Evidence Record

Legal Response Filing - Legalist SPV III, LP

Marilyn Burgess - District Clerk Harris County Envelope No. 115503041

Type
judgment
Date
June 2023 - May 2026
Pages
11
Lines
451
SHA-256
dd819cddef33

DISTIL analysis

DISTIL Run
Profile
Standard
Version
1
Doc Type
Legal Response Filing
Total Nodes
38
Node Legend
Entity (ENT)
Event (EVT)
Claim (CLM)
Anchor (ANC)
Omission (OMI)
Tension (TEN)
Tell (TEL)
Inference (INF)
Hypothesis (HYP)
Stage 1
Index
Orientation · No nodes
Document Classification
Legal Response Filing Legalist SPV III, LP via counsel Austin N. Priddy Receivership Termination Proceedings, Harris County District Court, Texas June 2023 - May 2026
creditor_priority_disputesecured_interest_claimreceivership_terminationsurplus_fund_distribution
Analytical Frame
Post-judgment creditor priority dispute over surplus receivership funds
Analytical Summary
Legalist SPV III, LP filed a response opposing the Receiver's proposed distribution of surplus receivership funds to unpaid employees, asserting entitlement to approximately $469,670.21 remaining after receiver fees. Legalist claims three bases for priority: (1) it provided the full $3,083,639.75 wire transfer that satisfied the underlying judgment, (2) Cyberlux agreed in writing on June 10, 2025 that surplus funds would be returned directly to Legalist, and (3) Legalist holds senior secured UCC liens on all Cyberlux assets securing debt exceeding $13 million. The underlying judgment between Atlantic Wave Holdings/Secure Community and Cyberlux/Mark Schmidt was satisfied through funds Legalist provided, leading to nonsuit and receivership termination. The dispute centers on whether surplus funds revert to the judgment debtor (and thus to Legalist as secured creditor) or can be distributed to other claimants.
Key Points
  • Legalist wired $3,083,639.75 to Receiver on June 10, 2025 to satisfy underlying $1.57M judgment plus fees
  • Cyberlux counsel confirmed in writing that surplus would be returned directly to Legalist
  • Legalist holds UCC liens securing all Cyberlux assets with debt exceeding $13,997,282.46
  • Underlying judgment satisfied, judgment creditors nonsuited claims, receivership terminated as matter of law
  • Receiver proposes distributing remaining $469,670.21 to unpaid employees; Legalist disputes this allocation
Stage 2
Core — Entities, Events, Claims
24 nodes
ENT-001
Entity
Legalist SPV III, LP
Plaintiff-Intervenor and secured creditor claiming entitlement to surplus receivership funds. Holds UCC liens on all Cyberlux assets. Owed $13,997,282.46 by judgment debtors as of May 26, 2026.
Page 1, 4 — Plaintiff-Intervenor Legalist SPV III, LP hereby files its response... Legalist holds UCC liens on all assets of the Judgment Debtors, and as of May 26, 2026, the Judgment Debtors are indebted to Legalist in the amount of $13,997,282.46.
ENT-002
Entity
Cyberlux Corporation
Judgment debtor and recipient of financing from Legalist under Government Purchase Order Financing Agreement. Subject of receivership and UCC liens.
Page 1, 5 — CYBERLUX CORPORATION AND MARK SCHMIDT, INDIVIDUALLY, DEFENDANTS/JUDGMENT-DEBTORS... Cyberlux Corporation, through its counsel at Thompson Coburn LLP, agreed on June 10, 2025
ENT-003
Entity
Mark Schmidt
Individual judgment debtor who personally guaranteed Cyberlux's debt to Legalist under the Financing Agreement.
Page 1, 2 — CYBERLUX CORPORATION AND MARK SCHMIDT, INDIVIDUALLY, DEFENDANTS/JUDGMENT-DEBTORS... which was personally guaranteed by Mark Schmidt.
ENT-004
Entity
Atlantic Wave Holdings, LLC and Secure Community, LLC
Original judgment creditors who obtained consent judgment in Virginia and initiated Texas enforcement action. Nonsuited claims after judgment satisfaction.
Page 1, 3 — ATLANTIC WAVE HOLDINGS, LLC AND SECURE COMMUNITY, LLC, PLAINTIFFS/JUDGMENT-CREDITORS... On March 9, 2026, the Judgment Creditors filed a Notice of Nonsuit
ENT-005
Entity
Robert W. Berleth
Court-appointed Receiver pursuant to Section 31.002(b)(3) of Texas Civil Practice and Remedies Code. Filed Fifth and Final Report seeking fees of $1,017,601.11 plus expenses of $722,728.68.
Page 2, 4 — On May 22, 2025, this Court signed a turnover order appointing Robert W. Berleth as Receiver... the Receiver filed his Fifth and Final Report, Final Accounting, Verified Motion for Disbursement of Funds, and Motion to Terminate Receivership
ENT-006
Entity
Alex Pennetti / Thompson Coburn LLP
Counsel for Cyberlux Corporation who confirmed in writing that surplus funds would be returned directly to Legalist.
Page 3 — Cyberlux's counsel, Alex Pennetti of Thompson Coburn LLP, confirmed via email: 'Cyberlux is agreed.'
EVT-001
Event
Virginia Consent Judgment Entry
Circuit Court of the City of Richmond, Virginia entered consent judgment on June 23, 2023 in favor of judgment creditors against Cyberlux and Schmidt for $1,572,500 plus $187,863.69 in fees/sanctions and 12% annual interest.
Page 2 — On June 23, 2023, the Circuit Court of the City of Richmond, Virginia entered a consent judgment in favor of the Judgment Creditors and against the Judgment Debtors in the amount of $1,572,500, plus attorney's fees and sanctions totaling $187,863.69 and interest at 12% per annum
