Joseph Fragala, et al. v. 500.com Ltd., et al. 15-CV-01463...

EXHIBIT 1

Case 2:15-cv-01463-JFW-E Document 88-2 Filed 10/28/16 Page 1 of 101 Page ID #:1553

STIPULATION AND AGREEMENT OF SETTLEMENT

This Stipulation and Agreement of Settlement (together with all Exhibits and Schedules

thereto, the "Stipulation"), dated as of September 12, 2016, which is entered into by and among

(i) the Lead Plaintiff (as defined herein), on his own behalf and on behalf of the Settlement Class

(as defined herein), and (ii) 500.com Limited ("500.com"), Man San Law and Zhengming Pan

(collectively, "Defendants"), by and through their undersigned attorneys, states all of the terms

of the settlement and resolution of this matter by the Settling Parties (as defined herein) and is

intended by the Settling Parties to fully and finally release, resolve, remise and discharge the

Released Claims (as defined herein) against the Released Parties (as defined herein), subject to

the approval of the United States District Court for the Central District of California (the

"Court").

Throughout this Stipulation, all terms used with initial capitalization, but not immediately

defined, shall have the meanings ascribed to them in Section 1 below.

WHEREAS:

A. The Action

On February 27, 2015, this putative class action lawsuit was filed in the United States

District Court for the Central District of California against Defendants and Deutsche Bank

Securities Inc., Piper Jaffray & Co. and Oppenheimer & Co. Inc. alleging violations of the

Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the

"Exchange Act"). The case was captioned Joseph Fragala v. 500. corn Limited, et al., Case No.

2:15-cv-01463 JFW (Ex).

On April 28, 2015, Plaintiff Liu Shaolin moved to be appointed as Lead Plaintiff and

moved for his attorneys, Levi & Korsinsky LLP, to be appointed as Lead Counsel.

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On July 7, 2015, the Court appointed shareholder Liu Shaolin as Lead Plaintiff and approved

his selection of Lead Counsel, Levi & Korsinsky, LLP, and Liaison Counsel, Shepherd, Finkelman,

Miller & Shah LLP, pursuant to the Private Securities Litigation Reform Act, as amended.

Lead Counsel conducted an investigation regarding the claims asserted in the Action.

Following this investigation, on September 15, 2015, Lead Plaintiff filed the First Amended

Class Action Complaint ("FAC"). The FAC asserts claims on behalf of a putative class of

Persons (as defined herein) who acquired American Depository Shares ("ADSs") of 500.com

between November 22, 2013 and March 2, 2015, inclusive (the "Class Period"). The FAC

alleges that Defendants (as defined herein) violated the Securities Act of 1933, asserting claims

pursuant to §§ 11, 12(a)(2) and 15, and the Securities Exchange Act of 1934, asserting claims

pursuant to §§10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder (17

C.F.R. §240.10b-5).

On November 16, 2015, Defendants filed a motion to dismiss the FAC for failure to state

a claim, and Deutsche Bank Securities Inc., Piper Jaffray & Co. and Oppenheimer & Co. Inc.

filed a separate motion to dismiss the FAC for failure to state a claim.

On December 31, 2015, Lead Plaintiff filed a consolidated opposition to the motions to

dismiss.

On January 4, 2016, the Action was reassigned from the calendar of Judge Margaret M.

Morrow to the calendar of Judge John F. Walter.

On January 11, 2016, the Court denied all pending motions without prejudice to re-filing.

On January 22, 2016, Lead Plaintiff and Deutsche Bank Securities Inc., Piper Jaffray &

Co. and Oppenheimer & Co. Inc. stipulated to the voluntary dismissal with prejudice of all

claims against Deutsche Bank Securities Inc., Piper Jaffray & Co. and Oppenheimer & Co. Inc.

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On January 26, 2016, Defendants filed a motion to dismiss the FAC for failure to state a

claim, which Lead Plaintiff opposed on February 8, 2016.

On February 12, 2016, Defendants filed a reply in further support of their motion to

dismiss.

On February 22, 2016, Lead Plaintiff and Defendants submitted a Joint 26(f) Report.

On February 25, 2016, the Court issued orders setting August 1, 2016 as the last day to

conduct a settlement conference before a private mediator, October 31, 2016 as the discovery

cut-off date, November 7, 2016 as the last day for a hearing on motions, and December 20, 2016

as the first day of trial.

On March 15, 2016, the Court issued an order denying Defendants' motion to dismiss.

On March 29, 2016, Defendants filed an answer to the FAC.

On April 1, 2016, the parties exchanged Initial Disclosures pursuant to Federal Rule of

Civil Procedure 26(a).

On April 4, 2016, the parties served their first set of document requests and

interrogatories.

On or about May 2, 2016, Lead Plaintiff served subpoenas on Deutsche Bank Securities

Inc., Piper Jaffray & Co. and Oppenheimer & Co.

B. The Settlement

On May 19, 2016, Lead Plaintiff and Defendants participated in a mediation before Jed

D. Melnick, Esq. at JAMS in Los Angeles, California. During the mediation, Lead Plaintiff and

Defendants reached an agreement in principle to settle the Action.

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This Stipulation memorializes the agreement between the Parties to fully and finally

settle the Action and to fully release all claims asserted against Defendants and the Released

Parties with prejudice in return for specified consideration.

C. Defendants' Denial Of Wrongdoing And Liability

Throughout the course of the Action, Defendants have denied and continue to deny each

and all allegations of wrongdoing, fault, liability or damage whatsoever asserted in the FAC.

Defendants have also denied, inter alia, the allegations that Lead Plaintiff or the Settlement Class

have suffered damage or that Lead Plaintiff or the Settlement Class were harmed by the conduct

alleged in the Action.

Defendants have taken into account the uncertainty and risks inherent in any litigation

and enter into this Stipulation to eliminate the uncertainties, burden and expense of further

litigation. Nothing in this Stipulation shall be construed as any admission by either Defendants

or any of the Released Parties of any wrongdoing, fault, liability or damages whatsoever.

D. Claims Of Lead Plaintiff And Benefits Of Settlement

Lead Counsel represent that they have conducted a diligent investigation into the claims

and the underlying events and transactions alleged in this Action. Among other things, Lead

Counsel have analyzed public filings, records, analyst reports, news stories and other materials

concerning 500.com, certain of its customers, and the industry within which it operates,

including the collection and review of various materials originally filed and/or disseminated in

the People's Republic of China. In addition, Lead Counsel have consulted with certain experts

with information relevant to certain aspects of Lead Plaintiff's claims, and have researched the

applicable law with respect to those claims.


Based on their investigation and review, Lead Plaintiff believes that the claims asserted in

the Action have merit. Lead Plaintiff, however, recognizes and acknowledges the expense and

length of continued proceedings necessary to prosecute the Action against Defendants through

trial and appeals. Lead Plaintiff has also taken into account the uncertain outcome and the risk of

any litigation. In particular, Lead Plaintiff has considered developments in China subsequent to

the filing of the Action, the challenges in conducting discovery abroad and the risk in obtaining

and collecting any judgment against the Defendants. Lead Plaintiff has therefore determined that

the Settlement set forth in this Stipulation is fair, adequate, reasonable and in the best interests of

the Settlement Class.

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and

among the Lead Plaintiff, for himself and on behalf of the Settlement Class, and Defendants, by

and through their respective undersigned counsel, that, subject to the approval of the Court

pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, in consideration of the benefits

flowing to the Settling Parties from the Settlement set forth herein, the Action and the Released

Claims as against the Released Parties shall be finally and fully compromised, settled and

released, the Action shall be dismissed with prejudice and the Released Claims shall be finally

and fully released as against the Released Parties, upon and subject to the terms and conditions

of this Stipulation, as follows.

1. Definitions

In addition to the terms defined above, the following capitalized terms, used in this

Stipulation, shall have the meanings specified below:

1.1. "FAC" means the First Amended Class Action Complaint filed by

Lead Plaintiff on September 15, 2015.

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1.2. "Action" means the putative class action captioned Fragala v.

500.com Limited, et al., Case No. 2:15-cv-01463-JFW (Ex), pending in the United States District

Court for the Central District of California.

1.3. "Administrative Costs" means all costs and expenses associated with

providing notice of the Settlement to the Settlement Class and otherwise administering or

carrying out the terms of the Settlement. Such costs may include, without limitation: escrow

agent costs, the costs of publishing summary notice and the costs of printing and mailing the full

Notice and Proof of Claim, as directed by the Court. Such costs do not include legal fees.

1.4. "ADSs" means American Depository Shares of 500.com.

1.5. "Authorized Claimant" means any Settlement Class Member who is a

Claimant and whose claim for recovery has been allowed pursuant to the terms of this

Stipulation, the exhibits hereto and any order of the Court.

1.6. "Claimant" means any Settlement Class Member who files a Proof of

Claim in such form and manner, and within such time, as the Court shall prescribe.

1.7. "Claims" means any and all manner of claims, demands, rights,

actions, potential actions, causes of action, liabilities, duties, damages, losses, diminutions in

value, obligations, agreements, suits, fees, attorneys' fees, expert or consulting fees, debts,

expenses, costs, sanctions, judgments, decrees, matters, issues and/or controversies of any kind

or nature whatsoever, whether known or unknown, contingent or absolute, liquidated or not

liquidated, accrued or unaccrued, suspected or unsuspected, disclosed or undisclosed, apparent or

not apparent, foreseen or unforeseen, matured or not matured, which now exist, or heretofore or

previously existed, or may hereafter exist (including, but not limited to, any claims arising under

federal, state or foreign law, common law, bankruptcy law, statute, rule or regulation relating to

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alleged fraud, breach of any duty, negligence, fraudulent conveyance, avoidance, violations of

the Securities Act of 1933, as amended and rules promulgated thereunder, violations of the

Securities Exchange Act of 1934, as amended and rules promulgated thereunder, violations of

other federal securities laws or otherwise), whether individual, class, direct, derivative,

representative, on behalf of others, legal, equitable, regulatory, governmental or of any other type

or in any other capacity.

1.8. "Claims Administrator" means RG/2 Claims Administration LLC,

which shall administer the Settlement.

1.9. "Defendants" means 500.com Limited, Man San Law and Zhengming

Pan.

1.10. "Escrow Account" means an interest-bearing escrow account

established by the Escrow Agent at Citibank. The Escrow Account shall be managed by the

Escrow Agent, subject to the Court's supervisory authority, for the benefit of Lead Plaintiff and

the Settlement Class in accordance with the terms of the Stipulation.

1.11. The "Escrow Agent" is Levi & Korsinsky, LLP. The Escrow Agent

shall perform the duties as set forth in this Stipulation.

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

conditions specified in ¶ 10.3 of this Stipulation have been met and have occurred.

1.13. "Final" when referring to the Final Judgment means exhaustion of all

possible appeals, meaning (i) if no appeal or request for review is filed, the day after the date of

expiration of any time for appeal or review of the Final Judgment, and (ii) if an appeal or request

for review is filed, the day after the date the appeal or request for review is dismissed, or the

Final Judgment is upheld on appeal or review in all material respects, and is not subject to further

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review on appeal or by certiorari or otherwise; provided, however, that any dispute or appeals

relating solely to the amount, payment or allocation of attorneys' fees and expenses or the Plan

of Allocation shall have no effect on finality for purposes of determining the date on which the

Final Judgment becomes Final.

1.14. "Final Judgment" means the order and judgment to be entered by the

Court approving the Settlement, materially in the form attached hereto as Exhibit B.

1.15. "Individual Defendants" means Man San Law and Zhengming Pan.

1.16. "Lead Plaintiff' means Liu Shaolin, as identified in the opening

paragraph of the FAC.

1.17. "Notice" means the "Notice of Proposed Settlement of Class Action

and Settlement Fairness Hearing, and Motion for Attorneys' Fees and Reimbursement of

Expenses," which is to be sent to Settlement Class Members substantially in the form attached

hereto as Exhibit A-1.

1.18. "Opt-Out" means any one of, and "Opt-Outs" means all of, any

Persons who otherwise would be Settlement Class Members and have timely and validly

requested exclusion from the Settlement Class in accordance with the provisions of the

Preliminary Approval Order and the Notice given pursuant thereto.

1.19. "Person" means individual, corporation, fund, limited liability

corporation, professional corporation, limited liability partnership, partnership, limited

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

association, government or any political subdivision or agency thereof and any business or legal

entity and their spouses, heirs, predecessors, successors, representatives or assigns.

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1.20. "Plaintiff's Counsel" means the law firm of Levi & Korsinsky, LLP

and the law firm of Shepherd, Finkelman, Miller & Shah, LLP.

1.21. "Plan of Allocation" means the plan or formula described in the

Notice or any alternate plan approved by the Court for allocating the Settlement Fund to

Authorized Claimants after payment of Administrative Costs, Taxes and Tax Expenses, and such

attorneys' fees, costs and expenses as may be awarded by the Court. Any Plan of Allocation is

not a condition to the effectiveness of this Stipulation, and the Released Parties shall have no

responsibility or liability with respect thereto.

1.22. "Preliminary Approval Order" means the proposed order

preliminarily approving the Settlement and directing notice thereof to the Settlement Class

substantially in the form attached hereto as Exhibit A.

1.23. "Proof of Claim" means the Proof of Claim to be submitted by

Claimants, substantially in the form attached as Exhibit A-3.

1.24. "Publication Notice" means the summary notice of proposed

settlement and hearing for publication and which, subject to the approval of the Court, shall be

substantially in the form attached as Exhibit A-2 hereto.

1.25. "Recognized Claim" means any claim for recovery of an Authorized

Claimant that has been allowed pursuant to the terms of this Stipulation, the exhibits hereto and

any order of the Court.

1.26. "Released Claims" means any and all Claims, including Unknown

Claims, that have been, could have been or in the future can or might be asserted in any federal,

state or foreign court, tribunal, forum or proceeding by or on behalf of any of the Releasing

Parties against any one or more of the Released Parties, whether any such Released Parties were

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named, served with process or appeared in the Action, which directly or indirectly arise out of or

relate to (i) the Action; (ii) 500.com's Prospectus and Registration Statement for its November

22, 2013 initial public offering; (iii) marketing and/or selling of the ADSs by one or more of the

Defendants and/or the Released Parties in connection with 500.com's initial public offering

and/or during the Class Period; (iv) the purchase, sale or decision not to sell the ADS by any of

the Releasing Parties in connection with 500.com's initial public offering and/or during the Class

Period; or (v) any claims in connection with, based upon, arising out of or relating to the

Settlement (but excluding any claims to enforce the terms of the Settlement).

1.27. "Released Parties" means (i) 500.com, its past, present and future,

direct or indirect, parent entities, associates, affiliates and subsidiaries, each and all of their

respective past, present and future directors, officers, partners, alleged partners, stockholders,

predecessors, successors and employees and each and all of their underwriters, attorneys,

advisors, consultants, trustees, insurers, co-insurers, reinsurers, representatives and assigns;

(ii) each of the Individual Defendants and their respective present, past and future spouses,

parents, siblings, children, grandparents and grandchildren, the present, past and future spouses

of their respective parents, siblings and children and the present, past and future parents and

siblings of their respective spouses, including step and adoptive relationships; (iii) any and all

persons, firms, trusts, corporations and other entities in which any of the Defendants or foregoing

Released Parties has a financial interest or was a founder, settler or creator and, in their capacity

as such, any and all officers, directors, employees, trustees, beneficiaries, settlers, creators,

attorneys, consultants; agents or representatives of any such person, firm, trust, corporation or

other entity; and (iv) in their capacity as such, the legal representatives, heirs, executors,

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administrators, predecessors, successors, predecessors-in-interest, successors-in-interest and

assigns of any of the foregoing.

1.28. "Releasing Parties" means the Lead Plaintiff, each and every member

of the Settlement Class and each of their respective parent entities, associates, affiliates,

subsidiaries, predecessors, successors, assigns, attorneys, heirs, representatives, administrators,

executors, devisees, legatees and estates.

1.29. "Settlement" means the settlement contemplated by this Stipulation.

1.30. "Settlement Amount" means the sum of US$2,500,000.00 (two

million five hundred thousand U.S. dollars).

1.31. "Settlement Class" means all Persons (including, without limitation,

their beneficiaries) who purchased or otherwise acquired 500.com ADSs between November 22,

2013 and March 2, 2015, inclusive. Excluded from the Settlement Class are (i) Opt-Outs and

(ii) Defendants and any entity in which the Defendants have a controlling interest, and the

officers, directors, affiliates, legal representatives, immediate family members, heirs, successors,

subsidiaries and/or assigns of any such individual or entity in their capacity as such.

1.32. "Settlement Class Member" means any one of, and "Settlement Class

Members" means all of, the members of the Settlement Class.

1.33. "Settlement Hearing" means the hearing at or after which the Court

will make a final decision pursuant to Rule 23 of the Federal Rules of Civil Procedure as to

whether the Settlement contained in the Stipulation is fair, reasonable and adequate, and

therefore, should receive final approval from the Court.


1.34. "Settling Party" means any one of, and "Settling Parties" means all

of, the parties to the Stipulation, namely Defendants and Lead Plaintiff on behalf of himself and


1.35. "Unknown Claims" shall mean all claims, demands, rights, liabilities

and causes of action of every nature and description which any Settlement Class Member does

not know or suspect to exist in his, her or its favor 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 settlement with and

release of the Released Parties, or might have affected his, her or its decision not to opt-out or

object to this Settlement. With respect to any and all Released Claims, the Settling Parties

stipulate and agree that, upon the Effective Date, the Lead Plaintiff shall expressly waive, and

each of the Settlement Class Members shall be deemed to have waived, and by operation of the

Final Judgment shall have waived, the provisions, rights and benefits of California Civil Code

§ 1542, which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

The Lead Plaintiff shall expressly waive and each of the Settlement Class Members shall be

deemed to have, and by operation of the Final Judgment shall have, expressly waived any and all

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

principle of common law, which is similar, comparable or equivalent to California Civil Code

§ 1542. Lead Plaintiff and/or one or more Settlement Class Members may hereafter discover

facts in addition to or different from those which he, she or it now knows or believes to be true

with respect to the subject matter of the Released Claims, but the Lead Plaintiff shall expressly

fully, finally and forever settle and release, and each Settlement Class Member, upon the

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

fully, finally and forever settled and released, any and all Released Claims, known or unknown,

suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden,

which now exist, or heretofore have existed, upon any theory of law or equity now existing or

coming into existence in the future, including, but not limited to, conduct which is negligent,

intentional, with or without malice, or a breach of fiduciary duty, law or rule, without regard to

the subsequent discovery or existence of such different or additional facts. The Lead Plaintiff

acknowledges, and the Settlement Class Members shall be deemed by operation of the Final

Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a

key element of the Settlement of which this release is a part.

