SC 13D/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 5)1

Lantronix, Inc.

(Name of Issuer)

Common Stock, par value $0.0001

(Title of Class of Securities)

516548 20 3

(CUSIP Number)

ADAM W. FINERMAN, ESQ.

OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

August 9, 2011

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 516548 20 3

1	NAME OF REPORTING PERSON TL Investment GmbH
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Germany
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,951,687
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,951,687
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,951,687
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 37.7%1
14	TYPE OF REPORTING PERSON OO

1 Based on 10,486,769 shares of common stock outstanding as of May 3, 2011, as reported in Lantronix, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2011.

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CUSIP NO. 516548 20 3

1	NAME OF REPORTING PERSON Bernhard Bruscha
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Germany
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 61,8551
	8	SHARED VOTING POWER 3,951,6872
	9	SOLE DISPOSITIVE POWER 61,8551
	10	SHARED DISPOSITIVE POWER 3,951,6872
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,013,542
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.3%3
14	TYPE OF REPORTING PERSON IN

1 Consists of direct beneficial ownership of 61,855 shares of common stock issuable upon exercise of stock options held by the Reporting Person, which are exercisable within 60 days of the date hereof.

 

2 Represents shares of common stock held directly by TL Investment GmbH, of which the Reporting Person is the sole owner and one of two managing directors.

 

3 Based on 10,486,769 shares of common stock outstanding as of May 3, 2011, as reported in Lantronix, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2011.

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CUSIP NO. 516548 20 3

1	NAME OF REPORTING PERSON Manfred Rubin-Schwarz
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o   (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Germany
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 383
	8	SHARED VOTING POWER 3,951,6871
	9	SOLE DISPOSITIVE POWER 383
	10	SHARED DISPOSITIVE POWER 3,951,6871
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,952,070
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 37.7%2
14	TYPE OF REPORTING PERSON IN

1 Represents shares of common stock held directly by TL Investment GmbH, of which the Reporting Person is the sole owner and one of two managing directors.

 

2 Based on 10,486,769 shares of common stock outstanding as of May 3, 2011, as reported in Lantronix, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2011.

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CUSIP NO. 516548 20 3

Introduction

This constitutes Amendment No. 5 to the statement on Schedule 13D, filed on behalf of TL Investment GmbH, a limited liability company organized under the laws of Germany (“TL Investment”), Bernhard Bruscha, a citizen of Germany (“Bruscha”), and Manfred Rubin-Schwarz, a citizen of Germany (“Rubin-Schwarz,” and together with TL Investment and Bruscha, the “Reporting Persons”), dated November 10, 2008 (as amended, the “Statement”), as amended by Amendment No. 1 thereto, dated December 8, 2008, by Amendment No. 2 thereto, dated June 12, 2009, by Amendment No. 3 thereto, dated August 19, 2010, and by Amendment No. 4 thereto, dated August 19, 2010, relating to the common stock, par value $0.0001 per share of Lantronix, Inc. (the “Issuer”). Unless specifically amended or modified hereby, the disclosure set forth in the Statement shall remain unchanged and capitalized terms used herein but not otherwise defined herein shall have the meaning as set forth in the Statement.

Item 4. Purpose of Transaction.

Item 4 is hereby amended and restated as follows:

The Reporting Persons originally purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity.  Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, subject to applicable limitations, on such terms and at such times as the Reporting Persons may deem advisable.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon completion of any of the actions discussed herein.  The Reporting Persons intend to review their investment in the Issuer on a continuing basis.  Depending on various factors including, without limitation, the Issuer's financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, communications with management and the Issuer’s Board of Directors (the “Board”), whether as a shareholder or Board member, engaging in discussions with third parties about the Issuer and the Reporting Persons’ investment, making proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure or operations of the Issuer, purchasing additional Shares, selling some or all of their Shares, or changing their intention with respect to any and all matters referred to in Item 4.

On November 29, 2010, the Issuer and TL Investment entered into an agreement in settlement of a proxy contest (the “Settlement Agreement”) between the Reporting Persons and the Issuer.  Certain provisions of the Settlement Agreement are summarized below:

1. The Settlement Agreement provided for Bruscha and Hoshi Printer to be included by the Issuer in its slate of nominees for election to the Board at the Issuer’s 2010 Annual Meeting.  Mssrs. Bruscha and Printer were elected to the Board at the 2010 Annual Meeting.

