united states district court central … following cases were commenced in the united states...

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

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

JOSH CRYSTAL, Individually And On Behalf Of 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

Ex. 1 Pg. 3

Case 2:15-cv-00426-BRO-JEM Document 88-3 Filed 12/18/15 Page 2 of 106 Page ID #:1078

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1. SETTLEMENTAGREEMENT Case No. 2:15-CV-00426-BRO (JEMX)

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 al. 2:15-cv-00426-BRO-JEM 01/21/15

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

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

Ex. 1 Pg. 4


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

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

Mitchell.

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

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

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

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

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

counsel for the Class (“Lead Counsel”) (Id.).

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

Violations of the Federal Securities Laws (the “Consolidated Complaint”) (Dkt.

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

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

Quintanilla, and Q Accountancy as defendants.

Following the filing of the Consolidated Complaint, Lead Plaintiffs and

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

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

and Defendants agreed to the Settlement.

II. CLAIMS OF LEAD PLAINTIFFS AND BENEFITS OF THE SETTLEMENT

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

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

recognize and acknowledge the expense and length of continued proceedings

necessary to prosecute the Class Action against Defendants through continued

discovery, trial, and appeals. Lead Plaintiffs and Lead Counsel also have taken into

account the uncertain outcome and the risk of any litigation, especially in complex

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

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

Ex. 1 Pg. 5


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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 alia, 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

Ex. 1 Pg. 6


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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

Ex. 1 Pg. 7


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

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


1.5 “Class” means all Persons who purchased or otherwise acquired

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

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

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

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

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

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

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

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

have or had a controlling interest.

1.6 “Class Action” means the consolidated securities class action pending

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

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

caption.

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

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

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

December 29, 2014, inclusive.

1.9 “Court” means the United States District Court for the Central District

of California.

1.10 “Defendants” mean Medbox, Inc., Pejman Vincent Mehdizadeh, Bruce

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

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

meaning as defined above.

Ex. 1 Pg. 8


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1.11 “Effective Date” means the first date by which all of the events and

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

occurred.

1.12 “Escrow Account” means the interest-bearing account created pursuant

to Section IV.2 herein.

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

perform the duties as set forth in this Settlement Agreement.

1.14 “Execution Date” means the last date upon which this Settlement

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

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

¶6.1 of this Settlement Agreement.

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

the Court to Lead Counsel and Plaintiffs’ Counsel to be paid from the Settlement

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

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

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

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

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

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

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

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

from the Settlement Fund.

1.17 “Final” means when the last of the following with respect to the

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

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

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

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

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

Ex. 1 Pg. 9


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

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

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

purposes of this paragraph, an “appeal” shall include any petition for a writ of

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

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

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

1.18 “Final Settlement Approval Hearing” means the final hearing to be

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

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

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

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

attorneys’ fees and expenses to Lead Counsel.

1.19 “Gross Settlement Fund” means the Settlement Amount plus all

interest earned thereon.

1.20 “Individual Defendants” means Pejman Vincent Mehdizadeh, Bruce

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

Ned Siegel, Timothy Quintanilla, and Q Accountancy Corporation.

1.21 “Judgment” means the judgment and order of dismissal with prejudice

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

form attached hereto as Exhibit B.

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

1.23 “Lead Plaintiffs” mean Peter Phan and Paul Poon.

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

and former parents, subsidiaries, divisions, and affiliates.

1.25 “Net Settlement Fund” means the portion of the Settlement Fund that

shall be distributed to Authorized Claimants as allowed by the Settlement

Ex. 1 Pg. 10


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

set forth in ¶5.4 of this Settlement Agreement.

1.26 “Notice and Administration Account” means the interest-bearing

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

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

upon by the Claims Administrator for Notice and Administration Expenses without

prior approval of the Court.

1.27 “Notice and Administration Expenses” means all expenses incurred

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

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

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

service; printing and mailing the Mailed Notice (as defined in ¶3.1-¶3.2, below), as

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

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

Claim and Release.

1.28 “Person” means an individual, corporation, partnership, limited

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

unincorporated association, government or any political subdivision or agency

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

predecessors, successors, representatives, or assignees.

1.29 “Plaintiffs’ Counsel” means any counsel who have appeared on behalf

of any plaintiff in the Class Action.

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

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

shall be distributed to Authorized Claimants after payment of Notice and

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

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

Ex. 1 Pg. 11


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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 § 1.468B-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

Ex. 1 Pg. 12


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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:

Ex. 1 Pg. 13


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A general release does not extend to claims which the

creditor does not know or suspect to exist in his or her favor at the

time of executing the release, which if known by him or her must

have materially affected his or her settlement with the debtor.

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 any and all

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

this release is a part.

2. The Settlement

a. The Settlement Fund

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

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

Ex. 1 Pg. 14


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

insurers shall cause One Million Seven Hundred Thousand United States Dollars

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

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

the “Cash Amount”), into the Escrow Account maintained by the Escrow Agent on

behalf of Lead Plaintiffs and the Class.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ex. 1 Pg. 15


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appropriate action to perfect the exemption of the Settlement Shares from

registration under the federal securities laws by reason of Section 3(a)(10), or other

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

the Court for its consideration shall expressly state that “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 1933.” In the event the Court does not make

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

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

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

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

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

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

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

Hon. Layn R. Phillips (Ret.) (the “Mediator”) for binding arbitration of the issue.

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

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

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

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

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

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

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

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

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

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

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

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

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

Ex. 1 Pg. 16


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

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

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

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

this Settlement Agreement.

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

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

Settlement Fund.

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

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

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

Administration Expenses associated with the administration of the Settlement

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

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

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

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

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

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

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

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

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

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

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

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

administrative expenses incurred and fees charged by the Claims Administrator in

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

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

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

Ex. 1 Pg. 17


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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.

Ex. 1 Pg. 18


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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 §468B 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

Ex. 1 Pg. 19


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

hereof.

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

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

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

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

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

Settlement Fund” for federal or state income tax purposes (“Taxes”), and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

§1.468B-2(l)(2)); neither Defendants nor their counsel are responsible nor shall

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

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

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

Ex. 1 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 alia, 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-1 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

Ex. 1 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

Ex. 1 Pg. 22


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

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

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

4.2 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, directly or

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

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

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

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

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

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

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

Released Claims.

