the relevant vesting
date. For the avoidance of doubt, in the event the first performance
milestone is attained all shares shall begin to vest in accordance with the
foregoing vesting schedule and the Company shall not be required to attain
either the second or third performance milestone in order for the optionee
to
continue vesting. In the event either the net revenues target and/or
the net income target is not attained the shortfall is rolled into the next
quarter’s milestone.
In
the
event one of the first milestone targets was not attained, the second milestone
shall mean the determination by the Company that it has attained certain
quarterly net revenues targets and quarterly net income targets as disclosed
in
the initial filing of the Company’s Form 10-Q for the second fiscal quarter
ended March 31, 2008. If the second milestone is attained, then 25%
of the shares subject to the option shall vest immediately and 25% of the shares
subject to the option shall vest on the last day of each fiscal quarter
thereafter beginning on September 30, 2008 and subject, in each case, to the
optionee’s continued employment with the Company through the relevant vesting
date. For the avoidance of doubt, in the event the first performance
milestone or second performance milestone has been attained all shares shall
have begun to vest in accordance with either of the foregoing vesting schedules
and the Company shall not be required to attain the third performance milestone
in order for the optionee to continue vesting. In the event either
the net revenues target and/or the net income target is not attained the
shortfall is rolled into the next quarter’s milestone.
In
the
event one of the first milestone targets and one of the second milestone targets
was not attained, the third milestone shall mean the determination by the
Company that it has attained certain quarterly net revenues targets and
quarterly net income targets as disclosed in the initial filing of the Company’s
Form 10-K for the year ended June 30, 2008. If the third milestone is
attained, then 25% of the shares subject to the option shall vest immediately
and 25% of the shares subject to the option shall vest on the last day of each
fiscal quarter thereafter beginning on December 31, 2008 and subject, in each
case, to the optionee’s continued employment with the Company through the
relevant vesting date.
In
the
event that none of the three performance milestones has been attained, none
of
shares subject to the option shall vest and the entire option shall be forfeited
immediately upon the final determination that none of the performance milestones
has been attained.
In
addition, in the event Mr. Sakai is terminated without Cause (as defined below)
or resigns from employment with the Company for Good Reason (as defined below)
within six (6) months following the hiring of the Company’s Permanent CEO,
subject to the optionee signing and not revoking separation agreement and
release of claims in a form reasonably acceptable to the Company, the options
will immediately vest and become payable as to 100% of the aggregate number
of
then unvested shares of Company common stock; provided that the first, second
or
third milestone shall have been attained as of the date of such termination
and
the optionee shall have been an employee at the time of attainment.
For
purposes of the foregoing, “Cause” means: (i) optionee’s commission of a
felony or misdemeanor or his possession, use or sale of a controlled substance
(other than the use or possession of legally prescribed medication used for
their prescribed purpose); (ii) optionee’s significant neglect, or materially
inadequate performance of, his duties as an employee of the Company; (iii)
optionee’s breach of a fiduciary duty to the Company or its shareholders; (iv)
optionee’s willful breach of duty in the course of his employment;
(v) optionee’s material violation of the Company’s personnel or business
policies; (vi) Optionee’s willful misconduct; (vii) Optionee’s death;
or (viii) optionee’s disability. For purposes of this Agreement, optionee shall
be considered disabled if optionee has been physically or mentally unable to
perform his essential job duties hereunder for (x) a continuous period of at
least one hundred twenty (120) days or (y) a total of one hundred fifty (150)
days during any one hundred and eighty (180) day period, and optionee has not
recovered and returned to the full time performance of his duties within thirty
(30) days after written notice is given to optionee by the Company following
such 120 day period or 180 day period, as the case may be.
For
purposes of the foregoing, “Good Reason” means optionee’s resignation within
ninety (90) days following the expiration of any Company cure period (discussed
below) following the occurrence of one or more of the following, without
optionee’s consent: (i) the assignment to optionee of any duties,
or the reduction of optionee’ s duties, either of which results in
a material diminution of optionee’s authority, duties, or responsibilities with
the Company in effect immediately prior to such assignment, or the removal
of
optionee from such position and responsibilities; (ii) a material reduction
of
optionee’s base salary; and (iii) a material change in the geographic location
at which optionee must perform services (in other words, the relocation of
optionee to a facility that is more than fifty (50) miles from optionee’s
current location). Optionee will not resign for Good Reason without
first providing the Company with written notice of the acts or omissions
constituting the grounds for “Good Reason” within ninety (90) days of the
initial existence of the grounds for “Good Reason” and a reasonable cure period
of not less than thirty (30) days following the date of such
notice.
The
options terminate on November 19, 2014.
On
November 15, 2007, the Board of Directors also approved a plan to compensate
certain members of the executive staff for their interim roles and increased
responsibilities directly related to the recent departure of the Company’s
former Chief Executive Officer and other executive staff. Under the
terms of the plan, Mr. Sakai, Interim Chief Executive Officer and Chief
Financial Officer will earn an additional $10,000 per quarter while he is the
acting Interim Chief Executive Officer. A copy of the Executive
Compensation Plan is attached to this Current Report on Form 8-K as
Exhibit 99.1 and is incorporated herein by reference.
|
Item
9.01
|
Financial
Statements and Exhibits.
|
|
Exhibit
Number
|
Description
|
|
10.1
|
Executive
Compensation Plan
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
LANTRONIX,
INC.
|
|
|
|
|
|
|
|
Dated:
November 20, 2007
|
By:
|
/S/ REAGAN
Y. SAKAI
|
|
|
|
|
Name:
Reagan Y. Sakai
|
|
|
|
|
Title:
Interim Chief Executive Officer
and Chief
Financial Officer
|
|
|
|
|
|
|