2. The Settlement Agreement states that at the 2011 Annual Meeting of the Issuer’s Stockholders (the “2011 Annual Meeting”) in connection with the election of directors to the Board, the Issuer shall nominate seven persons for election to the Board, of which TL Investment shall be entitled to nominate three members.

3. The Settlement Agreement precludes TL Investment, pursuant to a standstill provision, from acquiring any voting securities of the Issuer such that TL Investment’s beneficial ownership of the Issuer’s Shares of common stock would exceed 38% of the then currently outstanding common stock, from making any public announcement with respect to, or submitting a proposal for or offer of (with or without conditions) any merger, business combination, recapitalization, restructuring or other extraordinary transaction involving the Issuer or any of its securities or assets, from transferring or selling any Shares of the Issuer’s common stock held by it prior to the completion of the 2011 Annual Meeting except pursuant to customary open market broker transactions, and from taking the certain other actions described in the Settlement Agreement in order to exert influence or control over the Issuer; and

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CUSIP NO. 516548 20 3

4. The Settlement Agreement, by its terms, would terminate the day after the Issuer’s 2011 Annual Meeting, if not terminated previously by the mutual agreement of the Issuer and TL Investment.

The Issuer’s Board has recently announced that it had determined it to be in the best interest of the Issuer to reduce the size of the Board to four members effective upon the date of the 2011 Annual Meeting, and that the Board intends to nominate the incumbent directors Bruscha, Hoshi Printer, John Rehfeld and Thomas Wittenschlaeger as the four nominees to the Board.

In connection with reducing the size of the Board, effective August 9, 2011, the Issuer, Bruscha and TL Investment entered into a Termination of Agreement (the “Settlement Termination”) to terminate the Settlement Agreement on such date. Pursuant to the terms of the Settlement Termination: (1) Bruscha, in his capacity as a member of the Board, agreed to recuse himself from deliberating and voting with regard to the appointment of a fifth director of the Issuer in the event the Board determines to expand the size of the Board following the Issuer’s 2011 Annual Meeting (with such agreement terminating on March 15, 2012); and (2) TL Investment agreed that until November 16, 2011, it shall not, alone or in conjunction with any third party, without the prior written consent of the Issuer make any public announcement with respect to, or submit a proposal for, or offer of (with or without conditions) any merger, business combination, recapitalization, restructuring or other extraordinary transaction involving the Issuer or any of its securities or assets.

In its public filings, the Issuer stated that it expects to hold the 2011 Annual Meeting on November 16, 2011.

The foregoing description of the Settlement Agreement and Settlement Termination is qualified in its entirety by reference to the full text of the Settlement Agreement and Settlement Termination, which are attached as Exhibit 99.1 and Exhibit 99.2 hereto, respectively, and are incorporated herein by reference.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 6 is hereby amended and restated as follows:

On November 29, 2010, the Issuer and TL Investment entered into the Settlement Agreement defined and described in Item 4 above and attached as Exhibit 99.1 hereto.

On August 9, 2011, the Issuer, Bruscha and TL Investment entered into the Settlement Termination defined and described in Item 4 above and attached as Exhibit 99.2 hereto.

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

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CUSIP NO. 516548 20 3

Item 7. Material to Be Filed as Exhibits.

Item 7 is hereby amended to include the following exhibits:

99.1 Settlement Agreement between Lantronix, Inc. and TL Investment GmbH, dated November 29, 2010.

99.2 Termination of Agreement between Lantronix, Inc. and TL Investment GmbH, dated August 9, 2011.

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CUSIP NO. 516548 20 3

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated:  August 11, 2011

TL INVESTMENT GMBH
By:	/s/ Bernhard Bruscha
	Bernhard Bruscha
	Managing Director

/s/ Bernhard Bruscha

Bernhard Bruscha

/s/ Manfred Rubin-Schwarz

Manfred Rubin-Schwarz

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EX-99.1

Exhibit 99.1

AGREEMENT

THIS AGREEMENT (this “Agreement”) is made and entered into as of November 29, 2010, by and between TL Investment GmbH (together with any affiliate thereof, “TLI”) and Lantronix, Inc., a Delaware corporation (the “Company”).