EVT-002
Event
Texas Enforcement Action Filing
Judgment creditors filed Petition to Enforce Underlying Judgment in Harris County District Court on July 30, 2024, initiating enforcement proceedings.
Page 2 — On July 30, 2024, the Judgment Creditors filed a Petition to Enforce the Underlying Judgment in this Court, initiating this enforcement action.
EVT-003
Event
Receiver Appointment
Court signed turnover order appointing Robert W. Berleth as Receiver on May 22, 2025 pursuant to Texas Civil Practice and Remedies Code Section 31.002(b)(3).
Page 2 — On May 22, 2025, this Court signed a turnover order appointing Robert W. Berleth as Receiver pursuant to Section 31.002(b)(3) of the Texas Civil Practice and Remedies Code.
EVT-004
Event
Legalist Wire Transfer to Receiver
Legalist wired $3,083,639.75 to Receiver's trust account on June 10, 2025 on behalf of judgment debtors to satisfy underlying judgment. Amount calculated per Receiver's judgment calculation dated June 9, 2025.
Page 2 — Less than three weeks after the Receiver was appointed, Legalist wired $3,083,639.75 to the Receiver's trust account on behalf of the Judgment Debtors to satisfy the Underlying Judgment and terminate the receivership. The amount wired was calculated pursuant to a judgment calculation prepared by the Receiver as of June 9, 2025
EVT-005
Event
Cyberlux Written Agreement on Surplus
Cyberlux counsel Alex Pennetti confirmed via email on June 10, 2025 that 'any surplus leftover at the end of the enforcement proceeding will be returned directly to Legalist.' Agreement made contemporaneously with wire transfer.
Page 3 — Before the foregoing wire was sent, counsel for Legalist requested written confirmation from Cyberlux's counsel that 'any surplus leftover at the end of the enforcement proceeding will be returned directly to Legalist.' Cyberlux's counsel, Alex Pennetti of Thompson Coburn LLP, confirmed via email: 'Cyberlux is agreed.'
EVT-006
Event
Virginia Court Disbursement
Circuit Court of Fairfax County, Virginia entered final order on November 14, 2025 disbursing $952,601.71 (principal) and $187,399.95 (fees/costs) to judgment creditors.
Page 3 — On November 14, 2025, the Circuit Court of Fairfax County, Virginia entered a final order disbursing $952,601.71 (the principal balance owed on the Underlying Judgment) and $187,399.95 (attorney's fees and costs incurred in the Virginia proceedings) to the Judgment Creditors.
EVT-007
Event
Joint Motion for Settlement
Judgment creditors and debtors filed Joint Notice of Settlement and Joint Motion on February 26, 2026, stipulating judgment creditors' Texas fees totaled $873,849.02, payment of which would fully satisfy judgment.
Page 3 — On February 26, 2026, the Judgment Creditors and Judgment Debtors filed a Joint Notice of Settlement and Joint Motion for Release of Funds, for Satisfaction of Judgment, and to Dissolve Receivership in the instant matter (the 'Joint Motion'). The Joint Motion stipulated that the Judgment Creditors' reasonable attorney's fees and expenses in this Texas enforcement action totaled $873,849.02, the payment of which would fully satisfy the Underlying Judgment.
EVT-008
Event
Texas Attorney Fee Disbursement
Court ordered Receiver to disburse $873,849.02 to judgment creditors on March 2, 2026, which Receiver executed, satisfying the underlying judgment.
Page 3 — On March 2, 2026, the Court ordered the Receiver to disburse $873,849.02 to the Judgment Creditors, and the Receiver did so
EVT-009
Event
Judgment Creditors' Nonsuit
Judgment creditors filed Notice of Nonsuit on March 9, 2026. Court signed Order of Nonsuit on March 13, 2026, dismissing judgment creditors' claims.
Page 3 — On March 9, 2026, the Judgment Creditors filed a Notice of Nonsuit, nonsuiting this action and their claims against the Judgment Debtors. On March 13, 2026, the Court signed an Order of Nonsuit, dismissing the Judgment Creditors' claims.
EVT-010
Event
Denial of Receivership Expansion
Court signed order on March 14, 2026 denying Receiver's request to expand receivership into general receivership under Section 64.001 of Texas Civil Practice and Remedies Code.
Page 4 — On March 14, 2026, the Court signed an order denying the Receiver's request to expand the receivership into a general receivership under Section 64.001 of the Texas Civil Practice and Remedies Code.
EVT-011
Event
Legalist Intervention
Legalist intervened as matter of right on February 27, 2026 to protect substantial secured interests in receivership assets.
Page 4 — On February 27, 2026, Legalist intervened in this action as a matter of right to protect its substantial secured interests.
EVT-012
Event
Receiver's Final Report Filing
Receiver filed Fifth and Final Report on May 27, 2026, proposing disbursement of $722,728.68 in expenses, $1,017,601.11 in fees (33% contingency), and $469,670.21 to unpaid employees or next receivership.
