1’AS’PERNA IC & PAsr1ERNA IC CYNTHIA F. PASTERNAK DAVID J. PASPERNAK AIAWlOHPOIIATION 1873 (ENl’IflV PAIZIC EAST, StilE ±flXI LOS ANGELES, (‘A LI FORNIA 900157—232:1 BLAKE C. ALSHROOK FACSIMILE (310) 5a3-1a60 WWW.flRcIUH’.COfll pa.dflrrn6.paclaw.com FREDMAN LIEHERMAN PEARL LLP GREG YARIS OF COUNSEL AUTHOR S E-MAIL dlpwpu.cIsw.com Original via U.S. Mall Copy Via Facsimile 310.476.8138 — March 1,2017 Perfect 10, Inc. 11803 Norfield Court Los Angeles, CA 90077 Re: Perfect 10, Inc. v. Gipanews, Inc., etc., et al. United States District Court, Central District, Western Division Los Angeles, Case No. 11-cv-07098-AB (JPRx) Gentlemen: I am writing to you as the Court-appointed Receiver in the above-referenced matter. I enclose a copy of the Order Granting Judgment Creditor Giganews, Inc.’s Motion to Levy on Judgment Debtor’s Intellectual Property And Appoint A Receiver issued by United States District Court Judge Andre Birotte, Jr., on February 24, 2017. Pursuant to the terms of the enclosed Order, I am hereby taking possession of all of your ‘intellectual property,’ which specifically includes but is not limited to domain names, copyrights and copyright interests, trademarks, trademark interests, and associated goodwill, and related interests, as well as all royalties, rents, issues, profits and income (including any cash) resulting from or generated by such intellectual property. Pursuant to the terms of the enclosed Order, I hereby request that you immediately turn over to me all registrations, books, records, books of account, ledgers, operating statements, budgets, bills, contracts, choses in action, and all other business records relating to such intellectual property, wherever located, and in whatever mode maintained, including information contained on computers, and any all software or databases relating thereto, as well as all banking records, statements and cancelled checks. In addition, pursuant to the terms of the enclosed Order, I hereby request that you immediately turn over to me all documents that pertain to all registrations, licenses, permits, or government actions or approvals relating to your intellectual property and immediately advise me of any social security or taxpayer identification numbers used in connection with your intellectual property. {00173332.DOCX 66390.0001 PASTIRNAR & PASTEUNAI( A LAW CORPQRATIJ Perfect 10, Inc. Re: Perfect 10, Inc. v. Giganews, Inc. March 1,2017 Page 2 In addition, pursuant to the terms of the enclosed Order, I hereby request that you immediately advise me as to the nature and extent of insurance coverage for your intellectual property, and immediately name me as an insured on any insurance policies for such intellectual property. Finally, please let me know immediately whether there are any lawsuits, administrative proceedings. arbitrations. or other proceedings that are pending concerning your intellectual property, other than the above-specified action in which I have been appointed as Receiver. Thank you for your anticipated prompt response and anticipated thIl compliance with Judge Birottes Receivership Order. Ve ‘truly yours. ...-- David J. Pastemak Receiver DJP/lks Enclosure cc: Via US. Mail and e-Mail With Enclosure Lynell Diondra Davis, Esq. Eric J. Benink. Esq. David Nathan Schultz, Esq. Matthew C. Mickelson. Esq. Andrew P. Bridges. Esq. Jedediab Wakefield. Esq. Jonathan Levi Abrams. Esq. Annasara G. Purcell. Esq. Anthony King Brown, Esq. Armen Nercess Nercessian. Esq. Ilana S. Rubel, Esq. Joseph Stephen Belichick, Esq. Liwen A. Mah, Esq. Ronald P. Slates. Esq. Joshua Kluewer, Esq. Todd Richard Gregorian, Esq. Steven W. Yuen. Esq. Zachary Lake {00173332.DOCX 663900001 — Case 111-cv-07098-AB-JPR Document 809 Filed 02/24/17 Page 1 of 9 Page ID #:40872 1 2 3 4 5 6 7 8 9 10 11 12 13 jI ANDREW P. BRIDGES (CSB No. 122761) abridaes6Dfenwick.com JED1JIXH WAKEFIELD (CSB. No. 178058) iwakefiel&Zfenwick.com IOSEPH SELICFIICK (CSB No. 229371) jbe1ichick@fenwick.com TODD R.’tREGORIAN (CSB No. 236096) tgregorianWfenwick.com FENWICIC& WEST LLP 555 California Street, 12th Floor San Francisco, CA 94104 Telephone: (415) 875-2300 Facsimile: (415) 281-1350 Attorneys for Defendant GIGANEWS, INC. RONALD P. SLATES, State Bar #437 12 RONALD P. SLATES, P.C. 500 South Grand Ave., Suite 2010 Los Angeles, CA 90071 Telephone: (213)624-1515 Aftorne s for Defendant LIVEWRE SERVICES. INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 16 17 18 WESTERN DIVISION PERFECT 10, INC., a California corporation, Plaintiff, 19 20 21 22 v. GIGANEWS, INC., a Texas Corporation; et al. 23 Defendants. 