40,00~ O1 1 2 CS 7 WESTERN DIVISIO N. Ctrm: Hon. George P. Schiavelli. 20 All Actions. t : ~~' I~ ' `' 21}06 EICEr,+

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1 0 1 Kevin J. Yourman () Vahn Alexander YOURMAN ALEXAND R & PAREKH LLP 01 Aviation Boulevard Suite 000 Manhattan Beach CA 0 Tel : () -0 0 Fax : () - 0 Counsel for Lead Plaintif 0,00~ FILED CLERK. U.S. DI STRICT COUR T O1 1 CENTRAL 01!Gi OF CALIFORNIA BY Aj DEPUTY CS a Q U W 0- UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNI A WESTERN DIVISIO N y;llf r IN RE LANTRONIX, INC. SECURITIES LITIGATION 1 This Document Relates To : All Actions CASE NO: CV 0- GPS (JTLx) CLASS ACTION F ROPOSM1 ORDER AND FINAL "GMENT Filed Pursuant to the Court's Order dated September, 0 ;) Date: November, 0 Time: :00 p.m. Ctrm: Hon. George P. Schiavelli 1 t : ~~' I~ ' `' }0 EICEr,+ ' RAi UI~T~fIC p ALIF ;JRIA -., rz -t C~

2 1 1 1 This matter came for hearing on November, 0 (the "Settlement t Hearing"), upon the application of the parties for approval of the Settlement set forth in the Stipulation of Settlement dated August, 0 (the "Stipulation"): Due and adequate notice having been given to the Members of the Settlement Class, and the Court having considered all papers filed and proceedings had herein and otherwise being fully informed in the premises and good cause appearing therefor, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that : 1. This Judgment hereby incorporates by reference the definitions in the Stipulation, and all terms used herein shall have the same meanings as set forth i n the Stipulation. '. As previously stipulated to by the Settling Parties, the Court hereby certifies a Settlement Class, pursuant to Rule of the Federal Rules of Civil Procedure, as follows : (a) A class consisting of all Persons and enti ties who purchased Lantronix, Inc. common stock from August, 0D through November, 00 inclusive (the "Securities Act Class"), and who were damaged thereby. Excluded from the Securities Act Class are Defendants their officers and directors, members of their immediate families, and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. Also excluded from the Secu rities Act Class are those Persons who request exclusion pursuant to the Notice[]; and (b) A class consisting of all Persons and entities who purchased-or otherwise ac quired Lantronix Inc. common stock from November 1-00 through Way 0, 0, inclusive (including those individuals who acquiredytheir Lantronix, Inc. common stock in exchan e for shares, ADRs, or options in other companies which were acquired by the Company} (the "Exchange Act Class") and who were dama ged thereby. Excluded from the Exchan ge Act Class are Defendants, their officers and directors, members of their immediate families, and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. Also excluded from the Exchange Act Class are those Persons who request exclusion pursuant to the Notice[.}. This Court has jurisdiction to enter this Final Judgment and Order o f Dismissal. The Court has jurisdiction over the subject matter of the Litigation and over all parties to the Litigation, including all Members of the Settlement Class. --

3 . a The notice given to the stockholders of Lantronix ("Lantronix " of the "Company" ) as set forth in the No tice of Pendency and Proposed Se ttlement of:; 1-1 k Class Action and Settlement Hearing ("Notice of Pendency"), Proof of Claim "rid Release, and publication of the Summary Notice as provided for in the Order Preliminarily Approving Settlement and Directing Notice of Pendency and Settlement of Class Action and Setting Hearing Date for Final Approval of Settlement constituted the best notice practicable under the circumstances, including the individual notice to stockholders who could be identified through reasonable effort.. Pursuant to and in compliance with Rule of the Federal Rules of Civil Procedure, the Court hereby finds that due and adequate notice of these proceedings was directed to all Persons who are Settlement Class Members, advising them of the Settlement, the Plan of Allocation, and Lead Plaintiff' s Counsel's right to apply for attorney's fees and reimbursement of expenses associated with the Litigation, and of their right to object thereto, and a full and fair opportunity was accorded to all Persons who are Settlement Class Members to be heard with respect to the foregoing matters.. Pursuant to Rule of the Federal Rules of Civil Procedure, this Court hereby approves the Settlement as set forth in the Stipulation and finds that the Settlement is, in all respects, fair, reasonable and adequate to the Lea d Plaintiff, and the Settlement Class and each of the Settlement Class Members, in light of the complexity, expense and possible duration of further litigation, the discovery and investigation conducted, and the risk and difficulty of establishing liability, causation and damages. This Court further finds that the Settlement se t forth in the Stipulation is the result of arm's-length negotiations between experienced counsel representing the interests of the Lead Plaintiff, the Settlement Class Members, and Defendants. Accordingly, the Settlement embodied in the Stipulation is hereby approved and shall be consummated in accordance with the --

