In re Audioeye, Inc. Sec. Litig.
Court Docket Sheet

District of Arizona

4:2015-cv-00163 (azd)

* MOTION and Memorandum of Points and Authorities in Support of Preliminary Approval of Settlement, Preliminary Certification of Settlement Class, and Establishing Notice Procedures by Globis Capital Partners LP, Globis Overseas Fund Limited.

Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 1 of 24 1 Ira M. Press (pro hac vice) 2 ipress@kmllp.com KIRBY McINERNEY LLP 3 825 Third Avenue, 16th Floor 4 New York, NY 10022 Telephone: (212) 371-6600 5 Fax: (212) 751-2540 6 Lead Counsel for Plaintiffs 7 Andrew S. Friedman (AZ #: 005425) 8 BONNETT, FAIRBOURN, FRIEDMAN & BALINT, P.C. 9 2325 E. Camelback Rd. Ste. 300 Phoenix, AZ 85016 10 Telephone: (602) 274-1100 11 Fax: (602) 274-1199 Email: afriedman@bffb.com 12 13 Liaison Counsel for Plaintiffs 14 15 UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA 16 17 Case No: 4:15-cv-00163-DCB 18 19 UNOPPOSED MOTION AND In re AudioEye, Inc. Sec. Litig. MEMORANDUM OF POINTS AND 20 AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF 21 SETTLEMENT, PRELIMINARY 22 CERTIFICATION OF SETTLEMENT CLASS, AND 23 ESTABLISHING NOTICE 24 PROCEDURES 25 26 27 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 2 of 24 1 TABLE OF CONTENTS 2 I. PRELIMINARY STATEMENT.......................................................................... 1 3 II. STATEMENT OF FACTS................................................................................... 2 4 III. THE PROPOSED SETTLEMENT WARRANTS PRELIMINARY 5 APPROVAL......................................................................................................... 3 6 A. The Standards for Preliminary Approval.................................................. 4 7 B. The Proposed Settlement Is Fair, Reasonable, and Adequate................... 5 8 9 1. The Proposed Settlement Was Negotiated by Informed, Experienced Counsel Who Were Aware of the Risks of 10 the Litigation.................................................................................. 5 11 2. The Proposed Settlement Resulted from Arm‟s-Length 12 Negotiations and is Presumed to be Fair to the Class.................... 6 13 C. The Court Should Approve the Proposed Form and Method of Class 14 Notice........................................................................................................ 7 15 D. The Proposed Form of Notice Adequately Informs Settlement Class Members of their Rights in this Litigation................................................ 9 16 17 IV. THE COURT SHOULD PRELIMINARILY CERTIFY THE SETTLEMENT CLASS................................................................................................................ 10 18 A. The Settlement Class Is Sufficiently Numerous to Warrant 19 Certification............................................................................................. 11 20 B. There Are Substantial Common Questions of Law and Fact.................. 12 21 C. Lead Plaintiff‟s Claims Are Typical of Other Settlement Class 22 Members.................................................................................................. 13 23 D. Plaintiffs and Lead Counsel Have Adequately Represented the 24 Settlement Class...................................................................................... 13 25 E. The Predominance and Superiority Requirements Are Satisfied............ 14 26 V. PROPOSED SETTLEMENT SCHEDULE....................................................... 15 27 VI. CONCLUSION.................................................................................................. 17 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES i Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 3 of 24 1 TABLE OF AUTHORITIES 2 CASES 3 In re Activision Sec. Litig., 4 621 F. Supp. 415 (N.D. Cal. 1985).................................................................... 12 5 In re Advanced Battery Techs., Inc. Sec. Litig., 6 298 F.R.D. 171 (S.D.N.Y. 2014).......................................................................... 8 7 Amchem Products, Inc. V. Windsor, 8 521 U.S. 591 (1997)..................................................................................... 10, 14 9 In re AnnTaylor Stores Sec. Litig., No. 91 Civ. 7145, 1992 WL 249975 (S.D.N.Y. Sept.22, 1992)........................ 12 10 11 Arnold v. Arizona Dep't. of Pub. Safety, No. 01 Civ. 1463 (PHX) (LOA), 2006 WL 2168637 (D. Ariz. July 31, 2006)... 4 12 In re AT&T Mobility Wireless Data Servs. Sales Tax Litig., 13 789 F. Supp. 2d 935 (N.D. Ill. 2011)................................................................... 8 14 Barani v. Wells Fargo Bank, N.A., 15 No. 12 Civ. 2999, 2014 WL 1389329 (S.D. Cal. Apr. 9, 2014)......................... 8 16 Basic Inc. v. Levinson, 17 485 U.S. 224 (1988)........................................................................................... 14 18 Blackie v. Barrack, 524 F.2d 891 (9th Cir. 1975).............................................................................. 10 19 20 In re Bridgepoint Educ., Inc. Sec. Litig., No. 12 Civ. 1737, 2015 WL 224631 (S.D. Cal. Jan. 15, 2015)........................ 11 21 Brosious v. Children’s Place Retail Stores, 22 189 F.R.D. 138 (D.N.J. 1999)............................................................................ 12 23 Carson v. Am. Brands, Inc., 24 450 U.S. 79 (1981)............................................................................................... 4 25 In re China Intelligent Lighting & Elecs., Inc. Sec. Litig., 26 No. 11 Civ. 2768, 2013 WL 5789237 (C.D. Cal. Oct. 25, 2013)................ 11, 12 27 Conn. Ret. Plans & Trust Funds v. Amgen, Inc., 28 No. 07 Civ. 2536, 2009 WL 2633743 (C.D. Cal. Aug. 12, 2009)..................... 15 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES ii Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 4 of 24 1 In re Excess Value Ins. Coverage Litig., 2 MDL-1339, 2004 WL 1724980 (S.D.N.Y. July 30, 2004).................................. 6 3 In re GE Co. Sec. Litig., No. 09 Civ. 1951, slip op. at 5 (S.D.N.Y. May 30, 2013).................................... 8 4 5 Gerardo v. Quong Hop & Co., No. 08 Civ. 3953, 2009 WL 1974483 (N.D. Cal. Jul. 7, 2009)........................... 6 6 Gilbert v. First Alert, Inc., 7 904 F. Supp. 714 (N.D. Ill. 1995)...................................................................... 12 8 Gribble v. Cool Transports Inc., 9 No. 06 Civ. 04863, 2008 WL 5281665 (C.D. Cal. Dec. 15, 2008)...................... 6 10 Hanlon v. Chrysler Corp., 11 150 F.3d 1011 (9th Cir. 1998).................................................................. 6, 10, 12 12 Hatamian v. Advanced Micro Devices, Inc., No. 14 Civ. 00226, 2016 WL 1042502 (N.D. Cal. Mar. 16, 2016)................... 12 13 14 Horton v. USAA Cas. Ins. Co., 266 F.R.D. 360 (D. Ariz. 2009)........................................................................... 4 15 Huberman v. Tag It Pacific Inc., 16 314 Fed. App‟x 59 (9th Cir. 2009)..................................................................... 15 17 Katz v. Image Innovations Holdings, Inc., 18 No. 06 Civ. 3707, 2010 WL 2926196 (S.D.N.Y. July 22, 2010)....................... 11 19 In re M.L. Stern Overtime Litig., 20 No. 07 Civ. 0018, 2009 WL 995864 (S.D. Cal. Apr. 13, 2009).......................... 4 21 Mangone v. First USA Bank, 22 206 F.R.D. 222 (S.D. Ill. 2001)............................................................................ 9 23 In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454 (9th Cir. 2000)................................................................................ 6 24 25 In re Miller Energy Res., Inc. Sec. Litig., No. 11 Civ. 386 (TAV), slip op. at 2 (E.D. Tenn. Feb. 3, 2015)......................... 8 26 In re Montage Technlogy Grp. Ltd. Sec. Litig., 27 No. 14 Civ. 00722, 2016 WL 1598666 (N.D. Cal. Apr. 21, 2016).................... 12 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES iii Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 5 of 24 1 Mullane v. Cent. Hanover Bank & Trust Co., 2 339 U.S. 306 (1950)............................................................................................. 7 3 In re Mut. Funds Inv. Litig., No.04 Md. 15861, 2010 WL 2342413 (D. Md. May 19, 2010)........................... 8 4 5 Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523 (C.D. Cal. 2004)..................................................................... 5, 6 6 Officers for Justice v. Civil Serv. Comm’n of the City & Cnty. of S.F., 7 688 F.2d 615 (9th Cir. 1982)............................................................................... 3 8 In re PE Corp. Sec. Litig., 9 228 F.R.D. 102 (D. Conn. 2005)........................................................................ 12 10 Persky v. Turley, 11 No. 88 Civ. 1830 (PHX) (SMM), 1991 WL 329564 (D. Ariz. Dec. 20, 1991)..................................................................................... 14 12 13 In re Portal Software, Inc. Sec. Litig., No. 03 Civ. 5138, 2007 WL 1991529 (N.D. Cal. June 30, 2007)........................ 6 14 Schneider v. Traweek, 15 No. 88 Civ. 0905, 1990 WL 132716 (C.D. Cal. July 31, 1990)........................ 10 16 Soberal-Perez v. Heckler, 17 717 F.2d 36 (2d Cir. 1983)................................................................................... 7 18 Staton v. Boeing Co., 19 327 F.3d 938 (9th Cir. 2003).............................................................................. 13 20 In re Syncor ERISA Litig., 21 516 F.3d 1095 (9th Cir. 2008).............................................................................. 3 22 In re THQ, Inc., Sec. Litig., No. 00 Civ. 1783, 2002 WL 1832145 (C.D. Cal. Mar. 22, 2002)..................... 10 23 24 In re Unioil Sec. Litig., 107 F.R.D. 615 (C.D. Cal. 1985)....................................................................... 11 25 26 27 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES iv Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 6 of 24 1 Wade v. Indus. Funding Corp., 2 No. 92 Civ. 0343, 1993 WL 594019 (N.D. Cal. Dec.14, 1993)........................ 12 3 In re Washington Pub. Power Supply Sys. Sec. Litig., 720 F. Supp. 1379 (D. Ariz. 1989)....................................................................... 6 4 5 Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168 (9th Cir. 2010)...................................................................... 11, 12 6 Yamner v. Boich, 7 No. 92 Civ. 20597, 1994 WL 514035 (N.D. Cal. Sept. 15, 1994)..................... 10 8 Zeidman v. J. Ray McDermott & Co., Inc., 9 651 F.2d 1030 (5th Cir. 1981)............................................................................ 12 10 11 STATUTES 12 15 U.S.C. § 78u 4, et seq........................................................................................ passim 13 14 15 RULES 16 Fed. R. Civ. P. 23................................................................................................... passim 17 18 OTHER AUTHORITIES 19 4 Herbert Newberg & Alba Conte, Newberg on Class Actions 20 §§ 8.04, 11:25 (4th ed. 2002)........................................................................... 4, 9 21 Manual for Complex Litigation §§ 13.14, 21.312, 21.632 (4th ed. 20014)................ 4, 7 22 5 James W. Moore, Moore‟s Federal Practice ¶ 23.83 (3d ed. 2001)............................. 4 23 24 25 26 27 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES v Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 7 of 24 1 MOTION 2 Lead Plaintiffs Globis Capital Partners, L.P. and Globis Overseas Fund Ltd. 3 ("Plaintiffs"), by and through their undersigned counsel, hereby move this Court, to 4 enter the accompanying Preliminary Approval Order, to which Defendants consent,1 5 which provides for: 1) Preliminary approval of the Proposed Settlement; 2) Provisional 6 certification of a Settlement Class; 3) Approval of the form and method for giving 7 notice; and 4) Setting a hearing date to consider (i) whether the Proposed Settlement is 8 fair, reasonable, and should be finally approved; (ii) fully certifying a Settlement 9 Class; and (iii) Plaintiffs counsel‟s application for an award of attorneys‟ fees and 10 expenses. 11 MEMORANDUM OF POINTS AND AUTHORITIES 12 I. PRELIMINARY STATEMENT 13 The Parties2 have reached a proposed settlement of this securities class action in 14 which Defendants‟ insurers, will pay $1,525,000 to the class. A copy of the Stipulation 15 of Settlement dated December 13, 2016, which was extensively negotiated among the 16 Parties, is attached hereto as Exhibit A. 17 The Proposed Settlement is an excellent result for the Class. It was reached after 18 over a year of litigation, which included a comprehensive investigation by counsel, the 19 drafting of the consolidated Amended Class Action Complaint (Dkt. No. 41), and 20 briefing by Lead Counsel in opposition to Defendants‟ motion to dismiss (Dkt. No 75). 21 Furthermore, Lead Counsel worked closely with the forensic accountant to analyze the 22 financial data of defendant AudioEye Inc. ("AudioEye"). 23 In an effort to resolve this Action, the Parties engaged Robert A. Meyer, Esq. as 24 a mediator. This Proposed Settlement was the result of arm‟s-length negotiations 25 26 1 Because Defendants consent to the relief requested in this Motion, unless the Court 27 requests further briefing, the Motion is now fully submitted for the Court‟s review. 2 Unless otherwise defined herein, all capitalized terms have the same meaning as set 28 forth in the Proposed Settlement. UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 1 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 8 of 24 1 conducted by experienced counsel, with the assistance of an experienced mediator, and 2 represents a substantial recovery of the Class‟ estimated potential damages. Plaintiffs 3 submit that, while they believe the merits of the case are strong, the Proposed 4 Settlement is not only well within the range of reasonableness, it is an excellent result 5 and is in the best interests of the Class in light of: (a) Defendants‟ potential defenses; 6 (b) the maximum amount of potentially recoverable damages; and (c) the risks of 7 prosecuting this Action through trial. The Proposed Settlement warrants preliminary 8 approval by this Court so that notice of the Proposed Settlement can be distributed to 9 members of the Class and a Settlement Hearing can be scheduled to consider final 10 approval. 11 II. STATEMENT OF FACTS 12 This Action was filed as a class action on behalf of all persons or entities who 13 acquired shares of AudioEye stock during the period between May 14, 2014 through 14 April 1, 2015 (the "Class Period"). (Dkt. No. 41). By Order dated August 3, 2015, 15 this Court appointed Globis Capital Partners L.P. and Globis Overseas Fund Ltd. as 16 Lead Plaintiffs, approved Lead Plaintiffs‟ choice of Kirby McInerney LLP as Lead 17 Counsel and Bonnett Fairbourn Friedman & Balint as Liaison Counsel. (Dkt. No. 35). 18 On November 30, 2015, Plaintiffs filed a Consolidated Amended Class Action 19 Complaint (the "Complaint"), on behalf of Class Period purchasers of AudioEye 20 shares (the "Class"), against AudioEye, Nathaniel Bradley, AudioEye‟s CEO, and 21 Edward O‟Donnell, AudioEye‟s CFO (collectively, "Defendants"). (Dkt. No. 41). The 22 Complaint asserted claims under Sections 10(b) and 20(a), of the Securities Exchange 23 Act of 1934 (the "Exchange Act"). 24 Thereafter, the Parties engaged in motion practice related to Defendants‟ motion 25 to dismiss the Complaint. During this same time, the Parties agreed to engage Mr. 26 Meyer to mediate a possible settlement. In advance of the scheduled mediation session, 27 the Parties submitted briefing concerning their respective claims and defenses. On July 28 20, 2016, the Parties attended a full day mediation session under the direction of Mr. UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 2 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 9 of 24 1 Meyer. The Parties were unable to reach a settlement at that time. However, following 2 the mediation session, the mediator made a mediator‟s proposal for a settlement of 3 $1.525 million, which the Parties subsequently accepted. On August 8, 2016, this 4 Court entered an Order vacating the case schedule in light of the Parties‟ agreement to 5 settle the Action. (Dkt. No. 87). 6 Plaintiffs believe that the claims asserted in the Action are strong and additional 7 evidence from discovery would have further supported the claims. Nevertheless, 8 Plaintiffs recognize the inherent problems of proof under, and possible defenses to, the 9 securities law violations asserted in this Action, especially with respect to proof of 10 Defendants‟ scienter, loss causation, the maximum amount of potentially recoverable 11 damages to the Class had Plaintiffs prevailed at trial, as well as the expense and length 12 of continued proceedings necessary to prosecute the Action against AudioEye through 13 trial and appeals. Taking the foregoing into account, Plaintiffs believe that the 14 Proposed Settlement is excellent and is in the best interests of the Class. 15 Defendants continue to deny all claims of wrongdoing against them. 16 Nonetheless, Defendants have concluded that further litigation would be uncertain, 17 protracted and expensive, and that it is desirable that the Action be fully and finally 18 settled upon the terms and conditions set forth in the Stipulation. 19 III. THE PROPOSED SETTLEMENT WARRANTS PRELIMINARY 20 APPROVAL 21 As a matter of public policy, settlement is a strongly favored method for 22 resolving disputes, especially in complex class actions. See, In re Syncor ERISA Litig., 23 516 F.3d 1095, 1101 (9th Cir. 2008) ("there is a strong judicial policy that favors 24 settlements, particularly where complex class action litigation is concerned"); Officers 25 for Justice v. Civil Serv. Comm’n of the City and Cnty. of S.F., 688 F.2d 615, 625 (9th 26 Cir. 1982) ("voluntary conciliation and settlement are the preferred means of dispute 27 resolution"). 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 3 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 10 of 24 1 A. The Standards for Preliminary Approval 2 Fed. R. Civ. P. 23(e) requires court approval for any settlement of a class action, 3 pursuant to a two-step process where the court first determines whether a proposed 4 settlement deserves preliminary approval, and then, after notice is given to class 5 members, whether final approval is warranted. Arnold v. Arizona Dep’t. of Pub. Safety, 6 No. 01 Civ. 1463 (PHX) (LOA), 2006 WL 2168637, at *4 (D. Ariz. July 31, 2006); In 7 re M.L. Stern Overtime Litig., No. 07 Civ. 0018, 2009 WL 995864, at *3 (S.D. Cal. 8 Apr. 13, 2009); Manual for Complex Litigation ("MCL") § 13.14, at 173 (4th ed. 9 2004). By this motion, Plaintiffs request that the Court take the first step in this process 10 – preliminary approval of the Proposed Settlement. 11 In determining whether preliminary approval is warranted, the Court determines 12 whether the Proposed Settlement is within the range of what might be found fair, 13 reasonable, and adequate, so that notice of the Proposed Settlement should be given to 14 Class Members, and a hearing scheduled to consider final Settlement approval. See 15 MCL § 21.632, at 321 (4th ed. 2004); 4 Herbert Newberg & Alba Conte, Newberg on 16 Class Actions § 11:25 (4th ed. 2002); Horton v. USAA Cas. Ins. Co., 266 F.R.D. 360, 17 363, 367 (D. Ariz. 2009). However, preliminary approval does not require the Court to 18 make a final determination that the Proposed Settlement is fair, reasonable, and 19 adequate. Rather, that decision is made at the final approval stage, after Class 20 Members have had an opportunity to object to or exclude themselves from the 21 Settlement.3 When considering a potential settlement, the Court need "not decide the 22 merits of the case or resolve unsettled legal questions." Carson v. Am. Brands, Inc., 23 450 U.S. 79, 88 n. 14 (1981). Preliminary approval is merely the prerequisite to giving 24 3 25 See 5 James W. Moore, Moore‟s Federal Practice ¶¶ 23.83 [1], 23-336.2-23-339 (3d ed. 2001); M.L. Stern, 2009 WL 995864, at *3 ("Because class members will 26 subsequently receive notice and have an opportunity to be heard on the settlement, this 27 Court need not review the settlement in detail at this juncture; instead, preliminary approval is appropriate so long as the proposed settlement falls "within the range of 28 possible judicial approval."). UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 4 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 11 of 24 1 notice, and "after notice is given to class members," the court must determine 2 "whether final approval is warranted." Nat’l Rural Telecomms. Coop. v. DIRECTV, 3 Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). 4 B. The Proposed Settlement Is Fair, Reasonable, and Adequate 5 6 1. The Proposed Settlement was Negotiated by Informed, Experienced Counsel who were Aware of the Risks of the 7 Litigation 8 The Proposed Settlement of $1,525,000 is well within the range of 9 reasonableness. Plaintiffs‟ counsel and Defendants have extensive experience in 10 securities class action litigation, and reached the Proposed Settlement only after 11 substantial mediation before an experienced neutral mediator. 12 Plaintiffs and their counsel have conducted a thorough investigation of the 13 claims asserted in the Action. Plaintiffs‟ counsel has, inter alia, reviewed AudioEye‟s 14 public filings, conference calls, media and analyst reports about AudioEye. The Parties 15 also engaged in additional briefing in the context of the mediation. Thus, the Proposed 16 Settlement was entered into only after Plaintiffs and their experienced counsel 17 conducted a thorough analysis of the legal and factual issues and the risks associated 18 with continued litigation. 19 While Plaintiffs believe they would ultimately prevail on their claims, they 20 recognize the significant risk that they would not survive Defendant‟s motion to 21 dismiss, given the stringent requirements of the PSLRA. Even if the Complaint 22 survived Defendants‟ motion to dismiss, continued prosecution of the action would be 23 complex, expensive, and lengthy, with a favorable outcome highly uncertain. There 24 would still be a substantial risk that Defendants would prevail at trial and the class 25 would obtain no recovery. The Proposed Settlement represents an excellent resolution 26 when the substantial risks of expense and delay of continued litigation are weighed 27 against the certain and immediate recovery for the Class 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 5 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 12 of 24 1 2. The Proposed Settlement Resulted from Arm’s-Length 2 Negotiations and is Presumed to be Fair to the Class 3 There is an initial presumption that a proposed settlement is fair and reasonable 4 when it is the result of arm‟s-length negotiations.4 Courts have consistently held that 5 the function of the court reviewing a settlement is to determine whether the proposed 6 settlement taken as a whole is fundamentally fair, adequate, and reasonable, and not to 7 "delete, modify or substitute" provisions within a settlement agreement. Hanlon v. 8 Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). 9 The Proposed Settlement is the product of arm‟s-length negotiations by 10 experienced counsel, with the assistance of an experienced neutral mediator. There was 11 no collusion among the Parties. See, e.g., In re Mego Fin. Corp. Sec. Litig., 213 F.3d 12 454, 458 (9th Cir. 2000). Counsel for both sides have extensive experience in 13 securities class action litigation and are thoroughly familiar with the factual and legal 14 issues involved. The opinion of experienced and informed counsel, as here, supporting 15 the Proposed Settlement is entitled to considerable weight.5 16 17 4 18 See In re Portal Software, Inc. Sec. Litig., No. 03 Civ. 5138, 2007 WL 1991529, at *5 (N.D. Cal. June 30, 2007) ("Experienced counsel on both sides, each with a 19 comprehensive understanding of the strengths and weaknesses of each party‟s 20 respective claims and defenses, negotiated this settlement over an extended period of time…."); see also In re Excess Value Ins. Coverage Litig., No. MDL-1339, 2004 WL 21 1724980, at *10 (S.D.N.Y. July 30, 2004) ("Where „the Court finds that the Settlement 22 is the product of arm‟s length negotiations conducted by experienced counsel knowledgeable in complex class litigation, the Settlement will enjoy a presumption of 23 fairness‟"). 5 24 See In re Washington Pub. Power Supply Sys. Sec. Litig., 720 F. Supp. 1379, 1392 (D. Ariz. 1989); Gribble v. Cool Transports Inc., No. 06 Civ. 04863, 2008 WL 25 5281665, at *9 (C.D. Cal. Dec. 15, 2008) ("Great weight is accorded to the recommendation of counsel, who are most closely acquainted with the facts of the 26 underlying litigation.") (quoting Nat’l Rural Telecomms., 221 F.R.D. at 528); see also 27 Gerardo v. Quong Hop & Co., No. 08 Civ. 3953, 2009 WL 1974483, at *3 (N.D. Cal. Jul. 7, 2009) (fact that proponents of settlement are experienced in this type of 28 litigation supports preliminarily approving a proposed class action settlement). UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 6 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 13 of 24 1 C. The Court Should Approve the Proposed Form and Method of Class 2 Notice 3 "Rule 23(e)(1)(B) requires the court to „direct notice in a reasonable manner to 4 all class members who would be bound by a proposed settlement, voluntary dismissal, 5 or compromise,‟ regardless of whether the class was certified under Rule 23(b)(1), 6 (b)(2), or (b)(3)." See MCL at § 21.312. To satisfy due process, notice to class 7 members must be "reasonably calculated, under all the circumstances, to apprise 8 interested parties of the pendency of the action and afford them an opportunity to 9 present their objections." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 10 314 (1950) "„The notice must be of such nature as reasonably to convey the required 11 information... and it must afford a reasonable time for those interested to make their 12 appearance.