2. The Settlement Consideration

2.1. In consideration for the promises and obligations contained herein

and the full and final release, settlement and discharge of all Released Claims against the

Released Parties, the Settling Parties have agreed that, subject to the terms of the Stipulation,

500.com shall deposit and/or cause Defendants' directors and officers insurance carriers to

deposit the Settlement Amount into the Escrow Account, under the control of the Escrow Agent,

within sixty (60) calendar days of the Preliminary Approval Order. The funds transferred to the

Escrow Account pursuant to this paragraph, and any interest earned thereon, are referred to as

the "Settlement Fund."

2.2. Under no circumstances will Defendants be required to pay more than

the Settlement Amount pursuant to this Stipulation and the Settlement for any reason

whatsoever, including, without limitation, as compensation to any Settlement Class Member or

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in payment of any fees or expenses incurred by any Settlement Class Member or Plaintiff's

Counsel.

2.3. Defendants agree to cooperate with Lead Plaintiff to the extent

necessary to permit Lead Plaintiff to conduct reasonable additional due diligence and

confirmatory discovery with respect to the factual and legal issues of the Action and the fairness

of the terms of the settlement as set forth in this Stipulation.

3. Handling And Disbursement Of Funds By The Escrow Agent

3.1. No monies will be disbursed from the Settlement Fund until after the

Effective Date except:

(a) As provided in ¶ 3.4 below;

(b) As provided in ¶ 10.9 below, if applicable; and

(c) To pay Taxes and Tax Expenses (as defined in ¶ 4.1 below) on the income

earned by the Settlement Fund. Taxes and Tax Expenses shall be paid out of the Settlement

Fund and shall be considered to be a cost of administration of the Settlement and shall be timely

paid by the Escrow Agent without prior order of the Court.

3.2. The Escrow Agent shall invest any funds (other than security interests

in assets) deposited into the Settlement Fund in short term instruments backed by the full faith

and credit of the United States Government or fully insured by the United States Government or

an agency thereof, and shall reinvest the proceeds of these instruments as they mature in similar

instruments at their then-current market rates. Defendants and their counsel and the Released

Parties shall have no responsibility for, interest in or any liability whatsoever with respect to

investment decisions executed by the Escrow Agent. The Settlement Fund shall bear all risks

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related to the investments of the Settlement Amount in accordance with the guidelines set forth

in this paragraph.

3.3. The Escrow Agent shall not disburse the Settlement Fund except as

provided in this Stipulation or by an order of the Court.

3.4. At any time after the Court grants preliminary approval of the

Settlement, the Escrow Agent may, without further approval from Defendants or the Court,

disburse at the direction of Plaintiff's Counsel up to $100,000.00 from the Settlement Fund prior

to the Effective Date to pay the Administrative Costs.

4. Taxes

4.1. The Settling Parties agree to treat the Settlement Fund as being at all

times a "qualified settlement fund" within the meaning of Treasury Regulation § 1.468B-1. In

addition, Plaintiff's Counsel or its designee shall timely make such elections as necessary or

advisable to carry out the provisions of this ¶ 4.1, including the "relation-back election" (as

defined in Treasury Regulation § 1.468B-1) back to the earliest permitted date. Such elections

shall be made in compliance with the procedures and requirements contained in such regulations.

It shall be the responsibility of Plaintiff's Counsel or its designee to timely and properly prepare

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

cause the appropriate filing to occur.

(a) For purposes of § 468B of the Internal Revenue Code of 1986, as

amended, and Treasury Regulation § 1.468B-2(k)(3) promulgated thereunder, the

"administrator" shall be Plaintiffs Counsel or its designee. Plaintiffs Counsel or its designee

shall timely and properly file all informational and other tax returns necessary or advisable with

respect to the Settlement Fund (including without limitation the returns described in Treasury

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Regulation § 1.468B-2(k)). Such returns (as well as the election described in this ¶ 4.1) shall be

consistent with this ¶ 4.1 and in all events shall reflect that all Taxes (including any estimated

Taxes, interest or penalties) on the income earned by the Settlement Fund shall be paid out of the

Settlement Fund as provided in 1119(ii) hereof.

(b) All Taxes (including any estimated Taxes, interest or penalties) arising

with respect to the income earned by the Settlement Fund, including any Taxes or tax detriments

that may be imposed upon Defendants or their counsel with respect to any income earned by the

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

"qualified settlement fund" for federal or state income tax purposes ("Taxes"), and expenses and

costs incurred in connection with the operation and implementation of this ¶ 4.1 (including,

without limitation, expenses of tax attorneys and/or accountants and mailing and distribution

costs and expenses or penalties relating to filing (or failing to file) the returns described in this

¶ 4.1) ("Tax Expenses"), shall be paid out of the Settlement Fund, as appropriate. Defendants,

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

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

administration of the Settlement and shall be timely paid out of the Settlement Fund without

prior order from the Court. The Escrow Agent shall be obligated (notwithstanding anything

herein to the contrary) to withhold from distribution to Authorized Claimants any funds

necessary to pay such amounts, including the establishment of adequate reserves for any Taxes

and Tax Expenses (as well as any amounts that may be withheld under Treasury Regulation

§ 1.468B-2(1)(2)). Defendants, their counsel and the Released Parties shall have no

responsibility for, interest in or any liability whatsoever with respect to the foregoing provided in

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this ¶ 4.1. The Settling Parties agree to cooperate with each other, and their tax attorneys and

accountants, to the extent reasonably necessary to carry out the provisions of this ¶ 4.1.

5. Preliminary Approval Order, Notice Order And Settlement Hearing

5.1. Plaintiff's Counsel shall submit this Stipulation and its exhibits to the

Court and shall apply for preliminary approval of the Settlement set forth in this Stipulation,

entry of a preliminary approval order and approval for the mailing and dissemination of notice,

substantially in the form of Exhibits A, A-1, A-2 and A-3. The mailed Notice (Exhibit A-1) shall

include the general terms of the Settlement and the provisions of the Plan of Allocation, and shall

set forth the procedure by which recipients of the Notice may object to the Settlement or the Plan

of Allocation or request to be excluded from the Settlement Class. The date and time of the

Settlement Hearing shall be added to the Notice before it is mailed or otherwise provided to

Settlement Class Members.

5.2. To assist in dissemination of notice, 500.com will cooperate in

obtaining the names and contact information of the Settlement Class Members and their

nominees or custodians. 500.com shall provide to Lead Counsel or to the Claims Administrator

a list of the names and last known addresses of the persons and entities who were 500.com ADS

holders of record during the Class Period, as 500.com or the depository for such ADSs possess,

no later than seven (7) calendar days after entry of the Preliminary Approval Order.

5.3. At the time of the submission described in ¶ 5.1 hereof, the Settling

Parties, through their counsel, shall jointly request that, after the Notice is provided, the Court

hold the Settlement Hearing and (i) approve the Settlement as set forth herein and (ii) enter

judgment substantially in the form of Exhibit B hereto, as promptly after the Settlement Hearing

as possible.

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6. Releases And Covenants Not To Sue

6.1. Upon the Effective Date, as defined in ¶ 1.12 hereof, the Releasing

Parties, on behalf of themselves, their successors and assigns and any other Person claiming

(now or in the future) through or on behalf of them, regardless of whether any such Releasing

Party ever seeks or obtains by any means, including without limitation by submitting a Proof of

Claim, any disbursement from the Settlement Fund, shall be deemed to have, and by operation of

the Final Judgment shall have, fully, finally and forever released, relinquished and discharged all

Released Claims against the Released Parties and shall have covenanted not to sue the Released

Parties with respect to all such Released Claims, and shall be permanently barred and enjoined

from asserting, commencing, prosecuting, instituting, assisting, instigating or in any way

participating in the commencement or prosecution of any action or other proceeding, in any

forum, asserting any Released Claim, either directly, representatively, derivatively or in any

other capacity, against any of the Released Parties. Nothing contained herein shall, however, bar

the Releasing Parties from bringing any action or claim to enforce the terms of this Stipulation or

the Final Judgment.

6.2. Upon the Effective Date, as defined in ¶ 1.12 hereof, Defendants, on

behalf of themselves and their heirs, executors, predecessors, successors and assigns, shall be

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

released, relinquished and discharged the Lead Plaintiff, Settlement Class Members and

Plaintiffs Counsel from all Claims which arise out of, concern or relate to the institution,

prosecution, settlement or dismissal of the Action (the "Defendant Released Claims"), and shall

be permanently enjoined from prosecuting the Defendant Released Claims against Lead Plaintiff,

Settlement Class Members and Plaintiffs Counsel. Defendants hereby represent and warrant

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that they are not aware of any claims that they have or may have against Lead Plaintiff,

Settlement Class Members and Plaintiff's Counsel that are not released by virtue of this ¶ 6.2.

Nothing contained herein shall, however, bar Defendants or any Released Party from bringing

any action or claim to enforce the terms of this Stipulation or the Final Judgment.

7. Administration And Calculation Of Claims, Final Awards And Supervision And Distribution Of The Settlement Fund

7.1. Under the supervision of Plaintiff's Counsel, acting on behalf of the

Settlement Class, and subject to such supervision and direction of the Court as may be necessary

or as circumstances may require, the Claims Administrator shall administer and calculate the

claims submitted by Settlement Class Members and shall oversee distribution of the Net

Settlement Fund (as defined below) to Authorized Claimants.

7.2. The Settlement Fund shall be applied as follows:

(a) To pay the Taxes and Tax Expenses described in ¶ 4.1 above;

(b) To pay Administrative Costs;

(c) To pay Plaintiff's Counsel's attorneys' fees and expenses and any

incentive award to Lead Plaintiff (the "Fee and Expense Award"), to the extent allowed by the

Court; and

(d) To distribute the balance of the Settlement Fund, that is, the

Settlement Fund less the items set forth in ¶ 7.2(a), (b) and (c) hereof (the "Net Settlement

Fund"), to the Authorized Claimants as allowed by this Stipulation, the Plan of Allocation or the

Court.

7.3. Upon and after the Effective Date with respect to the Net Settlement

Fund, and in accordance with the terms of the Plan of Allocation or such further approval and

further order(s) of the Court as may be necessary or as circumstances may require, the Net

-19-


Settlement Fund shall be distributed to Authorized Claimants subject to and in accordance with

the Plan of Allocation set forth in the Notice.

7.4. Each Authorized Claimant shall be allocated a pro rata share of the

Net Settlement Fund based on his, her, or its Recognized Claim compared to the total

Recognized Claims of all accepted claimants. This is not a claims-made settlement, and if all

conditions of the Stipulation are satisfied and the Final Judgment becomes Final, no portion of

the Settlement Fund will be returned to Defendants. Neither Defendants nor their counsel shall

have any responsibility for, interest in or liability whatsoever with respect to the investment or

distribution of the Net Settlement Fund, the Plan of Allocation, the determination, administration

or calculation of claims, the payment or withholding of Taxes or Tax Expenses or any losses

incurred in connection therewith. No Person shall have any claims against Plaintiffs Counsel,

the Claims Administrator or any other agent designated by Plaintiffs Counsel based on

distribution determinations or claim rejections made substantially in accordance with this

Stipulation and the Settlement contained herein, the Plan of Allocation or orders of the Court.

Plaintiffs Counsel shall have the right, but not the obligation, to waive what they deem to be

formal or technical defects in any Proofs of Claim filed, where doing so is in the interest of

achieving substantial justice.

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

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

an Authorized Claimant's claim set forth therein, is not a condition of this Stipulation and is to

be considered by the Court separately from the Court's consideration of the fairness,

reasonableness and adequacy of the Settlement set forth in this Stipulation. Any order or

proceedings relating to the Plan of Allocation, or any appeal from any order relating thereto or

-20-


reversal or modification thereof, shall not operate to modify, terminate or cancel this Stipulation,

or affect or delay the finality of the Final Judgment, or any other orders entered pursuant to this

Stipulation.

7.6. Administration Of The Settlement:

(a) Any member of the Settlement Class who does not submit a valid

Proof of Claim will not be entitled to receive any of the proceeds from the Net Settlement Fund,

but will otherwise be bound by all of the terms of this Stipulation, including the terms of the

Final Judgment to be entered in the Action and the releases provided for herein, and will be

barred from bringing any action against the Released Parties concerning the Released Claims.

(b) For purposes of determining the extent, if any, to which a

Settlement Class Member shall be entitled to be treated as an Authorized Claimant, the following

conditions shall apply:

Each Settlement Class Member shall be required to submit

a Proof of Claim (in substantially the form set forth in Exhibit A-3 hereto) which, inter alia,

releases all of that Settlement Class Member's Released Claims, is signed under penalty of

perjury, and is supported by such documents or proof as Lead Counsel and/or the Claims

Administrator, in their discretion, may deem acceptable;

(ii) All Proofs of Claim must be submitted by the date specified

in the Notice, unless such period is extended by Order of the Court. Any Settlement Class

Member who fails to submit a Proof of Claim by such date shall be forever barred from receiving

any payment pursuant to this Stipulation (unless, by order of the Court, a later submitted Proof of

Claim by such Settlement Class Member is approved), but shall in all other respects be bound by

all of the terms of this Stipulation, including the terms of the Final Judgment to be entered in the

-21 -


Action and the releases provided for herein, and shall be barred from bringing any action against

the Released Parties concerning the Released Claims. Provided that it is received before the

motion for the Class Distribution Order is filed, a Proof of Claim shall be deemed to have been

submitted when posted, if received with a postmark indicated on the envelope and if mailed by

first-class mail and addressed in accordance with the instructions thereon. In all other cases, the

Proof of Claim shall be deemed to have been submitted when actually received by the Claims

Administrator;

(iii) Each Proof of Claim shall be submitted to and reviewed by

the Claims Administrator, who shall determine, in accordance with this Stipulation, the approved

Plan of Allocation, and any applicable orders of the Court, the extent, if any, to which each claim

shall be allowed, subject to review by the Court pursuant to subparagraph (e) below. The

Released Parties shall not have any role in, or responsibility or liability to any Person or entity

for, the solicitation, review, evaluation, approval or rejection of any Proofs of Claim;

(iv) Proofs of Claim that do not meet the submission

requirements may be rejected. Prior to rejection of a Proof of Claim, the Claims Administrator

shall communicate with the claimant in order to remedy the curable deficiencies in that

claimant's submitted Proof of Claim. The Claims Administrator shall notify, in a timely fashion

and in writing, all claimants whose Proofs of Claim they propose to reject in whole or in part,

setting forth the reasons therefor, and shall indicate in such notice that the claimant whose claim

is to be rejected has the right to a review by the Court if the claimant so desires and complies

with the requirements of subparagraph (v) below;

(v) If any claimant whose claim has been rejected in whole or

in part desires to contest such rejection, the claimant must, within twenty (20) days after the date

-22-


of mailing of the notice required in subparagraph (iv) above, serve upon the Claims

Administrator a notice and statement of reasons indicating the claimant's grounds for contesting

the rejection along with any supporting documentation, and requesting a review thereof by the

Court. If a dispute concerning a claim cannot be otherwise resolved, Lead Counsel shall

thereafter present the request for review to the Court; and

(vi) The administrative determinations of the Claims

Administrator accepting and rejecting claims shall be presented to the Court, on notice to

Defendants' counsel, for approval by the Court in the Class Distribution Order.

(c) Each claimant shall be deemed to have submitted to the

jurisdiction of the Court with respect to the claimant's claim, and the claim will be subject to

investigation and discovery pursuant to the Federal Rules of Civil Procedure, provided that such

investigation and discovery shall be limited to that claimant's status as a Settlement Class

Member and the validity and amount of the claimant's claim. No discovery shall be allowed to

be directed to Defendants or any of the Released Parties, and no discovery shall be allowed on

the merits of the Action or the Stipulation in connection with processing of the Proofs of Claim.

(d) Payment pursuant to this Stipulation shall be deemed final and

conclusive against all Settlement Class Members. All Settlement Class Members whose claims

are not approved by the Court shall be barred from any participation in distributions from the Net

Settlement Fund, but otherwise shall be bound by all of the terms of this Stipulation, including

the terms of the Final Judgment to be entered in the Action and the releases provided for herein,

and will be barred from bringing any action against the Released Parties concerning the Released

Claims. No Person shall have any claim against the Lead Plaintiff or his counsel (including Lead

Counsel), or any claims administrator, or other agent designated by Lead Counsel, based on the

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distributions made substantially in accordance with this Stipulation, the Plan of Allocation or any

order(s) of the Court.

(e) All proceedings with respect to the administration, processing and

determination of claims and the determination of all controversies relating thereto, including

disputed questions of law and fact with respect to the validity of claims, shall be subject to the

jurisdiction of the Court, but shall not delay or affect the finality of the Final Judgment.

(f) The Net Settlement Fund shall be distributed by the Claims

Administrator to, or for the account of, Authorized Claimants, as the case may be, only after the

Effective Date and after: (i) all claims have been processed, and all claimants whose claims have

been rejected or disallowed, in whole or in part, have been notified and provided the opportunity

to be heard concerning such rejection or disallowance; (ii) all objections with respect to all

rejected or disallowed claims have been resolved by the Court, and all appeals therefrom have

been resolved or the time therefor has expired; (iii) all matters with respect to the Fee and

Expense Application have been resolved by the Court, all appeals therefrom have been resolved

or the time therefore has expired; and (iv) all fees and costs of administration have been paid.

(g) Lead Counsel will apply to the Court for entry of a class

distribution order (the "Class Distribution Order") approving the Claims Administrator's

administrative determinations concerning the acceptance and rejection of the claims submitted

herein and approving any fees and expenses not previously applied for, including the fees and

expenses of the Claims Administrator, and, if the Effective Date has occurred, directing payment

of the Net Settlement Fund to or for the account of Authorized Claimants, as the case may be.

- 24 -


8. Plaintiff's Counsel's Attorneys' Fees And Reimbursement Of Expenses

8.1. Plaintiffs Counsel will submit an application or applications (the

"Fee and Expense Application") for distributions from the Settlement Fund to Plaintiffs Counsel

for (i) an award of attorneys' fees not to exceed 25% of the Settlement Fund; (ii) reimbursement

of actual costs and expenses, including the fees and expenses of experts and/or consultants,

incurred in connection with prosecuting the Action; and (iii) an incentive award to Lead Plaintiff.

Defendants will take no position regarding the Fee and Expense Application.

