Josh Crystal, et al. v. Medbox, Inc., et al. 15-CV-00426...

Case 2:15-cv-00426-BROJEM Document 883 Filed 12/18/15 of 106 Page ID #:1077

EXHIBIT 1

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15-cv-00426-BROJEM Document 883 Filed 12/18/15 of 106 Page ID #:1078

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

JOSH CRYSTAL Individually And On Behalf O' All Others Similarly Situated,

Plaintiff,

V.

MEDBOX, INC., PEJMAN VINCENT MEHDIZADEH, BRUCE BEDRICK, THOMAS IWANSKI, GUY MARSALA, AND DOUGLAS MITCHELL,

Defendants.

Case No.: 2:15-CV-00426-BRO (JEMx)

CLASS ACTION

STIPULATION AND AGREEMENT OF SETTLEMENT

SE TT L EM ENTA GRE EM ENT Case No. 2:15-C V-00426-BRO (JEMX)

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This Stipulation and Agreement of Settlement dated December 17, 2015 (the

"Settlement Agreement"), embodies a settlement (the "Settlement") made and

entered into by and among the following Settling Parties: (i) Peter Phan and Paul

Poon ("Lead Plaintiffs"), on behalf of themselves and each of the members of the

Class, as defined herein, on the one hand; and (ii) Medbox, Inc. ("Medbox"),

Pejman Vincent Mehdizadeh ("Mehdizadeh"), Bruce Bedrick ("Bedrick"), Thomas

Iwanski ("Iwanski"), Guy Marsala ("Marsala"), C. Douglas Mitchell ("Mitchell"),

J. Mitchell Lowe ("Lowe"), Ned Siegel ("Siegel"), Timothy Quintanilla

("Quintanilla"), and Q Accountancy Corporation ("Q Accountancy") (collectively,

"Defendants") on the other hand, by and through their counsel of record in the

above-referenced litigation pending in the United States District Court for the

Central District of California (the "Court"). The Settlement Agreement is intended

by the Settling Parties to fully, finally, and forever resolve, discharge, and settle the

Released Claims, upon and subject to the terms and conditions hereof and subject to

the approval of the Court. Throughout this Settlement Agreement, all capitalized

terms used, but not immediately defined, have the meanings given to them in

Section IV. 1, below.

I. THE LITIGATION

The following cases were commenced in the United States District Court for

the Central District of California, on or after January 21, 2015:

Abbreviated Case Name Case Number Date Filed

1. Crystal v. Medbox, Inc., et at 2:1 5-cv-00426-BRO-JEM 01/21/15

2. Gutierrez v. Medbox, Inc., et at 2:1 5-cv-00636-MWF-FFM 01/28/15

3. Donnino v. Medbox, Inc., et al. 2:15-cv-00683-DMG-PJW 01/29/15

1 SETTLEMENTAGREEMENT

Case No. 2:15-C V-00426-BRO (JEMX) ELi Pg. 4


1

The above-captioned cases, collectively, alleged violations of federal

2 securities laws as to Medbox, Mehdizadeh, Bedrick, Iwanski, Marsala, and

3 I Mitchell.

4

Pursuant to an Order dated April 23, 2015, the above-captioned cases were

5 consolidated for all purposes under the caption, Crystal v. Medbox, Inc., et al., Case

6 No.: 2:15-CV-00426-BRO (JEMx) (the "Class Action") (Dkt. No. 33). By that

7 same Order dated April 23, 2015, the Court appointed Peter Phan and Paul Poon as

8 Lead Plaintiffs and appointed the law firm of Johnson & Weaver, LLP as lead

9 counsel for the Class ("Lead Counsel") (Id.).

10

On July 27, 2015, Lead Plaintiffs filed their Consolidated Complaint for

11 Violations of the Federal Securities Laws (the "Consolidated Complaint") (Dkt.

12 No. 48). In addition to naming Medbox, Mehdizadeh, Bedrick, Iwanski, Marsala,

13 and Mitchell as defendants, the Consolidated Complaint added Lowe, Siegel,

14 Quintanilla, and Q Accountancy as defendants.

15

Following the filing of the Consolidated Complaint, Lead Plaintiffs and

16 Defendants attended a mediation on October 16, 2015, and following arm's-length

17 negotiations with the assistance of the Hon. Layn R. Phillips (Ret.), Lead Plaintiffs

18 and Defendants agreed to the Settlement.

19 II. CLAIMS OF LEAD PLAINTIFFS AND BENEFITS OF THE SETTLEMENT

20 Lead Plaintiffs and Lead Counsel believe that the claims asserted in the

21 Consolidated Complaint have merit. However, Lead Plaintiffs and Lead Counsel

22 23 recognize and acknowledge the expense and length of continued proceedings

24 necessary to prosecute the Class Action against Defendants through continued

discovery, trial, and appeals. Lead Plaintiffs and Lead Counsel also have taken into 25 26 account the uncertain outcome and the risk of any litigation, especially in complex

27 actions such as the Class Action, as well as the risks posed by the difficulties and

28 delays inherent in such litigation. Lead Plaintiffs and Lead Counsel also are aware




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of the possible defenses to the alleged federal securities law violations asserted in

the Consolidated Complaint, and therefore believe that it is desirable that the

Released Claims be fully and finally compromised, settled and resolved with

prejudice and enjoined as set forth herein. Lead Plaintiffs and Lead Counsel

believe that the Settlement set forth in this Settlement Agreement confers

substantial benefits upon the Class in light of the circumstances here. Based on

their evaluation, Lead Plaintiffs and Lead Counsel have determined that the

Settlement set forth in this Settlement Agreement is fair, reasonable, and adequate

and in the best interests of Lead Plaintiffs and the Class.

III. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY

Defendants have denied and continue to deny that they have violated the

federal securities laws or any laws. Defendants accordingly have denied and

continue to deny specifically each and all of the claims and contentions alleged in

the Consolidated Complaint, along with all charges of wrongdoing or liability

against them arising out of any of the conduct, statements, acts or omissions

alleged, or that could have been alleged, in the Consolidated Complaint.

Defendants also have denied and continue to deny, inter a/ia, the allegations that

any Defendants made any material misstatements or omissions; that any member of

the Class has suffered damages; that the price of Medbox's common stock was

artificially inflated by reason of the alleged misrepresentations, omissions, or

otherwise; that the members of the Class were harmed by the conduct alleged in the

Consolidated Complaint; or that Defendants knew or were reckless with respect to

the alleged misconduct. In addition, Defendants maintain that they have

meritorious defenses to all claims alleged in the Class Action.

Nonetheless, taking into account the uncertainty, risks, and costs inherent in

any litigation, especially in complex cases, Defendants have concluded that further

conduct of the Class Action could be protracted and distracting. Defendants have,

therefore, determined that it is desirable and beneficial to them that the Class


Case No. 2:15-C V-00426-BRO (JEMX) ELi

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Action be settled in the manner and upon the terms and conditions set forth in this

Settlement Agreement.

IV. TERMS OF THE SETTLEMENT AGREEMENT AND AGREEMENT OF SETTLEMENT

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by

and among Lead Plaintiffs (for themselves and the members of the Class), on the

one hand, and Defendants, on the other hand, by and through their respective

counsel or attorneys of record, that, subject to the approval of the Court, in

consideration of the benefits flowing to the Settling Parties from the Settlement set

forth herein, the Class Action and the Released Claims shall be finally and fully

compromised, settled, and released, and the Class Action shall be dismissed with

prejudice, as to all Settling Parties, upon and subject to the terms and conditions of

this Settlement Agreement, as follows.

1. Definitions

As used in the Settlement Agreement the following terms have the meanings

specified below:

1.1 "Authorized Claimant" means a member of the Class who submits a

timely and valid Proof of Claim and Release form to the Claims Administrator and

whose Proof of Claim is not rejected. Only those members of the Class who file a

valid and timely Proof of Claim and Release shall be entitled to receive any

distributions from the Net Settlement Fund.

1.2 "Business Day" means any day except a Saturday or Sunday or other

day on which national banks are authorized by federal law to be closed.

1.3 "Calendar Day" means any day of the week including Saturday,

Sunday, and all other days of the week on which national banks are authorized by

federal law to be closed.

1.4 "Claims Administrator" means the firm of Strategic Claims Services,

which shall administer the Settlement, including sending a mailed notice to Class




1 Members, arranging for publication of notice, and processing claims filed after the

2 entry of the Judgment, and such other administrative functions required under this

3 Settlement Agreement.

4

1.5 "Class" means all Persons who purchased or otherwise acquired

5 Medbox common stock between April 2, 2013 and December 29, 2014, inclusive,

6 and who were damaged thereby. Excluded from the Class are: (a) Persons or

7 entities who submit valid and timely requests for exclusion from the Class in

8 accordance with the requirements set forth in the Mailed Notice (as defined and

9 described in ¶3.1 and ¶3.2, below) and Rule 23 of the Federal Rules of Civil

10 Procedure; and (b) Defendants and their families, the officers and directors of the

11 Company, at all relevant times, members of their families and their legal

12 representatives, heirs, successors, or assigns, and any entity in which Defendants

13 have or had a controlling interest.

14

1.6 "Class Action" means the consolidated securities class action pending

15 in this Court under the caption, Crystal v. Medbox, Inc., et at, Case No.: 2:15-CV-

16 00426-BRO (JEMx), including, without limitation, all cases consolidated under that

17 caption.

18

1.7 "Class Member" means a Person who falls within the definition of the

19 Class as set forth in ¶1.5 of this Settlement Agreement.

20

1.8 "Class Period" means the period of time from April 2, 2013, through

21 December 29, 2014, inclusive.

22

1.9 "Court" means the United States District Court for the Central District

23 I of California.

24

1.10 "Defendants" mean Medbox, Inc., Pejman Vincent Mehdizadeh, Bruce

25 Bedrick, Thomas Iwanski, Guy Marsala, C. Douglas Mitchell, J. Mitchell Lowe,

26 Ned Siegel, Timothy Quintanilla, and Q Accountancy Corporation, the same

27 meaning as defined above.

28

5 SETTLEMENTAGREEMENT Case No. 2:15-C V-00426-BRO (JEMX)

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1

1. 11 "Effective Date" means the first date by which all of the events and

2 conditions specified in ¶7.1 of the Settlement Agreement have been met and have

3 I occurred.

4

1.12 "Escrow Account" means the interest-bearing account created pursuant

5 I to Section IV.2 herein.

6

1.13 "Escrow Agent" means Lead Counsel or its designees, who shall

7 perform the duties as set forth in this Settlement Agreement.

8

1.14 "Execution Date" means the last date upon which this Settlement

9 Agreement has been signed by all the signatories hereto through their counsel.

10

1.15 "Fee and Expense Application" has the same meaning as set forth in

11 ¶6.1 of this Settlement Agreement.

12

1.16 "Fee and Expense Award" means such amounts as may be awarded by

13 the Court to Lead Counsel and Plaintiffs' Counsel to be paid from the Settlement

14 Fund to compensate Lead Counsel and Plaintiffs' Counsel for their efforts on behalf

15 of the Class and reimburse them for their expenses in connection with their

16 prosecution of the Class Action, which may include some or all of the following:

17 (i) an award of attorneys' fees, (ii) reimbursement of expenses incurred in

18 connection with prosecuting the Class Action, including, without limitation,

19 expenses attributable to experts and/or consultants retained by Lead Counsel, and

20 (iii) interest on such attorneys' fees and expenses at the same rate as earned by the

21 Settlement Fund, from the date the Court orders such award until the dates paid

22 from the Settlement Fund.

23

1. 17 "Final" means when the last of the following with respect to the

24 Judgment approving the Settlement, substantially in the form of Exhibit B attached

25 hereto, shall occur: (i) the expiration of the time to file a motion to alter or amend

26 the Judgment under Federal Rule of Civil Procedure 59(e) has passed without any

27 such motion having been filed; (ii) the expiration of the time in which to appeal the

28 Judgment has passed without any appeal having been taken; and (iii) if a motion to



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1 alter or amend is filed or if an appeal is taken, the determination of that motion or

2 appeal in such a manner as to permit the consummation of the Settlement, in

3 accordance with the terms and conditions of this Settlement Agreement. For

4 purposes of this paragraph, an "appeal" shall include any petition for a writ of

5 certiorari or other writ that may be filed in connection with approval or disapproval

6 of this Settlement, but shall not include any appeal which concerns only the issue of

7 attorneys' fees and expenses or any Plan of Distribution of the Settlement Fund.

8

1.18 "Final Settlement Approval Hearing" means the final hearing to be

9 held by the Court to determine whether the proposed Settlement should be

10 approved as fair, reasonable and adequate; whether an order approving the

11 Settlement should be entered thereon; whether the Plan of Distribution of the

12 Settlement Fund should be approved; and whether and in what amounts to award

13 attorneys' fees and expenses to Lead Counsel.

14

1.19 "Gross Settlement Fund" means the Settlement Amount plus all

15 I interest earned thereon.

16

1.20 "Individual Defendants" means Pejman Vincent Mehdizadeh, Bruce

17 Bedrick, Thomas Iwanski, Guy Marsala, C. Douglas Mitchell, J. Mitchell Lowe,

18 Ned Siegel, Timothy Quintanilla, and Q Accountancy Corporation.

19

1.21 "Judgment" means the judgment and order of dismissal with prejudice

20 to be rendered by the Court upon approval of the Settlement, substantially in the

21 form attached hereto as Exhibit B.

22

1.22 "Lead Counsel" means Johnson & Weaver, LLP or its successor(s).

23

1.23 "Lead Plaintiffs" mean Peter Phan and Paul Poon.

24

1.24 "Medbox" means Medbox, Inc., a Nevada corporation, and its present

25 and former parents, subsidiaries, divisions, and affiliates.

26

1.25 "Net Settlement Fund" means the portion of the Settlement Fund that

27 shall be distributed to Authorized Claimants as allowed by the Settlement

28



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Case :15-cvM0426BRO-JEM Document 88-3 fled 12/18/15 of 106 Page ID #:1086

1 Agreement, the Plan of Distribution, or the Court, after provision for the amounts

2 set forth in ¶5.4 of this Settlement Agreement.

3

1.26 "Notice and Administration Account" means the interest-bearing

4 account to be established and maintained by the Claims Administrator from the

5 Gross Settlement Fund. The Notice and Administration Account may be drawn

6 upon by the Claims Administrator for Notice and Administration Expenses without

7 prior approval of the Court.

8

1.27 "Notice and Administration Expenses" means all expenses incurred

9 (whether or not paid) in connection with the Settlement administration, and shall

10 include, among other things, the cost of publishing the Summary Notice (as defined

11 in ¶3.1, below) in Investor's Business Daily and on a national business internet wire

12 service; printing and mailing the Mailed Notice (as defined in ¶3.1 -3 .2, below), as

13 directed by the Court; and the cost of processing proofs of claim and distributing

14 the Net Settlement Fund to Class Members who timely submit a valid Proof of

15 Claim and Release.

16

1.28 "Person" means an individual, corporation, partnership, limited

17 partnership, association, joint stock company, estate, legal representative, trust,

18 unincorporated association, government or any political subdivision or agency

19 thereof, and any business or legal entity and his, her or its spouses, heirs,

20 predecessors, successors, representatives, or assignees.

21

1.29 "Plaintiffs' Counsel" means any counsel who have appeared on behalf

22 of any plaintiff in the Class Action.

23

1.30 "Plan of Distribution," means a plan or formula of allocation of the

24 Net Settlement Fund, to be approved by the Court, whereby the Settlement Fund

25 shall be distributed to Authorized Claimants after payment of Notice and

26 Administration Expenses of the Settlement, Taxes and Tax Expenses, and such

27 attorneys' fees, costs, expenses, and interest, and other expenses as may be awarded

28



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Document 883 fled 12/18/15 of 106 Page ID #:1087

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by the Court. Any Plan of Distribution is not part of the Settlement Agreement and

the Released Persons shall have no responsibility or liability with respect thereto.

1.31 "Qualified Settlement Fund" means a fund within the meaning of

Treasury Regulations § 1.46813-1.

1.32 "Released Claims" means any and all claims and causes of action of

every nature and description, whether known or unknown, whether arising under

federal, state, common or foreign law, that arise out of or are related in any way to

(a) Lead Plaintiffs' or any Class Member's investments in Medbox securities,

including the purchase, acquisition, sale, or holding of Medbox securities; (b) the

subject matter of the Class Action; or (c) the facts alleged or that could have been

alleged in any complaint filed in the Class Action. Released Claims do not include,

and expressly exclude: (i) claims to enforce the Settlement and/or the terms of this

Settlement Agreement; (ii) any governmental or regulatory agency's claims in any

criminal or civil action against any Defendants; and (iii) claims in any Shareholder

Derivative Litigations.

1.33 "Released Persons" means each and all of Defendants and each and all

of their present or former parents, subsidiaries, affiliates (as defined in 17 C.F.R.

§210.1-02(b)), successors and assigns, and each and all of the present or former

officers, principals, directors, employees, employers, attorneys, accountants,

auditors, advisors, lenders, insurers, investment bankers, representatives, general

and limited partners and partnerships, subsidiaries, divisions, predecessors,

stockholders, trustees, fiduciaries, consultants, agents, heirs, executors,

administrators, successors, affiliates, and assigns of each of them.

1.34 "Settlement Amount" means (a) One Million Eight Hundred Fifty

Thousand United States Dollars (USD $1,850,000.00) in cash to be paid by means

of check(s), money order(s), or wire transfer(s) to the Escrow Agent pursuant to

¶2.1 of this Settlement Agreement, together with all interest and income earned

thereon and (b) Two Million Three Hundred Thousand (2,300,000) shares of



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Medbox common stock that Medbox and Defendant Bedrick shall transfer in

accordance with the provisions set forth in ¶2.2 of this Settlement Agreement.

1.35 "Settlement Brokerage Account" means the account created pursuant

to Section IV.2 herein into which the Settlement Shares shall be transferred by

Medbox and Defendant Bedrick in accordance with the provisions of ¶2.2 of this


1.36 "Settlement Fund" means the payments to be made in accordance with

¶2.1 and ¶2.2 of this Settlement Agreement.

1.37 "Settlement Shares" means the shares of Medbox common stock that

Medbox and Defendant Bedrick shall transfer in accordance with the provisions of

¶2.2 of this Settlement Agreement.

1.38 "Settling Parties" means, collectively, Defendants and Lead Plaintiffs

on behalf of themselves and the Class Members.

1.39 "Shareholder Derivative Litigations" means all such derivative cases

filed and/or shareholder demands made arising from the facts and circumstances

alleged in the Class Action and/or in the Consolidated Complaint.

1.40 "Unknown Claims" means any Released Claims which Lead Plaintiffs

or any Class Member does not know or suspect to exist in his, her or its favor at the

time of the release of the Released Persons which, if known by him, her or it, might

have affected his, her or its settlement with and release of the Released Persons, or

might have affected his, her or its decision not to object to this Settlement. With

respect to any and all Released Claims, the Settling Parties stipulate and agree that,

upon the Effective Date, Lead Plaintiffs shall expressly and each of the Class

Members shall be deemed to have, and by operation of the Judgment shall have,

expressly waived to the fullest extent permitted by law the provisions, rights, and

benefits of California Civil Code § 1542, which provides:



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1

A general release does not extend to claims which the

2

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

3

have materially affected his or her settlement with the debtor.

