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					                                                                           Feb 14 2008 15:21
FEB-14-200S 15: 44                                                                                           P. 02/07

            : Case 2:06-cv-01944-MMB Document 504 Filed 02/14/2008 Page'                        14 of 18




                                     IN mE UNTED ST A.T;ES DISTRICT COURT
                                  FOR THE EASTERN DISTRICT OF PENNSYLVANIA


        STEPHEN J. HARMLlN, AS RECEIVER AD
        LITEM FOR PHILADELPHIA ALTERNATIVE
        ASSET MAAGEMENT COMPANY, LLC, AN                                    Civil Action No. 06-CV-1944 (MMB)
        ITS PARTNERS., AFFILIATES, SUBSIDIARIES,
        AND RELATED ENTITIES,
                                                   .Plaintif,
                             v.
        MAN FINANCIAL INC, et at,
                               Defendants.

        COMMODITY FUTURES TRADING
        COMMISSION,
                                                  Plaintift~                Case No. 05-CV~2973::(MM)
                             v.
        PAUL M'. EUSTACE, AND
        PH1LADELPHIA ALTERNATIVE ASSET
        MANAGEMENT COMPAN, LLC,
                                                   Defendants.




                                             4Z ' ~
                              . ORDER~CONCERNING PROPOSED SETTLEMENT .
                   The Cour baving been notified that the Receiver ad litem (the "RAL"), on 'behalf of the

        Philadelphia Alternative Asset Management Company, LtC. and its parers, affiliates,
                                                                              ..
        subsidiaries and related entities, \ncludig Philadelphia Alternative Asset FUd, Ltd.,

        Philadelphia Alterntive Feeder Fund, LLC, Option Capital Fund, LP 'an :Pluládelphia

        Altemative Asset Fund, LP (collectively; th~ "Receivership Entities"), has enter.e into a

        Settlem.ent Agreement (the "Settlement Agreement") with defendants John Wallace (UWallace")

        and Edward Gobora ("Gobora"), it is HEREßV O:RDEREDtla,t:

                   1. A Settlement Hearng is scheduled to be held before the Cour on M~ch 5,2008

        atj:OO p.m. for the following puroses:
           3;00



        721357_1
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             Case 2:06-cv-01944-MMB Document 504 Filed 02/14/2008 Page:,fS,of 18



                              a. to determine whether the Settlement Agreement and tÌ~ releils'ës'set forth


         therein should be approved by the Court;

                              b. to determne wheter the Order as provided \)der . thè Setemt

         Agreement should be entered;

                              c. to rule upon such other matters as the Cour may deem appiopnate.



                                                                      i. .
                   2. The Receiver, C. Clark Hoçigson, Jr., shall cause a Setlement Noti~e to be

         mailed, by first cIass mail, postage p~paid, on or before ~ (1 ,2008; to ali:' investors in

        the Re,ceivership Entities who have been and can be identified with reasonable, efort. The

        Motion and Exhbit "An thereto (the Settlement Agreement), sh.all accompany ~'Settlement

        Notice, The ReGeiver is permitted to sexe copies of the Motioo electroiicafly upor; those for

        whom he has ai electronic address, and shall also post the Motion and Settement Ägreement on

        ros website.

                   3. The Receiver's cowise! shalL., at or before the Setement Hearng;,file with the


        Cow1 proof of service of       the Settlement Notice.

                   4. The Cour will consider comments and/or objections to the, Settemert Agreement

        only if sucb èomments or objectio.ns and any supporting papers ar~ filed in wnti,ng' with th~ Clerk

        of the Cour, United States Disi.ct Cour for the Eastern Distrct of Pennsylvana, D,S.


        Courthouse, 601 Market Street, Room 2609, Philadelplùa, Pennsylvania 19106~179!).and copIes

        of all such papers are served, on or before Februry 28, 2008, upon each oftbe' following: James

        1. Rodgers, Esquire, Dilwort Paxson LLP, 3200 The Mellon Ban Center, i 735' Maket Street,

        Philadelplua, Pennsylvania 19103-7595 (on behalf of the RAL) and Timothy. E. Hoeffnr,

        Esquire, Saul Ewing LLP, Centre Square West, 1500 Market Street, Philadelphia, PAt9102, (On
                                                                                                 ,.
        behalf of Wallace and Gobora). Persons wishing to be heard orally in opposition to -the approval




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                   Case 2:06-cv-01944-MMB Document-504 Filed 02/14/2008 Page;t6:of 18



              of the .Settlement Agreement shall state in their written objection their intention to ,appear at the

              Settlement Hearing, and identify any witnesses they may call to testify and exlbitå th~y intend

              to introduce into evidence. Persons do not need to appear at the Heang or tae any.~other actìon


              to indicate their approval.


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     Case 2:06-cv-01944-MMB Document 504 Filed 02/14/2008 Page 1 of 18




                         IN THE UNITED STATES DISTRICT COURT
                      FOR THE EASTERN DISTRICT OF PENNSYLVANI


STEPHEN 1. HALIN, AS RECEIVER AD
LITEM FOR PHILADELPHIA AL TERNA TIVE
ASSET MANAGEMENT COMPANY, LLC, AND                          Civil Action No. 06-CV-1944 (MMB)
ITS PARTNERS, AFFILIATES, SUBSIDIARIES,
AND RELATED ENTITIES,
                        Plaintiff,
          v.
MAN FINANCIAL INC, et al.,
                        Defendants.

COMMODITY FUTURES TRAING
COMMISSION,
                               Plaitiff,                    Case No. 05-CV -2973 (MMB)
                 v.
PAUL M, EUSTACE, AND
PHILADELPHIA AL TERNA TIVE ASSET
MANAGEMENT COMPANY, LLC,
                     Defendants.


                           THE RECEIVER AD LITEM'S
             MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT WITH
                      JOHN WALLACE AND EDW AM GOBORA

           The Receiver ad litem (the "RAL"), on behalf of the Philadelphia Alternative Asset

Management Company, LLC, and its parers, affiliates, subsidiaries and related entities,

including Philadelphia Alternative Asset Fund, Ltd. ("P AAF"), Philadelphia Alternative Feeder

Fund, LLC, Option Capital Fund, LP and Philadelphia Alternative Asset Fund, LP (collectively,

the "Receivership Entities"), has entered into a Settlement Agreement (the "Settlement


Agreement") with defendants John Wallace ("Wallace") and Edward Gobora ("Gobora"). The

RA, Wallace and Gobora are collectively referred to herein as the "Settling Paries". The RAL

respectfully submits ths Motion for Approval of the Settlement Agreement. As set forth in the

accompanying Memorandum of Law and Declaration of the RAL, it is the conclusion and



721846_2
       Case 2:06-cv-01944-MMB Document 504                      Filed 02/14/2008 Page 2 of 18



recommendation of the RA that it is in the best interests of the Receivership Entities and all

Interested Paries that the Court enter an Order: (a) approving the Settlement Agreement without

modification; (b) enjoining and baring all Interested Paries, all defendants and thrd-party

defendants in the Action and Third-Pary Action (as defined in the Settlement Agreement), and

Richard Fogerty and G. James Cleaver, as Joint Official Liquidators ofPAAF, from commencing

a claim, action or proceeding of any kind in any foru as against Gobora and Wallace based on,

relating to or arsing from any of the underlying facts that form the basis for the allegations,

claims or defenses in the Action and the Third-Par Action; and (c) finding that the Settlement

Agreement and the releases set fort therein are final and binding upon the RAL, the Receiver,

Gobora, Wallace, the ReceivershipEntities and         all Interested P¡ries.