8.2. Except as otherwise provided in this paragraph, the attorneys' fees

and expenses awarded by the Court shall be paid to Plaintiffs Counsel from the Settlement Fund

within two (2) business days of the date the Court enters an order awarding such fees and

expenses. In the event that the Effective Date does not occur, any order or the Final Judgment is

reversed or modified in any way that affects the award of attorneys' fees and expenses or the

Stipulation is terminated for any other reason, then each plaintiffs' counsel receiving fees or

expenses under this provision shall, within ten (10) business days from receiving notice from

Defendants' counsel or from a court of appropriate jurisdiction, refund to the Settlement Fund,

either the full amount of the fees and expenses previously received by it pursuant to these

provisions or an amount consistent with any modification of the order or Final Judgment with

respect to the fee and expense award. Plaintiffs Counsel and any other plaintiffs' counsel's law

firm that receives fees and expenses, on behalf of itself and each partner and/or shareholder of it,

agrees that the law firm and its partners and/or shareholders are subject to the jurisdiction of the

Court for the purpose of enforcing the provisions of this paragraph, and each shall be liable for

repayment of all attorneys' fees and expenses awarded by the Court. Furthermore, without

limitation, Plaintiffs Counsel and any other plaintiffs' counsel's law firm that receives fees and

-25-


expenses, and each such firm's partners and/or shareholders, agree that the Court may, upon

application of Defendants, summarily issue orders, including, without limitation, judgments and

attachment orders and may make appropriate findings of or sanctions for contempt against that

firm or any of its partners and/or shareholders should such law firm fail timely to repay fees and

expenses pursuant to this paragraph.

8.3. The procedure for, and allowance or disallowance by the Court of,

any application by Plaintiffs Counsel or the Lead Plaintiff for attorneys' fees, expenses,

including the fees and expenses of experts and/or consultants, and/or incentive awards are not a

condition of the Settlement set forth in this Stipulation and are to be considered by the Court

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

Settlement set forth in this Stipulation. Any order of or proceedings relating to the Fee and

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

thereof, shall not operate to modify, terminate or cancel this Stipulation, or affect or delay the

finality of the Final Judgment or any other orders entered pursuant to this Stipulation.

8.4. Any award of attorneys' fees and/or expenses and/or any incentive

award shall be paid solely from the Settlement Fund and shall reduce the settlement

consideration paid to the Settlement Class accordingly. The Released Parties shall have no

responsibility for, and no liability whatsoever with respect to, any payments to Plaintiff's

Counsel or the Lead Plaintiff and/or any other Person who receives payment from the Settlement

Fund.

9. Class Certification

9.1. In the Final Judgment, the Settlement Class shall be certified for

purposes of this Settlement, but in the event that the Final Judgment does not become Final or

-26-


the Settlement fails to become effective for any reason, all Settling Parties reserve all their rights

on all issues, including whether a class should be certified in the Action. For settlement purposes

only, in connection with the Final Judgment, Defendants shall consent to (i) the appointment of

Lead Plaintiff as the class representative; (ii) the appointment of Plaintiffs Counsel as class

counsel; and (iii) the certification of the Settlement Class pursuant to Rules 23(a) and (b)(3) of

the Federal Rules of Civil Procedure.

10. Conditions Of Settlement, Effect of Disapproval, Cancellation Or Termination

10.1. The Lead Plaintiff, on behalf of the Settlement Class, and Defendants

shall each have the right to terminate the Settlement and Stipulation by providing written notice

of his or its election to do so ("Termination Notice") to all other Settling Parties within thirty

(30) days of:

entry of a Court order declining to enter the Preliminary Approval Order

in any material respect;

(ii) entry of a Court order refusing to approve this Stipulation in any material

respect;

(iii) entry of a Court order declining to enter the Final Judgment in any

material respect;

(iv) entry of an order by which the Final Judgment is modified or reversed in

any material respect by the Court, the Court of Appeals or the United States Supreme Court. In

the absence of any of the events enumerated in the preceding sentence or elsewhere in this

Stipulation, no Party shall have the right to terminate the Agreement for any reason.

10.2. If the Settlement Amount is not paid into the Escrow Account in

accordance with ¶ 2.1 of this Stipulation, then the Lead Plaintiff, on behalf of the Settlement

-27-


Class, shall have the right to (a) terminate the Settlement and Stipulation by providing written

notice to Defendants at any time prior to the Court's entry of the Final Judgment ("Failure to

Fund Termination Notice"); or (b) enforce the terms of the Settlement and this Stipulation and

seek a judgment effecting the terms herein.

10.3. The Effective Date of this Stipulation shall not occur unless and until

each of the following events occurs and shall be the date upon which the last in time of the

following events occurs:

(a) The Court has entered the Preliminary Approval Order attached

hereto as Exhibit A or an order containing materially the same terms;

(b) The sum of $2,500,000 (Two Million Five Hundred Thousand

Dollars) has been paid into the Escrow Account, as set forth in ¶ 2.1;

(c) The Court has approved the Settlement, following notice to the

Settlement Class and the Settlement Hearing, and has entered the Final Judgment; and

(d) The Final Judgment has become Final as defined in ¶ 1.13.

10.4. Upon the occurrence of the Effective Date, any and all interest or

right of Defendants in or to the Settlement Fund, if any, shall be absolutely and forever

extinguished, except as set forth in this Stipulation.

10.5. If prior to final Court approval of the Settlement, (i) Opt-Outs in the

aggregate purchased stock during the Settlement Class Period in an amount greater than the

amount specified in a separate Supplemental Agreement between the parties (the "Supplemental

Agreement"), or (ii) Persons file lawsuits alleging fraud in connection with the purchase of more

than the number of 500.com shares specified in the Supplemental Agreement, then Defendants

shall have, in their sole and absolute discretion, the option to terminate this Stipulation and

-28-


Settlement in strict accordance with the requirements and procedures set forth in the

Supplemental Agreement (the "Supplemental Termination Option"). The Supplemental

Agreement shall not be filed with the Court unless and until a dispute among the Settling Parties

concerning its interpretation or application arises.

10.6. If some or all of the conditions specified in ¶ 10.3 above are not met,

or in the event that this Stipulation is not approved by the Court, or the Settlement set forth in

this Stipulation is terminated or fails to become effective in accordance with its terms, then this

Stipulation shall be canceled and terminated, unless all of the Settling Parties agree in writing to

proceed with this Stipulation. None of the Settling Parties, or any of them, shall have any

obligation whatsoever to proceed under any terms other than those provided for and agreed

herein. If any Settling Party engages in a material breach of the terms hereof, any other Settling

Party, provided that it is in substantial compliance with the terms of this Stipulation, may

terminate this Stipulation on notice to all the Settling Parties.

10.7. In the event the Stipulation shall terminate, or be canceled, or shall

not become effective for any reason, the Settling Parties shall be restored to their respective

positions in the Action immediately prior to the date of this Stipulation, and they shall proceed in

all respects as if the Stipulation had not been executed and the related orders had not been

entered, and in that event all of their respective claims and defenses as to any issue in the Action

shall be preserved without prejudice.

10.8. In the event that the Stipulation is not approved by the Court or the

Settlement set forth in this Stipulation is terminated or fails to become effective in accordance

with its terms, the terms and provisions of this Stipulation, except as otherwise provided herein,

shall have no further force and effect with respect to the Settling Parties or Defendants and shall

-29-


not be used in this Action or in any other proceeding for any purpose, and any judgment or order

entered by the Court in accordance with the terms of this Stipulation shall be treated as vacated,

nunc pro tunc.

10.9. In the event the Stipulation shall be terminated, or be canceled, or

shall not become effective for any reason, within seven (7) business days (except as otherwise

provided in the Supplemental Agreement) after the occurrence of such event, the Settlement

Fund, less taxes and Administrative Costs which are determined to be chargeable, shall be

refunded by the Escrow Agent to 500.com and/or Defendants' directors and officers insurance

carriers (pursuant to written instructions from counsel for Defendants pursuant to this

Stipulation) in proportion to the prior contributions of each to the Settlement Fund. At the

request of counsel for Defendants, Plaintiff's Counsel or its designee shall apply for any tax

refund owed on the Settlement Fund and pay the proceeds, after deduction of any fees or

expenses incurred in connection with such application(s) for refund, pursuant to written direction

from counsel for Defendants.

10.10. No order of the Court or modification or reversal on appeal of any

order of the Court concerning the Plan of Allocation or the amount of any attorneys' fees, costs,

expenses and interest awarded by the Court to Plaintiff's Counsel shall constitute grounds for

cancellation or termination of the Stipulation.

11. No Admission Of Liability

11.1. The Settling Parties covenant and agree that neither this Stipulation,

nor the fact nor any terms of the Settlement, nor any communication relating thereto, nor the

Supplemental Agreement, is evidence, or an admission or concession by any Settling Party or

their counsel, any Settlement Class Member, or any of the Released Parties, of any fault, liability

-30-


or wrongdoing whatsoever, as to any facts or claims alleged or asserted in the Action, or any

other actions or proceedings, or as to the validity or merit of any of the claims or defenses

alleged or asserted in any such action or proceeding. This Stipulation is not a finding or

evidence of the validity or invalidity of any claims or defenses in the Action, any wrongdoing by

any Settling Party, Settlement Class Member or any of the Released Parties, or any damages or

injury to any Settling Party, Settlement Class Member or any Released Parties. Neither this

Stipulation, nor the Supplemental Agreement, nor any of the terms and provisions of this

Stipulation or the Supplemental Agreement, nor any of the negotiations or proceedings in

connection therewith, nor any of the documents or statements referred to herein or therein, nor

the Settlement, nor the fact of the Settlement, nor the Settlement proceedings, nor any statement

in connection therewith, (a) shall (i) be argued to be, used or construed as, offered or received in

evidence as or otherwise constitute an admission, concession, presumption, proof, evidence or a

finding of any, liability, fault, wrongdoing, injury or damages or of any wrongful conduct, acts or

omissions on the part of any Released Party, or of any infirmity of any defense, or of any

damages to the Lead Plaintiff or any other Settlement Class Member, or (ii) otherwise be used to

create or give rise to any inference or presumption against any of the Released Parties

concerning any fact or any purported liability, fault or wrongdoing of the Released Parties or any

injury or damages to any person or entity, or (b) shall otherwise be admissible, referred to or

used in any proceeding of any nature, for any purpose whatsoever; provided, however, that the

Stipulation or the Supplemental Agreement or the Final Judgment may be introduced in any

proceeding, whether in the Court or otherwise, as may be necessary to argue and establish that

the Stipulation or Supplemental Agreement or Final Judgment has res judicata, collateral

-31-


estoppel or other issue or claim preclusion effect or to otherwise consummate or enforce the

Settlement or Supplemental Agreement or Final Judgment, or as otherwise required by law.

12. Miscellaneous Provisions

12.1. Except in the event of the filing of a Termination Notice or Failure to

Fund Termination Notice or termination notice in accordance with the parties' Supplemental

Agreement, pursuant to Paragraphs 10.1, 10.2 or 10.5 of this Stipulation, the Settling Parties

shall take all actions necessary to consummate this agreement; and (b) agree to cooperate with

each other to the extent reasonably necessary to effectuate and implement all terms and

conditions of the Stipulation.

12.2. The Settling Parties and their counsel represent that they will not

encourage or otherwise influence any Settlement Class Members to request exclusion from, or

object to, the Settlement.

12.3. Each of the attorneys executing this Stipulation, any of its exhibits or

any related settlement documents on behalf of any Settling Party hereto hereby warrants and

represents that he or she has been duly empowered and authorized to do so by the Settling Party

he or she represents.

12.4. Lead Plaintiff and Plaintiff's Counsel represent and warrant that the

Lead Plaintiff is a Settlement Class Member and none of the Lead Plaintiff's claims or causes of

action against one or more Defendants in the Action, or referred to in this Stipulation, or that

could have been alleged against one or more Defendants in the Action, have been assigned,

encumbered or in any manner transferred in whole or in part.

12.5. This Stipulation, together with the Supplemental Agreement,

constitutes the entire agreement between the Settling Parties and supersedes any prior

- 32 -


agreements. No representations, warranties or inducements have been made to or relied upon by

any Settling Party concerning this Stipulation, other than the representations, warranties and

covenants expressly set forth herein and in the Supplemental Agreement. Except as otherwise

provided herein, each Settling Party shall bear its own costs.

12.6. This Stipulation may not be modified or amended, nor may any of its

provisions be waived, except by a writing signed by all Settling Parties or their counsel or their

respective successors in interest.

12.7. This Stipulation shall be binding upon, and shall inure to the benefit

of, the Settling Parties and their respective agents, successors, executors, heirs and assigns.

12.8. The Released Parties who do not appear on the signature lines below

are acknowledged and agreed to be third party beneficiaries of this Stipulation and Settlement

and have the same rights to enforce this Stipulation and Settlement as the signatories hereto.

12.9. The headings herein are used for the purpose of convenience only and

are not meant to have legal effect.

12.10. This Stipulation may be executed in any number of counterparts by

any of the signatories hereto and the transmission of an original signature page electronically

(including by facsimile or portable document format) shall constitute valid execution of the

Stipulation as if all signatories hereto had executed the same document. Copies of this

Stipulation executed in counterpart shall constitute one agreement.

12.11. This Stipulation, the Settlement and any all disputes arising out of or

relating in any way to this Stipulation, whether in contract, tort or otherwise, shall be governed

by and construed in accordance with the laws of the State of California without regard to conflict

of laws principles.

- 33 -


12.12. The Court shall retain jurisdiction with respect to the implementation

and enforcement of the terms of this Stipulation, and all parties hereto submit to the jurisdiction

of the Court for purposes of implementing and enforcing the Settlement embodied in this

Stipulation.

12.13. The Stipulation shall not be construed more strictly against one Party than

another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel

for one of the Settling Parties, it being recognized that it is the result of arm's-length negotiations

between the Settling Parties, and all Settling Parties have contributed substantially and materially

to the preparation of this Stipulation.

12.14. All agreements by, between or among the Settling Parties, their

counsel and their other advisors as to the confidentiality of information exchanged between or

among them shall remain in full force and effect, and shall survive the execution and any

termination of this Stipulation and the final consummation of the Settlement, if finally

consummated, without regard to any of the conditions of the Settlement.

12.15. The Settling Parties shall not assert or pursue any action, claim or

rights that any party violated any provision of Rule 11 of the Federal Rules of Civil Procedure in

connection with the Action, the Settlement, the Stipulation or the Supplemental Agreement. The

Settling Parties agree that the Action was resolved in good faith following arm's-length

bargaining.

12.16. Any failure by any of the Settling Parties to insist upon the strict

performance by any other Settling Party of any of the provisions of the Stipulation shall not be

deemed a waiver of any of the provisions hereof, and such Settling Party, notwithstanding such

- 34 -



By: Chet A. Kronenberg 1999 Avenue of the Star th Floor Los Angeles, Califo r is 900 7 (310) 407-7500

Dated: September 12, 2016

SIMPSON THACHER & BARTLETT LLP

Counsel for Defendants 500.com Limited, Man San Law and Zhengming Pan

-36-


EXHIBIT A

[PROPOSED] ORDER PRELIMINARILY APPROVING SETTLEMENT AND PROVIDING FOR NOTICE OF PROPOSED SETTLEMENT

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

JOSEPH FRAGALA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiff, v. 500.COM LIMITED, MAN SAN LAW, ZHENGMING PAN, DEUTSCHE BANK SECURITIES INC., PIPER JAFFRAY & CO., AND OPPENHEIMER & CO. INC., Defendants.

No. 2:15-CV-01463-JFW (Ex) [PROPOSED] ORDER PRELIMINARY APPROVING CLASS ACTION SETTLEMENT AND PROVIDING FOR NOTICE OF PROPOSED SETTLEMENT Judge: Hon. John F. Walter


EXHIBIT A

[PROPOSED] PRELIMINARY APPROVAL ORDER Case No. 2:15-CV-01463-JFW

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WHEREAS a class action is pending before the Court entitled Joseph

Fragala v. 500.com Limited, et al., Case No. 2:15-cv-01463 JFW (Ex) (the

“Action”);

WHEREAS the Court has reviewed the Stipulation and Agreement of

Settlement dated as of September 12, 2016 (the “Stipulation”), which has been

entered into by the Lead Plaintiff (on behalf of the Settlement Class); and 500.com

Limited (“500.com”), Man San Law and Zhengming Pan (collectively,

“Defendants,” and together with Lead Plaintiff, the “Settling Parties”);

WHEREAS the Stipulation, together with the exhibits annexed thereto, sets

forth the terms and conditions for a proposed settlement and dismissal of the Action

with prejudice (the “Settlement”);

WHEREAS the Settling Parties have made an application, pursuant to

Federal Rule of Civil Procedure 23(e), for an order preliminarily approving the

Settlement;

WHEREAS the Settling Parties have consented to the entry of this Order;

and

WHEREAS all capitalized and defined terms contained herein shall have the

same meaning as set forth in the Stipulation;

NOW, THEREFORE, THE COURT HAVING READ AND CONSIDERED

THE STIPULATION, THE EXHIBITS ANNEXED THERETO, AND

SUBMISSIONS MADE RELATING TO THE SETTLEMENT, IT IS HEREBY

ORDERED:

1. The Court does hereby preliminarily approve the Stipulation and the

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

Hearing described below.

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

Procedure and for the purposes of the Settlement only, the Action is hereby

preliminarily certified as a class action on behalf of all Persons (including, without


EXHIBIT A


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limitation, their beneficiaries) who purchased or otherwise acquired American

Depository Shares (ADSs) of 500.com between November 22, 2013 and March 2,

2015, inclusive, excluding: (i) those Persons who timely and validly request

exclusion from the Settlement Class; and (ii) Defendants and any entity in which

the Defendants have a controlling interest, and the officers, directors, affiliates,

legal representatives, immediate family members, heirs, successors, subsidiaries

and/or assigns of any such individual or entity in their capacity as such (“Settlement

Class Members”).

3. The Court finds, preliminarily and for purposes of this Settlement

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

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

Settlement Class Members is so numerous that joinder of all members of the

Settlement Class is impracticable; (b) there are questions of law or fact common to

the Settlement Class Members that predominate over any individual questions; (c)

the claims of the Lead Plaintiff are typical of the claims of the Settlement Class he

seeks to represent; (d) the Lead Plaintiff fairly and adequately represents the

interests of the Settlement Class; and (e) a class action is superior to other available

methods for the fair and efficient adjudication of the Action.

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

preliminarily and for the purposes of this Settlement only, the Lead Plaintiff is

appointed as the class representative on behalf of the Settlement Class, and Levi &

Korsinsky LLP is hereby appointed Counsel for the Settlement Class (“Plaintiff’s

Counsel”). Plaintiff’s Counsel have the authority to enter into the Stipulation on

behalf of the Settlement Class and are authorized to act on behalf of the Settlement

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

to the Settlement.

5. The Court finds that: (a) the Stipulation resulted from good faith,

arm’s-length negotiations; and (b) the Stipulation is sufficiently fair, reasonable and


EXHIBIT A


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adequate to the Settlement Class Members to warrant providing notice of the

Settlement to Settlement Class Members and holding a Settlement Hearing.