Page 4 — On May 27, 2026, the Receiver filed his Fifth and Final Report, Final Accounting, Verified Motion for Disbursement of Funds, and Motion to Terminate Receivership. In his Final Report, the Receiver represents that he has already disbursed $873,639.75 to Plaintiff's counsel and proposes the following additional disbursements from the trust account: (a) $722,728.68 to the Receiver as reasonable and incurred expenses; (b) $1,017,601.11 as the Receiver's fee; and (c) the remaining $469,670.21 to the next receivership (if present) or to the previous unpaid employees of Cyberlux.
CLM-001
Claim
Legalist's Wire Transfer Entitlement
Legalist claims entitlement to surplus funds because it provided every dollar ($3,083,639.75) wired to Receiver on June 10, 2025 and is entitled to return of any surplus.
Page 1 — Those funds - every dollar of them - were wired by Legalist to the Receiver on June 10, 2025, in the amount of $3,083,639.75, on behalf of the Judgment Debtors, for the express purpose of satisfying the underlying judgment and terminating the receivership... Legalist is entitled to those funds for three independent reasons: (1) Legalist provided the funds to the Receiver and is entitled to the return of any surplus
CLM-002
Claim
Written Agreement for Surplus Return
Legalist claims entitlement based on Cyberlux's written agreement via counsel that 'any surplus leftover at the end of the enforcement proceeding will be returned directly to Legalist.'
Page 1, 3 — Legalist is entitled to those funds for three independent reasons:... (2) the Judgment Debtors agreed in writing that any surplus remaining at the conclusion of the enforcement proceedings would be returned directly to Legalist
CLM-003
Claim
Senior Secured Creditor Priority
Legalist claims entitlement as priority secured creditor holding UCC liens securing all Cyberlux assets as collateral, owed in excess of $13,000,000.
Page 1, 4 — Legalist is entitled to those funds for three independent reasons:... (3) Legalist is a secured priority creditor that holds UCC liens securing all assets of Cyberlux as collateral, and is owed in excess of $13,000,000 by the Judgment Debtors.
CLM-004
Claim
Receivership Terminated as Matter of Law
Once underlying judgment is satisfied, turnover order and receivership terminate as matter of law, with no authority to retain funds beyond judgment satisfaction and approved fees.
Page 4, 5 — When the judgment underlying a turnover order is satisfied, the turnover order and the receivership it established terminate as a matter of law. Pandozy v. Beaty, 254 S.W.3d 613, 617 (Tex. App .- Texarkana 2008, no pet.) ('once the judgment was paid, the turnover order lost its teeth and was of no further force and effect').
CLM-005
Claim
Surplus Must Return to Judgment Debtors
Upon receivership termination, remaining assets must be returned to judgment debtors. Receiver has no authority to retain funds beyond judgment satisfaction and court-approved fees.
Page 5 — Upon satisfaction of the underlying judgment and termination of the receivership, any remaining assets held by the Receiver must be returned to the Judgment Debtors. The Turnover Statute authorizes the Receiver to take possession of a judgment debtor's property and pay the proceeds to the judgment creditor only 'to the extent required to satisfy the judgment.' Tex. Civ. Prac. & Rem. Code § 31.002(b)(3).
CLM-006
Claim
Receiver's 33% Contingency Fee Claim
Receiver claims entitlement to 33% contingency fee totaling $1,017,601.11, asserting he 'collected the full amount of the judgment.'
Page 4 — The Receiver claims entitlement to a 33% contingency fee, asserting that he 'collected the full amount of the judgment.'
Stage 3
In Situ — Quotations, Tells, Tensions, Questions
7 nodes
QUO-001
Quotation
Cyberlux Counsel Agreement
Email confirmation from Alex Pennetti stating 'Cyberlux is agreed' in response to request that surplus funds be returned directly to Legalist.
Page 3 — Cyberlux's counsel, Alex Pennetti of Thompson Coburn LLP, confirmed via email: 'Cyberlux is agreed.'
QUO-002
Quotation
Pandozy Precedent Language
Texas appellate court holding that 'once the judgment was paid, the turnover order lost its teeth and was of no further force and effect.'
Page 4, 5 — Pandozy v. Beaty, 254 S.W.3d 613, 617 (Tex. App .- Texarkana 2008, no pet.) ('once the judgment was paid, the turnover order lost its teeth and was of no further force and effect').
TEN-001
Tension
Receiver Collection vs. Legalist Funding
Receiver claims 33% fee for 'collecting the full amount of the judgment,' but Legalist asserts it provided every dollar via wire transfer, not the Receiver's collection efforts.
Page 1, 4 — The Receiver claims entitlement to a 33% contingency fee, asserting that he 'collected the full amount of the judgment.'... Those funds - every dollar of them - were wired by Legalist to the Receiver on June 10, 2025
TEN-002
Tension
Surplus Distribution Priority Dispute
Receiver proposes distributing remaining $469,670.21 to unpaid Cyberlux employees, while Legalist claims entitlement as wire transfer provider, contractual beneficiary, and senior secured creditor.