4 5 Lead Plaintiffs shall expressly and each of the Class Members shall be deemed to

6 have, and by operation of the Judgment shall have, expressly waived any and all

7 provisions, rights, and benefits conferred by any law of any state or territory of the

8 United States, or principle of common law, which is similar, comparable, or

9 equivalent to California Civil Code §1542. Lead Plaintiffs and Class Members may

10 hereafter discover facts in addition to or different from those which he, she or it

11 now knows or believes to be true with respect to the subject matter of the Released

12 Claims, but Lead Plaintiffs shall expressly, and each Class Member, upon the

13 Effective Date, shall be deemed to have, and by operation of the Judgment shall

14 have, fully, finally, and forever settled and released any and all Released Claims,

15 known or unknown, suspected or unsuspected, contingent or non-contingent,

16 whether or not concealed or hidden, which now exist, or heretofore have existed,

17 upon any theory of law or equity now existing or coming into existence in the

18 future, whether direct, indirect, or derivative, including, but not limited to, conduct

19 that is negligent, intentional, with or without malice, or a breach of any duty, law,

20 or rule, without regard to the subsequent discovery or existence of such different or

21 additional facts. Lead Plaintiffs acknowledge, and the Class Members shall be

22 deemed by operation of the Judgment to have acknowledged, that the foregoing

23 waiver was separately bargained for and a key element of the Settlement of which

24 this release is a part.

2. The Settlement 25

a. The Settlement Fund 26

27 2.1 Within ten (10) Business Days following preliminary approval of the

28 Settlement by the Court, Medbox shall cause One Hundred Fifty Thousand United



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1

States Dollars (USD $150,000.00) in cash to be paid on behalf of itself, and its

2 insurers shall cause One Million Seven Hundred Thousand United States Dollars

3 (USD $1,700,000.00) in cash to be paid on behalf of the Individual Defendants

4 (collectively, the USD $150,000.00 and USD $1,700,000.00 shall be referred to as

5 the "Cash Amount"), into the Escrow Account maintained by the Escrow Agent on

6 behalf of Lead Plaintiffs and the Class.

7

2.2 Within five (5) Business Days following the Court's entry of the

8 Judgment, Medbox shall transfer 2,000,000 shares of its common stock into the

9 Settlement Brokerage Account maintained by the Escrow Agent on behalf of Lead

10 Plaintiffs and the Class. Likewise, within five (5) Business Days following the

11 Court's entry of the Judgment, Defendant Bedrick shall transfer 300,000 shares of

12 his common stock into the Settlement Brokerage Account. The Settlement Shares

13 shall be fully paid, non-assessable and, upon the Court's entry of the Judgment,

14 exempt from registration under Section 3(a)(10) of the Securities Act of 1933, as

15 amended, and will be identical in all respects to Medbox's currently outstanding

16 shares of common stock. Specifically, the beneficiaries of the Settlement Shares

17 shall be entitled to all economic benefits of the Settlement Shares upon the deposit

18 of the Settlement Shares into the Settlement Brokerage Account, including but not

19 limited to stock or cash dividends; but voting rights of the Settlement Shares shall

20 not be transferred until the shares are distributed from the escrow. In addition, the

21 number of shares of Medbox common stock issuable hereunder will be adjusted if,

22 prior to the issuance of the Settlement Shares, Medbox: (i) declares a dividend in

23 Medbox common stock on any class of its capital stock; (ii) issues generally to its

24 stockholders rights, options, or warrants to purchase Medbox common stock at less

25 than the current market price of the common stock; (iii) subdivides, combines, or

26 reclassifies its outstanding Medbox common stock; or (iv) distributes generally to

27 its stockholders evidences of debt, shares of its capital stock, cash, or other assets.

28 Medbox, with the cooperation of Defendant Bedrick, shall take all necessary and



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1 appropriate action to perfect the exemption of the Settlement Shares from

2 registration under the federal securities laws by reason of Section 3(a)(I 0), or other

3 applicable provisions, of the Securities Act of 1933, and the Judgment submitted to

4 the Court for its consideration shall expressly state that "any shares issued to pay

5 the Settlement Shares shall be fully paid, non-assessable and, upon final approval of

6 the Settlement, exempt from registration under Section 3(a)(I 0), or other applicable

7 provisions, of the Securities Act of 1933." In the event the Court does not make

8 such a finding, within fifteen (15) Calendar Days following such a determination by

9 the Court, Counsel for Medbox and Lead Plaintiffs shall, in good faith, meet and

10 confer to discuss (a) Medbox paying all expenses necessary to register and issue the

11 Settlement Stock, or (b) Medbox substituting the cash value of the Settlement

12 Stock, using the closing price on the date of the Court's determination regarding the

13 exempt status of the Settlement Shares. Should Medbox and Lead Plaintiffs fail to

14 reach a resolution regarding the foregoing, they agree to submit the issue to the

15 Hon. Layn R. Phillips (Ret.) (the "Mediator") for binding arbitration of the issue.

16 Any decision rendered by the Mediator must be complied with within fifteen

17 (15) Calendar Days of such decision. Medbox and Lead Plaintiffs shall bear the

18 expense of the Mediator proportionally. All costs associated with the transfer of the

19 Settlement Shares to the Settlement Brokerage Account shall be borne by Medbox.

20 Lead Plaintiffs and the Class Members shall retain the benefit of any increase and

21 the risk of any decrease in value of the price of the Settlement Shares. Upon receipt

22 of the Settlement Shares, the Escrow Agent will have the right to take any measures

23 they deem appropriate to protect the overall value of the Settlement Shares prior to

24 distribution to the Authorized Claimants, including, but not limited to, sales of all

25 or part of the Settlement Shares. Neither the Escrow Agent nor Lead Counsel shall

26 have liability for any sale, liquidation, transfer, or other disposition of the

27 Settlement Shares absent gross negligence or willful misconduct, but shall not sell

28 the Settlement Shares to Lead Counsel. The Escrow Agent shall also have the right



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1 to use the cash component of the Settlement Fund to protect the overall value of the

2 Settlement Fund. Neither Lead Plaintiffs, the Class Members, nor Defendants shall

3 have a claim against Lead Counsel or Lead Plaintiffs, or any of their agents, based

4 on the disposition of the Settlement Stock or distributions made in accordance with

5 this Settlement Agreement.

6

2.3 The Cash Amount and Settlement Shares referred to in ¶2.1 and ¶2.2

7 above, together with any interest and income earned thereon, shall constitute the

8 Settlement Fund.

9

2.4 Upon deposit of the Cash Amount pursuant to ¶2.1 hereof into the

10 Escrow Account, the Escrow Agent, without further approval of Defendants or the

11 Court, may pay from the Settlement Fund up to $200,000 in Notice and

12 Administration Expenses associated with the administration of the Settlement

13 (described herein). The Escrow Agent is expressly authorized to transfer such

14 funds from the Gross Settlement Fund to the Notice and Administration Account

15 for Notice and Administration Expenses which shall include, without limitation: the

16 cost of identifying and locating members of the Class, mailing the Mailed Notice

17 (as is defined in ¶3.1) and Proof of Claim and Release form and publishing the

18 Summary Notice (as is defined in ¶3.1) (such amount shall include, without

19 limitation, the actual costs of publication of the Summary Notice, printing and

20 mailing the Mailed Notice and Proof of Claim and Release form, and

21 reimbursement to nominee owners for forwarding notice to their beneficial owners),

22 soliciting Class claims, assisting with the filing of claims, administering and

23 distributing the Net Settlement Fund to Authorized Claimants, processing Proof of

24 Claim and Release forms, and paying escrow fees and costs, if any, and the

25 administrative expenses incurred and fees charged by the Claims Administrator in

26 connection with providing notice and processing the submitted claims. Prior to the

27 Effective Date, any Notice and Administration Expenses exceeding $200,000 shall

28 require notice to and agreement from Defendants or order of the Court.


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2.5 Except for costs associated with their obligation to provide the

information set forth in ¶5.2 related to class notice and any costs associated with the

transfer of the Settlement Shares to the Settlement Brokerage Account pursuant to

¶2.2, under no circumstances will Defendants be required to pay more than the

Settlement Fund pursuant to this Settlement Agreement and the Settlement.

b. The Escrow Agent

2.6 The Escrow Agent shall invest any funds held in the Settlement Fund

in instruments backed by the full faith and credit of the United States Government

or fully insured by the United States Government or an agency thereof and shall

reinvest the proceeds of these instruments as they mature in similar instruments at

their then-current market rates. So long as the Settlement Fund is invested in

accordance with this ¶2.6, all risks related to the investment of the Settlement Fund

shall be borne by the Settlement Fund. In all events, no risk related to the

investment of the Settlement Fund shall be borne by Defendants.

2.7 The Escrow Agent shall not disburse the Settlement Fund except (a) as

provided in the Settlement Agreement, (b) by an order of the Court, or (c) with the

written agreement of counsel for the Settling Parties.

2.8 Subject to further order(s) and/or direction(s) as may be made by the

Court, or as provided in the Settlement Agreement, the Escrow Agent is authorized

to execute such transactions as are consistent with the terms of the Settlement

Agreement. The Settling Parties shall have no responsibility for, interest in, or

liability whatsoever with respect to the actions of the Escrow Agent, or any

transaction executed by the Escrow Agent.

2.9 The Settlement Fund, including any interest earned thereon net of any

taxes on the income thereof, shall be used to pay: (i) attorneys' fees and expenses,

(ii) taxes and tax expenses, and (iii) Notice and Administration Expenses. The

balance of the Settlement Fund shall be the Net Settlement Fund and shall be

distributed to the Authorized Claimants as set forth in the Plan of Distribution.



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:15-cvM0426BRO-JEM Document 88-3 fled 12/18/15 of 106 Page ID #:1094

Lead Plaintiffs and Class Members shall look solely to the Net Settlement Fund for

payment and satisfaction of any and all Released Claims.

2.10 All funds held by the Escrow Agent shall be deemed in custodia legis

of the Court, and shall remain subject to the jurisdiction of the Court until such time

as such funds shall be distributed pursuant to the Settlement Agreement and/or

further orders of the Court.

2.11 After the Effective Date, Defendants shall have no interest in the Gross

Settlement Fund or in the Net Settlement Fund.

C. Taxes

2.12 Qualified Settlement Fund

(a) The Settling Parties agree to treat the Settlement Fund as being

at all times a "Qualified Settlement Fund" within the meaning of Treas. Reg.

§1.468B-1. In addition, the Escrow Agent shall timely make such elections as

necessary or advisable to carry out the provisions of this ¶2.12, including the

"relation-back election" (as defined in Treas. Reg. §1.468B-1) back to the earliest

permitted date. Such elections shall be made in compliance with the procedures

and requirements contained in such regulations. It shall be the responsibility of the

Escrow Agent to timely and properly prepare and deliver the necessary

documentation for signature by all necessary parties, and thereafter to cause the

appropriate filing to occur.

(b) For the purpose of §46813 of the Internal Revenue Code of 1986,

as amended, and the regulations promulgated thereunder, the "administrator" shall

be the Escrow Agent. The Escrow Agent shall timely and properly file all

informational and other tax returns necessary or advisable with respect to the

Settlement Fund (including, without limitation, the returns described in Treas. Reg.

§1.468B-2(k)). Such returns (as well as the election described in ¶2.12(a) hereof)

shall be consistent with this ¶2.12 and in all events shall reflect that all Taxes

(including any estimated Taxes, interest, or penalties) on the income earned by the


Case No. 2:15-C V-00426-BRO (JEMX)

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1 Settlement Fund shall be paid out of the Settlement Fund as provided in ¶2.12(c)

2 hereof.

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(c) All (a) Taxes (including any estimated Taxes, interest, or

4 penalties) arising with respect to the income earned by the Settlement Fund,

5 including any Taxes or tax detriments that may be imposed upon the Settling

6 Parties or their counsel with respect to any income earned by the Settlement Fund

7 for any period during which the Settlement Fund does not qualify as a "Qualified

8 Settlement Fund" for federal or state income tax purposes ("Taxes"), and

9 (b) expenses and costs incurred in connection with the operation and

10 implementation of this ¶2.12 (including, without limitation, expenses of tax

11 attorneys and/or accountants and mailing and distribution costs and expenses

12 relating to filing (or failing to file) the returns described in this ¶2.12) ("Tax

13 Expenses"), shall be paid out of the Settlement Fund; in all events the Settling

14 Parties and their counsel shall have no liability or responsibility for the Taxes or the

15 Tax Expenses. The Settlement Fund shall indemnify and hold each of Defendants

16 and their counsel harmless for Taxes and Tax Expenses (including, without

17 limitation, Taxes payable by reason of any such indemnification). Further, Taxes

18 and Tax Expenses shall be treated as, and considered to be, a cost of administration

19 of the Settlement Fund and shall be timely paid by the Escrow Agent out of the

20 Settlement Fund without prior order from the Court and the Escrow Agent shall be

21 obligated (notwithstanding anything herein to the contrary) to withhold from

22 distribution to Authorized Claimants any funds necessary to pay such amounts,

23 including the establishment of adequate reserves for any Taxes and Tax Expenses

24 (as well as any amounts that may be required to be withheld under Treas. Reg.

25 §1 .468B-2(l)(2)); neither Defendants nor their counsel are responsible nor shall

26 they have any liability therefore. The Settling Parties hereto agree to cooperate

27 with the Escrow Agent, each other, and their tax attorneys and accountants to the

28 extent reasonably necessary to carry out the provisions of this ¶2.12.



Pg. 20


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(d) For the purpose of this ¶2.12, references to the Settlement Fund

shall include both the Settlement Fund and any earnings thereon.

d. Termination of the Settlement

2.13 In the event that the Class is not certified, or if the Settlement

Agreement: (i) is not approved; (ii) is terminated, cancelled, or fails to become

effective for any reason, including, without limitation, in the event the Judgment is

reversed or vacated following any appeal taken therefrom; or (iii) is successfully

collaterally attacked, the Settlement Fund (including accrued interest) less expenses

actually incurred or due and owing for Notice and Administration Expenses

pursuant to ¶2.4 or ¶2.12, shall be refunded to Defendants and, if applicable, their

insurers pursuant to written instructions from Medbox's counsel.

3. Preliminary Approval Order and Settlement Hearing

3.1 Promptly after execution of the Settlement Agreement, the Settling

Parties shall submit the Settlement Agreement together with its exhibits (the

"Exhibits") to the Court and shall apply for entry of an order (the "Preliminary

Approval Order"), substantially in the form of Exhibit A attached hereto,

requesting, inter a/ia, the preliminary approval of the Settlement set forth in the

Settlement Agreement, certification of the Class for settlement purposes only, and

approval for the mailing of a settlement notice (the "Mailed Notice") and

publication of a summary notice (the "Summary Notice"), substantially in the forms

of Exhibits A-i and A-3, respectively, attached hereto.

3.2 The Mailed Notice shall include a proof of claim, substantially in the

form of Exhibit A-2 attached hereto (the "Proof of Claim and Release"), the general

terms of the Settlement set forth in the Settlement Agreement, and shall set forth the

procedure by which Persons who otherwise would be members of the Class may

request to be excluded from the Class. Medbox shall assist Lead Counsel and/or

the Claims Administrator in obtaining, from Medbox's transfer agent, records of



Pg. 21


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ownership as necessary to process and administer the Mailed Notice. The cost, if

any, associated with compiling and/or delivering these records from Medbox's

transfer agent to Lead Counsel or the Claims Administrator shall be borne by

Defendants in accordance with ¶5.2 of this Settlement Agreement.

3.3 Lead Counsel shall request that after notice is given to the Class, the

Court hold the Final Settlement Approval Hearing and approve the Settlement of

the Class Action as set forth herein. At or after the Final Settlement Approval

Hearing, Lead Counsel also shall request that the Court approve the proposed Plan

of Distribution and the Fee and Expense Application.

3.4 The Settling Parties hereby stipulate to certification of the Class,

pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure, solely for

purposes of this Settlement Agreement and the Settlement set forth herein. If this

Settlement Agreement is not approved by the Court, however, then (a) Defendants

shall retain all rights to (i) object to and oppose class certification, or (ii) challenge

the standing of Lead Plaintiffs or any other intervening plaintiff; and (b) this

Settlement Agreement and any motion or other papers filed in support of its

approval shall not be offered as evidence of any agreement, admission or

concession that any class should be or remain certified in the Class Action or that

Lead Plaintiffs or any other intervening plaintiff has standing or any legal right to

represent any class.

4. Releases

4.1 Upon the Effective Date, Lead Plaintiffs and each of the Class

Members who have not timely opted out of the Class (whether or not such Class

Members execute and deliver the Proof of Claim and Release forms) and their

predecessors, successors, agents, representatives, attorneys, and affiliates, and the

heirs, executors, administrators, successors, and assigns of each of them shall be

deemed to have, and by operation of the Judgment shall have, fully, finally, and

forever settled, released, relinquished, and discharged the Released Persons from all



Pg. 22

Case


1 Released Claims (including, without limitation, any Unknown Claims), as well as

2 any other claims arising out of, relating to, or in connection with, the defense,

3 settlement, or resolution of the Class Action or the Released Claims. Released

4 Claims do not include, and expressly exclude: (i) claims to enforce the Settlement

5 and/or the terms of this Settlement Agreement; (ii) any governmental or regulatory

6 agency's claims in any criminal or civil action against any Defendants; and

7 (iii) claims in any Shareholder Derivative Litigations.

8

4.2 Upon the Effective Date, Lead Plaintiffs and each of the Class

9 Members who have not timely opted out of the Class (whether or not such Class

10 Members execute and deliver the Proof of Claim and Release forms), and their

11

predecessors, successors, agents, representatives, attorneys, and affiliates, and the

12 heirs, executors, administrators, successors, and assigns of each of them, directly or

13 indirectly, individually, representatively, or in any other capacity, shall be

14 permanently barred and enjoined from the assertion, institution, maintenance,

15 prosecution, or enforcement against Defendants, or any other Released Persons, in

16 any state or federal court or arbitral foram, or in the court or tribunal of any foreign

17 jurisdiction, of any and all Released Claims (including, without limitation,

18 Unknown Claims), as well as any other claims arising out of, relating to, or in

19 connection with, the defense, settlement, or resolution of the Class Action or the

20 Released Claims.

21

4.3 The Proof of Claim and Release form to be executed by Class

22 Members shall release all Released Claims against the Released Persons and shall

23 be substantially in the form contained in Exhibit A-2 attached hereto.

24

4.4 Upon the Effective Date, each of the Released Persons shall be

25 deemed to have, and by operation of the Judgment shall have, fully, finally, and

26 forever settled, released, relinquished, and discharged Lead Plaintiffs, each and all

27 of the Class Members, and Lead Counsel and Plaintiffs' Counsel from all claims

28 (including, without limitation, Unknown Claims) arising out of, relating to, or in



Pg. 23


connection with, the institution, prosecution, assertion, settlement, or resolution of

the Class Action or the Released Claims.

5. Administration and Calculation of Claims, Final Awards, and Supervision and Distribution of the Settlement Fund

5.1 The Claims Administrator, subject to such supervision and direction of

the Court as may be necessary or as circumstances may require, shall provide notice

of the Settlement to the Class, shall administer and calculate the claims submitted

by Class Members, and shall oversee distribution of the Net Settlement Fund to

Authorized Claimants.

5.2 Within ten (10) Business Days of the Court's preliminary approval of

this Settlement Agreement, Medbox will use reasonable efforts to cause its transfer

agent to provide to the Claims Administrator in a computer-readable format

acceptable to the Claims Administrator, the last known names and addresses of all

shareholders of record during the Class Period. Medbox shall bear its own expense

of providing such names and addresses.

5.3 Within ten (10) Business Days of Medbox's transfer agent providing

the Claims Administrator with the last known names and addresses of all

shareholders of record as required by ¶5.2 hereof (the "Notice Date"), the Claims

Administrator will cause to be mailed to all shareholders of record identified by

Medbox' s transfer agent the Mailed Notice, substantially in the form of Exhibit A-i

attached hereto, and a Proof of Claim and Release, substantially in the form of

Exhibit A-2 attached hereto. The Mailed Notice and Proof of Claim and Release

form, as well as the Settlement Agreement, shall also be posted on the Claims

Administrator's website. Not later than seven (7) Business Days following the

Notice Date, the Summary Notice, substantially in the form of Exhibit A-3 attached

hereto, will also be published once in the national edition of Investor's Business

Daily and once over a national business internet wire service. The cost of providing

such notice shall be paid out of the Notice and Administration Account. Not later



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1 than thirty-five (35) Calendar Days prior to the Final Settlement Approval Hearing,

2 Lead Counsel shall serve on Defendants' counsel and file with the Court proof, by

3 affidavit or declaration, of such mailing and publishing.