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

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

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

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

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

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

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

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

Ex. 1 Pg. 23


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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-1

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

Ex. 1 Pg. 24


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

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

affidavit or declaration, of such mailing and publishing.

5.4 The Settlement Fund shall be applied as follows:

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

by the Court;

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

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

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

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

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

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

and

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

Settlement Fund”) to Authorized Claimants as allowed by the Settlement

Agreement, the Plan of Distribution, or the Court.

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

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

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

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

subject to and in accordance with ¶5.6-¶5.13 hereof.

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

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

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

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

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

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

are reasonably available to such Person.

Ex. 1 Pg. 25


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

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

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

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

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

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

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

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

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

materially delayed.

5.8 Lead Counsel shall cause the Claims Administrator to calculate the

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

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

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

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

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

Fund.

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

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

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

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

have a reversionary interest in the Settlement Fund. 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. These redistributions shall be

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

Ex. 1 Pg. 26


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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.

6. 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

Ex. 1 Pg. 27


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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

Ex. 1 Pg. 28


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

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

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

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

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

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

Settlement Fund.

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

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

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

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

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

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

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

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

Plaintiffs’ Counsel to make appropriate refunds or repayments to the Settlement

Fund.

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

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

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

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

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

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

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

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

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

Agreement and the Settlement of the Class Action.

Ex. 1 Pg. 29


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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 alia, 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

Ex. 1 Pg. 30


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

mutually agree in writing to proceed with the Settlement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ex. 1 Pg. 31


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

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

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

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

portion of the Settlement Amount to the Settlement Fund.

8. Miscellaneous Provisions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

reflect a settlement that was reached voluntarily after consultation with experienced

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

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

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

Ex. 1 Pg. 32


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made in any public forum regarding the Class Action, including that the Class

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

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

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

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

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

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

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

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

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

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

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

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

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

Settlement amount, in 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.

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

Action relating to the confidentiality of information shall survive this Settlement

Agreement.

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

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

Ex. 1 Pg. 33


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

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

successors-in-interest.

8.7 The Settlement Agreement and the Exhibits attached hereto constitute

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

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

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

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

covenants contained and memorialized in such documents. Except as otherwise

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

Settling Party shall bear its own fees and costs.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

expressly authorized to enter into any modifications or amendments to the

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

Ex. 1 Pg. 34


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

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

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

in whole or in part.

8.11 Each counsel or other Person executing the Settlement Agreement or

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

has the full authority to do so.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

may proceed as if the Settlement were never entered into.

8.13 This Settlement Agreement shall not be construed more strictly against

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

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

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

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

preparation.

Ex. 1 Pg. 35


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

not intended to have legal effect.

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

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

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

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

8.16 The Settlement Agreement may be executed in one or more

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

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

with the Court.

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

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

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

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

8.18 The Court shall retain jurisdiction with respect to implementation and

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

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

enforcing the Settlement embodied in the Settlement Agreement.

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

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

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

against any of the Released Persons.

8.20 This Settlement Agreement and the Exhibits hereto shall be considered

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

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

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

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

effect to that State’s choice-of-law principles.

Ex. 1 Pg. 36


1 8.21 Notices required or permitted by this Stipulation shall be submitted

2 either by overnight mail or in person as follows:

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Notice to Plaintiffs:

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

Notice to Defendants:

Phillip R. Kaplan MANATT, PHELPS &

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 & WEA VER, LLP FRANK J. JOHNSON SHAWNE. FIELDS

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

Lead Counsel for Lead Plaintiffs

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

Ex. 1 Pg. 37


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

Counsel.for D~fendant Medbox, Inc.

HORWITZ+ ARMSTRONG LLP JOHN R. ARMSTRONG MATTHEWS. HENDERSON

JOHN R. ARMSTRONG

264 7 5 Rancho Parkway South Lake Forest, CA 92630 Telephone: 949/540-6540 949/540-6583 (fax) [email protected] [email protected]

Counsel for Defendants Timothy Quintanilla and Q Accountancy Corporation


Ex. 1 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.

HORWITZ + ARMSTRONG LLP

JOHN R. ARMSTRONG MATTHEW S. HENDERSON

JOHN R. ARMSTRONG

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

Counsel for Defendants Timothy Quintanilla and Q Accountancy Corporation

Ex. 1 Pg. 39


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12121 Wils · e Boulevard, Suite 600 Los Angele CA 90025 Telephone: :J 10/899-2070 31Of496-l930 (fax) rrabbat@_enenstein Jaw .com rwenge1~enenste inlaw.com

Counsel for Defendant Pejman Vincent Mehdizadeh

CONANT LAW FIRM, PLC PAUL A. CONANT

PAUL A. CONANT

2398 East Camelback Road, Su ite 925 Phoenix, AZ 850 16 Telephone: 602/508-9010 602/508-90 15 (fax) pau [email protected]

Counsel for Defendant Bruce Bedrick

36. SE'rl'LEi\ IENTAGREEi\IENT Case No. 2 : I S-CV-00426-BRO (J EMX)

Ex. 1 Pg. 40


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ENENSTEIN RIBAKOFF La VINA & PHAM,APC

ROBERT A. RABBAT RYANT. WENGER

ROBERT A. RABBAT

12121 Wilshire Boulevard, Suite 600 Los Angeles, CA 90025 Telephone: 310/899-2070 310/496-1930 (fax) [email protected] rwenger~enensteinlaw .com

Counsel for Defendant Pejman Vincent Mehdizadeh

CONANT LAW FIRM, PLC PAUL~ONANT J \

A~ (11·..,) ~~ULA.~~T

2398 East Camelback Road, Suite 925 Phoenix, AZ 85016 Telephone: 602/508-9010 602/508-9015 (fax) [email protected]

Counsel for Defendant Bruce Bedrick


Ex. 1 Pg. 41


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BIENERT, MILLER & KATZ THOMAS H. BIENERT, JR.