           Accordingly, the Settling Paries hereby request that the Court enter Order # i scheduling

a Settlement Hearing to further consider the Settement Agreement and, following such Hearng,

the Settling Paries fuher request that the Cour enter Order # 2 approving the Settlement


Agreement without modification and providing all other relief expressly requested.



                                                Respectfully,

                                                 /s/ James J. Rodgers
                                                 James J. Rodgers
                                                 Laura E. Vendzules
                                                 Thomas Vecchio
                                                 DILWORTH PAXSON LLP
                                                 3200 The Mellon Ban Center
                                                 1735 Market Street
                                                 Philadelphia, PA 19103
                                                 (215) 575-7000 - phone
                                                 (215) 575-7200 - fax
                                                 Attorneys for Stephen 1. Harelin,
                                                 Receiver ad litem for Philadelphia Alternative Asset
                                                 Management Company, LLC and Its Parners,
                                                 Affliates, Subsidiaries and Related Entities




721846_2                                              2
     Case 2:06-cv-01944-MMB Document 504 Filed 02/14/2008 Page 3 of 18




                                Lee A. Rosengard
                                Keith R. Dutil
                                Michael Cordone
                                STRALEY RONON STEVENS & YOUNG, LLP
                                2600 One COmmerce Square
                                Philadelphia, PA 19103
                                (215) 564-8000 - pJ:one
                                (215) 564-8120 - fax

                                Attomeys for Reç~iver C. Clark Hoagson, Jr and
                                SÜ~phenJ. Hamielin, Receiver ad litem for
                                Philaael¡)h.a AIteTIative Asset M~agement
                                Company, LLC ~d Its Parers, Affiliates,
                                Subsidiares and Related Entities



DATED: February 14,2008




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    Case 2:06-cv-01944-MMB Document 504 Filed 02/14/2008 Page 4 of 18



                               IN THE UNTED STATES DISTRICT COURT
                        FOR THE EASTERN DISTRICT OF PENNSYL VANIA


STEPHEN 1. HARILIN, AS RECEIVER AD
LITEM FOR PHILADELPHIA AL TERNA TIVE
ASSET MANAGEMENT COMPANY, LLC, AND                          Civil Action No. 06-CV-1944 (MB)
ITS PARTNERS, AFFILIATES, SUBSIDIARIES,
AND RELATED ENTITIES,
                                         Plaitiff,
                   v.
MAN FINANCIAL INC, et aI.,
                        Defendants.

COMMODITY FUTURES TRAING
COMMISSION,
                                         Plaintiff,         Case No. 05-CV -2973 (MMB)
                   v.
PAUL M.EUSTACE, AND
PHILADELPHIA ALTERNATIVE ASSET
MAAGEMENT COMPANY, LLC,
                    Defendants.


      MEMORANDUM OF LAW IN SUPPORT OF THE RECEIVER                         AD LITEM'S
           MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT WITH
                    JOHN WALLACE AND EDWARD GOBORA

        Stephen 1. Harmelin, the Receiver ad litem (the "RAL") for Philadelphia Alternative

Asset Management Company, LLC, and its partners, affiliates, subsidiaries and related entities,

including Philadelphia Alternative Asset Management Company, LLC ("P AAMCo"),

Philadelphia Alternative Asset Fund, Ltd. ("P AAF"), Philadelphia Alternative Feeder Fund,


LLC, Option Capital Fund, LP and Philadelphia Alternative Asset Fund, LP (collectively, the

"Receivership Entities"), has entered into a Settlement Agreement (the "Settlement Agreement")

with defendants John Wallace ("Wallace"); Edward Gobora ("Gobora") (Wallace and Gobora

are referred to collectively as the "Settling Defendants": Plaintiff and the Settling Defendants

shall be referred to herein collectively as the "Settling Paries"). The RAL respectfully submits

this Motion for Approval of the Settlement Agreement. As set forth in this Memorandum of
      Case 2:06-cv-01944-MMB Document 504                                                 Filed 02/14/2008 Page 5 of 18



Law and accompanying Declaration of the RAL, it is the conclusion and recommendation of the

RAL that it is in the best interests of the Receivership Entities and all Interested Paries (as

dermed in the Settlement Agreement) that the Court enter an Order: (a) approving the Settlement

Agreement without modification; (b) enjoining and baring all Interested Paries, all defendants

and all thrd-pary defendants in the Action and the Third-Part Action (as dermed below), and

Richard Fogerty and G. James Cleaver, as Joint Offcial Liquidators of P AAF, and all of their

respective heus, trstees, executors, administrators, legal representatives, agents, successors and


assigns, from commencing a claim, action or proceeding of any kind in any foru against


Wallace and Gobora based on, relating to or arising from any of the underlying facts that form

the basis for the allegations, claims or defenses in the Action and the Third-Pary ActioIi; and (c)

finding that the Settlement Agreement and the releases set forth therein are final and binding

upon the RAL, the Receiver (defined below), Wallace, Gobora, the Receivership Entities and all

Interested Parties. If           the Settlement Agreement is approved, the insurer for Gobora and Wallace

will pay a total of $500,000 (the "Settlement Proceeds") to the RAL. This Memorandum of                               Law

and the accompanying Exhibits are submitted in support of the Motion of the RAL for Approval

of the Settlement Agreement, and the releases set forth therein.

I. RELEVANT BACKGROUND
           On or about June 23, 2005, the United States Commodity Futures Trading Commission

("CFTC") commenced an action against Paul Eustace and P AAMCo, Civil Action No. 05-CV-

2973, in this Cour. On June 23, 2005, the Honorable John R. Padova entered a statutory

restraining order (the "SRO") appointing C. Clark Hodgson, Jr. as the temporary receiver (the

"Receiver") for P AAMCo, and its "parners, affliates or subsidiares or related entities of the

Defendants" (i.e., the Receivership Entities). SRO at § IV. The SRO expressly granted the
Case 2:06-cv-01944-MMB Document 504   Filed 02/14/2008 Page 6 of 18
      Case 2:06-cv-01944-MMB Document 504                                              Filed 02/14/2008 Page 7 of 18



Alternative Asset Management Company, LLC, and its Partners, Affliates, Subsidiaries and

Related Entites v. Man Financial lnc, Thomas Gilmartin and UBS Fund Services (Cayman),


Ltd., (the "SAC"), which added direct claims against UBS. On December 14, 2007, the RAL

sought permission of this Couit to file direct claims against Lashbrook, Somervile, Wallace and

Gobora. On January 31, 2008, this Court extended the time for the RAL to file a Third Amended

Complaint to assert direct claims until Februar 13,2008.

           By Order entered on December 24,2007, this Court approved a settlement of
                                                                                                              the claims

between the RA and MFG and Gilmartn. The Court issued an Opinion in support of
                                                                                                               the Order

approving that settlement on December 28, 2007.

           On January 31, 2008, the RAL and UBS filed a Joint Motion for Approval of the

settlement between them. This Court has scheduled a hearig for March 5, 2008 in order to

detem1Îne whether the settlement between the RAL and UBS should be approved.

           Without admitting any liability, fault, or wrongdoing on the part of any of the Settling

Paries, and in order to avoid the expense and uncertainty associated with contiuing the Action,

the Settling Paries wish to settle and resolve fully and finally all disputes or claims between

them, to discontinue with prejudice the Action as it relates to Wallace and Gobora, and to release

each of the Settling Parties (and the other Re1easees as set forth in the Settlement Agreement)

from any and all liability connected therewith.

II. SUMMARY OF THE TERMS OF THE SETTLEMENT AGREEMENT

            On or about Februar 13,2008, the RA, the Receiver and Wallace and Gobora executed


the Settlement Agreement, attached hereto as Exhibit "A", which sets forth the terms and

conditions for the settlement of all claims between the Settling Parties on the merits and with
      Case 2:06-cv-01944-MMB Document 504                                            Filed 02/14/2008 Page 8 of 18



prejudice. The Declaration of Stephen J. Harelin in support of approval of the Settlement


Agreement is attached hereto as Exhibit "B".