24 75 - Case No.: 1 1-cv-07098-AB (JPRx) IPROPOSED] ORDER GRANTING JUDGMENT CREDITOR GIGANEWS, INC.’S MOTION TO LEVY ON JUDGMENT DEBTOR’S INTELLECTUAL PROPERTY AND APPOINT A RECEIVER Date: Time: Courtroom: Judge: Febru 27, 2017 10:00 a.m. No. 4, 2nd Fl. (Spring Street) Hon. André Birone, Jr. AND RELATED CROSS-ACTIONS 26 27 28 FPROPOSEDJ ORDER GRANTING OIGANEWSS MOTION TO LEVY AND TO APPOINT A RECEIVER CASE NO. ii -cv-07098-AB (SHx) Case 211-cv-07098-AB-JPR Document 809 Filed 02/24/17 Page 2 of 9 Page ID #:40873 1 The Court has considered defendant and judgment creditor Giganews, Inc.’s 2 (“Giganews”) motion to levy on the intellectual property of plaintiff and judgment 3 debtor Perfect 10, Inc. (“Perfect 10”), and to appoint a receiver to carry out the 4 levy. (Dkt. No. 202.) Giganews moves under Fed. R. Civ. Proc. 69(a), and Cal. 5 Code Civ. Proc. 6 district court to enforce a judgment through a writ of execution, and to appoint a 7 receiver to aid in executing the judgment. The Court finds good cause both to levy 8 on Perfect 10’s intellectual property and to appoint a receiver to carry that out, for 9 all of the reasons Giganews stated in its motion. The Court considered all of the 10 points Perfect 10 made in its opposition and finds that they lack merit. The Court 11 therefore ORDERS as follows: 695.010, 699.710, and 708.620., which together authorize the 12 1. The Court GRANTS Giganews’s motion. 13 2. The Court APPOINTS David J. Pasternak as a receiver to carry out a levy on Perfect 10’s property in accordance with the remainder of this Order. For 14 15 the remainder of this order, the term “intellectual property” specifically includes but 16 is not limited to domain names, copyrights and copyright interests; and trademarks, 17 trademark interests, and associated goodwill; and related interests. 18 19 20 3. The receiver may seize and sell any and all intellectual property of Perfect 10 in order to satisfy this Court’s judgment. 4. By virtue of the appointment of the receiver, the Court divests Perfect 21 10 of; and puts under the exclusive control of the receiver, any and all of the 22 intangible property, including domain names; copyrights or copyright interests; and 23 trademarks, trademark interests, and associated goodwill that Perfect 10 owns or 24 possesses. 25 5. The receiver shall assume sole and immediate possession, custody and 26 control of all of Perfect 10’s property and sell that property subject to this Court’s 27 confirmation and approval in satisfaction of the Judgment. 28 [PROPOSEDJ ORDER GRANTING GIGANEWS S MOTION TO LEVY AND TO APPOINT A RECEIVER 1 CASE NO. I 1-cv-07098-AB (SHx) 11-cv-07098-AB-JPR Document 809 Filed 02/24/17 Page 3 of 9 Page ID #:40874 Case 1 2 3 4 5 6. The receiver shall have the authority to assign and transfer Perfect 10’s property, as further specified below. 7. The proceeds of any sales shall be used to satisi’ the Judgment, less the receivership’s reasonable costs and fees; 8. Any bid for, and purchase of, Perfect 10’s property by Giganews may 6 be credited against the amounts that Perfect 10 owes Giganews pursuant to the 7 Judgment. Giganews need not use its own money to bid for, and purchase, Perfect 8 10’s property. Instead any successful bids and/or purchases may be credited against 9 Perfect 10’s judgment debt to Giganews. 10 9. The receiver may charge as interim fees his standard hourly billing 11 rate, which is currently $575 per hour, plus reimbursement of costs for the 12 receiver’s services. The receiver is authorized to employ the services of Pasternak 13 & Pasternak, A Law Corporation (in which the receiver and his wife are 14 shareholders); SoCal IP Law Group, LLP; and accountants, computer consultants, 15 and other professionals in connection with his duties administering the receivership 16 estate and to pay for those services in the amount of the normal fees charged by 17 those professionals. 