6. The Settlement Hearing shall be held before the Honorable John F.

Walter on , 201_ (120 days after the date of this Order), at : _.m. at the

United States District Court for the Central District of California, 312 North Spring

Street, Los Anglees, California 90012, to determine whether the proposed

Settlement of the Action on the terms and conditions provided for in the Stipulation

is fair, reasonable and adequate to the Settlement Class and should be approved by

the Court; whether a Final Judgment and Order of Dismissal with Prejudice (“Final

Judgment”) as provided in Exhibit B to the Stipulation should be entered herein;

whether the proposed Plan of Allocation should be approved; to determine the

amount of fees and expenses that should be awarded to Plaintiff’s Counsel; and to

rule upon such other matters as the Court may deem appropriate. The Court may

adjourn or continue the Settlement Hearing without further notice to Settlement

Class Members.

7. The Court approves, as to form and content, the Notice of Proposed

Settlement of Class Action and Settlement Fairness Hearing and Motion for

Attorneys’ Fees and Reimbursement of Expenses (the “Notice”), the Publication

Notice (“Publication Notice”), and the Proof of Claim and Release form (the “Proof

of Claim”), annexed as Exhibits A-1, A-2 and A-3 to the Stipulation, respectively.

8. The Court appoints RG/2 Claims Administration LLC as the Claims

Administrator to supervise and administer the notice procedure as well as the

processing of claims, as follows:

(a) Not later than seven (7) days after the date of this Order, 500.com

shall provide to Lead Counsel or the Claims Administrator a list of the names and

last known addresses of the persons and entities who were 500.com ADS holders

of record during the Class Period, as 500.com or the depository for such ADSs

possess, in electronic format. Lead Plaintiff agrees that this information will be


EXHIBIT A


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kept confidential and not used for any purpose other than to provide the notice

contemplated by this Order.

(b) Not later than fourteen (14) days after the date of this Order (the

“Notice Date”), the Claims Administrator shall cause a copy of the Notice and the

Proof of Claim, substantially in the forms annexed as Exhibits A-1 and A-3 to the

Stipulation, to be mailed by first class mail to all record owners of 500.com ADSs

identified pursuant to paragraph ¶ 8(a).

(c) Not later than twenty-one (21) days after the date of this Order, the

Claims Administrator shall cause the Publication Notice to be published once in

Investors’s Business Daily and to be transmitted over PR Newswire.

9. Record owners who are nominees or custodians who held ADSs

during the Class Period for the benefit of Settlement Class Members shall within

ten (10) days of receipt of the Notice and Proof of Claim as provided in ¶ 8(b) hereof,

either (i) request additional copies of the Notice and Proof of Claim sufficient to

send the Notice and Proof of Claim to all beneficial owners for whom they are

nominee or custodian, and within ten (10) days after receipt thereof send copies to

such beneficial owners; or (ii) provide a list of the names, addresses and email

addresses of such beneficial owners to the Claims Administrator, in which event the

Claims Administrator shall promptly deliver the Notice and Proof of Claim to such

beneficial owners. Nominees who elect to send the Notice and Proof of Claim to

their beneficial owners shall send a statement certification to the Claims

Administrator confirming that the mailing has been made as directed. The Claims

Administrator shall, if requested, reimburse banks, brokerage houses or other

nominees or custodians out of the Settlement Fund solely for their reasonable out-

of-pocket expenses incurred in providing notice to beneficial owners, which

expenses would not have been incurred except for the sending of such notice, and

subject to further order of this Court with respect to any dispute concerning such

reimbursement.


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10. Not later than fourteen (14) days after the date of this Order, the

Claims Administrator shall cause the Stipulation and its exhibits, this Preliminary

Approval Order, and a copy of the Notice to be posted on a website maintained by

the Claims Administrator.

11. Not later than twenty-eight (28) days prior to the Settlement Hearing,

Plaintiff’s Counsel shall cause to be filed with the Court proof, by affidavit or

declaration, of the mailing and publishing required by this Order.

12. The forms and methods set forth herein of notifying Settlement Class

Members of the Settlement and its terms and conditions meet the requirements of

due process, Rule 23 of Federal Rules of Civil Procedure, and Section 21D(a)(7) of

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

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

circumstances; and constitute due and sufficient notice to all Persons entitled

thereto.

13. All Settlement Class Members shall be bound by all determinations

and judgments in this Action concerning the Settlement, unless such Persons request

exclusion from the Settlement Class in a timely and proper manner.

14. Any Person falling within the definition of the Settlement Class may,

upon request, be excluded from the Settlement Class. Any request for exclusion

must be in the form of a written, signed statement (the “Request for Exclusion”)

and received by the Claims Administrator at the address designated in the Notice

on or before , 201_ (45 days from the Notice Date) (the “Exclusion Deadline”).

15. In order to be valid, each such Request for Exclusion (A) must state

the name, address, email address and telephone number of the Person seeking

exclusion; state that the sender “requests exclusion from the Settlement Class in

Joseph Fragala v. 500.com Limited, et al., Case No. 2:15-cv-01463 JFW (Ex),” and

state (i) the date(s), number and dollar amount of ADSs purchased, and of any sale

transactions; and (ii) the number of ADSs held by that Person as of March 2, 2015;


EXHIBIT A


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and (B) must be submitted with documentary proof (i) of all purchase or obtainment

or sale of ADSs; and (ii) demonstrating the Person’s status as a beneficial owner of

the ADS. Any such Request for Exclusion must be signed and submitted by the

beneficial owner.

16. A Request for Exclusion shall not be valid or effective unless it

provides the required information as true and accurate and is made within the time

stated above. The Claims Administrator shall provide all Requests for Exclusion

and supporting documentation submitted therewith (including untimely requests) to

counsel for the Settling Parties as soon as possible and no later than the Exclusion

Deadline or upon the receipt thereof (if later than the Exclusion Deadline). The

Settlement Class will not include any Person who delivers a valid and timely

Request for Exclusion.

17. Any Settlement Class Member who submits a Request for Exclusion

shall not be deemed to have submitted to the jurisdiction of any Court in the United

States for any matter on account of such submission, and any Settlement Class

Member who submits a Proof of Claim thereby submits to the jurisdiction of this

Court with respect only to the subject matter of such Proof of Claim and all

determinations made by this Court thereon and shall not be deemed to have

submitted to the jurisdiction of this Court or of any court in the United States for

any other matter on account of such submission.

18. Any Person that submits a Request for Exclusion may thereafter

submit to the Claims Administrator a written revocation of that Request for

Exclusion, provided that it is received no later than two business days before the

Settlement Hearing, in which event that Person will be included in the Settlement

Class.

19. All Persons who submit a valid, timely and unrevoked Request for

Exclusion will be forever barred from receiving any payments pursuant to the

Settlement.


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20. Any Settlement Class Member who wishes to share in the distribution

of the proceeds of the Settlement shall complete and submit a Proof of Claim form

in accordance with the instructions contained therein. Unless the Court orders

otherwise, all Proof of Claim forms must be received by the Claims Administrator

no later than ______________, 201_ (sixty (60) days after the Notice Date). Any

Settlement Class Member who does not submit a valid Proof of Claim and the

information and documentation required therein within the time allowed shall be

barred from sharing in the distribution of the proceeds of the Settlement, unless

otherwise ordered by the Court.

21. Except where a Settlement Class Member who submits a Request for

Exclusion commences or otherwise prosecutes or pursues a Released Claim against

a Released Party, all information submitted by a Settlement Class Member in a

Request for Exclusion or a Proof of Claim shall be treated as confidential protected

information and may not be disclosed by the Claims Administrator, its affiliates or

the Settling Parties to any third party absent a further order of this Court upon a

showing of necessity, and any such information that is submitted to the Court shall

be filed under seal.

22. Any Settlement Class Member may enter an appearance in the Action,

at their own expense, individually or through counsel of their own choice, in which

case such counsel must file with the Clerk of the Court a notice of such appearance.

Absent entry of an appearance by counsel, Settlement Class Members will be

represented by Plaintiff’s Counsel.

23. Any Settlement Class Member may appear and show cause why the

proposed Settlement should or should not be approved as fair, reasonable and

adequate, why a judgment should or should not be entered thereon, why the Plan of

Allocation should or should not be approved, or why attorneys’ fees and

reimbursement of expenses should or should not be awarded to Plaintiff’s Counsel;

provided, however, that no Settlement Class Member or any other Person shall be


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heard or entitled to contest the approval of the terms and conditions of the proposed

Settlement, or, if approved, the Final Judgment, or any other order relating thereto,

unless that Person has filed appropriate objections, affidavits and briefs with the

Clerk of the United States District Court for the Central District of California, on or

before the Exclusion Deadline and delivered copies of any such papers to counsel

identified in the Notice on or before such date. Any Settlement Class Member who

does not make an objection in the manner provided shall be deemed to have waived

such objection and shall forever be foreclosed from making any such objection,

unless otherwise ordered by the Court.

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

to be in custodia legis of the Court, and shall remain subject to the jurisdiction of

the Court, until such time as such funds shall be distributed or returned pursuant to

the Stipulation and Plan of Allocation and/or further order(s) of the Court.

25. All papers in support of the Settlement, the Plan of Allocation, and

the application for attorneys’ fees or expenses, shall be filed and served not later

than twenty-eight (28) days prior to the Settlement Hearing. Any reply papers shall

be filed and served no later than fourteen (14) days prior to the Settlement Hearing.

26. Defendants, their counsel and the Released Parties shall have no

responsibility for or liability with respect to the Plan of Allocation or any

application for attorneys’ fees or expenses submitted by Plaintiff’s Counsel or the

Lead Plaintiff, and such matters will be considered separately from the fairness,

reasonableness and adequacy of the Settlement.

27. All reasonable expenses incurred in identifying and notifying

Settlement Class Members, as well as in administering the Settlement, including

payment of any taxes, shall be paid as set forth in the Stipulation.

28. Neither the Stipulation, nor any of its terms or provisions, nor any of

the negotiations or proceedings connected with it, shall be construed as an

admission or concession by Defendants or any of the Released Parties of the truth


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of any of the allegations in the Action, or of any liability, fault or wrongdoing of

any kind and shall not be construed as, or deemed to be evidence of or an admission

or concession that the Lead Plaintiff or any Settlement Class Members have

suffered any damages, harm or loss. Further, neither the Stipulation, nor any of its

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

nor this Order shall be construed as an admission or concession by the Lead Plaintiff

of the validity of any factual or legal defense or of any infirmity in any of the claims

or facts alleged in this Action.

29. The Settling Parties may elect to terminate the Settlement only as

provided in the Stipulation. In such event, or in the event the Settlement does not

become effective in accordance with the terms of the Stipulation or the Effective

Date does not occur, then the Stipulation and this Order (including any

amendment(s) thereof, and except as expressly provided in the Stipulation or by

order of the Court) shall be rendered null and void, of no further force or effect, and

without prejudice to any Settling Party, and may not be introduced as evidence or

used in any action or proceeding by any Person against the Settling Parties or the

Released Parties, and each shall be restored to his, her or its respective litigation

positions as they existed prior to the execution of the Stipulation.

30. Pending final determination of whether the Settlement should be

approved or further order of the Court, the Court hereby stays all litigation of claims

and related discovery in the Action between the Lead Plaintiff and Settlement Class

Members on one hand and the Defendants on the other, except as provided in the

Stipulation and as necessary to carry out or comply with the terms and conditions

of the Stipulation.

31. Except as provided in the Stipulation, pending final determination of

whether the Settlement should be approved or further order of the Court, no

potential Settlement Class Member, whether directly, representatively or in any

other capacity, and whether or not such Persons have appeared in the Action, shall


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commence or prosecute in any court or forum any proceeding involving the subject

matter of any of the Released Claims against any of the Released Parties. This

injunction is necessary to protect and effectuate the Settlement, this Order and the

Court’s flexibility and authority to effectuate the Settlement and to enter judgment

when appropriate, and is ordered in aid of the Court’s jurisdiction and to protect its

judgments.

32. The Court reserves the right to consider all further applications arising

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

with such modifications as may be agreed to by the Settling Parties, without further

notice to the Settlement Class, where to do so would not impair Settlement Class

Members’ rights in a manner inconsistent with Rule 23 and due process of law.

IT IS SO ORDERED.

DATED:

_______________________

The Honorable John F. Walter United States District Court


EXHIBIT A-1

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_ UNITED STATES DISTRICT COURT


JOSEPH FRAGALA, INDIVIDUALLY

AND ON BEHALF OF ALL OTHERS

SIMILARLY SITUATED,

Plaintiff,

v.

500.COM LIMITED, MAN SAN LAW,

ZHENGMING PAN, DEUTSCHE

BANK SECURITIES INC., PIPER

JAFFRAY & CO., AND

OPPENHEIMER & CO. INC.,

Defendants.

No. 2:15-CV-01463-JFW (Ex)

NOTICE OF PROPOSED

SETTLEMENT OF CLASS

ACTION AND SETTLEMENT

FAIRNESS HEARING, AND

MOTION FOR ATTORNEYS’

FEES AND REIMBURSEMENT

OF EXPENSES

Judge: Hon. John F. Walter

Your legal rights may be affected - Please read this Notice carefully.

To: All Persons (including, without limitation, their beneficiaries) who

purchased or otherwise acquired American Depository Shares (“ADSs”)

of 500.com Limited (“500.com” or “the Company”) between November

22, 2013 and March 2, 2015, inclusive (collectively, the “Settlement

Class”).

If you meet the above definition of the Settlement Class, you could get a

payment from a class action settlement.

A federal court authorized this Notice. This is not a solicitation from a lawyer.

The purpose of this Notice is to inform you of a proposed settlement of this

class action (the “Action”) for a cash payment of $2,500,000.00 (two million five

hundred thousand dollars) (the “Settlement Fund”) and the scheduling of a

settlement fairness hearing with respect to the proposed settlement and the motion

of the Lead Plaintiff and Plaintiff’s Counsel for an award of attorneys’ fees and

reimbursement of expenses. Documents related to the proposed settlement are


EXHIBIT A-1

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available on the Settlement website established by the Notice and Claims

Administrator (the “Claims Administrator”) at www.rgwclaims.com/500.com.html.

This Notice describes important rights you may have and what steps you

must take if you wish to participate in the Settlement or wish to be excluded from


YOUR LEGAL RIGHTS AND OPTIONS IN THE SETTLEMENT:

SUBMIT A CLAIM FORM Deadline ________, 201_ (60 days

from Notice Date). This is the only

way to receive a payment from the

Settlement Fund.

EXCLUDE YOURSELF FROM

THE SETTLEMENT CLASS

Deadline ________, 201_ (45 days

from Notice Date). Receive no

payment from the Settlement. If the

Court approves the Settlement, this is

the only option that allows you ever to

participate in any other lawsuit against

the Released Parties (defined below)

which involves the Released Claims

(defined below).

OBJECT Deadline ________, 201_ (45 days

from Notice Date). You may write to

the Court if you do not like this

Settlement or the request for an award

of attorneys’ fees and reimbursement

of expenses. You may not object if you

have excluded yourself from the

Settlement.

GO TO THE SETTLEMENT

HEARING

Settlement Hearing ________, 201_.

Whether or not you object to the

Settlement, you may ask to speak in

Court about the fairness of the

Settlement. The Deadline to ask to

speak in Court about the Settlement is

________, 201_ (45 days from Notice

Date).

DO NOTHING Receive no payment if you do not

submit a claim form.


EXHIBIT A-1

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These rights and options - and the deadlines to exercise them - are

explained in this Notice.

The Court presiding over this case must decide whether to approve the

Settlement. Payments will be made only if the Court approves the Settlement, and

if there are any appeals, after appeals are resolved, and the Claims Administrator

has had an opportunity to process all claim forms. Please be patient.

Your legal rights are affected whether you act or do not act. Please read this

Notice carefully.

SPECIAL NOTICE TO NOMINEES OR CUSTODIANS

The Court has ordered that if you acquired 500.com ADSs between

November 22, 2013 and March 2, 2015, inclusive, as a nominee or custodian,

then, within ten (10) days after you receive this Notice, you must, at your option,

either (i) send this Notice and Proof of Claim and Release (“Proof of Claim”) to

the beneficial owner, or (ii) request the Claims Administrator to send you

additional copies of this Notice and the Proof of Claim sufficient to deliver to all

beneficial owners, and within ten (10) days after receipt thereof make such

delivery to all beneficial owners, or (iii) provide a list of the names and addresses

or email addresses of all beneficial owners to the Claims Administrator, who will

send those Persons a copy of this Notice and the Proof of Claim by first class mail

or email. Nominees who elect to themselves deliver the Notice and Proof of Claim

to their beneficial owners shall send a statement to the Claims Administrator

confirming that the delivery was made as directed, and subject to any

confidentiality agreement, statute or regulation that may limit their ability to do so,

shall provide the Claims Administrator with a list of the names and addresses of

the Persons to whom the Notice and Proof of Claim were delivered.

If you choose to deliver the Notice and Proof of Claim yourself, you may

obtain from the Claims Administrator (without cost to you) as many additional

copies of these documents as you will need to complete the delivery, by submitting

a request to:

RG/2 Claims Administration LLC

P.O. Box 59479

Philadelphia, PA 19102-9479

Toll Free Number: (866) 742-4955

www.rgwclaims.com/500.com.html


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Regardless of whether you choose to complete the delivery yourself or elect

to have the delivery performed for you, you may obtain reimbursement for

reasonable administrative costs actually incurred in connection with forwarding the

Notice and Proof of Claim and which would not have been incurred but for the

obligation to forward the Notice and Proof of Claim, upon submission of

appropriate documentation to the Claims Administrator. The Claims Administrator

has also maintained on its website pdf versions of this Notice and the Proof of

Claim. Delivery to beneficial owners may be effected through electronic means.

SUMMARY OF NOTICE

Summary of the Proposed Settlement

The Lead Plaintiff1 and Defendants2 have entered into a proposed settlement

releasing all claims that were asserted or could have been asserted by the

Lead Plaintiff in the Action, individually and on behalf of the Settlement

Class, against 500.com, Defendants and other Released Parties.3

Under the terms of the proposed Settlement, the aggregate amount of

$2,500,000.00 will be paid into the Settlement Fund. These funds (less

Court-approved attorneys’ fees and reimbursement of expenses and the costs

of claims administration) shall be paid to the Settlement Class pursuant to

the Plan of Allocation.