Page 1, 4 — (c) the remaining $469,670.21 to the next receivership (if present) or to the previous unpaid employees of Cyberlux... any remaining funds should be disbursed to Legalist. Legalist is entitled to those funds for three independent reasons
QST-001
Question
Receiver Fee Reasonableness
Are the Receiver's claimed fees ($1,017,601.11 at 33% contingency) and expenses ($722,728.68) reasonable given that Legalist provided the entire judgment satisfaction amount via wire transfer?
Page 4 — Legalist disputes the reasonableness of the Receiver's claimed fees and expenses, but the adjudication of the Receiver's fees is not the subject of this response.
QST-002
Question
Enforceability of Cyberlux Agreement
Is the email confirmation from Cyberlux counsel ('Cyberlux is agreed') enforceable as a binding agreement to return surplus funds to Legalist, or merely an acknowledgment without contractual force?
Page 3, 6 — This agreement was made contemporaneously with, and as a condition of, Legalist's willingness to fund the wire transfer to the Receiver... Legalist would not have funded the wire without this assurance.
QST-003
Question
Priority Over Unpaid Employee Claims
Does Legalist's senior secured creditor status give it priority over claims of unpaid Cyberlux employees, or do employee wage claims have statutory priority over secured creditors in this context?
Page 1, 4 — (c) the remaining $469,670.21 to the next receivership (if present) or to the previous unpaid employees of Cyberlux... Legalist holds UCC liens securing all assets of the Judgment Debtors as collateral
Stage 4
Interpretive — Inferences, Omissions, Patterns
7 nodes
INF-001
Inference
Material Inducement for Wire Transfer
Legalist's wire transfer decision was materially induced by Cyberlux's written commitment to return surplus funds. Legalist likely would not have advanced $3+ million without this protection.
Page 6 — This agreement was made contemporaneously with, and as a condition of, Legalist's willingness to fund the wire transfer to the Receiver. Legalist would not have funded the wire without this assurance.
INF-002
Inference
Receiver Fee Timing and Calculation
The $3,083,639.75 wire amount was calculated based on Receiver's June 9, 2025 judgment calculation, which accounted for receiver fees. Yet Receiver now claims additional fees under 33% contingency theory, suggesting fee structure changed after wire transfer.
Page 2, 4 — The amount wired was calculated pursuant to a judgment calculation prepared by the Receiver as of June 9, 2025, which accounted for the principal judgment amount, post-judgment interest, attorney's fees, the Receiver's fee, and expenses... The Receiver claims entitlement to a 33% contingency fee
INF-003
Inference
Receivership Expansion Denial Significance
Court's denial of Receiver's motion to expand into general receivership under Section 64.001 suggests limited scope for Receiver's ongoing authority and potential distribution discretion.
Page 4 — On March 14, 2026, the Court signed an order denying the Receiver's request to expand the receivership into a general receivership under Section 64.001 of the Texas Civil Practice and Remedies Code.
INF-004
Inference
Joint Motion Recognition of Legalist Priority
Original parties' joint request for $1,991,328.43 disbursement to Legalist evidences their shared understanding that Legalist has equitable or contractual right to surplus funds.
Page 6, 7 — The Joint Motion filed by the Judgment Creditors and Judgment Debtors on February 26, 2026, requested that the Court 'release $1,991,328.43 to Legalist SPV III, LP within two business days of entry of the Court's order.'
OMI-001
Omission
Unpaid Employee Claim Details Absent
Receiver proposes distributing funds to 'previous unpaid employees of Cyberlux' but provides no detail on: number of employees, amounts owed, nature of claims, or temporal relationship to receivership.
Page 4 — (c) the remaining $469,670.21 to the next receivership (if present) or to the previous unpaid employees of Cyberlux.
OMI-002
Omission
Receiver Collection Efforts Unspecified
Receiver claims 33% contingency fee for 'collecting' judgment but document provides no description of actual collection activities beyond receiving Legalist's wire transfer.
Page 4 — The Receiver claims entitlement to a 33% contingency fee, asserting that he 'collected the full amount of the judgment.'
OMI-003
Omission
Virginia Interpleader Context
Document references Virginia Interpleader action (HII Mission Technologies v. Cyberlux, 3:25-cv-483-JAG) where Receiver acknowledged Legalist's senior secured status, but provides no substantive detail on that proceeding.
Page 6 — In fact, the Receiver acknowledged Legalist's status as a senior secured creditor and the fact that Legalist should be paid in his Memorandum of Law in Support of Motion for Summary Judgment filed in the interpleader matter currently pending in the Eastern District of Virginia styled HII Mission Technologies Corp. v. Cyberlux Corporation et al., Civil Action No. 3:25-cv-483-JAG