903 Calle Amanecer, uite 350 San Clemente, C 2673 Telephone 949/369-3700 949/369-3701 (fax) [email protected]

LC

Counsel f<?r Defendants Guy Marsala and Douglas Mitchell

FENNEMORE & CRAIG, P.C. PATRICK SHEEHAN

PATRICK SHEEHAN 300 S. Fourth Stree~ Suite 1400 Las Vegas, NV 891ul Telephone: 702/692-8000 702(692-8099 (fax) [email protected]

Counsel for Defendants J Mitchell Lowe and Neef Siegel

GRANT, GENOVESE & BARATTA, LLP GORDON G. MAY

GORDON G. MAY 2030 Main Street, Suite 1600 Irvine CA 92614 Tele2hone: 949/660-1600 [email protected]

Counsel for Defendant Thomas Iwanski


Ex. 1 Pg. 42


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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

~KSHEEHAN 300 S. Fourth Street, Suite 1400 Las Vegas, NV 89101 TeleJ?hone: 702/692-8000 702/092-8099 (fax) [email protected]

Counsel for Defendants J Mitchell Lowe and Ned' Siegel

GRANT, GENOVESE & BARATTA, LLP GORDON G. MAY

GORDON G. rvIAY

2030 Main Streeti Suite L600 Irvine CA 92614 Tele2bone: 949/660-1600 ggm@ggb- law.com

Counsel for Defendant Thomas Iwanski


Ex. 1 Pg. 43


Ex. 1 Pg. 44


EXHIBIT A

Ex. 1 Pg. 45


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1.



JOSH CRYSTAL, Individually And On Behalf Of 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 Exhibit A [PROPOSED] PRELIMINARY APPROVAL ORDER

[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”)1

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

1 Lead Plaintiffs, on behalf of themselves and the Class, and Defendants are

collectively referred to as the “Settling Parties.”

Ex. 1 Pg. 46


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2.

Agreement of Settlement, dated as of December 17, 2015 (the “Settlement

Agreement”), which is subject to review under Rule 23 of the Federal Rules of

Civil Procedure, and which, together with the exhibits thereto, sets forth the terms

and conditions for the proposed Settlement of the claims alleged in the

Consolidated Complaint filed in the Class Action on the merits and with prejudice;

WHEREAS, all capitalized terms used herein shall have the same meaning as

in the Settlement Agreement; and

WHEREAS, this Court having read and considered the Settlement

Agreement, the proposed Notice of Proposed Class Action Settlement (“Mailed

Notice”), the Summary Notice of Proposed Class Action Settlement (“Summary

Notice”), the proposed Proof of Claim and Release, and the [Proposed] Final

Judgment and Order of Dismissal with Prejudice (“Judgment”), and finding that

substantial and sufficient grounds exist for entering this Preliminary Approval

Order:

NOW, THEREFORE, IT IS HEREBY ORDERED, this ___ day of

____________, 2016, that:

1. The Court hereby preliminarily approves the Settlement Agreement

and the Settlement set forth therein, subject to further consideration at the Final

Settlement Approval Hearing described below.

2. Pending further order of the Court, all litigation activity in the Class

Action is hereby stayed, except that which is contemplated herein, in the Settlement

Agreement, or otherwise as is necessary to effectuate the Settlement, and all

hearings, deadlines, and other proceedings in this Class Action, except insofar as

they relate to the Settlement, are hereby taken off calendar.

3. Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil

Procedure and for the purposes of the Settlement only, claims in the Class Action

against the Defendants are hereby preliminarily certified as a class action on behalf

of all Persons who purchased or otherwise acquired Medbox common stock

Ex. 1 Pg. 47


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3.

between April 2, 2013 and December 29, 2014, inclusive, and who were damaged

thereby. Excluded from the Settlement Class are: (1) Defendants and their families,

the officers and directors of the Company, at all relevant times, members of their

families and their legal representatives, heirs, successors, or assigns, and any entity

in which Defendants have or had a controlling interest; (2) any persons who have

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;

and (3) those persons or entities who submit valid and timely requests for exclusion

from the Class in accordance with this Order.

4. This Court finds, preliminarily and for purposes of Settlement only,

that the prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal

Rules of Civil Procedure have been satisfied in that: (a) the number of Class

Members is so numerous that joinder of all members of the Class is impracticable;

(b) there are questions of law and fact common to the Class; (c) the claims of Lead

Plaintiffs are typical of the claims of the Class they seek to represent; (d) Lead

Plaintiffs will fairly and adequately represent the interests of the Class; (e) the

questions of law and fact common to the Class predominate over any questions

affecting only individual members of the Class; and (f) a class action is superior to

other available methods for the fair and efficient adjudication of the controversy.

5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure,

preliminarily and for the purposes of settlement only, Lead Plaintiffs are certified as

the Class representatives on behalf of the Class and Lead Counsel previously

selected by Lead Plaintiffs and appointed by the Court, is hereby appointed as Lead

Counsel for the Class.

6. A hearing pursuant to Federal Rule of Civil Procedure 23(e) (the

“Final Settlement Approval Hearing”) is hereby scheduled to be held before this

Ex. 1 Pg. 48


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4.

Court on [At the Court’s convenience, on or after one-hundred (100) Calendar

Days following the entry of the Preliminary Approval Order]

__________________, 2016 at 1:30 p.m. for the following purposes:

(a) to finally determine whether the Class Action satisfies the applicable

prerequisites for class action treatment under Federal Rules of Civil

Procedure 23(a) and (b) for purposes of settlement;

(b) to determine whether the Settlement is fair, reasonable, and adequate,

and should be approved by this Court;

(c) to determine whether the Judgment as provided under the Settlement

Agreement, and submitted as Exhibit B to the Settlement Agreement, should

be entered, dismissing all claims in the Consolidated Complaint against all of

the Defendants, on the merits and with prejudice, and to determine whether

the release of Released Claims against any and all Released Persons, as set

forth in the Settlement Agreement, should be ordered;

(d) to determine whether the proposed Plan of Distribution for the Net

Settlement Fund is fair and reasonable and should be approved by this Court;

(e) to consider the application of Lead Counsel for an award of attorneys’

fees and expenses; and

(f) to rule upon such other matters as the Court may deem appropriate.

7. The Court reserves the right to approve the Settlement with or without

modification and with or without further notice of any kind. The Court further

reserves the right to enter its Judgment approving the Settlement Agreement and

dismissing the claims in the Consolidated Complaint as to the Defendants, on the

merits and with prejudice, regardless of whether it has approved the Plan of

Distribution or awarded attorneys’ fees and expenses to Lead Counsel.

8. The Court approves the form, substance and requirements of: (a) the

Mailed Notice, (b) the Summary Notice, and (c) the Proof of Claim and Release.