1 “Lead Plaintiff” means the representative plaintiff in the Action, namely Liu Shaolin. 2 “Defendants” are 500.com, Man San Law and Zhengming Pan. 3 “Released Parties” means (i) 500.com, its past, present and future, direct or indirect, parent

entities, associates, affiliates and subsidiaries, each and all of their respective past, present and

future directors, officers, partners, alleged partners, stockholders, predecessors, successors and

employees and each and all of their underwriters, attorneys, advisors, consultants, trustees,

insurers, co-insurers, reinsurers, representatives and assigns; (ii) each of the Individual

Defendants and their respective present, past and future spouses, parents, siblings, children,

grandparents and grandchildren, the present, past and future spouses of their respective parents,

siblings and children and the present, past and future parents and siblings of their respective

spouses, including step and adoptive relationships; (iii) any and all persons, firms, trusts,

corporations and other entities in which any of the Defendants or foregoing Released Parties has

a financial interest or was a founder, settler or creator and, in their capacity as such, any and all

officers, directors, employees, trustees, beneficiaries, settlers, creators, attorneys, consultants,

agents or representatives of any such person, firm, trust, corporation or other entity; and (iv) in

their capacity as such, the legal representatives, heirs, executors, administrators, predecessors,

successors, predecessors-in-interest, successors-in-interest and assigns of any of the foregoing.


EXHIBIT A-1

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Statement of Settlement Class Members’ Recovery

Estimates of the percentage recovery on the potential claims that may be

filed vary depending on a number of factors including the class period utilized, the

trading model and the regression model used to estimate damages. The estimates

attempt to determine economic losses caused by the alleged violations of the

federal securities laws as opposed to losses caused by market or industry factors or

company-specific factors unrelated to the alleged violations of law. The estimates

were, among other things, based upon a review of publicly available information

regarding 500.com, a statistical analysis of the price movements of 500.com ADSs

and the price performance of relevant market and peer indices during the

Settlement Class Period.

Based however on the $35.5 million reported losses of investments in

500.com ADSs, Lead Plaintiff approximates (assuming that all Settlement Class

Members file claims equal in the aggregate to the losses) that Settlement Class

Members will receive from the Settlement Fund, before deduction of Court-

awarded attorneys’ fees and expenses and the costs of claims administration,

approximately 7% of losses. This represents, based on Lead Plaintiff’s

approximation, a recovery of approximately $0.17 per ADS. That percentage

recovery, however, could be higher if less than all Settlement Class Members file

claims.

Statement of Potential Outcome of Settled Claims

The Settlement must be compared to the risk of no recovery on the relevant

claims after contested dispositive motions, trial and likely appeals. The claims

being settled involve complex legal and factual issues, many of which would

require expert testimony. Among the many key issues about which Lead Plaintiff

and Defendants do not agree are (1) whether any of the Defendants violated

federal law or otherwise engaged in any wrongdoing; (2) whether any Defendants

acted negligently, recklessly or with intent to defraud; (3) whether the

misrepresentations and omissions alleged by Lead Plaintiff were material, false,

misleading or otherwise actionable; (4) the extent to which putative class members

relied on the alleged misrepresentations and omissions; (5) the method for

determining whether, and the extent to which, investors suffered injury and

damages that could be recovered at trial. In addition, even if Lead Plaintiff were to

obtain a judgment against 500.com or Defendants that is affirmed on appeal,


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complex legal and factual issues may impede Lead Plaintiff’s efforts to collect

such a judgment on behalf of shareholders.

Reason for Settlement

Lead Plaintiff and Plaintiff’s Counsel, who have extensive experience in

securities and complex shareholder class-action litigation, believe that the

Settlement provides the Settlement Class with significant and certain benefits now

and eliminates the risk of no recovery following what would be years of further

uncertain litigation, including the disposition of a class certification motion,

motion for summary judgment, and if summary judgment is not granted to

Defendants, a contested trial and likely appeals, with the possibility of no recovery

at all. Lead Plaintiff and Defendants vigorously disagree on both liability and the

amount of money that could have been won if Lead Plaintiff prevailed at trial. The

parties disagree about (1) the amount of alleged damages, if any, that could be

recovered at trial; (2) the other causes of the loss in the value of the stock at the

end of the Class Period; (3) the proper measure of alleged damages; (4) the extent

that various facts alleged by the Lead Plaintiff were materially false and

misleading; and (5) whether the facts alleged were material, false, misleading or

otherwise actionable under the securities laws.

Lead Plaintiff, in proposing that the Court approve the $2,500,000.00 (two

million five hundred thousand dollar) settlement as fair, reasonable and adequate to

the Settlement Class, has considered, among other factors, Lead Plaintiff’s ability

to prevail on the contested factual and legal issues summarized in the Statement of

Potential Outcome of Settled Claims (above). There was a significant risk that

Lead Plaintiff’s claims could have been dismissed or limited prior to or at trial, or

on appeal from a jury verdict. In addition, Plaintiff’s Counsel considered the

reality that substantially all of 500.com’s assets are located in the People’s

Republic of China. Accordingly, Lead Plaintiff concluded that there is a

substantial risk that it would not be able to enforce any judgment that it might

obtain in this action.

Lead Plaintiff will file with the Court on or before ___________, 201_ (28

days prior to the Settlement Hearing) a formal motion for approval of the proposed

Settlement further discussing the reasons justifying the settlement.

Defendants have denied and continue to deny each and all of the claims and

contentions alleged in the Action and believe that they have meritorious defenses

to those claims and contentions. The Settlement shall in no event be construed as,


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or deemed to be evidence of, an admission or concession by any of the Defendants

or Released Parties with respect to any claim of any fault or liability or

wrongdoing or damage to the Lead Plaintiff, the Settlement Class Members or any

Person.

Statement of Attorneys’ Fees and Expenses

Plaintiff’s Counsel have not received any payment to date for their work or

expenses incurred in investigating the facts, conducting this litigation and

negotiating the Settlement on behalf of the Lead Plaintiff and the Settlement Class.

Plaintiff’s Counsel will ask the Court to approve payment from the Settlement

Fund of attorneys’ fees of up to 25% of the Settlement Fund and for

reimbursement of expenses that were advanced by Plaintiff’s Counsel through

September 12, 2016 in connection with the litigation. The average cost per ADS

for the attorneys’ fees and reimbursement of expenses to be sought by Plaintiff’s

Counsel is $0.05.

If the above amounts are requested and approved by the Court, based upon

current information, fees and expenses are estimated at approximately 27% of the

Settlement Fund.

Dismissal and Releases

If the proposed Settlement is approved, the Court will enter a Final

Judgment and Order of Dismissal with Prejudice (the “Final Judgment”). The

Final Judgment will dismiss with prejudice the claims asserted in the Action

against Defendants. The Final Judgment will also provide that all Settlement Class

Members shall be deemed to have released and forever discharged all Released

Claims against all Released Parties. The specific terms of the releases, including

the meaning of the term “Released Claims,” are set forth in the Stipulation.

Unless you exclude yourself from the Settlement Class, you will be releasing

claims you may have against the Released Parties.


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WHAT THIS NOTICE CONTAINS

BASIC INFORMATION 1. Why did I receive this notice package? 2. What is this lawsuit about?

3. Why is this a class action?

WHO IS IN THE SETTLEMENT 4. How do I know if I am part of the settlement? 5. What are the exceptions to being included?

6. I’m still not sure if I’m included.

THE SETTLEMENT BENEFITS – WHAT YOU GET 7. What does the settlement provide? 8. How much will my payment be?

HOW YOU GET A PAYMENT – SUBMITTING A CLAIM FORM 9. How can I obtain a payment? 10. When will I receive my payment?

11. What am I giving up to receive a payment?

12. If I stay in the Settlement Class may I still recover additional

amounts from other sources?

THE LAWYERS REPRESENTING YOU 13. Do I have a lawyer in the case? 14. How will the lawyers be paid?

EXCLUDING YOURSELF FROM THE SETTLEMENT 15. How do I exclude myself from the Settlement? 16. If I do not exclude myself from the Settlement, can I sue the

Released Parties for the same thing later?

17. If I exclude myself, can I get money from this Settlement?

OBJECTING TO THE SETTLEMENT 18. How do I tell the Court that I do not like the Settlement? 19. What is the difference between objecting and requesting exclusion?

THE COURT’S SETTLEMENT HEARING 20. When and where will the Court decide whether to approve the

settlement?


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21. Do I have to come to the Hearing?

22. May I speak at the Hearing?

IF YOU DO NOTHING 23. What happens if I do nothing at all?

GETTING MORE INFORMATION 24. Are there more details about the settlement?

THE PLAN OF ALLOCATION 25. What is the objective of the Plan of Allocation? 26. How does the Plan of Allocation calculate Class Members’

recognized loss?

27. What are the additional details of the Plan of Allocation?


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BASIC INFORMATION

1. Why Did I Receive This Notice Package?

You or someone in your family may have purchased or acquired an

American Depository Share of 500.com during the period November 22, 2013 to

March 2, 2015, inclusive.

This Notice was sent because you have a right to know about a proposed

settlement of a class action lawsuit concerning 500.com, and about all of your

options, before the Court decides whether to approve the Settlement. If the Court

approves the Settlement and after any objections or appeals are resolved, the Claims

Administrator appointed by the Court will recommend that payments be made to

those Settlement Class Members who timely submit valid claims in the manner

described below. Persons who are not Settlement Class Members may have

received this Notice. If you seek to obtain a distribution from the Settlement in this

Action, it is your responsibility to demonstrate that you are a member of the

Settlement Class.

This Notice explains the lawsuit, the Settlement, your legal rights, what

benefits are available, who is eligible for them and how to get them.

The Court in charge of the case is the United States District Court for the

Central District of California, and the case is known as Joseph Fragala v. 500.com

Limited, et al., Case No. 2:15-cv-01463-JFW.

The Lead Plaintiff in this action – Liu Shaolin – is called the Lead Plaintiff.

Defendants are 500.com Limited (“500.com” or “the Company”), and Man

San Law and Zhengming Ping (collectively, the “Defendants”). All claims against

these Defendants will be released if the Settlement is approved.

The Settling Parties are the Lead Plaintiff and Defendants.

2. What Is This Lawsuit About?

This lawsuit alleges that Defendants misrepresented or omitted material

information regarding the Company’s status as a licensed provider of online lottery

services within the People’s Republic of China and the Company’s maintenance of

adequate internal controls. Defendants deny the allegations.


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3. Why Is This a Class Action?

In a class action, one or more people or entities called class representatives

(in this case the Lead Plaintiff) sue on behalf of people who have similar claims.

Here, all these people are called a class or class members, and those included in this

Settlement are called a Settlement Class or Settlement Class Members. One court

resolves the issues for all class members, except for those who timely and validly

excluded themselves from the class. United States District Judge, the Honorable

John F. Walter, is in charge of this class action.

WHO IS PART OF THE SETTLEMENT

To see if you will receive money from this Settlement, you first have to

determine if you are a Settlement Class Member.

4. How Do I Know if I Am Part of the Settlement?

For purposes of the Settlement, the Court has provisionally approved the

following definition of the Settlement Class:

All Persons (including, without limitation, their beneficiaries) who purchased or otherwise acquired 500.com ADSs between November 22, 2013 and March 2, 2015, inclusive. 5. What Are the Exceptions to Being Included?

The Settlement Class excludes (i) those Persons who timely and validly

request exclusion from the Settlement Class and (ii) Defendants and any entity in

which the Defendants have a controlling interest, and the officers, directors,

affiliates, legal representatives, immediate family members, heirs, successors,

subsidiaries and/or assigns of any such individual or entity in their capacity as such.

6. I’m Still Not Sure if I Am Included.

If you are still not sure whether you are included, you can ask for free help.

You can request additional information from the persons identified in Question 23

below. Or you can fill out and return the claim form described in question 9, to see

if you qualify.


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THE SETTLEMENT BENEFITS — WHAT YOU GET

7. What Does the Settlement Provide?

500.com has agreed to cause to be paid $2,500,000.00 (two million five

hundred thousand dollars) in cash into the Settlement Fund. The Settlement Fund,

after payment of Court-approved attorneys’ fees and expenses and the costs of

claims administration, including the costs of printing and mailing this Notice and

the cost of publishing notice (the “Net Settlement Fund”), will be divided among all

eligible Settlement Class Members who send in valid claim forms pursuant to the

Plan of Allocation described below.

8. How Much Will My Payment Be?

Your share of the Net Settlement Fund will depend on the size of your net

loss compared to the aggregate net loss of principal of all Settlement Class

Members who submit valid claim forms.

You can calculate your net loss in accordance with the explanation below in

the Plan of Allocation. After the deadline for submitting a Proof of Claim, the

payment you receive will reflect your net loss in relation to the net loss of all

Settlement Class Members who submit a valid Proof of Claim. The net loss is not

the amount of the payment that you can expect, but is used to determine how the

Net Settlement Fund will be allocated among all Settlement Class Members who

submit valid claims.

HOW YOU OBTAIN A PAYMENT — SUBMITTING A CLAIM FORM

9. How Will I Obtain a Payment?

To qualify for payment, you must be an eligible Settlement Class Member,

submit a valid Proof of Claim and properly document your claim as described in the

Proof of Claim. A Proof of Claim form is enclosed with this Notice. You may also

get a Proof of Claim form on the internet at www.rgwclaims.com/500.com.html.

Read the instructions carefully, fill out the Proof of Claim, include the documents

the form asks for, sign it and submit it so that it is received by the Administrator no

later than ___________, 201_.

Only beneficial owners may file a Proof of Claim with respect to each ADS.


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Where the record owner of shares is a nominee, custodian or other Person acting in

a materially similar fashion on behalf of one or more beneficial owners, that

nominee, custodian or other Person is not a beneficial owner and may not file a

Proof of Claim on behalf of any such beneficial owners. However, executors,

administrators, guardians, conservators or other legal representatives may file

Proofs of Claim on behalf of beneficial owners.

10. When Will I Receive My Payment?

The Court will hold a hearing on ___________, 201_ to decide whether to

approve the Settlement. If the Court approves the Settlement, there may be appeals.

It is always uncertain how these appeals will be resolved, and resolving them can

take time, perhaps more than a year. After any approval by the Court and any

appeals are decided favorably, it will take several months for the Claims

Administrator to process all of the Proof of Claim forms and to determine and pay

the ultimate distribution amounts.

11. What Am I Giving Up to Receive a Payment?

Unless you timely exclude yourself from the Settlement Class by the

___________, 201_ deadline, you are a member of the Settlement Class and will be

bound by the release of claims against the Defendants and the Released Parties.

That means that you cannot sue, continue to sue, or be part of any other lawsuit

against 500.com, the Defendants or the Released Parties about the Released Claims.

The specific terms of the release are included in the Stipulation.

THE LAWYERS REPRESENTING YOU

12. Do I Have a Lawyer in This Case?

The law firm of Levi & Korsinsky LLP brought the Action on behalf of the

Lead Plaintiff and they represent you and all other Settlement Class Members.

These lawyers are called Plaintiff’s Counsel. You will not be charged for these

lawyers. If you want to be represented by your own lawyer, you may hire one at

your own expense.

13. How Will the Lawyers Be Paid?

Plaintiff’s Counsel will ask the Court for attorneys’ fees up to 25% of the

$2,500,000.00 Settlement Fund, and for expenses that were advanced through


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September 12, 2016 by Plaintiff’s Counsel in connection with the litigation. Such

sums as may be approved by the Court will be paid from the Settlement Fund.

Settlement Class Members are not personally liable for any such fees or expenses.

The attorneys’ fees and expenses requested represent payment to Plaintiff’s

Counsel for their efforts in achieving this Settlement and for their risk in

undertaking this representation on a wholly contingent basis. Since the case began,

Plaintiff’s Counsel has undertaken extensive work necessary to prepare and litigate

the Action. To date, Plaintiff’s Counsel have not been paid for their services in

conducting this litigation on behalf of the Lead Plaintiff and the Settlement Class,

nor for their expenses. The fee requested will compensate Plaintiff’s Counsel in

part for their work and expenses in achieving the Settlement.

Plaintiff’s Counsel shall file a motion with the Court for approval of the

Settlement, the Plan of Allocation and the request for attorneys’ fees and

reimbursement of expenses by ______________, 201_ (28 days prior to the

Settlement Hearing). Copies of that motion will be posted on the Claim

Administrator’s website. Defendants takes no position with respect to the request

for attorneys’ fees and reimbursement of expenses. The Court determines the

amount counsel should receive from the Settlement Fund for fees and expenses

separately from its determination of whether the Settlement is fair, reasonable and

adequate, and may award less than the amount Plaintiff’s Counsel has requested.

EXCLUDING YOURSELF FROM THE SETTLEMENT

14. How Do I Exclude Myself From the Settlement?

If you want to retain the right to sue or to continue to sue the Released Parties

on your own about the claims being released in this Settlement, then you must take

steps to exclude yourself from the Settlement. This is referred to as opting out of

the Settlement Class, and persons who do so are referred to as “Opt-Outs”.

Excluding yourself is not the same as doing nothing in response to this

Notice. Each member of the Settlement Class shall be bound by all determinations

and judgments in the Action concerning the Settlement, whether favorable or

unfavorable, unless such a Person delivers to the Claims Administrator a written

request for exclusion from the Settlement Class, so that it is received by the Claims

Administrator no later than _____________, 201_ addressed to

500.com Limited Securities Litigation Claims Administrator


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500.COM Limited Securities Litigation Settlement

c/o RG/2 Claims Administration LLC

P.O. Box 59479




No Person may exclude himself, herself or itself from the Settlement Class

after that date. In order to be valid, each request for exclusion by a Person seeking

to opt-out must state the name, address and telephone number of the Person seeking

exclusion; state that the Person “requests exclusion from the Settlement Class in

Joseph Fragala v. 500.com Limited, et al., Case No. 2:15-cv-01463 JFW),” and

state (i) the dates and amounts of each ADS purchase, and any sale transactions,

and (ii) the number of ADSs held by the Person as of March 2, 2015. Each Person

seeking to opt-out also must supply documentary proof of each purchase and sale

transaction and of the Person’s membership in the Settlement Class. Any such

request for exclusion must be signed by the Person requesting exclusion.

Requests for exclusion shall not be effective unless the request includes the

required information as true and accurate and documentation and is made within the

time period stated above. Only beneficial owners may file a request for exclusion

with respect to each ADS. Where the record owner of shares is a nominee,

custodian or other Person acting in a materially similar fashion on behalf of one or

more beneficial owners, that nominee, custodian or other Person is not a beneficial

owner and may not file a request for exclusion on behalf of any such beneficial

owners.

If you ask to be excluded, you will not receive any payment from this

Settlement, and you cannot object to the Settlement. You will not be legally bound

by anything that happens in the Action with respect to Released Claims and may be

able to sue (or continue to sue) the Released Parties in the future.

15. If I Do Not Exclude Myself From the Settlement, Can I Sue the

Released Parties For the Same Thing Later?

No. Unless you exclude yourself, you give up any rights to bring a lawsuit or

claim in any forum asserting any of the Released Claims against the Released

Parties. If you have a pending lawsuit or claim in any forum that you believe

concerns the Released Claims or the same matters alleged in this case, speak to

your lawyer immediately. You will likely have to exclude yourself from the


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Settlement Class if you wish to continue your own lawsuit or claim. Remember, the

exclusion deadline is____________, 201_.