18 10. The receiver shall: a. 19 Take possession! custody and control of, and exclusively and in 20 his sole discretion, operate, manage, control, exploit, and operate Perfect 10’s 21 property; 22 23 b. Collect all royalties, rents, issues, profits, and income resulting from or generated by Perfect 10’s property; 24 c. Care for, preserve, operate and maintain Perfect 10’s property; 25 d. Use (at his discretion) any tax identification or Social Security 26 numbers previously used in connection with Perfect 10’s property; 27 28 [PROPOSED) ORDER GRANTING GIGANEWS S MOTION TO LEVY AND TO APPOINT A RECEIVER 7 - CASE NO. II -cv-07098-AB (SHX) Case i11-cv-07098-AB-JPR Document 809 Filed 02/24/17 Page 4 of 9 1 2 e. Page ID #:40875 Enter into contracts as the receiver reasonably believes necessary for the preservation of Perfect 10’s property; f. 3 Institute and prosecute all suits as the receiver, upon obtaining 4 permission of the Court, he may reasonably believe to be necessary in connection 5 with Perfect 10’s property, and may without further order of the Court defend all 6 suits and actions as may be instituted concerning Perfect 10’s property; 7 g. Negotiate and make financial arrangements for any licenses or 8 permits that the receiver reasonably believes to be appropriate in connection with 9 Perfect 10’s property; h. 10 Issue subpoenas, conduct and participate in discovery, take 11 depositions, pursue contempt actions, and otherwise pursue all remedies available 12 by law to ensure compliance with the receiver’s authority under this Order; i. 13 14 maintenance of Perfect 10’s property; and 15 16 17 Incur the expenses necessary for the care, preservation and j. To the extent that there are funds available, pay such funds to Giganews in satisfaction of this Court’s Judgment. 11. Within sixty (60) days after the issuance of this Order, the receiver 18 shall file an inventory of all of the assets of which he has taken possession pursuant 19 to this Order; 20 12. The receiver shall prepare and serve monthly statements reflecting the 21 receiver’s fees and administrative expenses, including fees and costs of the 22 accountants and attorneys and other professionals authorized by the Court, incurred 23 for each monthly period in the operation and administration of the receivership 24 estate. Upon service of each statement, the receiver may disburse from estate 25 funds, if any, the amount of each statement. Notwithstanding periodic payment of 26 fees and expenses, all fees and expenses shall be submitted to the Court for its 27 approval and confirmation, in the form of either a properly noticed interim request 28 [PROPOSEDJ ORDER GRANTING OIGANEWS S MOTION TO LEVY AND TO APPOINT A RECEIVER 2 CASE NO. I I-cv-07098-AB (SHx) 11-cv-07098-AB-JPR Document 809 FlIed 02/24/17 Page 5 of 9 Case I for fees, a stipulation of all parties, or in the receiver’s interim or final account and 2 report; 3 13. The receiver may employ agents, employees, clerks, accountants, and 4 property managers to administer the receivership estate, purchase materials, 5 supplies and services, and pay for them at the ordinary and usual rates out of the 6 funds which shall come into the receiver’s possession and shall do all things and 7 incur the risks and obligations ordinarily incurred by owners, managers, and 8 operators of similar property. No such risk or obligation so incurred shall be the 9 personal risk or obligation of the receiver, but shall be the risk and obligation of the 10 11 1! Page ID #:40876 receivership estate; 14. The receiver is empowered to establish bank accounts for the deposit 12 of monies and funds collected and received in connection with the receivership 13 estate, at federally insured banking institutions or savings associations which are 14 not parties to this case. Monies coming into the possession of the receiver and not 15 expended for any purposes authorized by this Order shall be held by the receiver in 16 interest-bearing accounts; 17 15. The receiver may issue Receivership Certificates in increments of at 18 least $10,000 bearing interest at eight percent (8%) per annum for up to $250,000 to 19 any person or parties, in order to fund and carry out the receivership. All funds 20 loaned to the receiver pursuant to such Receivership Certificate shall be deemed to 21 be a lien of first priority which shall be repaid prior to all other encumbrances and 22 claims, other than costs of administration. 