Extracted text

11 pages · 18073 characters

Plaintiffs/judgment-Creditors v. Cyberlux Corporation and Mark — Formatted Extract

Type: judgment
Filing Header

Marilyn Burgess - District Clerk Harris County Envelope No. 115503041

By: Shanelle Taylor Filed: 5/29/2026 1:16 PM

ATLANTIC WAVE HOLDINGS, LLC AND SECURE COMMUNITY, LLC,

PLAINTIFFS/JUDGMENT-CREDITORS,

V.

CYBERLUX CORPORATION AND MARK § SCHMIDT, INDIVIDUALLY, §

DEFENDANTS/JUDGMENT-DEBTORS.

§ IN THE DISTRICT COURT OF

§ §

§

§

§

§ § 129TH JUDICIAL DISTRICT

§ HARRIS COUNTY, TEXAS

PLAINTIFF-INTERVENOR LEGALIST SPV III, LP'S RESPONSE TO RECEIVER'S FIFTH AND FINAL REPORT, FINAL ACCOUNTING, VERIFIED MOTION FOR DISBURSEMENT OF FUNDS, AND MOTION TO TERMINATE RECEIVERSHIP

Plaintiff-Intervenor Legalist SPV III, LP hereby files its response to Receiver's Fifth and Final Report, Final Accounting, Verified Motion for Disbursement of Funds, and Motion to Terminate Receivership, and in support thereof shows the Court as follows:

INTRODUCTION

The receivership in this case has run its course. The underlying judgment has been satisfied. The Judgment Creditors have nonsuited their claims. The Court denied the Receiver's request to expand the receivership. The sole remaining issue is the disposition of funds held in the Receiver's trust account. Those funds Cevery dollar of them-were wired by Legalist to the Receiver on June 10, 2025, in the amount of $3,083,639.75, on behalf of the Judgment Debtors, for the express purpose of satisfying the underlying judgment and terminating the receivership. Once the Court adjudicates the Receiver's reasonable fees and expenses, any remaining funds should be disbursed to Legalist. Legalist is entitled to those funds for three independent reasons: (1) Legalist provided the funds to the Receiver and is entitled to the return of any surplus; (2) the Judgment Debtors agreed in writing that any surplus remaining at the conclusion of the enforcement proceedings would be returned directly to Legalist; and (3) Legalist is a secured priority creditor that holds

UCC liens securing all assets of Cyberlux as collateral, and is owed in excess of $13,000,000 by the Judgment Debtors.

FACTUAL BACKGROUND
A. The Underlying Judgment and Receivership

On June 23, 2023, the Circuit Court of the City of Richmond, Virginia entered a consent judgment in favor of the Judgment Creditors and against the Judgment Debtors in the amount of $1,572,500, plus attorney's fees and sanctions totaling $187,863.69 and interest at 12% per annum (the "Underlying Judgment"). On July 30, 2024, the Judgment Creditors filed a Petition to Enforce the Underlying Judgment in this Court, initiating this enforcement action. On May 22, 2025, this Court signed a turnover order appointing Robert W. Berleth as Receiver pursuant to Section 31.002(b)(3) of the Texas Civil Practice and Remedies Code.

B. Legalist's Wire Transfer to the Receiver

Less than three weeks after the Receiver was appointed, Legalist wired $3,083,639.75 to the Receiver's trust account on behalf of the Judgment Debtors to satisfy the Underlying Judgment and terminate the receivership. The amount wired was calculated pursuant to a judgment calculation prepared by the Receiver as of June 9, 2025, which accounted for the principal judgment amount, post-judgment interest, attorney's fees, the Receiver's fee, and expenses. See Exhibit A-1. Legalist made this payment as a creditor of Cyberlux, pursuant to a Government Purchase Order Financing Agreement (the "Financing Agreement") under which Cyberlux became indebted to Legalist, and which was personally guaranteed by Mark Schmidt. See Exhibit B, 1 3- 4.