           This Settlement Agreement was facilitated by the Honorable David R. Strawbridge who

conducted a number of conferences                        and many telephone calls among the paries. If this Cour


approves the Settlement Agreement                      the RAL wil        recover $500,000"   as Settlement Proceeds. The

total proceeds from the settlement agreements in tms litigatign, either                           previously approved or

under ponsideration, wil amount to a recovery of $96 niillÒn, well Oyer 50%()f the maxim~m

damages posited in the              reports of      the RAL's damageèxpert.

           Separate and apart from settlements in this litigation, t1ie Receiver has already recovered

in   excess of $75 millon in assets, over $43 milion ofwhic1ihas been distributed t6 the Investors

in the Offshore, Option Capital or LP Funds. Such a recovery is extraordinary. For example, a

recent study of class action settlements indicates that the median settlement as a percentage of

estimated damages was 3.1 % in 2005 and 2.4% in 2006. Cornerstone Research, Securities Class

Action Settlement: 2006 Review and Analysis, Laura E. Simons and Ellen M. Ryan, p. 6. See

also Sterling v. Stewart, 158 F.3d 1199, 1204, n.7 (11th Cir.1998) (noting that the distrct court

considered a settlement recovery that was 15% of the maximum recovery fair and that the actual

settlement of25% was fair, adequate and reasonable).

      The following is a summar of the key terms of the Settlement Agreement among the

Receiver and the RAL, on the one hand, and Gobora and Wallace on the other hand:


      . Plaintiff agrees to seek from this Cour the entr of an Order approving the Settlement
           Agreement, as well as the entr of a Bar Order (the "Bar Order") from tms Cour to
            enjoin or bar all Interested Pares, all defendants and third-par defendants in the Action
            and the Third-Par Action, and the Joint Liquidators from commencing or continuing a
            claim against the Settling Defendants. iI 1.
     Case 2:06-cv-01944-MMB Document 504                                Filed 02/14/2008 Page 9 of 18



    . National Union Fire Insurance Company of Pittsburgh (insurer for the Settling
         Defendants) will pay $500,000 to the RAL to resolve all disputes between the Settling
         Paries. ~ 2.


    . The Receiver agrees not to distribute any funds until afer a CourtOrder approving the
         Settlement Agreement is final and non-appealable. ~ 2.

    . Settlement Agreement provides for mutual releases between the Settling Paries,
         including a joint tortfeasor release of the Settling Defendants. ~~ 3-4 .

    . The Settlement Agreement contemplates Notice to all Interested Paries and a hearing to
         assist the Court in determining whether to approve the Settlement Agreement. ~ 1.

    . The Action is being settled witlthe Settliiig Defendants only, and the Settlement
         Agreement shall have no effect whatsoever on                the claims or P9tential claims by the RA
         against other parties. ~ 5.

         As mentioned above, the RAL has agreed to seek the entry of a Bar Order that would

prohibit any Interested Pary from bringillg suit against the Settling Defendants. Other Interested

Parties face substantial hurdles if they were to decide to try to pursue claims directly, including

but not limited to statute of limitations issues, diffculty in establishig standing and potential


causes of action, the lack of privity and the cost of pursuing uncertain litigation. i

         In a similar case, the United States District Cour for the District of New Jersey found

that a bar order enjoining potential claimants was fair and, given the difficulties that the



i With respect to the statute oflimitations, this Court's SRO and Consent Order specifically provided following:

         IT is FURTHER ORDERED that except by leave of the Court, during the pendency of the receivership
         ordered herein, the Defendants, and all other persons and entities be and hereby are stayed from taking any
         action to establish or enforce any claim, right or interest for, against, on behalf of, in, or in the name of, the
         receivership defendants, the Receiver, receivership assets, or the Receiver's duly authorized agents acting
         in their capacities as such, including but not limited to, the following actions:
         A. Commencing prosecuting, litigating or enforcing any suit, except that actions may be filed to toll any
         applicable statute of limitations;
                                                         * * * *


SRO, VII (A) and Consent Order, XII (A) (emphasis added). To the RA's knowledge, no such suit tolling the
statute of limitations has been fiied by any Investor in the Receivership Entities in any jurisdiction. It is the RAL's
opinion that there would be numerous defenses to any individual claim filed by an individual Investor after this date
including those based on applicable statutes of limitation.
     Case 2:06-cv-01944-MMB Document 504                                               Filed 02/14/2008 Page 10 of 18



claimants faced in bringing individual claims, the bar order actually led to a higher settlement

value on the case:

                       The Cour finds that the Receiver established this settlement is in
                       the best interest of the Receivership estate, and tht federal                 law and
                       public policy favor the entr of the Bar Order t9 facilitate
                       settlement of this matter. Inadqition, the Cour is satisfied that the
                       Receiver established that the Bar Order is fair to Shasta members,
                       and will not prejudice them. Specifically, the Receiver notes that
                       individual claIms by Sha1;ta members would be difficult to pursue
                       for various reasons, includjng problems with standjng, statute of
                       li11itatIo.ns, and privity issltes.. hi short, the Receiver denl0nstrates
                      tnat the Bar Order               will lead to a higher 1;ettlement vaIue, and
                      therefore a larger recovery for claImants than would otherwse be
                      available without the Bar Order.

Commodity Futures Trading Commission v. Equity Financial Group, Civil No. 04-1512 (RBK),

2007 U.S. Dist. LEXIS 53310, at *5 (D.N.J. July23, 2007). This Court has already approved


such a Bar Order in the context of                   the RA's settlement with MFG and Gilmarin.


           As set forth in the accompanying Declaration of the RAL, in determining to enter into the

Settlement Agreement, the RAL considered several factors, including but not limited to: (1) the

risk, expense and delay inherent in proceeding with a jury trial and potential appeals; (2) the law

and the facts in light of the extensive discovery; (3) the risk to other Interested Parties in


attempting to pursue claims directly; and (4) the anticipated recovery in light of the
recommendations of Judge Strawbridge. DecL ~ 6. After extensive consideration of these

factors and others, it is the RAL's good faith business judgment that the Settlement Agreement is

in the best interests of the Receivership Entities, and that the Settlement Agreement is fair,

adequate and reasonable. Decl. ~ 7. The RAL strongly recommends and encourages the

Investors not to object to the Settlement. DecL ~ 8.
     Case 2:06-cv-01944-MMB Document 504                                   Filed 02/14/2008 Page 11 of 18



III. CONCLUSION

           It is the conclusion and recommendation of the RAL that it is in the best interests of the

Receivership Entities to enter into the Settlement Agreement, which the RAL believes is fair,

adequate and reasonable. The RAL also believes that the Settlement Agreement is in the best

interests of all Interested Paries. For all the foregoing                   reasons, and after consideration of all

evidence provided at a hearng on ths matter, the Settling Parties respectfully request that this

Cour enter Order # 2 approving                          the Settlement Agreement and providing all other relief

expressly requested.