‟" Soberal-Perez v. Heckler, 717 F.2d 36, 43 (2d Cir. 1983). 13 Class members will be mailed the Postcard Notice (Stipulation Exhibit A-1) 14 ("Mailed Notice"), which will provide Class members with information on how they 15 can download the long-version Notice (Stipulation Exhibit A-2) from the internet, or 16 request (by phone, mail, or email) for a copy to be mailed or emailed to them. A 17 Summary Notice (Stipulation Exhibit A-3) will also be posted online via 18 GlobeNewswire and published in Investors’ Business Daily. The Notice describes in 19 plain English the terms of the Settlement, the considerations that led Lead Counsel to 20 conclude that the Settlement is fair and adequate, the maximum attorneys‟ fees (33%) 21 that may be sought, the procedure to object to the Settlement, and the date and place of 22 the Settlement Hearing. 23 This proposed method of notice, i.e., postcard, summary publication, and online 24 full notice, takes into consideration both the need to (i) fairly apprise Class Members 25 of the Settlement and their options with respect thereto constituent with due process 26 requirements and (ii) be cost-sensitive as far as administration expenses. The cost 27 savings that can be achieved is particularly important given the small absolute size of 28 the settlement fund (even though it is a large percentage of the potential class UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 7 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 14 of 24 1 damages). Accordingly, mailing a 20+ page long form notice to all class members 2 would be disproportionally expensive here. On the other hand, this less-expensive 3 procedure would not negatively impact due process in any way. All of the class 4 members who would otherwise receive the full notice by mail will still receive mailed 5 notification of the settlement, and they all will be able to receive the full notice at no 6 cost-by going to the website, by email, or by mail. For that reason, the proposed 7 notice plan readily meets the standards of Rule 23(c)(2)(B) which requires a certified 8 class to receive "the best notice that is practicable under the circumstances, including 9 individual notice to all members who can be identified through reasonable effort." 10 Further, "[t]he use of a combination of a mailed post card directing class members to a 11 more detailed online notice has been approved by courts." In re Advanced Battery 12 Techs., Inc. Sec. Litig., 298 F.R.D. 171, 183 n.3 (S.D.N.Y. 2014) (approving postcard 13 and detailed online full notice for $275,000 settlement involving 10(b) claim).6 14 Neither Rule 23 nor due process require receipt of actual notice by all 15 Settlement Class Members; rather, notice should be mailed to the last known addresses 16 of those who can be identified and publication used to notify others. Newberg § 8.04; 17 18 6 See also, In re GE Co. Sec. Litig., No. 09 Civ. 1951, slip op. at 5 (S.D.N.Y. 19 May 30, 2013) (approving postcard and online full notice for $40 million settlement involving ‟34 Act claims); In re Miller Energy Res., Inc. Sec. Litig., No. 11 Civ. 386, 20 slip op. at 2 (E.D. Tenn. Feb. 3, 2015) (approving combination of postcard and online 21 full notice for $2,950,000 settlement involving 10(b) claims). Barani v. Wells Fargo Bank, N.A., No. 12 Civ. 2999, 2014 WL 1389329, at *10 (S.D. Cal. Apr. 9, 2014) 22 (approving combination of postcard and online notice in consumer case); In re AT&T 23 Mobility Wireless Data Servs. Sales Tax Litig., 789 F. Supp. 2d 935, 973 (N.D. Ill. 2011) (holding that postcard notice was "more than sufficient" despite not providing 24 detailed information about class members‟ options and deadlines because website and claims administrator via phone did); In re Mut. Funds Inv. Litig., No. 04 md 15861, 25 2010 WL 2342413, at *6 (D. MD. May 19, 2010) (finding that a combination of post 26 card notice, publication notice, and a long-form notice available online "is the best notice practical under the circumstances and allows Class Members a full and fair 27 opportunity to consider the proposed Settlements."). 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 8 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 15 of 24 1 see also Mangone v. First USA Bank, 206 F.R.D. 222, 231-32 (S.D. Ill. 2001 2 (approving mailed notice to last known addresses of a Settlement Class with nearly 3 18.5 million members). 4 D. The Proposed Form of Notice Adequately Informs Settlement Class 5 Members of their Rights in this Litigation 6 In an action proceeding under Rule 23(b)(3), the notice must inform each class 7 member that "the court will exclude anyone from the class if he so requests [by a 8 specified date]; the judgment will include all members who do not request exclusion 9 and any member not requesting exclusion may, if he desires, enter an appearance 10 through counsel." Fed. R. Civ. P. 23(c)(2). 11 Here, the proposed Notice, clearly and accurately discloses the information 12 material to a Settlement Class Member‟s decision whether to accept, object to, or opt 13 out of the Settlement. The proposed Notice provides information on, inter alia: the 14 proposed Settlement Class; the terms and provisions of the Stipulation, including the 15 Settlement Consideration; the relief to the Class and the releases to Defendants that the 16 Settlement will provide; the maximum amount of any award of attorney‟s fees and 17 reimbursement of expenses to Lead Counsel and of any incentive award to Plaintiffs; 18 the date, time, and place of the final approval hearing; and the procedures and 19 deadlines for opting out of the settlement or submitting comments or objections. 20 The Notice also meets the requirements of the PSLRA, 15 U.S.C. § 78u-4(a)(7). 21 The Notice provides: 22 a cover page summarizing the information contained in the Notice; 23 a statement of the Settlement Class Members‟ potential recovery; 24 the general terms of the Settlement; 25 a statement of the potential outcome of the case including a statement 26 concerning the issues on which the parties disagree; 27 a statement of attorney‟s fees or costs to be sought; 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 9 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 16 of 24 1 contact information for the Claims Administrator and/or Lead Counsel; 2 and 3 the reasons for the Proposed Settlement, including the factors Plaintiffs and the Settling Defendants considered in reaching the Proposed 4 Settlement. 5 IV. THE COURT SHOULD PRELIMINARILY CERTIFY THE 6 SETTLEMENT CLASS 7 At the Settlement Hearing on final approval of the Settlement, the Court will be 8 asked to grant final approval to the Settlement on behalf of the Settlement Class. For 9 that reason, it is appropriate for the Court to consider, at the preliminary approval 10 stage, whether the certification of the Settlement Class appears to be appropriate. 11 Hanlon, 150 F.3d at 1019. 12 This Action satisfies all the factors for certification of a class and, if the Action 13 were proceeding towards trial, class certification would be appropriate. Certainly, in 14 the context of the Proposed Settlement, the preliminary certification of a Settlement 15 Class is warranted.7 The Ninth Circuit and numerous courts within the Ninth Circuit 16 have held class actions to be generally favored in securities fraud actions. Blackie v. 17 Barrack, 524 F.2d 891, 902-03 (9th Cir. 1975), cert. denied, 429 U.S. 816 (1976). 18 "[T]he law in the Ninth Circuit is very well established that the requirements of Rule 19 23 should be liberally construed in favor of class action cases brought under the federal 20 securities laws." In re THQ, Inc., Sec. Litig., No. 00 Civ. 1783, 2002 WL 1832145, at 21 *2 (C.D. Cal. Mar. 22, 2002) (quoting Schneider v. Traweek, No. 88 Civ. 0905, 1990 22 WL 132716, at *6 (C.D. Cal. July 31, 1990)); Yamner v. Boich, No. 92 Civ. 20597, 23 1994 WL 514035, at *2 (N.D. Cal. Sept. 15, 1994) ("Ninth Circuit favors a liberal use 24 of class actions to enforce federal securities laws"). 25 26 7 Indeed, "[w]hether trial would present intractable management problems, see Rule 27 23(b)(3)(D), is not a consideration when settlement-only certification is requested, for the proposal is that there be no trial." Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 28 593 (1997). UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 10 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 17 of 24 1 Under Fed. R. Civ. P. 23(a), a class may be certified if it is so numerous that 2 joinder of all members is impracticable; there are questions of law and fact common to 3 the class; the claims or defenses of the representative parties are typical of the claims 4 or defenses of the class; and the representative parties will fairly and adequately 5 protect the interests of the class. Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 6 1168, 1172 (9th Cir. 2010). In addition, the court must find that at least one of the 7 three conditions of Fed. R. Civ. P. 23(b) are satisfied. Id. Under subsection (b)(3), the 8 court must also find the questions of law or fact common to the members of the class 9 predominate over any questions affecting only individual members and that a class 10 action is superior to other available methods for the fair and efficient adjudication of 11 the controversy. Id. 12 As set forth below, this Action clearly satisfies each of the requirements for the 13 certification of a settlement class. 14 A. The Settlement Class is Sufficiently Numerous to Warrant 15 Certification 16 Rule 23(a)(1) requires the class to be so large that joinder of all members is 17 impracticable. The purchasers of AudioEye‟s shares during the Class Period, and 18 hence members of the Class, number in the hundreds, if not the thousands. According 19 to AudioEye‟s SEC filings, the company has more than 77 million shares outstanding, 20 and an average of 237,902 shares trade each day. Courts have routinely held that 21 numerosity can be inferred from these circumstances.8 22 8 See, In re Bridgepoint Educ., Inc. Sec. Litig., No. 12 Civ. 1737, 2015 WL 224631, *4 23 (S.D. Cal. Jan. 15, 2015) (numerosity satisfied "where 51.3 million shares of stock 24 were outstanding during the proposed class period… and an average reported daily trading volume of more than 529,000 shares"); In re China Intelligent Lighting & 25 Elecs., Inc. Sec. Litig., No. 11 Civ. 2768, 2013 WL 5789237, *3-4 (C.D. Cal. Oct. 25, 2013) (numerosity standard met, where 6.6 million shares of Defendant‟s stock were 26 acquired) (citing, See, e.g., In re Unioil Sec. Litig., 107 F.R.D. 615, 618 (C.D. Cal. 27 1985) (finding numerosity based on the purchase of "several million shares"); Katz v. Image Innovations Holdings, Inc., No. 06 Civ. 3707, 2010 WL 2926196, at *3 28 (S.D.N.Y. July 22, 2010) (sale of approximately 1.2 million shares); Wade v. Indus. UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 11 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 18 of 24 1 Additionally, the Class Members are located in numerous jurisdictions 2 throughout the United States. A group this large and geographically diverse is too 3 unwieldy to join in a single action. In re China Intelligent, 2013 WL 5789237, *4 4 ("…because this is a securities action involving a publicly-traded stock, it is highly 5 likely that the members of the Class are geographically diverse, making joinder 6 impractical.) 7 B. There are Substantial Common Questions of Law and Fact 8 9 A proposed settlement class has sufficient commonality to justify certification 10 where there are substantial questions of law and fact common to the class. See Wolin, 11 617 F.3d at 1172. Fed. R. Civ. P. 23(a)(2) should be construed permissibly, such that 12 "[a]ll questions of fact and law need not be common to satisfy the rule." Hanlon, 150 13 F.3d at 1019. A class has sufficient commonality where there is "[t]he existence of 14 shared legal issues with divergent factual predicates" or "a common core of salient 15 facts coupled with disparate legal remedies within the class." Hanlon, 150 F.3d at 16 17 Funding Corp., No. 92 Civ. 0343, 1993 WL 594019, at *3 (N.D. Cal. Dec. 14, 1993) 18 (sale of approximately 1.8 million shares); In re PE Corp. Sec. Litig., 228 F.R.D. 102, 107 (D. Conn. 2005) (sale of "almost 4 million shares"); In re Activision Sec. Litig., 19 621 F.Supp. 415, 428 (N.D. Cal. 1985) (sale of four million shares); Brosious v. 20 Children's Place Retail Stores 189 F.R.D. 138, 145 (D.N.J. 1999) (sale of at least four million shares); Gilbert v. First Alert, Inc., 904 F.Supp. 714, 719 (N.D. Ill. 1995) 21 ("more than four million" outstanding shares); In re AnnTaylor Stores Sec. Litig., No. 22 91 Civ. 7145, 1992 WL 249975, at *1 (S.D.N.Y. Sept.22, 1992) (sale of approximately seven million shares); see also Zeidman v. J. Ray McDermott & Co., Inc., 651 F.2d 23 1030, 1039-40 (5th Cir. 1981) (noting that an allegation of six million shares in trading 24 volume would ordinarily satisfy numerosity)); See also, In re Montage Technlogy Grp. Ltd. Sec. Litig., No. 14 Civ. 00722, 2016 WL 1598666, at *3 (N.D. Cal. Apr. 21, 2016) 25 (finding where 36.5 million shares of Defendant‟s stock were traded during the class period, and an average of 26.5 million shares were outstanding, numerosity 26 requirement satisfied); Hatamian v. Advanced Micro Devices, Inc., No. 14 Civ. 27 00226, 2016 WL 1042502, at *4 (N.D. Cal. Mar. 16, 2016) (700 million shares outstanding during the proposed class period… and the average daily trading volume 28 for common stock over 19.6 million shares, numerosity satisfied.) UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 12 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 19 of 24 1 1019; accord Staton v. Boeing Co., 327 F.3d 938, 953 (9th Cir. 2003). Here, there are 2 numerous questions of law and fact common to the Settlement Class; including 3 whether provisions of the Exchange Act were violated by Defendants‟ acts as alleged 4 in Plaintiffs‟ Complaint; whether Defendants publicly misrepresented material facts 5 about the Company and its reported operating results; whether such alleged 6 misrepresentations were made with scienter, and the extent to which such alleged 7 misrepresentations inflated the price of AudioEye‟s shares. In the context of the Class, 8 additional common questions include whether the Proposed Settlement is fair, 9 reasonable and adequate; and whether the Proposed Settlement should be approved. 10 Thus, the Class should be preliminarily certified. 11 C. Lead Plaintiffs’ Claims are Typical of Other Settlement Class 12 Members 13 The claims of the Plaintiffs are typical of the claims of the other members of the 14 Class. Because Plaintiffs and the Class purchased AudioEye‟s stock during the Class 15 Period, at a time when Defendants‟ alleged misrepresentations had not been disclosed. 16 Plaintiffs allege that Defendants‟ alleged misrepresentations resulted in artificial 17 inflation of AudioEye‟s share price and that, upon disclosure of the alleged 18 misrepresentations, the value of AudioEye‟s stock declined. The other members of the 19 Class were affected in the same ways. Similarly, the interest of the Plaintiffs in 20 obtaining a fair, reasonable, and adequate settlement of the claims asserted are 21 identical to the interests of the Class Members. Under the proposed Plan of Allocation, 22 Plaintiffs will receive the same pro rata share of the Settlement Fund as the rest of the 23 Settlement Class. Accordingly, the typicality requirement is met. 24 25 D. Plaintiffs and Lead Counsel Have Adequately Represented the Settlement Class 26 27 Plaintiffs have prosecuted the Action, negotiated with Defendants, and obtained 28 a Proposed Settlement representing a significant percentage of the losses allegedly UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 13 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 20 of 24 1 suffered by members of the Settlement Class. Moreover, Plaintiffs retained, and are 2 represented by, highly qualified counsel with extensive experience in the prosecution 3 of securities class actions. See Exhibit B (Lead Counsel‟s firm resume) attached 4 hereto. Thus, Plaintiffs have fairly and adequately protected and advanced the 5 interests of the Settlement Class and the requirements of Rule 23(a)(4) are met. 6 E. The Predominance and Superiority Requirements are Satisfied 7 8 Under Rule 23(b)(3), a class may be certified if a court finds that common 9 questions of law or fact predominate over individual questions, and that a class action 10 is superior to other available methods for the fair and efficient adjudication of the 11 controversy. Here, the proposed Settlement Class satisfies the requirements of Rule 12 23(b) in that, as described above, the questions of law or fact common to the members 13 of the Settlement Class clearly predominate over any questions affecting individual 14 members. Moreover, damages suffered by members of the Settlement Class are not 15 sufficient to make it economical to prosecute separate actions in order to recover 16 individual losses sustained as a result of Defendants‟ alleged violations of the 17 securities laws. Amchem Prods., 521 U.S. at 617 ("The policy at the very core of the 18 class action mechanism is to overcome the problem that small recoveries do not 19 provide the incentive for any individual to bring a solo action…A class action solves 20 this problem…"). Accordingly, a class action is superior to other available methods for 21 the fair and efficient adjudication of the controversy. 22 In securities claims, it is common for factual variations among shareholders 23 related to stock transaction dates and sizes, "sophistication of investors and degree of 24 reliance" to exist, but common questions of fact related to misrepresentation claims 25 "will predominate over the individual issues." Persky v. Turley, No. 88 Civ. 1830-26 (PHX) (SMM), 1991 WL 329564, at *3 (D. Ariz. Dec. 20, 1991). Additionally, 27 Plaintiffs may rely on the fraud-on-the-market presumption since AudioEye was 28 actively traded in an efficient market. See Basic Inc. v. Levinson, 485 U.S. 224, 241-UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 14 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 21 of 24 1 42, 246-47 (1988); see also Conn. Ret. Plans & Trust Funds v. Amgen, Inc., No. 07 2 Civ. 2536, 2009 WL 2633743, at *12 (C.D. Cal. Aug. 12, 2009). An efficient market is 3 one that rapidly reflects new information in price, such that security prices fully reflect 4 all available information. Conn. Ret. Plans, 2009 WL 2633743, at *10. Here, where 5 AudioEye was publicly traded on the NASDAQ, a national exchange, covered by 6 analysts, had average daily trading volume of 493,241 shares, and stock prices 7 reflected public information, an efficient market is present. Accordingly, the need for 8 individual reliance by each Class Member is eliminated. This further supports the 9 conclusion that common questions of fact and law predominate over individual 10 questions pursuant to Rule 23(b)(3). See Huberman v. Tag-It Pacific Inc., 314 Fed. 11 App‟x 59, 62-63 (9th Cir. 2009). 12 As demonstrated by the foregoing, the proposed Settlement Class satisfies each 13 of the requirements for the certification of a class pursuant to Fed. R. Civ. P. 23(a) and 14 at least one of the factors enumerated in Rule 23(b). Certification of the Settlement 15 Class is thus warranted. 16 V. PROPOSED SETTLEMENT SCHEDULE 17 The Court‟s entry of the proposed Preliminary Approval Order would, among 18 other things: (i) provisionally certify, for settlement purposes, this Action as a class 19 action; (ii) direct notice of the Proposed Settlement to all members of the Settlement 20 Class; and (iii) schedule the Settlement Hearing to consider whether the Proposed 21 Settlement should be approved as being fair, reasonable, and adequate. As such, the 22 Preliminary Approval Order sets a proposed schedule for mailing and publication of 23 the Mailed Notice and Summary Notice, and deadlines for submitting claims, 24 objecting to the Proposed Settlement, and/or opting out of the Settlement Class. 25 Plaintiffs respectfully recommend the schedule set forth below, pursuant to 26 which the Settlement Hearing would be set a minimum of 100 days after the granting 27 of the Preliminary Approval Order in order to allow for the other deadlines referenced 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 15 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 22 of 24 1 in the proposed Preliminary Approval Order, which were negotiated among the 2 Parties. 3 Defendant‟s deadline to produce Within (14) calendar days of receipt 4 transfer records of a copy of the Preliminary Approval 5 (Preliminary Approval Order, ¶ 13) Order 6 Notice Mailed to Class Members No later than fourteen (14) calendar (Preliminary Approval Order, ¶ 11) days following receipt of the transfer 7 records report from Defendants 8 Publication of Summary Notice Within thirty-five (35) calendar days 9 (Preliminary Approval Order, ¶ 16) after entry of the Order 10 Support of Settlement, the Plan of Filed and served thirty-five (35) Allocation and application for calendar days before the Final 11 Attorneys‟ Fees and Expenses Settlement Hearing 12 (Preliminary Approval Order, ¶ 23) Deadline for Objections to the Received at least twenty-one (21) 13 Settlement, the Plan of Allocation, or calendar days prior to the Final 14 the application for Attorneys‟ Fees and Settlement Hearing Expenses 15 (Preliminary Approval Order, ¶ 21) 16 Deadline to request exclusion from the Received no later than thirty (30) Settlement Class calendar days prior to the Final 17 (Preliminary Approval Order, ¶ 20) Settlement Hearing Settlement Hearing To be determined by the Court; 18 Plaintiffs propose the hearing be set a 19 minimum of 100 days after the order preliminarily approving the settlement 20 Deadline for Plaintiffs to file papers in Filed no later than seven (7) calendar 21 further support of the Settlement, the days prior to the Final Settlement Plan of Allocation and application for Hearing 22 Attorneys‟ Fees or Expenses 23 (Preliminary Approval Order, ¶ 24) Deadline for submitting Proof of Postmarked no later than ninety (90) 24 Claim forms calendar days from the date of the 25 (Preliminary Approval Order, ¶ 18(a)) Order 26 27 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 16 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 23 of 24 1 VI. CONCLUSION 2 Plaintiffs respectfully request that the Court enter the Preliminary Approval 3 Order, which Defendants have consented to, preliminarily certify the Settlement Class, 4 and direct the notice be distributed to the members of the Class. 5 Dated: December 16, 2016 Respectfully Submitted, 6 7 KIRBY McINERNEY LLP 8/s/Ira M. Press Ira M. Press (pro hac vice) 9 ipress@kmllp.com 10 825 Third Avenue, 16th Floor New York, NY 10022 11 Telephone: (212) 371-6600 12 Fax: (212) 751-2540 13 Lead Counsel for Plaintiffs 14 BONNETT, FAIRBOURN, 15 FRIEDMAN & BALINT, P.C. 16 Andrew S. Friedman (AZ #: 005425) 2325 E. Camelback Rd. Ste. 300 17 Phoenix, AZ 85016 18 Telephone: (602) 274-1100 Fax: (602) 274-1199 19 Email: afriedman@bffb.com 20 Liaison Counsel for the Plaintiffs 21 22 23 24 25 26 27 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES 17 Case 4:15-cv-00163-DCB Document 89 Filed 12/16/16 Page 24 of 24 1 CERTIFICATE OF SERVICE 2 I hereby certify that on December 16, 2016, I electronically filed the foregoing 3 4 with the Clerk of the Court using the CM/ECF system which will send notification of 5 such filing to the e-mail addresses denoted on the Electronic Mail notice list, and I 6 hereby certify that I have mailed the foregoing document or paper via the United States 7 Postal Service to the non-CM/ECF participants indicated on the Manual Notice list. 8 9 I certify under penalty of perjury under the laws of the United States of America 10 that the foregoing is true and correct. 11 12/s/Ira M. Press 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNOPPOSED MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT, PRELIMINARY CERTIFICATION OF SETTLEMENT CLASS, AND ESTABLISHING NOTICE PROCEDURES

Exhibit A