C. Cyberlux's Agreement to Return Surplus Funds to Legalist

Before the foregoing wire was sent, counsel for Legalist requested written confirmation from Cyberlux's counsel that "any surplus leftover at the end of the enforcement proceeding will be returned directly to Legalist." Cyberlux's counsel, Alex Pennetti of Thompson Coburn LLP, confirmed via email: "Cyberlux is agreed." See Exhibit A-2. This agreement was made contemporaneously with, and as a condition of, Legalist's willingness to fund the wire transfer to the Receiver.

D. Satisfaction of the Underlying Judgment and Settlement

On November 14, 2025, the Circuit Court of Fairfax County, Virginia entered a final order disbursing $952,601.71 (the principal balance owed on the Underlying Judgment) and $187,399.95 (attorney's fees and costs incurred in the Virginia proceedings) to the Judgment Creditors. On February 26, 2026, the Judgment Creditors and Judgment Debtors filed a Joint Notice of Settlement and Joint Motion for Release of Funds, for Satisfaction of Judgment, and to Dissolve Receivership in the instant matter (the "Joint Motion"). The Joint Motion stipulated that the Judgment Creditors' reasonable attorney's fees and expenses in this Texas enforcement action totaled $873,849.02, the payment of which would fully satisfy the Underlying Judgment. On March 2, 2026, the Court ordered the Receiver to disburse $873,849.02 to the Judgment Creditors, and the Receiver did so,

E. Nonsuit, Denial of Receivership Expansion, and Termination

On March 9, 2026, the Judgment Creditors filed a Notice of Nonsuit, nonsuiting this action and their claims against the Judgment Debtors. On March 13, 2026, the Court signed an Order of Nonsuit, dismissing the Judgment Creditors' claims. On March 14, 2026, the Court signed an order

denying the Receiver's request to expand the receivership into a general receivership under Section 64.001 of the Texas Civil Practice and Remedies Code.

F. Legalist's Intervention

On February 27, 2026, Legalist intervened in this action as a matter of right to protect its substantial secured interests. Legalist holds UCC liens on all assets of the Judgment Debtors, and as of May 26, 2026, the Judgment Debtors are indebted to Legalist in the amount of $13,997,282.46. See Exhibits B, B-1 and A-5.

G. The Receiver's Final Report and Proposed Disbursements

On May 27, 2026, the Receiver filed his Fifth and Final Report, Final Accounting, Verified Motion for Disbursement of Funds, and Motion to Terminate Receivership. In his Final Report, the Receiver represents that he has already disbursed $873,639.75 to Plaintiff's counsel and proposes the following additional disbursements from the trust account: (a) $722,728.68 to the Receiver as reasonable and incurred expenses; (b) $1,017,601.11 as the Receiver's fee; and (c) the remaining $469,670.21 to the next receivership (if present) or to the previous unpaid employees of Cyberlux. The Receiver claims entitlement to a 33% contingency fee, asserting that he "collected the full amount of the judgment." Legalist disputes the reasonableness of the Receiver's claimed fees and expenses, but the adjudication of the Receiver's fees is not the subject of this response. Regardless of the amount ultimately awarded to the Receiver, any remaining funds must be disbursed to Legalist.

ARGUMENT AND AUTHORITIES
A. The Receivership Has Terminated as a Matter of Law

When the judgment underlying a turnover order is satisfied, the turnover order and the receivership it established terminate as a matter of law. Pandozy v. Beaty, 254 S.W.3d 613, 617

(Tex. App .- Texarkana 2008, no pet.) ("once the judgment was paid, the turnover order lost its teeth and was of no further force and effect"). A turnover order becomes "immediately moot when the judgment which it was issued to enforce was satisfied." Bennett/Nguyen Joint Venture v. Coghlan, No. 01-10-00575-CV, 2011 WL 2732435, at *1 (Tex. App .- Houston [Ist Dist.] July 14, 2011, no pet.) (quoting Pandozy). The Turnover Statute authorizes a receiver only "to take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment." Tex. Civ. Prac. & Rem. Code'§ 31.002(b)(3). Once that judgment is satisfied, the statutory basis for the receivership ceases to exist.

Here, the Underlying Judgment has been satisfied-the parties have jointly stipulated to that fact, the Judgment Creditors have nonsuited their claims, and the Court has dismissed the Judgment Creditors' action. The only remaining issues are the adjudication of the Receiver's reasonable fees and expenses and the distribution of remaining receivership assets.

B. Remaining Funds Must Be Returned to the Judgment Debtors

Upon satisfaction of the underlying judgment and termination of the receivership, any remaining assets held by the Receiver must be returned to the Judgment Debtors. The Turnover Statute authorizes the Receiver to take possession of a judgment debtor's property and pay the proceeds to the judgment creditor only "to the extent required to satisfy the judgment." Tex. Civ. Prac. & Rem. Code § 31.002(b)(3). The Receiver has no authority to retain funds beyond what is necessary to satisfy the judgment and pay his court-approved fees and expenses.