4

5.4 The Settlement Fund shall be applied as follows:

5

(a) to pay the Fee and Expense Award, if and to the extent allowed

6 by the Court;

7

(b) to pay all the costs and expenses reasonably and actually

8 incurred in connection with providing notice, including locating Class Members,

9 soliciting Class claims, assisting with the filing of claims, administering and

10 distributing the Net Settlement Fund to Authorized Claimants, processing Proof of

11 Claim and Release forms, and paying escrow fees and costs, if any;

12

(c) to pay the Taxes and Tax Expenses described in ¶2.12 hereof;

13 and

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(d) to distribute the balance of the Settlement Fund (the "Net

15 Settlement Fund") to Authorized Claimants as allowed by the Settlement

16 Agreement, the Plan of Distribution, or the Court.

17

5.5 Upon the Effective Date and thereafter, and in accordance with the

18 terms of the Settlement Agreement, the Plan of Distribution, or such further

19 approval and further order(s) of the Court as may be necessary or as circumstances

20 may require, the Net Settlement Fund shall be distributed to Authorized Claimants,

21 subject to and in accordance with ¶5. 6-5.1 3 hereof.

22

5.6 Each Person claiming to be an Authorized Claimant shall be required

23 to submit to the Claims Administrator a completed Proof of Claim and Release

24 form postmarked by no later than ninety (90) Calendar Days from the Notice Date,

25 or such other time as may be set by the Court (the "Bar Date"), substantially in the

26 form of Exhibit A-2 attached hereto, signed under penalty of perjury and supported

27 by such documents as are specified in the Proof of Claim and Release form and as

28 are reasonably available to such Person.



Pg. 25

Case :15-cvM0426BRO-JEM Document 88-3 fled 12/18/15 of 106 Page ID #:11O1

1

5.7 Except as otherwise ordered by the Court, all Class Members who fail

2 to submit a Proof of Claim and Release form by the Bar Date, or such other period

3 as may be ordered by the Court, or who file a Proof of Claim and Release form that

4 is rejected, shall be forever barred from receiving any payments pursuant to the

5 Settlement Agreement and the Settlement set forth herein, but will in all other

6 respects be subject to and bound by the provisions of the Settlement Agreement, the

7 releases contained herein, and the Judgment. Notwithstanding the foregoing, Lead

8 Counsel may, in their discretion, accept for processing late submitted claims so

9 long as the distribution of the Net Settlement Fund to Authorized Claimants is not

10 materially delayed.

11

5.8 Lead Counsel shall cause the Claims Administrator to calculate the

12 allocation of the Net Settlement Fund of each member of the Class. Following the

13 Effective Date and upon application to the Court by Lead Counsel, Lead Counsel

14 shall cause the Claims Administrator to distribute to each Class Member eligible for

15 a distribution from the Net Settlement Fund his, her, or its pro rata share of the Net

16 Settlement Fund. The cost of these procedures shall be paid out of the Settlement

17 Fund.

18

5.9 This is not a claims-made settlement and, if all conditions of the

19 Settlement Agreement are satisfied and the Settlement becomes Final, no portion of

20 the Settlement Fund will be returned to Defendants or their insurance carriers and

21 Defendants expressly acknowledge that neither Defendants nor their insurer(s) shall

22 have a reversionary interest in the Settlement Fund. If there is any balance

23 remaining in the Settlement Fund after six (6) months from the date of the initial

24 distribution of the Net Settlement Fund whether by reason of tax refunds, uncashed

25 checks or otherwise), Lead Counsel shall, if feasible, distribute in an equitable and

26 economical fashion such balance among Authorized Claimants who negotiated the

27 checks sent to them in the initial distribution. These redistributions shall be

28 repeated until the balance remaining in the Net Settlement Fund is tie minimis (an



Pg. 26


amount less than $10,000) and such remaining balance shall then be donated to an

appropriate non-profit organization designated as the Court may direct and approve.

5.10 The Released Persons shall have no responsibility for, interest in, or

liability whatsoever with respect to the distribution of the Net Settlement Fund, the

Plan of Distribution, the determination, administration, or calculation of claims, the

payment or withholding of Taxes, or any losses incurred in connection therewith.

5.11 Defendants shall take no position with respect to the Plan of

Distribution or any other such plan as may be approved by the Court.

5.12 It is understood and agreed by the Settling Parties that any proposed

Plan of Distribution of the Net Settlement Fund including, but not limited to, any

adjustments to an Authorized Claimant's claim set forth therein, is not a part of the

Settlement Agreement and is to be considered by the Court separately from the

Court's consideration of the fairness, reasonableness, and adequacy of the

Settlement set forth in the Settlement Agreement, and any order or proceeding

relating to the Plan of Distribution shall not operate to terminate or cancel the

Settlement Agreement or affect the finality of the Court's Judgment approving the

Settlement Agreement and the Settlement set forth therein, or any other orders

entered pursuant to the Settlement Agreement. Class Members and Defendants

shall be bound by the terms of this Settlement Agreement, irrespective of whether

the Court disapproves or modifies the Plan of Distribution.

5.13 No Person shall have any claim against Lead Plaintiffs, Lead Counsel,

Plaintiffs' Counsel, Defendants, or their respective counsel, or the Claims

Administrator based on distributions made substantially in accordance with the

Settlement, the Settlement Agreement, and the Plan of Distribution, or otherwise as

further ordered by the Court.

Plaintiffs' Counsel's Attorneys' Fees And Expenses

6.1 Lead Counsel may submit an application or applications (the "Fee and

Expense Application") for distributions to Lead Counsel from the Settlement Fund


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for: (a) an award of attorneys' fees; plus (b) reimbursement of actual costs and

expenses, including experts or consultants, incurred in connection with prosecuting

the Class Action plus any interest on such attorneys' fees, costs and expenses at the

same rate and for the same periods as earned by the Gross Settlement Fund (until

paid) as may be awarded by the Court. The Fee and Expense Application may

include a request for an award to Lead Plaintiffs for reimbursement of their

expenses in accordance with 15 U.S.C. §78u-4(a)(4) plus interest at the same rate

and for the same periods as earned by the Gross Settlement Fund (until paid) as

may be awarded by the Court. Lead Counsel reserves the right to make additional

applications for fees and expenses incurred, if necessary. Defendants will take no

position with regard to the Fee and Expense Application.

6.2 The attorneys' fees and expenses, including the fees and expenses of

experts and consultants, as awarded and ordered by the Court ("Fee and Expense

Award"), shall be payable to Lead Counsel from the Settlement Fund upon the

entry of the Court's order awarding such fees and expenses. Any attorneys' fees

awarded pursuant to the Fee and Expense Award shall be paid proportionally from

the Cash Amount and Settlement Shares. Any reimbursement of expenses pursuant

to the Fee and Expense Award shall be paid from the Cash Amount. The Cash

Amount portion of the Fee and Expense Award shall be paid to Lead Counsel

immediately upon execution by the Court of the Judgment, and the Settlement

Shares portion of the Fee and Expense Award shall be delivered to Lead Counsel

within five (5) Business Days after Medbox and Defendant Bedrick transfer the

Settlement Shares to the Escrow Account as set forth in ¶2.2 of this Settlement

Agreement. Medbox and Defendant Bedrick shall use their best reasonable efforts

to assist the transfer of Lead Counsel's proportionate share of the Settlement

Shares. This provision shall apply notwithstanding timely objections to, potential

for appeal from, or collateral attack on the Settlement. Lead Counsel shall

thereafter have sole authority to allocate the attorneys' fees amongst other



Pg. 28


1 Plaintiffs' Counsel in a manner that Lead Counsel in good faith believes reflects the

2 contributions of such counsel to the prosecution and settlement of the Class Action.

3 Defendants shall have no obligation to make any payment other than as provided

4 for herein with respect to funding the Settlement Fund and shall have no

5 responsibility with respect to the allocation of attorneys' fees, costs, and expenses

6 amongst Plaintiffs' Counsel. Any such awards shall be paid solely by the

7 Settlement Fund.

8

6.3 In the event that the Judgment or the order awarding such fees and

9 expenses paid to Lead Counsel pursuant to ¶6.1 and ¶6.2 is reversed or modified, or

10 if the Settlement is cancelled or terminated for any reason, then Lead Counsel shall,

11 in an amount consistent with such reversal or modification, refund such fees,

12 expenses, and/or costs to the Settlement Fund, plus interest thereon at the same rate

13 as earned on the Settlement Fund, within fifteen (15) business days from receiving

14 notice from Medbox's counsel or from a court of competent jurisdiction. Any

15 refunds required pursuant to this paragraph shall be the several obligation of each

16 Plaintiffs' Counsel to make appropriate refunds or repayments to the Settlement

17 Fund.

18

6.4 The procedure for and the allowance or disallowance by the Court of

19 the Fee and Expense Application, to be paid out of the Settlement Fund (including

20 the Settlement Shares), are not part of the Settlement set forth in the Settlement

21 Agreement, and are to be considered by the Court separately from the Court's

22 consideration of the fairness, reasonableness, and adequacy of the Settlement set

23 forth in this Settlement Agreement; and any order or proceeding relating to the Fee

24 and Expense Application, or any appeal from any order relating thereto or reversal

25 or modification thereof, shall not operate to terminate or cancel the Settlement

26 Agreement, or affect or delay the finality of the Judgment approving the Settlement

27 Agreement and the Settlement of the Class Action.

28



Pg. 29


6.5 Released Persons shall have no responsibility for any payment of

attorneys' fees and expenses to Lead Counsel or any Class Member's counsel over

and above payment of the Settlement Fund.

6.6 Released Persons shall have no responsibility or authority for the

allocation among Plaintiffs' Counsel or any Class Member's counsel, and/or any

other Person who may assert some claim thereto, of any Fee and Expense Award

that the Court may make in the Class Action.

7. Conditions of Settlement, Effect of Disapproval, Cancellation, or Termination

7.1 The Effective Date of the Settlement Agreement shall be conditioned

on the occurrence of all of the following events:

(a) Execution of the Settlement Agreement and such other

documents as may be required to obtain final Court approval of the Settlement

Agreement in a form satisfactory to the Settling Parties;

(b) Medbox or its insurers, on behalf of Defendants as provided in

¶2.1 hereof, shall have caused the Cash Amount of the Settlement Fund to be timely

deposited with the Escrow Agent, and Medbox and Defendant Bedrick shall have

caused the Settlement Shares to be timely transferred as provided in ¶2.2 hereof;

(c) The Court has entered the Preliminary Approval Order, as

required by ¶3.1 hereof;

(d) The Court has entered the Judgment that, inter a/ia, dismisses

with prejudice the Class Action, substantially in the form attached hereto as Exhibit

B; and

(e) The Judgment has become Final, as defined in ¶1.17 hereof.

7.2 Upon the occurrence of all of the events referenced in ¶7.1 hereof, any

and all remaining interest or right of Defendants in or to the Settlement Fund, if

any, shall be absolutely and forever extinguished. If all of the conditions specified

in ¶7.1 hereof are not met, then the Settlement Agreement shall be cancelled and



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1 terminated subject to ¶7.3 hereof unless Lead Counsel and counsel for Defendants

2 mutually agree in writing to proceed with the Settlement.

3

7.3 Unless otherwise ordered by the Court, in the event the Settlement

4 Agreement is terminated or does not become effective for any reason, within ten

5 (10) Business Days after written notification of such event is sent by counsel for

6 Defendants or Lead Counsel to the Escrow Agent, the Settlement Fund (including

7 accrued interest), less expenses which have either been incurred or disbursed for

8 Notice and Administration Expenses pursuant to ¶2.4 or ¶2.12 hereof, shall be

9 refunded to Medbox and, if applicable, its insurers pursuant to written instructions

10 from Medbox's counsel. At the request of counsel for Defendants, the Escrow

11 Agent or its designee shall apply for any tax refund owed on the Settlement Fund

12 and pay the proceeds, after deduction of any expenses incurred in connection with

13 such application(s) for refund, at the written direction of counsel to Defendants.

14

7.4 In the event that the Settlement Agreement is not approved by the

15 Court or the Settlement set forth in the Settlement Agreement is terminated or fails

16 to become effective in accordance with its terms, the Settling Parties shall be

17 restored to their respective positions in the Class Action as of the Execution Date of

18 the Settlement Agreement, with all of their respective claims and defenses

19 preserved as they existed on that date. In such event, the terms and provisions of

20 the Settlement Agreement, with the exception of ¶1.1-1.40, ¶2.8, ¶2.12-2.13,

21 ¶6.3, ¶7.5, and ¶8.3-8.4 hereof, shall have no further force and effect with respect

22 to the Settling Parties and shall not be used in the Class Action or in any other

23 proceeding for any purpose, and any Judgment or order entered by the Court in

24 accordance with the terms of the Settlement Agreement shall be treated as vacated,

25 nunc pro tunc, and the Settling Parties shall be deemed to return to their status as of

26 the Execution Date of the Settlement Agreement, and shall be required to present an

27 amended schedule to the Court. No order of the Court or modification or reversal

28 on appeal of any order of the Court concerning the Plan of Distribution or the



Pg. 31


1 amount of any attorneys' fees, costs, expenses, and interest awarded by the Court to

2 Lead Counsel shall constitute grounds for termination of the Settlement Agreement.

3

7.5 Lead Counsel shall have the right but not the obligation to terminate

4 the Settlement thirty (30) Calendar Days after Defendants' failure to timely pay any

5 portion of the Settlement Amount to the Settlement Fund.

6

8. Miscellaneous Provisions

7

8.1 The Settling Parties (a) acknowledge that it is their intent to

8 consummate this Settlement Agreement; (b) agree to cooperate to the extent

9 reasonably necessary to effectuate and implement all terms and conditions of the

10 Settlement Agreement; and (c) agree to exercise their best efforts and to act in good

11 faith to accomplish the terms and conditions of the Settlement Agreement.

12

8.2 The parties to this Settlement Agreement intend the Settlement to be a

13 final and complete resolution of all disputes asserted or which could be asserted by

14 Lead Plaintiffs and the Class Members against the Released Persons with respect to

15 the Released Claims and all claims Defendants and Released Persons have asserted

16 or could assert against Lead Plaintiffs, Class Members, and their attorneys with

17 respect to the Released Claims. The Settling Parties and their counsel agree that

18 they shall not assert or allege in any action, proceeding, or claim that any party

19 hereto violated Rule 11 of the Federal Rules of Civil Procedure, and the Final

20 Judgment shall contain a finding that all Settling Parties and their counsel complied

21 with the requirements of Rule 11 of the Federal Rules of Civil Procedure with

22 respect to the institution, prosecution, defense, and resolution of the Class Action.

23 The Settling Parties agree that the amount paid to the Settlement Fund and the other

24 terms of the Settlement were negotiated in good faith by the Settling Parties and

25 reflect a settlement that was reached voluntarily after consultation with experienced

26 and competent legal counsel, and with the assistance of an experienced jurist and

27 mediator, the Hon. Layn R. Phillips (Ret.). The Settling Parties reserve their right

28 to rebut, in a manner that such party determines to be appropriate, any contention



Pg. 32


1 made in any public foram regarding the Class Action, including that the Class

2 Action was brought or defended in bad faith or without a reasonable basis.

3

8.3 The Settlement shall not be deemed an admission by any Settling Party

4 as to the merits of any claim or defense and neither the Settlement Agreement nor

5 the Settlement, nor any act performed or document executed pursuant to or in

6 furtherance of the Settlement Agreement or the Settlement nor any of their terms,

7 nor any press release or other statement or report by the Settling Parties or by others

8 concerning this Settlement Agreement or the Settlement or their terms (a) is or may

9 be deemed to be or may be used as an admission of, or evidence of, the validity of

10 any Released Claim, or of any wrongdoing or liability of the Released Persons; or

11 (b) is or may be deemed to be or may be used as an admission of, or evidence of,

12 any fault or omission of any of the Released Persons; or (c) is or may be deemed to

13 be or may be used as an admission or evidence that any claims asserted by Lead

14 Plaintiffs were not valid or that the amount recoverable was not greater than the

15 Settlement amount, in any civil, criminal, or administrative proceeding in any court,

16 administrative agency, or other tribunal. The Released Persons may file the

17 Settlement Agreement and/or the Judgment in any action that may be brought

18 against them in order to support a defense or counterclaim based on principles of

19 res judicata, collateral estoppel, release, good faith settlement, judgment bar or

20 reduction, or any other theory of claim preclusion or issue preclusion or similar

21 defense or counterclaim.

22

8.4 All agreements made and orders entered during the course of the Class

23 Action relating to the confidentiality of information shall survive this Settlement

24 Agreement.

25

8.5 All of the Exhibits to the Settlement Agreement are material and

26 integral parts hereof and are fully incorporated herein by this reference.

27

28



Pg. 33


1

8.6 The Settlement Agreement may be amended or modified only by a

2 written instrument signed by or on behalf of all Settling Parties or their respective

3

successors-in-interest.

4

8.7 The Settlement Agreement and the Exhibits attached hereto constitute

5 the entire agreement among the Settling Parties, and supersede any and all prior

6 agreements, written or oral, between the Settling Parties. No representations,

7 warranties, or inducements have been made to any Settling Party concerning the

8 Settlement Agreement or its Exhibits other than the representations, warranties, and

9 covenants contained and memorialized in such documents. Except as otherwise

10 provided herein (or, as between Defendants, in any agreement between them), each

11

Settling Party shall bear its own fees and costs.

12

8.8 Neither the Class Members nor Defendants shall be bound by the

13 Settlement Agreement if the Court modifies material terms thereof, provided,

14 however, that it shall not be a basis for Class Members to terminate the Settlement

15 if the Court modifies any proposed Plan of Distribution or criteria for allocation of

16 the Net Settlement Fund amongst Class Members, or if the Plan of Distribution is

17 modified on appeal. Nor shall it be a basis to terminate the Settlement Agreement

18 if the Court disapproves of or modifies the terms of this Settlement Agreement with

19 respect to attorneys' fees or expenses or the distribution of the Net Settlement Fund.

20 Notwithstanding any such modification of the terms or Plan of Distribution or the

21 Settlement Agreement with respect to attorneys' fees or expenses, Defendants shall

22 be entitled to all benefits of the Settlement and shall not, under any circumstances,

23 be called upon to contribute additional funds to the Settlement Fund.

24

8.9 Lead Counsel, on behalf of the Class, is expressly authorized by Lead

25 Plaintiffs to take all appropriate action required or permitted to be taken by the

26 Class pursuant to the Settlement Agreement to effectuate its terms and also is

27 expressly authorized to enter into any modifications or amendments to the

28 Settlement Agreement on behalf of the Class which it deems appropriate.



Pg. 34

Case :15-cvM0426BRO-JEM Document 88-3 fled 12/18/15 of 106 Page ID #:111O

1

8.10 Lead Plaintiffs and Lead Counsel represent and warrant that none of

2 Lead Plaintiffs' claims or causes of action referred to in the Class Action or this

3 Settlement Agreement has been assigned, encumbered, or in any manner transferred

4 in whole or in part.

5

8.11 Each counsel or other Person executing the Settlement Agreement or

6 any of its Exhibits on behalf of any Settling Party hereby warrants that such Person

7 has the full authority to do so.