23 16. The receiver and the parties to this case may at any time apply to this 24 Court for further or other instructions or orders and for further powers necessary to 25 enable the receiver to perform the receiver’s duties properly; 26 27 17. All monies coming into the receiver’s possession shall be expended only for the purposes herein authorized, unless otherwise ordered by Court; 28 [PROPOSEDJ ORDER GRANTING GIGANEWS S MOTION TO LEVY AND TO APPOINT A RECEIVER A CASE NO. I 1-cv-07098-AB (SHx) 11-cv-07098-AB-JPR Document 809 Piled 02/24/17 Page 6 of 9 Page ID #:40877 Case 1 18. The receiver shall determine upon taking possession of the property 2 whether in the receiver’s judgment there is sufficient insurance coverage. With 3 respect to any insurance coverage, the receiver shall be named as the insured on the 4 policies for the period that the receiver shall be in possession of the property. If 5 sufficient insurance coverage does not exist, the Receiver shall immediately noti& 6 the parties to this lawsuit and shall have thirty (30) calendar days to procure 7 sufficient insurance for the property; provided, however, that if the receiver does 8 not have sufficient funds to do so, the receiver shall seek instructions from the 9 Court with regard to whether insurance shall be obtained and how it is to be paid 10 for. If consistent with existing law, the receiver shall not be responsible for claims 11 arising from the lack of procurement or inability to obtain insurance; 12 19. Discharge of the receiver shall require a court order after a properly 13 noticed motion approving the receiver’s final report and account and exoneration of 14 the receiver’s bond; 15 20. The parties, and each of them, on receipt of this Order shall provide 16 the receiver with all tax identification numbers utilized in connection with Perfect 17 10’s property. The receiver shall also be entitled to utilize the tax identification 18 numbers during his possession of Perfect 10’s property. The Receiver shall not be 19 responsible for filing any federal or state tax returns on behalf of Perfect 10. 20 21. The receiver is authorized to have all mail, other deliveries, and 21 notices concerning Perfect 10’s property forwarded to an address to be designated 22 by him; 23 22. IT IS FURTHER ORDERED that Perfect 10 and its respective owners, 24 officers, directors, agents, partners, property managers, employees, assignees, 25 successors, attorneys, representatives, and all persons acting under, in concert with, 26 or for them (specifically including Norman Zada, Melanie Poblete, Bruce Hersh, 27 Owendalyn Augustine, Jennifer Snow McCall, and Sean Chumura): 28 [PROPOSED) ORDER GRANTING GIGANEWS S MOTION TO LEVY AND TO APPOINT A RECEIVER CASE NO. I I-cv-07098-AB (SHx) -‘ 11-cv-07098-AB-JPR Document 809 Case a. I Filed 02/24/17 Page 7 of 9 Page ID #:40878 Shall immediately relinquish and turn over possession of Perfect 2 10’s intellectual property, including but not limited to all or their profits and 3 proceeds (including any cash) to the receiver forthwith upon his appointment 4 becoming effective; b. 5 Shall immediately turn over to the receiver and direct all other 6 third parties in possession thereof to turn over to the receiver all registrations, 7 books, records, books of account, ledgers, operating statements, budgets, bills, 8 contracts, choses in action, and all other business records relating to Perfect 10’s 9 intellectual property, wherever located, and in whatever mode maintained, 10 including information contained on computers, and any and all software or 11 databases relating thereto as well as all banking