9. Lead Counsel has the authority to enter into the Settlement Agreement

Ex. 1 Pg. 49


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5.

on behalf of the Class and is authorized to act on behalf of the members of the Class

with respect to all acts or consents required by or that may be given pursuant to the

Settlement Agreement or such other acts that are reasonably necessary to

consummate the Settlement.

10. The Court approves the appointment of Strategic Claims Services as

the Claims Administrator, and approves the payment of reasonable administration

costs to the Claims Administrator from the proceeds of the Settlement, not to

exceed $200,000.00 without further Court order.

11. Within ten (10) Business Days of entry of this Order, Defendants are

to arrange for Medbox or 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.

12. 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 ¶11 of this Order (“Notice Date”), the Claims

Administrator shall:

(a) 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-1

attached to the Settlement Agreement, and a Proof of Claim and Release,

substantially in the form of Exhibit A-2 attached to the Settlement

Agreement. The Claims Administrator shall also make reasonable efforts to

give notice to nominee owners such as brokerage firms and other persons or

entities who purchased Medbox during the Class Period. Such nominee

purchasers are hereby directed to forward copies of the Mailed Notice and

Proof of Claim and Release to their beneficial owners or to provide the

Claims Administrator with lists of the names and addresses of the beneficial

owners. Promptly upon receipt of any such information from nominee

purchasers, the Claims Administrator shall cause the Mailed Notice and

Ex. 1 Pg. 50


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6.

Proof of Claim and Release to be mailed to such beneficial owners.

Additional copies of the Mailed Notice and Proof of Claim and Release shall

be made available to any record holder requesting the same for the purpose

of distribution to beneficial owners;

(b) cause the Settlement Agreement and the Mailed Notice and Proof of

Claim and Release substantially in the forms submitted as Exhibits A-1 and

A-2 to the Settlement Agreement, respectively, to be posted on the Claims

Administrator’s website; and

(c) cause, not later than seven (7) Business Days following the Notice

Date, the Summary Notice to be published once over a national business

internet wire service and once in Investor’s Business Daily.

13. Not later than thirty-five (35) Calendar Days prior to the Final

Settlement Approval Hearing, Lead Counsel shall serve on Defendants’ counsel and

file with the Court proof, by affidavit or declaration, of such mailing and

publishing.

14. The form and method set forth herein of notifying the Class of the

Settlement and its terms and conditions meet the requirements of due process and

Rule 23 of the Federal Rules of Civil Procedure and Section 21D(a)(7) of the

Exchange Act, 15 U.S.C. § 78u-4(a)(7), as amended by the Private Securities

Litigation Reform Act of 1995; constitutes the best notice practicable under the

circumstances; and shall constitute due and sufficient notice to all persons and

entities entitled thereto. Under no circumstances shall any Class Member be

relieved from the terms of the Settlement, including the releases provided for

therein, based upon the contention or proof that such Class Member failed to

receive actual or adequate notice.

15. To share in the net proceeds of the Settlement in the event the

Settlement is effected in accordance with all of the terms and conditions thereof,

each Class Member shall take the following action and be subject to the following

Ex. 1 Pg. 51


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7.

conditions:

(a) A properly executed Proof of Claim and Release, substantially in the

form submitted as Exhibit A-2 to the Settlement Agreement, shall be

submitted, by first-class mail, postage prepaid, postmarked no later than

ninety (90) Calendar Days from the Notice Date, to the Post Office Box

address listed in the Mailed Notice. Such deadline may be further extended

by Order of this Court. Each Proof of Claim and Release shall be deemed to

have been submitted when postmarked (if properly addressed and mailed by

first-class mail) provided it is actually received before the filing of a motion

for an Order of the Court approving distribution of the Net Settlement Fund.

Any Proof of Claim and Release submitted in any other manner shall be

deemed to have been submitted when it was actually received at the address

designated in the Mailed Notice;

(b) The Proof of Claim and Release submitted by the Class Member must:

(i) be fully and properly completed, without any material deletions or

modifications of any form provided to the Class Member; (ii) state, for the

Class Member, all purchases of Medbox shares during the Class Period,

including the number and price of the shares purchased and the date of each

purchase, the number and price of shares sold during the Class Period; (iii) be

accompanied by adequate documentation to demonstrate the transaction(s)

reported therein, in the form of broker confirmation slips, broker account

statements, an authorized statement from the broker containing the

transactional information found in a broker confirmation slip, or such other

documentation as is deemed adequate by Lead Counsel or the Claims

Administrator; (iv) be executed under penalty of perjury; and (v) be

accompanied, if the person executing the Proof of Claim and Release is

acting in a representative capacity, by a certification of the executor’s current

authority to act on behalf of the Class Member;

Ex. 1 Pg. 52


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8.

(c) Once the Claims Administrator has considered a timely submitted

Proof of Claim and Release, Lead Counsel, through the Claims

Administrator, shall determine, based upon the Plan of Distribution, whether

such claim is valid, deficient, or rejected. For each claim determined to be

either deficient or rejected, the Claims Administrator shall send a deficiency

letter or rejection letter as appropriate, describing the basis on which the

claim was so determined; and

(d) As part of the Proof of Claim and Release, each Class Member shall

submit to the jurisdiction of the Court with respect to the claim submitted.

16. Class Members shall be bound by all determinations and judgments in

the Class Action, whether or not they submit a valid and timely Proof of Claim and

Release and are thereby entitled to share in the net proceeds of the Settlement,

unless such Person(s) request exclusion from the Class in a timely and proper

manner, as hereinafter provided:

(a) A person eligible to be a Class Member, but who wishes to be

excluded from the Class, may request exclusion by mailing the request in

written form, by first-class mail, postage prepaid, postmarked no later than

twenty-one (21) Calendar Days prior to the Final Settlement Approval

Hearing, to the address listed in the Mailed Notice. 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;

(b) The request for exclusion shall clearly indicate the name and address

of the person seeking exclusion and that the sender specifically requests to be

excluded from the Class;

(c) The request for exclusion shall be executed, under penalty of perjury,

Ex. 1 Pg. 53


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9.

by the person requesting exclusion from the Class, and accompanied, if said

person is acting in a representative capacity, by a certification of the person’s

current authority to act on behalf of the person requesting exclusion from the

Class;

(d) The request for exclusion shall state, for the Class Member, all

purchases of Medbox common stock during the Class Period, including the

number and price of the shares purchased and the date of each purchase, the

number and price of shares sold during the Class Period and the date of each

sale; and

(e) It is also requested that such persons provide their telephone number or

other contact information.