C. Cyberlux Agreed That Surplus Funds Would Be Returned Directly to Legalist

Cyberlux Corporation, through its counsel at Thompson Coburn LLP, agreed on June 10, 2025-the same day Legalist wired the $3,083,639.75 to the Receiver-that "any surplus leftover at the end of the enforcement proceeding will be returned directly to Legalist." Cyberlux's counsel

confirmed this agreement in writing: "Cyberlux is agreed." See Exhibit A-2. This agreement was made as a material inducement for Legalist's decision to wire over $3 million to the Receiver to satisfy the judgment and terminate the receivership. Legalist would not have funded the wire without this assurance.

Because the Judgment Debtors are the parties entitled to the return of surplus receivership assets, and because Cyberlux has agreed that those surplus funds should be returned directly to Legalist, this Court should order that any funds remaining in the Receiver's trust account be disbursed directly to Legalist.

D. Legalist Is a Secured Creditor With Priority Liens on All Cyberlux Assets

Even apart from Cyberlux's express agreement, Legalist is entitled to the remaining funds as a priority senior secured creditor. Legalist holds UCC liens securing all assets of the Judgment Debtors as collateral. See Exhibit A-5. As of May 26, 2026, the Judgment Debtors are indebted to Legalist in the amount of $13,997,282.46 by virtue of their failure to satisfy their obligations under the Financing Agreement. Any surplus funds would therefore immediately be subject to Legalist's senior lien interest. Disbursing funds to Legalist directly would be the most equitable and efficient resolution. In fact, the Receiver acknowledged Legalist's status as a senior secured creditor and the fact that Legalist should be paid in his Memorandum of Law in Support of Motion for Summary Judgment filed in the interpleader matter currently pending in the Eastern District of Virginia styled HII Mission Technologies Corp. v. Cyberlux Corporation et al., Civil Action No. 3:25-cv- 483-JAG (the "Virginia Interpleader"). See Exhibit A-4.

E. The Joint Motion Previously Recognized Legalist's Entitlement

The Joint Motion filed by the Judgment Creditors and Judgment Debtors on February 26, 2026, requested that the Court "release $1,991,328.43 to Legalist SPV III, LP within two business

days of entry of the Court's order." The proposed order attached to the Joint Motion likewise stated that "$3,083,639.75 was previously transferred by Legalist SPV III, LP on behalf of Defendants to the Receiver, and that amount exceeds recoveries and credits against the Underlying Judgment, and the remaining balance should be disbursed to Legalist SPV III, LP." Both the Judgment Creditors and the Judgment Debtors thus recognized and agreed that remaining funds should be disbursed to Legalist.

CONCLUSION AND PRAYER

Based on the foregoing, any funds that remain once the Court adjudicates the Receiver's reasonable fees and expenses should be transferred to Legalist

Respectfully submitted, VARTABEDIAN KATZ HESTER & HAYNES LLP

s/ Austin N. Priddy Austin N. Priddy Texas State Bar No. 24098284 austin.priddy@vkhh.com 301 Commerce St., Ste. 2200 Fort Worth, Texas 76102 Telephone: 817.214.4985

ATTORNEYS FOR LEGALIST

Unofficial Copy Office of Marien Burgessuistrict Ceanu Ke

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing instrument was served by the court's efile system on all counsel of record in accordance with the Texas Rules of Civil Procedure on May 29, 2026.

/s/ Austin N. Priddy Austin N. Priddy

Unofficial Copy Office of Marilyn Burgess District Clerk

Automated Certificate of eService

This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Austin Priddy on behalf of Austin Priddy Bar No. 24098284 austin.priddy@vkhh.com Envelope ID: 115503041

Filing Code Description: No Fee Documents Filing Description: Legalist's Response to Receiver's Final Account Status as of 5/29/2026 3:09 PM CST

