UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS GORDON MITCHELL, Derivatively on ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 1:08-cv-10674-RWZ Behalf of NEUROMETRIX, INC., DERIVATIVE ACTION Plaintiff,

NOTICE OF PROPOSED SETTLEMENT OF

SHAREHOLDER DERIVATIVE ACTION

TO: ALL OWNERS OF NEUROMETRIX, INC. ( NEUROMETRIX )

COMMON STOCK AS OF DECEMBER 21, 2009 ( CURRENT NEUROMETRIX SHAREHOLDERS )

PLEASE READ THIS NOTICE

CAREFULLY AND IN ITS ENTIRETY. YOUR

RIGHTS MAY BE AFFECTED.

This notice has been sent to you, pursuant to

an Order of the United States District Court for the District of Massachusetts

(the Court ). The purpose of the notice

is to advise you of the proposed settlement (the Settlement ), as set forth in

a Stipulation of Settlement dated as of December 21, 2009 (the Stipulation ),

of the shareholder derivative litigation pending before the Court (the Action ),

and of the Settlement Hearing (as defined below in 1.19). The Settlement will fully resolve the Action

on the terms set forth in the Stipulation and summarized in this notice,

including the dismissal of the Action with prejudice. For a more detailed statement of the matters

involved in the Action, the Settlement, and the terms discussed in this notice,

the Stipulation may be inspected at the Clerk of Court s Office, John Joseph

Moakley U.S. Courthouse, 1 Courthouse Way, Boston, Massachusetts 02210, during

regular business hours of each business day.

You may have the right to object to the

Settlement in the manner provided herein.

If you fail to object in the manner provided herein at least ten (10) business

days prior to the Settlement Hearing, you will be deemed to have waived your

objections and will be bound by the Judgment (as defined below in 1.8) to be

entered and the releases to be given, unless otherwise ordered by the Court.

This notice is not intended to be an

expression of any opinion by the Court with respect to the merits of the claims

made in the Action, but is merely to advise you of the pendency and Settlement

As used in the Stipulation, the following

terms have the meanings specified below:

1.1. Action means the action

captioned Mitchell v. Gozani, et al., Civil Action

No. 1:08-cv-10674-RWZ (D. Mass filed April 22, 2008).

1.2. Current NeuroMetrix

Shareholders means any Persons who owned NeuroMetrix common stock as of December 21,

2009, and who continue to hold their NeuroMetrix common stock as of the date

of the final settlement approval hearing, excluding the Individual Defendants,

the officers and directors of NeuroMetrix, members of their immediate families,

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

in which Individual Defendants have or had a controlling interest.

1.3. Defendants means,

collectively, the Individual Defendants and nominal defendant NeuroMetrix.

1.4. Defendants Counsel means

Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, MA 02109.

1.5. Fees and Expenses Award

means the agreed upon Fees and Expenses Award that the Defendants will cause to

be paid out of NeuroMetrix s insurance proceeds to Plaintiff s Counsel, subject

to Court approval, in recognition of the benefits conferred on NeuroMetrix by

the negotiated corporate governance measures, for Plaintiff s Counsel s

attorneys fees and reimbursement of expenses in connection with the litigation

1.6. Final means when the last

of the following with respect to the Judgment approving the Stipulation shall

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

the Judgment under Federal Rule of Civil Procedure 59(e) has passed

without any such motion having been filed; (ii) the expiration of the time

in which to appeal the Judgment has passed without any appeal having been

taken; and (iii) if a motion to alter or amend is filed or if an appeal is

taken, the determination of that motion or appeal in such a manner as to permit

the consummation of the Settlement substantially in accordance with the terms

and conditions of the Stipulation. For

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

of certiorari, petition for review, or other writ that may be filed in

connection with approval or disapproval of this settlement, but shall not

include any appeal which concerns only the issue of attorneys fees and

1.7. Individual Defendants

means, collectively, Shai N. Gozani, Gary L. Gregory, W. Bradford Smith,

Michael Williams, Guy Daniello, Charles R. LaMantia, David E. Goodman, W. Mark

Lortz, Allen J. Hinkle, Nicholas J. Alessi, William Laverack, Jr., and

1.8. Judgment means the

Proposed Final Order of Dismissal With Prejudice and Judgment to be rendered by

1.9. NeuroMetrix or the Company

means nominal defendant NeuroMetrix, Inc.

collectively, Plaintiff, the Individual Defendants, and NeuroMetrix.

1.11. Person means an

individual, corporation, limited liability corporation, professional

corporation, partnership, limited partnership, limited liability partnership,

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

unincorporated association, government or any political subdivision or agency

thereof, and any business or legal entity and their spouses, heirs,

predecessors, successors, representatives, or assignees.

1.12. Plaintiff means Gordon

Mitchell, individually, and derivatively on behalf of NeuroMetrix.

1.13. Plaintiff s Counsel means

Robbins Umeda LLP, 600 B Street, Suite 1900, San Diego, CA 92101, Holzer

Holzer & Fistel, LLC, 200 Ashford Center North, Suite 300,

Atlanta, GA 30338, Partridge Ankner & Horstmann, LLP, The Berkeley

Building, 200 Berkeley Street, 16th Floor, Boston, MA 02116, and any successors

1.14. Related Persons means each

of the Released Parties (as defined herein) past or present directors, officers,

employees, partners, members, principals, agents, insurers, co-insurers,

reinsurers, underwriters controlling shareholders, attorneys, accountants or

auditors, personal or legal representatives, advisors, predecessors,

successors, parents, subsidiaries, divisions, joint ventures or joint

venturers, assigns, spouses, heirs, estates, administrators, related or

affiliated entities, entities in which any of the Released Parties has a

controlling interest, any members of any Individual Defendant s immediate

family, or any trust of which any Individual