16. If I Exclude Myself, Can I Get Money From This Settlement?

No. You will however retain any right you may have to bring a lawsuit, to

continue to pursue an existing lawsuit, or to be part of a different lawsuit asserting a

Released Claim against a Released Party.

OBJECTING TO THE SETTLEMENT

17. How Do I Tell the Court that I Do Not Like the Settlement or the

Request for Attorneys’ Fees and Reimbursement of Expenses?

If you are a Settlement Class Member, you can object to the Settlement if

you do not like any part of it, including the Plan of Allocation and the request for

attorneys’ fees or expenses. You can state the reasons why you think the Court

should not approve it, and the Court will consider your views. To object, you must

submit a letter saying that you object to the Settlement in Joseph Fragala v.

500.com Limited, et al., Case No. 2:15-cv-01463 JFW. Be sure to include your

name, address, telephone number, your signature, the dates and number and dollar

amounts of ADSs purchased and sold, and to supply documentary proof of the

purchase and/or sale transactions and of your membership in the Settlement Class,

and the reasons you object. Any objection letter must be delivered such that it is

received by each of the following no later than ____________, 201_.

Court:

Clerk of the Court


Central District of California – Western Division

312 North Spring Street

Los Angeles, California 90012-4701

Plaintiff’s Counsel Designee:

Shannon L. Hopkins, Esq.

LEVI & KORSINSKY LLP

733 Summer Street, Suite 304

Stamford, CT 06901

Defendants’ Counsel Designee:

Chet A. Kronenberg, Esq.

SIMPSON THACHER &

BARTLETT LLP

1999 Avenue of the Stars, 29th Floor


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Los Angeles, CA 90067

18. What is the Difference between Objecting and Requesting

Exclusion?

Objecting is simply telling the Court that you do not like something about the

proposed Settlement. Objecting does not prevent you from participating and

recovering money in the Settlement. However, you can object only if you stay in

the Settlement Class. Excluding yourself is telling the Court that you do not want to

be part of the Settlement Class. If you exclude yourself, you have no basis to object

because the Settlement no longer affects you.

THE COURT’S SETTLEMENT HEARING

The Court will hold a hearing to decide whether to approve the Settlement.

You may attend and you may ask to speak, but you do not have to.

19. When and Where Will the Court Decide Whether to Approve the

Settlement?

The Court will hold a Settlement Hearing at ___.m., on ______________,

at the United States District Courthouse, 312 North Spring Street, Los Angeles, CA

90012. At this hearing the Court will consider whether the settlement is fair,

reasonable and adequate. If there are objections, the Court will consider them. The

Court will also consider Plaintiff’s Counsel’s application for fees and expenses and

whether the Plan of Allocation is fair, reasonable and adequate. The Court may

decide these issues at the hearing or take them under consideration for a later

decision.

20. Do I Have to Come to the Hearing?

No. Plaintiff’s Counsel will answer questions the Court may have. But, you

are welcome to come at your own expense. If you send an objection, you do not

have to come to Court to talk about it. As long as you submitted your written

objection on time, the Court will consider it. You may also pay your own lawyer to

attend, but it is not necessary.


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21. May I Speak at the Hearing?

You may ask the Court for permission to speak at the Settlement Hearing.

To do so, you must submit a letter saying that it is your intention to appear in

Joseph Fragala v. 500.com Limited, et al., Case No. 2:15-cv-01463-JFW. Be sure

to include your name, address, telephone number, your signature, the number and

dollar amount of 500.com ADSs purchased and/or sold and to supply documentary

proof of the purchase and/or sale of any ADS and of your membership in the

Settlement Class, and the reasons you want to speak at the hearing. Your notice of

intention to appear must be received no later than _____________, 201_, by the

Clerk of the Court, Plaintiff’s Counsel Designee and the Defendants’ Counsel

Designee, at the three addresses listed in question 17.

IF YOU DO NOTHING

22. What Happens If I Do Nothing at All?

If you do nothing, all of your claims against the Released Parties will be

released, but you will not receive any money from this Settlement, because in order

to receive money it is necessary to submit a valid Proof of Claim.

GETTING MORE INFORMATION

23. Are There More Details About the Settlement?

This Notice summarizes the proposed Settlement. More details are in the

Stipulation of Settlement dated as of September 12, 2016. You can obtain a copy of

the Stipulation of Settlement or more information about the Settlement by

contacting the Claims Administrator.

500.com Limited Securities Litigation

Claims Administrator

500.com Limited Securities Litigation Settlement


P.O. Box 59479




or Plaintiff’s Counsel


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Shannon L. Hopkins, Esq.



Stamford, Connecticut 06901

[email protected]

203.992.4523

Or by visting www.rgwclaims.com/500.com.html

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

Clerk of the Court


Central District of California – Western Division

312 North Spring Street

Los Angeles, California 90012-4701

PLEASE DO NOT CONTACT THE COURT REGARDING THIS NOTICE

PLAN OF ALLOCATION OF NET SETTLEMENT FUND AMONG CLASS

MEMBERS

24. What is the objective of the Plan of Allocation?

The objective of the Plan of Allocation is to equitably distribute the Net

Settlement Fund to those Settlement Class Members who suffered economic losses

as a result of the alleged violations of the federal securities laws as opposed to

losses caused by market or industry factors or company-specific factors unrelated to

the alleged violations of law. The Plan of Allocation reflects Lead Plaintiff’s

damages expert’s analysis undertaken to that end, including a review of publicly

available information regarding 500.com and a statistical analysis of the price

movements of 500.com ADSs and the price performance of relevant market and

peer indices during the Settlement Class Period. The Plan of Allocation, however,

is not a formal damages analysis.

The calculations made pursuant to the Plan of Allocation are not intended to

be estimates of, nor indicative of, the amounts that Settlement Class Members

might have been able to recover after a trial. Nor are the calculations pursuant to


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the Plan of Allocation intended to be estimates of the amounts that will be paid to

Authorized Claimants pursuant to the Settlement. The computations under the Plan

of Allocation are only a method to weigh the claims of Authorized Claimants

against one another for the purposes of making pro rata allocations of the Net

Settlement Fund.

The Plan of Allocation generally measures the amount of loss that a

Settlement Class Member can claim for purposes of making pro rata allocations of

the Net Settlement Fund to Authorized Claimants. For losses to be compensable

damages under the federal securities laws, the disclosure of the allegedly

misrepresented information must be the cause of the decline in the price of the

security. In this case, Plaintiff alleges that Defendants issued false statements and

omitted material facts from November 22, 2013 to March 2, 2015, that inflated the

price of 500.com ADSs. It is alleged that the partial corrective information that

emerged between February 25, 2015 and March 2, 2015 impacted the market price

of 500.com ADSs in a statistically significant manner and removed the alleged

artificial inflation from the stock price on that day. Accordingly, in order to have a

compensable loss, 500.com ADSs must have been purchased or otherwise acquired

during the Settlement Class Period and held until the release of the corrective

information.

25. How does the Plan of Allocation calculate Class Members’

Recognized loss?

For purposes of determining whether a Claimant has a “Recognized Claim”,

purchases, acquisitions and sales of 500.com ADSs will first be matched on a First

In/First Out (“FIFO”) basis as set forth below.

For each 500.com ADS purchased or otherwise acquired during the

Settlement Class Period and sold before the close of trading on May 26, 2015,4 an

4 May 26, 2015 represents the last trading day of the 90-day period subsequent to the date on

which the information Lead Plaintiff contends corrected the misstatement or omission that is the

basis for the action is disseminated to the market (the “90-day look back period”). The Private

Securities Litigation Reform Act of 1995 (“PSLRA”) imposes a statutory limitation on

recoverable damages using the 90-day look back period. This limitation is incorporated into the

calculation of a Settlement Class Member’s Recognized Loss Amount. Specifically, a

Settlement Class Member’s Recognized Loss Amount cannot exceed the difference between the

purchase price paid for the 500.com ADSs and the average price of 500.com ADSs during the

90-day look back period if the ADS was held through May 26, 2015, the end of the 90-day look

back period. Losses on 500.com ADSs purchased/acquired during the Settlement Class Period


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“Out of Pocket Loss” will be calculated. Out of Pocket Loss is defined as the

purchase price (excluding all fees, taxes and commissions) minus the sale price

(excluding all fees, taxes and commissions). To the extent that calculation of the

Out of Pocket Loss results in a negative number, that number shall be set to zero.

A “Recognized Loss Amount” will be calculated as set forth below for each

500.com ADS purchased or otherwise acquired during the Settlement Class Period

from November 22, 2013 to March 2, 2015, that is listed in the Claim Form and for

which adequate documentation is provided. To the extent that the calculation of a

Claimant’s Recognized Loss Amount results in a negative number, that number

shall be set to zero.

(1). For each 500.com ADS purchased or acquired between

November 22, 2013 and March 2, 2015, inclusive, and

A. Sold prior to the close of trading on February 24, 2015, the

Recognized Loss Amount shall be zero;

B. Sold at a loss between February 25, 2015 and May 26, 2015,

inclusive, the Recognized Loss Amount shall be the lesser of:

i. $2.57 per ADS; or

ii. the difference between the purchase price per share and

the mean trading price from February 25, 2015 through

date of sale.

C. Held as of the close of trading on May 26, 2015, the

Recognized Loss Amount for each ADS shall be the lesser of:

i. $2.57 per ADS; or

ii. the difference between the purchase price per share and

$15.19 per share, if greater than zero.5

and sold during the 90-day look back period cannot exceed the difference between the purchase

price paid for the 500.com ADSs and the average price of 500.com ADSs during the portion of

the 90-day look back period elapsed as of the date of sale. 5 Pursuant to Section 21(D)(e)(1) of the Private Securities Litigation Reform Act of 1995, “in

any private action arising under this title in which the plaintiff seeks to establish damages by

reference to the market price of a security, the award of damages to the plaintiff shall not exceed

the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff


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(2). For each 500.com ADR purchased between February 25, 2015

and February 27, 2015, inclusive, the recognized loss is $0.00.6

for the subject security and the mean trading price of that security during the 90 day period

beginning on the date on which the information correcting the misstatement or omission that is

the basis for the action is disseminated.” The mean closing price of 500.com ADSs for the 90-

day period beginning on February 25, 2015 and ending on May 26, 2015 was $15.19 per share. 6 The closing price per share during this period is less than the mean closing price of $15.19 per

share for the 90-day lookback period.


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26. What are the additional details of the Plan of Allocation?

If a Settlement Class Member has more than one purchase/acquisition or sale

of 500.com ADSs during the Settlement Class Period, all purchases/acquisitions

and sales shall be matched on a FIFO basis. Settlement Class Period sales will be

matched first against any holdings at the beginning of the Settlement Class Period,

and then against purchases/acquisitions in chronological order, beginning with the

earliest purchase/acquisition made during the Settlement Class Period.

2/25/2015 $9.96 4/13/2015 $12.18

2/26/2015 $10.03 4/14/2015 $12.31

2/27/2015 $9.76 4/15/2015 $12.46

3/2/2015 $9.83 4/16/2015 $12.62

3/3/2015 $10.02 4/17/2015 $12.75

3/4/2015 $10.37 4/20/2015 $12.88

3/5/2015 $10.86 4/21/2015 $12.99

3/6/2015 $11.32 4/22/2015 $13.09

3/9/2015 $11.49 4/23/2015 $13.18

3/10/2015 $11.58 4/24/2015 $13.28

3/11/2015 $11.65 4/27/2015 $13.38

3/12/2015 $11.63 4/28/2015 $13.46

3/13/2015 $11.63 4/29/2015 $13.55

3/16/2015 $11.65 4/30/2015 $13.64

3/17/2015 $11.66 5/1/2015 $13.74

3/18/2015 $11.51 5/4/2015 $13.83

3/19/2015 $11.42 5/5/2015 $13.91

3/20/2015 $11.40 5/6/2015 $13.98

3/23/2015 $11.40 5/7/2015 $14.06

3/24/2015 $11.41 5/8/2015 $14.15

3/25/2015 $11.43 5/11/2015 $14.24

3/26/2015 $11.47 5/12/2015 $14.33

3/27/2015 $11.49 5/13/2015 $14.41

3/30/2015 $11.45 5/14/2015 $14.50

3/31/2015 $11.43 5/15/2015 $14.57

4/1/2015 $11.39 5/18/2015 $14.60

4/2/2015 $11.42 5/19/2015 $14.73

4/6/2015 $11.45 5/20/2015 $14.87

4/7/2015 $11.56 5/21/2015 $14.99

4/8/2015 $11.72 5/22/2015 $15.08

4/9/2015 $11.89 5/26/2015 $15.19

4/10/2015 $12.04

500.com ADRs

90-day Mean Trading Price


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Class Members who held 500.com ADSs prior to November 22, 2013 and

sold these ADSs between November 22, 2013 and March 2, 2015, gained from the

alleged artificial inflation in the ADSs attributable to the allegedly misrepresented

information. These Pre-Class Gains shall be netted against Class Members’ total

Recognized Loss Amounts to determine a Claimant’s Recognized Claim. For each

500.com ADS held prior to November 22, 2013, and sold between November 22,

2013 and March 2, 2015, the Recognized Gain amount shall be zero.

Purchases or acquisitions and sales of 500.com ADSs shall be deemed to

have occurred on the “contract” or “trade” date as opposed to the “settlement” or

“payment” date. The receipt or grant by gift, inheritance or operation of law of

500.com ADSs during the Settlement Class Period shall not be deemed a purchase,

acquisition or sale of these ADSs for the calculation of an Authorized Claimant’s

Recognized Claim, nor shall the receipt or grant be deemed an assignment of any

claim relating to the purchase/acquisition of such 500.com ADSs unless (i) the

donor or decedent purchased or otherwise acquired such 500.com ADSs during the

Settlement Class Period; (ii) no Claim Form was submitted by or on behalf of the

donor, on behalf of the decedent, or by anyone else with respect to such 500.com

ADSs; and (iii) it is specifically so provided in the instrument of gift or assignment.

The date of covering a “short sale” is deemed to be the date of purchase or

acquisition of the 500.com ADSs. The date of a “short sale” is deemed to be the

date of sale of 500.com ADSs. In accordance with the Plan of Allocation, however,

the Recognized Loss Amount on “short sales” is zero. In the event that a Claimant

has an opening short position in 500.com ADSs, the earliest Settlement Class

Period purchases or acquisitions shall be matched against such opening short

position and not be entitled to a recovery until that short position is fully covered.

500.com ADSs are the only security eligible for recovery under the Plan of

Allocation. Option contracts to purchase or sell 500.com ADSs are not securities

eligible to participate in the Settlement. With respect to 500.com ADSs purchased

or sold through the exercise of an option, the purchase/sale date of the 500.com

ADSs is the exercise date of the option and the purchase/sale price is the exercise

price of the option.

The sum of a Claimant’s Recognized Loss Amounts will be the Claimant’s

“Recognized Claim.”

An Authorized Claimant’s Recognized Claim shall be the amount used to


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calculate the Authorized Claimant’s pro rata share of the Net Settlement Fund. If

the sum total of Recognized Claims of all Authorized Claimants who are entitled to

receive payment out of the Net Settlement Fund is greater than the Net Settlement

Fund, each Authorized Claimant shall receive his, her or its pro rata share of the

Net Settlement Fund. The pro rata share shall be the Authorized Claimant’s

Recognized Claim divided by the total of Recognized Claims of all Authorized

Claimants, multiplied by the total amount in the Net Settlement Fund.

If the Net Settlement Fund exceeds the sum total amount of the Recognized

Claims of all Authorized Claimants entitled to receive payment out of the Net

Settlement Fund, the excess amount in the Net Settlement Fund shall be distributed

pro rata to all Authorized Claimants entitled to receive payment.

The Net Settlement Fund will be allocated among all Authorized Claimants

whose prorated payment is $10.00 or greater. If the prorated payment to any

Authorized Claimant calculates to less than $10.00, it will not be included in the

calculation and no distribution will be made to that Authorized Claimant.

DATED ______________________,

2016

BY ORDER OF THE COURT

UNITED STATES DISTRICT

COURT

CENTRAL DISTRICT OF

CALIFORNIA


EXHIBIT A-2

A2 - 1



JOSEPH FRAGALA, INDIVIDUALLY AND

ON BEHALF OF ALL OTHERS SIMILARLY

SITUATED,

Plaintiff,

v.


ZHENGMING PAN, DEUTSCHE BANK

SECURITIES INC., PIPER JAFFRAY & CO.,

AND OPPENHEIMER & CO. INC.,

Defendants.

No. 2:15-CV-01463-JFW (Ex)

PUBLICATION NOTICE


TO: All Persons (including, without limitation, their beneficiaries) who purchased or

otherwise acquired American Depository Shares (“ADSs”) of 500.com Limited

(“500.com” or “the Company”) between November 22, 2013 and March 2, 2015,

inclusive (collectively, the “Settlement Class”).

If you meet the above class definition, you could get a payment from a class action settlement.

A federal court authorized this Notice. This is not a solicitation from a lawyer.

YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States District

Court for the Central District of California, that a hearing will be held on ______________,

201_, at _.m., before The Honorable John F. Walter, at the United States District Court for the

Central District of California, 312 North Spring Street, Los Angeles, California 90012-4701 (the

“Court”), for the purpose of determining (1) whether the proposed settlement of claims in the

above-captioned Action for consideration including the sum of $2,500,000.00 (two million five

hundred thousand dollars) in cash should be approved by the Court as fair, reasonable and

adequate; (2) whether this Action should be dismissed with prejudice as to the Defendants

pursuant to the terms and conditions set forth in the Stipulation dated as of September 12, 2016;

(3) whether the proposed plan to distribute the settlement proceeds (the “Plan of Allocation”) is


EXHIBIT A-2

A2 - 2

fair, reasonable and adequate and therefore should be approved; and (4) whether the application

of Lead Plaintiff’s Counsel for the payment of attorneys’ fees and expenses incurred in

connection with this Action and reimbursement of the Lead Plaintiff’s reasonable costs and

expenses (including lost wages) directly related to their representation of the Settlement Class

should be approved.

If you purchased or otherwise acquired 500.com ADSs between November 22, 2013 and

March 2, 2015, inclusive, your rights may be affected by this Settlement, including the release

and extinguishment of claims you may possess relating to your ownership interest in the ADSs.

If you are a member of the Settlement Class, in order to share in the distribution of the

Net Settlement Fund, you must submit a Proof of Claim and Release form that is received no

later than _____________, 201_, establishing that you are entitled to recovery.

If you desire to be excluded from the Settlement Class, you must submit a request for

exclusion to RG/2 Claims Administration LLC, P.O. Box 59479, Philadelphia, PA 19102-9479,

so that it is received by ____________, 201_. Any objection to any aspect of the Settlement

must be filed with the Court, Plaintiff’s Counsel Designee and the Defendants’ Counsel

Designee, no later than ____________, 201_.