EXHIBIT A Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 40 of 103 Exhibit A 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF ARIZONA 8----------------------------------------------------X 9 No. 4:15-cv-00163-DCB 10 [PROPOSED] ORDER 11 IN RE AUDIOEYE, INC. SECURITIES PRELIMINARILY 12 LITIGATION APPROVING SETTLEMENT 13 AND PROVIDING FOR NOTICE 14 15 Exhibit A 16 Hearing Date: _______, 201_ 17----------------------------------------------------X Time: 10:00 a.m. 18 Judge: Hon David Bury 19 20 WHEREAS, (i) Lead Plaintiffs Globis Capital Partners, L.P. and Globis 21 Overseas Fund Ltd ("Lead Plaintiffs"), on behalf of themselves and the putative 22 Class, and (ii) Defendants AudioEye, Inc. ("AudioEye"), Nathaniel Bradley and 23 Edward O’Donnell (collectively, "Defendants"), by and through their respective 24 counsel, have entered into a Stipulation of Settlement, dated December 13, 2016 25 (the "Stipulation"), which is subject to review under Rule 23 of the Federal Rules 26 of Civil Procedure and which, together with the exhibits thereto, sets forth the 27 28 1 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 41 of 103 Exhibit A 1 terms and conditions for the proposed settlement of the claims alleged in this 2 Litigation; and 3 WHEREAS, the Court having read and considered the Stipulation, the 4 "Postcard Notice of Proposed Settlement" ("Postcard Notice"), the proposed 5 "Notice of Pendency and Proposed Settlement of Class Action" ("Long Form 6 Notice"), the proposed "Summary Notice of Pendency and Proposed Class Action 7 Settlement" ("Summary Notice"), the proposed Plan of Allocation of the Net 8 Settlement Fund among Settlement Class Members, the proposed form of the 9 Proof of Claim and Release ("Proof of Claim"), the proposed form of Order and 10 Final Judgment, and submissions made relating thereto, and finding that 11 substantial and sufficient grounds exist for entering this Order; 12 NOW, THEREFORE, IT IS HEREBY ORDERED, this ____ day of 13 __________, 201_, that: 14 1. Capitalized terms used herein have the meanings defined in the 15 Stipulation. 16 2. The Court preliminarily approves the Settlement of the Litigation as 17 set forth in the Stipulation, subject to the right of any Settlement Class Member to 18 challenge the fairness, reasonableness, and adequacy of the Settlement and to 19 show cause, if any exists, why a final judgment dismissing the Litigation based on 20 the Stipulation should not be entered, and subject to further consideration of such 21 matters by the Court at the hearing on final approval of the Stipulation described 22 below. 23 3. The Court provisionally certifies for purposes of effectuating the 24 proposed Settlement set forth in the Stipulation a Settlement Class comprised of 25 all Persons who purchased or otherwise acquired any common stock of AudioEye 26 during the period from May 14, 2014 through and including April 1, 2015, and 27 who were allegedly damaged thereby. Excluded from the Settlement Class are 28 2 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 42 of 103 Exhibit A 1 Defendants, the officers and directors of AudioEye during the Class Period, 2 members of their immediate families and their legal representatives, heirs, 3 successors, or assigns, any entity in which Defendants have or had a controlling 4 interest, and any persons who separately file an action against one or more of 5 Defendants, based in whole or in part on any claim arising out of or relating to any 6 of the alleged acts, omissions, misrepresentations, facts, events, matters, 7 transactions, or occurrences referred to in the Litigation or otherwise alleged, 8 asserted, or contended in the Litigation. Also excluded from the Settlement Class 9 are those persons who file valid and timely requests for exclusion in accordance 10 with the Court’s Order of Preliminary Approval of Settlement concerning the 11 Stipulation. This conditional certification of the Settlement Class shall be binding 12 only with respect to the Settlement of the Litigation and shall be withdrawn if the 13 Effective Date does not occur for any reason and/or the Settlement is not 14 consummated according to its terms. By entering into the Stipulation and assenting 15 to entry of this order and the proposed Order and Final Judgment, the Defendants 16 have not waived any rights with respect to any arguments they might make in 17 opposition to a motion for class certification in the event that the Effective Date 18 does not occur and/or the Settlement is not consummated according to its terms. 19 4. A hearing (the "Final Settlement Hearing") pursuant to Federal Rule of 20 Civil Procedure 23(e) shall be held before the Court on _____________ 201_ at 21 _____ __.m. for the following purposes: 22 a. to consider whether the Litigation satisfies the applicable 23 prerequisites for class action treatment under Federal Rules of Civil 24 Procedure 23(a) and (b) for the purpose of effectuating the 25 Settlement; 26 b. to finally determine whether the Settlement is fair, reasonable, and 27 adequate, and should be approved by the Court; 28 3 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 43 of 103 Exhibit A 1 c. to finally determine whether the Order and Final Judgment as 2 provided under the Stipulation should be entered, dismissing the 3 Litigation on the merits and with prejudice, and to determine whether 4 the release by the Settlement Class of the Released Parties as set forth 5 in the Stipulation, should be ordered, along with a permanent 6 injunction barring efforts to bring any claims extinguished by the 7 release; 8 d. to finally determine whether the proposed Plan of Allocation for the 9 distribution of the Net Settlement Fund is fair and reasonable and 10 should be approved by the Court; 11 e. to consider the application of Lead Plaintiffs’ Counsel for an award of 12 Attorneys’ Fees and Expenses and an Award to Lead Plaintiffs; 13 f. to consider any Settlement Class Members’ objections to the 14 Settlement, whether submitted previously in writing or presented 15 orally at the Final Settlement Hearing by Settlement Class Members 16 (or by counsel on their behalf); and 17 g. to rule upon such other matters as the Court may deem appropriate. 18 5. The Court reserves the right to adjourn the Final Settlement Hearing 19 to a later date and to approve the Settlement with or without modification and with 20 or without further notice of any kind. The Court further reserves the right to enter 21 its Order and Final Judgment approving the Settlement and dismissing the 22 Complaint, on the merits and with prejudice, regardless of whether it has approved 23 the Plan of Allocation or awarded any Attorneys’ Fees and Expenses or Award to 24 Lead Plaintiffs. 25 6. The Court reserves the right to approve the Settlement with such 26 modifications as may be agreed upon or consented to by the Settling Parties and 27 without further notice to the Settlement Class where to do so would not impair 28 4 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 44 of 103 Exhibit A 1 Settlement Class Members’ rights in a manner inconsistent with Rule 23 and due 2 process of law. 3 7. The Court approves the form, substance and requirements of (a) the 4 Postcard Notice, (b) the Long Form Notice, (c) the Summary Notice and (d) the 5 Proof of Claim, which were submitted as exhibits to this Proposed Order. 6 8. Lead Plaintiffs’ Counsel has the authority to enter into the Stipulation 7 on behalf of the Settlement Class and is authorized to act on behalf of the 8 Settlement Class Members with respect to all acts or consents required by or that 9 may be given pursuant to the Stipulation or such other acts that are reasonably 10 necessary to consummate the Settlement. 11 9. Any Settlement Class Member may enter an appearance in the 12 Litigation at his, her or its own expense, individually or through counsel of his, 13 her or its own choice. Settlement Class Members who do not enter appearances 14 shall be represented by Lead Plaintiffs’ Counsel. Any Settlement Class Member 15 who anticipates the need and wishes to appeal any aspect of the Stipulation or 16 Settlement should formally move to intervene as a party under Rule 24 of the 17 Federal Rules of Civil Procedure. 18 10. JND Legal Administration is approved as the Claims Administrator 19 for the Settlement. 20 11. Lead Plaintiffs’ Counsel, through the Claims Administrator, shall 21 cause the Postcard Notice, substantially in the form annexed hereto, to be mailed, 22 by United States mail, postage prepaid, no later than fourteen (14) calendar days 23 following receipt of the transfer records report from Defendants to all Settlement 24 Class Members who can be identified with reasonable effort by the Claims 25 Administrator. No later than five (5) business days after receipt of a request for a 26 copy of the Long Form Notice, the Claims Administrator or Lead Plaintiffs’ 27 Counsel shall cause a copy of the Long Form Notice, substantially in the form 28 5 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 45 of 103 Exhibit A 1 annexed hereto as Exhibit A-2, to be mailed by first-class mail, postage prepaid, or 2 emailed to any putative Class Members that makes such a request. 3 Contemporaneously with the mailing of the Postcard Notice, the Claims 4 Administrator and Lead Plaintiffs’ Counsel shall cause copies of the Long Form 5 Notice and Proof of Claim, substantially in the forms annexed hereto as Exhibit A-6 2 and A-4, respectively, to be posted in downloadable form on a website specific 7 to the Settlement, www.audioeyesecuritieslitigation.com, and at www.kmllp.com. 8 12. Lead Plaintiffs’ Counsel are authorized to establish a Notice and 9 Administration Account (as defined in the Stipulation) of $100,000 (One Hundred 10 Thousand Dollars), to be used for reasonable out-of-pocket costs in connection 11 with providing notice of the Settlement to the Settlement Class and for other 12 reasonable out-of-pocket administrative expenses without further order of the 13 Court. After the Effective Date, additional amounts may be transferred from the 14 Settlement Fund to the Notice and Administration Account and any notice and 15 administration costs in excess of $100,000 shall be paid from the Notice and 16 Administration Account, subject to approval of Lead Plaintiffs’ Counsel, without 17 further order of the Court. 18 13. AudioEye and any and all issuers, securities firms or transfer agents 19 holding transfer records which indicate the legal owners of AudioEye common 20 stock and/or securities currently or during the Class Period are hereby ordered to 21 produce such transfer records in a usable electronic format to Lead Plaintiffs’ 22 Counsel or the Claims Administrator, without any charge to the Gross Settlement 23 Fund, Lead Plaintiffs’ Counsel or the Claims Administrator, within fourteen (14) 24 calendar days of receipt of a copy of this Order. 25 14. Lead Plaintiffs’ Counsel, through the Claims Administrator, shall also 26 make all reasonable efforts to give notice to nominee owners such as brokerage 27 firms and other persons or entities who purchased AudioEye common stock and/or 28 6 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 46 of 103 Exhibit A 1 securities during the Class Period. Within ten (10) calendar days after receiving 2 the Notice, such nominee purchasers are directed to forward the Postcard Notice to 3 their beneficial owners or to provide the Claims Administrator with lists of the 4 names and addresses of the beneficial owners, and in the latter case, the Claims 5 Administrator is ordered to send the Postcard Notice promptly to such beneficial 6 owners. Additional copies of the Postcard Notice shall be made available to any 7 record holder requesting same for the purpose of distribution to beneficial owners, 8 and such record holders shall be reimbursed from the Gross Settlement Fund, upon 9 receipt by the Claims Administrator of proper documentation, for the reasonable 10 expense of sending the Postcard Notice to beneficial owners. 11 15. Lead Plaintiffs’ Counsel shall, at or before the Final Settlement 12 Hearing, serve upon Defendants’ Counsel, and file with the Court, proof of 13 mailing of the Notice and Proof of Claim, both to Settlement Class Members and 14 to nominees. 15 16. Lead Plaintiffs’ Counsel, through the Claims Administrator, shall 16 cause the Summary Notice to be published electronically once on the 17 GlobeNewswire and in print once in the Investor’s Business Daily within thirty-18 five (35) calendar days after the entry of this Order. Lead Plaintiffs’ Counsel shall, 19 at or before the Final Settlement Hearing, serve upon Defendants’ Counsel and file 20 with the Court proof of publication of the Summary Notice. 21 17. The forms and methods set forth herein of notifying the Settlement 22 Class of the Settlement and its terms and conditions meet the requirements of due 23 process and Rule 23 of the Federal Rules of Civil Procedure, Section 21D(a)(7) of 24 the Exchange Act, 15 U.S.C. 78u-4(a)(7), as amended by the Private Securities 25 Litigation Reform Act of 1995; constitute the best notice practicable under the 26 circumstances; and constitute due and sufficient notice to all persons and entities 27 entitled thereto. No Settlement Class Member will be relieved from the terms of 28 7 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 47 of 103 Exhibit A 1 the Settlement, including the releases provided for therein, based upon the 2 contention or proof that such Settlement Class Member failed to receive actual or 3 adequate notice. 4 18. In order to be entitled to participate in recovery from the Net 5 Settlement Fund after the Effective Date, each Settlement Class Member shall take 6 the following action and be subject to the following conditions: 7 a. A properly completed and executed Proof of Claim must be submitted 8 to the Claims Administrator, at the Post Office Box indicated in the 9 Notice, postmarked no later than ninety (90) calendar days from the 10 date of this Order. Such deadline may be further extended by Order of 11 the Court. Each Proof of Claim shall be deemed to have been 12 submitted when legibly postmarked (if properly addressed and mailed 13 by first-class mail). Any Proof of Claim submitted in any other 14 manner shall be deemed to have been submitted when it was actually 15 received by the Claims Administrator at the address designated in the 16 Notice. 17 b. The Proof of Claim submitted by each Settlement Class Member 18 must satisfy the following conditions: (i) it must be properly filled 19 out, signed and submitted in a timely manner in accordance with the 20 provisions of the preceding subparagraph; (ii) it must be accompanied 21 by adequate supporting documentation for the transactions reported 22 therein, in the form of broker confirmation slips, broker account 23 statements, an authorized statement from the broker containing the 24 transactional information found in a broker confirmation slip, or such 25 other documentation as is deemed adequate by the Claims 26 Administrator or Lead Plaintiffs’ Counsel; (iii) if the person 27 executing the Proof of Claim is acting in a representative capacity, a 28 8 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 48 of 103 Exhibit A 1 certification of his current authority to act on behalf of the Settlement 2 Class Member must be provided with the Proof of Claim; and (iv) the 3 Proof of Claim must be complete and contain no material deletions or 4 modifications of any of the printed matter contained therein and must 5 be signed under penalty of perjury. 6 c. Once the Claims Administrator has considered a timely-submitted 7 Proof of Claim, it shall determine whether such claim is valid, 8 deficient or rejected. For each claim determined to be either deficient 9 or rejected, the Claims Administrator shall send a deficiency letter or 10 rejection letter as appropriate, describing the basis on which the claim 11 was so determined. Persons who timely submit a Proof of Claim that 12 is deficient or otherwise rejected shall be afforded a reasonable time 13 (at least seven (7) calendar days) to cure such deficiency if it shall 14 appear that such deficiency may be cured. 15 d. For the filing of and all determinations concerning their Proof of 16 Claim, each Settlement Class Member shall submit to the jurisdiction 17 of the Court. 18 19. All Settlement Class Members who do not submit valid and timely 19 Proofs of Claim will be forever barred from receiving any payments from the Net 20 Settlement Fund, but will in all other respects by subject to and bound by the 21 provisions of the Stipulation and the Order and Final Judgment, if entered. 22 Notwithstanding the foregoing, Lead Plaintiffs’ Counsel may, in their discretion, 23 accept late-submitted claims for process by the Claims Administrator so long as 24 distribution of the Net Settlement Fund to Authorized Claimants is not materially 25 delayed thereby. 26 20. Settlement Class Members shall be bound by all determinations and 27 judgments in the Litigation, whether favorable or unfavorable, unless such persons 28 9 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 49 of 103 Exhibit A 1 request exclusion from the Settlement Class in a timely and proper manner, as 2 hereinafter provided. A Settlement Class Member wishing to make such request 3 shall mail it, in written form, by first class mail, postage prepaid, or otherwise 4 deliver it, so that it is received no later than thirty (30) calendar days prior to the 5 Final Settlement Hearing or _________201_, to the addresses listed in the Notice. 6 Such request for exclusion shall clearly indicate the name, address, phone number 7 and e-mail contact information (if any) of the person seeking exclusion, state that 8 the sender specifically requests to be excluded from the Settlement Class, and 9 must be signed by such person. Such persons requesting exclusion are also 10 required to specify all their purchases and sales of AudioEye common stock and/or 11 securities during the Class Period, including the date, number of shares and price 12 of the shares purchased or sold and include account documentation substantiating 13 such purchases and sales. The request for exclusion shall not be effective unless it 14 provides the required information, is legible, and is made within the time stated 15 above, or the exclusion is otherwise accepted by the Court. Lead Plaintiffs’ 16 Counsel may contact any person or entity filing a request for exclusion, or their 17 attorney if one is designated, to discuss the exclusion. Requests for exclusion must 18 be filed no later than thirty (30) calendar days prior to the Final Approval Hearing. 19 21. Settlement Class Members requesting exclusion from the Settlement 20 Class shall not be entitled to receive any payment out of the Net Settlement Fund. 21 The Court will consider comments and/or objections to the Settlement, the Plan of 22 Allocation, or the application for Attorneys’ Fees and Expenses and any payment 23 to Lead Plaintiff, only if such comments or objections and any supporting papers 24 are served to be received at least twenty-one (21) calendar days prior to the Final 25 Settlement Hearing, upon each of the following: 26 27 LEAD PLAINTIFFS’ COUNSEL: 28 10 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 50 of 103 Exhibit A 1 Ira M. Press, Esq. Mark Strauss, Esq. 2 Kirby McInerney LLP 3 825 Third Avenue, 16th Floor New York, New York 10022 4 (212) 371-6600 5 6 COUNSEL FOR DEFENDANTS AUDIOEYE AND NATHANIEL BRADLEY: Robert D. Weber, Esq. 7 DLA Piper LLP (US) 8 2000 Avenue of the Stars 9 Suite 400, North Tower Los Angeles, California, 90067 10 Tel: 310-595-3000 11 Fax: 310-595-3300 12 COUNSEL FOR DEFENDANT EDWARD O’DONNELL: 13 Mendy Piekarski, Esq. 14 Sichenzia Ross Ference Kesner LLP 15 61 Broadway, 32nd Floor New York, NY 10006 16 (212) 930-9700 17 18 and the objector has (by that same date) filed said objections, papers and briefs, 19 showing due proof of service upon counsel identified above, with the Clerk of the 20 Court, U.S. District Court, District of Arizona, Evo A. DeConcini U.S. Courthouse 21 405 West Congress Street, Suite 1500 Tucson, AZ 85701-5010. Attendance at the 22 Final Settlement Hearing is not necessary but persons wishing to be heard orally in 23 opposition to the Settlement, the Plan of Allocation, and/or the application for 24 Attorneys’ Fees and Expenses or Award to Lead Plaintiffs are required to indicate 25 in their written objection (or in a separate writing that is submitted in accordance 26 with the deadline and after instruction pertinent to the submission of a written 27 objection) that they intend to appear at the Final Settlement Hearing and identify 28 11 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 51 of 103 Exhibit A 1 any witnesses they may call to testify or exhibits they intend to introduce into 2 evidence at the Final Settlement Hearing. Settlement Class Members do not need 3 to appear at the Final Settlement Hearing or take any other action to indicate their 4 approval. Any Settlement Class Member who does not object in the manner 5 prescribed above shall be deemed to have waived all such objections and shall 6 forever be foreclosed from making any objection to the fairness, adequacy or 7 reasonableness of the Settlement, the Order and Final Judgment to be entered 8 approving the Settlement, the Plan of Allocation, and/or the application for an 9 award of Attorneys’ Fees and Expenses and a payment to Lead Plaintiffs. 10 22. The Court reserves the right to adjourn the Final Settlement Hearing 11 or any adjournment thereof without any further notice other than entry of an Order 12 on the Court’s docket, and to approve the Settlement without further notice to the 13 Settlement Class. 14 23. All papers in support of the Settlement, the Plan of Allocation and 15 any application for Attorneys’ Fees or Expenses or a payment to Lead Plaintiffs 16 shall be filed and served thirty-five (35) calendar days before the Final Settlement 17 Hearing. 18 24. Any submissions filed in response to any objections or in further 19 support of the Settlement, the Plan of Allocation and any application for 20 Attorneys’ Fees or Expenses or a payment to Lead Plaintiffs shall be filed no later 21 than seven (7) calendar days prior to the Final Settlement Hearing. 22 25. Pending final determination of whether the Settlement should be 23 approved, all Settlement Class Members, and each of them, and anyone acting or 24 purporting to act for any of them, shall be enjoined from prosecuting, attempting 25 to prosecute, or assisting others in the prosecution of, any Settled Claims. In 26 addition, the Litigation is stayed. 27 28 12 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 52 of 103 Exhibit A 1 26. Neither the Stipulation, nor any of its terms or provisions, nor any of 2 the negotiations or proceedings connected with it, shall be construed as an 3 admission or concession by Lead Plaintiffs regarding the merits of the claims 4 made in the Litigation. Neither the Stipulation nor any of the terms and provisions 5 of the Settlement set forth therein, nor any statements made, acts performed or 6 documents executed in the negotiation of, pursuant to or in furtherance of the 7 Stipulation or the Settlement: (i) is or may be deemed to be or may be used as an 8 admission of, or evidence of, the validity or truth of any of the allegations in the 9 Litigation or the validity of any of the Released Claims, or of any fault, 10 wrongdoing or liability of any of the Settling Defendants and their Related Parties; 11 or (ii) is or may be deemed to be or may be used as an admission of, or evidence 12 of, any fault or omission of any of the Settling Defendants and their Related 13 Parties in any civil, criminal or administrative proceeding in any court, 14 administrative agency or other tribunal. 15 27. In the event the Settlement is not consummated pursuant to its terms, 16 the Stipulation, except as otherwise provided therein, including any amendment(s) 17 thereto, and this Order, shall be null and void, of no further force or effect, and 18 without prejudice to any Settling Party, and may not be introduced as evidence or 19 referred to in any action or proceedings by any person or entity, and each party 20 shall be restored to his, her or its respective position as it existed before the 21 execution of the Stipulation, pursuant to the terms of the Stipulation, except that 22 any notice and administration costs paid or incurred at the time of termination, and 23 less any taxes paid or payable on the Gross Settlement Fund (including any costs 24 and expenses of tax attorneys and accountants) at the time of termination need not 25 be refunded to Settling Defendants or their insurer funding the Settlement. 26 28. The Court retains exclusive and specific jurisdiction over the action 27 to consider all further matters arising out of, or relating to, the Settlement, 28 13 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 53 of 103 Exhibit A 1 including by way of illustration and not limitation, any dispute concerning any 2 Proof of Claim filed by any Settlement Class Member and any future requests by 3 one or more of the Settling Parties that the Final Order and Judgment, the Release 4 and/or the permanent injunction set forth in the Stipulation be enforced. 5 29. All funds held by the Escrow Agent shall be deemed and considered 6 to be in custodial legis of the Court, and shall remain subject to the jurisdiction of 7 the Court, until such time as such funds shall be distributed pursuant to the 8 Stipulation and/or further order(s) of the Court. 9 30. Neither the Defendants, Released Parties, nor Defendants’ counsel 10 shall have any responsibility for the Plan of Allocation or any application for 11 attorneys’ fees or expenses submitted by Lead Plaintiffs’ Counsel, and such 12 matters will be considered separately from the fairness, reasonableness, and 13 adequacy of the Settlement. 14 31. All Taxes, Tax Expenses, and Notice and Administration Expenses 15 shall be paid from the Settlement Fund without further order of the Court in a 16 manner consistent with the provisions of the Stipulation. In the event the 17 Settlement is not approved by the Court, or otherwise fails to become effective, 18 neither Lead Plaintiffs nor any of their counsel shall have any obligation to repay 19 any amounts incurred and/or properly disbursed pursuant to the Stipulation. 20 21 22 23 24 25 26 27 28 14 Preliminary Approval Order-Case No. 4:15-cv-00163-DCB WEST\272741954.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 54 of 103 Exhibit A-1 Important Legal Notice authorized by the United Court-Ordered Legal Notice States District Court for the District of Arizona about a Securities Class Action Settlement IN RE AUDIOEYE, INC. SEC. LITIG. C/O [NAME OF CLAIMS If you purchased or otherwise acquired any ADMINISTRATOR] common stock of AudioEye, Inc. ("AudioEye") CLAIMS ADMINISTRATOR during the period from May 14, 2014 through [CLAIMS ADMINISTRATOR ADDRESS] April 1, 2015, inclusive, you may be entitled to a payment from a proposed class action settlement. [NAME] [ADDRESS] You may be entitled to a CASH payment. [CITY] [STATE] [ZIP] [COUNTRY] THIS NOTICE MAY AFFECT YOUR LEGAL RIGHTS. PLEASE READ IT CAREFULLY. Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 55 of 103 Exhibit A-1 In re AudioEye, Inc. Securities Litigation, No. 4:15-cv-00163-DCB (D. Ariz.) THIS CARD ONLY PROVIDES LIMITED INFORMATION ABOUT THE SETTLEMENT. PLEASE VISIT WWW.AUDIOEYESECURITIESLITIGATION.COM FOR MORE INFORMATION. There is a proposed Settlement of claims against AudioEye and certain officers and directors of AudioEye (collectively, "Defendants"). The proposed Settlement would resolve a lawsuit in which the Plaintiffs allege that Defendants misled investors by issuing false and misleading public filings and statements between May 14, 2014 through April 1, 2015, inclusive (the "Class Period"), and seeks money damages for violations of the federal securities laws. Defendants deny any wrongdoing. The parties disagree on how much money, if any, could have been won if the case went to trial. If approved by the Court, the Settlement will resolve the case and will pay money to eligible Settlement Class Members. Who’s Included? You are included if you purchased or acquired shares of AudioEye securities during the Class Period. You may have held these shares through a broker-dealer or other financial intermediary. What Can You Get? The Settlement established a $1,525,000 cash Settlement Fund, that after payment of certain Court-approved expenses such as attorneys’ fees and administration costs, is intended for distribution to Settlement Class Members in exchange for the settlement of this case and the release by Settlement Class Members of the claims described above and other related claims against Defendants. The Settlement is explained in detail in the Full Notice, and in the Stipulation, available at the website below. The Proof of Claim is also located at the website listed below. Your share of the Settlement Fund will depend on a number of factors including the number of valid Proofs of Claim that Settlement Class Members submit, the number of shares of AudioEye securities that you purchased or sold during the Class Period and the dates of such purchases and sales. The exact amount, if any, of your payment will be determined according to a Court-approved Plan of Allocation (a proposed version of which is available at the website listed below). You may contact the Claims Administrator or Lead Counsel (see below) with any further questions How to Get Money? To qualify for payment, you must submit a valid Proof of Claim to In re AudioEye, Inc. Securities Litigation, c/o JND Legal Administration, Claims Administrator, P.O. Box 6847, Broomfield, CO 80021. PROOFS OF CLAIM ARE DUE BY _______________, 201_. Your Other Rights. If you do not want to be legally bound by the Settlement, you must exclude yourself by __________, 201_, or you will not be able to sue the Defendants for any claims relating to this case. If you exclude yourself, you cannot get money from this Settlement. If you stay in the Settlement Class, you may object to the Settlement by ________, 201_. The Full Notice, located at the website listed below, explains how to exclude yourself from, or object to, the Settlement. The Court will hold a hearing in this case on _______, 201_ at ____ [a.m./p.m.] to consider whether to approve the Settlement, Plan of Allocation, and a request by the lawyers representing all Class Members for up one third in attorneys’ fees, plus expenses not to exceed $75,000, for litigating the case and negotiating the Settlement. You may attend the hearing and ask to be heard by the Court, but you do not have to. If you do not take any action, you will be legally bound by the Settlement and any orders or Judgments entered in the Action, and will fully, finally, and forever give up any rights to prosecute certain claims against the Defendants. Lead Counsel. Ira M. Press, Esq. and Mark Strauss, Esq., Kirby McInerney LLP, 825 Third Avenue, 16th Floor, New York, NY 10022, Toll Free: (888) 529-4787. For more information or a Claim Form: Toll-Free 1-844-357-6871 or www.audioeyesecuritieslitigation.com; www.kmllp.com Do not contact the Court, Defendants or their counsel in this Action with questions. Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 56 of 103 Exhibit A-2 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF ARIZONA 3----------------------------------------------------X 4 No. 4:15-cv-00163-DCB 5 CLASS ACTION 6 IN RE AUDIOEYE, INC. SECURITIES 7 LITIGATION Exhibit A-2 8 9 10----------------------------------------------------X 11 NOTICE OF PENDENCY AND PROPOSED SETTLEMENT 12 OF CLASS ACTION 13 14 A Federal Court Authorized This Notice. This Is Not A Solicitation From A Lawyer. 15 16 TO: ALL PERSONS WHO PURCHASED OR ACQUIRED ANY 17 COMMON STOCK OF AUDIOEYE, INC. ("AUDIOEYE") DURING THE PERIOD FROM MAY 14, 2014 THROUGH APRIL 1, 2015, 18 INCLUSIVE (the "CLASS PERIOD"), YOU COULD RECEIVE A 19 PAYMENT FROM A CLASS ACTION SETTLEMENT. CERTAIN 20 PERSONS ARE EXCLUDED FROM THE DEFINITION OF THE CLASS AS SET FORTH BELOW1 21 22 • PLEASE READ THIS NOTICE CAREFULLY. 23 24 25 26 1 All capitalized terms that are not defined in this Notice have the meaning ascribed to them in the Stipulation of Settlement (the "Stipulation") dated December 13, 2016, which is available on 27 the website established for the Settlement at www.audioeyesecuritieslitigation.com. 28 1 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 57 of 103 Exhibit A-2 1 • IF YOU WISH TO COMMENT IN FAVOR OF THE SETTLEMENT OR OBJECT TO THE SETTLEMENT, YOU MUST FOLLOW THE 2 DIRECTIONS IN THIS NOTICE. 3 • YOUR LEGAL RIGHTS MAY BE AFFECTED BY THIS LAWSUIT. 4 • TO RECEIVE MONEY FROM THIS SETTLEMENT, YOU MUST 5 SUBMIT A VALID PROOF OF CLAIM AND RELEASE FORM 6 ("CLAIM FORM") POSTMARKED ON OR BEFORE ________________ 7 __, 201_. 8 • IF YOU DO NOT WISH TO PARTICIPATE IN THE SETTLEMENT, 9 YOU MAY REQUEST TO BE EXCLUDED FROM THE SETTLEMENT BY SENDING A WRITTEN REQUEST FOR EXCLUSION THAT MUST 10 BE POSTMARKED ON OR BEFORE ________________ __, 201_. 11 • IF YOU RECEIVED THIS NOTICE ON BEHALF OF A SETTLEMENT 12 CLASS MEMBER WHO IS DECEASED, YOU SHOULD PROVIDE THE 13 NOTICE TO THE AUTHORIZED LEGAL REPRESENTATIVE OF THAT SETTLEMENT CLASS MEMBER. 14 YOU ARE HEREBY NOTIFIED AS FOLLOWS:2 15 16 A proposed Settlement has been reached by the Parties in the constituent actions 17 that make up the consolidated class action pending in the United States District Court for the District of Arizona (the "District Court"), which was brought on 18 behalf of the Settlement Class. The District Court has preliminarily approved the 19 Settlement, the terms of which are set forth in the Stipulation, which is available at www.audioeyesecuritieslitigation.com and has preliminarily certified the 20 Settlement Class for purposes of Settlement only. You have received this Notice 21 because the Parties’ records indicate that you may be a member of the Settlement Class. This Notice is designed to inform you of your rights, how you can submit a 22 Claim Form, and how you can comment in favor of the Settlement or object to the 23 Settlement. If the Settlement is finally approved by the District Court, the Settlement will be binding upon you, unless you exclude yourself, even if you do 24 not submit a Claim Form to obtain money from the Net Settlement Fund and even 25 if you object to the Settlement. 26 27 2 A copy of this Notice may be found at www.audioeyesecuritieslitigation.com. 28 2 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 58 of 103 Exhibit A-2 1 A hearing to be held by the District Court on notice to the Settlement Class, to consider approval of the Settlement, the Plan of Allocation, and the Fee and 2 Expense Application (the "Settlement Hearing") will be held before the Honorable 3 David C. Bury, United States District Court Judge, at ___:_____ __.m. on _______________, 201_, at the Evo A. DeConcini U.S. Courthouse, 405 West 4 Congress Street, Suite 6170, Tucson, AZ 85701. 5 THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS 6 OF THE COURT AND SHOULD NOT BE UNDERSTOOD AS AN 7 EXPRESSION OF ANY OPINION OF THE COURT AS TO THE MERITS OF ANY CLAIMS OR DEFENSES BY ANY OF THE PARTIES. IT IS 8 BASED ON CONTENTIONS OF THE PARTIES AND IS SENT FOR THE 9 SOLE PURPOSE OF INFORMING YOU OF THE EXISTENCE OF THE LAWSUIT AND OF THE FINAL SETTLEMENT HEARING ON A 10 PROPOSED SETTLEMENT SO THAT YOU MAY MAKE APPROPRIATE 11 DECISIONS AS TO STEPS YOU MAY, OR MAY NOT, WISH TO TAKE IN RELATION TO THE LAWSUIT. 12 13 I. BACKGROUND OF THE LAWSUIT 14 On or about April 14, 2015, a class action complaint styled Lee Nykaza, 15 individually and on behalf of all others similarly situated v. AudioEye Incorporated et al., case number 2:15-cv-00673-DCB (the "Nykaza Action"), 16 alleging violations of federal securities laws against the Defendants was filed in the 17 United States District Court for the District of Arizona (the "Court"). 18 On or about April 20, 2015, a class action complaint styled Ralph Saczawa, 19 individually and on behalf of all others similarly situated v. AudioEye Incorporated et al., case number 4:15-cv-00163-DCB (the "Saczawa Action"), 20 alleging violations of federal securities laws against the Defendants also was filed 21 in the Court. 22 On July 1, 2015, the Honorable Judge David C. Bury consolidated the 23 Nykaza Action and the Saczawa Action under the Master File and caption In re 24 AudioEye, Inc. Sec. Litig., No. CV-15-00163-TUC-DCB. 25 On August 3, 2015, the Court appointed Globis Capital Partners, L.P. and 26 Globis Overseas Fund Ltd. as Lead Plaintiffs, and their attorneys Kirby McInerney LLP as counsel for the Lead Plaintiffs ("Lead Plaintiffs’ Counsel"). 27 28 3 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 59 of 103 Exhibit A-2 1 On November 30, 2015, the Lead Plaintiffs filed the operative Consolidated Amended Complaint alleging against all Defendants: (Count 1) violations of 2 Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"); and 3 (Count 2) violations of Section 20(a) of the Exchange Act. 4 On February 5, 2016, Defendants filed Motions to Dismiss the Consolidated 5 Amended Complaint and Lead Plaintiffs filed their opposition on March 18, 2016. 6 On. July 20, 2016, counsel for the Lead Plaintiffs, counsel for the 7 Defendants, and counsel for the Defendants’ liability insurer participated in a full-day mediation conference before mediator Robert Meyer. At and following the 8 mediations, the participants engaged in extensive arm’s-length negotiations with 9 each other, such negotiations bearing fruit as set forth in the Stipulation, and 10 negotiated a settlement that they believe is in the best interests of their respective clients. The Settlement allow both sides to avoid the risks and cost of uncertain 11 litigation and the uncertainty of a trial and appeals, and permits Class Members to 12 be compensated without further delay. Lead Plaintiffs and their counsel believe the settlement is best for all Class Members. 13 14 On July 25, 2016 the Parties accepted the mediator’s proposal concerning the Settlement amount, which was thereafter memorialized in the Stipulation. 15 16 Defendants have denied the claims asserted against them in the Action and 17 deny having engaged in any wrongdoing or violation of law of any kind whatsoever. Defendants have agreed to the Settlement solely to eliminate the 18 burden and expense of continued litigation. Accordingly, the Settlement may not 19 be construed as an admission of any wrongdoing by any of the Defendants. The District Court has not ruled on the merits of whether the Defendants violated the 20 securities laws, or any other laws or rules. 21 Lead Plaintiffs and Defendants, and their counsel, have concluded that the 22 Settlement is advantageous, considering the risks and uncertainties to each side of 23 continued litigation. The Parties and their counsel have determined that the Settlement is fair, reasonable, and adequate and is in the best interests of the 24 Settlement Class Members. 25 26 The Settlement creates a Gross Settlement Fund in the amount of $1,525,000 in cash, plus interest that accrues on the fund prior to distribution. Your recovery 27 from the Gross Settlement Fund will depend on a number of variables, including 28 4 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 60 of 103 Exhibit A-2 1 the number of AudioEye securities that you purchased during the Class Period, and the timing of your purchases and sales. Lead Plaintiffs estimate that if all eligible 2 Claimants submit a valid Claim Form, the average distribution per damaged 3 AudioEye common stock will be approximately $0.06 before deduction of Court-approved fees and expenses. Settlement Class Members should note, however, 4 that this is only an estimate based on the overall number of potentially affected 5 AudioEye securities. Settlement Class Members may recover more or less than the amount estimated herein. 6 7 Lead Plaintiffs and Defendants do not agree on the average amount of damages per AudioEye share that would be recoverable if Lead Plaintiffs were to 8 have prevailed in the Action. Specifically, the Parties disagree concerning the 9 extent to which any of Defendants’ alleged false or misleading statements 10 artificially inflated the price of AudioEye securities during the class period. 11 Lead Plaintiffs’ Counsel, who have been prosecuting this Action on a 12 wholly-contingent basis since its inception, have not received any payment of attorneys’ fees for their representation of the Settlement Class and they have 13 advanced the funds to pay expenses necessarily incurred to prosecute the Action. 14 Lead Plaintiffs’ Counsel will apply to the Court for an award of attorneys’ fees for all Plaintiffs’ Counsel in the amount up to one third of the Settlement Fund. In 15 addition, Lead Plaintiffs’ Counsel will apply for reimbursement of litigation 16 expenses (exclusive of administration costs) paid or incurred in connection with 17 the prosecution and resolution of the claims against the Defendants, in an amount not to exceed $75,000. Any fees and expenses awarded by the Court will be paid 18 from the Settlement Fund. Settlement Class Members are not personally liable for 19 any such fees or expenses. If the Settlement is approved, and Lead Plaintiffs’ Counsel’s fee and expense application is granted in its entirety, the average cost 20 per AudioEye share of these fees and expenses will be approximately $0.02, 21 assuming that all eligible shares submit valid claims for recovery in the Settlement. 22 Lead Plaintiffs and the Settlement Class are being represented by Kirby 23 McInerney LLP. Any questions regarding the Action or the Settlement should be directed to Ira Press, Esq. and Mark Strauss Esq. at Kirby McInerney LLP, 825 24 Third Avenue, 16th Floor, New York, NY 10022, (212) 371-6600. 25 26 27 28 5 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 61 of 103 Exhibit A-2 1 Your Legal Rights and Options in the Settlement: 2 Submit A Claim Form By This is the only way to be eligible to get a payment [] [], 201_ in connection with the Settlement. 3 Exclude Yourself From If you exclude yourself from the Settlement Class, 4 The Settlement Class By you will not be eligible to get any payment from the Submitting A Written Net Settlement Fund. This is the only option that 5 Request Postmarked No allows you to be part of any other lawsuit against 6 Later Than [] [], 201_ any of the Settling Defendants or the other Released Parties concerning the Settled Claims (defined 7 below). 8 Object To The Settlement If you do not like the proposed Settlement, the 9 OR THE REQUEST FOR proposed Plan of Allocation, or the Fee and Expense FEES AND EXPENSES Application, you may write to the District Court and 10 By Submitting A Written explain why you do not like them. You cannot 11 Objection No Later Than [] object to the Settlement, the Plan of Allocation, or [], 201_ the Fee and Expense Application unless you are a 12 Settlement Class Member and do not exclude 13 yourself. Go To The Settlement Filing a written objection and notice of intention to 14 Hearing On [] [], 2017 At appear allows you to speak in court about the 15 [] [].M., And File A fairness of the Settlement, the Plan of Allocation, 16 Notice Of Intention To and/or the Attorneys’ Fees and Expenses Appear No Later Than [] [application. If you submit a written objection, you 17], 2017 may (but do not have to) attend the hearing and 18 speak to the District Court about your objection. Do Nothing If you are a member of the Settlement Class and you 19 do not submit a Claim Form by [] [], 201_, you 20 will not be eligible to receive any payment from the Net Settlement Fund. You will, however, remain a 21 member of the Settlement Class, which means that 22 you give up your right to sue about the claims that are resolved by the Settlement and you will be 23 bound by any Judgments or Orders entered by the 24 District Court pertaining to the class actions in the 25 Action. 26 [END OF COVER PAGE] 27 28 6 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 62 of 103 Exhibit A-2 1 II. FREQUENTLY ASKED QUESTIONS CONCERNING THE SETTLEMENT 2 A. Why Did I Get This Notice? 3 4 This Notice is being sent to you because you, someone in your family, or an investment account for which you serve as a custodian may have purchased or 5 otherwise acquired AudioEye securities during the Class Period. The District 6 Court has directed us to send you this Notice because, as a potential Settlement Class Member, you have a right to know about your options before the Court rules 7 on the proposed Settlement. If the District Court approves the Settlement and the 8 Plan of Allocation (or some other plan of allocation), the Claims Administrator 9 selected by Lead Plaintiffs’ Counsel and approved by the Court will make payments pursuant to the Settlement and the court-approved Plan of Allocation 10 after any objections and appeals are resolved. This Notice is also to inform you of 11 a hearing to be held by the District Court to consider the fairness, reasonableness, and adequacy of the Settlement, the proposed Plan of Allocation, and the 12 Attorneys’ Fees and Expenses application. 13 In a class action lawsuit, the court selects one or more people, known as class 14 representatives, to sue on behalf of all people with similar claims, commonly 15 known as the class or the class members. A class action is a type of lawsuit in which the claims of a number of individuals are resolved together, thus providing 16 the class members with both consistency and efficiency. Once the class is 17 certified, the court must resolve all issues on behalf of the class members, except for any Persons who choose to exclude themselves from the class. The District 18 Court has preliminarily certified this Action to proceed as a class action for 19 settlement purposes only and preliminarily certified Lead Plaintiffs as the representatives for the Settlement Class. 20 21 This Notice does not express any opinion by the District Court concerning the merits of any claim in the Action. The District Court has to decide whether to 22 approve the Settlement. If the Court approves the Settlement and the Plan of 23 Allocation, payments to Authorized Claimants will be made after any appeals are resolved, and after the completion of all claims processing. Please be patient. 24 25 B. What Does The Settlement Provide? 26 In exchange for the release of the Settled Claims against each of the Defendants 27 and the Released Parties, as well as dismissal of the litigation as against the Defendants, the Defendants have agreed to pay, or cause AudioEye to pay, the sum 28 7 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 63 of 103 Exhibit A-2 1 of one million, five hundred and twenty-five thousand United States dollars ($1,525,000), plus interest earned thereon for the benefit of the Settlement Class. 2 The Settlement Fund less all Taxes, Notice and Administration Costs, and 3 Attorneys’ Fees and Expenses Award paid out of the Settlement Fund in accordance with applicable orders of the District Court (the "Net Settlement 4 Fund") will be divided among all eligible Settlement Class Members who send in a 5 valid Proof of Claim. The Proof of Claim is described in more detail below in Section F below. 6 7 C. Am I Included In The Settlement? 8 You are included in the Settlement if you purchased or acquired AudioEye 9 common stock during the Class Period and were damaged thereby. Excluded from the Class are the Defendants, the officers and directors of AudioEye during the 10 Class Period, members of their immediate families and their legal representatives, 11 heirs, successors, or assigns, any entity in which Defendants have or had a controlling interest, and any persons who separately file an action against one or 12 more of Defendants, based in whole or in part on any claim arising out of or 13 relating to any of the alleged acts, omissions, misrepresentations, facts, events, matters, transactions, or occurrences referred to in the Action or otherwise alleged, 14 asserted, or contended in the Action. Also excluded from the Settlement Class are 15 any Persons who exclude themselves by submitting a request for exclusion in accordance with the requirements set forth in this Notice (see pages ___ below). 16 17 PLEASE NOTE: RECEIPT OF THIS NOTICE DOES NOT MEAN THAT YOU ARE A SETTLEMENT CLASS MEMBER OR THAT YOU WILL BE 18 ENTITLED TO RECEIVE PROCEEDS FROM THE SETTLEMENT. IF 19 YOU ARE A SETTLEMENT CLASS MEMBER AND YOU WISH TO BE ELIGIBLE TO PARTICIPATE IN THE DISTRIBUTION OF PROCEEDS 20 FROM THE SETTLEMENT, YOU ARE REQUIRED TO SUBMIT THE 21 CLAIM FORM THAT IS BEING DISTRIBUTED WITH THIS NOTICE 22 AND THE REQUIRED SUPPORTING DOCUMENTATION AS SET FORTH THEREIN POSTMARKED NO LATER THAN _______ __, 201_. 23 D. What Might Happen If There Were No Settlement? 24 25 If there were no Settlement and Lead Plaintiffs failed to establish any essential legal or factual element of its claims against the Defendants, neither it nor the 26 Settlement Class would recover anything from the Settling Defendants. 27 28 8 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 64 of 103 Exhibit A-2 1 E. What Is The Legal Effect Of The Settlement On My Rights? 2 If you are a member of the Settlement Class, the Settlement will affect you. If the District Court grants final approval of the Settlement, the Action will be dismissed 3 with prejudice and all Settlement Class Members will fully release and discharge 4 the Defendants from all claims (as detailed below) for relief arising out of or based 5 on Lead Plaintiffs’ allegations. When a Person "releases" claims, that means that Person cannot sue the defendants for any of the claims covered by the release. If 6 you are a Settlement Class Member and you submit a valid and timely Claim 7 Form, you will receive a payment based upon the distribution formula described below. 8 9 F. What Will I Receive From The Settlement? 10 At this time, it is not possible to make any determination as to how much a Settlement Class Member may receive from the Settlement. Pursuant to the 11 Settlement, Defendants have agreed to pay $1,525,000 in cash. The settlement 12 amount will be deposited into an interest-bearing escrow account. If the 13 Settlement is approved by the District Court, the Net Settlement Fund will be distributed to Settlement Class Members as set forth in the proposed Plan of 14 Allocation, or such other plan as the District Court may approve. 15 After approval of the Settlement by the District Court and upon satisfaction of the 16 other conditions to the Settlement, the Net Settlement Fund will be distributed to Authorized Claimants in accordance with the Plan of Allocation approved by the 17 District Court. Under the proposed Plan of Allocation, your share of the Net 18 Settlement Fund will depend on: (1) the dates you acquired or sold your AudioEye 19 securities; (2) the number of AudioEye securities acquired or sold and the price paid or received; (3) the expense of administering the claims process; (4) any 20 attorneys’ fees and expenses awarded by the Court; (5) interest income received 21 and taxes paid by the Settlement Fund; (6) the number of eligible AudioEye securities acquired by other Settlement Class Members who submit timely and 22 valid Proof of Claim Forms; and (7) the Recognized Losses of all other Authorized 23 Claimants computed in accordance with the Plan of Allocation set out on pages _____ below. 24 25 You can calculate your Recognized Loss in accordance with the formula set forth below in the proposed Plan of Allocation. In the event the aggregate Recognized 26 Losses of all timely and validly submitted Proof of Claim Forms exceed the Net 27 Settlement Fund, your share of the Net Settlement Fund will be proportionally less 28 9 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 65 of 103 Exhibit A-2 1 than your calculated Recognized Loss. It is unlikely that you will get a payment for all of your Recognized Loss. After all Settlement Class Members have sent in their 2 Proof of Claim Forms, the payment you get will be that proportion of the Net 3 Settlement Fund equal to your Recognized Loss divided by the total Recognized Losses of all Settlement Class Members who submit timely and valid Proof of 4 Claim Forms (the "Pro Rata Share"). See the Plan of Allocation on pages ___ for 5 more information on your Recognized Loss. 6 The Net Settlement Fund will not be distributed until the District Court has 7 approved a plan of allocation, and the time for any petition for rehearing, appeal, or review, whether by certiorari or otherwise, has expired. 8 9 Neither Defendants nor any other Person that paid any portion of the Settlement Amount is entitled to get back any portion of the Net Settlement Fund once the 10 District Court’s Final Approval Order and Judgment approving the Settlement 11 becomes final. Defendants will not have any liability, obligation, or responsibility for the administration of the Settlement or disbursement of the Net Settlement 12 Fund or the Plan of Allocation. 13 Approval of the Settlement is independent from approval of the Plan of Allocation. 14 Any determination with respect to the Plan of Allocation will not affect the 15 Settlement, if approved. 16 Each Person wishing to participate in the distribution must timely submit a valid Claim Form establishing membership in the Settlement Class, and including all 17 required documentation, postmarked on or before _______ __, 201_, to the address 18 set forth in the Claim Form that accompanies this Notice. 19 Unless the District Court otherwise orders, any Settlement Class Member who fails 20 to submit a Claim Form postmarked on or before ______ __, 201_, shall be fully and forever barred from receiving payments pursuant to the Settlement, but will in 21 all other respects remain a Settlement Class Member and be subject to the 22 provisions of the Stipulation and Settlement that is approved, including the terms 23 of any judgment entered and releases given. 24 The District Court has reserved jurisdiction to allow, disallow, or adjust the Claim of any Settlement Class Member on equitable grounds. 