                                                            /s/ James 1. Rodgers
                                                            James J. Rodgers
                                                            Laura E. Vendzules
                                                            Thomas Vecchio
                                                            DILWORTH PAXSON LLP
                                                             3200 The Mellon Ban Center
                                                             1735 Market Street
                                                             Philadelphia, P A 19103
                                                             (215) 575-7000 - phone
                                                             (215) 575-7200 - fax
                                                             Attorneys for Stephen J. Harmelin,
                                                             Receiver adliÌem for Philadelphia Alternative Asset
                                                             Management Company, LLC and Its Parners,
                                                             Affliates, Subsidiaries and Related Entities


                                                             Lee A. Rosengard
                                                             Keith R. Dutil
                                                             Michael Cordone
                                                             STRALEY RONON STEVENS & YOUNG, LLP
                                                             2600 One Commerce Square
                                                             Philadelphia, P A 19103
                                                             (215) 564-8000 - phone
                                                             (215) 564-8120 - fax

                                                             Attorneys for Receiver C. Clark Hodgson, Jr. and
                                                             Stephen 1. Harelin, Receiver ad litem for
                                                             Philadelphia Alternative Asset Management
                                                             Company, LLC and Its Parners, Affiliates,
                                                             Subsidiaries and Related Entities

DATED: February 14,2008
     Case 2:06-cv-01944-MMB Document 504                                              Filed 02/14/2008 Page 12 of 18



                                                 CERTIFICATE OF SERVICE


           I hereby certify that on the 14th day of February, 2008, I caused a true and COlTect copy


of the Receiver ad litem's ("RAL") Motion for Approval of Settlement between the RAL, John

Wallace and Edward Gobora (collectively, the "Settling                                Parties"), the Memorandum of Law in

support thereof and proposed form of Order # 1 and 2 ("Motion for Approval"), to                                 be served via


electronic transmission on the following:

Gl~1l Irwin Chernigoff, Esquire                                             Michael    1 Otten,.   Esquire
gchernigoff(Icftc.gov                                                       motten(Icftc.gov

Robert Sentner, Esquire                                                     Har J. Giacometti, Esquire
rsentner(Iiixonpeabody.com                                                  hgiacometti(Isgclegal.com

Therese Doherty, Esquire                                                    WayneC. Stansfield, Esquire
tdohert(Ierrick.com                                                         wstansfield(Ireedsmith.com
                                                                            rreber(Ireedsmith.com
Timothy E. Hoeffer
thoeffer~saui.com                                                            DavidM. Howard
                                                                             david.howard~dechert.com

Gaetan Alfano, Esquire                                                       Keith W. Miler, Esquire
galfano(?niar-law.com                                                        keithmiler. paulhastings.com




            Also on February 14,2008, I caused a true and correct copy of                              the Motion for Approval

to be served via United States First Class Mail, postage prepaid, on the paries listed below:

Thomas W. Sexton, Esq.                                                       Paul M. Eustace
National Futures Association                                                 102 Lakeshore Road East
200 W. Madison                                                               Oakvile, Ontaro
Chicago, Ilinois 60606                                                       CANADA
                                                                             L6J 6N2




721846_2
   Case 2:06-cv-01944-MMB Document 504 Filed 02/14/2008 Page 13 of 18




Mark Hollgan, Esquire                       Linda T. Coberly, Esquire
Walkers                                     Michael J. Philippi, Esquire
Walkers House                               David W. Wirt, Esquire
PO Box 265 GT, Mar Street                   Winston & Strawn, LLP
George Town, Grand Cayman, Cayman Islands   35 W. Wacker Drive
(VIA AIR MAL)                               Chicago, Ilinois 60601




                                                 /s/ James J. Rodgers
                                                James J. Rodgers (JR797)




721846_2                                    2
    Case 2:06-cv-01944-MMB Document 504 Filed 02/14/2008 Page 14 of 18



                          IN THE UNITED STATES DISTRICT COURT
                       FOR THE EASTERN DISTRICT OF PENNSYLVANIA


STEPHEN J. HARMLIN, AS RECEIVER AD
LITEM FOR PHILADELPHIA AL TERNA TIVE
ASSET MAAGEMENT COMPANY, LLC, AND                             Civil Action No. 06-CV-1944 (MMB)
ITS PARTNERS, AFFILIATES, SUBSIDIARIES,
AND RELATED ENTITIES,
                      Plaintiff,
                  v.
MAN FINANCIA INC, et aI.,
                                Defendants.

COMMODITY FUTURES TRADING
COMMSSION,
                   Plaintiff,                                 Case No. 05-CV -2973 (MMB)
                  v.
PAUL M. EUSTACE, AND
PHILADELPHIA AL TERNA TIVE ASSET
MANAGEMENT COMPANY, LLC,
                     Defendants.



                       ORDER #1 CONCERNING PROPOSED SETTLEMENT

           The Cour, having been notified that the Receiver ad litem (the "RA"), on behalf of the

Philadelphia Alternative Asset Management Company, LLC, and its parners, affiiates,

subsidiaries and related entities, including Philadelphia Alternative Asset Fund, Ltd.,

Philadelphia Alternative Feeder Fund, LLC, Option Capital Fund, LP and Philadelphia

Alternative Asset Fund, LP (collectively, the "Receivership Entities"), has entered into a

Settlement Agreement (the "Settlement Agreement") with defendants John Wallace ("Wallace")

and Edward Gobora ("Gobora"), it is HEREBY ORDERED that:

           1. A Settlement Hearing is scheduled to be held before the Cour on March 5, 2008


at 4:00 p.m. for the following purposes:




721857_1
     Case 2:06-cv-01944-MMB Document 504                                      Filed 02/14/2008 Page 15 of 18



                      a. to determine whether the Settlement Agreement and the releases set forth


therein should be approved by the Court;

                      b. to determne whether the Order as provided under the Settlement

Agreement should be entered;

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


            2. The Receiver, C. Clark Hodgson, Jr., shall cause a Settlement Notice to be

mailed, by first class mail, postage prepaid, on or before , 2008, to all investors in


the Receivership Entities who have been and can be identified with reasonable effort. The

Motion and Exhbit "A" thereto (the Settlement Agreement), shall accompany the Settlement

Notice. The Receiver is permitted to serve copies of the Motion electronically upon those for

whom he has an electronic address, and shall also post the Motion and Settlement Agreement on

his website.

            3. The Receiver's counsel shall, at or before the Settlement Hearing, file with the

Court proof of service of the Settlement Notice.

            4. The Cour wil consider comments and/or objections to the Settlement Agreement


only if such comments or objections and any supporting papers are fied in writing with the Clerk

of the Cour, United States Distrct Cour for the Eastern District of Pennsylvania, U.S.


Courthouse, 601 Market Street, Room 2609, Philadelphia, Pennsylvana 19106-1797, and copies

of all such papers are served, on or before February 28, 2008, upon each of                   the following: James

J. Rodgers, Esquire, Dilwort Paxson LLP, 3200 The Mellon Bank Center, 1735 Market Street,

Philadelphia, Pennsylvania 19103-7595 (on behalf of the RAL) and Timothy E. Hoeffner,

Esquire, Saul Ewing LLP, Centre Square West, 1500 Market Street, Philadelphia, PA 19102, (on

behalf of     Wallace and Gobora). Persons wishing to be heard orally in opposition to the approval




721857_1                                                                  2
    Case 2:06-cv-01944-MMB Document 504                  Filed 02/14/2008 Page 16 of 18



of the Settlement Agreement shall state in their written objection their intention to appear at the

Settlement Hearing, and identify any witnesses they may call to testify and exhbits they intend

to introduce into evidence. Persons do not need to appear at the Hearing or take any other action

to indicate their approval.

                                                     BY THE COURT:



                                                     Baylson, J.




721857_1                                         3
    Case 2:06-cv-01944-MMB Document 504                Filed 02/14/2008 Page 17 of 18




                        IN THE UNITED STATES DISTRICT COURT
                     FOR THE EASTERN DISTRICT OF PENNSYLVANIA


STEPHEN 1. HARMELIN, AS RECEIVER AD
LITEM FOR PHILADELPHIA AL TERNA TIVE
ASSET MANAGEMENT COMPANY, LLC, AN                          Civil Action No. 06-CV-1944 (MMB)
ITS PARTNERS, AFFILIATES, SUBSIDIARIES,
AND RELATED ENTITIES,
                      Plaintiff,
                v.
MAN FINANCIAL INC, et aI.,
                        Defendants.