records, statements and cancelled 12 checks; 13 c. Shall immediately turn over to the receiver all documents that 14 pertain to all registrations, licenses, permits, or government actions or approvals 15 relating to Perfect 10’s intellectual property and shall immediately advise the 16 receiver of any social security or taxpayer identification numbers used in 17 connection with Perfect 10’s intellectual property; 18 d. Shall immediately advise the receiver as to the nature and extent 19 of insurance coverage for Perfect 10’s intellectual property. Perfect 10 shall 20 immediately name the receiver as an insured on the insurance policy(ies) for the 21 period that the receiver shall be in possession of Perfect 10’s intellectual property. 22 Perfect 10 and its agents and representatives are prohibited from canceling, 23 reducing or modiing any and all insurance coverage currently in existence with 24 respect to Perfect 10’s domain names, copyrights and/or trademarks and 25 accompanying goodwill and shall fully assist receiver in transferring said insurance 26 for the benefit of the receiver; and 27 28 [PROPOSEDJ ORDER GRANTING GIGANEWS S MOTION TO LEVY AND TO APPOINT A RECEIVER U CASE NO. II -cv-07098-AB (SHx) Case 211-cv-07098-AB-JPR Document 809 Filed 02/24/17 Page 8 of 9 Page ID #:40879 e. Shall cooperate with and fully assist the receiver with respect to 2 his possession and attempts to sell Perfect 10’s property or interests therein, 3 including but not limited to promptly responding to any inquiry by the Receiver for 4 information; 5 23. IT IS FURTHER ORDERED that, immediately and until such further 6 Order of this Court, Perfect 10 and its agents, partners, property managers, 7 employees, assignees, successors, attorneys, representatives, and all other persons 8 acting in concert with them who have actual or constructive knowledge of this 9 Order, and their agents and employees shall not: a. 10 Commit or permit any waste on any of Perfect 10’s property or 11 any part thereof, of suffer or commit or permit any act on Perfect 10’s property or 12 any part thereof, or suffer or commit or permit any act on Perfect 10’s property or 13 any part thereof in violation of any law, or alienate, remove, transfer, encumber or 14 otherwise dispose of any of Perfect 10’s property or any part thereof; b. 15 Directly or indirectly interfere in any manner with the discharge 16 of the receiver’s duties under this Order or the receiver’s possession of and 17 operation and attempts to sell Perfect 10’s property; c. 18 Expend, disburse, transfer, assign, sell, convey, devise, pledge, 19 mortgage, create a security interest in, encumber, conceal or in any manner 20 whatsoever deal in or dispose of the whole or any part of Perfect 10’s property or 21 any of its proceeds without prior specific Order of this Court; d. 22 Withhold any of Perfect 10’s property or books or records 23 regarding Perfect 10’s property, or funds generated from Perfect 10’s property from 24 the receiver; and 25 e. Do any act which will, or which will tend to impair, defeat, 26 divert, prevent or prejudice the preservation of Perfect 10’s property, profits, or 27 proceeds; 28 [PROPOSED) ORDER GRANTING GIGANEWS S MOTION TO LEVY AND TO APPOINT A RECEIVER CASE NO. I 1-cv-07098-AB (SHx) Case 11-cv-07098-AB-JPR Document 809 Filed 02/24/17 Page 9 of 9 1 24. Page ID #:40880 The parties shall serve the receiver with all papers in this action and shall give notice to the receiver about aLl proceedings: 3 25. The parties shall jointly and severally defend and indemnify and hold 4 harmless the receiver and his employees against any claims or actions, including 5 but not limited to any criminal proceedings. that result from his possession. 6 operation. and attempts to sell Perfect 10’s property or interests therein as this 7 Court’s receiver. 8 IT IS SO ORDERED: 10 DATED: Febmary 24, 2017 11 The onorable André Birotte Jr. United States District Judge Central District of California 1’ — 13 14 P’t 15 16 17 18 19 20 21 7 23 24 25 26 27 28 [PROPOSED) ORI)ER GRANTING GIGANEWS S MOTION To LEVY AN]) TO APPOINT A RECEWER CASE NO. 1 1-cv-07098-AB (Slix)