The request for exclusion shall not be effective unless the potential Class Member

provides the required information set forth in this ¶16, and is made within the time

stated above, or the exclusion is otherwise accepted by the Court. Class Members

requesting exclusion from the Class shall not be entitled to receive any payment out

of the Net Settlement Fund as described in the Mailed Notice and Summary Notice.

17. Any Class Member may appear and show cause, if he, she or it has

any, why the proposed Settlement of the Class Action should or should not be

approved as fair, reasonable, and adequate, why a judgment should or should not be

entered thereon, why the Plan of Distribution should or should not be approved

and/or why attorneys’ fees and expenses should or should not be awarded to

counsel for Lead Plaintiffs; provided, however, that no Class Member or any other

Person shall be heard or entitled to contest such matters, unless that Person has

delivered by hand or sent by first-class mail written objections and copies of any

papers and briefs such that they are received on or before twenty-one (21) Calendar

Days prior to the Final Settlement Approval Hearing by: Frank J. Johnson, Johnson

& Weaver, LLP, 600 West Broadway, Suite 1540, San Diego, CA 92101, as Lead

Counsel for Lead Plaintiffs and the Class, and by Phillip R. Kaplan, Manatt, Phelps

Ex. 1 Pg. 54


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10.

& Phillips, LLP, Park Tower, 695 Town Center Drive, 14th Floor, Costa Mesa, CA

92626, as Defendants’ Counsel designee. Any such objections, papers, and briefs

shall also be filed with the Clerk of the United States District Court for the Central

District of California, Western Division, on or before twenty-one (21) Calendar

Days prior to the Final Settlement Approval Hearing. Any objection must include:

(a) the full name, address and phone number of the objecting Class Member; (b) a

list of all of the Class Member’s transactions involving Medbox common stock

during the Class Period; (c) a written statement of all grounds for the objection; (d)

identify any case, by name, court, and docket number, in which the objector or his

attorney, if any, has objected to a settlement in the last three years; and (e) the

objector’s signature, even if represented by counsel. Class Members intending to

object and 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 hearing. Any Class Member

who does not make his, her or its objection in the manner provided 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 set forth in the Settlement

Agreement, to the Plan of Distribution, or to the award of attorneys’ fees and

expenses to Lead Counsel, unless otherwise ordered by the Court.

18. All funds held by the Escrow Agent shall be deemed and considered to

be 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 order(s) of the Court.

19. All papers in support of the Settlement, the Plan of Distribution, and

request by Lead Counsel for an award of attorneys’ fees and expenses, shall be filed

and served thirty-five (35) Calendar Days prior to the Final Settlement Approval

Hearing. Any reply in further support of the Settlement, the Plan of Distribution,

any application by Lead Counsel for attorneys’ fees and expenses, and any other

Ex. 1 Pg. 55


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11.

matter including, but not limited to, a response to an objection, if any, shall be filed

and served by Lead Counsel seven (7) Calendar Days prior to the Final Settlement

Approval Hearing.

20. All expenses incurred in identifying and notifying Class Members, as

well as administering the Settlement Fund, shall be paid as set forth in the

Settlement Agreement. In the event the Settlement is not approved by the Court, or

otherwise fails to become effective, neither Lead Plaintiffs nor any of their counsel

shall have any obligation to repay any amounts incurred or properly disbursed

pursuant to ¶2.4 or ¶2.12 of the Settlement Agreement.

21. In the event that the Settlement is not consummated pursuant to its

terms, the Settlement Agreement, except as otherwise provided therein, including

any amendment(s) thereto, and this Order, shall be null and void, of no further force

or effect, and without prejudice to any Settling Party, and each Settling Party shall

be restored to their, his, her, or its respective position as it existed as of the

Execution Date of the Settlement Agreement.

22. Neither the Settlement Agreement, nor this Order, nor any of their

terms or provisions, nor any of the negotiations or proceedings connected with it,

nor any act performed or document signed in connection with the Settlement, shall,

in this or any other court, administrative agency, arbitration forum or other tribunal,

constitute or be construed as an admission or concession of, or evidence of, or be

deemed to create any inference of, the truth of any of the allegations in the Class

Action, or of any liability, fault, or wrongdoing of any kind on the part of any of the

Settling Parties.

23. The Court reserves the right to continue or adjourn the Final

Settlement Approval Hearing without any further notice to Class Members, and

retains jurisdiction over the Class Action to consider all further applications arising

out of or connected with the Settlement. The Court may approve the Settlement,

with such modifications as may be agreed to by the Settling Parties, if appropriate,

Ex. 1 Pg. 56


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without further notice to the Class.

SO ORDERED this _________ day of ___, 2016.

___________________________________

HON. BEVERLY REID O’CONNELL

UNITED STATES DISTRICT JUDGE

Ex. 1 Pg. 57


EXHIBIT A-1

Ex. 1 Pg. 58


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1. NOTICE OF PROPOSED CLASS ACTION

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




Case No.: 2:15-CV-00426-BRO (JEMx) CLASS ACTION Exhibit A-1 Notice of Proposed Class Action Settlement

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.1

1 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.

Ex. 1 Pg. 59


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NOTICE OF PENDENCY OF CLASS ACTION. Please be advised that

your rights may be affected by a putative class action lawsuit pending in this Court

(the “Class Action”) if you purchased or otherwise acquired shares of Medbox, Inc.

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

NOTICE OF SETTLEMENT. Please also be advised that the Court-

appointed Lead Plaintiffs, Peter Phan and Paul Poon, on behalf of themselves and

the Class (defined below), have reached a settlement of the Class Action with

Defendants Medbox, Inc. (“Medbox” or the “Company”), Pejman Vincent

Mehdizadeh, Bruce Bedrick, Thomas Iwanski, Guy Marsala, C. Douglas Mitchell,

J. Mitchell Lowe, Ned Siegel, Timothy Quintanilla, and Q Accountancy

Corporation for total consideration of One Million Eight Hundred Fifty Thousand

United States Dollars (USD $1,850,000.00) in cash and Two Million Three

Hundred Thousand (2,300,000) shares of Medbox common stock, that will resolve

all claims in the Class Action (the “Settlement”).

This Notice explains important rights you may have, including possible receipt

of compensation from the Settlement. Your legal rights are affected whether

or not you act. Please read this Notice carefully.