8

8.12 In the event of a final order of a court of competent jurisdiction, not

9 subject to any further proceedings, determining the transfer of the Settlement Fund,

10 or any portion thereof, by or on behalf of any Defendant to be a preference,

11 voidable transfer, fraudulent transfer or conveyance, or similar transaction under

12 Title 11 of the United States Code (Bankruptcy) or applicable state law and any

13 portion thereof is required to be refunded and such amount is not promptly

14 deposited in the Settlement Fund by or on behalf of any of Defendants, then, at the

15 election of Lead Counsel, as to the Defendant as to whom such order applies, the

16 Settlement may be terminated and the releases given and the Judgment entered in

17 favor of such Defendant shall be null and void. In such instance, the releases given

18 and the Judgment entered in favor of other Defendants shall remain in full force and

19 effect. Alternatively, Lead Counsel may elect to terminate the entire Settlement as

20 to all Defendants and all of the releases given and judgments entered in favor of

21 Defendants pursuant to the Settlement shall be null and void and Lead Plaintiffs

22 may proceed as if the Settlement were never entered into.

23

8.13 This Settlement Agreement shall not be construed more strictly against

24 one party than another merely by virtue of the fact that it, or any part of it, may

25 have been prepared by counsel for one of the Settling Parties, it being recognized

26 that this Settlement Agreement is the result of arm's-length negotiations between

27 the parties and all parties have contributed substantially and materially to its

28 preparation.



Pg. 35


1

8.14 The headings herein are used for the purpose of convenience and are

2 not intended to have legal effect.

3

8.15 Medbox shall use its best efforts to provide Lead Plaintiffs with

4 transfer records, or help Lead Plaintiffs procure transfer records or other

5 appropriate information that will assist in the identification of Class Members for

6 the purpose of providing Class Members with notice of the proposed Settlement.

7

8.16 The Settlement Agreement may be executed in one or more

8 counterparts. All executed counterparts and each of them shall be deemed to be one

9 and the same instrument. A complete set of executed counterparts shall be filed

10 with the Court.

11

8.17 The Settlement Agreement shall be binding upon, and inure to the

12 benefit of, the heirs, successors, assigns, executors, administrators, affiliates

13 (including parent companies), and legal representatives of the Settling Parties

14 hereto. No assignment shall relieve any party hereto of obligations hereunder.

15

8.18 The Court shall retain jurisdiction with respect to implementation and

16 enforcement of the terms of the Settlement Agreement, and all Settling Parties

17 hereto submit to the jurisdiction of the Court for purposes of implementing and

18 enforcing the Settlement embodied in the Settlement Agreement.

19

8.19 Pending approval of the Court of the Settlement Agreement and its

20 Exhibits, all proceedings in the Class Action shall be stayed and all members of the

21 Class shall be barred and enjoined from prosecuting any of the Released Claims

22 against any of the Released Persons.

23

8.20 This Settlement Agreement and the Exhibits hereto shall be considered

24 to have been negotiated, executed, and delivered, and to be wholly performed, in

25 the State of California, and the rights and obligations of the parties to the

26 Settlement Agreement shall be construed and enforced in accordance with, and

27 governed by, the internal, substantive laws of the State of California without giving

28 effect to that State's choice-of-law principles.



Pg. 36

Case 2:15-cv-00426-BRO-JEM Document 88-3 Filed l2/18/15 of 106 Page D #:1112

8.21 Notices required or permitted by this Stipulation shall be submitted

either by overnight mail or in person as follows:

Notice to Plaintiffs: Notice to Defendants:

Frank J. Johnson JOHNSON & WEAVER, LLP 600 West Broadway Suite 1540 San Diego, CA 92101

MllpR

T Kapl

En

NAT L PS & PHILLIPS, LLP

Park Tower 695 Town Center Drive 14th Floor Costa Mesa, CA 92626

IN WITNESS WHEREOF, the Settling Parties hereto have caused the

Settlement Agreement to be executed, by their duly authorized attorneys, dated

December 17, 2015.

Respectfully submitted,

JOHNSON & WEAVER, LLP FRANK I. JOHNSON SHAWN E. FIELDS

(/ •:if' 2 ilk 1c J. iOHNSN

600 West Broadway, Suite 1540 San Diego, CA 92101 Telephone: 619/230-0063 619/255-1856 (fax) [email protected] [email protected]

Lead Counsel for Lead Plaintiffs 22

23

24

25

26

27

28

34 SETTLEMENTAGREEMENT Case No. 2:15-C V-00426-BR0 (JEMx)

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ELi Pg. 37

Case 2:15-cv-00426-BRO-JEM Document 88-3 fled 12/18/15 of 106 Page D #:1113

MANATET?1WELPS & PHILLIPS,

Park Tower 695 Town Center Drive, 14th Floor Costa Mesa, CA 92626 Telephone: 714/371-2500 714/371-2550 (fax) PKaplanmanatt.com

Counsel for Defendant Medbox, Inc.

HORWITZ + ARMSTRONG LLP JOHN R. ARMSTRONG MATTHEW S. HENDERSON

26475 Rancho Parkway South Lake Forest, CA 92630 Telephone: 949/540-6540 9491540-6583 (fax) [email protected] mhendersonhorwitzarmstrong.com

Counsel for Defendants Timothy Quintan il/a and Q Accountancy Corporation

22

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Case No. 215-CV-00426-BRO (JEMx)

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ELi Pg. 38


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MANATT, PHELPS & PHILLIPS, LLP PHILLIP R. KAPLAN

PHILLIP R. KAPLAN

Park Tower 695 Town Center Drive, 14th Floor Costa Mesa, CA 92626 Telephone: 714/371-2500 714/371-2550 (fax) [email protected]

Counsel for Defendant Medbox, Inc.

HORWTTZ + ARMSTRONG LLP JOHN R. ARMSTRONG MATTHEW S. HENDERSON

Eel no lam 141111111,111 A LVJ LIS 1101

26475 Rancho Parkway South Lake Forest, CA 92630 Telephone: 949/540-6540 2491540-6583 (fax) armstrongorwitzarmstrong .com

mhendersonhorwitzarmstrong. corn

Counselfor Defendants Timothy Quintanilla and Q Accountancy Corporation



Case 2:15-cv-00426-BRO-JEM Document 88-3 Filed l2/18/15 of 106 Page UD #:1115

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Case 2:15-cv-00426-BRO-JEM Document 88-3 Filed 12/18/15 of 106 Page ID #:1116

ENENSTEIN RIBAKOFF LaVINA & PHAM, APC

ROBERT A. RABBAT RYAN T. WENGER

ROBERT A. RABBAT

12121 Wilshire Boulevard, Suite 600 Los Angeles, CA 90025 Telephone: 310/899-2070 310/496-1930 (fax) [email protected] rwengerçenensternlaw.com

Counsel for Defendant Pejman Vincent Mehdizadeh

CONANT LAW FIRM, PLC PAUL A. CONANT

A A7r! P&UL A.LCONANT

2398 East Camelback Road, Suite 925 Phoenix, AZ 85016 Telephone: 602/508-9010 602/508-9015 (fax) paulconantconantlawfirrn.com

Counsel for Defendant Bruce Bedrick

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36 SETTLEMENTAGREEMENT Case No, 2:I5-CV-00426-BRO(JEMx)

ELi Pg. 41

Case 2:15-cv-00426-BRO-JEM Document 883 Red 12/18/15 of 106 Page D

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Case 2:15-cv-00426-BRO-JEM Document 88-3 fled 12/18/15 of 106 Page ID #:1119

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BIENERT, MILLER & KATZMAN, PLC THOMAS H. BIENERT, JR.

THOMAS H. BIENERT, JR.

903 Calle Amanecer, Suite 350 San Clemente, CA. 92673 Telephone .949/369-3700 949/369-3701 (fax) [email protected]

Counsel for Defendants Guy Marsala and Douglas Mitchell

FENNEMORE & CRAIG, P.C. PATRICK SHEEHAN

PATRICK SHEEHAN

300 S. Fourth Street Suite 1400 Las Vegas, NV 891151 Telephone: 702/692-8000 702/692-8099 (fax) [email protected]

Counsel for Defendants J. Mitchell Lowe and Ned 'Siegel

GRANT, GENOVESE & BARATFA, LLP GORDO Y..

UORDO( U. MAY

2030 Main Street, Suite 1600 Irvine CA 92614 Telepfione: 949/660-1600 ggmggb-law,com

Counsel for Defendant Thomas Iwansld

37 SErFLEMENTAGREEMENT Case No. 2:15-C V-00426-Bl4O (JEMx)

ELi Pg. 44

Case 2:15-cvM0426BROJEM Document 88-3 fled 12/18/15 of 106 Page ID #:1120

EXHIBIT A

ELi Pg. 45


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JOSH CRYSTAL Individually Case No.: 2:1 5-CV-00426-BRO (JEMx) And On Behalf O All Others Similarly Situated,

CLASS ACTION Plaintiff,

V. Exhibit A

MEDBOX, INC., PEJMAN [PROPOSED] PRELIMINARY VINCENT MEHDIZADEH, APPROVAL ORDER BRUCE BEDRICK, THOMAS IWANSKI, GUY MARSALA, and DOUGLAS MITCHELL,

Defendants.

[PROPOSED] PRELIMINARY APPROVAL ORDER

WHEREAS, (i) Lead Plaintiffs Peter Phan and Paul Poon ("Lead Plaintiffs")

and (ii) Medbox, Inc. ("Medbox"), Pejman Vincent Mehdizadeh, Bruce Bedrick,

Thomas Iwanski, Guy Marsala, C. Douglas Mitchell, J. Mitchell Lowe, Ned Siegel,

Timothy Quintanilla, and Q Accountancy Corporation (collectively, "Defendants")'

have agreed to a settlement of all claims asserted in the Class Action against all of

the Defendants;

WHEREAS, that Settlement was entered into through a Stipulation and

Lead Plaintiffs, on behalf of themselves and the Class, and Defendants are collectively referred to as the "Settling Parties."

ELi Pg. 46

1.


1 Agreement of Settlement, dated as of December 17, 2015 (the "Settlement

2 Agreement"), which is subject to review under Rule 23 of the Federal Rules of

3 Civil Procedure, and which, together with the exhibits thereto, sets forth the terms

4 and conditions for the proposed Settlement of the claims alleged in the

5 Consolidated Complaint filed in the Class Action on the merits and with prejudice;

6

WHEREAS, all capitalized terms used herein shall have the same meaning as

7 in the Settlement Agreement; and

8

WHEREAS, this Court having read and considered the Settlement

9 Agreement, the proposed Notice of Proposed Class Action Settlement ("Mailed

10 Notice"), the Summary Notice of Proposed Class Action Settlement ("Summary

11 Notice"), the proposed Proof of Claim and Release, and the [Proposed] Final

12 Judgment and Order of Dismissal with Prejudice ("Judgment"), and finding that

13 substantial and sufficient grounds exist for entering this Preliminary Approval

14 Order:

15

NOW, THEREFORE, IT IS HEREBY ORDERED, this

day of

16

2016, that:

17

1. The Court hereby preliminarily approves the Settlement Agreement

18 and the Settlement set forth therein, subject to further consideration at the Final

19 Settlement Approval Hearing described below.

20

2. Pending further order of the Court, all litigation activity in the Class

21 Action is hereby stayed, except that which is contemplated herein, in the Settlement

22 Agreement, or otherwise as is necessary to effectuate the Settlement, and all

23 hearings, deadlines, and other proceedings in this Class Action, except insofar as

24 they relate to the Settlement, are hereby taken off calendar.

25

3. Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil

26 Procedure and for the purposes of the Settlement only, claims in the Class Action

27 against the Defendants are hereby preliminarily certified as a class action on behalf

28 of all Persons who purchased or otherwise acquired Medbox common stock

ELi Pg. 47

2.


1 between April 2, 2013 and December 29, 2014, inclusive, and who were damaged

2 thereby. Excluded from the Settlement Class are: (1) Defendants and their families,

3 the officers and directors of the Company, at all relevant times, members of their

4 families and their legal representatives, heirs, successors, or assigns, and any entity

5 in which Defendants have or had a controlling interest; (2) any persons who have

6 separately filed actions against one or more of Defendants, based in whole or in part

7 on any claim arising out of or relating to any of the alleged acts, omissions,

8 misrepresentations, facts, events, matters, transactions, or occurrences referred to in

9 the Class Action or otherwise alleged, asserted, or contended in the Class Action;

10 and (3) those persons or entities who submit valid and timely requests for exclusion

11 from the Class in accordance with this Order.

12

4. This Court finds, preliminarily and for purposes of Settlement only,

13 that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal

14 Rules of Civil Procedure have been satisfied in that: (a) the number of Class

15 Members is so numerous that joinder of all members of the Class is impracticable;

16 (b) there are questions of law and fact common to the Class; (c) the claims of Lead

17 Plaintiffs are typical of the claims of the Class they seek to represent; (d) Lead

18 Plaintiffs will fairly and adequately represent the interests of the Class; (e) the

19 questions of law and fact common to the Class predominate over any questions

20 affecting only individual members of the Class; and (f) a class action is superior to

21 other available methods for the fair and efficient adjudication of the controversy.

22

5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure,

23 preliminarily and for the purposes of settlement only, Lead Plaintiffs are certified as

24 the Class representatives on behalf of the Class and Lead Counsel previously

25 selected by Lead Plaintiffs and appointed by the Court, is hereby appointed as Lead

26 Counsel for the Class.

27

6. A hearing pursuant to Federal Rule of Civil Procedure 23(e) (the

28 "Final Settlement Approval Hearing") is hereby scheduled to be held before this

3.

ELi Pg. 48


1 Court on [At the Court's convenience, on or after one-hundred (100) Calendar

2 Days following the entry of the Preliminary Approval Order]

3

2016 at 1:30 p.m. for the following purposes:

4

(a) to finally determine whether the Class Action satisfies the applicable

5

prerequisites for class action treatment under Federal Rules of Civil

6

Procedure 23(a) and (b) for purposes of settlement;

7

(b) to determine whether the Settlement is fair, reasonable, and adequate,

8

and should be approved by this Court;

9

(c) to determine whether the Judgment as provided under the Settlement

10

Agreement, and submitted as Exhibit B to the Settlement Agreement, should

11

be entered, dismissing all claims in the Consolidated Complaint against all of

12

the Defendants, on the merits and with prejudice, and to determine whether

13

the release of Released Claims against any and all Released Persons, as set

14

forth in the Settlement Agreement, should be ordered;

15

(d) to determine whether the proposed Plan of Distribution for the Net

16

Settlement Fund is fair and reasonable and should be approved by this Court;

17

(e) to consider the application of Lead Counsel for an award of attorneys'

18

fees and expenses; and

19

(f) to rule upon such other matters as the Court may deem appropriate.

20

7. The Court reserves the right to approve the Settlement with or without

21 modification and with or without further notice of any kind. The Court further

22 reserves the right to enter its Judgment approving the Settlement Agreement and

23 dismissing the claims in the Consolidated Complaint as to the Defendants, on the

24 merits and with prejudice, regardless of whether it has approved the Plan of

25 Distribution or awarded attorneys' fees and expenses to Lead Counsel.

26

8. The Court approves the form, substance and requirements of: (a) the

27 Mailed Notice, (b) the Summary Notice, and (c) the Proof of Claim and Release.

28

9. Lead Counsel has the authority to enter into the Settlement Agreement

4.

ELi Pg. 49


1 on behalf of the Class and is authorized to act on behalf of the members of the Class

2 with respect to all acts or consents required by or that may be given pursuant to the

3 Settlement Agreement or such other acts that are reasonably necessary to

4 consummate the Settlement.

5

10. The Court approves the appointment of Strategic Claims Services as

6 the Claims Administrator, and approves the payment of reasonable administration

7 costs to the Claims Administrator from the proceeds of the Settlement, not to

8 exceed $200,000.00 without thither Court order.

9

11. Within ten (10) Business Days of entry of this Order, Defendants are

10 to arrange for Medbox or its transfer agent to provide to the Claims Administrator

11 in a computer-readable format acceptable to the Claims Administrator, the last

12 known names and addresses of all shareholders of record during the Class Period.

13

12. Within ten (10) Business Days of Medbox's transfer agent providing

14 the Claims Administrator with the last known names and addresses of all

15 shareholders of record as required by ¶11 of this Order ("Notice Date"), the Claims

16 Administrator shall:

17

(a) cause to be mailed to all shareholders of record identified by Medbox' s

18

transfer agent the Mailed Notice, substantially in the form of Exhibit A-i

19

attached to the Settlement Agreement, and a Proof of Claim and Release,

20

substantially in the form of Exhibit A-2 attached to the Settlement

21

Agreement. The Claims Administrator shall also make reasonable efforts to

22

give notice to nominee owners such as brokerage firms and other persons or

23

entities who purchased Medbox during the Class Period. Such nominee

24

purchasers are hereby directed to forward copies of the Mailed Notice and

25

Proof of Claim and Release to their beneficial owners or to provide the

26

Claims Administrator with lists of the names and addresses of the beneficial

27

owners. Promptly upon receipt of any such information from nominee

28

purchasers, the Claims Administrator shall cause the Mailed Notice and

ELi Pg. 50

5.


1

Proof of Claim and Release to be mailed to such beneficial owners.

2

Additional copies of the Mailed Notice and Proof of Claim and Release shall

3

be made available to any record holder requesting the same for the purpose

4

of distribution to beneficial owners;

5

(b) cause the Settlement Agreement and the Mailed Notice and Proof of

6

Claim and Release substantially in the forms submitted as Exhibits A-i and

7

A-2 to the Settlement Agreement, respectively, to be posted on the Claims

8

Administrator's web site; and

9

(c) cause, not later than seven (7) Business Days following the Notice

10

Date, the Summary Notice to be published once over a national business

11

internet wire service and once in Investor's Business Daily.

12

13. Not later than thirty-five (35) Calendar Days prior to the Final

13 Settlement Approval Hearing, Lead Counsel shall serve on Defendants' counsel and

14 file with the Court proof, by affidavit or declaration, of such mailing and

15 publishing.

16

14. The form and method set forth herein of notifying the Class of the

17 Settlement and its terms and conditions meet the requirements of due process and

18 Rule 23 of the Federal Rules of Civil Procedure and Section 21D(a)(7) of the

19 Exchange Act, 15 U.S.C. § 78u-4(a)(7), as amended by the Private Securities

20 Litigation Reform Act of 1995; constitutes the best notice practicable under the

21 circumstances; and shall constitute due and sufficient notice to all persons and

22 entities entitled thereto. Under no circumstances shall any Class Member be

23 relieved from the terms of the Settlement, including the releases provided for

24 therein, based upon the contention or proof that such Class Member failed to

25 receive actual or adequate notice.

26

15. To share in the net proceeds of the Settlement in the event the

27 Settlement is effected in accordance with all of the terms and conditions thereof,

28 each Class Member shall take the following action and be subject to the following

6.

ELi Pg. Si


1

conditions:

2

(a) A properly executed Proof of Claim and Release, substantially in the

3

form submitted as Exhibit A-2 to the Settlement Agreement, shall be

4

submitted, by first-class mail, postage prepaid, postmarked no later than

5

ninety (90) Calendar Days from the Notice Date, to the Post Office Box

6

address listed in the Mailed Notice. Such deadline may be further extended

7

by Order of this Court. Each Proof of Claim and Release shall be deemed to

8

have been submitted when postmarked (if properly addressed and mailed by

9

first-class mail) provided it is actually received before the filing of a motion

10

for an Order of the Court approving distribution of the Net Settlement Fund.

11

Any Proof of Claim and Release submitted in any other manner shall be

12

deemed to have been submitted when it was actually received at the address

13

designated in the Mailed Notice;

14

(b) The Proof of Claim and Release submitted by the Class Member must:

15

(i) be fully and properly completed, without any material deletions or

16

modifications of any form provided to the Class Member; (ii) state, for the

17

Class Member, all purchases of Medbox shares during the Class Period,

18

including the number and price of the shares purchased and the date of each

19

purchase, the number and price of shares sold during the Class Period; (iii) be

20

accompanied by adequate documentation to demonstrate the transaction(s)

21

reported therein, in the form of broker confirmation slips, broker account

22

statements, an authorized statement from the broker containing the

23

transactional information found in a broker confirmation slip, or such other

24

documentation as is deemed adequate by Lead Counsel or the Claims

25

Administrator; (iv) be executed under penalty of perjury; and (v) be

26

accompanied, if the person executing the Proof of Claim and Release is

27

acting in a representative capacity, by a certification of the executor's current

28

authority to act on behalf of the Class Member;

7.