If you wish to receive a detailed Notice concerning the terms of the Settlement or the

Proof of Claim and Release form, you may obtain copies by writing to RG/2 Claims

Administration LLC, P.O. Box 59479, Philadelphia, PA 19102-9479, or by visiting

www.rgwclaims.com/500.com.html.

DO NOT TELEPHONE THE COURT, THE CLERK’S OFFICE OR ANY OF THE

DEFENDANTS OR COUNSEL FOR THE DEFENDANTS REGARDING THIS NOTICE.

DATED ______________________, 2016 BY ORDER OF THE COURT


EXHIBIT A-2

A2 - 3




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KOLIN C. TANG (SBN 279834)

Email: [email protected]

SHEPHERD, FINKELMAN, MILLER & SHAH, LLP

11755 Wilshire Blvd.

Los Angeles, CA 90025

Tel: (323) 510-4060

Fax: (866) 300-7367

SHANNON L. HOPKINS*


NANCY A. KULESA*




Stamford, CT 06901

Tel: (203) 992-4523

Fax: (212) 363-7171

*Admitted Pro Hac Vice

Attorneys for Lead Plaintiff Liu Shaolin ___



JOSEPH FRAGALA, INDIVIDUALLY

AND ON BEHALF OF ALL OTHERS

SIMILARLY SITUATED,

Plaintiff,

v.


ZHENGMING PAN, DEUTSCHE

BANK SECURITIES INC., PIPER

JAFFRAY & CO., AND

OPPENHEIMER & CO. INC.,

Defendants.

No. 2:15-CV-01463-JFW (Ex)

PROOF OF CLAIM FORM


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[Exhibit A-3]

TO HAVE AN OPPORTUNITY TO RECEIVE A SHARE OF THE

SETTLEMENT FUND, YOU MUST COMPLETE AND SIGN THIS PROOF

OF CLAIM FORM, AND RETURN IT TO:

500.com Limited Securities Litigation Settlement


P.O. Box 59479




YOU MUST COMPLETE AND SIGN THIS PROOF OF CLAIM AND MAIL IT

BY PREPAID, FIRST-CLASS MAIL, POSTMARKED NO LATER THAN

__________. FAILURE TO SUBMIT YOUR CLAIM BY ____________ WILL

SUBJECT YOUR CLAIM TO REJECTION AND PRECLUDE YOU FROM

RECEIVING ANY MONEY IN CONNECTION WITH THE SETTLEMENT OF

THIS ACTION.

DO NOT MAIL OR DELIVER YOUR PROOF OF CLAIM FORM TO THE

COURT OR ANY PARTIES OR THEIR COUNSEL. ANY SUCH CLAIM WILL

BE DEEMED NOT TO HAVE BEEN SUBMITTED. SUBMIT YOUR CLAIM

ONLY TO THE CLAIMS ADMINISTRATOR.


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PART I – CLAIMANT INFORMATION Last Name (Claimant) First Name (Claimant)

Last Name (Beneficial Owner First Name

if Different from Claimant) (Beneficial Owner) Last Name (Co-Beneficial Owner) First Name (Co-Beneficial

Owner) Company/Other Entity (If Claimant Is Not an Individual) Contact Person (If

Claimant Is Not

an Individual) Trustee/Nominee/Other

Account Number (If Claimant Is Not an Individual) Trust/Other Date (If Appl.)

Address Line 1

Address Line 2 (If Applicable)

City State Zip Code

Foreign Province Country Foreign Zip Code

Telephone Number (Day) Telephone Number (Night)


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Beneficial Owner’s Employer Identification Number or Social Security Number 1 Email

IDENTITY OF CLAIMANT (check only one box): [ ] Individual [ ] Joint Owners [ ] Estate

[ ] Corporation [ ] Trust [ ] Partnership [ ] Private Pension Fund [ ] IRA, Keogh, or other type of individual

retirement plan [ ] Legal Representative (indicate type of plan, mailing address, and name of

current custodian) [ ] Other (specify, describe on separate sheet) .

1 The taxpayer identification number (TIN), consisting of a valid Social Security number (SSN)

for individuals or employer identification number (EIN) for business entities, trusts, estates, etc.,

and telephone number of the beneficial owner(s) may be used in verifying this claim.


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PART II – GENERAL INSTRUCTIONS

1. It is important that you completely read and understand the Notice of

Proposed Settlement of Class Action (the “Notice”) that accompanies this Proof of

Claim and Release (“Proof of Claim”) and the Plan of Allocation included in the

Notice. The Notice describes the proposed Settlement that will resolve this

Action, how Class Members are affected by the Settlement, and the manner in

which the Net Settlement Fund will be distributed if the Court approves the

Settlement and the Plan of Allocation. The Notice also contains the definitions of

some of the defined terms (which are indicated by initial capital letters) used in

this Proof of Claim.2 By signing and submitting this Proof of Claim, you will be

certifying that you have read and that you understand the Notice, including the

terms of the releases described therein and provided for herein.

2. TO BE ELIGIBLE TO RECEIVE A DISTRIBUTION FROM THE

NET SETTLEMENT FUND, YOU MUST MAIL YOUR COMPLETED AND

SIGNED PROOF OF CLAIM TO THE CLAIMS ADMINSTRATOR BY FIRST-

CLASS MAIL, POSTAGE PREPAID, POSTMARKED BY ____________,

ADDRESSED AS FOLLOWS:



P.O. Box 59479




3. This Proof of Claim is directed to all Persons or entities (including,

without limitation, their beneficiaries) that purchased or otherwise acquired

500.com Limited (“500.com” or the “Company”) American Depository Shares

(“ADSs”) between November 22, 2013 and March 2, 2015, inclusive (the “Class

Period”) (the “Class”).

4. “Class Members” means any persons and entities who purchased or

otherwise acquired 500.com ADSs during the Class Period and are not excluded

from the Class. Persons and entities excluded from the Class are: Defendants and

any entity in which the Defendants have a controlling interest, and the officers,

2 All capitalized terms not defined herein or in the Notice are defined in the Stipulation and

Agreement of Settlement dated September 12, 2016 (the “Stipulation”). The Stipulation is

posted on the Claims Administrator’s settlement website www.rgwclaims.com/500.com.html.


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directors, affiliates, legal representatives, immediate family members, heirs,

successors, subsidiaries and/or assigns of any such individual or entity in their

capacity as such. Also excluded from the Class will be any Person who timely

and validly seeks exclusion from the Class in accordance with the requirements of

the Notice

5. IF YOU ARE NOT A CLASS MEMBER, OR IF YOU, OR

SOMEONE ACTING ON YOUR BEHALF, FILED A REQUEST FOR

EXCLUSION FROM THE CLASS, DO NOT SUBMIT A PROOF OF CLAIM.

YOU MAY NOT, DIRECTLY OR INDIRECTLY, PARTICIPATE IN THE

SETTLEMENT IF YOU ARE NOT A CLASS MEMBER. THUS, IF YOU FILE

A VALID REQUEST FOR EXCLUSION IN A TIMELY MANNER, ANY

PROOF OF CLAIM THAT YOU SUBMIT, OR THAT MAY BE SUBMITTED

ON YOUR BEHALF, WILL NOT BE ACCEPTED.

6. All Class Members will be bound by the terms of the Final Judgment

entered in the Action WHETHER OR NOT A PROOF OF CLAIM FORM IS

SUBMITTED, unless a valid request for exclusion from the Class is received by

________. The Final Judgment will release and enjoin the filing or continued

prosecution of the Released Claims, as described in the Notice.

7. You may only participate in the distribution of the Net

Settlement Fund if you are a member of the Class and if you complete and

return this form as specified below. If you fail to file a timely, properly

addressed, and completed Proof of Claim, your claim may be rejected and you

may be precluded from receiving any distribution from the Net Settlement Fund.

8. Submission of this Proof of Claim does not guarantee that you

will share in the Net Settlement Fund. The distribution of the Net Settlement

Fund will be governed by the Plan of Allocation set forth in the Notice, if

approved by the Court, or such other plan of allocation as the Court approves. 9. Use Part III of this Proof of Claim entitled “SCHEDULE OF

TRANSACATIONS IN 500.COM ADSs” to supply all required details of your

transaction(s) in 500.com ADSs. On the schedule, provide all the requested

information with respect to all purchases, acquisitions, and sales of 500.com

ADSs during the period from November 22, 2013 to March 2, 2015, inclusive, as

well as the number of 500.com ADSs you held as of the close of trading on

November 22, 2013 and March 2, 2015.


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10. You are required to submit genuine and sufficient documentation for

all your transactions in and holdings of 500.com shares as set forth in the Schedule

of Transactions in Part III. Documentation may consist of copies of brokerage

confirmations or monthly statements. IF SUCH DOCUMENTS ARE NOT IN

YOUR POSSESSION, PLEASE OBTAIN COPIES OR EQUIVALENT

CONTEMPORANEOUS DOCUMENTS FROM YOUR BROKER. FAILURE

TO SUPPLY THIS DOCUMENTATION MAY RESULT IN REJECTION OF

YOUR CLAIM. DO NOT SEND ORIGINAL DOCUMENTS. Please keep a

copy of all documents that you send to the Claims Administrator. 11. Separate Proof of Claim forms should be submitted for each

separate legal entity (e.g., a claim from joint owners should not include separate

transactions of just one of the joint owners, and an individual should not

combine his or her IRA transactions with transactions made solely in the

individual’s name). Conversely, a single Proof of Claim form should be submitted

on behalf of one legal entity, including all transactions made by that entity on

one Proof of Claim form, no matter how many separate accounts that entity has

(e.g., a corporation with multiple brokerage accounts should include all

transactions made in all accounts on one Proof of Claim form).

12. All joint beneficial owners must each sign this Proof of Claim form.

If you purchased or acquired 500.com ADSs during the Class Period and held

the securities in your name, you are the beneficial owner as well as the record

owner. If, however, you purchased or acquired 500.com ADSs during the Class

Period and the securities were registered in the name of a third party, such as a

nominee or brokerage firm, you are the beneficial owner of these securities, but

the third party is the record owner.

13. Agents, executors, administrators, guardians, and trustees must

complete and sign the Proof of Claim on behalf of persons represented by them,

and they must:

a. expressly state the capacity in which they are acting;

b. identify the name, account number, Social Security Number (or taxpayer identification number), address, and telephone number of the beneficial owner of (or other person or entity on whose behalf they are acting with respect to) the 500.com ADSs; and

c. furnish evidence of their authority to bind to the Proof of Claim

the person or entity on whose behalf they are acting. (Authority to complete and sign a Proof of Claim cannot be established by 500.com ADSs demonstrating only that they have


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discretionary authority to trade 500.com ADSs in another person’s accounts).

14. By submitting a signed Proof of Claim, you will be swearing that

you:

a. own(ed) the 500.com ADSs you have listed in the Proof of Claim;

or

b. are expressly authorized to act on behalf of the owner thereof.

15. By submitting a signed Proof of Claim, you will be swearing to the

truth of the statements contained therein and the genuineness of the documents

attached thereto, subject to penalties of perjury under the laws of the United

States of America. The making of false statements, or the submission of forged

or fraudulent documentation, will result in the rejection of your claim and may

subject you to civil liability or criminal prosecution. 16. NOTICE REGARDING ELECTRONIC FILES: Certain

claimants with large numbers of transactions may request to, or may be

requested to, submit information regarding their transactions in electronic files.

To obtain the mandatory electronic filing requirements and file layout, you may

visit the website at www.rgwclaims.com/500.com.html or you may email the

Claims Administrator at [email protected]. Any file not in accordance with the

required electronic filing format will be subject to rejection. No electronic files

will be considered to have been properly submitted unless the Claims

Administrator issues an email after processing your file with your claim number(s)

and respective account information. Do not assume that your file has been

received or processed until you receive this email. If you do not receive such an

email within 10 days of your submission, you should contact the electronic filing

department at [email protected] to inquire about your file and

confirm it was received and acceptable. 17. If you have questions concerning the Proof of Claim, or need

additional copies of the Proof of Claim or the Notice, you may contact the

Claims Administrator, RG/2 Claims Administration LLC, at the above address or

by toll-free phone at 1-(866) 742-4955, or you may download the documents

from www.rgwclaims.com/500.com.html.


mailto:[email protected]


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PART III – SCHEDULE OF TRANSACTIONS IN 500.COM

SHARES Failure to provide proof of all purchases, sales, and closing positions will

impede proper processing of your claim. Please include proper documentation

with your Proof of Claim as described in detail in Part I, Paragraph 10, above. A. BEGINNING HOLDINGS:

State the total number of ADSs of 500.com held as of the close of trading on November 22, 2013.

__________________ ___

IF NONE, CHECK HERE

O

B. PURCHASES: Separately list each and every purchase of 500.com ADSs during the period from November 22, 2013 through and including the close of trading on March 2, 2015.

IF NONE, CHECK HERE O

Date(s) of Sales(s)

(List

Chronologically)

(Month/Day/Year)

Number of

Shares Sold

Sales Price per Share

(Excluding

Commissions,

Taxes & Fees)

Proof of Sale

Enclosed

___/___/______ _____________ $__________ o Y o N

___/___/______ _____________ $__________ o Y o N

___/___/______ _____________ $__________ o Y o N

___/___/______ _____________ $__________ o Y o N

C. ACQUIRED SHARES

State the number of 500.com ADSs that you acquired during the period from November 22, 2013 through and including the close of trading on March 2, 2015.

IF NONE, CHECK

HERE

O


[PROPOSED] STATEMENT OF DECISION

DENYING DEFENDANTS’ MOTION TO DISMISS

Case No. 2:15-CV-01463-JFW

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Date(s) of Sales(s)

(List

Chronologically)

(Month/Day/Year)

Number of

Shares Sold

Acquisition Price

per Share

(Excluding

Commissions,

Taxes & Fees)

Proof of Sale

Enclosed

___/___/______ ______________ $__________ o Y o N

___/___/______ ______________ $__________ o Y o N

___/___/______ ______________ $__________ o Y o N

___/___/______ ______________ $__________ o Y o N

D. SALES:

Separately list each and every sale of 500.com ADSs during the period from November 22, 2013 through and including close of trading on March 2, 2015. ___

IF NONE, CHECK HERE

O

Date(s) of Sales(s)

(List

Chronologically)

(Month/Day/Year)

Number of

Shares Sold

Sales Price per

Share

(Excluding

Commissions,

Taxes & Fees)

Proof of Sale

Enclosed

___/___/______ ______________ $__________ o Y oN

___/___/______ ______________ $__________ o Y oN

___/___/______ ______________ $__________ o Y oN

___/___/______ ______________ $__________ o Y oN

E. ENDING HOLDINGS:

State the total number of shares of 500.com ADSs held as of the close of trading on ____________.

IF NONE, CHECK HERE

O

IF YOU REQUIRE ADDITIONAL SPACE, ATTACH EXTRA

SCHEDULES IN THE SAME FORMAT AS ABOVE. PRINT THE

BENEFICIAL OWNER’S FULL NAME AND TAXPAYER

IDENTIFICATION NUMBER ON EACH

ADDITIONAL PAGE.


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PART IV – RELEASE OF CLAIMS AND SIGNATURE

YOU MUST ALSO READ THE RELEASE AND CERTIFICATION BELOW AND SIGN ON PAGE 10 OF THIS PROOF OF CLAIM

A. I (we) hereby acknowledge full and complete satisfaction of, and do

hereby fully, finally, and forever waive, release, discharge, and dismiss each

and every one of the Released Parties with respect to any and all of the Released

Claims, as those terms are defined in the accompanying Notice.

B. I (we) hereby acknowledge that as of the Effective Date, I (we): (i) shall

be deemed to have, and shall have, fully, finally, and forever waived, released,

relinquished, and discharged all Released Claims; (ii) shall forever be enjoined

from instituting, commencing, assisting, maintaining or prosecuting any

Released Claim; and (iii) agree and covenant not to sue on the basis of any

Released Claims or to assist any third party in instituting, commencing,

assisting, maintaining or prosecuting any suit related to any Released Claims. CERTIFICATION

By signing and submitting this Proof of Claim, the claimant(s) or the

person(s) who represents the claimant(s) certifies, as follows: 1. that I (we) have read and understand the contents of the Notice, the Plan

of Allocation, and the Proof of Claim, including the releases provided for in the Settlement;

2. that the claimant(s) is a (are) Class Member(s), as defined in the Notice,

and is (are) not excluded from the Class; 3. that the claimant has not submitted a request for exclusion from the Class;

4. that I (we) own(ed) the 500.com ADSs identified in the Proof of Claim and

have not assigned the claim against the Released Parties to another, or

that, in signing and submitting this Proof of Claim, I (we) have the

authority to act on behalf of the owner(s) thereof; 5. that the claimant has not submitted any other claim covering the same

purchases, acquisition, sales, or holdings of 500.com ADSs and knows of

no other person having done so on his/her/its behalf; 6. that the claimant submits to the jurisdiction of the Court with respect to

his/her/its claim and for purposes of enforcing the releases set forth herein;


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7. that I (we) agree to furnish such additional information with respect to this

Proof of Claim as the parties, the Claims Administrator, or the Court may

require; 8. that the claimant waives the right to trial by jury, to the extent it exists,

and agrees to the Court’s summary disposition of the determination of

the validity or amount of the claim made by this Proof of Claim; 9. that I (we) acknowledge that the claimant will be bound by and subject

to the terms of any judgment that may be entered in the Action; and

10. that the claimant is NOT subject to backup withholding under the

provisions of Section 3406(a)(1)(C) of the Internal Revenue Code because

(a) the claimant is exempt from backup withholding or (b) the claimant has

not been notified by the IRS that he/she/it is subject to backup withholding

as a result of a failure to report all interest or dividends or (c) the IRS has

notified the claimant that he/she/it is no longer subject to backup

withholding. If the IRS has notified the claimant that he/she/it is subject to

backup withholding, please strike out the language in the preceding

sentence indicating that the claim is not subject to backup withholding in

the certification above. UNDER THE PENALTIES OF PERJURY, I (WE) CERTIFY THAT ALL OF

THE INFORMATION PROVIDED BY ME (US) ON THIS FORM IS TRUE,

CORRECT, AND COMPLETE, AND THAT THE DOCUMENTS SUBMITTED

HEREWITH ARE TRUE AND CORRECT COPIES OF WHAT THEY

PURPORT TO BE.