SUMMARY OF KEY PROVISIONS AND REASONS FOR SETTLEMENT

Security and Time Period: Medbox common stock (stock symbol: MDBX)

purchased or otherwise acquired between April 2, 2013, and December 29, 2014,

inclusive (the “Class Period”). Excluded from the Class are: (1) Defendants and

their families, the officers and directors of the Company, at all relevant times,

members of their families and their legal representatives, heirs, successors, or

assigns, and any entity in which Defendants have or had a controlling interest;

(2) any Persons who have 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,

Ex. 1 Pg. 60


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asserted, or contended in the Class Action; and (3) those persons or entities who

submit valid and timely requests for exclusion pursuant to this Notice.

Settlement Fund: USD $1,850,000.00 (One Million Eight Hundred Fifty

Thousand United States Dollars) in cash and 2,300,000 (Two Million Three

Hundred Thousand) shares of Medbox common stock. Your recovery will depend

on the number of shares of Medbox common stock you, and other Class Members

who file claims, purchased and sold and the prices at which you, and the other Class

Members who file claims, purchased and sold those shares. Based on the

information currently available to Lead Plaintiffs and the analysis performed by

their damages expert, it is estimated that if Class Members submit claims for 100%

of the shares eligible for distribution under the Plan of Distribution (described

below), the estimated average value of the distribution per share of common stock

will be $0.21 per share, before deduction of Court-approved fees and expenses,

including the cost of notifying Class Members and settlement administration and

any attorneys’ fees and expenses awarded by the Court to counsel for Lead

Plaintiffs, based on a valuation of the stock component of the Settlement at

$0.014 per share, the closing price of Medbox common stock on December 17,

2015. The Plan of Distribution is included in this Notice and may be modified by

the Court without further notice. Historically, actual claims rates are less than

100%, which result in higher distributions per share. A Class Member’s actual

recovery will be a proportion of the Net Settlement Fund (the Settlement Fund less

Taxes and Tax Expenses, Notice and Administration Expenses, and attorneys’ fees

and expenses awarded to Lead Counsel) determined by that claimant’s recognized

claim as compared to the total recognized claims of all Class Members who submit

valid Proof of Claim and Release forms.

Reasons for Settlement: Avoids the costs and risks associated with

continued litigation, including the danger of no recovery.

Ex. 1 Pg. 61


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Lead Plaintiffs believe that the claims asserted in the Class Action have merit

and that the facts developed to date support the claims asserted. Nevertheless, Lead

Plaintiffs recognize and acknowledge the uncertain outcome and the risk of any

litigation, especially in complex actions such as the Class Action, as well as the

difficulties and delays inherent in such litigation. Lead Plaintiffs and their counsel

believe that the Settlement provides the Class with a substantial benefit now in lieu

of engaging in further litigation, with the risk of no recovery.

Defendants have denied, and continue to deny, all charges of wrongdoing or

liability against them arising out of any of the claims alleged in the Class Action.

Nonetheless, Defendants have concluded that further conduct of the Class Action

would be uncertain, 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

risks inherent in any litigation, especially in complex cases like the Class Action.

If the Case Had Not Settled: Continuing with the case could have resulted

in dismissal at the pleadings stage, no class being certified, or dismissal on the

merits at summary judgment, trial or on appeal. The two sides vigorously disagree

on both liability and the amount of money that could have been won if Lead

Plaintiffs prevailed at trial. The Settling Parties disagree about, among other things:

(1) whether there was any wrongdoing on the part of Defendants; (2) whether

Defendants made any material, false, misleading, or otherwise actionable

statements under the federal securities laws; (3) whether class certification is

appropriate; (4) whether the price of Medbox common stock was artificially

inflated during the Class Period and the amount of any such alleged inflation;

(5) the extent that various facts alleged by Lead Plaintiffs influenced the trading

price of Medbox common stock during the Class Period; and (6) the method for

determining whether, and the extent to which, purchasers of Medbox common stock

suffered injury and damages that could be recovered at trial.

Ex. 1 Pg. 62


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Attorneys’ Fees and Expenses: Lead Counsel have not received any

payment for their work or expenses incurred in investigating the facts, prosecuting

this Class Action, and negotiating the Settlement on behalf of Lead Plaintiffs and

the Class. Lead Counsel will ask the Court for attorneys’ fees not to exceed 30% of

the Settlement Fund and expenses not to exceed $100,000 to be paid from the

Settlement Fund.

If the above amounts are requested and approved by the Court, then the

average cost per share of common stock will be approximately $0.07 per share,

making the estimated recovery per share after fees and expenses approximately

$0.14.

Dismissal and Releases: If the proposed Settlement is approved, the Court

will enter a Final Judgment and Order of Dismissal with Prejudice (the

“Judgment”). The Judgment will dismiss the Released Claims with prejudice as to

the Released Persons, which include Defendants, Lead Plaintiffs, and their

respective related parties (including, but not limited to, their parents, subsidiaries

and affiliates, and all of their employees, directors and officers). The Judgment will

provide that all Class Members shall be deemed to have released and forever

discharged all Released Claims (to the extent Class Members have such claims)

against all Released Persons. The terms of the releases, including the meaning of

the term “Released Claims,” are set forth in the Proof of Claim and Release form

that is enclosed with the Notice.

Deadlines:

Submit Proof of Claim and Release form: _______________, 2016

File Objection: _______________, 2016

Request Exclusion: _______________, 2016

Final Settlement Approval Hearing: _______________, 2016

Ex. 1 Pg. 63


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More Information: www.strategicclaims.net or

Claims Administrator:

Medbox, Inc. Securities Litigation

c/o Strategic Claims Services

600 N. Jackson St., Suite 3

Media, PA 19063

Telephone: (866) 274-4004

Facsimile: (610) 565-7985

Email: [email protected]

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


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.

Ex. 1 Pg. 64


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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 further notice to the Class. If you plan on attending the Final Settlement

Approval Hearing, please check the website, www.strategicclaims.net, or call Lead

Counsel at (619) 230-0063 to confirm that the date and/or time has not changed.

Ex. 1 Pg. 65


http://www.strategicclaims.net/

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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?

Ex. 1 Pg. 66


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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.

Ex. 1 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 al., 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.

Ex. 1 Pg. 68


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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.