ELi Pg. 52


1

(c) Once the Claims Administrator has considered a timely submitted

2

Proof of Claim and Release, Lead Counsel, through the Claims

3

Administrator, shall determine, based upon the Plan of Distribution, whether

4

such claim is valid, deficient, or rejected. For each claim determined to be

5

either deficient or rejected, the Claims Administrator shall send a deficiency

6

letter or rejection letter as appropriate, describing the basis on which the

7

claim was so determined; and

8

(d) As part of the Proof of Claim and Release, each Class Member shall

9

submit to the jurisdiction of the Court with respect to the claim submitted.

10

16. Class Members shall be bound by all determinations and judgments in

11 the Class Action, whether or not they submit a valid and timely Proof of Claim and

12 Release and are thereby entitled to share in the net proceeds of the Settlement,

13 unless such Person(s) request exclusion from the Class in a timely and proper

14 manner, as hereinafter provided:

15

(a) A person eligible to be a Class Member, but who wishes to be

16

excluded from the Class, may request exclusion by mailing the request in

17

written form, by first-class mail, postage prepaid, postmarked no later than

18

twenty-one (21) Calendar Days prior to the Final Settlement Approval

19

Hearing, to the address listed in the Mailed Notice. However, a Class

20

Member may submit a written revocation of a request for exclusion up until

21

two (2) Business Days prior to the date of the Final Settlement Approval

22

Hearing and receive payments pursuant to this Settlement and the Settlement

23

Agreement provided the Class Member also timely submits a valid Proof of

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Claim and Release;

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(b) The request for exclusion shall clearly indicate the name and address

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of the person seeking exclusion and that the sender specifically requests to be

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excluded from the Class;

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(c) The request for exclusion shall be executed, under penalty of perjury,

ELi Pg. 53


1

by the person requesting exclusion from the Class, and accompanied, if said

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person is acting in a representative capacity, by a certification of the person's

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current authority to act on behalf of the person requesting exclusion from the

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Class;

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(d) The request for exclusion shall state, for the Class Member, all

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purchases of Medbox common stock during the Class Period, including the

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number and price of the shares purchased and the date of each purchase, the

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number and price of shares sold during the Class Period and the date of each

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sale; and

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(e) It is also requested that such persons provide their telephone number or

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other contact information.

12 The request for exclusion shall not be effective unless the potential Class Member

13 provides the required information set forth in this ¶16, and is made within the time

14 stated above, or the exclusion is otherwise accepted by the Court. Class Members

15 requesting exclusion from the Class shall not be entitled to receive any payment out

16 of the Net Settlement Fund as described in the Mailed Notice and Summary Notice.

17

17. Any Class Member may appear and show cause, if he, she or it has

18 any, why the proposed Settlement of the Class Action should or should not be

19 approved as fair, reasonable, and adequate, why a judgment should or should not be

20 entered thereon, why the Plan of Distribution should or should not be approved

21 and/or why attorneys' fees and expenses should or should not be awarded to

22 counsel for Lead Plaintiffs; provided, however, that no Class Member or any other

23 Person shall be heard or entitled to contest such matters, unless that Person has

24 delivered by hand or sent by first-class mail written objections and copies of any

25 papers and briefs such that they are received on or before twenty-one (21) Calendar

26 Days prior to the Final Settlement Approval Hearing by: Frank J. Johnson, Johnson

27 & Weaver, LLP, 600 West Broadway, Suite 1540, San Diego, CA 92101, as Lead

28 Counsel for Lead Plaintiffs and the Class, and by Phillip R. Kaplan, Manatt, Phelps

ELi Pg. 54

9.


1 & Phillips, LLP, Park Tower, 695 Town Center Drive, 14th Floor, Costa Mesa, CA

2 92626, as Defendants' Counsel designee. Any such objections, papers, and briefs

3 shall also be filed with the Clerk of the United States District Court for the Central

4 District of California, Western Division, on or before twenty-one (21) Calendar

5 Days prior to the Final Settlement Approval Hearing. Any objection must include:

6 (a) the full name, address and phone number of the objecting Class Member; (b) a

7 list of all of the Class Member's transactions involving Medbox common stock

8 during the Class Period; (c) a written statement of all grounds for the objection; (d)

9 identify any case, by name, court, and docket number, in which the objector or his

10 attorney, if any, has objected to a settlement in the last three years; and (e) the

11 objector's signature, even if represented by counsel. Class Members intending to

12 object and present evidence at the Final Settlement Approval Hearing must include

13 in their written objections the identity of any witnesses they may call to testify and

14 exhibits they intend to introduce into evidence at the hearing. Any Class Member

15 who does not make his, her or its objection in the manner provided shall be deemed

16 to have waived such objection and shall forever be foreclosed from making any

17 objection to the fairness or adequacy of the settlement as set forth in the Settlement

18 Agreement, to the Plan of Distribution, or to the award of attorneys' fees and

19 expenses to Lead Counsel, unless otherwise ordered by the Court.

20

18. All funds held by the Escrow Agent shall be deemed and considered to

21 be in custodia legis of the Court, and shall remain subject to the jurisdiction of the

22 Court, until such time as such funds shall be distributed pursuant to the Settlement

23 Agreement and/or further order(s) of the Court.

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19. All papers in support of the Settlement, the Plan of Distribution, and

25 request by Lead Counsel for an award of attorneys' fees and expenses, shall be filed

26 and sewed thirty-five (35) Calendar Days prior to the Final Settlement Approval

27 Hearing. Any reply in further support of the Settlement, the Plan of Distribution,

28 any application by Lead Counsel for attorneys' fees and expenses, and any other

10.

ELi Pg. 55


1 matter including, but not limited to, a response to an objection, if any, shall be filed

2 and sewed by Lead Counsel seven (7) Calendar Days prior to the Final Settlement

3 Approval Hearing.

4

20. All expenses incurred in identifying and notifying Class Members, as

5 well as administering the Settlement Fund, shall be paid as set forth in the

6 Settlement Agreement. In the event the Settlement is not approved by the Court, or

7 otherwise fails to become effective, neither Lead Plaintiffs nor any of their counsel

8 shall have any obligation to repay any amounts incurred or properly disbursed

9 pursuant to ¶2.4 or ¶2.12 of the Settlement Agreement.

10

21. In the event that the Settlement is not consummated pursuant to its

11 terms, the Settlement Agreement, except as otherwise provided therein, including

12 any amendment(s) thereto, and this Order, shall be null and void, of no thither force

13 or effect, and without prejudice to any Settling Party, and each Settling Party shall

14 be restored to their, his, her, or its respective position as it existed as of the

15 Execution Date of the Settlement Agreement.

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22. Neither the Settlement Agreement, nor this Order, nor any of their

17 terms or provisions, nor any of the negotiations or proceedings connected with it,

18 nor any act performed or document signed in connection with the Settlement, shall,

19 in this or any other court, administrative agency, arbitration foram or other tribunal,

20 constitute or be construed as an admission or concession of, or evidence of, or be

21 deemed to create any inference of, the truth of any of the allegations in the Class

22 Action, or of any liability, fault, or wrongdoing of any kind on the part of any of the

23

Settling Parties.

24

23. The Court reserves the right to continue or adjourn the Final

25 Settlement Approval Hearing without any further notice to Class Members, and

26 retains jurisdiction over the Class Action to consider all further applications arising

27 out of or connected with the Settlement. The Court may approve the Settlement,

28 with such modifications as may be agreed to by the Settling Parties, if appropriate,

11.

ELi Pg. 56


1 without further notice to the Class.

2

SO ORDERED this _ day of, 2016.

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5 HON. BEVERLY REID O'CONNELL

UNITED STATES DISTRICT JUDGE 6

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12. ELi

Pg. 57


EXHIBIT A-i

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JOSH CRYSTAL, Individually Case No.: 2:15-CV-00426-BRO (JEMx) And On Behalf Of All Others Similarly Situated,


V. Exhibit A-i

IVIEDBOX, INC., PEJIVIAN Notice of Proposed Class Action VINCENT MEHDIZADEH, Settlement BRUCE BEDRICK, THOMAS IWANSKI, GUY MARSALA, and DOUGLAS MITCHELL,

Defendants.

A Federal Court Authorized This Notice.

This Is Not A Solicitation From A Lawyer.

If you purchased or otherwise acquired shares of Medbox, Inc. common stock between April 2, 2013, and December 29, 2014, inclusive, and incurred damages and are not otherwise excluded from the Class (see Question 6 below), you could receive a payment from a class action settlement.'

This Notice incorporates by reference the definitions in the Stipulation and Agreement of Settlement dated as of December 17, 2015 ("Settlement Agreement"), and all capitalized terms used, but not defined herein, shall have the same meanings as in the Settlement Agreement. The Settlement Agreement can be obtained at www.strategicclaims.net .

NOTICE OF PROPOSED CLASS ACTION 1. SETTLEMENT

Ex. 1 Case No. 2:15-CV-00426-BRO (JEMX)

Pg. 59


1

NOTICE OF PENDENCY OF CLASS ACTION. Please be advised that

2 your rights may be affected by a putative class action lawsuit pending in this Court

3 (the "Class Action") if you purchased or otherwise acquired shares of Medbox, Inc.

4 common stock between April 2, 2013, and December 29, 2014, inclusive.

5

NOTICE OF SETTLEMENT. Please also be advised that the Court-

6 appointed Lead Plaintiffs, Peter Phan and Paul Poon, on behalf of themselves and

7 the Class (defined below), have reached a settlement of the Class Action with

8 Defendants Medbox, Inc. ("Medbox" or the "Company"), Pejman Vincent

9 Mehdizadeh, Bruce Bedrick, Thomas Iwanski, Guy Marsala, C. Douglas Mitchell,

10 J. Mitchell Lowe, Ned Siegel, Timothy Quintanilla, and Q Accountancy

11 Corporation for total consideration of One Million Eight Hundred Fifty Thousand

12 United States Dollars (USD $1,850,000.00) in cash and Two Million Three

13 Hundred Thousand (2,300,000) shares of Medbox common stock, that will resolve

14 all claims in the Class Action (the "Settlement").

15 This Notice explains important rights you may have, including possible receipt 16 of compensation from the Settlement. Your legal rights are affected whether

17 or not you act. Please read this Notice carefully.

18 SUMMARY OF KEY PROVISIONS AND REASONS FOR SETTLEMENT

19

Security and Time Period: Medbox common stock (stock symbol: IVIDBX)

20 purchased or otherwise acquired between April 2, 2013, and December 29, 2014,

21 inclusive (the "Class Period"). Excluded from the Class are: (1) Defendants and

22 their families, the officers and directors of the Company, at all relevant times,

23 members of their families and their legal representatives, heirs, successors, or

24 assigns, and any entity in which Defendants have or had a controlling interest;

25 (2) any Persons who have separately filed actions against one or more of

26 Defendants, based in whole or in part on any claim arising out of or relating to any

27 of the alleged acts, omissions, misrepresentations, facts, events, matters,

28 transactions, or occurrences referred to in the Class Action or otherwise alleged,


ELi Case No. 2:15-CV-00426-BRO (JEMX)

Pg. 60


1 asserted, or contended in the Class Action; and (3) those persons or entities who

2 submit valid and timely requests for exclusion pursuant to this Notice.

3

Settlement Fund: USD $1,850,000.00 (One Million Eight Hundred Fifty

4 Thousand United States Dollars) in cash and 2,300,000 (Two Million Three

5 Hundred Thousand) shares of Medbox common stock. Your recovery will depend

6 on the number of shares of Medbox common stock you, and other Class Members

7 who file claims, purchased and sold and the prices at which you, and the other Class

8 Members who file claims, purchased and sold those shares. Based on the

9 information currently available to Lead Plaintiffs and the analysis performed by

10 their damages expert, it is estimated that if Class Members submit claims for 100%

11 of the shares eligible for distribution under the Plan of Distribution (described

12 below), the estimated average value of the distribution per share of common stock

13 will be $0.21 per share, before deduction of Court-approved fees and expenses,

14 including the cost of notifying Class Members and settlement administration and

15 any attorneys' fees and expenses awarded by the Court to counsel for Lead

16 Plaintiffs, based on a valuation of the stock component of the Settlement at

17 $0014 per share, the closing price of Medbox common stock on December 17,

18 2015. The Plan of Distribution is included in this Notice and may be modified by

19 the Court without further notice. Historically, actual claims rates are less than

20 100%, which result in higher distributions per share. A Class Member's actual

21 recovery will be a proportion of the Net Settlement Fund (the Settlement Fund less

22 Taxes and Tax Expenses, Notice and Administration Expenses, and attorneys' fees

23 and expenses awarded to Lead Counsel) determined by that claimant's recognized

24 claim as compared to the total recognized claims of all Class Members who submit

25 valid Proof of Claim and Release forms.

26

Reasons for Settlement: Avoids the costs and risks associated with

27 continued litigation, including the danger of no recovery.

28 NOTICE OF PROPOSED CLASS ACTION

3. SETTLEMENT


Pg. 61


1

Lead Plaintiffs believe that the claims asserted in the Class Action have merit

2 and that the facts developed to date support the claims asserted. Nevertheless, Lead

3 Plaintiffs recognize and acknowledge the uncertain outcome and the risk of any

4 litigation, especially in complex actions such as the Class Action, as well as the

5 difficulties and delays inherent in such litigation. Lead Plaintiffs and their counsel

6 believe that the Settlement provides the Class with a substantial benefit now in lieu

7 of engaging in thither litigation, with the risk of no recovery.

8

Defendants have denied, and continue to deny, all charges of wrongdoing or

9 liability against them arising out of any of the claims alleged in the Class Action.

10 Nonetheless, Defendants have concluded that further conduct of the Class Action

11 would be uncertain, protracted, and expensive, and that it is desirable that the Class

12 Action be fully and finally settled in the manner and upon the terms and conditions

13 set forth in the Settlement Agreement. Defendants also have taken into account

14 risks inherent in any litigation, especially in complex cases like the Class Action.

15

If the Case Had Not Settled: Continuing with the case could have resulted

16 in dismissal at the pleadings stage, no class being certified, or dismissal on the

17 merits at summary judgment, trial or on appeal. The two sides vigorously disagree

18 on both liability and the amount of money that could have been won if Lead

19 Plaintiffs prevailed at trial. The Settling Parties disagree about, among other things:

20 (1) whether there was any wrongdoing on the part of Defendants; (2) whether

21 Defendants made any material, false, misleading, or otherwise actionable

22 statements under the federal securities laws; (3) whether class certification is

23 appropriate; (4) whether the price of Medbox common stock was artificially

24 inflated during the Class Period and the amount of any such alleged inflation;

25 (5) the extent that various facts alleged by Lead Plaintiffs influenced the trading

26 price of Medbox common stock during the Class Period; and (6) the method for

27 determining whether, and the extent to which, purchasers of Medbox common stock

28 suffered injury and damages that could be recovered at trial. NOTICE OF PROPOSED CLASS ACTION

4. SETTLEMENT


Pg. 62


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Attorneys' Fees and Expenses: Lead Counsel have not received any

2 payment for their work or expenses incurred in investigating the facts, prosecuting

3 this Class Action, and negotiating the Settlement on behalf of Lead Plaintiffs and

4 the Class. Lead Counsel will ask the Court for attorneys' fees not to exceed 30% of

5 the Settlement Fund and expenses not to exceed $100,000 to be paid from the

6 Settlement Fund.

7

If the above amounts are requested and approved by the Court, then the

8 average cost per share of common stock will be approximately $0.07 per share,

9 making the estimated recovery per share after fees and expenses approximately

10

$0.14.

11

Dismissal and Releases: If the proposed Settlement is approved, the Court

12 will enter a Final Judgment and Order of Dismissal with Prejudice (the

13 "Judgment"). The Judgment will dismiss the Released Claims with prejudice as to

14 the Released Persons, which include Defendants, Lead Plaintiffs, and their

15 respective related parties (including, but not limited to, their parents, subsidiaries

16 and affiliates, and all of their employees, directors and officers). The Judgment will

17 provide that all Class Members shall be deemed to have released and forever

18 discharged all Released Claims (to the extent Class Members have such claims)

19 against all Released Persons. The terms of the releases, including the meaning of

20 the term "Released Claims," are set forth in the Proof of Claim and Release form

21 that is enclosed with the Notice.

22 Deadlines:

23

24 Submit Proof of Claim and Release form:

2016

25

File Objection:

2016

26 Request Exclusion:

2016 27

28 Final Settlement Approval Hearing:

2016



Pg. 63


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More Information: www.strategicclaims.net or

Claims Administrator:

Medbox, Inc. Securities Litigation do Strategic Claims Services 600 N. Jackson St., Suite 3 Media, PA 19063 Telephone: (866) 274-4004 Facsimile: (610) 565-7985 Email: infostrategicclaims.net

Lead Counsel:

Frank J. Johnson JOHNSON & WEAVER, LLP 600 West Broadway Suite 1540 San Diego, CA 92101 Telephone: (619) 230-0063 Facsimile: (619) 255-1856 Email: frankj johnsonandweaver.com

• Your legal rights are affected whether you act, or don't act. Please read this Notice carefully.

YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT:

SUBMIT A CLAIM The only way to receive a payment. Proof of Claim and Release forms must be submitted by 2016.

OBJECT You may write to the Court if you do not like this Settlement, the Plan of Distribution, or the request for attorneys' fees and expenses. You cannot object to the Settlement unless you are a member of the Class and do not validly exclude yourself. Any objections must be filed with the Court and received by counsel by ,2016.



Pg. 64


EXCLUDE YOURSELF Get no payment. This is the only option that allows you to participate in another lawsuit against Defendants for the legal claims being released in this case. Exclusions must be postmarked by

.2016.

GO TO A HEARING You may ask to speak in Court about the fairness of the Settlement. The Final Settlement Approval Hearing is currently scheduled for 2016, at 1:30 p.m. 2

DO NOTHING Get no payment. Give up your rights.

• You may submit a Proof of Claim and Release or object, or do both, or do nothing. However, if you timely exclude yourself, that is the only thing you can do: you may not object in writing, you may not appear at the Final Settlement Approval Hearing to state any objections, and you may not submit a Proof of Claim and Release.

If you object and do not request exclusion, you will remain a member of the Class, and if the Court approves the Settlement, you will be bound by the terms of the Settlement in the same way as Class Members who do not object.

• Unless you timely request exclusion from the Class, or unless the Court rejects the proposed Settlement, you are bound by the Settlement Agreement and its release, whether or not you submit a Proof of Claim and Release or object.

• These rights and options are explained in this Notice. Please take careful note of the deadlines to exercise them, as set forth above.

The Court presiding over this case must decide whether to approve the Settlement. Payments will be made only if the Court approves the Settlement and, if there are any appeals, after appeals are resolved. Please be patient.

2 The date and/or time of the Final Settlement Approval Hearing may change without thither notice to the Class. If you plan on attending the Final Settlement Approval Hearing, please check the website, www. strategiccl aim snet, or call Lead Counsel at (619) 230-0063 to confirm that the date and/or time has not changed.

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7. SETTLEMENT


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• The Court has authorized this Notice, but no money will be paid to anyone until the Court holds the Final Settlement Approval Hearing on 2016. The Court has not decided the merits of this case.

WHAT THIS NOTICE CONTAINS

BASIC INFORMATION

1. Why did I receive this notice package? 2. What is this lawsuit about? 3. Why is this a class action? 4. Why is there a settlement?

WHO IS IN THE SETTLEMENT

5. How do I know if I am part of the Settlement? 6. What are the exceptions to being included? 7. I am still not sure if I am included.