25 26 Each Claimant shall be deemed to have submitted to the jurisdiction of the District Court with respect to his, her, or its Claim Form. Upon request of the Claims 27 Administrator, each Person that submits a Claim Form shall subject his, her, or its 28 10 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 66 of 103 Exhibit A-2 1 Claim to investigation as to his, her, or its status as a Claimant and the allowable amount of his, her, or its Claim. 2 Persons that are excluded from the Settlement Class by definition or that exclude 3 themselves from the Settlement Class will not be eligible to receive a distribution 4 from the Net Settlement Fund and should not submit a Claim Form. 5 Proposed Plan Of Allocation 6 The Net Settlement Fund will be distributed to Settlement Class Members who 7 submit valid, timely Claim Forms. If you have a net loss on all transactions in 8 AudioEye securities during the Class Period, you will be paid the percentage of the Net Settlement Fund that your Recognized Loss bears to the total of the 9 Recognized Losses of all Authorized Claimants. Payment in this manner shall be 10 deemed conclusive against all Authorized Claimants. The calculation of Claims below is not an estimate of the amount you will receive. It is a formula for 11 allocating the Net Settlement Fund among all Authorized Claimants. 12 13 Each Authorized Claimant’s Recognized Loss will be calculated as follows: 14 For all AudioEye shares acquired during the Class Period and sold prior to 15 April 1, 2015, the Recognized Loss shall be $0. 16 For all AudioEye shares acquired during the Class Period that were not sold 17 prior to April 1, 2015, the Recognized Loss shall be the difference between (a) 18 the lesser of the purchase or acquisition price and $0.41 per share, and (b) the greater of the sale price or $0.30 per share. 19 20 To the extent an Authorized Claimant had an aggregate gain from his, her or its transactions in AudioEye common stock during the Class Period, the value of his, 21 her or its total Recognized Loss will be zero. To the extent that an Authorized 22 Claimant suffered an overall loss on his, her or its transactions in AudioEye common stock during the Class Period, but the loss was less than the Recognized 23 Loss calculated above, then the Recognized Loss shall be limited to the amount of 24 the actual loss. Purchases that were made in order to cover short sales are ineligible and will not be included in the Recognized Loss calculation; however, 25 any aggregate gains with respect to short sales shall be offset against Recognized 26 Loss on other transactions. All purchases/acquisitions and sales of AudioEye shares in the Class Period shall be matched on a Last-In-First-Out ("LIFO") basis; 27 sales during the Class Period and the 90 days thereafter will be matched first 28 11 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 67 of 103 Exhibit A-2 1 against the most recent AudioEye shares purchased during that period that have not already been matched to sales, and then against prior purchases/acquisitions in 2 backward chronological order, until the beginning of the Class Period. 3 The date of purchase or sale is the "contract" or "trade" date as distinguished from 4 the "settlement" or "payment" date. However, for AudioEye securities that were 5 put to investors pursuant to put options sold by those investors, the purchase of AudioEye securities shall be deemed to have occurred on the date that the put 6 option was sold, rather than the date on which the AudioEye securities were 7 subsequently put to the investor pursuant to that option. The proceeds of any put option sales shall be offset against any losses from AudioEye securities that were 8 purchased as a result of the exercise of the put option. Additionally, AudioEye 9 securities acquired during the Class Period through the exercise of a call option shall be treated as a purchase on the date of exercise for the exercise price plus the 10 cost of the call option, and any Claim arising from such transaction shall be 11 computed as provided for other purchases of AudioEye securities as set forth herein. 12 13 The receipt or grant by gift, devise or inheritance of AudioEye securities during the Class Period shall not be deemed to be a purchase of AudioEye securities for the 14 calculation of an Authorized Claimant’s Recognized Loss if the Person from which 15 the AudioEye securities were received did not themselves acquire the securities during the Class Period, nor shall it be deemed an assignment of any claim relating 16 to the purchase of such AudioEye securities unless specifically provided in the 17 instrument or gift or assignment. 18 An Authorized Claimant will be eligible to receive a distribution from the Net 19 Settlement Fund only if the Authorized Claimant had a net loss, after all profits from transactions in AudioEye securities during the Class Period are subtracted 20 from all losses from transactions in AudioEye securities during the Class Period. 21 If an Authorized Claimant’s distribution amount calculates to less than $10.00, no 22 distribution will be made to that Authorized Claimant. 23 Distributions will be made to Authorized Claimants after all Claims have been 24 processed and after the District Court has finally approved the Settlement. If any 25 funds remain in the Net Settlement Fund by reason of uncashed checks or otherwise, then, after the Claims Administrator has made reasonable and diligent 26 efforts to have Settlement Class Members who are entitled to participate in the 27 distribution of the Net Settlement Fund cash their distribution checks, any balance 28 12 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 68 of 103 Exhibit A-2 1 remaining in the Net Settlement Fund one (1) year after the initial distribution of such funds shall, if economically feasible, be re-distributed, after payment of any 2 Taxes and unpaid costs or fees incurred in administering the Net Settlement Fund 3 for such re-distribution, to Authorized Claimants who have cashed their checks and who would receive at least $10.00 from such re-distribution. Lead Plaintiffs’ 4 Counsel shall, if economically feasible, continue to reallocate any further balance 5 remaining in the Net Settlement Fund after the redistribution is completed among Authorized Claimants in the same manner and time frame as provided for above. 6 In the event that Lead Plaintiffs’ Counsel determines that further redistribution of 7 any balance remaining (following the initial distribution and redistribution) is no longer economically feasible, thereafter Lead Plaintiffs’ Counsel shall donate the 8 remaining funds, if any, to a non-sectarian, not-for-profit 501(c)(3) organization to 9 be designated by Lead Counsel and approved by the Court. 10 Payment pursuant to the Plan of Allocation, or such other plan as may be approved 11 by the District Court, shall be conclusive against all Authorized Claimants. No Person shall have any claim against Lead Plaintiffs, Lead Counsel, Defendants, 12 and their respective counsel or any of the other Released Parties, or the Claims 13 Administrator or other agent designated by Lead Counsel arising from distributions 14 made substantially in accordance with the Stipulation, the Plan of Allocation approved by the District Court, or further orders of the District Court. Lead 15 Plaintiffs, Defendants, and their respective counsel, and all other Released Parties 16 shall have no responsibility or liability whatsoever for the investment or distribution of the settlement funds, the Net Settlement Fund, the Plan of 17 Allocation, or the determination, administration, calculation, or payment of any 18 Claim Form or nonperformance of the Claims Administrator, the payment or withholding of taxes owed by the Settlement Fund, or any losses incurred in 19 connection therewith. 20 The Plan of Allocation set forth herein is the plan that is being proposed by Lead 21 Plaintiffs and Lead Plaintiffs’ Counsel to the District Court for approval. The 22 District Court may approve this Plan of Allocation as proposed or it may modify the Plan of Allocation without further notice to the Settlement Class. Any orders 23 regarding a modification of the Plan of Allocation will be posted on the settlement 24 website, www.audioeyesecuritieslitigation.com. 25 G. Can I Decide To Opt Out Of This Settlement? 26 Yes. If you do not wish to be included in the Settlement Class and you do not wish 27 to participate in the Settlement, you may request to be excluded. To do so, you 28 13 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 69 of 103 Exhibit A-2 1 must submit a written request for exclusion that must be signed by you or your authorized representative and postmarked on or before _____________ __, 201_. 2 You must set forth: (a) the name, address, and telephone number of the Person 3 requesting exclusion; (b) the amount of AudioEye common stock purchased, acquired and/or sold during the Class Period; (c) prices paid or received for such 4 AudioEye common stock; (d) the date of each purchase, acquisition or sale 5 transaction; and (e) a statement that the Person wishes to be excluded from the Settlement Class. 6 7 The exclusion request should be addressed as follows: 8 In re AudioEye, Inc. Securities Litigation EXCLUSION REQUEST 9 Claims Administrator c/o JND Legal Administration 10 P.O. Box 6847 11 Broomfield, CO 80021 12 NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID 13 UNLESS ALL OF THE INFORMATION DESCRIBED ABOVE IS INCLUDED IN ANY SUCH REQUEST AND RECEIVED WITHIN THE 14 TIME STATED ABOVE, OR IS OTHERWISE ACCEPTED BY THE 15 COURT. 16 If you timely and validly request exclusion from the Settlement Class, (a) you will 17 be excluded from the Settlement Class, (b) you will not share in the proceeds of the Settlement described herein, (c) you will not be bound by any judgment entered in 18 the case, and (d) you will not be precluded, by reason of your decision to request 19 exclusion from the Settlement Class, from otherwise prosecuting an individual claim, if timely, against the Defendants based on the matters complained of in the 20 litigation. Defendants may withdraw from and terminate the Settlement if 21 Settlement Class Members who purchased the requisite number of AudioEye 22 securities exclude themselves from the Settlement Class. 23 H. What If A Settlement Class Member Is Deceased? 24 The authorized legal representative(s) of a Settlement Class Member may receive a 25 recovery on behalf of the Settlement Class Member. 26 27 28 14 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 70 of 103 Exhibit A-2 1 I. What If I Bought AudioEye Securities On Someone Else’s Behalf? 2 If you purchased or otherwise acquired AudioEye securities during the Class Period for the beneficial interest of a Settlement Class Member, you must either (a) 3 forward the Postcard Notice to the beneficial owners of the AudioEye common 4 stock within ten (10) calendar days from the receipt of the Postcard Notice, and 5 provide written confirmation to the Claims Administrator of such; or (2) provide the names and addresses of such persons or entities to In re AudioEye, Inc. 6 Securities Litigation, c/o JND Legal Administration, P.O. Box 6847, Broomfield, 7 CO 80021. If you choose the second option, the Claims Administrator will send the Postcard Notice to the beneficial owners. Upon full compliance with these 8 directions, such nominees may seek reimbursement of their reasonable expenses 9 actually incurred, by providing the Claims Administrator with proper documentation supporting the out-of-pocket expenses for which reimbursement is 10 sought. 11 Copies of this Notice and the Claim Form can be obtained from the website 12 maintained by the Claims Administrator, www.audioeyesecuritieslitigation.com, 13 by calling the Claims Administrator toll-free at 1-844-357-6871, or from Lead Counsel’s website, www.kmllp.com. 14 15 J. How And What Do I Do To Make Sure The Claims Administrator Has My Correct Address? 16 If your address changes from the address to which this Notice was directed, you 17 must notify the Claims Administrator of your new address as soon as possible. 18 Failure to keep the Claims Administrator informed of your address may result in 19 the loss of any monetary award you might be eligible to receive. Please send your new contact information to the Claims Administrator at the address listed below 20 and include your old address, new address, new telephone number, date of birth, 21 and Social Security number. These last two items are required so that the Claims Administrator can verify that the address change is from an actual Settlement Class 22 Member. 23 24 25 26 27 28 15 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 71 of 103 Exhibit A-2 1 In re AudioEye, Inc. Securities Litigation ADDRESS CHANGE Claims Administrator 2 c/o JND Legal Administration 3 P.O. Box 6847 Broomfield, CO 80021 4 5 K. What Are Lead Plaintiffs’ Counsels’ Fees And Costs? 6 At the Settlement Hearing, Lead Plaintiffs’ Counsel will request that the District 7 Court award attorneys’ fees of up to one third of the Settlement Fund, plus expenses (exclusive of administration costs) not to exceed $75,000, which were 8 incurred in connection with the litigation of the Action, plus interest at the same 9 rate as earned on the Settlement Amount. Whatever amount is approved by the Court as legal fees and expenses will be paid from the Gross Settlement Fund. 10 11 To date, Lead Plaintiffs’ Counsel have not received any payment for their services in conducting this action, nor has counsel been reimbursed for their substantial 12 expenses. The fees requested by Lead Plaintiffs’ Counsel will compensate Lead 13 Plaintiffs’ Counsel for their efforts in achieving the Gross Settlement Fund for the benefit of the Settlement Class, and for their risk in undertaking this representation 14 on a wholly-contingent basis. If the amount requested is approved by the Court, 15 the average cost per damaged AudioEye share will be $0.02. 16 L. How Will the Notice Costs and Expenses Be Paid? 17 Lead Plaintiffs’ Counsel are authorized by the Stipulation to pay the Claims 18 Administrator’s fees and expenses incurred in connection with giving notice, 19 administering the Settlement, and distributing the Net Settlement Fund to Settlement Class Members. 20 III. LEAD PLAINTIFFS AND LEAD PLAINTIFFS’ COUNSEL 21 SUPPORT THE SETTLEMENT 22 Lead Plaintiffs and Lead Plaintiffs’ Counsel believe that the claims asserted against 23 the Defendants have merit. Lead Plaintiffs and their Counsel recognize, however, 24 the expense and length of continued proceedings necessary to pursue its claims against these Defendants through trial and appeals, as well as the difficulties in 25 establishing liability and damages at trial. The immediate cash benefits under the 26 Settlement must be considered against the significant risk that a smaller recovery – 27 or indeed no recovery at all – might be achieved after a heavily contested appeals 28 16 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 72 of 103 Exhibit A-2 1 process, contested motions, a contested trial and likely further appeals, a process that could be expected to last several years into the future. 2 In light of the value of the Settlement and the immediacy of a cash recovery to the 3 Settlement Class, Lead Plaintiffs and Lead Plaintiffs’ Counsel believe that the 4 proposed Settlement is fair, reasonable, and adequate. Indeed, Lead Plaintiffs and 5 Lead Plaintiffs’ Counsel believe that the Settlement achieved is an excellent result and in the best interests of the Settlement Class. The Settlement, which provides an 6 immediate $1,525,000 in cash (less the various deductions described in this 7 Notice), individually and collectively provides substantial benefits now as compared to the risk that a similar, smaller, or no recoveries would be achieved 8 after a trial and appeals, possibly years in the future. 9 IV. WHAT OPPORTUNITY WILL I HAVE TO GIVE MY OPINION 10 ABOUT THE SETTLEMENT? 11 A. How Can I Object To The Settlement, Plan of Allocation and Fee 12 and Expense Application? 13 Any Settlement Class Member who does not request exclusion may object to the 14 Settlement, the proposed Plan of Allocation, and/or the Attorneys’ Fees and Expenses application. Objections must be in writing. You must file any written 15 objection, together with copies of all other papers and briefs supporting the 16 objection, with the Clerk’s Office at the United States District Court for the District of Arizona at the address set forth below on or before __________ __, 17 201_. Your written objection should include all reasons for the objection, 18 including any legal and evidentiary support you wish to bring to the Court’s 19 attention. The objection must also include your name, address, telephone number, and the number of AudioEye common stock you purchased and sold during the 20 Class Period, including proof of your purchases and sales of AudioEye common 21 stock. You must also serve the papers on designated representative Lead Plaintiffs’ Counsel and Defendants’ counsel at the addresses set forth below for 22 their respective counsel so that the papers are received on or before ___________ 23 __, 201_. 24 To be considered, your objection must be filed with the Office of the Clerk’s 25 Office no later than ____________ __, 201_, to: 26 27 28 17 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 73 of 103 Exhibit A-2 1 Clerk’s Office Defendants’ Counsel Lead Counsel 2 Clerk of the Court Perrie M. Weiner, Esq. Ira M. Press, Esq. 3 United States District Court Robert D. Weber, Esq. Mark Strauss, Esq. District of Arizona DLA Piper LLP (US) Kirby McInerney 4 Evo A. DeConcini 2000 Avenue of the LLP 5 United States Courthouse Stars 825 Third Avenue, 405 West Congress Street, Suite Suite 400 North Tower 16th Floor 6 1500 Los Angeles, CA New York, NY 7 Tucson, AZ 85701 90067 10022 8 Re: In re AudioEye, Inc. Securities Counsel for Defendants Counsel for Lead 9 Litigation AudioEye, Inc.and Plaintiffs and the 10 Case No. 4:15-cv-00163-DCB Nathaniel Bradley Class 11 12 Mendy Piekarski, Esq. Sichenzia Ross 13 Ference Kesner LLP 14 61 Broadway, 32nd Floor 15 New York, NY 10006 16 17 Counsel for Defendant Edward O’Donnell 18 19 You may file a written objection without having to appear at the Settlement 20 Hearing. You may not, however, appear at the Settlement Hearing to present your 21 objection unless you first filed and served a written objection in accordance with the procedures described above, unless the Court orders otherwise. 22 23 If you file an objection to the Settlement, Plan of Allocation, and/or the Attorneys’ Fees and Expenses application you also have a right to appear at the Settlement 24 Hearing either in person or through counsel hired by you at your own expense. 25 You are not required, however, to hire an attorney to represent you in making written objections or in appearing at the Settlement Hearing. If you wish to be 26 heard orally at the hearing in opposition to the approval of the Settlement, the Plan 27 of Allocation, or the Attorneys’ Fees and Expenses application, and if you file and 28 18 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 74 of 103 Exhibit A-2 1 serve a timely written objection as described above, you must also file a notice of appearance with the Clerk’s Office and serve it on the Claims Administrator at the 2 address set forth above. Persons who intend to object and desire to present 3 evidence at the Settlement Hearing must include in their written objection or notice of appearance the identity of any witnesses they may call to testify and exhibits 4 they intend to introduce into evidence at the hearing. 5 Unless the District Court orders otherwise, any Settlement Class Member who 6 does not object in the manner described above will be deemed to have waived 7 any objection and shall be forever foreclosed from making any objection to the proposed Settlement, the proposed Plan of Allocation and the Attorneys’ 8 Fees and Expenses application. Settlement Class Members do not need to 9 appear at the Settlement Hearing or take any other action to indicate their approval. 10 11 B. What Rights Am I Giving Up By Remaining In The Class? 12 If you remain in the Settlement Class, you will be bound by any orders issued by 13 the District Court. For example, if the District Court approves the Settlement, the District Court will enter the Order and Final Judgment. The Order and Final 14 Judgment will dismiss with prejudice the claims against the Defendants and will 15 provide that, upon the Effective Date of the Settlement, Lead Plaintiffs and each of the other members of the Settlement Class on behalf of themselves, their respective 16 heirs, executors, administrators, successors, and assigns shall be deemed by 17 operation of law to have fully granted and completely discharged, dismissed with prejudice, settled and released, and agreed to be barred by a permanent injunction 18 from the assertion of, Settled Claims against any of the Released Parties and their 19 attorneys. 20 "Settled Claims" means any and all claims, debts, demands, liabilities, rights, and 21 causes of action of every nature and description whatsoever (including, but not limited to, any claims for damages, interest, attorneys’ fees, expert or consulting 22 fees, and any other costs, expenses, or liabilities whatsoever), whether based on 23 federal, state, local, statutory or common law, or any other law, rule, or regulation, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at 24 law or in equity, matured or unmatured, whether class or individual in nature, 25 including both known claims and Unknown Claims (as defined below): (i) that 26 have been asserted in the Litigation by the Lead Plaintiffs and/or Settlement Class Members or any of them against any of the Released Parties, including, without 27 limitation, all statements made by any of the Defendants that Plaintiffs allege in the 28 19 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 75 of 103 Exhibit A-2 1 Litigation were false or misleading, or any of the alleged acts, omissions, representations, facts, events, matters, transactions, or occurrences asserted in, 2 relating to in any way, or arising out of the Litigation, or otherwise alleged, 3 asserted, or contended in the Litigation; or (ii) that relate to the purchase of AudioEye securities, including, without limitation, claims for fraud, negligent 4 misrepresentation, or claims based upon or related in any way to the purchase, 5 acquisition, or sale of AudioEye securities during the Class Period by the Lead Plaintiffs or any Settlement Class Member, on behalf of themselves, their heirs, 6 executors, administrators, successors, and assigns against the Released Parties or 7 any of them. Settled Claims also include any and all claims arising out of or relating to in any way the Settlement or resolution of the Litigation against the 8 Released Parties (including Unknown Claims that arise out of, relate to, or are in 9 connection with the Settlement or resolution of the Litigation against the Released 10 Parties), except claims to enforce any of the terms of the Stipulation. 11 "Released Parties" means the Defendants and any of their current, former, or future parents, subsidiaries, affiliates, partners, joint venturers, officers, directors, 12 principals, shareholders, members, agents (acting in their capacity as agents), 13 employees, attorneys, trustees, insurers (including Argonaut Insurance Company 14 and its respective businesses, affiliates, subsidiaries, parents and affiliated corporations, divisions, predecessors, shareholders, partners, joint venturers, 15 principals, insurers, reinsurers, successors and assigns, and their respective past, 16 present and future employees, officers, directors, attorneys, accountants, auditors, agents and representatives), reinsurers, advisors, accountants, associates, and/or 17 any other individual or entity in which any Defendant has or had a controlling 18 interest or which is or was related to or affiliated with any Defendant, and the current, former, and future legal representatives, heirs, successors-in-interest, or 19 assigns of any Defendant. 20 "Unknown Claims" means (a) any Settled Claim that the Lead Plaintiffs or any 21 Settlement Class Member does not know or suspect to exist in his, her, or its favor 22 at the time of the release of the Released Parties, which if known by him, her, or it, might have affected his, her, or its decision(s) with respect to the Settlement, 23 including, but not limited to, the decision not to object to the Settlement, provided 24 such claim arises out of or relates to the purchase or sale of AudioEye securities, 25 and (b) any Defendants’ Claims that any Defendant does not know or expect to exist in his, her, or its favor, which if known by him, her, or it might have affected 26 his, her, or its decision(s) with respect to the Settlement. With respect to any and 27 all Settled Claims and Settled Defendants’ Claims, the Settling Parties stipulate and agree that upon the Effective Date, the Settling Parties shall expressly waive, 28 20 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 76 of 103 Exhibit A-2 1 and each of the Settlement Class Members shall be deemed to have waived and by operation of the Order and Final Judgment shall have waived, any and all 2 provisions, rights, and benefits conferred by any law of any state or territory of the 3 United States, or principle of common law that is similar, comparable, or equivalent to Cal. Civ. Code § 1542, which provides: "A general release does not 4 extend to claims which the creditor does not know or suspect to exist in his or her 5 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.". 6 7 V. SETTLEMENT HEARING 8 The District Court will hold a Settlement Hearing at ___:___ __.m. on 9 _____________ __, 201_ at the United States District Court for the District of Arizona, Evo A. DeConcini United States Courthouse, 405 West Congress Street, 10 Suite 6170, Tucson, AZ 85701, to determine whether the Settlement should be 11 finally approved as fair, reasonable, and adequate. The District Court will also be asked to approve the proposed Plan of Allocation and the Attorneys’ Fees and 12 Expenses Award. The District Court may adjourn or continue the Settlement 13 Hearing without further notice to the Settlement Class. If you intend to attend the Settlement Hearing, you should confirm the date and time with Lead Plaintiffs’ 14 Counsel. 