Ex. 1 Pg. 69


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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 ($0.014/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

Ex. 1 Pg. 70


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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.strategicclaims.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

Ex. 1 Pg. 71


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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 served 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 de 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.

Ex. 1 Pg. 72


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RECOGNIZED LOSS FORMULA (1) Recognized Claim for Medbox common stock purchased or otherwise

acquired during the Class Period (i.e., 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 $3.343 per

share.

3 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.

Ex. 1 Pg. 73


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INFLATION TABLE A Medbox Common Stock Purchased or Acquired During 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

TABLE B

Date

Closing

Price

Avg.

Closing

Price

Date

Closing

Price

Avg.

Closing

Price

12/30/2014 $6.39 $6.39

2/13/2015 $1.44 $4.68

12/31/2014 $5.58 $5.99

2/17/2015 $1.84 $4.59

1/2/2015 $6.21 $6.06

2/18/2015 $2.14 $4.52

1/5/2015 $6.75 $6.23

2/19/2015 $2.03 $4.45

1/6/2015 $6.30 $6.25

2/20/2015 $2.21 $4.39

1/7/2015 $6.26 $6.25

2/23/2015 $2.14 $4.32

1/8/2015 $6.22 $6.24

2/24/2015 $2.03 $4.26

1/9/2015 $6.45 $6.27

2/25/2015 $1.92 $4.20

1/12/2015 $6.68 $6.32

2/26/2015 $1.83 $4.15

1/13/2015 $6.14 $6.30

2/27/2015 $1.81 $4.09

1/14/2015 $6.07 $6.28

3/2/2015 $1.86 $4.04

1/15/2015 $6.01 $6.26

3/3/2015 $1.80 $3.98

1/16/2015 $6.00 $6.24

3/4/2015 $2.38 $3.95

1/20/2015 $6.00 $6.22

3/5/2015 $2.05 $3.90

1/21/2015 $5.94 $6.20

3/6/2015 $2.16 $3.87

1/22/2015 $5.10 $6.13

3/9/2015 $2.08 $3.83

1/23/2015 $4.64 $6.04

3/10/2015 $1.97 $3.79

1/26/2015 $4.87 $5.98

3/11/2015 $1.97 $3.75

1/27/2015 $4.89 $5.92

3/12/2015 $1.92 $3.72

1/28/2015 $4.62 $5.86

3/13/2015 $1.97 $3.68

1/29/2015 $4.25 $5.78

3/16/2015 $1.97 $3.65

1/30/2015 $4.11 $5.70

3/17/2015 $1.79 $3.61

2/2/2015 $4.08 $5.63

3/18/2015 $1.66 $3.58

2/3/2015 $3.98 $5.56

3/19/2015 $1.65 $3.54

2/4/2015 $3.28 $5.47

3/20/2015 $1.49 $3.51

Ex. 1 Pg. 74


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Date

Closing

Price

Avg.

Closing

Price Date

Closing

Price

Avg.

Closing

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.

Ex. 1 Pg. 75


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Upon receipt of Medbox Settlement Shares, Lead Counsel will have the right to

take any measures they deem appropriate to protect the overall value of the

Settlement Shares prior to distribution to the Authorized Claimants, including, but

not limited to, sales of all or part of the Settlement Shares. Lead Counsel shall have

no liability for any sale, liquidation, transfer, or other disposition of the Settlement

Shares absent gross negligence or willful misconduct. Lead Counsel shall also

have the right to use the cash component of the Settlement Fund to protect the

overall value of the Settlement Fund.

Payment pursuant to the Plan of Distribution approved by the Court shall be

conclusive against all Authorized Claimants. No Person shall have any claim

against Defendants, Defendants’ Counsel, Lead Plaintiffs, Lead Counsel or the

Settlement Administrator or other agent designated by Lead Counsel based on the

distributions made substantially in accordance with the Stipulation and the

Settlement contained therein, the Plan of Distribution, or further orders of the

Court. Each claimant shall be deemed to have submitted to the jurisdiction of the

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

the processing of the claims submitted in connection with the Settlement, or

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

arising out of such involvement, and all Class Members, whether or not they are to

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

as provided in any distribution orders entered by the Court.

Class Members who do not submit a timely request for exclusion and do not

submit an acceptable Proof of Claim and Release form by the deadline for

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.

Distributions will be made to Authorized Claimants after all claims have been

processed and after the Court has finally approved the Settlement.

HOW YOU OBTAIN A PAYMENT — SUBMITTING A CLAIM FORM

10. How will I obtain a payment?

To qualify for payment, you must be an eligible Class Member, send in a

valid Proof of Claim and Release form, and properly document your claim as

requested in the Proof of Claim and Release form. A Proof of Claim and Release

Ex. 1 Pg. 76


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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 __________, 2016

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

Ex. 1 Pg. 77


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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.

2:15-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 __________, 2016 to:




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

Ex. 1 Pg. 78


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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 __________, 2016.

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

Ex. 1 Pg. 79


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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 al., 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:

Ex. 1 Pg. 80


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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


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

Ex. 1 Pg. 81


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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 al., Case No. 2:15-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

Ex. 1 Pg. 82


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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:

Frank J. Johnson


600 West Broadway

Suite 1540

San Diego, CA 92101

Telephone: (619) 230-0063

Facsimile: (619) 255-1856


or the Claims Administrator:




Media, PA 19063

Telephone: (866) 274-4004

Facsimile: (610) 565-7985


or by visiting www.strategicclaims.net.

Ex. 1 Pg. 83


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You can also obtain a copy from the Clerk’s office during regular business hours:

Clerk of the Court



Western Division


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



Media, PA 19063

Telephone: (866) 274-4004

Facsimile: (610) 565-7985

Email: [email protected] 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

Ex. 1 Pg. 84


EXHIBIT A-2

Ex. 1 Pg. 85


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PROOF OF CLAIM AND RELEASE Case No. 2:15-CV-00426-BRO (JEMX)




Case No.: 2:15-CV-00426-BRO (JEMx) CLASS ACTION Exhibit A-2 Proof of Claim and Release

Ex. 1 Pg. 86


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1. PROOF OF CLAIM AND RELEASE Case No. 2:15-CV-00426-BRO (JEMX)

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:



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 _____________, 2016, 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

Ex. 1 Pg. 87


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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

Ex. 1 Pg. 88


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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.