THE SETTLEMENT BENEFITS - WHAT YOU GET

8. What does the Settlement provide? 9. How much will my payment be?

PROPOSED PLAN OF DISTRIBUTION OF THE NET SETTLEMENT FUND TO AUTHORIZED CLAIMANTS

RECOGNIZED LOSS FORMULA

FURTHER INFORMATION APPLICABLE TO ALL CLAIMANTS

HOW YOU OBTAIN A PAYMENT - SUBMITTING A CLAIM FORM

10. How will I obtain a payment? 11. When will I receive my payment? 12. What am I giving up to receive a payment?

EXCLUDING YOURSELF FROM THE CLASS ACTION SETTLEMENT

13. How do I get out of the Class? 14. If I do not exclude myself, can I sue Defendants for the same thing

later? 15. If I exclude myself, can I receive money from the Class Action

Settlement?

NOTICE OF PROPOSED CLASS ACTION SETTLEMENT


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THE LAWYERS REPRESENTING YOU

16. Do I have a lawyer in this case? 17. How will the lawyers be paid?

OBJECTING TO THE SETTLEMENT

18. How do I tell the Court that I do not like the Settlement? 19. What is the difference between objecting and excluding myself from

the Settlement?

THE COURT'S SETTLEMENT HEARING

20. When and where will the Court decide whether to approve the Settlement?

21. Do I have to come to the hearing? 22. May I speak at the hearing?

IF YOU DO NOTHING

23. What happens if I do nothing at all?

GETTING MORE INFORMATION

24 Are there more details about the Settlement?

BASIC INFORMATION

1. Why did I receive this Notice package?

You or someone in your family may have purchased or otherwise acquired Medbox common stock between April 2, 2013, and December 29, 2014, inclusive, and incurred damages.

The Court directed that you be sent this Notice because you have a right to know about a proposed settlement of a class action lawsuit, and about all of your options, before the Court decides whether to approve the Settlement. If the Court approves the Settlement, and after any objections or appeals are resolved, the Claims Administrator appointed by the Court will make the payments to those Persons who timely submit claims in the manner described below.

This package explains the lawsuit, the Settlement, your legal rights, what benefits are available, who is eligible for them, and how to get them.



Pg. 67


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The Court in charge of the case is the United States District Court for the Central District of California, Western Division, and the case is known as Crystal v. Medbox, Inc., et at, Case No. 2:15-CV-00426-BRO (JEMx). The United States District Court Judge overseeing the Class Action is the Hon. Beverly Reid O'Connell. The persons that lead the Class Action, Peter Phan and Paul Poon, are called Lead Plaintiffs, and the Company and the individuals they sued are called Defendants.

2. What is this lawsuit about?

This Class Action alleges that Medbox and certain of its current and former officers and directors violated the federal securities laws by issuing a series of untrue or materially misleading statements, or omitted material facts to make such statements not false and misleading, related to, among other things, Medbox's questionable accounting practices which ultimately led to Medbox having to restate eleven consecutive quarters of financial statements, as well as investigations into Medbox and certain of its former officers and directors by the U.S. Department of Justice and the U.S. Securities and Exchange Commission. Lead Plaintiffs allege that, as a result of these untrue or materially misleading statements or omissions, the price of Medbox common stock was artificially inflated during the Class Period. Lead Plaintiffs allege that, through several partial revelations of the truth regarding the Company's accounting practices, Class Members suffered damages as a result of declines in the price of Medbox common stock.

Defendants deny all of Lead Plaintiffs' allegations and further deny that they did anything wrong. Defendants also deny that Lead Plaintiffs or the Class suffered damages or that the price of Medbox common stock was artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise.

3. Why is this a class action?

In a class action, one or more people called class representatives (in this case, the Court appointed Peter Phan and Paul Poon as Lead Plaintiffs), sue on behalf of people who have similar claims. All of these people and/or entities are called a class or class members. One judge - in this case United States District Court Judge Beverly Reid O'Connell - resolves the issues for all class members, except for those who exclude themselves from the class.



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4. Why is there a settlement?

The Court did not decide in favor of Lead Plaintiffs or Defendants. Instead, both sides agreed to a Settlement. This permits them to avoid the cost, delay, and uncertainty of a trial, and permits eligible Class Members who submit valid claims to receive some compensation rather than risk ultimately receiving nothing. Lead Plaintiffs and their attorneys believe the Settlement is best for all Class Members. Defendants have concluded that further defense of the Class Action would be protracted and expensive, and that it is desirable that the Class Action be fully and finally settled in the manner and upon the terms and conditions set forth in the Settlement Agreement. Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases such as the Class Action.

WHO IS IN THE SETTLEMENT

To see if you will receive money from this Settlement, you first have to determine if you are a possible Class Member.

5. How do I know if I am part of the Settlement?

The potential Class includes all persons or entities who purchased or otherwise acquired shares of Medbox common stock between April 2, 2013, and December 29, 2014, inclusive.

6. What are the exceptions to being included?

You are excluded from the Class if: (1) you are a Defendant; any parent or subsidiary, present or former director, officer, or subsidiary of Medbox; any entity in which any excluded Person has a controlling interest; their legal representatives, heirs, successors and assigns; or any immediate family member of a Defendant; (2) you are a person or entity who has separately filed actions against one or more of Defendants, based in whole or in part on any claim arising out of or relating to any of the alleged acts, omissions, misrepresentations, facts, events, matters, transactions, or occurrences referred to in the Class Action or otherwise alleged, asserted, or contended in the Class Action; or (3) you are a person or entity who submits a valid and timely request for exclusion pursuant to this Notice.



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7. I am still not sure if I am included.

If you are still not sure whether you are included, you can ask for free help. You can call 1-866-274-4004 or visit www.strategicclaims.net for more information; or, you can call Frank J. Johnson of Johnson & Weaver, LLP at 1-619-230-0063 for more information; or you can fill out and return the Proof of Claim and Release form described in Question 10 to see if you qualify.

THE SETTLEMENT BENEFITS - WHAT YOU GET

8. What does the Settlement provide?

The Settlement will result in a payment of USD $1,850,000.00 (One Million Eight Hundred Fifty Thousand United States Dollars) in cash ("Cash Amount") and 2,300,000 (Two Million Three Hundred Thousand) shares of Medbox common stock ("Settlement Shares," and collectively with the Cash Amount, the "Settlement Amount"). The Settlement Amount, plus interest earned on the Cash Amount from the date it is deposited into an escrow account to fund the Settlement (the "Settlement Fund"), less costs, fees, and expenses (the "Net Settlement Fund"), will be divided among all eligible Class Members who send in valid Proofs of Claim and Release forms ("Authorized Claimants"). Costs, fees, and expenses include Court-approved attorneys' fees and expenses, the costs of notifying Class Members of the Settlement, including the costs of printing and mailing this Notice, the cost of publishing newspaper notice in Investor's Business Daily, the cost associated with issuing the Internet wire service notice, the costs of claims administration, and taxes on the Settlement Fund.

9. How much will my payment be?

The payment you receive will reflect your pro rata share of the Net Settlement Fund. Your share of the Net Settlement Fund will depend on the number of valid Proofs of Claim and Release forms that Class Members send in, the number of shares of Medbox common stock you purchased during the Class Period, and the timing of your purchases and sales. Depending on the number of eligible shares that participate in the Settlement, and when those shares were purchased and sold, the estimated average payment will be approximately $0.21 for each damaged share, assuming a claims rate of 100% of damaged shares, before deduction of Court-approved fees and expenses, with the stock value as of the end of trading on December 17, 2015 ($0.0 14/share). The number of claimants who send in claims varies widely from case to case. If fewer than anticipated Class Members send in valid Proof of Claim and Release forms, you could receive


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additional money. You will not receive a payment, however, if your proportionate share of the Net Settlement Fund is less than $10.00.

You can calculate your Recognized Claim in accordance with the formula shown below in the proposed Plan of Distribution, which was formulated following consultation with Lead Plaintiffs' damages expert. After all Class Members have sent in their Proof of Claim and Release forms, the payment you receive will reflect your Recognized Claim in relation to the Recognized Claims of all Persons submitting valid Proof of Claim and Release forms. The Recognized Claim is not the amount of the payment that you can expect, but is used to determine how the Net Settlement Fund is to be allocated among all Persons submitting Proof of Claims and Release forms.

PROPOSED PLAN OF DISTRIBUTION OF THE NET SETTLEMENT FUND TO AUTHORIZED CLAIMANTS

The purpose of the Plan of Distribution is to allocate Settlement proceeds equitably to those Class Members who suffered economic losses resulting from the alleged misrepresentations and omissions by Defendants in the Class Period. The Plan of Distribution is a matter separate and apart from the proposed Settlement, and any decision by the Court concerning the Plan of Distribution shall not affect the validity or finality of the proposed Settlement. The Court may approve the Plan of Distribution with or without modifications agreed to among the Settling Parties, or another plan of distribution, without further notice to Class Members. Any orders regarding a modification of the Plan of Distribution will be posted to the Claims Administrator's website, www.strategicclairns.net .

One requirement for eligibility to share in the allocation of the Net Settlement Fund is that Class Members must have purchased Medbox common stock in the Class Period, from April 2, 2013, through December 29, 2014, inclusive. Federal securities laws allow investors to recover for losses caused by disclosures which corrected Defendants' previous misleading statements and omissions, but not for losses caused by broad market conditions or by other events unrelated to the alleged securities fraud. Therefore, another requirement for eligibility is that the Class Member held Medbox common stock at the time its price declined due to a disclosure of information which corrected an allegedly misleading statement or omission. Lead Plaintiffs and Lead Counsel have identified the following dates of such price declines: February 18 and 19, 2014 (price declines following February 18, 2014 publication of a report by Citron Research accusing Medbox of keeping three sets of books and of inflating market capitalization by fraud), November 3, 4, and 5, 2014 (price declines following revelations

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Case :15cvM0426BROJEM Document 883 fled 12/18/15 of 106 Page ID #:1147

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concerning, among other things, that a committee of the Company's Board of Directors was formed to investigate a letter from a former employee to the U.S. Securities and Exchange Commission alleging wrongdoing by a former officer of Medbox, and disclosure that the U. S. Department of Justice had sewed a grand jury subpoena on Medbox' s accountants in August 2014), and December 31, 2014 (price decline following Medbox's press release of December 30, 2014, disclosing that Medbox would be restating its financial statements and that the Company was in default of debt covenants). If the stock was purchased and then sold before February 18, 2014, or purchased and then sold between consecutive dates above, those transactions are excluded from consideration in allocation of the Settlement proceeds.

The Claims Administrator shall determine each Authorized Claimant's pro rata share of the Net Settlement Fund based upon each Authorized Claimant's Recognized Claim. Please Note: The Recognized Claim formula, set forth below, is not intended to be an estimate of the amount of what a Class Member might have been able to recover after a trial, nor is it an estimate of the amount that will be paid to Authorized Claimants pursuant to the Settlement. The Recognized Claim formula is the basis upon which the Net Settlement Fund will be proportionately allocated to the Authorized Claimants. To the extent there are sufficient funds in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant's Recognized Claim. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total Recognized Claim of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage of the Net Settlement Fund that each Authorized Claimant's Recognized Claim bears to the total Recognized Claims of all Authorized Claimants (i.e., "pro rata share"). Payment in this manner shall be deemed conclusive against all Authorized Claimants.

If there is any balance remaining in the Settlement Fund after six (6) months from the date of the initial distribution of the Net Settlement Fund whether by reason of tax refunds, uncashed checks or otherwise), Lead Counsel shall, if feasible, distribute in an equitable and economical fashion such balance among Authorized Claimants who negotiated the checks sent to them in the initial distribution. However, no Authorized Claimant will receive a redistribution if his, her, or its proportionate share of the Net Settlement Fund is less than $10.00. These redistributions shall be repeated until the balance remaining in the Net Settlement Fund is tie minimis (an amount less than $10,000) and such remaining balance shall then be donated to an appropriate non-profit organization designated as the Court may direct and approve.



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1 RECOGNIZED LOSS FORMULA

(1) Recognized Claim for Medbox common stock purchased or otherwise acquired during the Class Period (Le., April 2, 2013 to December 29, 2014, inclusive) will be calculated as follows:

(A) For shares purchased or otherwise acquired during the Class Period and sold during the Class Period, the Recognized Claim per share will be the lesser of: (1) the inflation per share upon purchase (as set forth in Inflation Table A below) less the inflation per share upon sale (as set forth in Inflation Table A below); or (2) the purchase price per share minus the sales price per share.

(B) For shares purchased or otherwise acquired during the Class Period and sold during the period December 30, 2014 through March 29, 2015, inclusive, the Recognized Claim will be the lesser of (1) the inflation per share upon purchase (as set forth in Inflation Table A below); or (2) the difference between the purchase price per share and the average closing stock price as of the date of sale provided in Table B below.

(C) For shares purchased or otherwise acquired during the Class Period April 2, 2013 through December 29, 2014 inclusive, and retained as of March 29, 2015, the Recognized Claim will be the lesser of (1) the inflation per share upon purchase (as set forth in Inflation Table A below); or (2) the purchase price per share minus $3343 per share.

Pursuant to Section 21 (D)(e)( 1) of the Private Securities Litigation Reform Act of 1995, "in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, the award of damages to the plaintiff shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the subject security and mean trading price of that security during the 90-day period beginning on the date on which the information correcting the misstatement or omission that is the basis for the action is disseminated." $3.34 per share was the mean (average) daily closing trading price of Medbox's common stock during the 90-day period beginning on December 30, 2014 and ending on March 29, 2015.

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15. SETTLEMENT


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INFLATION TABLE A Medho\ Commoii stock I uchuscd or Acquired I )uing the Class Period

Period Inflation April 2, 2013 to February 17, 2014, inclusive $9.85 per share February 18, 2014 $7.71 per share February 19, 2014 to November 2, 2014, inclusive $5.59 per share November 3, 2014 $4.06 per share November 4, 2014 $3.62 per share November 5, 2014 to December 30, 2014, inclusive $0.65 per share December 31, 2014 and after $0.00 per share

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Date 12/30/2014 12/31/2014

1/2/2015 1/5/2015 1/6/2015 1/7/20 15 1/8/2015 1/9/2015

1/12/2015 1/13/2015 1/14/2015 1/15/2015 1/16/2015 1/20/2015 1/21/2015 1/22/2015 1/23/2015 1/26/2015 1/27/2015 1/28/2015 1/29/2015 1/30/2015 2/2/2015 2/3/2015 2/4/2015

Closing Price $6.39 $5.58 $6.21 $6.75 $6.30 $6.26 $6.22 $6.45 $6.68 $6.14 $6.07 $6.01 $6.00 $6.00 $5.94 $5.10 $4.64 $4.87 $4.89 $4.62 $4.25 $4.11 $4.08 $3.98 $3.28

Avg. Closing Price $6.39 $5.99 $6.06 $6.23 $6.25 $6.25 $6.24 $6.27 $6.32 $6.30 $6.28 $6.26 $6.24 $6.22 $6.20 $6.13 $6.04 $5.98 $5.92 $5.86 $5.78 $5.70 $5.63 $5.56 $5.47

Date 2/13/2015 2/17/2015 2/18/2015 2/19/2015 2/20/2015 2/23/2015 2/24/2015 2/25/2015 2/26/2015 2/27/2015 3/2/2015 3/3/2015 3/4/2015 3/5/2015 3/6/2015 3/9/2015

3/10/2015 3/11/2015 3/12/2015 3/13/2015 3/16/2015 3/17/2015 3/18/2015 3/19/2015 3/20/2015

Closing Price $1.44 $1.84 $2.14 $2.03 $2.21 $2.14 $2.03 $1.92 $1.83 $1.81 $1.86 $1.80 $2.38 $2.05 $2.16 $2.08 $1.97 $1.97 $1.92 $1.97 $1.97 $1.79 $1.66 $1.65 $1.49

Avg. Closing

Price $4.68 $4.59 $4.52 $4.45 $4.39 $4.32 $4.26 $4.20 $4.15 $4.09 $4.04 $3.98 $3.95 $3.90 $3.87 $3.83 $3.79 $3.75 $3.72 $3.68 $3.65 $3.61 $3.58 $3.54 $3.51



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Avg. Avg. Closing Closing

Closing Closing Date

Price

Price

Date

Price

Price 2/5/2015

$2.29

$5.35

3/23/2015

$1.57

$3.47 2/6/2015

$1.56

$5.21

3/24/2015

$1.48

$3.44 2/9/2015

$2.29

$5.11

3/25/2015

$1.40

$3.40 2/10/2015

$1.88

$4.99

3/26/2015

$1.41

$3.37 2/11/2015

$1.79

$4.89

3/27/2015

$1.65

$3.34 2/12/2015

$1.60

$4.78

FURTHER INFORMATION APPLICABLE TO ALL CLAIMANTS

To the extent a claimant had a trading gain or "broke even" from his, her or its overall transactions in Medbox shares during the Class Period, the value of the Recognized Claim will be zero and the claimant will not be entitled to a share of the Net Settlement Fund. To the extent that a claimant suffered a trading loss on his, her or its overall transactions in Medbox shares during the Class Period, but that trading loss was less than the Recognized Claim calculated above, then the Recognized Claim shall be limited to the amount of the claimant's actual trading loss. The purchase and sales prices exclude any brokerage commissions, transfer taxes, or other fees.

For purposes of calculating your Recognized Claim, the date of purchase, acquisition or sale is the "contract" or "trade" date and not the "settlement" or "payment" date. The receipt or grant by gift, inheritance or operation of law of Medbox shares shall not be deemed a purchase, acquisition or sale of Medbox shares for the calculation of an Authorized Claimant's Recognized Claim. The covering purchase of a short sale is not an eligible purchase.

For purposes of calculating your Recognized Claim, all purchases, acquisitions and sales shall be matched on a First In, First Out ("FIFO") basis in chronological order. Therefore, on the Proof of Claim and Release enclosed with this Notice, you must provide all of your purchases and acquisitions of Medbox shares during the time period from April 2, 2013 through and including March 29, 2015.

Notwithstanding any of the above, receipt of Medbox common stock during the Class Period in exchange for common stock of any other corporation or entity shall not be deemed a purchase or sale of Medbox common stock.



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1

Upon receipt of Medbox Settlement Shares, Lead Counsel will have the right to 2 take any measures they deem appropriate to protect the overall value of the

Settlement Shares prior to distribution to the Authorized Claimants, including, but 3 not limited to, sales of all or part of the Settlement Shares. Lead Counsel shall have 4 no liability for any sale, liquidation, transfer, or other disposition of the Settlement

Shares absent gross negligence or willful misconduct. Lead Counsel shall also 5 have the right to use the cash component of the Settlement Fund to protect the 6 overall value of the Settlement Fund.

7

Payment pursuant to the Plan of Distribution approved by the Court shall be 8 conclusive against all Authorized Claimants. No Person shall have any claim

against Defendants, Defendants' Counsel, Lead Plaintiffs, Lead Counsel or the 9 Settlement Administrator or other agent designated by Lead Counsel based on the

10 distributions made substantially in accordance with the Stipulation and the Settlement contained therein, the Plan of Distribution, or further orders of the

11 Court. Each claimant shall be deemed to have submitted to the jurisdiction of the 12 Court with respect to the claimant's Proof of Claim and Release. All Persons

involved in the review, verification, calculation, tabulation, or any other aspect of 13 the processing of the claims submitted in connection with the Settlement, or 14 otherwise involved in the administration or taxation of the Settlement Fund or the

Net Settlement Fund shall be released and discharged from any and all claims 15 arising out of such involvement, and all Class Members, whether or not they are to 16 receive payment from the Net Settlement Fund, will be barred from making any

further claim against the Net Settlement Fund beyond the amount allocated to them 17 as provided in any distribution orders entered by the Court.