COMMODITY FUTURES TRADING
COMMISSION,
                   Plaintiff,                               Case No. 05-CV-2973 (MMB)
                v.
PAUL M. EUSTACE, AND
PHILADELPHIA ALTERNATIVE ASSET
MAAGEMENT COMPANY, LLC,
                     Defendants.


           ORDER #2 GRATING APPROVAL OF SETTLEMENT AGREEMENT

           AND NOW, this           day of                   , 2008, upon consideration of the

Motion of the Receiver ad litem (the "RAL"), on behalf of the Philadelphia Alternative Asset

Management Company, LLC, and its partners, afliates, subsidiaries and related entities,

including Philadelphia Alternative Asset Fund, Ltd. ("PAAF"), Philadelphia Alternative Feeder

Fund, LLC, Option Capital Fund, LP and Philadelphia Alternative Asset Fund, LP (collectively,

the "Receivership Entities") for Approval of the Settlement Agreement between the RAL and

defendants John Wallace ("Wallace") and Edward Gobora ("Gobora" and together with Wallace,

the "Settling Defendants"), and after a Hearng on this matter, the Court having determined that

the Settlement Agreement is fair, reasonable and adequate, it is hereby ORDERED,




721858_1
    Case 2:06-cv-01944-MMB Document 504     Filed 02/14/2008 Page 18 of 18



ADJUGED, and DECREED that the Motion is GRATED. It is FURTHER ORDERED

that:




                                          BY THE COURT:




                                          Baylson, J.




721858_1                            2
Case 2:06-cv-01944-MMB Document 504-2                          Filed 02/14/2008 Page 1 of 20




                                       SETTLEMENT AGREEMENT

                     This Settement Agreement (the "Agreement") is made as of Februar

       ~ 2008, by and between Stephen J. Hanelin, the cour-appointed Receiver ad litem


       (the ~'Receiver ad ¡ite,n") and C. Clark Hodgson, Jr., the cour-appointed Receiver (the

       "Receiver") for the Philadelphia Alternative Asset Management Company, LLC

       C"PAAMCd') and all ofIts parers, affiliates, subsidiadesand related entities,including,
       but not-limited to, Philadelphia Alternative Asset Fund, Ltd. ("P AA"), Option Capital

       FlUd, LP, Philadelphia Alternative Asset Food, LP, and Philadelphia Alternative Feeder

   Fund, LLC (collectively, the "Receivership Entities"), on behalf of all of the foregoing

   Receivership Entities (collectively, "Plainti), on the o,nehand, and JohI Wallace

   ("Wallace"), Edward Go~ora ("Gobora") and, for puroses of Paragraph 2 hereof,
   National UnIon Fire Insurance Company of Pittsbligh, P A ("National Union"), on the

   other hand. Plaintiff, Wallace and Gobora together shall be referred to herein as the

   "Setting Paries" and, where the context so requires, individuay as a "Setting Pary."


                    WHREAS, on or about June 23, 20G5, the United States Commodity

  Futues Trading'Commssion ("CFTC") commenced an action against Paul Eustace and

  P AACo, Civil Action No. OS-CV -2973, in the United States Distrct Cour for the

  Easern District ofPennylvana (the "Court");


                    WHREAS, at the request of        the CFTC and initialy by Order dated June

  23, 2005, and thereafer by Orders dated September 22, 2005, and April 21, 2006, the

  Cour appointed C. Clark Hodgson, Jr. as the Receiver, with the fu powers of an equIty

  receiver, for P AACo and the other Receivership Entities;



       5843_i                                                                                    EXfUBIT
                                                                                            i "
                                                                                            ~ A
  71
                                                 1
Case 2:06-cv-01944-MMB Document 504-2                                             Filed 02/14/2008 Page 2 of 20




                          WHREAS, the Receiver commenced an action agaist, inter alia, MF

    Global Inc., f/a Man Financial Inc ("MFG"), Thomas Gilmarin ("Gilmarn") and

    certain other defendants on or about May 8, 2006, by filing a complait in the Cour

    (Civil Action No. 06-CV~1944 (ME)), which complaint was subsequently amended on

    or about November 15, 2006 (the "Action");


                         WHEREAS, MFG filed a third-par complait in the Cour 011 or                   about

   Augut 4, 2006, asserting claims agait Wallace, Gobora David Lashbrook

   ("Lashbrook") and Scott Somervile CSomervile") (the third pary complaint including

   subsc:quent amendments therèto, the "Third-Par Action");



                        WHREAS, by Order dated May 3, 2007, the Cour replaced C. Clark

   Hodgson, Jr. as Receiver with respect to the Action and appoin:rd Stephen J. Harelin to

   act as the Receiver ad litem with ful and exclusive autority over the Action;


                        WHREAS, on or about July 6, 2007, the ReceiYer ad litem filed a second

  amended complaint in the Action, which is captioned Stêphen J. Haneli. Reèeiver ad

  Litem for Philadelphia Alternative Asset Mangement Compary, LLC, and its Pårers,

  Affliates. Subsidiaries and Related Entities. v. Man Financial Inc. Thoma Gilmarin and

  DES Fund Servces (Cayman). Ltd.;


                       WHERES, on or about Decembèr 2, 2007, Plaintiff entered into. a
  Settlement Agreement with MFG and Gilmar, which was amended as of                            December 17.

 2007 and subsequently approved by the Cour on December 20,2007;




 715843_2
                                                                2
Case 2:06-cv-01944-MMB Document 504-2                      Filed 02/14/2008 Page 3 of 20




                  WHREAS, on December 20,2007, the Cour entered an order granting

   the Receiver ad litem leave to file a thd amended complait to assert direct clais
   against Wallace and Gobora, which order has been subsequently modified to require that

   the Receiver ad litem must do so on or before Febru 14,2008;


                  WHEREAS, on or about Janua 30, 1008, Plaitiff entered into a

   settement agreement, dated as of Janua 28.2008, with UBS Cayman;


                 WHREAS, Wallace and Gobora deny aU matenal allegations agaist

   them and deny any and all fault or liabilty to any par to the Action or the Thid-Par

   Action; and


                 WHEREAS, without admtting any liabilty, fault, or wrongdoing on the

   par of any Setting Par hereto,in order to save the expenses of, and avoid the

  uncerainties associated with potentiål litigation, the Settling Pares wish to sette and

  resolve fully and finaly all differences, disputes or claims between them, whether actual

  or potential, lmovvn or unown, suspected or unsuspected, specifcally mentioned hèrein

  or not, related to the allegations in the Action, the Trud-Par Action, andfor predecesor

  actions by the Receiver, and to release each of the Setting Pares fro~ any and all
  liabilty connected therewith with the understading that the releases do not constitute an

  admission of any liabilty, wrongdoing' of any natue, or the lack of merit of any potential

  clais, cross-clai, counterclaims, tlrd-pai claims, or defenses;



                 NOW, THEREFORE, for the consideration stated herein, including but

  not limite to, the mutual covenants and undertngs set fort herein, the receipt and




  715843_2                                    3
Case 2:06-cv-01944-MMB Document 504-2                                             Filed 02/14/2008 Page 4 of 20




     suffciency of which Is hereby acknowledged, the Setting Paries hereby stipulate and

    agree as follows:


                         1. Order Confirming Agreement. The Receiver ad ltem shall,

    witlú 10 days afr the execution of ths Agreement, fie a motion in the Cour for an