15 Settlement Class Members do not need to attend the Settlement Hearing. The 16 District Court will consider any submission made in accordance with the 17 provisions in this Notice even if the Settlement Class Member does not attend the hearing. You can participate in the Settlement without attending the 18 Settlement Hearing. You are not obligated to attend the Settlement Hearing. 19 20 VI. GETTING MORE INFORMATION 21 This Notice is a summary and does not describe all of the details of the Stipulation. 22 For precise terms and conditions of the Settlement, you may review the Stipulation filed with the District Court, as well as the other pleadings and records of this 23 litigation, which may be inspected during business hours, at the office of the Clerk 24 of the Court, United States District Court for the District of Arizona, Evo A. DeConcini United States Courthouse, 405 West Congress Street, Suite 1500, 25 Tucson, AZ 85701, at www.audioeyesecuritieslitigation.com, or from Lead 26 Plaintiffs’ Counsel’s website, www.kmllp.com. Settlement Class Members 27 without access to the internet may be able to review this document online at locations such as a public library. 28 21 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 77 of 103 Exhibit A-2 1 If you have any questions about the settlement of the Action, you may contact 2 Lead Plaintiffs’ Counsel: 3 Ira M. Press, Esq. 4 Mark Strauss, Esq. 5 KIRBY McINERNEY LLP 825 Third Avenue, 16th Floor 6 New York, NY 10022 7 Tel: (212) 371-6600 8 You may also call or write to the Claims Administrator at In re AudioEye, Inc. 9 Securities Litigation, c/o JND Legal Administration, P.O. Box 6847, Broomfield, CO 80021, or call toll-free 1-844-357-6871, stating that you are requesting 10 assistance regarding the AudioEye litigation. 11 DO NOT TELEPHONE OR WRITE THE DISTRICT COURT OR THE 12 OFFICE OF THE CLERK OF THE COURT REGARDING THIS NOTICE. 13 DATED: _______________, 201_ BY ORDER OF THE COURT 14 UNITED STATES DISTRICT COURT 15 DISTRICT OF ARIZONA 16 17 18 19 20 21 22 23 24 25 26 27 28 22 29 Notice of Pendency and Proposed Settlement of Class Action-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 78 of 103 Exhibit A-3 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF ARIZONA 3----------------------------------------------------X 4 No. 4:15-cv-00163-DCB 5 CLASS ACTION 6 IN RE AUDIOEYE, INC. SECURITIES 7 LITIGATION Exhibit A-3 8 9 10----------------------------------------------------X 11 SUMMARY NOTICE 12 13 TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED 14 ANY COMMON STOCK OF AUDIOEYE, INC. ("AUDIOEYE") 15 DURING THE PERIOD FROM MAY 14, 2014 THROUGH AND 16 INCLUDING APRIL 1, 2015 17 18 YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States 19 District Court for the District of Arizona (the "District Court") and Rule 23 of the 20 Federal Rules of Civil Procedure, that a hearing will be held at ___:_____ __.m. on 21 _____________ __, 201_ before the Honorable David C. Bury, United States 22 District Court Judge, at the Evo A. DeConcini U.S. Courthouse, 405 West 23 Congress Street, Suite 6170, Tucson, AZ 85701, for the purpose of determining: 24 (1) whether the proposed settlement of the Litigtion for the principal amount of 25 $1,525,000, plus accrued interest, should be approved by the District Court as fair, 26 reasonable, and adequate; (2) whether the Order and Final Judgment should be 27 entered by the District Court dismissing the Litigation with prejudice; (3) whether 28 1 29 Summary Notice-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 79 of 103 Exhibit A-3 1 the proposed Plan of Allocation is fair, reasonable, and adequate and, therefore, 2 should be approved; and (4) whether the Attorneys’ Fee and Expense application 3 should be approved. In connection with the Attorneys’ Fee and Expense 4 application, Lead Plaintiffs’ Counsel will request attorneys’ fees of up to one third 5 of the Settlement Fund, plus interest, and expenses (exclusive of administration 6 costs) not to exceed $75,000. 7 If you purchased AudioEye common stock during the period from May 14, 8 2014 through April 1, 2015, inclusive, your rights may be affected by the 9 settlement of the Litigation. To receive a detailed Notice of Pendency and 10 Proposed Settlement of Class Action (the "Notice") and a copy of the Claim Form, 11 you may obtain copies by writing to In re AudioEye, Inc. Securities Litigation, c/o 12 JND Legal Administration, P.O. Box 6847, Broomfield, CO 80021, or by calling 13 toll-free 1-844-357-6871, or on the internet at 14 www.audioeyesecuritieslitigation.com, or from Lead Plaintiffs’ Counsel’s website 15 at www.kmllp.com. If you are a Settlement Class Member, in order to share in the 16 distribution of the Net Settlement Fund, you must submit a Claim Form, 17 postmarked on or before _______________, 201_, establishing that you are 18 entitled to recovery. 19 If you desire to be excluded from the Settlement Class, you must submit a 20 request for exclusion postmarked by no later than _______________, 201_, in the 21 manner and form explained in the detailed Notice referred to above. All members 22 of the Settlement Class who have not timely and validly requested exclusion from 23 the Settlement Class will be bound by any judgment entered in the Litigation 24 pursuant to the Stipulation of Settlement dated as of December 13, 2016. If you 25 properly and timely exclude yourself from the Settlement Class, you will not be 26 bound by any judgments or orders entered by the Court in the Litigation and you 27 will not be eligible to share in the proceeds of the Settlement. 28 2 29 Summary Notice-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 80 of 103 Exhibit A-3 1 Any objections to any aspect of the proposed Settlement, the proposed Plan 2 of Allocation or Lead Plaintiffs’ Counsel’s application for an award of attorneys’ 3 fees and reimbursement of expenses, must be filed with the Court and delivered to 4 designated representative Lead Plaintiffs’ Counsel and counsel for the Defendants 5 such that they are received no later than _______________, 201__, in accordance 6 with the instructions set forth in the Notice. 7 8 PLEASE DO NOT CONTACT THE DISTRICT COURT OR THE 9 CLERK’S OFFICE REGARDING THIS NOTICE. If you have any questions 10 about the Settlement, you may contact Lead Plaintiffs’ Counsel: 11 12 Ira Press, Esq. 13 Mark Strauss, Esq. 14 KIRBY McINERNEY LLP 15 825 Third Avenue, 16th 16 New York, NY 10022 17 Tel: (212) 371-6600 18 19 20 DATED: _________________, 201_ BY ORDER OF THE COURT UNITED STATES DISTRICT COURT 21 FOR THE DISTRICT OF ARIZONA 22 23 24 25 26 27 28 3 29 Summary Notice-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 81 of 103 Exhibit A-4 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF ARIZONA 3----------------------------------------------------X 4 No. 4:15-cv-00163-DCB 5 CLASS ACTION 6 IN RE AUDIOEYE, INC. SECURITIES 7 LITIGATION Exhibit A-4 8 9 10----------------------------------------------------X 11 PROOF OF CLAIM AND RELEASE 12 13 I. GENERAL INSTRUCTIONS 14 1. To recover as a member of the Settlement Class based on your claims 15 in the action entitled In re AudioEye, Inc. Securities Litigation, No. 4:15-cv-00163-16 DCB (the "Action"), you must complete and, on page 11 hereof, sign this Proof of 17 Claim and Release Form (the "Claim Form"). If you fail to file a properly 18 addressed Claim Form (as set forth in section 3 below), your Claim may be 19 rejected and you may be precluded from any recovery from the Net Settlement 20 Fund created in connection with the proposed Settlement of the Action. 21 2. Submission of this Claim Form, however, does not assure that you 22 will share in the proceeds of the Settlement in the Action. 23 3. YOU MUST MAIL YOUR COMPLETED AND SIGNED CLAIM 24 FORM POSTMARKED ON OR BEFORE ______________ __, 201_, 25 ADDRESSED AS FOLLOWS: 26 27 28 1 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 82 of 103 Exhibit A-4 1 In re AudioEye, Inc. Securities Litigation Claims Administrator 2 c/o JND Legal Administration 3 P.O. Box 6847 Broomfield, CO 80021 4 Toll-Free: 1-844-357-6871 5 www.audioeyesecuritieslitigation.com 6 If you are NOT a Member of the Settlement Class, as defined in the Notice of 7 Settlement of Class Action and Settlement Fairness Hearing, and Motion for an 8 9 Award of Attorneys’ Fees and Reimbursement of Litigation Expenses (the 10 "Notice"), DO NOT submit a Claim Form. 11 4. If you are a Member of the Settlement Class, you are bound by the 12 terms of any judgment entered in the Action, WHETHER OR NOT YOU 13 SUBMIT A CLAIM FORM. 14 II. DEFINITIONS 15 1. "Defendants" means AudioEye, Inc. ("AudioEye), Nathaniel Bradley 16 and Edward O’Donnell. 17 2. "Released Parties" and "Settled Claims" are defined below. 18 19 III. CLAIMANT IDENTIFICATION 20 1. If you purchased or acquired any common stock of AudioEye during 21 the period from May 14, 2014 through and including April 1, 2015 (the "Class 22 Period"), and held the securities in your name, you are the beneficial purchaser, as 23 well as the record purchaser. If, however, the AudioEye securities were registered 24 in the name of a third party, such as a nominee or brokerage firm, you are the 25 beneficial purchaser and the third party is the record purchaser. 26 2. In Section IV below, use Part I of the form entitled "Claimant 27 Identification" to identify each purchaser of record, if different from the beneficial 28 2 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 83 of 103 Exhibit A-4 1 purchaser of the AudioEye securities that forms the basis of this Claim. THIS 2 CLAIM MUST BE FILED BY THE ACTUAL BENEFICIAL PURCHASER(S), 3 OR THE LEGAL REPRESENTATIVE OF SUCH PURCHASER(S) OF 4 AUDIOEYE SECURITIES UPON WHICH THIS CLAIM IS BASED, NOT THE 5 RECORD PURCHASER. 6 3. All joint purchasers must sign this Claim Form. Executors, 7 administrators, guardians, conservators, and trustees must complete and sign this 8 Claim Form on behalf of Persons represented by them and their authority must 9 accompany this Claim Form and their titles or capacities must be stated. The 10 Social Security (or taxpayer identification) number and telephone number of the 11 beneficial owner may be used in verifying the Claim. Failure to provide the 12 foregoing information could delay verification of your claim or result in rejection 13 of the claim. 14 IV. CLAIM FORM 15 1. Use Part II of this Claim Form, entitled "Schedule of Transactions in 16 AudioEye Common Stock," to supply all required details of your transaction(s) in 17 AudioEye securities. If you need more space or additional schedules, attach 18 separate sheets giving all of the required information in substantially the same 19 form. Sign and print or type your name on each additional sheet. 20 2. On the schedules, provide all of the requested information with 21 respect to all of your purchases and all of your sales of AudioEye common stock 22 that took place during the Class Period, whether such transactions resulted in a 23 profit or a loss. Failure to report all such transactions may result in the rejection of 24 your Claim. 25 26 27 28 3 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 84 of 103 Exhibit A-4 1 3. List each transaction in the Class Period separately and in 2 chronological order, by trade date, beginning with the earliest. You must 3 accurately provide the month, day, and year of each transaction you list. 4 4. The date of covering a "short sale" is deemed to be the date of 5 purchase of AudioEye securities. The date of a "short sale" is deemed to be the 6 date of sale of AudioEye securities. 7 5. Broker confirmations or other documentation of your transactions in 8 AudioEye securities must be attached to your Claim. Do not send original 9 documents, including security certificates. If you no longer have copies of your 10 broker’s confirmations or statements, your broker may be able to get you copies. 11 Failure to provide this documentation could delay verification of your Claim or 12 result in rejection of your Claim. 13 6. The above requests are designed to provide the minimum amount of 14 information necessary to process the most simple claims. The Claims 15 Administrator may request additional information as required to efficiently and 16 reliably calculate your losses. In some cases where the Claims Administrator 17 cannot perform the calculation accurately or at a reasonable cost to the Settlement 18 Class with the information provided, the Claims Administrator may condition 19 acceptance of the Claim upon the production of additional information and/or the 20 hiring of an accounting expert at the Claimant’s cost. 21 22 23 24 25 26 27 28 4 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 85 of 103 Exhibit A-4 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF ARIZONA 3 In re AudioEye, Inc. Securities Litigation Civil Action No. 4:15-cv-00163-DCB 4 5 CLAIM FORM 6 Must be Postmarked No Later Than: 7 ___________ __, 201_ 8 Please Type or Print 9 PART I: CLAIMANT IDENTIFICATION 10 11 12 Beneficial Owner’s Name (First, Middle, Last) 13 14 15 Street Address 16 17 18 19 City State Zip Code 20 21 22 23 Foreign Province Foreign Country 24 25 26 Individual 27 28 5 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 86 of 103 Exhibit A-4 1 Social Security Number or Taxpayer Identification 2 Number Corporation/Other 3 4 (work) 5 6 Area Code Telephone Number 7 8 (home) 9 Area Code Telephone Number 10 11 12 13 Record Owner’s Name (if different from beneficial owner listed above) 14 15 16 PART II: SCHEDULE OF TRANSACTIONS IN AUDIOEYE COMMON STOCK 17 A. BEGINNING HOLDINGS: Number of shares of AudioEye common stock 18 held at the beginning of trading on May 14, 2014. If none, write "zero" or 19 "0"; if other than zero, must be documented): ________________ 20 21 22 23 24 25 26 27 28 6 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 87 of 103 Exhibit A-4 1 B. COMMON STOCK PURCHASES OR ACQUISITIONS: Purchases or acquisitions of AudioEye common stock during the period May 14, 2014 2 through June 30, 2015, inclusive (excluding short sales):1 3 Trade Date Number of Purchase or Net Identify if shares 4 (Mo./Day/Year) Shares Acquisition Purchase or acquired pursuant 5 List Purchased Price Acquisition to: (1) sale of put Chronologically or Acquired Per Share Price (less options; (2) 6 commissions corporate merger 7 and fees) or acquisition; (3) employee shares; 8 (4) cover of short 9 position; or (5) exercise of call 10 option during 11 Class Period2 12 13 14 15 16 C. COMMON STOCK SALES: Sales from May 14, 2014 through June 30, 17 2015, inclusive (excluding short sales): 18 Trade Date Number of Sale Price Net Sale Price Share Sold 19 (Mo./Day/Year) Shares Sold Per Share (less commissions Short (Y/N) 20 List and fees) Chronologically 21 22 23 1 24 Information requested with respect to your purchases of AudioEye securities from April 2, 2015 through and including June 30, 2015 is needed in order to balance your claim; purchases 25 during this period, however, are not eligible for recovery under the Settlement and will not be used for purposes of calculating your Recognized Claim pursuant to the Plan of Allocation. 26 2 If you indicate that the purchase or sale was the result of the exercise or assignment of an 27 options contract, you must provide documentation to support both the options purchase or sale and the exercise or assignment to purchase common stock. 28 7 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 88 of 103 Exhibit A-4 1 2 3 C. Number of shares of AudioEye common stock held at close of trading 4 on June 30, 2015: (If none write "zero" or "0"; if other than zero, must 5 be documented) ________________ 6 If you require additional space, attach extra schedules in the same format as above. 7 Sign and print your name on each additional page. 8 YOU MUST READ AND SIGN THE RELEASE ON PAGES 8-11 9 10 V. SUBMISSION TO JURISDICTION OF COURT AND 11 ACKNOWLEDGMENTS 12 I (We) submit this Claim Form under the terms of the Stipulation described 13 in the Notice. I (We) also submit to the jurisdiction of the United States District 14 Court for the District of Arizona with respect to my Claim as a Settlement Class 15 Member (as defined in the Notice) and for purposes of enforcing the release set 16 forth herein. I (We) further acknowledge that I (we) am (are) bound by and subject 17 to the terms of any judgment that may be entered in the Action. I (We) agree to 18 furnish additional information to Lead Plaintiffs’ Counsel to support this Claim if 19 required to do so. I (We) have not submitted any other Claim covering the same 20 purchases or sales of AudioEye securities during the Class Period and know of no 21 other Person having done so on my (our) behalf. 22 VI. RELEASE 23 1. I (We) hereby acknowledge full and complete satisfaction of, and do 24 hereby fully, finally and forever settle, release, relinquish and discharge, all of the 25 Settled Claims against each and all of the Defendants and each and all of the 26 "Released Parties," defined as the Defendants and any of their current, former, or 27 28 8 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 89 of 103 Exhibit A-4 1 future parents, subsidiaries, affiliates, partners, joint venturers, officers, directors, 2 principals, shareholders, members, agents (acting in their capacity as agents), 3 employees, attorneys, trustees, insurers (including Argonaut Insurance Company 4 and its respective businesses, affiliates, subsidiaries, parents and affiliated 5 corporations, divisions, predecessors, shareholders, partners, joint venturers, 6 principals, insurers, reinsurers, successors and assigns, and their respective past, 7 present and future employees, officers, directors, attorneys, accountants, auditors, 8 agents and representatives), reinsurers, advisors, accountants, associates, and/or 9 any other individual or entity in which any Defendant has or had a controlling 10 interest or which is or was related to or affiliated with any Defendant, and the 11 current, former, and future legal representatives, heirs, successors-in-interest, or 12 assigns of any Defendant. 13 2. "Settled Claims" means any and all claims, debts, demands, liabilities, 14 rights, and causes of action of every nature and description whatsoever (including, 15 but not limited to, any claims for damages, interest, attorneys’ fees, expert or 16 consulting fees, and any other costs, expenses, or liabilities whatsoever), whether 17 based on federal, state, local, statutory or common law, or any other law, rule, or 18 regulation, whether fixed or contingent, accrued or unaccrued, liquidated or 19 unliquidated, at law or in equity, matured or unmatured, whether class or 20 individual in nature, including both known claims and Unknown Claims (as 21 defined below): (i) that have been asserted in the Litigation by the Lead Plaintiffs 22 and/or Settlement Class Members or any of them against any of the Released 23 Parties, including, without limitation, all statements made by any of the Defendants 24 that Plaintiffs allege in the Litigation were false or misleading, or any of the 25 alleged acts, omissions, representations, facts, events, matters, transactions, or 26 occurrences asserted in, relating to in any way, or arising out of the Litigation, or 27 otherwise alleged, asserted, or contended in the Litigation; or (ii) that relate to the 28 9 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 90 of 103 Exhibit A-4 1 purchase of AudioEye securities, including, without limitation, claims for fraud, 2 negligent misrepresentation, or claims based upon or related in any way to the 3 purchase, acquisition, or sale of AudioEye securities during the Class Period by the 4 Lead Plaintiffs or any Settlement Class Member, on behalf of themselves, their 5 heirs, executors, administrators, successors, and assigns against the Released 6 Parties or any of them. Settled Claims also include any and all claims arising out of 7 or relating to in any way the Settlement or resolution of the Litigation against the 8 Released Parties (including Unknown Claims that arise out of, relate to, or are in 9 connection with the Settlement or resolution of the Litigation against the Released 10 Parties), except claims to enforce any of the terms of the Stipulation. 11 3. "Unknown Claims" (a) any Settled Claim that the Lead Plaintiffs or 12 any Settlement Class Member does not know or suspect to exist in his, her, or its 13 favor at the time of the release of the Released Parties, which if known by him, her, 14 or it, might have affected his, her, or its decision(s) with respect to the Settlement, 15 including, but not limited to, the decision not to object to the Settlement, provided 16 such claim arises out of or relates to the purchase or sale of AudioEye securities, 17 and (b) any Defendants’ Claims that any Defendant does not know or expect to 18 exist in his, her, or its favor, which if known by him, her, or it might have affected 19 his, her, or its decision(s) with respect to the Settlement. With respect to any and 20 all Settled Claims and Settled Defendants’ Claims, the Settling Parties stipulate 21 and agree that upon the Effective Date, the Settling Parties shall expressly waive, 22 and each of the Settlement Class Members shall be deemed to have waived and by 23 operation of the Order and Final Judgment shall have waived, any and all 24 provisions, rights, and benefits conferred by any law of any state or territory of the 25 United States, or principle of common law that is similar, comparable, or 26 equivalent to Cal. Civ. Code § 1542, which provides: "A general release does not 27 extend to claims which the creditor does not know or suspect to exist in his or her 28 10 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 91 of 103 Exhibit A-4 1 favor at the time of executing the release, which if known by him or her must have 2 materially affected his or her settlement with the debtor". 3 4. This release shall be of no force or effect unless and until the District 4 Court approves the Stipulation and it becomes effective on the Effective Date. 5 5. I (We) hereby warrant and represent that I (we) have not assigned or 6 transferred or purported to assign or transfer, voluntarily or involuntarily, any 7 matter released pursuant to this release or any other part or portion thereof. 8 6. I (We) hereby warrant and represent that I (we) have included 9 information about all of my (our) transactions in AudioEye securities that occurred 10 during the Class Period, as well as the number and type of AudioEye securities 11 held by me (us) at the opening of trading on May 14, 2014 and at the close of 12 trading on April 1, 2015. 13 14 Name Date 15 16 17 18 SUBSTITUTE FORM W-9 19 Request for Taxpayer Identification Number ("TIN") and Certification 20 21 PART I 22 NAME: ___________________________________________________________ 23 Check appropriate box: 24 ¨ Individual/Sole Proprietor ¨ Pension Plan 25 ¨ Corporation ¨ Partnership ¨ Trust 26 ¨ IRA ¨ Other 27 Enter TIN on appropriate line. 28 11 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 92 of 103 Exhibit A-4 1 o For individuals, this is your Social Security Number ("SSN"). 2 o For sole proprietors, you must show your individual name, but your may also enter your business or "doing business as" name. You may 3 enter either your SSN or your Employer Identification Number 4 ("EIN"). 5 o For other entities, it is your EIN. 6 _ _ _ – _ _ – _ _ _ _ or _ _ _ – _ _ – _ _ _ _ 7 Social Security Number Employer Identification 8 Number 9 PART II 10 For Payees Exempt from Backup Withholding 11 If you are exempt from backup withholding, enter your correct TIN in Part I and 12 write "exempt" on the following line: _____________________________ 13 PART III 14 Certification 15 16 UNDER THE PENALTY OF PERJURY, I (WE) CERTIFY THAT: 17 1. The number shown on this form is my correct TIN; and 18 2. I (we) certify that I am (we are) NOT subject to backup withholding 19 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 20 (b) I (we) have not been notified by the Internal Revenue Service that 21 I am (we are) subject to backup withholding as a result of a failure to 22 report all interest or dividends; or (c) the Internal Revenue Service has notified me (us) that I am (we are) no longer subject to backup 23 withholding. 24 NOTE: If you have been notified by the Internal Revenue Service that you are 25 subject to backup withholding, you must cross out Item 2 above. 26 SEE ENCLOSED FORM W-9 INSTRUCTIONS 27 28 12 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 93 of 103 Exhibit A-4 1 The Internal Revenue Service does not require your consent to any provision of 2 this document other than the certification required to avoid backup withholding. 3 I declare under penalty of perjury under the laws of the United States of 4 America that the foregoing information supplied by the undersigned is true and 5 correct. 6 7 Executed this ____________ day of ____________________________, (Month/Year) 8 9 in ____________________________,__________________________________. 10 (City) (State/Country) 11 12 ___________________________________ (Sign your name here) 13 14 15 ___________________________________ (Type or print your name here) 16 17 ___________________________________ 18 (Capacity of person(s) signing, e.g., 19 Beneficial Purchaser, Executor, or Administrator) 20 21 22 23 24 25 26 27 28 13 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 94 of 103 Exhibit A-4 1 ACCURATE CLAIMS PROCESSING TAKES A 2 SIGNIFICANT AMOUNT OF TIME. 3 THANK YOU FOR YOUR PATIENCE. 4 Reminder Checklist: 5 1. Please sign the above release and declaration. 6 7 2. Remember to attach supporting documentation, if available. 8 3. Do not send original AudioEye securities certificates or originals of 9 any supporting documents. 10 4. Keep a copy of your Claim Form and all documentation submitted for your records. 11 12 5. If you desire an acknowledgment of receipt of your Claim Form, please send it Certified Mail, Return Receipt Requested. 