RECITALS

WHEREAS, TLI has submitted a proposal to the Company to nominate three members for election to the Company’s Board of Directors (the “Board”) at the 2010 Annual Meeting of Stockholders (the “2010 Meeting”) and has filed a Preliminary Proxy Statement on Schedule 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in support of such proposal; and

WHEREAS, the Company has filed a Definitive Proxy Statement (the “Schedule 14A”), which included the Company’s recommended slate of directors among other matters; and

WHEREAS, each of TLI and the Company has expended substantial time and resources in support of their respective nominees for election to the Board; and

WHEREAS, each of TLI and the Company believes it to be in their respective best interests and in the best interests of the Company’s stockholders to agree upon a mutually acceptable slate of nominees for election to the Board at the 2010 Meeting.

AGREEMENT

NOW, THEREFORE, in consideration of these premises and the covenants contained herein, the parties hereto, each intending to be legally bound, hereby agree as follows:

1.           Nominations for 2010 Meeting.  In connection with the 2010 Meeting, the Company agrees:

(a)           to include Bernhard Bruscha and Hoshi Printer or their respective Replacements (as hereinafter defined) (each, a “TLI Nominee”) in its slate of nominees for election to the Board at the 2010 Meeting;

(b)           that, if any TLI Nominee (or their respective Replacements) is unable to serve as a nominee for election as director or to serve as a director for any reason, TLI shall have the right to submit the name of a replacement (the “Replacement”) to the Company for its approval (such determination to be made in the sole discretion of the Company acting in good faith) and who shall serve as the nominee for election as director or serve as director.  If the proposed Replacement is not approved by the Company, TLI shall have the right to continue submitting the name of a proposed Replacement to the Company for its approval, until the Company approves that such Replacement may serve as a nominee for election as director or to serve as a director whereupon such person is appointed as the Replacement;

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(c)           that its slate of recommended nominees (the “Nominees”) for election to the Board at the 2010 Meeting shall consist of Bernhard Bruscha, Jerry D. Chase, Hoshi Printer, John Rehfeld, Larry Sanders, Howard T. Slayen and Thomas Wittenschlaeger; and

(d)           that it shall, promptly after the date of this Agreement, amend its Schedule 14A to reflect the inclusion of the Nominees on the Company’s slate of recommended nominees for election to the Board at the 2010 Meeting.

2.           Standstill.

(a)           TLI agrees that during the term of this Agreement, it shall not, alone or in conjunction with any third party, without the prior written consent of the Company:  (i) acquire or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities or direct or indirect rights to acquire any voting securities of the Company such that TLI’s beneficial ownership of the Company’s Common Stock would exceed 38% of the then currently outstanding Common Stock; (ii) make, initiate or submit any proposal to the Company’s stockholders not supported by a majority of the Board (and in no event with respect to any recommended nominee or slate of nominees for election to the Board except in accordance with the terms of this agreement), or in any way participate, directly or indirectly, in any “solicitation” of “proxies” to vote (as such terms are used in the rules of the Securities and Exchange Commission (“SEC”)), or seek to advise or influence any person or entity with respect to the voting of any voting securities of the Company except to vote in favor of matters for which the Board has recommended a vote “for”; (iii) make any public announcement with respect to, or submit a proposal for, or offer of (with or without conditions) any merger, business combination, recapitalization, restructuring or other extraordinary transaction involving the Company or any of its securities or assets; (iv) form, join or in any way participate in a “group” as defined in Section 13(d)(3) of the Exchange Act, in connection with any of the foregoing; (v) enter into any voting agreement with respect to any Company capital stock; or (vi) take any action that could reasonably be expected to require the Company to make a public announcement regarding the possibility of any of the events described in clauses (i) through (vi) above; provided that, this Section 2(a) shall be suspended if the Company enters into any definitive agreement for, or the Board approves or recommends, or there is otherwise announced, any acquisition by any Person (other than TLI) or group of (x) more than 50% of the Company’s outstanding voting securities (measured immediately following the closing of the proposed transaction) with the purpose or effect of changing control of the Company or (y) substantially all of the consolidated assets of the Company (collectively, a “Change of Control Proposal”), including by way of tender or exchange offer, merger, purchase of assets or otherwise having that purpose or effect and any such suspension pursuant to this sentence shall terminate and the obligations hereunder shall be reinstated upon the termination of any Change of Control Proposal; provided, further, that nothing contained in this Section 2(a) shall prevent or restrict TLI from making any non-public proposal to the Board.  “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust, joint venture, unincorporated organization, other entity.