4 1 terms and provisions of the Stipulation.. The Court hereby finds that the proposed Plan of Allocation of the Net Settlement Fund to Settlement Class Members, as set forth in the Notice of Pendency is, in all respects, fair, reasonable and adequate and the Court hereby approves the Plan of Allocation. The Court hereby finds that the formula for the calculation of the claims of Authorized Claimants which is set forth in the Notice of Pendency, sent to Settlement Class Members, provides a fair, -reasonable an d adequate basis upon which to allocate the proceeds of the Settlement Fund established by the Stipulation among Settlement Class Members, with due, io consideration having been given to administrative convenience and necessity. The i l parties to the Stipulation are hereby directed to consummate and perform its terms.. The Litigation is dismissed on the merits with prejudice as t o 1 Defendants, without costs to any party as against any other, and Lead Plaintiff, 1 named plaintiff Linda Pauwels and all Settlement Class Members are foreve r enjoined and barred from commencing, instituting or prosecuting, either directly, derivatively, representatively or in any other capacity, a class action or any other action against any of the Released Persons, past and present, with respect to, based on, arising from or related to any and all Released Claims or causes of action, 1 including Unknown Claims, that have been or might have been asserted by the Lead Plaintiff, named plaintiff Linda Pauwels or the Settlement Class Members, or any of them, against Defendants, or any of them, based upon or related to the purchase or acquisition of Lantronix common stock by the Lead Plaintiff, named plaintiff Linda Pauwels or Settlement Class Members during the Settlement Class Period as defined in the Stipulation, and the facts, transactions, events, occurrences, acts or omissions which were or could have been alleged in the Litigation.. Upon the Effective Date, as defined in the Stipulation, Lead Plaintiff, named plaintiff Linda Pauwels and each of the Settlement Class Members shall be --

5 0 deemed to have, and by operation of this Judgment shall have, fully, finally anti forever released, settled and discharged any and all Released Claims (including Unknown Claims) against the Released Persons, whether or not such Lead Plaintiff, named plaintiff Linda Pauwels and Settlement Class Members execute and deliver Proof of Claim and Release forms. Lead Plaintiff, named plaintiff Linda Pauwels, the Settlement Class Members, or Lead Plaintiffs Counsel may hereafter discover facts in addition to or different from those which he, she, or it now knows or believes to be true with respect to the subject matter of the Released Claims, but Lead Plaintiff and named plaintiff Linda Pauwels expressly shall have, and each Settlement Class Member, upon the Effective Date, shall be deemed to have, and by operation of this Judgment shall have, fully, finally and forever settled and released any and all Released Claims (including Unknown Claims), known or unknown, suspected or unsuspected, contingent or non-contingent,. whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts.. Upon the Effective Date, each of the Released Persons shall b e deemed to have, and by operation of this Judgment and Order of Dismissal shall have, fully, finally and forever released, relinquished and discharged Lead Plaintiff, named plaintiff Linda Pauwels, each and all of the Settlement Class Members and all plaintiffs' counsel and their agents from all claims, including all claims for malicious prosecution and Unknown Claims, arising out of, relating to, or connected with the institution, prosecution, assertion or resolution of the Litigation or the Released Claims.. All Persons who have filed valid and timely requests for exclusio n from the Settlement Class shall not be bound by this Final Judgment and Order o f --

6 Dismissal. Persons who would have been Settlement Class Members, but who validly and timely requested exclusion from the Settlement Class, may pursue their own individual remedies, if any.. Defendants' consent to the Stipulation, and the Settlement provide d for therein, may not be construed as an admission by Defendants, nor is this Judgment a finding or evidence, of the validity of any claims in the Litigation or o f any fault, wrongdoing or liability by Defendants. Furthermore, Defendants' consent to the Stipulation, and the Settlement provided for therein, may not be construed as a concession by any Defendant, nor shall it be used as an admission or evidence of any fault or omission by any Defendant. Neither this Judgment, the Stipulation nor any document referred to herein nor any action taken to carry out this Stipulation is, may be construed as, or may be used as, an admission by or against Defendants or evidence of any fault, wrongdoing or liability whatsoever. Entering into or carrying out the Stipulation, and the Exhibits thereto, and any negotiations or proceedings related thereto shall not, in any event, be construed as, or deemed to be evidence of, an admission or concession with regard to the denials or defenses by any Defendants and shall not be offered or received in evidence i n any action or proceeding against any party hereto in any court, administrativ e agency or other tribunal for any purpose whatsoever other than to enforce the provisions of this Judgment, the Stipulation, or any related agreement or release ; except that the Stipulation and the Exhibits may be filed in this Litigation or related litigation as evidence of the settlement or in any subsequent action against or by the Defendants to support a defense of resjudicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other theory o f claim preclusion or issue preclusion or similar defense or counterclaim. 1. The Court reserves jurisdiction, without affecting the finality of thi s Judgment, over: (a) implementation and enforcement of this Settlement, th e allowance, disallowance or adjustment of any Settlement Class Member's claim on --