13 14 If you move, please send your new address to the Claims Administrator at the 15 address below: 16 In re AudioEye, Inc. Securities Litigation 17 Claims Administrator 18 c/o JND Legal Administration P.O. Box 6847 19 Broomfield, CO 80021 20 Toll-Free: 1-844-357-6871 www.audioeyesecuritieslitigation.com 21 22 23 24 25 26 27 28 14 29 Proof of Claim Form-Case No. 4:15-cv-00163-DCB 30 31 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 95 of 103 Exhibit B 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF ARIZONA 8----------------------------------------------------X 9 No. 4:15-cv-00163-DCB 10 [PROPOSED] ORDER AND 11 IN RE AUDIOEYE, INC. SECURITIES FINAL JUDGMENT 12 LITIGATION Exhibit B 13 14 15----------------------------------------------------X 16 17 On the ____ day of ____________, 2017, a hearing having been held before 18 this Court to determine: (1) whether the terms and conditions of the Stipulation of 19 Settlement dated December 13, 2016 (the "Stipulation") are fair, reasonable and 20 adequate for the settlement of all claims asserted by (i) Plaintiffs against (ii) 21 Defendants AudioEye, Inc. ("AudioEye"), Nathaniel Bradley and Edward 22 O’Donnell (collectively, "Defendants"), and (2) whether to approve the proposed 23 Plan of Allocation as a fair and reasonable method to allocate the Net Settlement 24 Fund among Settlement Class Members; and, 25 The Court having considered all matters submitted to it at the hearing and 26 otherwise; and, 27 28 1 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 96 of 103 Exhibit B 1 It appearing that the Notice substantially in the form approved by the Court 2 in the Court’s Order Preliminarily Approving Settlement and Providing For Notice 3 ("Preliminary Approval Order") was mailed to all reasonably identifiable 4 Settlement Class Members and otherwise made available on the Claims 5 Administrator’s website; and, 6 It appearing that the Summary Notice substantially in the form approved by 7 the Court in the Preliminary Approval Order was published in accordance with 8 that Order and the specifications of the Court; 9 NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED 10 THAT: 11 1. Capitalized terms used herein have the meanings defined in the 12 Stipulation. 13 2. The Court has jurisdiction over the subject matter of the Litigation, 14 Lead Plaintiffs, all Settlement Class Members and the Settling Defendants. 15 3. For purposes of this Settlement, this is a class action on behalf of all 16 persons who purchased or otherwise acquired any common stock of AudioEye 17 during the period from May 14, 2014 through and including April 1, 2015, and 18 who were allegedly damaged thereby (the "Settlement Class"). Excluded from the 19 Settlement Class are Defendants, the officers and directors of AudioEye during the 20 Class Period, members of their immediate families and their legal representatives, 21 heirs, successors, or assigns, any entity in which Defendants have or had a 22 controlling interest, and any persons who separately file an action against one or 23 more of Defendants, based in whole or in part on any claim arising out of or 24 relating to any of the alleged acts, omissions, misrepresentations, facts, events, 25 matters, transactions, or occurrences referred to in the Litigation or otherwise 26 alleged, asserted, or contended in the Litigation. Also excluded from the 27 28 2 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 97 of 103 Exhibit B 1 Settlement Class are those persons who filed valid and timely requests for 2 exclusion in accordance with the Preliminary Approval Order. 3 4. With respect to the Class, and for purposes of this Settlement only, 4 the Court finds and concludes that the requirements of Federal Rules of Civil 5 Procedure 23(a) and 23(b)(3) are satisfied as: (a) the Members of the Class are so 6 numerous that joinder of all Class Members in the Litigation is impracticable; (b) 7 there are questions of law and fact common to the Class that predominate over any 8 individual questions; (c) the claims of the Lead Plaintiffs are typical of the claims 9 of the Class; (d) the Lead Plaintiffs and Lead Plaintiffs’ Counsel have fairly and 10 adequately represented and protected the interests of all the Class Members; and 11 (e) a class action is superior to other available methods for the fair and efficient 12 adjudication of the controversy, considering: (i) the interests of the Members of 13 the Class in individually controlling the prosecution of the separate actions, (ii) the 14 extent and nature of any litigation concerning the controversy already commenced 15 by Members of the Class, (iii) the desirability or undesirability of continuing the 16 litigation of these claims in this particular forum, and (iv) the difficulties likely to 17 be encountered in the management of the Litigation. Accordingly, for settlement 18 purposes only, the Class is certified, Lead Plaintiffs are appointed Class 19 Representatives, and Lead Plaintiffs’ Counsel are appointed Class Counsel 20 5. The Court hereby finds that the forms and methods of notifying the 21 Settlement Class of the Settlement and its terms and conditions met the 22 requirements of due process and Rule 23 of the Federal Rules of Civil Procedure, 23 Section 21D(a)(7) of the Exchange Act, 15 U.S.C. § 78u-4(a)(7), as amended by 24 the Private Securities Litigation Reform Act of 1995; the Constitution of the 25 United States (including the Due Process Clause); and any other applicable law, 26 constituted the best notice practicable under the circumstances; and constituted 27 due and sufficient notice to all persons and entities entitled thereto of these 28 3 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 98 of 103 Exhibit B 1 proceedings and the matters set forth herein, including the Settlement and Plan of 2 Allocation, to all persons entitled to such notice. No Settlement Class Member is 3 relieved from the terms of the Settlement, including the releases provided for 4 therein, based upon the contention or proof that such Settlement Class Member 5 failed to receive actual or adequate notice. A full opportunity has been offered to 6 the Settlement Class Members to object to the proposed Settlement and to 7 participate in the hearing thereon. The Court further finds that the notice 8 provisions of the Class Action Fairness Act, 28 U.S.C. § 1715, were fully 9 discharged. Thus, it is hereby determined that all members of the Settlement Class 10 are bound by this Order and Final Judgment [except those persons listed on 11 Exhibit A to this Order and Final Judgment]. 12 6. The Settlement is approved as fair, reasonable and adequate, and in 13 the best interests of the Plaintiffs. Lead Plaintiffs and Settling Defendants are 14 directed to consummate the Settlement in accordance with the terms and 15 provisions of the Stipulation. 16 7. The Litigation and the operative Consolidated Amended Complaint 17 are hereby dismissed in their entirety, with prejudice, and without costs. 18 8. Upon the Effective Date, and as provided in the Stipulation, Lead 19 Plaintiffs and each of the Settlement Class Members, on behalf of themselves, and 20 each of their current, past and future trusts, estates, beneficiaries, heirs, joint 21 tenants, tenants in common, executors, administrators, trustees, predecessors, 22 successors, partners, spouses, parents, subsidiaries, affiliates, attorneys, 23 consultants, experts, brokers, creditors, insurers, agents, representatives, and 24 assigns, and any Person that any of them represents, shall and by operation of this 25 Order and Final Judgment are hereby deemed to have fully, finally, and forever 26 released, relinquished and discharged, and are forever enjoined from prosecuting, 27 any and all of the Settled Claims and all claims arising out of, relating to, or in 28 4 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 99 of 103 Exhibit B 1 connection with the Settlement, the Litigation, and/or the resolution of the 2 Litigation against the Released Parties, whether or not such Settlement Class 3 Member executes and delivers the Proof of Claim and Release form or shares in 4 the Net Settlement Fund. 5 9. Upon the Effective Date, Defendants shall release and forever 6 discharge each and every one of the Defendants’ Claims, and by operation of this 7 Order and Final Judgment shall be forever enjoined from prosecuting Defendants’ 8 Claims as against any of the Lead Plaintiffs, Settlement Class Members, or their 9 attorneys, including but not limited to claims for malicious prosecution or 10 sanctions. 11 10. The Plan of Allocation is approved as fair and reasonable, and Lead 12 Plaintiffs’ Counsel and the Claims Administrator are directed to administer the 13 Stipulation and Plan of Allocation in accordance with its terms and provisions. 14 Any modification or change in the Plan of Allocation that may hereafter be 15 approved shall in no way disturb, affect or delay the finality of this Order and 16 Final Judgment or the Releases provided thereunder, shall not disturb, affect or 17 delay the Effective Date of the Settlement, and shall be considered separate from 18 this Order and Final Judgment. 19 11. In accordance with 15 U.S.C. § 78u-4(f)(7) and all other applicable 20 laws and regulations, any and all claims by any Person against any of the Settling 21 Defendants and/or other Released Persons for contribution or indemnification 22 arising out of or relating in any way to any Settled Claim, or where the alleged 23 damage to the claimant is measured by reference to the claimant’s liability to any 24 of the Lead Plaintiffs and/or Settlement Class Members, are hereby permanently 25 barred and discharged. Further: 26 a. All claims for contribution and indemnification, however 27 denominated, based upon or arising under the federal securities laws, 28 5 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 100 of 103 Exhibit B 1 state law, foreign law or common law, in favor of any Person(s), 2 against any of the Defendants and/or other Released Parties, with 3 respect to, arising out of, or relating in any way to the claims, 4 allegations, transactions, and/or events that are the subject of the 5 Litigation, and/or based upon liability for, or arising out of or relating 6 in any way to the Settled Claims, are extinguished, discharged, 7 barred, satisfied and/or otherwise unenforceable. 8 b. All Persons are hereby barred and permanently enjoined, to the fullest 9 extent allowed by law, from asserting, instituting or prosecuting in 10 any capacity, any claim, action or proceeding against any of the 11 Defendants and/or other Released Parties for equitable, partial, 12 comparative, or complete contribution, subrogation or indemnity, 13 however denominated, based upon liability for, and/or arising out of 14 or relating in any way to the Settled Claims, and the Court finds that 15 all such claims are extinguished, discharged, satisfied and made 16 unenforceable. 17 c. Notwithstanding the foregoing, nothing in the Stipulation or this 18 Order and Final Judgment shall apply to, bar, release or otherwise 19 affect any claim or right to indemnification by any present or former 20 employee, officer or director of AudioEye, based on contractual 21 indemnity, corporate by-laws, or Arizona law governing 22 indemnification of employees, directors and officers (including a 23 claimed right for advancement of fees and costs), or any claim by any 24 present or former employee, officer or director of AudioEye for 25 indemnity or contribution arising in or from any proceeding other 26 than this Litigation, that the Person asserting such claim would 27 otherwise be entitled to assert in the absence of the Stipulation and 28 6 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 101 of 103 Exhibit B 1 Settlement and the Court’s Order and Final Judgment. Nor shall any 2 of the foregoing apply to, bar, release or otherwise affect any rights or 3 claims by any of the Released Parties under any relevant insurance 4 policies. 5 12. The Court finds that all parties and their counsel have complied with 6 each requirement of Rule 11 of the Federal Rules of Civil Procedure as to all 7 proceedings herein. 8 13. Neither this Order and Final Judgment, the Stipulation, nor any of the 9 negotiations, documents or proceedings connected with them shall be: 10 a. described as, construed as, offered or received against any Defendant 11 or any of the Released Parties as evidence of and/or construed as or 12 deemed to be evidence of any presumption, concession or admission 13 by any of them of the truth of any fact alleged by Plaintiffs in the 14 Litigation, of the validity of any claim that was or could have been 15 asserted in the Litigation, or of the deficiency of any defense that was 16 or could have been asserted in the Litigation or in any other litigation, 17 or of any liability, loss, damage, negligence, fault or wrongdoing 18 whatsoever; 19 b. described as, construed as, offered or received against any Defendant 20 or any of the Released Parties as evidence of and/or construed as or 21 deemed to be evidence of any presumption, concession or admission 22 by any of them that the consideration to be provided hereunder, or the 23 proposed Plan of Allocation, represents the amount that could be or 24 would have been awarded to Lead Plaintiffs or the Settlement Class 25 Members after trial. 26 14. Exclusive and specific jurisdiction is hereby retained over 27 Defendants, the Lead Plaintiffs, and the Settlement Class Members for all matters 28 7 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 102 of 103 Exhibit B 1 relating to the Settlement, including the administration, interpretation, effectuation 2 or enforcement of the Stipulation or Settlement and this Order and Final 3 Judgment, and including any application for fees and expenses incurred in 4 connection with administering and distributing the settlement proceeds to the 5 Settlement Class Members. 6 15. Without further order of the Court, Settling Defendants and Lead 7 Plaintiffs may agree to reasonable extensions of time to carry out any of the 8 provisions of the Stipulation. 9 16. There is no just reason for delay in the entry of this Order and Final 10 Judgment and immediate entry by the Clerk of the Court is directed pursuant to 11 Rule 54(b) of the Federal Rules of Civil Procedure. 12 17. Lead Plaintiffs’ Counsel are hereby awarded ____% of the Gross 13 Settlement Fund for their attorneys’ fees, plus accrued interest, which sum the 14 Court finds to be fair and reasonable. In addition, Lead Plaintiffs’ Counsel are 15 hereby awarded $______________, plus accrued interest, in reimbursement of 16 litigation expenses, which expenses the Courts finds to be have been reasonably 17 incurred. The foregoing amounts shall be paid to Lead Plaintiffs’ Counsel from 18 the Gross Settlement Fund subject to the terms, conditions, and obligations of the 19 Stipulation, which terms, conditions, and obligations are incorporated herein. 20 Lead Plaintiffs’ Counsel may make payments of fees and expenses to counsel for 21 other plaintiffs as Lead Plaintiffs’ Counsel deems appropriate based on their 22 relative contribution to the prosecution and resolution of the Action. Neither the 23 Plan of Allocation submitted by Lead Plaintiffs’ Counsel nor the portion of this 24 Order and Final Judgment regarding the attorneys’ fee and litigation expenses 25 application including any modification or change in the award of attorneys’ fees 26 and litigation expenses that may hereafter be approved, shall in any way disturb or 27 28 8 Case No. 4:15-cv-00163-DCB WEST\272746464.1 Case 4:15-cv-00163-DCB Document 89-1 Filed 12/16/16 Page 103 of 103 Exhibit B 1 affect this Order and Final Judgment or the Releases provided hereunder and shall 2 be considered separate from this Order and Final Judgment. 3 18. In the event that the Settlement does not become final and effective 4 in accordance with the terms and conditions set forth in the Stipulation, then this 5 Order and Final Judgment shall be rendered null and void and be vacated and the 6 Settlement and all orders entered in connection therewith shall be rendered null 7 and void (except as provided in paragraphs E.1-3., G, L.4-7., and M.14. in the 8 Stipulation), and the parties shall be deemed to have reverted to their respective 9 status prior to the execution of the Stipulation, and they shall proceed in all 10 respects as if the Stipulation had not been executed and the related orders had not 11 been entered, preserving in that event all of their respective claims and defenses in 12 the Litigation, and shall revert to their respective positions in the Litigation. 13 19. The Escrow Agent shall maintain the Net Settlement Fund in 14 accordance with the requirements set forth in the Stipulation. No Defendant, or 15 any other Released Party, shall have any liability, obligation, or responsibility 16 whatsoever for the administration of the Settlement or disbursement of the Net 17 Settlement Fund. Lead Plaintiffs’ Counsel, Lead Plaintiffs, the Escrow Agent, and 18 the Claims Administrator shall have no liability to any Class Member with respect 19 to any aspect of the administration of the Settlement Fund, including, but not 20 limited to, the processing of Claim Forms and the distribution of the Net 21 Settlement Fund to Class Members. 22 23 24 25 26 27 28 9 Case No. 4:15-cv-00163-DCB WEST\272746464.1

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Description
1
04/20/2015
COMPLAINT. Filing fee received: $ 400.00, receipt number 0970-11584964 filed by Ralph Saczawa.
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Civil Cover Sheet
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https://ecf.azd.uscourts.gov/doc1/025114261954" onClick="goDLS{{'/doc1/025114261954','919874','8','','2','1','',''}};">2</a> Certification)
2 Attachments
2
04/20/2015
Filing fee paid, receipt number 0970-11584964. This case has been assigned to the Honorable David C Bury. All future pleadings or documents should bear the correct case number: 4:15-CV-00163-TUC-DCB. Notice of Availability of Magistrate Judge to Exercise Jurisdiction form attached.
3
04/20/2015
NOTICE TO FILER OF DEFICIENCY re: 1 Complaint filed by Ralph Saczawa. Pursuant to the Electronic Case Filing Administrative Policies and Procedures Manual Section II(B), attorneys are required to submit the automated Civil Cover Sheet when filing a new case. No further action is required. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
4
04/20/2015
*SUMMONS Submitted by Plaintiff Ralph Saczawa.
1
Summons
2
https://ecf.azd.uscourts.gov/doc1/025114262088" onClick="goDLS{{'/doc1/025114262088','919874','15','','2','1','',''}};">2</a> Summons) *Modified to correct event type on 4/21/2015
2 Attachments
5
04/21/2015
Summons Issued as to AudioEye Incorporated, Nathaniel Bradley, Edward O'Donnell. *** IMPORTANT: When printing the summons, select "Document and stamps" or "Document and comments" for the seal to appear on the document.
1
Summons
2
https://ecf.azd.uscourts.gov/doc1/025114265856" onClick="goDLS{{'/doc1/025114265856','919874','18','','2','1','',''}};">2</a> Summons)
2 Attachments
6
05/05/2015
SERVICE EXECUTED filed by Ralph Saczawa: Certificate of Service re: Complaint and Summons upon AudioEye, Inc. on 04/29/15.
7
05/05/2015
SERVICE EXECUTED filed by Ralph Saczawa: Certificate of Service re: Complaint and Summons upon Nathaniel Bradley on 04/27/15.
8
06/15/2015
*MOTION to Consolidate Cases, For Lead Plaintiffs Appointment and For Approval of Their Selection of Lead and Liaison Counsel by Ralph Saczawa, Sam Gindi.
1
Memorandum of Law
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Declaration of Andrei V. Rado
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Exhibits to Declaration of Andrei V. Rado
4
https://ecf.azd.uscourts.gov/doc1/025114497975" onClick="goDLS{{'/doc1/025114497975','919874','24','','2','1','',''}};">4</a> Text of Proposed Order) (Associated Cases: CV-15-00163-TUC-DCB,CV-15-00673-PHX-DLR) *Modified to add motion types on 8/3/2015
4 Attachments
9
06/15/2015
*MOTION to Consolidate Cases, WITHDRAWN BY DOC. 35 Motion to Appoint Lead Plaintiff, Motion to Appoint Lead Counsel by Glen Alvin Morgan.
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Declaration of Scott H. Zwillinger in Support of Motion
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Exhibit A
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Exhibit B
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Exhibit C
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Exhibit D
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https://ecf.azd.uscourts.gov/doc1/025114498802" onClick="goDLS{{'/doc1/025114498802','919874','30','','2','1','',''}};">6</a> Text of Proposed Order) (Associated Cases: CV-15-00673-PHX-DLR) *Modified to add motion types on 8/3/2015
6 Attachments
10
06/15/2015
*MOTION to Consolidate Cases ; WITHDRAWN BY DOC. 35 Appoint Lead Plaintiff; and Approve Lead Plaintiff's Selection of Counsel by Matthew Stapen.
1
https://ecf.azd.uscourts.gov/doc1/025114499231" onClick="goDLS{{'/doc1/025114499231','919874','34','','2','1','',''}};">1</a> Text of Proposed Order) (Associated Cases: CV-15-00673-PHX-DLR,CV-15-00163-TUC-DCB) *Modified to add motion types on 8/3/2015
1 Attachment
11
06/15/2015
*Memorandum of Points and Authorities in Support of 10 Motion to: (1) Consolidate Related Actions; (2) Appoint Lead Plaintiff; and (3) Approve Lead Plaintiff's Selection of Counsel by Matthew Stapen. (Associated Cases: CV-15-00673-PHX-DLR,CV-15-00163-TUC-DCB) *Modified to correct event type on 6/16/2015
12
06/15/2015
*Declaration of Richard G. Himelrick in Support of 10 Motion to: (1) Consolidate Related Actions; (2) Appoint Lead Plaintiff; and (3) Approve Lead Plaintiffs' Selection of Counsel by Matthew Stapen.
1
https://ecf.azd.uscourts.gov/doc1/025114499288" onClick="goDLS{{'/doc1/025114499288','919874','40','','2','1','',''}};">1</a> Exhibit 1-5) (Associated Cases: CV-15-00673-PHX-DLR,CV-15-00163-TUC-DCB) *Modified to correct event type on 6/16/2015
1 Attachment
13
06/15/2015
*MOTION to Consolidate Cases Appointment as Lead Plaintiff and Approval of Lead Counsel and Liaison Counsel by Globis Capital Partners, L.P., Globis Overseas Fund, Ltd.
1
https://ecf.azd.uscourts.gov/doc1/025114499517" onClick="goDLS{{'/doc1/025114499517','919874','42','','2','1','',''}};">1</a> Text of Proposed Order) (Associated Cases: CV-15-00163-TUC-DCB,CV-15-00673-PHX-DLR) *Modified to add motion types on 8/3/2015
1 Attachment
14
06/15/2015
DECLARATION of Ira M. Press re: 13 MOTION to Consolidate Cases Appointment as Lead Plaintiff and Approval of Lead Counsel and Liaison Counsel by Movants Globis Capital Partners, L.P., Globis Overseas Fund, Ltd.
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Exhibit 1-5
1 Attachment
15
06/16/2015
Pursuant to LRCiv 7.2(f) of the Rules of Practice of the United States District Court for the District of Arizona, IT IS ORDERED setting oral argument for re: 9 MOTION to Consolidate Cases filed by Glen Alvin Morgan, 13 MOTION to Consolidate Cases Appointment as Lead Plaintiff and Approval of Lead Counsel and Liaison Counsel filed by Globis Overseas Fund, Ltd., Globis Capital Partners, L.P., 11 MOTION to Consolidate Cases Memorandum of Points and Authorities in Support of Motion to: (1) Consolidate Related Actions; (2) Appoint Lead Plaintiff; and (3) Approve Lead Plaintiff's Selection of Counsel filed by Matthew Stapen, 8 MOTION to Consolidate Cases, For Lead Plaintiffs Appointment and For Approval of Their Selection of Lead and Liaison Counsel filed by Sam Gindi, Ralph Saczawa, 10 MOTION to Consolidate Cases ; Appoint Lead Plaintiff; and Approve Lead Plaintiff's Selection of Counsel filed by Matthew Stapen, 12 MOTION to Consolidate Cases Declaration of Richard G. Himelrick in Support of Motion to: (1) Consolidate Related Actions; (2) Appoint Lead Plaintiff; and (3) Approve Lead Plaintiffs' Selection of Counsel filed by Matthew Stapen Motion Hearing set for 6/16/2015 at 02:30PM (AZ time) before Senior Judge David C Bury's law clerk, Cynthia Lorge, by telephone conference call to be initiated by Eugene Goldsmith, Esq., to (520)205-4560 with all appropriate counsel on the line. Ordered by Senior Judge David C Bury. (This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.)
16
06/16/2015
MINUTE ENTRY for proceedings held before Senior Judge David C Bury: Telephone Conference held on 6/16/2015. All parties will confer and attempt to reach a stipulated agreement resolving the pending motions to consolidate which will be filed with the Court on or before June 29, 2015. Otherwise the parties should notify the Court by this date that a ruling is required. Hearing held 2:30pm to 2:45pm. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
17
06/22/2015
MOTION for Admission Pro Hac Vice as to attorney Ira M Press on behalf of Globis Capital Partners, L.P., and Globis Overseas Fund, Ltd.
06/22/2015
PRO HAC VICE FEE PAID. $ 35, receipt number PHX159900 as to Ira Michael Press. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
18
06/22/2015
ORDER pursuant to General Order 09-08 granting 17 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
19
07/01/2015
ORDER that all pending motions for consolidation are GRANTED. A Master File is established for this proceeding. The Master File shall be CV-15-00163-TUC- DCB. The Clerk shall file all pleadings in the Master File and note such filings on the Master Docket. The caption for the Consolidated Action is changed to: In re AudioEye, Inc. Sec. Litig., No. CV-15-00163-TUC-DCB. Oral argument by telephone conference call on the motions for appointment of lead plaintiff and lead counsel is set for July 21, 2015 at 1:00 PM (AZ). Counsel should file a notice of appearance with contact information for that date on or before July 17, 2015. Counsel may also appear in person. Signed by Senior Judge David C Bury on 7/1/2015. (Associated Cases: 4:15-cv-00163-DCB, 2:15-cv-00673-DLR)
20
07/02/2015
RESPONSE in Opposition re: 10 MOTION to Consolidate Cases ; Appoint Lead Plaintiff; and Approve Lead Plaintiff's Selection of Counsel, 9 MOTION to Consolidate Cases, 13 MOTION to Consolidate Cases Appointment as Lead Plaintiff and Approval of Lead Counsel and Liaison Counsel filed by Sam Gindi, Ralph Saczawa.