    Order to con:finn this Agreement (the "Cour Order"). The Setting Jares shall advocate

    for, and request th~.Cour to,            enter the Cour Order. The Setting Pares shall         not file any

   notice of appeal from the ent of the Court Order approving this Agreement. Plaintiff

   will ask the Cour:


                        (a) To provide reasonable notice to al pares interested in each of
                                                                                                            the

   Receivership Entities, including but not limited to, all investors in, sharholders,


   members, parers and creditors of. eäch of the Receivership Entities ("Interested

   Pares");

                   . (b)            To set a bar date by which the Interested Pares must file with the

  Cour any objections to the settement provisions contaned herein;


                       (c) To provide for a hearg on ths Agreement's provisions, including

  the releases contained herein, and any objections by                     any Interested Pares;


                       (d) To approve ths Agreement, without modification; and



                       (e) To permanently enjoin or bar all Interested Paries, all defendants
  and third-part defendants in the Action and Thid-Par Action, and Richard Fogert
  and G. James Cleaver, as Joint Offcial Liquidators ofPAA, and all of                         their respective

 heirs, trstee, executors, adminstrtors, legal representaves, agents, successors and




 715843_2                                                       4
Case 2:06-cv-01944-MMB Document 504-2                                 Filed 02/14/2008 Page 5 of 20




    assigns from commencing a claim, action Or proceedng of any kind in any fonu agaist


    Wallace and Gobora based on, relating to or arsing from any of             the underlying facts that

   fonn the basis for the allegations, clal or defenses in the Acton and the ThTd- Par

   Action; and


                        (f) To order tht ths Agreement and the releaes set fort herein are

   final and binding upon:Plaitiff," the Setting Pares, each of the Receivershíp Entities,


   and all Interested Pares.


                        2. Consideration. On behalf of Wallace and Gobora, National

   Union hereby agrees to               pay to the Receiver ad litem for the benefit of Plaintiffs
   receivership estate the sum of five hundred thousand dollars ($500,000.00) to resolve all

   disputes between the Setting Pares as set fort in ths Agreement (the "Settlement

  Amount"), to be paid with five                   (5) business days of entry of the Cour Order. Such.
  Settlement Amount shall be paid by wire trsfer to the account of the Receiver at.
  Citizens Ban of Pennsylviia, pursuant to the followig wire.trsfer instctions:

  Citizens Ban of PA, Plúladelphia, PA, ABA Nmnber 036076150, for fuer credit to

  the account of "Philadelphia Alternative Asset Managem.ent Company - C. Clark

  Hodgson, Jr. - Receiver," Account Number 6210906552. The Receiver shaH not
  distrbute any of the Settlement Amount unti the Cour Order becomes fial. For the

  purposes of      ths Agreement, the Cour Order becomes final: (a) ifno appea is taken, on

  the date on which the tie to appea has expired; (b) if any appeal is taen, on the date on

  which any such appea is finally disposed of in a maner afrmng the material
  provisions of the Cour Order, or (c) on such other date to which the Settling Pares may

  agree .in writig. In the event that ths Agreement shall be termated by" the Setting

  715843_2                                                      5
Case 2:06-cv-01944-MMB Document 504-2                      Filed 02/14/2008 Page 6 of 20




   Paries or declared void or unenforceable by a cour order, or the Cour Order is reversed

   on appeal, then the Receiver shall reftd the Settement Amoimt to National Union

   with five (5) business days aftr such termination or the issuace of such order and

   such   payment shall be   made in the maner instrted by AIG Domestic Claims, Inc.




  7J5843_2                                      6
Case 2:06-cv-01944-MMB Document 504-2                                  Filed 02/14/2008 Page 7 of 20




   whether known or unown, suspected or unsusected, and whether or not concealed or

   hidden, for, upon, or by reason of any matter, clai, cause or thg whatsoever from the

   begiing. of       the world to the day of      the date of   ths Agreement.




                   , . (b) It is the specific intention of the Settlig Pares hereto that ths

   Agreement be deemed to be a joint torteasor release conforming to and satifying the

   provisions of the laws of the Co:ronwealth of Pennylvania, só as to eXtinguish all

   liabilty of the Defendant Releaees including, but not limited to, liability for con-ibution

  and/or indemnty to any other par to the Action and/or the Thd-:Pary Action. Solely

  for purses of         ths Agreement, the Receiver ad liem and Wallac and Gobora agree that

  Walläce and Gobora are joint torteasors with defendants named in the Action and the

  Thrd-Pary Action.


                       (c) In the event it should ever be determined that any person,

  parership, corporation, or other entity is or was a joint tortfeasor with or common Jaw

  indemnitee of Wallace and Gob                 ora, whether set forth in the Action, the Thrd-Par

  Action, or otherwse, then a verdict, award, judgment, or settlement In favor of Plaintiff

  and agaist or with any such other person, parership, corporation, or other entity, shall

  be reduced by the greater of the:


                                  (i) pro rata shae allocable to Wallace and Gobora of

                                           Plaintiffs damages recoverable agains all joint tortfeasors;

                                           or


                                  (ii) amount of the consideration paid on behalf of Wallace and

                                           Gobora pursuat to this Agreement.


  715843_2                                                  7
Case 2:06-cv-01944-MMB   Document 504-2   Filed 02/14/2008   Page 8 of 20




  715843_2                       8
Case 2:06-cv-01944-MMB Document 504-2                      Filed 02/14/2008 Page 9 of 20




   reason of any matter, clai, cause or thng whatsoever from the begiring of the world to

   the day of the date of this Agreement.

                  (b) Concurently with the execution and delivery of this Agreement,

   each of Walace and Gobora shall provide to the Receiver ad litem an executed releae in

   favor of each of other defendant in the Action Or Thrd-Par Action with whom the

   Receiver ad litem has entered into a settlement agreement, and the Receiver ad litem shall

   provide to Wallace and Gobora a corresponding executed release of equivalent scope

   from each such defendant.

                  S. Reservation of Claims. Nothng contained herein shall- constitute

   a release of clais, punitive damages, exemplar daages, costs, judgments, debts,
  rentas, bonds, bils, commissions, contrbution or indemnfication clai, cauSes of

  action, grevances, demands, suits and proceedings in law or in equity of any nature

  whatsoever between Plaintiff and any pares in the Action or the Third-Par Action:

  òther than Wallace and Gobora.


                 6. Public Relations. The Settling Pares agree that other than as

  requied by law or judicial process or as contemplated by, or reaonably necessar to

  effectute the purposes of. ths Agreement, they will not issue a press ri;leae and shall

  not otherwse publicly comment on ths Agreement or the negotiations leading thereto.


                 7. No Other Actions; No Assignment. The Settling Paries hereto

  represent and warant tht they have not brought any proceedings against each other,


  other than the Action, and fuer that, except as otherwse provided in ths Agreement,


  they have not assigned or transferrd or purorted to assign or transfer to any person, fi




  715843-i                                     9
Case 2:06-cv-01944-MMB Document 504-2                      Filed 02/14/2008 Page 10 of 20




    or corporation whatsoever, any claim, debt, liabilty, demand, obligation, cost, expense,

   action or cause of action herein released.


                  8. Relince on Counsel. EACH OF TIE SETTING P ARTlES

   REPRESENTS AND WARS THAT HE is FREELY ENTERIG INTO nns
   AGREEMENT, THAT HE is ACTING WITH THE ADVICE OF COUNSEL OF HIS

   OR ITS CHOOSING, AN THAT I- HAS READ AL'I FULLY UNERSTANS

   THE CONTES AND EFFECTS OF THIS AGREEMENT. EACH OF THE
   UNERSIGNED HEREBY CERTIFIES TRATHE HAS READ ALL OF THIS
   AGREEMENT AND THE RELEASES AND FULLY UNERSTANDS ALL OF THE

   SAM.