7 S 1 equitable grounds and any award or distribution of the Settlement Fund ; li d wr (b) disposition of the Settlement Fund ; (c) hearing and determining Lead Plaintiff's Counsel's applications for attorneys' fees, costs, interest and expenses, including fees and costs of experts and/or consultants, and the award of reasonable costs and expenses (including lost wages) directly related to the representation of the Settlement Class to any representative plaintiff serving on the behalf of th e Settlement Class; (d) enforcing and administering this Judgment ; (e) enforcing and administering the Stipulation including any releases executed in connectio n therewith; and (f) other matters related or ancillary to the foregoing The Court finds that during the course of the Litigation, the Settling Parties and their respective counsel at all times complied with the requirements of Rule of the Federal Rules of Civil Procedure. 1. A separate order shall be entered to approve Lead Plaintiffs 1 Counsel's application for fees and reimbursement of costs and expenses a s allowed by the Court. Such order shall not disturb or affect any of the terms of this Judgment l/l --

8 1.. In the event that the Settlement does not become effective in -y r accordance with the terms of the Stipulation or in the event that the Settlement Fund, or any portion thereof, is returned to Defendants, then this Judgment shall be rendered null and void to the extent provided by and in accordance with the Stipulation and shall be vacated and, in such event, all orders entered and releases delivered in connection herewith shall be null and void to the extent provided by and in accordance with the Stipulation'. DATED :.l a UNITED STATES DISTRICT JUDGE 1 1 Submitted by : Kevin J. Yourman Vahn Alexander YOURMAN ALEXANDER & PAREKH LLP 01 Aviation Blvd., Suite 000 Manhattan Beach, CA 0 Tel : () -00 Counselfor Lead Plaintiff

9 1 1 1! STATE OF CALIFORNIA COUNTY OF LOS ANGELE S PROOF OF SERVICE ss. : I am employed in the county of Los Angeles, State of California, I am over the age of and not a party to the within action ; my business address is 01 Aviation Blvd., Suite 000, Manhattan Beach, California 0. On November, 0, I served the documents described as : [PROPOSED ] ORDER AND FINAL JUDGMENT by delivering true copies thereof enclosed in sealed envelopes addressed as follows: SEE ATTACHED SERVICE LIST. I served the above document(s) as follows : BY ELECTRONIC TRANSMISSION. I caused an electronic transmission from electronic address valexander@yaplaw.com to the electronic addresses on the a ttached Service List. Said transmission(s), was/were complete and without error. _ BY FACSIMILE TRANSMISSION. I caused a facsimile machine transmission from facsimile machine telephone number () - to the facsimile machine telephone number(s) listed on the attached Service List. Upon completion of said facsimile machine transmission(s), the transmitting machine issued a transmission report(s) showing the transmission (s) was/were complete and without error. X BY FEDERAL EXPRESS as indicated above. I de osuch envelope(s) in the Federal Express drop box locatedat 01 Aviation Boulevard, Manhattan Beach, California, with Federal Express charges prepaid. I am familiar with the firm's practice of collection and processing correspondence for mailing by Federal Express. Under that practice it would be deposited with the afore-mentioned Federal Express drop box on that same day with labels pre-printed, fully prepaid at Manhattan Beach, California by : p.m. Executed on November, 0, at Manhattan Beach, California 0. IJ -rr Joanne Kissa

10 Andrew J. Brown LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP West Broadway, Suite 100 San Diego, California Telephone: (1) 1- Facsimile: (1) 1- In re Lantronix, Inc. Securities Litigation Case No. CV 0- GPS (JTLx) SERVICE LIS T Counselfor Named Plaintiff Linda Pauwels Jordan Lurie Weiss & Lurie 0 Wilshire Boulevard `d Floor Los Angeles, California 00 Telephone : (} -00 Facsimile: } - Counsel for Plaintif Keith E. Eggleton Daniel W. urbow WILSON SONSINI GOODRICH & ROSATI A Professional Corporation 0 Page Mi ll Road Palo Alto, California 0-0 Telephone : (0) -00 Facsimile : (0)-0 Counselor Defendants Lantronix, Inc., Thomas W. Burton, and W. Brad Freeburg Michael D. Dempsey DEMPSEY & JOHNSON, PC 0 Century Park East, Suite Los Angeles, California 00 Telephone: () 1-00 Facsimile: () Counsel for Defendant Steven V. Cotton

11 Peter M. Stone Jay C. Gandh i PAUL, HASTINGS, JANOFSKY & WALKER, LLP Town Center Drive, th Floo r Costa Mesa, California -1 Telephone: (1) -0 Facsimile: (1) - 1 Counsel for Defendant Frederick G. Thiel Robert W. Perrin Jeremy Suiter LATHAM & WATKIN S West Fifth Street, Suite 000 Los Angeles, California 001 Telephone: () -1 Facsimile: () 1- Counsel for Defendant Ernst & Youn g Koji Fukumura Dennis Crovell a COOLEY GODWARD, LLP 01 Eastgate Mall San Diego, California -10 Telephone : () Facsimile: () 0- Counselfor Defendant Bernhard Bruscha r f~} e L. Marks Jeffrey A. Richmond HELLER EHRMAN LLP South Hope Street, th Floor Los Angeles, California Telephone : () -00 Facsimile: () 1- Counsel for Defendant Credit Suisse Securities (USA) LLC k