Signature of Claimant Date

Print Name of Claimant

Signature of Joint Claimant, if any Date

Print Name of Joint Claimant


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THIS CLAIM FORM MUST BE MAILED TO THE CLAIMS

ADMINISTRATOR BY FIRST-CLASS MAIL, POSTAGE PREPAID,

POSTMARKED BY ________________, ADDRESSED AS FOLLOWS:



P.O. Box 59479




A Proof of Claim received by the Claims Administrator shall be deemed

to have been submitted when posted, if mailed by ___________ and if a

postmark is indicated on the envelope, it is mailed First Class, and addressed in

accordance with the above instructions. In all other cases, a Proof of Claim shall

be deemed to have been submitted when actually received by the Claims

Administrator.

You should be aware that it will take a significant amount of time to fully

process all of the Proof of Claim forms. Please notify the Claims Administrator

of any change of address.

REMINDER CHECKLIST

1. Please sign the above release and certification. If this Proof of Claim is

being made on behalf of joint claimants, then both must sign.

2. Remember to attach only copies of acceptable supporting documentation. 3. Please do not highlight any portion of the Proof of Claim or any supporting

documents. 4. Do not send original stock certificates or documentation. These items

cannot be returned to you by the Claims Administrator. 5. Keep copies of the completed Proof of Claim and documentation for your

own records. 6. The Claims Administrator will acknowledge receipt of your Proof of

Claim by mail, within 60 days. Your claim is not deemed filed until you receive an acknowledgement postcard. If you do not receive an acknowledgement postcard within 60 days, please call the Claims Administrator toll free at 1-(866) 742-4955.


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7. If your address changes in the future, or if this Proof of Claim was sentto an old or incorrect address, please send the Claims Administratorwritten notification of your new address. If you change your name, pleaseinform the Claims Administrator.

8. If you have any questions or concerns regarding your claim, pleasecontact the Claims Administrator at the above address or [email protected], or visit www.rgwclaims.com/500.com.html.



[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE 1



JOSEPH FRAGALA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,

Plaintiff,

v.

500.COM LIMITED, MAN SAN LAW,ZHENGMING PAN, DEUTSCHEBANK SECURITIES INC., PIPERJAFFRAY & CO., ANDOPPENHEIMER & CO. INC.,

Defendants.

No. 2:15-CV-01463-JFW (Ex)

[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE


Exhibit BCase 2:15-cv-01463-JFW-E Document 88-2 Filed 10/28/16 Page 91 of 101 Page ID #:1643

[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE 1

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This matter came before the Court for hearing pursuant to the Order

Preliminarily Approving Settlement and Providing for Notice of Proposed

Settlement (“Preliminary Approval Order”), dated _________________, 2016, on

the application of the Lead Plaintiff for approval of the Settlement set forth in the

Stipulation of Settlement dated as of September 12, 2016 (the “Stipulation”). Due

and adequate notice having been given to the Settlement Class as required in said

Preliminary Approval Order, and the Court having considered all papers filed and

proceedings held herein, and otherwise being fully informed in the premises and

good cause appearing therefore, IT IS HEREBY ORDERED, ADJUDGED AND

DECREED that:

This Final Judgment and Order of Dismissal With Prejudice (the “Final

Judgment”) incorporates by reference the definitions in the Stipulation, and all

terms used herein shall have the same meanings as set forth in the Stipulation.

This Court has jurisdiction over the subject matter of the Action and over all

parties to the Action, including all Settlement Class Members.

The distribution of the Notice and the issuance of the Publication Notice, as

provided for in the Preliminary Approval Order, constituted the best notice

practicable under the circumstances, including individual notice to all Settlement

Class Members who could be identified through reasonable effort. Said notices

fully satisfied the requirements of Federal Rule of Civil Procedure 23, Section

21D(a)(7) of the Securities Exchange Act of 1934, as amended by the Private

Securities Litigation Reform Act of 1995 (15 U.S.C. ¶78u-4(a)(7)), the

requirements of due process and any other applicable law.

The Court finds that 500.com has provided notice pursuant to the Class

Action Fairness Act of 2005, 28 U.S.C. §§ 1715.

The Court finds that the prerequisites for a class action under Rule 23(a) and

(b)(3) of the Federal Rules of Civil Procedure have been satisfied for purposes of

this Settlement in that: (a) the number of Settlement Class Members is so numerous


[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE Case No. 2:15-CV-01463-JFW (Ex)

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that joinder of all members thereof is impracticable; (b) there are questions of law

or fact common to the Settlement Class that predominate over any individual

questions; (c) the claims of the Lead Plaintiff are typical of the claims of the

Settlement Class he seeks to represent; (d) the Lead Plaintiff fairly and adequately

represents the interests of the Settlement Class; and (e) a class action is superior to

other available methods for the fair and efficient adjudication of this Action.

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

Court hereby certifies the Action as a class action for purposes of this Settlement

only, and certifies as the Settlement Class all Persons (including, without limitation,

their beneficiaries) who purchased or otherwise acquired American Depository

Shares (ADSs) of 500.com between November 22, 2013 and March 2, 2015,

inclusive, excluding: (i) those Persons who timely and validly request exclusion

from the Settlement Class; and (ii) the Defendants and any entity in which the

Defendants have a controlling interest, and the officers, directors, affiliates, legal

representatives, immediate family members, heirs, successors, subsidiaries and/or

assigns of any such individual or entity in their capacity as such (“Settlement Class

Members”).

Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereby

approves the Settlement set forth in the Stipulation and finds that said Settlement

is, in all respects, fair, reasonable and adequate to, and is in the best interests of, the

Lead Plaintiff, the Settlement Class and each of the Settlement Class Members. This

Court further finds the Settlement set forth in the Stipulation is the result of good

faith, arm’s-length negotiations between experienced counsel representing the

interests of the Lead Plaintiff, Settlement Class Members and Defendants.

Accordingly, the Settlement embodied in the Stipulation is hereby approved in all

respects and shall be consummated in accordance with its terms and provisions. The

Settling Parties are hereby directed to perform the terms of the Stipulation.

In accordance with Paragraph 1.7 of the Stipulation, for purposes of this Final



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Judgment, the term “Claims” shall mean: any and all manner of claims, demands,

rights, actions, potential actions, causes of action, liabilities, duties, damages,

losses, diminutions in value, obligations, agreements, suits, fees, attorneys’ fees,

expert or consulting fees, debts, expenses, costs, sanctions, judgments, decrees,

matters, issues and/or controversies of any kind or nature whatsoever, whether

known or unknown, contingent or absolute, liquidated or not liquidated, accrued or

unaccrued, suspected or unsuspected, disclosed or undisclosed, apparent or not

apparent, foreseen or unforeseen, matured or not matured, which now exist, or

heretofore or previously existed, or may hereafter exist (including, but not limited

to, any claims arising under federal, state or foreign law, common law, bankruptcy

law, statute, rule or regulation relating to alleged fraud, breach of any duty,

negligence, fraudulent conveyance, avoidance, violations of the Securities Act of

1933, as amended and rules promulgated thereunder, violations of the Securities

Exchange Act of 1934, as amended and rules promulgated thereunder, violations of

other federal securities laws or otherwise), whether individual, class, direct,

derivative, representative, on behalf of others, legal, equitable, regulatory,

governmental or of any other type or in any other capacity.

In accordance with Paragraph 1.9 of the Stipulation, for purposes of this Final

Judgment, the term “Defendants” shall mean: 500.com Limited, Man San Law and

Zhengming Pan.

In accordance with Paragraph 1.26 of the Stipulation, for purposes of this

Final Judgment, the term “Released Claims” shall mean: any and all Claims,

including Unknown Claims, that have been, could have been or in the future can or

might be asserted in any federal, state or foreign court, tribunal, forum or proceeding

by or on behalf of any of the Releasing Parties against any one or more of the

Released Parties, whether any such Released Parties were named, served with

process or appeared in the Action, which directly or indirectly arise out of or relate

to: (i) the Action; (ii) 500.com’s Prospectus and Registration Statement for its



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November 22, 2013 initial public offering; (iii) marketing and/or selling of the

ADSs by one or more of the Defendants and/or the Released Parties in connection

with 500.com’s initial public offering and/or during the Class Period; (iv) the

purchase, sale or decision not to sell the ADS by any of the Releasing Parties in

connection with 500.com’s initial public offering and/or during the Class Period; or

(v) any claims in connection with, based upon, arising out of or relating to the

Settlement (but excluding any claims to enforce the terms of the Settlement).

In accordance with Paragraph 1.27 of the Stipulation, for purposes of this

Final Judgment, the term “Released Parties” shall mean: (i) 500.com, its past,

present and future, direct or indirect, parent entities, associates, affiliates and

subsidiaries, each and all of their respective past, present and future directors,

officers, partners, alleged partners, stockholders, predecessors, successors and

employees and each and all of their underwriters, attorneys, advisors, consultants,

trustees, insurers, co-insurers, reinsurers, representatives and assigns; (ii) each of

the Individual Defendants and their respective present, past and future spouses,

parents, siblings, children, grandparents and grandchildren, the present, past and

future spouses of their respective parents, siblings and children and the present, past

and future parents and siblings of their respective spouses, including step and

adoptive relationships; (iii) any and all persons, firms, trusts, corporations and other

entities in which any of the Defendants or foregoing Released Parties has a financial

interest or was a founder, settler or creator and, in their capacity as such, any and

all officers, directors, employees, trustees, beneficiaries, settlers, creators,

attorneys, consultants, agents or representatives of any such person, firm, trust,

corporation or other entity; and (iv) in their capacity as such, the legal

representatives, heirs, executors, administrators, predecessors, successors,

predecessors-in-interest, successors-in-interest and assigns of any of the foregoing.

In accordance with Paragraph 1.28 of the Stipulation, for the purposes of this

Final Judgment, the term “Releasing Parties” shall mean: the Lead Plaintiff, each



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and every member of the Settlement Class and each of their respective parent

entities, associates, affiliates, subsidiaries, predecessors, successors, assigns,

attorneys, heirs, representatives, administrators, executors, devisees, legatees and

estates.

In accordance with Paragraph 1.35 of the Stipulation, for the purposes of this

Final Judgment, the term “Unknown Claims” shall mean: all claims, demands,

rights, liabilities and causes of action of every nature and description which any

Settlement Class Member does not know or suspect to exist in his, her or its favor

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 settlement with and release of the Released

Parties, or might have affected his, her or its decision not to opt-out or object to this

Settlement. With respect to any and all Released Claims, the Settling Parties

stipulate and agree that, upon the Effective Date, the Lead Plaintiff shall expressly

waive, and each of the Settlement Class Members shall be deemed to have waived,

and by operation of the Final Judgment shall have waived, the provisions, rights

and benefits of California Civil Code § 1542, which provides:

A general release does not extend to claims which the creditor does not

know or suspect to exist in his or her favor at the time of executing the

release, which if known by him or her must have materially affected

his or her settlement with the debtor.

The Lead Plaintiff shall expressly waive and each of the Settlement Class

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

have, expressly waived any and all provisions, rights and benefits conferred by

any law of any state, territory, foreign country or principle of common law, which

is similar, comparable or equivalent to California Civil Code § 1542. Lead

Plaintiff and/or one or more Settlement Class Members may hereafter discover

facts in addition to or different from those which he, she or it now knows or

believes to be true with respect to the subject matter of the Released Claims, but



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the Lead Plaintiff shall expressly fully, finally and forever settle and release, and

each Settlement Class Member, upon the Effective Date, shall be deemed to have,

and by operation of the Final Judgment shall have, fully, finally and forever

settled and released, any and all Released Claims, known or unknown, suspected

or unsuspected, contingent or non-contingent, whether or not concealed or hidden,

which now exist, or heretofore have existed, upon any theory of law or equity now

existing or coming into existence in the future, including, but not limited to,

conduct which is negligent, intentional, with or without malice, or a breach of

fiduciary duty, law or rule, without regard to the subsequent discovery or

existence of such different or additional facts. The Lead Plaintiff acknowledges,

and the Settlement Class Members shall be deemed by operation of the Final

Judgment to have acknowledged, that the foregoing waiver was separately

bargained for and a key element of the Settlement of which this release is a part.

Except as to any individual claim of those Persons (identified in Exhibit 1

attached hereto), who pursuant to the Notice, timely requested exclusion from the

Settlement Class before the ____________, 201_ deadline, the Action and all claims

contained therein, as well as all of the Released Claims, are dismissed with prejudice

as against each and all of the Defendants. The parties are to bear their own costs,

except as otherwise provided in the Stipulation.

The Releasing Parties, on behalf of themselves, their successors and assigns,

and any other Person claiming (now or in the future) through or on behalf of them,

regardless of whether any such Releasing Party ever seeks or obtains by any means,

including without limitation by submitting a Proof of Claim, any disbursement from

the Settlement Fund, shall be deemed to have, and by operation of this Final

Judgment shall have, fully, finally and forever released, relinquished and discharged

all Released Claims (including Unknown Claims) against the Released Parties and

shall have covenanted not to sue the Released Parties with respect to all such

Released Claims, and shall be permanently barred and enjoined from asserting,



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commencing, prosecuting, instituting, assisting, instigating, or in any way

participating in the commencement or prosecution of any action or other

proceeding, in any forum, asserting any Released Claim, either directly,

representatively, derivatively or in any other capacity, against any of the Released

Parties. Nothing contained herein shall, however, bar the Releasing Parties from

bringing any action or claim to enforce the terms of the Stipulation or this Final

Judgment.

Defendants, on behalf of themselves, their heirs, executors, predecessors,

successors and assigns, shall be deemed to have, and by operation of this Final

Judgment shall have, fully, finally and forever released, relinquished, and

discharged the Lead Plaintiff, Settlement Class Members and Plaintiff’s Counsel

from all Claims which arise out of, concern or relate to the institution, prosecution,

settlement or dismissal of the Action (the “Defendant Released Claims”), and shall

be permanently enjoined from prosecuting the Defendant Released Claims against

the Lead Plaintiff, Settlement Class Members and Plaintiff’s Counsel. Nothing

contained herein shall, however, bar Defendants and the Released Parties from

bringing any action or claim to enforce the terms of the Stipulation or this Final

Judgment.

To the fullest extent permitted by law, all Persons shall be permanently

enjoined, barred and restrained from bringing, commencing, prosecuting or

asserting any claims, actions or causes of action for contribution, indemnity or

otherwise against any of the Released Parties seeking as damages or otherwise the

recovery of all or any part of any liability, judgment or settlement which they pay

or are obligated to pay or agree to pay to the Settlement Class or any Settlement

Class Member arising out of, relating to or concerning such Persons’ participation

in any acts, facts, statements or omissions that were or could have been alleged in

the Action, whether arising under state, federal or foreign law as claims, cross-

claims, counterclaims, third-party claims or otherwise, in the Court or any other



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federal, state or foreign court, or in any arbitration proceeding, administrative

agency proceeding, tribunal or any other proceeding or forum.

The Court hereby finds that the proposed Plan of Allocation is a fair and

reasonable method to allocate the Net Settlement Fund among Settlement Class

Members and directs that Plaintiff’s Counsel implement the Plan of Allocation in

accordance with the terms of the Stipulation.

The Court hereby grants Plaintiff’s Counsel attorneys’ fees of _____% of the

Settlement Fund and expenses in an amount of $ _______ together with the interest

earned thereon for the same time period and at the same rate as that earned on the

Settlement Fund. The Court finds that the amount of fees awarded is fair and

reasonable in light of the time and labor required, the novelty and difficulty of the

case, the skill required to prosecute the case, the experience and ability of the

attorneys, awards in similar cases, the contingent nature of the representation and

the result obtained for the Settlement Class.

Neither the Stipulation nor the Settlement contained therein, nor any act

performed or document executed pursuant to or in furtherance of the Stipulation or

the Settlement: (a) is, or may be deemed to be, or may be used as an admission,

concession or evidence of, the validity or invalidity of any Released Claims, the

truth or falsity of any fact alleged by the Lead Plaintiff, the sufficiency or deficiency

of any defense that has been or could have been asserted in the Action, or of any

wrongdoing, liability, negligence or fault of the Defendants, the Released Parties,

or any of them; (b) is or may be deemed to be or may be used as an admission of,

or evidence of, any fault or misrepresentation or omission with respect to any

statement or written document attributed to, approved or made by any of the

Defendants or Released Parties in any civil, criminal or administrative proceeding

in any court, administrative agency or other tribunal; (c) is or may be deemed to be

or shall be used, offered or received against the Settling Parties, the Defendants or

the Released Parties, or each or any of them, as an admission, concession or



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evidence of the validity or invalidity of the Released Claims, the infirmity or

strength of any claim raised in the Action, the truth or falsity of any fact alleged by

the Lead Plaintiff or the Settlement Class, or the availability or lack of availability

of meritorious defenses to the claims raised in the Action; and/or (d) is or may be

deemed to be or shall be construed as or received in evidence as an admission or

concession against the Defendants, or the Released Parties, or each or any of them,

that any of Lead Plaintiff’s or Settlement Class Members’ claims are with or without

merit, that a litigation class should or should not be certified, that damages

recoverable under the First Amended Complaint would have been greater or less

than the Settlement Fund or that the consideration to be given pursuant to the

Stipulation represents an amount equal to, less than or greater than the amount

which could have or would have been recovered after trial.

The Released Parties may file the Stipulation and/or this Final Judgment in

any other action that may be brought against them in order to support a defense or

counterclaim based on principles of res judicata, collateral estoppel, full faith and

credit, release, good faith settlement, judgment bar or reduction or any other theory

of claim preclusion or issue preclusion or similar defense or counterclaim.

The Court finds that during the course of the Action, the Settling Parties and

their respective counsel at all times complied with the requirements of Federal Rule

of Civil Procedure 11.

In the event that the Settlement does not become effective in accordance with

the terms of the Stipulation or the Effective Date does not occur, or in the event that

the Settlement Fund, or any portion thereof, is returned to 500.com in accordance

with the terms of the Stipulation, then this Final Judgment shall be vacated and

rendered null and void to the extent provided by and in accordance with the

Stipulation and, in such event, all orders entered and releases delivered in

connection herewith shall be null and void to the extent provided by and in

accordance with the Stipulation.



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The foregoing orders solely regarding the Plan of Allocation or request for

payment of fees and reimbursement of expenses, including, if applicable, a request

for payment of an incentive award (Stipulation ¶ 7.1), shall in no way disturb or

affect this Final Judgment and shall be separate and apart from this Final Judgment.

The Court expressly determines that there is no just reason for delay in

entering this Final Judgment and directs the Clerk of the Court to enter this Final

Judgment pursuant to Fed. R. Civ. P. 54(b).

Without affecting the finality of this Final Judgment in any way, exclusive

jurisdiction is hereby retained over the Defendants, and the Settlement Class

Members for all matters relating to the Action, including (i) the administration,

interpretation, effectuation or enforcement of the Stipulation and this Final

Judgment, (ii) disposition of the Settlement Fund; and (iii) any application for

attorneys’ fees, costs, interest and reimbursement of expenses in the Action.

Dated: ___________________ The Honorable John F. Walter

United States District Judge


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