21
07/02/2015
DECLARATION of Andrei V. Rado re: 20 Response in Opposition to Motion for Lead Plaintiff Appointment and for Approval of Lead Counsel. filed by Sam Gindi, Ralph Saczawa.
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Exhibit 1
2
Exhibit 2
3
Exhibit 3
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Exhibit 4
4 Attachments
22
07/02/2015
RESPONSE in Opposition re: 10 MOTION to Consolidate Cases ; Appoint Lead Plaintiff; and Approve Lead Plaintiff's Selection of Counsel, 8 MOTION to Consolidate Cases, For Lead Plaintiffs Appointment and For Approval of Their Selection of Lead and Liaison Counsel, 9 MOTION to Consolidate Cases filed by Globis Capital Partners LP, Globis Overseas Fund Limited.
23
07/02/2015
DECLARATION of Ira M. Press re: 22 Response in Opposition to Motion (Competing) for Lead Plaintiff Appointment by Movants Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Exhibit A & B
1 Attachment
24
07/06/2015
NOTICE re: of Non-Opposition to the Motions to Consolidate of the Actions, Appointment as Lead Plaintiff, and Approval of Selection of Lead Counsel by Glen Alvin Morgan.
25
07/10/2015
MOTION for Admission Pro Hac Vice as to attorney Andrei Rado on behalf of Ralph Saczawa.
07/10/2015
PRO HAC VICE FEE PAID. $ 35, receipt number PHX160554 as to Andrei V Rado. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
26
07/10/2015
ORDER pursuant to General Order 09-08 granting 25 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
27
07/10/2015
NOTICE re: Non-Opposition to Lead Plaintiff Motions by Matthew Stapen.
28
07/13/2015
REPLY to Response to Motion re: 8 MOTION to Consolidate Cases, For Lead Plaintiffs Appointment and For Approval of Their Selection of Lead and Liaison Counsel filed by Sam Gindi, Ralph Saczawa.
29
07/13/2015
REPLY to Response to Motion re: 13 MOTION to Consolidate Cases Appointment as Lead Plaintiff and Approval of Lead Counsel and Liaison Counsel filed by Globis Capital Partners LP, Globis Overseas Fund Limited.
30
07/13/2015
DECLARATION of Ira M. Press re: 29 Reply to Response to Motion for Lead Plaintiff Appointment by Movants Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Exhibit 1-3
1 Attachment
31
07/14/2015
*NOTICE of Appearance by Aaron Trachtman Goodman on behalf of AudioEye Incorporated, Nathaniel Bradley. *Modified to add attorney Mark A. Nadeau on 7/15/2015
32
07/14/2015
NOTICE of Appearance by Ira Michael Press on behalf of Globis Capital Partners LP, Globis Overseas Fund Limited.
33
07/15/2015
NOTICE of Appearance by Eugene N Goldsmith on behalf of Sam Gindi, Ralph Saczawa.
34
07/21/2015
MINUTE ENTRY for proceedings held before Senior Judge David C Bury: Motion Hearing held on 7/21/2015. Oral arguements by telephone conference call heard on the motions for appointment of lead plaintiff and lead counsel. Court has taken motions under advisement. Formal order shall follow. APPEARANCES: Telephonic appearance by Andrei Rado for Plaintiff Ralph Scazawa. Telephonic appearance by Eugene Goldsmith for Plaintiff Ralph Saczawa and Movant Sam Gindi. Telephonic appearance by Ira Press for Globis Capital/Globis Overseas Fund. Telephonic appearance by Aaron Goodman for Defendants AudioEye, Inc., Bradley, O'Donnell. Telephonic appearance by Robert Weber to file notice of Pro Hac Vice for Defendant. (Court Reporter Cindy Shearman.) Hearing held 1:00 PM to 2:00 PM This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
35
08/03/2015
ORDER that the Clerk's Office is directed to correct the docket to reflect that the motions at Docs. 8, 9, 10, and 13 are divided into three parts: consolidation, appointment of lead plaintiff, and appointment of lead counsel. All consolidation motions were granted previously by the Court. (Doc. 19). It is further Ordered that the motions for lead plaintiff and lead counsel (Doc. 9, 10) are withdrawn and denied as moot. It is further Ordered that the Plaintiffs Saczawa/Gindi's motion for appointment of lead plaintiff/counsel (Doc. 8) is DENIED and the Plaintiffs Globis' motion for appointment of lead plaintiff/counsel (Doc. 13) is granted. Globis Capital Partners LP and Globis Overseas Fund Ltd. are appointed lead plaintiffs and their chosen counsel are appointed as lead attorneys in this action: Kirby McInerney LLP and Bonnett Fairbourn Friedman & Balint (liaison). Signed by Senior Judge David C Bury on 7/31/2015.
36
08/04/2015
MOTION for Admission Pro Hac Vice as to attorney Perrie Weiner on behalf of AudioEye Incorporated and Nathaniel Bradley.
37
08/04/2015
MOTION for Admission Pro Hac Vice as to attorney Robert Weber on behalf of AudioEye Incorporated and Nathaniel Bradley.
08/05/2015
PRO HAC VICE FEE PAID. $ 70, receipt number TUC022992 as to Perrie M Weiner, Robert Weber. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
38
08/05/2015
ORDER pursuant to General Order 09-08 granting 36 Motion for Admission Pro Hac Vice; granting 37 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
39
11/03/2015
MOTION for Admission Pro Hac Vice as to attorney Mark A Strauss on behalf of Globis Capital Partners LP, and Globis Overseas Fund Limited.
11/04/2015
PRO HAC VICE FEE PAID. $ 35, receipt number PHX164631 as to Mark A Strauss. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
40
11/04/2015
ORDER pursuant to General Order 09-08 granting 39 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
41
11/30/2015
AMENDED COMPLAINT against AudioEye Incorporated, Nathaniel Bradley, Edward O'Donnell filed by Globis Overseas Fund Limited, Globis Capital Partners LP.
42
12/18/2015
STIPULATION Establishing Schedule for Filing of Consolidated Amended Complaint and Briefing on Motion(s) to Dismiss by Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Text of Proposed Order
1 Attachment
43
12/21/2015
ORDER granting 42 Stipulation, hard copy of Order to follow. Signed by Senior Judge David C Bury on 12/21/2015. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
44
12/29/2015
MOTION to Intervene by Matthew Stapen.
1
Text of Proposed Order
1 Attachment
45
12/29/2015
DECLARATION of Richard G. Himelrick in Support of re: 44 MOTION to Intervene by Movant Matthew Stapen.
1
Exhibit 1
1 Attachment
46
01/05/2016
ORDER establishing schedule for filing of consolidated amended complaint and briefing on motion(s) to dismiss. Plaintiffs shall file their consolidated amended class action complaint on or before November 30, 2015. Defendants shall answer or otherwise respond to the consolidated amended class action complaint by January 29, 2016. Plaintiffs shall file any opposition papers by March 4, 2016. Defendants shall file any reply papers by April 4, 2016. Signed by Senior Judge David C Bury on 1/5/16.
47
01/06/2016
STIPULATION re: 44 MOTION to Intervene by Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Text of Proposed Order
1 Attachment
48
01/06/2016
*NOTICE of Appearance by A Bates Butler, III on behalf of Edward O'Donnell. *Modified to correct attorney representation for Defendant Edward O'Donnell on 1/7/2016
49
01/07/2016
ORDER, re: 44 MOTION to Intervene. Any opposition papers shall be filed on or before February 2, 2016. Any reply papers shall be filed on or before February 19, 2016. Signed by Senior Judge David C Bury on 1/6/16.
50
01/21/2016
STIPULATION and (Proposed) Order Exceeding Page Limit for Briefing on Motions to Dismiss by Edward O'Donnell.
1
Text of Proposed Order
1 Attachment
51
01/25/2016
ORDER granting 47 Stipulation, 50 Stipulation. Formal Orders to follow. Signed by Senior Judge David C Bury on 1/25/2016. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
52
01/26/2016
STIPULATION ON BRIEFING MOTION TO INTERVENE: It is Ordered adopting the following briefing schedule for the Motion to Intervene (Doc. 44): Any opposition papers shall be filed on or before February 2, 2016 and any reply papers shall be filed on or before February 19, 2016. Signed by Senior Judge David C Bury on 1/26/2016.
53
01/26/2016
ORDER granting 50 Stipulation to Exceed Page Limit for Briefing on Motions to Dismiss filed by Edward O'Donnell (see attached Order for complete details). Signed by Senior Judge David C Bury on 1/26/2016.
54
01/27/2016
STIPULATION re: 41 Amended Complaint Modifying Schedule for Briefing on Motion to Dismiss by AudioEye Incorporated, Nathaniel Bradley.
1
Text of Proposed Order
1 Attachment
55
02/01/2016
MOTION for Admission Pro Hac Vice as to attorney Mendy Piekarski on behalf of Edward O'Donnell.
02/02/2016
PRO HAC VICE FEE PAID. $ 35, receipt number PHX167973 as to Mendy Piekarski. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
56
02/02/2016
ORDER pursuant to General Order 09-08 granting 55 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
57
02/02/2016
RESPONSE in Opposition re: 44 MOTION to Intervene filed by Globis Capital Partners LP, Globis Overseas Fund Limited.
58
02/02/2016
DECLARATION of Mark A. Strauss re: 57 Response in Opposition to Motion, 44 MOTION to Intervene. filed by Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Exhibit 1
2
Exhibit 2
2 Attachments
59
02/02/2016
RESPONSE in Opposition re: 44 MOTION to Intervene Defendant Edward O'Donnell's Response Brief in Opposition to Matthew Stapen's Motion to Intervene filed by Edward O'Donnell.
60
02/02/2016
ORDER granting 54 Stipulation : written order to follow. Signed by Senior Judge David C Bury on 2/2/2016. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
61
02/02/2016
ORDER, Defendants shall answer or otherwise respond to the consolidated amended class action complaint by February 5, 2016. Plaintiffs shall file any opposition papers by March 18, 2016. Defendants shall file any reply papers by April 18, 2016. Signed by Senior Judge David C Bury on 2/1/16.
62
02/02/2016
RESPONSE in Opposition re: 44 MOTION to Intervene filed by AudioEye Incorporated, Nathaniel Bradley.
63
02/04/2016
Pursuant to LRCiv 7.2(f) of the Rules of Practice of the United States District Court for the District of Arizona, IT IS ORDERED setting oral argument for re: 44 MOTION to Intervene filed by Matthew Stapen Motion Hearing set for 4/5/2016 at 01:30 PM (AZ time) in Courtroom 6B, 405 West Congress Street, Tucson, AZ 85701 before Senior Judge David C Bury. Any party interested in appearing telephonically should file a written notice with the Court by March 28, 2016 and the Court will provide you with the information to participate telephonically. Ordered by Senior Judge David C Bury. (This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.)
64
02/05/2016
*MOTION to Dismiss Case by Edward O'Donnell.
1
Memorandum of Law in Support of Defendant Edward O'Donnell's Motion to Dismiss
2
Declaration: Exhibit 1
3
Declaration: Exhibit 2
4
Declaration: Exhibit 3
5
Declaration: Exhibit 4
6
Declaration: Exhibit 5
7
Declaration: Exhibit 6
8
Declaration: Exhibit 7
9
https://ecf.azd.uscourts.gov/doc1/025115451526" onClick="goDLS{{'/doc1/025115451526','919874','268','','2','1','',''}};">9</a> Declaration of Mendy Piekarski in Support of Edward O'Donnell's Motion to Dismiss *Modified to correct title of attachment 1 on 2/5/2016 (DLC). *Modified to correct title of attachments 2-9 on 2/8/2016
9 Attachments
65
02/05/2016
MOTION to Dismiss Case by AudioEye Incorporated, Nathaniel Bradley.
1
Memorandum of Points and Authorities
2
Request for Judicial Notice
3
Declaration of Robert D. Weber Supporting Motion
3 Attachments
66
02/16/2016
NOTICE re: and Request for Telephonic Appearance by AudioEye Incorporated, Nathaniel Bradley re: 63 Set Oral Argument.
67
02/17/2016
NOTICE re: Request for Telephonic Appearance by Globis Capital Partners LP, Globis Overseas Fund Limited.
68
02/18/2016
MOTION for Admission Pro Hac Vice as to attorney Phillip Kim by Matthew Stapen.
1
Certificate of good standing
1 Attachment
69
02/18/2016
NOTICE TO FILER OF DEFICIENCY re: 68 MOTION for Admission Pro Hac Vice as to attorney Phillip Kim filed by Matthew Stapen. Pro Hac Vice motion submitted with state court certificate of good standing. FOLLOW-UP ACTION REQUIRED: Please resubmit motion with original certificates of good standing from a federal court. FOLLOW-UP ACTION REQUIRED: Please refile corrected document. Deficiency must be corrected within seven business days of this notice. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
70
02/18/2016
NOTICE re: Request for Telephonic Appearance by Edward O'Donnell re: 63 Set Oral Argument.
71
02/19/2016
REPLY to Response to Motion re: 44 MOTION to Intervene filed by Matthew Stapen.
72
03/02/2016
Due to a conflict in the Court's calendar, IT IS ORDERED the motion hearing for 44 Motion to Intervene filed by Matthew Stapen presently set for 4/5/2016 at 1:30 PM, is VACATED and RESET. Motion Hearing set for 4/4/2016 at 02:00 PM in Courtroom 6B, 405 West Congress Street, Tucson, AZ 85701 before Senior Judge David C Bury. Please notify the Court if you prefer to appear telephonically. Ordered by Senior Judge David C Bury. (DCB)(This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.)
73
03/03/2016
MOTION for Admission Pro Hac Vice as to attorney Marc J Ross on behalf of Edward O'Donnell.
03/04/2016
PRO HAC VICE FEE PAID. $ 35, receipt number PHX169262 as to Marc J Ross. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
74
03/04/2016
ORDER pursuant to General Order 09-08 granting 73 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
75
03/18/2016
RESPONSE in Opposition re: 64 MOTION to Dismiss Case, 65 MOTION to Dismiss Case filed by Globis Capital Partners LP, Globis Overseas Fund Limited.
76
03/18/2016
DECLARATION of Mark Strauss re: 64 MOTION to Dismiss Case, 65 MOTION to Dismiss Case, in Opposition. filed by Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Exhibit 1
1 Attachment
77
03/31/2016
MOTION for Admission Pro Hac Vice as to attorney Phillip Kim by Matthew Stapen.
1
Federal Certificate of Good Standing
1 Attachment
04/01/2016
PRO HAC VICE FEE PAID. $ 35, receipt number PHX170297 as to Phillip Kim. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
78
04/01/2016
ORDER pursuant to General Order 09-08 terminating 68 Motion for Admission Pro Hac Vice; granting 77 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
79
04/04/2016
MINUTE ENTRY for Motion Hearing held on 4/4/2016 before Senior Judge David C. Bury: Re: 44 MOTION to Intervene filed by Matthew Stapen. Oral arguements heard. The Court is taking under advisement 44 Motion to Intervene. Formal order shall follow. APPEARANCES: Telephonic appearance by Mark Strauss for Plaintiffs. A Bates Butler III present and Telephonic appearance by Mendy Piekarski for Defendant Edward O'Donnell. Present Phillip Kim and Richard Glenn Himelrick for Movant Matthew Stapen. (Court Reporter Cindy Shearman) Hearing held 2:00 PM to 2:23 PM This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
80
04/11/2016
Additional Attachments to Main Document re: 44 MOTION to Intervene Revised Proposed Order by Movant Matthew Stapen.
1
Text of Proposed Order Revised Proposed Order
1 Attachment
81
04/13/2016
ORDER that the Motion to Intervene (Doc. 44) is Granted in Part and Denied in Part. The motion is granted in that the Lead Plaintiff is directed to file a Second Amended Complaint that includes the Arizona Securities Law violations. It is further Ordered that the pending motions to dismiss (Docs. 64, 65)are dismissed as moot without prejudice to refiling after the Second Amended Complaint is filed (see attached Order for complete details). Signed by Senior Judge David C Bury on 4/11/2016.
82
04/13/2016
STIPULATION TEMPORARILY STAYING PROCEEDINGS UNTIL AFTER VOLUNTARY MEDIATION by AudioEye Incorporated, Nathaniel Bradley.
1
Proposed Order
1 Attachment
83
04/21/2016
ORDER pursuant to 82 Stipulation Temporarily Staying Proceedings Until After Voluntary Mediation. It is Ordered that all proceedings in this matter are stayed until June 30, 2016. Signed by Senior Judge David C Bury on 4/20/2016.
84
06/28/2016
STIPULATION and Proposed Order re Extending the Temporary Stay of Proceedings Until After Voluntary Mediation by Edward O'Donnell.
1
Text of Proposed Order
1 Attachment
85
07/05/2016
ORDER pursuant to 84 Stipulation Extending the Temporary Stay of Proceedings Until After Voluntary Mediation. It is ordered that a STAY of all matters in this action is continued and remains in effect until August 1, 2016, as the parties are engaging in private mediation. It is further ORDERED that, if this matter is not resolved by August 1, 2016, the following case schedule is in place: on or before August 12, 2016, Plaintiff is directed to file a Second Amended Complaint as required in the April 11, 2016 Order (Doc. 81). Signed by Senior Judge David C Bury on 6/30/16.
86
07/29/2016
NOTICE of Settlement by AudioEye Incorporated, Nathaniel Bradley.
87
08/08/2016
ORDER: Based on a Notice of Settlement filed with the Court, all scheduling deadlines and stay of proceedings are vacated. The parties should endeavor to file the settlement paperwork to resolve this class action on or before December 2, 2016. Signed by Senior Judge David C Bury on 8/8/2016. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
88
11/28/2016
ORDER: the parties should endeavor to file the settlement paperwork on or before December 16, 2016, otherwise a notice to show cause why this action should not be dismissed will issue. Signed by Senior Judge David C Bury on 11/28/16.
89
12/16/2016
* MOTION and Memorandum of Points and Authorities in Support of Preliminary Approval of Settlement, Preliminary Certification of Settlement Class, and Establishing Notice Procedures by Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Exhibit A
2
https://ecf.azd.uscourts.gov/doc1/025116785902" onClick="goDLS{{'/doc1/025116785902','919874','352','','2','1','',''}};">2</a> Exhibit B) *Modified to add motion type on 12/19/2016
2 Attachments
90
12/19/2016
Pursuant to LRCiv 7.2(f) of the Rules of Practice of the United States District Court for the District of Arizona, IT IS ORDERED setting oral argument for re: 89 MOTION and Memorandum of Points and Authorities in Support of Preliminary Approval of Settlement, Preliminary Certification of Settlement Class, and Establishing Notice Procedures filed by Globis Capital Partners LP, Globis Overseas Fund Limited Motion Hearing set for 1/23/2017 at 01:30 PM in Courtroom 6B, 405 West Congress Street, Tucson, AZ 85701 before Senior Judge David C Bury. Counsel should contact the Court by 1/18/17 to appear telephonically. Ordered by Senior Judge David C Bury. (DCB)(This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.)
91
01/18/2017
REQUEST re: Request for Telephonic Appearance at hearing scheduled for 1/23/17 at 1:30 PM by Defendant Edward O'Donnell.
92
01/23/2017
MINUTE ENTRY for Motion Hearing held on 1/23/2017 before Senior Judge David C Bury: Re: 89 MOTION and Memorandum of Points and Authorities in Support of Preliminary Approval of Settlement, Preliminary Certification of Settlement Class, and Establishing Notice Procedures MOTION to Certify Class filed by Globis Capital Partners LP, Globis Overseas Fund Limited. The Court is granting 89 Motion Preliminary Approval of Settlement; granting 89 Motion to Certify Class. Formal order shall follow. APPEARANCES: Ira Michael Press for Plaintiffs. Robert Weber for Defendants Telephonic appearance by Mendy Piekarsji for Defendant Edward O'Donnell. Final Settlement Conference set for 5/8/2017 at 01:30 PM before Senior Judge David C Bury. (Court Reporter Tracy Jamieson) Hearing held 1:30 PM to 1:51 PM This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
93
01/23/2017
ORDER PRELIMINARILY APPROVING SETTLEMENT AND PROVIDING FOR NOTICE. A hearing (the "Final Settlement Hearing") pursuant to Federal Rule of Civil Procedure 23(e) shall be held before the Court on 5/8/17 at 1:30 PM (See attached PDF for complete information). Signed by Senior Judge David C Bury on 1/23/17.
94
04/03/2017
MOTION to Certify Class and Plan of Allocation, MOTION for Final Approval of the Settlement and Memorandum of Points and Authorities in Support Thereof by Globis Capital Partners LP, Globis Overseas Fund Limited.
95
04/03/2017
MOTION for Attorney Fees and Reimbursement of Expenses; Memorandum of Points and Authorities in Support Thereof by Globis Capital Partners LP, Globis Overseas Fund Limited.
96
04/03/2017
DECLARATION of Ira M. Press re: 94 MOTION to Certify Class and Plan of Allocation MOTION for Final Approval of the Settlement and Memorandum of Points and Authorities in Support Thereof, 95 MOTION for Attorney Fees and Reimbursement of Expenses; Memorandum of Points and Authorities in Support Thereof by Plaintiffs Globis Capital Partners LP, Globis Overseas Fund Limited.
1
Exhibit A
2
Exhibit B
3
Exhibit C
4
Exhibit D
5
Exhibit E
6
Exhibit F
7
Exhibit G
8
Exhibit H
9
Exhibit I
9 Attachments
97
04/28/2017
REQUEST re: Notice and Request to Appear Telephonically at May 8th Settlement Hearing by Defendant Edward O'Donnell.
98
05/01/2017
REPLY to Response to Motion re: 94 MOTION to Certify Class and Plan of Allocation MOTION for Final Approval of the Settlement and Memorandum of Points and Authorities in Support Thereof, 95 MOTION for Attorney Fees and Reimbursement of Expenses; Memorandum of Points and Authorities in Support Thereof filed by Globis Capital Partners LP, Globis Overseas Fund Limited.
99
05/08/2017
MINUTE ENTRY for Final Settlement Conference held on 5/8/2017 held before Senior Judge David C Bury: granting 94 Motion to Certify Class; granting 94 Motion for Final Approval for Settlement; granting 95 Motion for Attorney Fees. (See attached pdf for complete information). Order and final judgment to follow. (Court Reporter Tracy Jamieson) Hearing held 1:30 PM to 1:45 PM.
100
05/08/2017
ORDER AND FINAL JUDGMENT: Lead Plaintiffs' Counsel are HEREBY AWARDED 33 1/3% (thirty-three and one-third percent) of the Gross Settlement Fund for their attorneys' fees, plus accrued interest, which sum the Court finds to be fair and reasonable. Lead Plaintiffs' Counsel are hereby AWARDED $507,825.00, plus accrued interest, in reimbursement of litigation expenses of $26,250.47, which expenses the Courts finds to be have been reasonably incurred. The foregoing amounts shall be paid to Lead Plaintiffs' Counsel from the Gross Settlement Fund, $1,525,000.00 in cash, subject to the terms, conditions, and obligations of the Stipulation, which terms, conditions, and obligations are incorporated herein. It is further Ordered that the Motion for an Award of Attorneys' Fees and Reimbursement of Expenses (Doc. 95) and the Motion for Final Approval of the Settlement, Class Certification and Plan of Allocation (Doc. 94) are GRANTED. This is the Final Judgment of the Court. This action is closed. Signed by Senior Judge David C Bury on 5/8/2017.
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