CALIFORNIA SUPERIOR COURT - KCC Class Action

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CALIFORNIA SUPERIOR COURT

COUNTY OF ALAMEDA

SHECHANG CHEN, derivatively, on behalf of Pegasus Wireless Corporation, Plaintiff, vs. JASPER KNABB, STEPHEN DURLAND, NICHOLAS PERATICOS, EDWARD CELANO, and DOES 1-100, inclusive, Defendants, and PEGASUS WIRELESS CORPORATION, Nominal Defendant.

No. RG 07310978

[PROPOSED] ORDER APPOINTING RECEIVER

DATE: June 6, 2012 TIME: 10:00 a.m. DEPT: 17 TRIAL DATE: Not set

Hon. Steven A. Brick

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[PROPOSED] ORDER APPOINTING RECEIVER (CASE No. RG 07310978)

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This matter came before the Court for hearing on June 6, 2012. Having considered all

papers filed and proceedings in this action, having heard oral argument, and otherwise being fully

informed and good cause appearing therefore, the Court ORDERS the following: 1

1. J. Michael Matthews (SBN 71848) is appointed as Receiver (hereinafter, the

“Receiver”) to oversee the receipt and distribution of the Net Settlement Funds as described

more fully herein.

2. The Receiver shall not enter into an agreement with any party to this action or

with counsel for Plaintiff or for the Individual Defendants (hereinafter the “Parties’ Counsel”)

and no party to this action or the Parties’ Counsel shall participate in or influence the Receiver in

carrying out his duties and obligations to oversee and distribute the Net Settlement Funds in

accordance with this order, the Stipulation, and the June 6, 2012 Order and Judgment Granting

Final Approval of Derivative Settlement, Awarding Attorney Fees and Costs and Incentive

Award, and Ordering Dismissal with Prejudice (“Final Order”).

3. The Receiver shall immediately, and before performing any other duties: (a)

execute and file a receiver’s oath and (b) file the bond required by Code of Civil Procedure

section 567(b) in the amount of $_____________. Any bond premium(s) shall be payable

from the funds remaining in the “$50,000 Notice and Admin. Fund” described in the Final

Order.

4. After qualifying, the Receiver shall perform the following tasks:

(A) Oversee the receipt of the Net Settlement Funds, which shall be deposited

in an FDIC-insured account established by the Settlement Administrator

within twenty (20) days after the Judgment becomes Final. Fees, if any,

associated with the establishment and maintenance of this account shall be

paid from the funds remaining in the $50,000 Notice and Admin. Fund;

1 This [Proposed] Order incorporates by reference the definitions in the February 22, 2012 Stipulation of Settlement in this action (the “Stipulation”), and, unless otherwise noted, capitalized terms used herein shall have the same meanings and/or definitions as set forth in the Stipulation.

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(B) Within 15 days of the receipt of the Net Settlement Funds, the Receiver

shall file with this court and serve on the Parties’ Counsel a receipt

acknowledging receipt of the funds and detailing the institution and

account into which the funds have been deposited;

(C) By whatever process he deems reasonable and practicable, the Receiver

shall make a good faith effort to identify, and, where necessary, notify

persons or entities who may possess legitimate, valid, and timely claims to

the Net Settlement Funds (hereinafter “Claimants”). In accordance with

applicable statues, regulations or other provisions of law, the Receiver

shall evaluate and report to this court the respective priorities of the

various claims and make recommendations to this court regarding a plan

for distribution of the Net Settlement Funds;

(D) The Receiver’s report and recommendation for distribution of the Net

Settlement Funds, for Discharge of the Receiver and for exoneration of the

Receiver’s bond shall require a court order on noticed motion.

(E) Not later than 30 days after the preparation of the Receiver’s report and

recommendation for distribution of the Net Settlement Funds, the

Receiver shall file, serve, and obtain a hearing date on a motion for

approval of the Receiver’s report and recommendation for distribution of

the Net Settlement Funds, for discharge of the Receiver and for

exoneration of the Receiver’s bond (“Receiver’s Motion”). The Receiver

shall give notice to all Claimants and to the Parties’ Counsel.