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(b)           So long as the Company has complied and is complying with its obligations set forth in this Agreement, TLI shall cause all shares of Common Stock owned of record and beneficially (as defined in Rule 13d-3 promulgated by the SEC under the Exchange Act) to be present for quorum purposes and to be voted at each of the 2010 Meeting and 2011 Annual Meeting of Stockholders or at any adjournments or postponements thereof, in accordance with the recommendations of the Board; provided, that the only matter TLI shall be required to vote in accordance with the Board’s recommendation at the 2011 Annual Meeting of Stockholders is the election of directors provided that such proposal is made in accordance with the terms of this Agreement.

3.           Board Matters.  Unless otherwise unanimously agreed to by the Board, the authorized number of directors of the Company shall be seven (7) during the term of this Agreement.  At the 2011 Annual Meeting of stockholders in connection with any election of directors to the Board, the Company shall nominate seven (7) persons for election to the Board, of which TLI shall be entitled to nominate three (3) members; provided, however, that in the event TLI’s beneficial ownership of the Company’s Common Stock is less than 31% but greater than 28% of the outstanding Common Stock, TLI shall be entitled to nominate two (2) members; if TLI’s beneficial ownership is equal to or less than 28% but greater than 14% TLI shall be entitled to nominate one (1) member and if TLI’s beneficial ownership is equal to or less than 14%, TLI shall not be entitled to nominate a member to the Board.  If any TL Investment nominee is not approved by the Company (such determination to be made in the sole discretion of the Company acting in good faith), TL Investment shall have the right to continue submitting the name of a Replacement to the Company for its approval until the Company approves such Replacement(s).  The Company shall use its commercially reasonable efforts to cause the election or appointment of such nominees at any election of stockholders, including, but not limited to, the recommendation of such nominees in any proxy statement or related materials.  TLI shall not be required to comply with time periods provided in the advance notice provisions of the Company’s bylaws or certificate of incorporation with respect to the nominees it is entitled to nominate hereunder; provided, however, that TLI shall inform the Company in a reasonable time and manner of its nominees to enable the Company to file its annual report and proxy and proceed with its annual meeting in a customary time and manner.  None of the parties hereto and no officer, director, stockholder, partner, employee or agent of any party makes any representation or warranty as to the fitness or competence of the nominee of any party hereunder to serve on the Board by virtue of such party’s execution of this Agreement or by the act of such party in voting for such nominee pursuant to this Agreement.  None of TLI, the Company, nor any officer or director thereof, shall call a special meeting of stockholders of the Company to be held regarding any election of directors within six months after the 2011 Annual Meeting of Stockholders.

4.           Consents.  For the purposes of this Agreement, any action taken by the Company or the Board pursuant to Sections 1(b), 2(a)(ii), 7, 9 and 16 of this Agreement shall require the approval of a majority of the non-TLI Nominee directors then serving on the Board.

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5.           Publicity.

(a)           The Company and TLI shall announce this Agreement and the material terms hereof by means of a joint press release as soon as practicable on or after the date hereof.  Neither the Company nor TLI shall make or cause to be made, directly or indirectly, any public announcement or statement regarding this Agreement or the subject matter hereof without the consent of the other party, except as required by applicable law (in which case such statements shall not be inconsistent with or contrary to the statements made in the Press Release).

(b)           During the term of this Agreement, neither the Company nor TLI shall publicly disparage the other party or its officers, directors or members.