                  9. No Admissions. The Seting Paries each acknowledge that the

   terms of ths Agreement are solely for the purose of résolving disputed claims and

   avoiding fuer costs and uncertty of litigation, and do not cònstute an admission of"

   any ~ongdoing by any Setting Par heretò.

                  10. Binding Agreement. Upon execution of this Agreement, ths

  Agreement is binding upn each of the Settng Paries hereto and upon their heirs,

  exectors, legal representatives, successors, and permitted assigns, and inures to the


  benefit of the Setting Paries benefited hereby and their heirs, executors, legal
  representatives, successors, and penntted assigns. Notwthding the foregoing, no
  Setting Pary hereto may assign its rights or obligations under this Agreement except as

  otherwse provided herein or without the pnor wrtten consent of any other Setting Par

  hereto.



  715843_2                                      10
Case 2:06-cv-01944-MMB Document 504-2                               Filed 02/14/2008 Page 11 of 20




                         i 1. Entire Understanding. Ths Agreement and the Exhibits hereto

   constitute the entire understanding of the Settling Paries hereto and supersede and

   replace all other prior agreements between the Settling Paries hereto with respect to the

   subject matter liereof, whether wrtten or oral. . The Settling Pares hereto acknowledge

   that each Setting Par ha not executed this Agreement in reliance on any promise,


   representation or waranty not set fort             herein.


                        12. . Aîendnients aJldVVaiver. Ths Agreement may not be altered,

   changed, amended or modified except by way of a wrtten instrent signed by duly

   authorized representatives of aU of theSettingParèS. 'The recitals set forth at the

   begiimng of this Agreement are incorporated into             the Agreement by rtference. Neither

   any failure nor delay on the par of aìy Setting Par in exercising any right, power or


   privilege hereunder shall operate as a waiver thereof, nor shall a single or parial exercise

   thereofprecIude any other or fuer exercise or any other right, power or privilege.


                        13. Governing Law. Ths Agreement shall be governed exclusively

   by, and construed, inteipreted and enforced in accordance with the laws of the
   Commonwealth ofPeimsylvana, applied without regard to confict ofla~s principles.


                        14. Counterparts; Facsimile Signatures. Th Agreement may be

   executed in any num~er of counterpar, and each executed counterpar shall have the

   same force and effect as the original instrent and as if all the Settling Pares to the


  counterpars had signed the same ii;strent Furer, the signatue pages of this

  Agreement may be transmitted by facsimile and/or PDF, and signates tranmitted by

  facsimile and/or PDF shall have the same force and effect as the original signatues.



  715843_2                                                11
Case 2:06-cv-01944-MMB Document 504-2                        Filed 02/14/2008 Page 12 of 20




                     15. Joint Drafting. This Agreement reflects the joint drafng effort


    of each Setting Par hereto in consultation with their respetive legal counsel. In the

    event of any dispute or controversy regarding the Agreement, the Settling Paries shall be

    considered joint authors and no provision shall be interpreted against any Settling Pary

   because of any aleged putative authorship.


                     16. Forum; Waiver of Ji-ry TriaL. The Setting Pares irevocably

   consent to the exclusive jursdiction of the Uiúted States Dístrct Cour for the Eastern

   Distrct. of   Pennsylvana to enforce, or in any action, suit or proceeding for any breach of

   or default under, ths Agreement and/or any underting or obligation under any other

   ageement, document or instfent entered into or executed in connection herewith.

   Without limiting the foregoing) each of the Setting Pares hereby expressly and
   irrevocably waives any claim or defense based on any aleged lack of personal'

   jursdiction) improper venue or foru non conveniens, or any similar basis. Each of the,

   Settling Pares hereby waives any right which he or it may have to a jur tral in any


   action, suit or proceeding arsing out of or related in any way to tls Agreement or any

   document executed pursut to or in connection with this Agreement.


                    17. Authority. .Each person signing this Agreement represents and

   ~arants that he or she is duly authonzed and empowered to execute this Agreement and

   bind the Setting Paries on whose behalf they have executed tls Agreement. The

   Settling Paries represent and warant to the extent applicable: (a) that they have taken all

   necessar corporate, legal and adminstrative actions duly to approve the making and

  performance of t1s Agreement, and no fuer corporate, administative or other

  approval is necessar; and (b) that the makng and peiformance of this Agreement wil


  715843_2                                       12
Case 2:06-cv-01944-MMB Document 504-2                       Filed 02/14/2008 Page 13 of 20




    not violate any provision of their respective aricles of incorporation, charer or corporate

    by-laws, or other binding document. It is i.derstood and agreed by the Setting Pares

    that the Receiver and the Receiver ad litem are entering into ths Agreement solely in

    their capacities as Receiver and Receiver ad litem, respectively, and that they shall have

    no personalìabilty for any oftheIr obligations hereunder other than!n such capacities.


                   18. Notices. (a) All notices, waivers, demands, requests, consents,


    approvals and communcations required or permitted under this Agreement ("Notice(s)")

   shall be in wrting and given as follows: by (i) personal delivery, (ìi) by facsimile and

   electronic mail. or (iii) established overnght conuercial courer, with delivery charges

   prepaid or duly charged. All Notices shal be addressed to the applicable addresses as set

   fort below, or to any other address or addresses as any par from time to tie may
   designate, by Notice given to the others in the maner provided in this paragraph as

   follows:


                          To: John Wallace and Edward Gobora;

                                  i. c/o Timothy Hoeffner, Esq.
                                         Saul Ewing LLP
                                         1500 Market Street, Suite 3400
                                         Philadelphia, PA 19103
                                         (215)
                                         (215) (facsimle)
                                         thoeffer(isaul.com

                          To: Receiver ad litem:
                                  1.     Stephen J. Harelín, Esq.
                                          Dilworth Paxson LLP
                                          1735 Market Street
                                         .Philadelphia, FA 19103-7595
                                          (215) 575-7000
                                          (215) 575-7200 (facsimle)
                                         shanelin~djlwortlaw.com

   715843_2                                     13.
Case 2:06-cv-01944-MMB            Document 504-2 Filed 02/14/2008                   Page 14 of 20




                                  2. James J. Rodgers, Esq.
                                         Dilworth Paxson LLP
                                         1735 Market Street
                                         Philadelphia, PA 19103-7595
                                         (215) 575-7000
                                         (215) 575-7200 (facsimile)
                                         jrodgersØ)dilwortaw.com

                          To: Receiver:

                                  1. C. Clàrk Hodgson. Jr.. Esq.
                                         Strdley Ronon Stevens 8t Young LLP
                                         2600 One Còmmerce Squae
                                         Philadelphia, P A 19103-7098
                                         (215) 564-8000
                                         (215) 564-8120 (facsimile)
                                         chodgsonØ)stradley.com

                                 2. Michael Cordone, Esq.
                                         Stradley Ronon Stevell & Young LLP
                                         2600 One Commerce Square
                                         Philade1phia,P A 19103-7098
                                         (215) 564-8000
                                         (215) 564-8120 (facsimile)
                                         mcordoneØ)stradley.com

                  (b) N otIces so given shalÌ be deemed to have been given on the day

   sent to the par or Settling Pares if delivered personally or by facsimile and electronic


   mail (with transmission confirmed), or the next business day if sent by overnght camer.

   AlI copies to the applicable persons or entity(ies) designated above to receive copies shal

   be given in the same maner as the origial Notice.

                  19. Attorneys' Fees. Each Settling Par shall bear its own attorneys'

   fees and costs in connection with the negotiation and dring of this Agreement, the

   Action and the Thid-Par Action.