Case Contacts

Name

BarNumber

Email

TimestampSubmitted

Status

Ashish Mahendru

amahendru@thelitigationgroup.com

5/29/2026 1:16:35 PM

SENT

Darren AndrewBraun

dbraun@thelitigationgroup.com

5/29/2026 1:16:35 PM

SENT

M. H. Cersonsky

mhcersonsky@law-cmpc.com

5/29/2026 1:16:35 PM

SENT

Evan A.Moeller

evan.moeller@arlaw.com

5/29/2026 1:16:35 PM

SENT

Evan A.Moeller

evan.moeller@arlaw.com

5/29/2026 1:16:35 PM

SENT

Danielle Butler

dbutler@thelitigationgroup.com

5/29/2026 1:16:35 PM

SENT

LaDonna Arey

LArey@belnunnally.com

5/29/2026 1:16:35 PM

SENT

Linda Carranza

Icarranza@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Elizabeth Myers

emyers@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Tara Rollin

tara.rollin@arlaw.com

5/29/2026 1:16:35 PM

SENT

Robert W.Berleth

rberleth@berlethlaw.com

5/29/2026 1:16:35 PM

SENT

David A.Walton

dwalton@bellnunnally.com

5/29/2026 1:16:35 PM

SENT

Travis Vargo

tvargo@vargolawfirm.com

5/29/2026 1:16:35 PM

SENT

Micah Jackson

mjackson@berlethlaw.com

5/29/2026 1:16:35 PM

SENT

Brice BBeale

beale@hooverslovacek.com

5/29/2026 1:16:35 PM

SENT

Mary Jahn

mary.jahn@arlaw.com

5/29/2026 1:16:35 PM

SENT

Shawn Grady

shawn@gradycollectionlaw.com

5/29/2026 1:16:35 PM

SENT

Shawn Grady

shawn@gradycollectionlaw.com

5/29/2026 1:16:35 PM

SENT

Aaron McLeod

aaron.mcleod@arlaw.com

5/29/2026 1:16:35 PM

SENT

Jeff Brown

jbrown@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Paula Gentry

pgentry@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Bernadette Martin

bernadette@gradycollectionlaw.com

5/29/2026 1:16:35 PM

SENT

Automated Certificate of eService

This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Austin Priddy on behalf of Austin Priddy Bar No. 24098284 austin.priddy@vkhh.com Envelope ID: 115503041

Filing Code Description: No Fee Documents

Filing Description: Legalist's Response to Receiver's Final Account Status as of 5/29/2026 3:09 PM CST

Case Contacts

Bernadette Martin

bernadette@gradycollectionlaw.com

5/29/2026 1:16:35 PM

SENT

Bernadette Martin

bernadette@gradycollectionlaw.com

5/29/2026 1:16:35 PM

SENT

Records Department

Records@bellnunnally.com

5/29/2026 1:16:35 PM

SENT

Michael Poynter

mpoynter@vargolawfirm.com

5/29/2026 1:16:35 PM

SENT

Emory Powers

emory.powers@arlaw.com

5/29/2026 1:16:35 PM

SENT

Caroline Pritikin

cpritikin@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Laurie DeBardeleben

Idebardeleben@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Roxanna Lock

rlock@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Frankie Huff

fhuff@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Alex Pennetti

apennetti@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Sheli Davis

sdavis@berlethlaw.com

5/29/2026 1:16:35 PM

SENT

Tristian Harris

tharris@berlethlaw.com

5/29/2026 1:16:35 PM

SENT

Corinne Martin

cmartin@berlethlaw.com

5/29/2026 1:16:35 PM

SENT

Douglas S.Lang

dlang@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Polly Bates

polly.bates@vkhh.com

5/29/2026 1:16:35 PM

SENT

Alayna EllenAbbott

aabbott@law-cmpc.com

5/29/2026 1:16:35 PM

SENT

Edward W.Gray,

EGray@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Daniel AArdmore

ardmorelawfirm@gmail.com

5/29/2026 1:16:35 PM

SENT

VHH EFILE

efile@vkhh.com

5/29/2026 1:16:35 PM

SENT

Monica Rodriguez

monica.rodriguez@arlaw.com

5/29/2026 1:16:35 PM

SENT

Daniel AArdmore

daniel.ardmore@ardmorelawfirm.com

5/29/2026 1:16:35 PM

SENT

Farah Ardmore

farah.ardmore@ardmorelawfirm.com

5/29/2026 1:16:35 PM

SENT

Hannah Fischer

hfischer@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Automated Certificate of eService

This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Austin Priddy on behalf of Austin Priddy Bar No. 24098284 austin.priddy@vkhh.com Envelope ID: 115503041

Filing Code Description: No Fee Documents

Filing Description: Legalist's Response to Receiver's Final Account Status as of 5/29/2026 3:09 PM CST

Case Contacts

Hannah Fischer

hfischer@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Jocelin A.Tapia

jtapia@thompsoncoburn.com

5/29/2026 1:16:35 PM

SENT

Jemisha Gandhi

jgandhi@bellnunnally.com

5/29/2026 1:16:35 PM

SENT

David M.Keithly

dkeithly@mortensontaggart.com

5/29/2026 1:16:35 PM

SENT

Tia Archuleta

tia.archuleta@ecf.courtdrive.com

5/29/2026 1:16:35 PM

SENT

Tia Archuleta

tia.archuleta@ykhh.com

5/29/2026 1:16:35 PM

SENT

Austin DPriddy

Austin.Priddy@vkhh.com

5/29/2026 1:16:35 PM

SENT

Angela Reza

angela.reza@vkhh.com

5/29/2026 1:16:35 PM

SENT

Jnofficial Copy Office aceite Burgess DistricanClerk

Original source file

Open source
File
Legal Response Filing - Legalist SPV III, LP
Source UID
source:dd819cddef3335dacb61b73d479fe4e938f5decbb98dcc84f96db54ff322d2d7
Full SHA-256
dd819cddef3335dacb61b73d479fe4e938f5decbb98dcc84f96db54ff322d2d7