18 Class Members who do not submit a timely request for exclusion and do not

19 submit an acceptable Proof of Claim and Release form by the deadline for 20 submitting claims, will not share in the recovery, but nevertheless will be bound by

the Settlement and the Judgment entered by the Court dismissing the Class Action. 21

22 Distributions will be made to Authorized Claimants after all claims have been

processed and after the Court has finally approved the Settlement. 23 24 HOW YOU OBTAIN A PAYMENT - SUBMITTING A CLAIM FORM

25

10. How will I obtain a payment?

26 To qualify for payment, you must be an eligible Class Member, send in a 27 valid Proof of Claim and Release form, and properly document your claim as 28 requested in the Proof of Claim and Release form. A Proof of Claim and Release



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form is enclosed with this Mailed Notice. You may also get a Proof of Claim and Release form on the internet at www.strategicclaims.net . Read the instructions carefully, fill out the Proof of Claim and Release form, include the documents the form asks for, sign it, and mail it in the enclosed envelope postmarked no later than

.2016.

11. When will I receive my payment?

The Court will hold a Final Settlement Approval Hearing on 2016, at 1:30 p.m., to decide whether to approve the Settlement. If the Court approves the Settlement, there may be appeals. It is always uncertain whether or when these appeals will be resolved, and resolving them can take time, perhaps more than a year. Even if no appeals are filed, it will take several months for the Claims Administrator to process all of the Proofs of Claim and Release forms and determine the ultimate distribution amounts.

12. What am I giving up to receive a payment?

Unless you timely exclude yourself from the Class by the 12016 deadline, you are staying in the Class, and that means that you cannot sue, continue to sue, or be part of any other lawsuit against Defendants about the same issues in this case or about issues that could have been asserted in this case. It also means that all of the Court's orders will apply to you and legally bind you and you will release your Released Claims in this case against Defendants and the Released Persons.

"Released Claims" means any and all claims and causes of action of every nature and description, whether known or unknown, whether arising under federal, state, common or foreign law, that arise out of or are related in any way to (a) Lead Plaintiffs' or any Class Member's investments in Medbox securities, including the purchase, acquisition, sale, or holding of Medbox securities; (b) the subject matter of the Class Action; or (c) the facts alleged or that could have been alleged in any complaint filed in the Class Action. Released Claims do not include, and expressly exclude: (i) claims to enforce the Settlement and/or the terms of this Settlement Agreement; (ii) any governmental or regulatory agency's claims in any criminal or civil action against any Defendants; and (iii) claims in any Shareholder Derivative Litigations.

"Unknown Claims" means any Released Claims which Lead Plaintiffs or any Class Members do not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons which, if known by him, her or it, might have

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19. SETTLEMENT


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affected his, her or its settlement with and release of the Released Persons, or might have affected his, her or its decision not to object to or to seek exclusion from this Settlement, and include, without limitation, any such claims, rights, benefits or provisions released or waived pursuant to ¶1.40 of the Settlement Agreement.

"Released Persons" means each and all of Defendants and each and all of their present or former parents, subsidiaries, affiliates (as defined in 17 C.F.R. §210.1-02(b)), successors and assigns, and each and all of the present or former officers, principals, directors, employees, employers, attorneys, accountants, auditors, advisors, lenders, insurers, investment bankers, representatives, general and limited partners and partnerships, subsidiaries, divisions, predecessors, stockholders, trustees, fiduciaries, consultants, agents, heirs, executors, administrators, successors, affiliates, and assigns of each of them.

EXCLUDING YOURSELF FROM THE CLASS ACTION SETTLEMENT

If you do not want a payment from the Class Action Settlement, but you want to keep the right to sue or continue to sue Defendants on your own for the Released Claims in the Class Action, then you must take steps to get out of the Class. This is called excluding yourself, or is sometimes referred to as "opting out" of the Class.

13. How do I get out of the Class?

To exclude yourself from the Class, you must send a letter by first-class mail stating that you want to be excluded from Crystal v. Medbox, Inc., et al., Case No. 2:1 5-CV-00426-BRO (JEMx). You must include your name, address, telephone number, your signature, and the number of shares of Medbox common stock you purchased or acquired between April 2, 2013, and December 29, 2014, inclusive, the number of shares of common stock sold during this time period, if any, the dates of such purchases and/or sales, and the price paid or received per share for each purchase or sale. You must mail your exclusion request postmarked no later than .2016to:

Medbox, Inc. Securities Litigation c/o Strategic Claims Services 600 N. Jackson St., Suite 3

Media, PA 19063

You cannot exclude yourself on the phone or by e-mail. Any request for exclusion must also be signed by the Person requesting exclusion, under penalty of perjury, and accompanied, if said Person is acting in a representative capacity, by a


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certification of the Person's current authority to act on behalf of the Person requesting exclusion from the Class. Requests for exclusion will not be valid if they are not received within the time stated above unless the Court orders otherwise. If you ask to be excluded, you are not eligible to receive any settlement payment, and you cannot object to the Class Action Settlement. You will not be legally bound by anything that happens in the Class Action lawsuit.

14. If I do not exclude myself, can I sue Defendants for the same thing later?

No. Unless you exclude yourself from the Class, you give up any right to sue Defendants or the Released Persons for the Released Claims in the Settlement. If you have a pending lawsuit against any of Defendants, speak to your lawyer in that case immediately. Remember, the exclusion deadline is 12016.

15. If I exclude myself, can I receive money from the Settlement?

No. If you exclude yourself, do not send in a Proof of Claim and Release form to ask for any money. Once you exclude yourself, you will receive no cash payment or any other benefit provided for in the Settlement even if you also submit a Proof of Claim and Release form. However, a Class Member may submit a written revocation of a request for exclusion up until two (2) Business Days prior to the date of the Final Settlement Approval Hearing and receive payments pursuant to this Settlement and the Settlement Agreement provided the Class Member also timely submits a valid Proof of Claim and Release form.

THE LAWYERS REPRESENTING YOU

16. Do I have a lawyer in this case?

The Court appointed the law firm Johnson & Weaver, LLP to represent you and other Class Members. These lawyers are called Lead Counsel. You will not be personally liable for the fees and expenses incurred by these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.

17. How will the lawyers be paid?

Lead Counsel will ask the Court for attorneys' fees of up to 30% of the Settlement Fund and for expenses up to $100,000, which were advanced in connection with the Class Action. If awarded, the cost would be $0.07 per share. This compensation, as may be approved by the Court, will be paid from the



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Settlement Fund. Class Members are not personally liable for any such fees or expenses. To date, Lead Counsel have not received any payment for their services in conducting this Class Action on behalf of Lead Plaintiffs and the Class, nor have counsel been paid for their expenses. The fee requested will compensate Lead Counsel for their work in achieving the Settlement Fund and is within the range of fees awarded to class counsel under similar circumstances in other cases of this type. The Court may award less than this amount.

OBJECTING TO THE SETTLEMENT

You can tell the Court that you do not agree with the Settlement, the Plan of Distribution, or Lead Counsel's request for an award of attorneys' fees and expenses.

18. How do I tell the Court that I do not like the Settlement?

If you are a Class Member (and you have not excluded yourself), you can object to the Settlement if you do not like any part of it, including the Plan of Distribution and the request for attorneys' fees and expenses. You can state the reasons why you think the Court should not approve the Settlement, the request for attorneys' fees and expenses, or the Plan of Distribution, and the Court will consider your views. To object, you must send a signed letter saying that you object to the Settlement in Crystal v. Medbox, Inc., et at, Case No. 2:15-CV-00426-BRO (JEMx). Be sure to include your full name, address, telephone number, your signature (the objection must be signed by the objector even if represented by counsel), a list of all of your transactions involving Medbox common stock during the Class Period (between April 2, 2013, and December 29, 2014, inclusive), identify any case, by name, court, and docket number, in which you or your attorney, if any, has objected to a settlement in the last three years, and the reasons you object to the Settlement, the request for attorneys' fees and expenses, or the Plan of Distribution. The motions in support of the Settlement and the request for attorneys' fees will be filed no later than, , 2016, and they will be available from Lead Counsel, the Claims Administrator or the Court. (The Claims Administrator's contact information is listed in Section 24, below.) Any objection must be sent by first-class mail or hand delivered such that it is received by each of the following no later than , 2016:



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Court:

Clerk of the Court United States District Court Central District of California

Western Division 312 North Spring Street, Room G-8

Los Angeles, CA 30012-4701 Lead Counsel:

Frank J. Johnson JOHNSON & WEAVER, LLP

600 West Broadway, Suite 1540 San Diego, CA 92101

Defendants' Counsel Designee:

Phillip R. Kaplan MANATT, PHELPS & PHILLIPS, LLP

Park Tower 695 Town Center Drive, 14th Floor

Costa Mesa, CA 92626

If you object to the Settlement, the Plan of Distribution, and/or Lead Counsel's request for an award of attorneys' fees and expenses, you are submitting to the jurisdiction of the Court with respect to the subject matter of the Settlement.

Any Class Member who does not make his, her or its objection in the manner provided for herein shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the fairness or adequacy of the Settlement as reflected in the Settlement Agreement, to the Plan of Distribution, and/or to the application by Lead Counsel for an award of attorneys' fees and expenses.

19. What is the difference between objecting and excluding myself from the Settlement?

Objecting is telling the Court that you do not like something about the proposed Settlement. You can object only if you stay in the Class. Excluding yourself is telling the Court that you do not want to be part of the Class. If you



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exclude yourself, you have no basis to object because the case no longer applies to you.

THE COURT'S SETTLEMENT HEARING

The Court will hold a hearing to decide whether to approve the Settlement. You may attend and you may ask to speak, but you do not have to.

20. When and where will the Court decide whether to approve the Settlement?

The Court will hold a Final Settlement Approval Hearing on 2016 at 1:30 p.m., at the United States District Court, Central District of California, Western Division, 312 North Spring Street, Courtroom 14, Los Angeles, CA 90012-4701. At this hearing the Court will consider whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. The Court will also consider how much money from the Settlement Fund will be allocated to pay Lead Counsel for their work on the Class Action and to reimburse their expenses, and whether the Plan of Distribution is fair, reasonable and adequate. The Court may decide these issues at the hearing or take them under consideration for a later decision.

21. Do I have to come to the Hearing?

No. Lead Counsel will answer questions the Court may have. But, you are welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it is not necessary. Persons who intend to object and desire to present evidence at the Final Settlement Approval Hearing must include in their written objections the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the Final Settlement Approval Hearing.

22. May I speak at the hearing?

You may ask the Court for permission to speak at the Final Settlement Approval Hearing. To do so, you must send a letter saying that it is your intention to appear in Crystal v. Medbox, Inc., et at, Case No. 2:1 5-CV-00426-BRO (JEMx). Be sure to include your name, address, telephone number, your signature, and a list of all of your transactions involving Medbox common stock during the Class Period (between April 2, 2013, and December 29, 2014, inclusive). Your notice of


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intention to appear must be received no later than , 2016, by the Clerk of the Court, Lead Counsel and Defendants' Counsel Designee, at the three addresses listed in Question 18.

IF YOU DO NOTHING

23. What happens if I do nothing at all?

If you do nothing, you will get no money from this Settlement. But, unless you exclude yourself, you will be bound by the Judgment and will not be able to start a lawsuit, continue with a lawsuit, or be part of any other lawsuit against Defendants about the same issues in this case.

GETTING MORE INFORMATION

24. Are there more details about the Settlement?

This Notice summarizes the proposed Settlement. More details are in the Settlement Agreement dated as of December 17, 2015. You can obtain a copy of the Settlement Agreement or more information about the Settlement by contacting Lead Counsel:


or the Claims Administrator:

Medbox, Inc. Securities Litigation do Strategic Claims Services 600 N. Jackson St., Suite 3 Media, PA 19063 Telephone: (866) 274-4004 Facsimile: (610) 565-7985 Email: infostrategicclaims.net

or by visiting www.strategicclaims.net .



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You can also obtain a copy from the Clerk's office during regular business hours:

Clerk of the Court United States District Court Central District of California Western Division 312 North Spring Street, Room G-8 Los Angeles, CA 30012-4701

DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE

SPECIAL NOTICE TO NOMINEES

The Court has ordered that if you held any Medbox common stock purchased or acquired between April 2, 2013, and December 29, 2014, inclusive, as nominee for a beneficial owner, then, within twenty (20) days after you receive this Notice, you must either: (1) send a copy of this Notice by first-class mail to all such Persons; or (2) provide a list of the names and addresses of such Persons to the Claims Administrator:

Medbox, Inc. Securities Litigation do Strategic Claims Services 600 N. Jackson St., Suite 3 Media, PA 19063 Telephone: (866) 274-4004 Facsimile: (610) 565-7985 Email: info strategicclaims .net

If you choose to mail the Notice and Proof of Claim and Release yourself, you may obtain from the Claims Administrator (without cost to you) as many additional copies of these documents as you will need to complete the mailing.

Regardless of whether you choose to complete the mailing yourself or elect to have the mailing performed for you, you may obtain reimbursement for administrative costs actually incurred in connection with forwarding the Mailed Notice and which would not have been incurred but for the obligation to forward the Mailed Notice, upon submission of appropriate documentation to the Claims Administrator.

DATED: BY ORDER OF THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION



Pg. 84


EXHIBIT A-2

ELi Pg. 85






V.

MEDBOX, INC., PEJMAN VINCENT MEHDIZADEH, BRUCE BEDRICK, THOMAS IWANSKI, GUY MARSALA, and DOUGLAS MITCHELL,

Defendants.

PROOF OF CLAIM AND RELEASE Case No. 2:15-CV-00426-BRO (JEMX)

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Exhibit A-2

Proof of Claim and Release

ELi Pg. 86


Deadline for Submission:

2016

IF YOU PURCHASED THE COMMON STOCK OF MEDBOX, INC. ("MEDBOX") DURING THE PERIOD FROM APRIL 2, 2013 THROUGH DECEMBER 29, 2014, INCLUSIVE ("CLASS PERIOD"), YOU ARE A "CLASS MEMBER" AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT PROCEEDS.

IF YOU ARE A CLASS MEMBER, YOU MUST COMPLETE AND SUBMIT THIS FORM IN ORDER TO BE ELIGIBLE FOR ANY SETTLEMENT BENEFITS.

YOU MUST COMPLETE AND SIGN THIS PROOF OF CLAIM AND RELEASE AND MAIL IT BY FIRST-CLASS MAIL, POSTMARKED NO LATER THAN , 2016, TO STRATEGIC CLAIMS SERVICES, THE CLAIMS ADMINISTRATOR, AT THE FOLLOWING ADDRESS:

Medbox, Inc. Securities Litigation do Strategic Claims Services

P.O. Box 230 600 N. Jackson St., Ste. 3

Media, PA 19063 Tel.: 866-274-4004 Fax: 610-565-7985

YOUR FAILURE TO SUBMIT YOUR CLAIM BY 12016, WILL SUBJECT YOUR CLAIM TO REJECTION AND PRECLUDE YOU FROM RECEIVING ANY MONEY IN CONNECTION WITH THE SETTLEMENT OF THE CLASS ACTION. DO NOT MAIL OR DELIVER YOUR CLAIM TO THE COURT OR TO ANY OF THE PARTIES OR THEIR COUNSEL AS ANY SUCH CLAIM WILL BE DEEMED NOT TO HAVE BEEN SUBMITTED. SUBMIT YOUR CLAIM ONLY TO THE CLAIMS ADMINISTRATOR.

CLAIMANT'S STATEMENT

1. I (we) purchased Medbox common stock and was (were) damaged thereby. (Do not submit this Proof of Claim and Release if you did not purchase Medbox common stock during the designated Class Period).

2. By submitting this Proof of Claim and Release, I (we) state that I (we) believe in good faith that I am (we are) a Class Member as defined above and in the Notice

1 PROOF OF CLAIM AND RELEASE

Case No. 2:15-CV-00426-BRO (JEMX)

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of Proposed Class Action Settlement (the "Mailed Notice"), or am (are) acting for such person(s); that I am (we are) not a Defendant in the Class Action or anyone excluded from the Class; that I (we) have read and understand the Mailed Notice; that I (we) believe that I am (we are) entitled to receive a share of the Net Settlement Fund, as defined in the Mailed Notice; that I (we) elect to participate in the proposed Settlement described in the Mailed Notice; and that I (we) have not filed a request for exclusion. (If you are acting in a representative capacity on behalf of a Class Member [e.g., as an executor, administrator, trustee, or other representative], you must submit evidence of your current authority to act on behalf of that Class Member. Such evidence would include, for example, letters testamentary, letters of administration, or a copy of the trust documents.)

3 I (we) consent to the jurisdiction of the Court with respect to all questions concerning the validity of this Proof of Claim and Release. I (we) understand and agree that my (our) claim may be subject to investigation and discovery under the Federal Rules of Civil Procedure, provided that such investigation and discovery shall be limited to my (our) status as a Class Member(s) and the validity and amount of my (our) claim. No discovery shall be allowed on the merits of the Class Action or Settlement in connection with processing of the Proof of Claim and Release.

4 I (we) have set forth where requested below all relevant information with respect to each purchase of Medbox common stock during the Class Period, and each sale, if any, of such common stock. I (we) agree to furnish additional information to the Claims Administrator to support this claim if requested to do so.

5. I (we) have enclosed photocopies of the stockbroker's confirmation slips, stockbroker's statements, or other documents evidencing each purchase, sale or retention of Medbox common stock listed below in support of my (our) claim. (IF ANY SUCH DOCUMENTS ARE NOT IN YOUR POSSESSION, PLEASE OBTAIN A COPY OR EQUIVALENT DOCUMENTS FROM YOUR BROKER BECAUSE THESE DOCUMENTS ARE NECESSARY TO PROVE AND PROCESS YOUR CLAIM)

6. I (we) understand that the information contained in this Proof of Claim and Release is subject to such verification as the Claims Administrator may request or as the Court may direct, and I (we) agree to cooperate in any such verification. (The information requested herein is designed to provide the minimum amount of information necessary to process most simple claims. The Claims Administrator may request additional information as required to efficiently and reliably calculate your recognized claim. In some cases, the Claims Administrator may condition acceptance of the claim based upon the


Case No. 2:15-CV-00426-BRO (JEMX) ELi

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production of additional information, including, where applicable, information concerning transactions in any derivative securities such as options.)

7. Upon the occurrence of the Court's approval of the Settlement, as detailed in the Mailed Notice, I (we) agree and acknowledge that my (our) signature(s) hereto shall effect and constitute a full and complete release, remise and discharge by me (us) and my (our) current, past and future trusts, estates, beneficiaries, heirs, joint tenants, tenants in common, executors, administrators, trustees, predecessors, successors, partners, spouses, parents, subsidiaries, affiliates, attorneys, consultants, experts, brokers, creditors, insurers, agents, representatives, and assigns, and any person that any of them represents, of all of the Released Claims (as defined in the Stipulation and Agreement of Settlement dated December 17, 2015 (the "Settlement Agreement")), each of the Released Persons (as defined in the Settlement Agreement), and all claims arising out of, relating to, or in connection with the Settlement, the Class Action, and/or the resolution of the Class Action against each of the Released Persons.

8. NOTICE REGARDING ELECTRONIC FILES: Certain claimants with large numbers of transactions may request, or may be requested, to submit information regarding their transactions in electronic files. All claimants MUST submit a manually signed paper Proof of Claim and Release listing all their transactions whether or not they also submit electronic copies. If you wish to file your claim electronically, you must contact the Claims Administrator at 1 - 866-274-4004 or visit its website at www.strategicclaims.net to obtain the required file layout. No electronic files will be considered to have been properly submitted unless the Claims Administrator issues to the claimant a written acknowledgment of receipt and acceptance of electronically submitted data.