   715843_2                                    14
Case 2:06-cv-01944-MMB Document 504-2     Filed 02/14/2008 Page 15 of 20




  Dated: Februy /3, 2008         Stephen J. Harelin, Receiver ad litem
                                 for Philadelphia Alternative Asset
                                 Management Company, LLC and its
                                 Parners, Affiliates, Subsidiares and Related
                                 Entities




  Dated: February _, 200.8       C. Clark Hodgson, Jr., Receiver for
                                 Philadelphia Álternative Asset Management
                                 Company, LLC and its Parers, Affliates,
                                 Subsidiares and Related Entities


                                 By:
                                        C. Clark Hodgson, Jr.


  Dated: Febru -' 2008




                                        John Wallace


  Dated: February _, 2008



                                        Edward Gobora


 Dated: February _,2008          AIG Domestic Claims, Inc. for
                                 National Union Fire Insurance Company
                                 of Pittburgh, PA


                                 By:
                                 Name: Alan E. Burkholz
                                 Title:




                                15
   Case 2:06-cv-01944-MMB Document 504-2           Filed 02/14/2008 Page 16 of 20

                                                  F eb 13 2008 11 : 53
02/12/2008 23; 55 5106603142              GENERAL CONSEL                        PAGE 02




         Dated; Febru -- 2008          Stehen J. Harelin, Reiver ad litem
                                       for Plradelpbia Alteniative Asset
                                       Management Company, LLC and its
                                       Parers, AfiateS, Subsidiares and Relat
                                       Entities


                                       By:
                                              Stephen J. Haeli

        Däte: Februar -,2008           C. Clark Hodg$o~ Jr., Reciver for
                                       Phiadelphia Alterntive Asset ~ement
                                       CompltY, LLC ánd its Pàrers, Afliates,
                                       Sub~idiareS and Relatd Entities



                                       By: C, 0"u.~w .
                                              C. Clark Hodgs


       Dated: Febru.. 2008


                                             John Wallace


      Dated: Febn: -- 2008




                                             Edward Ooborn

     Dated: Februar -' 2008           AlG Domestic Claims, Inc. for
                                      Natona Union Fir Ince Company
                                      of Pittburgh P A



                                  By:
                                  Name: Alan E, Burolz
                                  Tite;




    715843_2
                                '15
Case 2:06-cv-01944-MMB Document 504-2                               Filed 02/14/2008 Page 17 of 20
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                                                      in,~hi~ii ~rrYêkS~.
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          Pat~d: Febi -' .2008                        c.~E~~;ir?~ti"iii'r .
                                                      ~~d~phiàA.~~\le~M~~t
                                                        d .......... LL~áialtsl~ Afät
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                                                      :By:
                                                                  c.ciiu~;ir.
         . Dat: .'ebr .. 2008

                                                                  1ift~~
                                                             (!lshn W~
          Dawd; Febr ~ 2008


                                                                  EiWt G9m

          Dat: Febr ,. :lOOS                           AI(j:o~stc Cli, In. for
                                                      NaiQn ÌJI)ân Fire '(ütaee C~pai
                                                      ~fPfti~ PA

                                                       By;
                                                       Nll: Na R, Biiolz
                                                       "It1e:




          715113_2                                    15




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Case 2:06-cv-01944-MMB Document 504-2       Filed 02/14/2008 Page 18 of 20




     Date: Febnry -- 2008       Stephen J. Hwne1~ Reover ad litm
                                for Pbiladel;phiaAltere,lve Assét
                                MaagafeiitCóni.tâìy~ LLC and it
                                Pater, Afaies. Subsidiares and Related
                                Eies
                                 By;
                                        Stmbên J. Haelin

     Dat: Febru -- 2008          C.Clat Hödgsoii1r., R~ver f(!
                                PhlÏliMl'biA1t~~ASSMaemeDt
                                 Compaiy, JiLêãhd,ilPäier. AfWê.
                                 Stišidiiüèi~åñ Rclatêd Ertities


                                By:
                                        c. clä HQigsn, Ji:.

     Dated: Februar~. 200S




                                        Jobn Walace


     Dated: Febru -72008

                                 (JU)()Jul tr YfJ.møJ
                                    Bdwàr Gobora


    Dated: Febnia- L 5.008      AlG Poinestc Claws. me. for
                                Natona Union Fi:ç lnance Company
                                ?fPjttburgh. P A



                                 ~~~
                                Title: b¡,.ee+çr-C?~feÆ CklMS




    715843_i                    15
  Case 2:06-cv-01944-MMB Document 504-2                                 Filed 02/14/2008 Page 19 of 20




                                    DECLARTION OF STEPHEN J. HARMELIN
           Stephen 1. Harmelin deposes and says the followig:


           1. By Order of                this Cour dated May 3, 2007, I replaced the Receiver as the Receiver

           ad litem with full andexc1usive authority over the action captioned Stephen J Harmelin,

           Receiver ad Litem for Philadelphia Alternative Asset Management Company, LLC, and

           its Partners, Affliates, Subsidiaries and Related Entites, v. Man Financial Inc, Thomas

           Gilmartin and UBS Fund Services (Cayman), Ltd, Civil Action No. 06-CV-1944 (MMB)

           (the "Action").


           2. On February 13, 2008, I executed a Settlement Agreement (the "Settlement


           Agreement") with defendants John Wallace ("Wallace") and Edward Gobora

           ("Gobora"). Gobora and Wallace (and their insurer) also executed the Settlement

           Agreement on Februry 13,2008. The Settlement Agreement is attached to the Joint

           Motion for Approval of               the Settlement as Exlbit "A".


           3. If            the Settlement Agreement is approved, National Union Fire Insurance

           Company of          Pittsburgh, PA (the insurer for Gobora and Wallace) wil pay a total of

           $500,000 (the "Settlement Proceeds") for the benefit of              the Receivership Entities and the

           Investors in the Receivership Entities.


           4. In connection with obtaining a settlement of                 these claims, extensive negotiations

           were conducted by the Honorable David R. Strawbridge with the varous paries on at

           least ten occasions, including some full-day settlement conferences.




                                                                                                            EXHIBIT
                                                                                                      il
720838_1
                                                                                                      :õ
                                                                                                      ~       ß
  Case 2:06-cv-01944-MMB Document 504-2                                          Filed 02/14/2008 Page 20 of 20



           5. Additionally, I and my counsel engaged in substatial ars-lengt negotiations


           over a course of months with representatives of Gobora and Wallace in an effort to

           resolve all claims, and counsel for the Settling Paries have communicated by email or

           telephone on multiple occasions wherein the terms and scope of the proposed Settlement

           Agreement were extensively debated and negotiated.


           6. In determining the reasonableness of the Settlement Agreement, I considered


           several faCtors, il1cludlngbut nottiniÏedto: (1) the risk, expense aiddeiayinlerel1t il


           proceeding with a jur trial               and potential appeals; (2) the law and the facts in light of the

           extensive discovery; (3) the risk to other Interested Parties, including the Investors in the

           Receivership Entities, in attempting to pursue claims directly; and                    ( 4) the anticipated

           recovery in light of the recommendations of Judge Strawbridge.


           7. Afer extensive consideration of these factors and others, it is my good faith


           business judgment that the Settlement Agreement                       is in the best interests of the

           Receivership Entities, and that the Settlement Agreement is fair, adequate and reasonable.


           8. I strongly recommend and encourage the Investors in the Receivership Entities


           not to òbject to the Settlement Agreement.


           Pursuant to 28 D.S.C. § 1746, I declare under penalty ofpeijury that the foregoing is true

and correct.




Dated: February 14,2008
                                                                     Stephen J. Harelin
                                                                     Receiver ad litem




720838_1                                                                  2

				
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