6.           Representations and Warranties.  Each of the parties hereto represents and warrants to the other party that:

(a)           such party has all requisite company authority and power to execute and deliver this Agreement and to consummate the transactions contemplated hereby;

(b)           the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all required corporate or other action on the part of such party and no other proceedings on the part of such party are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby;

(c)           this Agreement has been duly and validly executed and delivered by such party and constitutes the valid and binding obligation of such party enforceable against such party in accordance with its terms; and

(d)           this Agreement will not result in a violation of any terms or provisions of any agreements to which such person is a party or by which such party may otherwise be bound or of any law, rule, license, regulation, judgment, order or decree governing or affecting such party.

7.           Term and Termination.

(a)           Unless earlier terminated in accordance herewith, this Agreement shall terminate on the earlier of (i) the date immediately following the Company’s 2011 Annual Meeting of Stockholders, (ii) the fifteen month anniversary of the date of this Agreement, (iii) the mutual agreement of TLI and the Company, or (iv) in the event Bernhard Bruscha ceases to own or control a majority in interest of TLI.  No provisions of this Agreement shall survive the termination or expiration of this Agreement with the exception of the final sentence of Section 3, which shall survive until six months after the 2011 Annual Meeting of Stockholders, and Section 4, 6 through 15, inclusive, which shall survive indefinitely.

(b)           Notwithstanding Section 7(a), if a party violates or fails to perform any material term of this Agreement, then the other party may give written notice of the default (“Notice of Default”) to the defaulting party.  If the first party does not repair the default within twenty (20) days after the effective date of the Notice of Default, then the other party has the right to terminate this Agreement by a second written notice (“Notice of Termination”).  If the other party sends a Notice of Termination to the first party, then this Agreement automatically terminates on the effective date of the Notice of Termination.

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8.           Governing Law.  The parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Court of Chancery or other federal or state courts of the State of Delaware, in addition to any other remedy to which they are entitled at law or in equity.  Furthermore, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Court of Chancery or other federal or state courts of the State of Delaware in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the Court of Chancery or other federal or state courts of the State of Delaware, and each of the parties irrevocably waives the right to trial by jury, (d) agrees to waive any bonding requirement under any applicable law, in the case any other party seeks to enforce the terms by way of equitable relief and (e) each of the parties irrevocably consents to service of process by a reputable overnight mail delivery service, signature requested, to the address of such parties’ principal place of business (as set forth in Section 11) or as otherwise provided by applicable law.  This Agreement shall be governed in all respects by the laws of the State of Delaware, without giving effect to the choice of law principles of such state that would compel the application of the law of another jurisdiction.

9.           Entire Agreement.  This Agreement, including the preamble and recitals above, contains the entire understanding of the parties with respect to the subject matter hereof and may be amended only by an agreement in writing executed by the parties hereto.

10.         Fees and Expenses.  Each party will be responsible for its fees or expenses in connection with this Agreement; provided, that TLI agrees that it will reimburse the Company for fifty percent of the out of pocket costs and expenses, including legal fees, of amending the Schedule 14A and re-soliciting the Company stockholders; provided, further such reimbursement shall not exceed $10,000.

11.         Notices.  All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be in writing and shall be deemed validly given, made or served, if (a) given by facsimile, when such facsimile is transmitted to the facsimile number set forth below and the appropriate confirmation is received or (b) if given by any other means, when actually received during normal business hours at the address specified in this subsection:

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if to the Company:

Lantronix, Inc.

167 Technology Drive

Irvine, California 92618

Attention: General Counsel

Facsimile: (949) 271-5691

with a copy to:

Wilson Sonsini Goodrich & Rosati, PC

650 Page Mill Road

Palo Alto, CA 94304

Attention: Jack Sheridan

Facsimile: (650) 493-6811

if to TLI:

TL Investment GmbH

Biesingerstrasse 27

Tuebingen 72070, Germany

Attention:  Manfred Rubin-Schwarz

Facsimile:

with a copy to:

K&L Gates LLP

1900 Main Street, Suite 600

Irvine, CA 92614

Attention: Michael A. Hedge

Facsimile: (949) 623-4454

12.         Severability.  If at any time subsequent to the date hereof, any provision of this Agreement shall be held by any court of competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality or unenforceability of such provision shall have no effect upon the legality or enforceability of any other provision of this Agreement.