Ex. 1 Pg. 89


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I. CLAIMANT INFORMATION

Name:

Address:

City: State: Zip Code:

Foreign Provence: Foreign Country:

Day Phone: Evening Phone:

Email:

Social Security Number (for

individuals):

OR Taxpayer Identification Number (for

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

(List

Chronologically)

(Month/Day/Year)

Number of

Shares

Purchased

Price per

Share

Total Cost

(Excluding

Commissions,

Taxes, and Fees)

Ex. 1 Pg. 90


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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

(List

Chronologically)

(Month/Day/Year)

Number of

Shares Sold

Price per

Share

Amount Received

(Excluding

Commissions,

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

individuals) OR

Taxpayer Identification Number

(for estates, trusts, corporations, etc.)

Ex. 1 Pg. 91


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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.)

Check here if proof of authority to file is

enclosed.

(See Item 2 under Claimant’s Statement)

Date: ____________________

Ex. 1 Pg. 92


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THIS PROOF OF CLAIM AND RELEASE MUST BE POSTMARKED NO

LATER THAN ______________, 2016 AND MUST BE MAILED TO:



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.

Ex. 1 Pg. 93


EXHIBIT A-3

Ex. 1 Pg. 94


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1. SUMMARY NOTICE Case No. 2:15-CV-00426-BRO (JEMX)




Case No.: 2:15-CV-00426-BRO (JEMx) CLASS ACTION Exhibit A-3 Summary Notice of Proposed Class Action Settlement

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

Ex. 1 Pg. 95


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2. SUMMARY NOTICE

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

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:




Media, PA 19063

Telephone: (866) 274-4004

Facsimile: (610) 565-7985


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

Ex. 1 Pg. 96


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3. SUMMARY NOTICE


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



Western Division


Los Angeles, CA 30012-4701 Frank J. Johnson


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

Ex. 1 Pg. 97


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4. SUMMARY NOTICE


If you have any questions about the Settlement, you may call or write to 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


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

Ex. 1 Pg. 98


EXHIBIT B

Ex. 1 Pg. 99


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1.




Case No.: 2:15-CV-00426-BRO (JEMx) CLASS ACTION Exhibit B [PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE

[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

Ex. 1 Pg. 100


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2.

appearing therefore, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED

that:

1. This Judgment incorporates by reference the definitions in the

Settlement Agreement, and all terms used herein shall have the same meanings as

set forth in the Settlement Agreement, unless otherwise set forth herein.

2. This Court has jurisdiction over the subject matter of the Class Action

and over all parties to the Class Action, including all members of the Class.

3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and solely

for purposes of the Settlement, the Court hereby finally certifies a Class defined as:

“all Persons who purchased or otherwise acquired Medbox, Inc. common stock

between April 2, 2013 and December 29, 2014, inclusive, and who were damaged

thereby. Excluded from the Class are: (1) Defendants and their families, the

officers and directors of the Company, at all relevant times, members of their

families and their legal representatives, heirs, successors, or assigns, and any entity

in which Defendants have or had a controlling interest; (2) any persons who have

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;

and (3) those persons or entities who submitted valid and timely requests for

exclusion from the Class in accordance with this Order, a list of whom is attached

hereto as Exhibit A.” With respect to the Class, this Court finds, solely for the

purposes of the Settlement, that the prerequisites for a class action under Rules

23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied.

4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Lead

Plaintiffs are certified as the Class representatives and Lead Counsel previously

selected by Lead Plaintiffs and appointed by the Court is hereby appointed as Lead

Counsel for the Class.

Ex. 1 Pg. 101


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3.

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 further 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.

Ex. 1 Pg. 102


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4.

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 21D(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 1933, 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.

Ex. 1 Pg. 103


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5.

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 21D(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

Ex. 1 Pg. 104


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6.

Action was not brought for any improper purpose and is not unwarranted by

existing law or legally frivolous.

16. The Court hereby GRANTS Lead Counsel’s request for attorneys’ fees

in the Cash Amount of $_________ and _________ shares of Medbox, Inc.

common stock, as well as reimbursement of reasonable and necessary expenses

incurred in the prosecution of the Class Action in the amount of $_____________,

together with the interest earned thereon for the same time period and at the rate

earned by the Settlement Fund until paid. Said fees shall be allocated among

Plaintiffs’ Counsel by Lead Counsel in a manner which, in their good-faith

judgment, reflects each counsel’s contribution to the institution, prosecution, and

resolution of the Class Action. The Court finds that the amount of fees awarded is

fair and reasonable in light of the time and labor required, the novelty and difficulty

of the case, the skill required to prosecute the case, the experience and ability of the

attorneys, awards in similar cases, the contingent nature of the representation and

the result obtained for the Class.

17. Any order approving or modifying the Plan of Distribution or Lead

Counsel’s application or award of attorneys’ fees and expenses, shall not disturb or

affect the finality of this Judgment, the Settlement Agreement, the Settlement

contained therein, nor any act performed or document executed to or in furtherance

of the Settlement Agreement or the Settlement.

18. In the event that the Settlement does not become effective in

accordance with the terms of the Settlement Agreement, or the Effective Date does

not occur, or in the event that the Settlement Fund, or any portion thereof, is

returned to Defendants or their insurers, then this Judgment shall be rendered null

and void to the extent provided by and in accordance with the Settlement

Agreement and shall be vacated and, in such event, all orders entered and releases

delivered in connection herewith shall be null and void to the extent provided by

and in accordance with the Settlement Agreement and the Settling Parties shall be

Ex. 1 Pg. 105


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

the Settlement Agreement.

19. Without further order of the Court, the Settling Parties may agree to

reasonable extensions of time to carry out any of the provisions of the Settlement

Agreement.

20. This Court finds, for purposes of the Federal Rules of Civil Procedure,

that there is no just reason for delay and expressly directs the Clerk of the Court to

enter this Judgment as set forth herein immediately. This Judgment is a final

judgment in the Class Action as to all claims asserted therein at any time and as to

all of the Class Member’s Released Claims against the Released Persons.

21. Judgment shall be, and hereby is, entered dismissing the Class Action

in its entirety with prejudice.

SO ORDERED this _________ day of ___, 2016.

___________________________________

HON. BEVERLY REID O’CONNELL

UNITED STATES DISTRICT JUDGE

Ex. 1 Pg. 106


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8.

Exhibit A – Requests for Exclusion

[To be added in connection with final approval briefing]

Ex. 1 Pg. 107


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