(F) The Receiver’s Motion shall include the receivership accounting, along

with a declaration stating (1) what was done during the receivership, (ii)

accuracy of the final accounting, and (iii) the legal and factual bases for the

Receiver’s report and recommendation for distribution of the Net

Settlement Funds.

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(G) Following approval of the Receiver’s report and recommendation for

distribution of the Net Settlement Funds, the Receiver shall distribute or

cause the distribution of the Net Settlement Fund in accordance

therewith;

(H) During this process, the Receiver shall, on a quarterly or more frequent

basis, file with this Court and serve the Parties’ Counsel with a report

detailing the progress of his efforts.

5. The Receiver shall charge no more than $485.00 per hour for his services.

6. Within 20 days after the Judgment becomes Final, Defendants’ insurer shall

deposit $10,000 with the Receiver. The Receiver shall hold these funds in his firm’s trust

account and use them to pay the Receiver’s expenses, including the Receiver’s and his firm’s

fees and any expenses advanced.

7. In accordance with the provisions of CRC 3.1182, the Receiver shall generate

written itemized statements on a monthly basis reflecting the charges for time and expenses

incurred in the prior month and shall file those statements with this court, with copies to be

served on the Parties’ Counsel, Defendants’ insurer and on any Claimants. If there is no

objection received within 10 business days of filing and service of the itemized statement

described in this paragraph, the Receiver is authorized to pay the statements using the funds in

the initial $10,000 payment from Defendants’ insurer. After the initial $10,000 is exhausted,

and if no objections to a monthly statement are received, Defendants’ insurer will reimburse

costs and expenses reflected on the monthly statement in excess of the initial $10,000 within 20

business days after the expiration of 10 business days after the filing and service of such monthly

statement, up to the point where the $50,000 Notice and Admin. Fund is exhausted. If there is

an objection to any monthly statement, only the balance of the statement as to which there is no

objection may be paid and the matter shall be resolved by this court, upon notice motion made by

the Receiver.

7. Should the funds remaining in the $50,000 Notice and Admin. Fund be

inadequate to cover the expenses of the Receiver, the Receiver may petition this Court by noticed

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motion to pay his fees and expenses from the Net Settlement Funds. Copies of any such petition

shall be served on the Parties’ Counsel and on Claimants.

8. The Receiver is authorized without further court order to: (a) hire bookkeepers

and/or accountants to assist him and/or to use the services of attorneys or other staff in his firm;

and/or (b) publish or mail appropriate notices soliciting claims to the Net Settlement Funds

should the receiver deem it necessary to do so. All expenses incurred in connection with the

engagement or use of such personnel or the publication and solicitation of claims shall be

expenses incurred in conjunction with discharging the Receiver’s duties and obligations as

described herein, not the personal expenses of the Receiver, and shall be paid as discussed in

paragraph Nos. 6-7, above, subject to oversight and approval by this court.

9. The Receiver shall engage a certified public accountant to report to him and the

Court regarding the responsibility of the Receiver and/or PEGASUS to file federal and state

income tax forms or returns in connection with the receipt and/or distribution of the Net

Settlement Funds. The expense(s) of such filings and of any tax payment(s) to be made shall be

paid from the Net Settlement Funds.

10. The Receiver may, at any time, apply to this court for further or other instructions

or orders and for further power necessary to enable to Receiver to perform the Receiver’s duties

properly.

11. The Receiver and/or this court, may communicate informally regarding the

progress and details of the Receiver’s duties, by means of telephone calls, e-mails, or the like, as

directed by this court.

IT IS SO ORDERED.

DATED: June _________, 2012

Hon. Steven A. Brick California Superior Court Judge

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CALIFORNIA SUPERIOR COURT - KCC Class Action