13.         Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same instrument.

14.         Further Assurances.  The parties agree to execute and deliver immediately upon request such other documents or instruments as may be necessary to evidence the agreements hereunder.

15.         Successors and Assigns.  This Agreement shall not be assignable by any of the parties to this Agreement but shall be binding on successors of the parties hereto.

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16.         Transfers.  Unless otherwise approved by the Board, TL Investment shall not transfer or sell any shares of Company capital stock held by it prior to the completion of the 2011 Annual Meeting of Stockholders except pursuant customary open market broker transactions.  In the event TLI desires to purchase additional shares of the Company’s Common Stock, subject to the limitations in this Agreement, in open market or private transactions, the Company shall, upon request by TLI, use its commercially reasonable efforts to assist TLI in effecting such purchases which shall include lifting any trading restrictions established by the Company’s internal policies so long as in compliance with applicable law.

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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or caused the same to be executed by its duly authorized representative as of the date first above written.

Lantronix, Inc.

/s/ Jerry D. Chase

Jerry D. Chase

Chief Executive Officer

TL Investment GmbH

/s/ Manfred Rubin-Schwarz

Manfred Rubin-Schwarz

Managing Director

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EX-99.2

Exhibit 99.2

LANTRONIX, INC.

TERMINATION OF AGREEMENT

This Termination of Agreement (the “Termination Agreement”) is made by and between Lantronix, Inc. (the “Company”), Bernhard Bruscha and TL Investment GmbH (together with any affiliate thereof, “TLI”) (collectively referred to as the “Parties”).

WHEREAS, TLI and Company entered into an Agreement (the “Settlement Agreement”) dated as of November 29, 2010;

WHEREAS, the Company and TLI desire to terminate the Settlement Agreement in its entirety;

WHEREAS, as a pre-requisite to entering into this Termination Agreement the Parties agree that Bernhard Bruscha shall recuse himself from certain matters as a member of the Company’s Board of Directors as provided in Section 2 below;

WHEREAS, the Board of Directors has determined to hold the 2011 Annual Meeting of Shareholders (“2011 Meeting”) on November 16, 2011, and to reduce the size of the board effective as of the date of the 2011 Meeting, to four directors and has nominated Thomas Wittenschlaeger, Hoshi Printer, John Rehfeld and Bernhard Bruscha for election at the 2011 Meeting; and

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and TLI hereby agree as follows:

1.      Effective Date.  This Termination Agreement shall be effective as of August 9, 2011.

2.      Director Election. Bernhard Bruscha, in his capacity as a member of the Company’s Board of Directors, agrees to recuse himself from deliberation and voting with regard to the appointment of a fifth director in the event the board determines to expand the size of the board following the 2011 Meeting.  Such agreement by Mr. Bruscha shall terminate on March 15, 2012.

3.      Termination of Settlement Agreement.  TLI and Company hereby terminate the Settlement Agreement in its entirety, and no provisions thereof shall survive the termination.

4.      Entire Agreement.  This Termination Agreement constitutes the full and complete understanding and agreement between the Parties with regard to the subject matter hereof.  This Termination Agreement may not be amended, waived, discharged or terminated other than by a written instrument signed by the Parties hereto.

5.      Standstill.  TLI agrees that until November 16, 2011, it shall not, alone or in conjunction with any third party, without the prior written consent of the Company make any public announcement with respect to, or submit a proposal for, or offer of (with or without conditions) any merger, business combination, recapitalization, restructuring or other extraordinary transaction involving the Company or any of its securities or assets.

6.      Governing Law.  This Termination Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of Delaware.

7.      Counterparts.  This Termination Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned Parties.

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IN WITNESS WHEREOF, the Parties have executed this Termination Agreement effective as of the 9th day of August 2011.

LANTRONIX, INC.
By:	/s/ Thomas Wittenschlaeger
	Thomas Wittenschlaeger
	Chairman of the Board
TL INVESTMENT GMBH
By:		/s/ Manfred Rubin-Schwarz
		Managing Director
BERNHARD BRUSCHA
/s/ Bernhard Bruscha