Pg. 89


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I. CLAIMANT INFORMATION I Name:

I Address:

I City:

State

Zip Code:

I Foreign Provence:

Foreign Country:

I Day Phone:

Evening Phone:

I Email:

Social Security Number (for OR I Taxpayer Identification Number (for individuals): I estates, trusts, corporations, etc.):

II. SCHEDULE OF TRANSACTIONS IN MEDBOX COMMON STOCK

Initial Holdings: A. State the total number of shares of Medbox common stock, if any, owned at

the start of trading on April 2, 2013, long or short (must be documented):

Purchases: B. Separately list each and every purchase of Medbox common stock during the

period from April 2, 2013 through March 28, 2015, inclusive, and provide the following information (must be documented):

Trade Date Total Cost (List Number of (Excluding

Chronologically) Shares Price per Commissions, (Month/lDav/Yearl Purchased Share Taxes, and Fees)

4 PROOF OF CLAIM AND RELEASE Case No. 2:15-CV-00426-BRO (JEMX)

ELi Pg. 90


Sales: C. Separately list each and every sale of Medbox common stock during the

period from April 2, 2013 through March 28, 2015, inclusive and provide the following information (must be documented):

Trade Date Amount Received (List (Excluding

Chronologically) Number of Price per Commissions,

(Month/lDav/Yearl Shares Sold Share Taxes, and Fees)

Ending Holdings: D. State the total number of shares of Medbox

common stock owned at the close of trading on March 28, 2015, long or short (must be documented').

If additional space is needed, attach separate, numbered sheets, giving all required information, substantially in the same format, and print your name and Social Security or Taxpayer Identification Number at the top of each sheet.

III. SUBSTITUTE FORM W-9

Request for Taxpayer Identification Number:

Enter Taxpayer Identification Number below for the Beneficial Owner(s). For most individuals, this is your Social Security Number. The Internal Revenue Service ("I.R.S.") requires such Taxpayer Identification Number. If you fail to provide this information, your claim may be rejected.

Social Security Number (for OR Taxpayer Identification Number individuals) (for estates, trusts, corporations, etc.)

5 PROOF OF CLAIM AND RELEASE Case No. 2:15-CV-00426-BRO (JEMX)

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I I

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IV. CERTIFICATION

I (we) certify that I am (we are) NOT subject to backup withholding under the provisions of Section 3406(a)(1 )(c) of the Internal Revenue Code because: (a) I am (we are) exempt from backup withholding, or (b) I (we) have not been notified by the I.R.S. that I am (we are) subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the I.R.S. has notified me (us) that I am (we are) no longer subject to backup withholding.

NOTE: If you have been notified by the I.R.S. that you are subject to backup withholding, please strike out the language that you are not subject to backup withholding in the certification above.

UNDER THE PENALTIES OF PERJURY UNDER THE LAWS OF THE UNITED STATES OF AMERICA, I (WE) CERTIFY THAT ALL OF THE INFORMATION I (WE) PROVIDED ON THIS PROOF OF CLAIM AND RELEASE FORM IS TRUE, CORRECT, AND COMPLETE.

Signature of claimant (If this claim is being made on behalf of joint claimants, then each must sign):

(Signature)

(Signature)

(Capacity of person(s) signing, e.g., beneficial purchaser(s), executor, administrator, trustee, etc.)

E Check here if proof of authority to file is enclosed. (See Item 2 under Claimant's Statement)

Date:



Pg. 92


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THIS PROOF OF CLAIM AND RELEASE MUST BE POSTMARKED NO LATER THAN , 2016 AND MUST BE MAILED TO:

Medbox, Inc. Securities Litigation do Strategic Claims Services

P.O. Box 230 600 N. Jackson St., Ste. 3

Media, PA 19063 Tel.: 866-274-4004 Fax: 610-565-7985

A Proof of Claim and Release received by the Claims Administrator shall be deemed to have been submitted when posted, if mailed by 2016, and if a postmark is indicated on the envelope and it is mailed first-class and addressed in accordance with the above instructions. In all other cases, a Proof of Claim and Release shall be deemed to have been submitted when actually received by the Claims Administrator.

You should be aware that it will take a significant amount of time to process fully all of the Proofs of Claim and Releases and to administer the Settlement. This work will be completed as promptly as time permits, given the need to investigate and tabulate each Proof of Claim and Release. Please notify the Claims Administrator of any change of address.

REMINDER CHECKLIST

o Please be sure to sign this Proof of Claim and Release on page . If this Proof of Claim and Release is submitted on behalf of joint claimants, then both claimants must sign.

o Please remember to attach supporting documents. Do NOT send any stock certificates. Keep copies of everything you submit.

o Do NOT use highlighter on the Proof of Claim and Release or any supporting documents.

o If you move after submitting this Proof of Claim and Release, please notify the Claims Administrator of the change in your address.



Pg. 93


EXHIBIT A-3

ELi Pg. 94




JOSH CRYSTAL Individually Case No.: 2:1 5-CV-00426-BRO (JEMx) And On Behalf O All Others Similarly Situated,


V. Exhibit A-3

MEDBOX, INC., PEJIMAN Summary Notice of Proposed Class VINCENT MEHDIZADEH, Action Settlement BRUCE BEDRICK, THOMAS IWANSKI, GUY MARSALA, and DOUGLAS MITCHELL,

Defendants.

SUMMARY NOTICE OF PROPOSED CLASS ACTION SETTLEMENT

TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED SHARES OF COMMON STOCK OF MEDBOX, INC. BETWEEN APRIL 2, 2013 AND DECEMBER 29, 2014, INCLUSIVE, AND INCURRED DAMAGES (THE "CLASS").

YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States

District Court for the Central District of California, Western Division, that a

hearing will be held on , 2016 at 1:30 p.m. in Courtroom 14

before the Honorable Beverly Reid O'Connell, United States District Judge for the

Central District of California, Western Division, 312 North Spring Street, Los

1 SUMMARY NOTICE

Case No. 2:15-CV-00426-BRO (JEMX)

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ELi Pg. 95


Angeles, CA 90012-4701 (the "Final Settlement Approval Hearing") for the

purpose of determining: (1) whether the proposed Settlement consisting of the sum

of One Million Eight Hundred Fifty Thousand United States Dollars

(USD $1,850,000.00) in cash (the "Cash Amount") and Two Million Three

Hundred Thousand (2,300,000) shares of Medbox, Inc. ("Medbox") common stock

(the "Settlement Shares," collectively with the Cash Amount, the "Settlement

Fund") should be approved by the Court as fair, reasonable, adequate, and in the

best interests of the Class; (2) whether the proposed plan to distribute the

Settlement proceeds is fair and reasonable and should be approved by the Court;

(3) whether Lead Counsel's application for an award of attorneys' fees (of not more

than 30% of the Settlement Fund) and reimbursement of expenses (of not more than

$100,000) should be approved by the Court; and (4) whether the Court should

approve the release of Released Claims against any and all Released Persons and

dismiss the Class Action with prejudice.

IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE,

YOUR RIGHTS WILL BE AFFECTED AND YOU MAY BE ENTITLED TO

SHARE IN THE SETTLEMENT FUND. If you have not yet received the full

printed Notice of Proposed Class Action Settlement (the "Mailed Notice") and a

copy of the Proof of Claim and Release form, you may obtain copies of these

documents by downloading them from www.strategicclaims.net , or by contacting:

Medbox, Inc. Securities Litigation do Strategic Claims Services 600 N. Jackson St., Suite 3

Media, PA 19063 Telephone: (866) 274-4004 Facsimile: (610) 565-7985

Email: info strategicclaims.net

If you are a member of the Class, to share in the distribution of the Net

Settlement Fund, you must submit a Proof of Claim and Release no later than

2016, establishing that you are entitled to recovery. Unless you

SUMMARY NOTICE 2. Case No. 2:15-CV-00426-BRO (JEMX)

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ELi Pg. 96


submit a written exclusion request, you will be bound by any judgment rendered in

the Class Action whether or not you make a claim. If you desire to be excluded

from the Class, you must submit a request for exclusion postmarked no later

than , 2016, in the manner and form explained in the detailed

Mailed Notice to the Claims Administrator.

Any objection to the Settlement, Plan of Distribution, or Lead Counsel's

request for an award of attorneys' fees and reimbursement of expenses must be

made in writing setting forth the objection in the manner and form explained in the

detailed Mailed Notice, and must be provided to the Court and the Settling Parties

such that it is received by each of the following no later than

2016, at the following addresses:

Clerk of the Court United States District Court Central District of California Western Division 312 North Spring Street, Room G-8 Los Angeles, CA 30012-4701

Frank J. Johnson JOHNSON & WEAVER, LLP 600 West Broadway, Suite 1540 San Diego, CA 92101 Telephone: (619) 230-0063 Facsimile: (619) 255-1856

Lead Counsel for Plaintiffs and the Class

Phillip R. Kaplan MANATT, PHELPS & PHILLIPS, LLP Park Tower 695 Town Center Drive, 14th Floor Costa Mesa, CA 92626 Telephone: (714) 371-2500 Facsimile: (714) 371-2550

Counsel for Medbox, Inc. and Defendants ' Counsel Designee


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If you have any questions about the Settlement, you may call or write to Lead

Counsel:


PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE REGARDING THIS NOTICE.

DATED: BY ORDER OF THE COURT UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION


ELi Pg. 98


EXHIBIT B

ELi Pg. 99


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V. Exhibit B

MEDBOX, INC., PEJMAN [PROPOSED] FINAL JUDGMENT VINCENT MEHDIZADEH, AND ORDER OF DISMISSAL WITH BRUCE BEDRICK, THOMAS PREJUDICE IWANSKI, GUY MARSALA, and DOUGLAS MITCHELL,

Defendants.

[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE

This matter came before the Court for a hearing pursuant to the Preliminary

Approval Order ("Order") dated , 2016, on the application of the

Settling Parties for approval of the Settlement set forth in the Stipulation and

Agreement of Settlement dated as of December 17, 2015 (the "Settlement

Agreement"). Due and adequate notice having been given to the Class as required

in said Order, and the Court having considered all papers filed and proceedings had

herein and otherwise being fully informed in the premises and good cause

1. ELi

Pg. 100

BRO-JEM Document 88-3 Filed l2/18/15 of 106 Page D #:1176

1 appearing therefore, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED

2 I that:

3

1. This Judgment incorporates by reference the definitions in the

4 Settlement Agreement, and all terms used herein shall have the same meanings as

5 set forth in the Settlement Agreement, unless otherwise set forth herein.

6

2. This Court has jurisdiction over the subject matter of the Class Action

7 and over all parties to the Class Action, including all members of the Class.

8

3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and solely

9 for purposes of the Settlement, the Court hereby finally certifies a Class defined as:

10 "all Persons who purchased or otherwise acquired Medbox, Inc. common stock

11 between April 2, 2013 and December 29, 2014, inclusive, and who were damaged

12 thereby. Excluded from the Class are: (1) Defendants and their families, the

13 officers and directors of the Company, at all relevant times, members of their

14 families and their legal representatives, heirs, successors, or assigns, and any entity

15 in which Defendants have or had a controlling interest; (2) any persons who have

16 separately filed actions against one or more of Defendants, based in whole or in part

17 on any claim arising out of or relating to any of the alleged acts, omissions,

18 misrepresentations, facts, events, matters, transactions, or occurrences referred to in

19 the Class Action or otherwise alleged, asserted, or contended in the Class Action;

20 and (3) those persons or entities who submitted valid and timely requests for

21 exclusion from the Class in accordance with this Order, a list of whom is attached

22 hereto as Exhibit A." With respect to the Class, this Court finds, solely for the

23 purposes of the Settlement, that the prerequisites for a class action under Rules

24 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied.

25

4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Lead

26 Plaintiffs are certified as the Class representatives and Lead Counsel previously

27 selected by Lead Plaintiffs and appointed by the Court is hereby appointed as Lead

28 Counsel for the Class.

2.

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5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the Court

hereby approves the Settlement set forth in the Settlement Agreement as fair,

reasonable, and adequate. The Court thither finds that the Settlement set forth in

the Settlement Agreement is the result of good-faith, informed, arm's-length

negotiations between competent, experienced counsel representing the interests of

the respective Settling Parties. The Court further finds that the record is sufficiently

developed and complete to have enabled the Settling Parties to have adequately

evaluated and considered their positions. Accordingly, the Settlement embodied in

the Settlement Agreement is hereby finally approved in all respects.

6. The Court hereby authorizes and directs implementation and

performance of all the terms and provisions of the Settlement Agreement, as well as

the terms and provisions hereof. The Court hereby dismisses the Class Action and

all Released Claims of the Class with prejudice and without costs as to any party,

except as and to the extent provided in the Settlement Agreement and herein.

7. Upon the Effective Date, Lead Plaintiffs, and each and every Class

Member, for themselves, and anyone claiming (now or in the future) through or on

behalf of any of them, shall be deemed to have, and by operation of this Judgment

shall have, fully, finally, and forever waived, released, relinquished, discharged,

and dismissed each and every one of the Released Claims (including Unknown

Claims) against each and every one of the Released Persons, whether or not such

Class Member executes and delivers the Proof of Claim and Release form, and

whether or not such Class Member shares in the Settlement Fund. The Settling

Parties acknowledge, and the Class Members shall be deemed by operation of law

and of this Judgment to have acknowledged, that the foregoing waiver of Unknown

Claims and of the provisions, rights and benefits of § 1542 of the California Civil

Code was separately bargained for and is a material element of the Settlement of

which the release in this paragraph is a part.

ELi Pg. 102

3.

BRO-JEM Document88-3 Filed l2/18/15 of 106 PageD #:1178

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8. All Class Members are hereby forever barred and enjoined from

prosecuting any of the Released Claims against any of the Released Persons.

9. Upon the Effective Date, each of the Released Persons shall be

deemed to have, and by operation of this Judgment shall have, fully, finally, and

forever released, relinquished, and discharged Lead Plaintiffs, each and all of the

Class Members, Lead Counsel, and Plaintiffs' Counsel from all claims (including

Unknown Claims) arising out of, relating to, or in connection with the institution,

prosecution, assertion, settlement or resolution of the Class Action or the Released

Claims.

10. The distribution of the Mailed Notice and the Summary Notice, as

provided for in the Order, given to the Class was the best notice practicable under

the circumstances, including the Mailed Notice to all Class Members who could be

identified through reasonable effort. Said notice provided the best notice

practicable under the circumstances of those proceedings and of the matters set

forth therein, including the proposed Settlement set forth in the Settlement

Agreement, to all Persons entitled to such notice, and said notice fully satisfied the

requirements of Rule 23 of the Federal Rules of Civil Procedure, Section 21 D(a)(7)

of the Securities Exchange Act of 1934, the requirements of due process, and any

other applicable law. Thus, it is hereby determined that all Class Members are

bound by this Judgment.

11. Pursuant to Section 3(a)(10) of the Securities Act of 1933, any shares

issued to pay the Settlement Shares shall be fully paid, non-assessable and, upon

final approval of the Settlement, exempt from registration under Section 3(a)(10),

or other applicable provisions, of the Securities Act of 193 3, and will be identical in

all respects to Medbox, Inc.'s currently outstanding shares of common stock.

12. The Court hereby finds that the proposed Plan of Distribution is a fair

and reasonable method to allocate the Net Settlement Fund among Authorized

Claimants.

ELi Pg. 103

4.


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13. Neither the Settlement Agreement nor the Settlement contained herein,

nor any act performed or document executed pursuant to or in furtherance of the

Settlement Agreement or the Settlement is or may be deemed to be or may be used

as an admission of, or evidence of (a) the validity of any Released Claim, or of any

liability, negligence, gross negligence, recklessness, deliberate recklessness, fault or

other wrongdoing of any kind; or (b) any liability, fault, misrepresentation or

omission with respect to any statement or written document; or (c) the validity or

invalidity of any claims asserted by Lead Plaintiffs or the amount of any

recoverable damages in connection with those claims; or (d) any infirmity in the

defenses that have been or could have been asserted in this Class Action. The

provisions set forth in this ¶13 (a)-(d) above each apply with respect to any civil,

criminal, or administrative proceeding in any court, administrative agency or other

tribunal. The Released Persons may file the Settlement Agreement and/or the

Judgment in any action that may be brought against them in order to support a

defense or counterclaim based on principles of res judicata, collateral estoppel,

release, good faith settlement, judgment bar or reduction, or any other theory of

claim preclusion or issue preclusion or similar defense or counterclaim.

14. Without affecting the finality of this Judgment in any way, this Court

hereby retains continuing jurisdiction over: (a) implementation of this Settlement

and any award or distribution of the Settlement Fund, including interest earned

thereon; (b) disposition of the Settlement Fund; (c) hearing and determining

applications for attorneys' fees, interest, and expenses in the Class Action; and

(d) all parties hereto for the purpose of construing, enforcing, and administering the


15. Pursuant to Section 21 D(c)(1) of the Private Securities Litigation

Reform Act of 1995, the Court finds that during the course of the Class Action, the

Settling Parties and their respective counsel at all times complied with each of the

requirements of Rule 11 of the Federal Rules of Civil Procedure, and that the Class

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1 Action was not brought for any improper purpose and is not unwarranted by

2 existing law or legally frivolous.

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16. The Court hereby GRANTS Lead Counsel's request for attorneys' fees

4 in the Cash Amount of $ and

shares of Medbox, Inc.

5 common stock, as well as reimbursement of reasonable and necessary expenses

6 incurred in the prosecution of the Class Action in the amount of $______________

7 together with the interest earned thereon for the same time period and at the rate

8 earned by the Settlement Fund until paid. Said fees shall be allocated among

9 Plaintiffs' Counsel by Lead Counsel in a manner which, in their good-faith

10 judgment, reflects each counsel's contribution to the institution, prosecution, and

11 resolution of the Class Action. The Court finds that the amount of fees awarded is

12 fair and reasonable in light of the time and labor required, the novelty and difficulty

13 of the case, the skill required to prosecute the case, the experience and ability of the

14 attorneys, awards in similar cases, the contingent nature of the representation and

15 the result obtained for the Class.

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17. Any order approving or modifying the Plan of Distribution or Lead

17 Counsel's application or award of attorneys' fees and expenses, shall not disturb or

18 affect the finality of this Judgment, the Settlement Agreement, the Settlement

19 contained therein, nor any act performed or document executed to or in furtherance

20 of the Settlement Agreement or the Settlement.

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18. In the event that the Settlement does not become effective in

22 accordance with the terms of the Settlement Agreement, or the Effective Date does

23 not occur, or in the event that the Settlement Fund, or any portion thereof, is

24 returned to Defendants or their insurers, then this Judgment shall be rendered null

25 and void to the extent provided by and in accordance with the Settlement

26 Agreement and shall be vacated and, in such event, all orders entered and releases

27 delivered in connection herewith shall be null and void to the extent provided by

28 and in accordance with the Settlement Agreement and the Settling Parties shall be

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ELi Pg. 105

Case BRO-JEM Document 88-3 Filed l2/18/15 of 106 Page D #:1181

1 I restored to their respective positions in the Class Action as of the Execution Date of

2 the Settlement Agreement.

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19. Without further order of the Court, the Settling Parties may agree to

4 reasonable extensions of time to carry out any of the provisions of the Settlement

5 I Agreement.

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20. This Court finds, for purposes of the Federal Rules of Civil Procedure,

7 that there is no just reason for delay and expressly directs the Clerk of the Court to

8 enter this Judgment as set forth herein immediately. This Judgment is a final

9 judgment in the Class Action as to all claims asserted therein at any time and as to

10 all of the Class Member's Released Claims against the Released Persons.

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21. Judgment shall be, and hereby is, entered dismissing the Class Action

12 in its entirety with prejudice.

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SO ORDERED this _ day of, 2016.

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HON. BEVERLY REID O'CONNELL

17 UNITED STATES DISTRICT JUDGE

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ELi Pg. 106

7.

Case BRO-JEM Document 88-3 Filed l2/18/15 of 106 Page D #:1182

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Exhibit A - Requests for Exclusion

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[To be added in connection with final approval briefing

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ELi Pg. 107

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Josh Crystal, et al. v. Medbox, Inc., et al. 15-CV-00426...

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Transcript of Josh Crystal, et al. v. Medbox, Inc., et al. 15-CV-00426...