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IN THE UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF TEXAS (DALLAS)

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) Case No. 09-34784-sgj11

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In re )

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ONDOVA LIMITED COMPANY, ) Dallas, Texas

) October 8, 2010

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Debtor. ) 10:42 a.m.

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__________________________________)

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TRANSCRIPT OF STATUS CONFERENCE

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RE: MOTION TO COMPROMISE CONTROVERSY W/JEFF BARON,

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SHOW CAUSE ORDER (JEFFREY BARON),

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AND MOTION TO WITHDRAW AS ATTORNEY

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BEFORE THE HONORABLE STACEY G. JERNIGAN,

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UNITED STATES BANKRUPTCY JUDGE

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Transcription Service: eScribers

P.O. Box 7533

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New York, NY 10116

(973) 406-2250

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PROCEEDINGS RECORDED BY ELECTRONIC SOUND RECORDING.

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TRANSCRIPT PRODUCED BY TRANSCRIPTION SERVICE.

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APPEARANCES:

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For Daniel J. Sherman, RAYMOND J. URBANIK, ESQ.

Chapter 11 Trustee: MUNSCH, HARDT, KOPF & HARR PC

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500 N. Akard Street, Suite 3800

Dallas, TX 75201

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For Quantec, LLC: JAMES MICHAEL ECKELS, ESQ.

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ATTORNEY AT LAW

7505 John Carpenter Freeway

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Dallas, TX 75247

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For Quantec, LLC and ERIC J. TAUBE, ESQ.

Novo Point, LLC: HOHMANN, TAUBE & SUMMERS, L.L.P.

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100 Congress Avenue, 18th Floor

Austin, TX 78701

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For Manila MELISSA S. HAYWARD, ESQ.

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Industries, Inc.: FRANKLIN SKIERSKI LOVALL HAYWARD LLP

10501 North Central Expressway

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Suite 106

Dallas, TX 75231

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For Netsphere, Inc.: JOHN MACPETE, ESQ.

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LOCKE LORD BISSELL & LIDDELL LLP

2200 Ross Avenue, Suite 2200

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Dallas, TX 75201

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For Jeffrey Baron: GARY G. LYON, ESQ.

ATTORNEY AT LAW

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P.O. Box 1227

Anna, TX 75409

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For Jeffrey Baron: RAKHEE V. PATEL, ESQ.

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PRONSKE & PATEL, P.C.

2200 Ross Avenue, Suite 5350

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Dallas, TX 75201

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For VeriSign, Inc.: REBECCA L. PETEREIT, ESQ.

VINSON & ELKINS, LLP

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2001 Ross Avenue, Suite 3700

Dallas, TX 75201

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ERIC LOPEZ SCHNABEL, ESQ.

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Dorsey & Witney LLP

300 Delaware Ave., Ste 1010

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Wilmington, DE 19801

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For Judge Furgeson: PETER S. VOGEL, ESQ.

GARDERE WYNNE SEWELL LLP

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1601 Elm Street, Suite 3000

Dallas, TX 75201

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For Netsphere, Inc.: RAVI PURI, ESQ.

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NETSPHERE, INC.

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DALLAS, TEXAS - OCTOBER 8, 2010 - 10:42 A.M.

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THE COURT: All right, now we'll begin the Ondova

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setting, case number 09-34784. Let's get appearances on the

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record, please. First from the ones in the courtroom.

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MR. URBANIK: Good morning, Your Honor. Ray Urbanik

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from Munsch, Hardt on behalf of the Chapter 11 Trustee, Daniel

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J. Sherman.

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THE COURT: Thank you.

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MR. ECKELS: Your Honor, good morning. James Eckels

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for Quantec.

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THE COURT: Good morning.

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MR. LYON: Good morning, Your Honor. Gary Lyon

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appearing for Jeffrey Baron.

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THE COURT: Okay, good morning.

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MS. PETEREIT: Good morning, Your Honor. Rebecca

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Petereit and Eric Schnabel appearing on behalf of VeriSign.

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THE COURT: Good morning.

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MR. SCHNABEL: Good morning, Your Honor.

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THE COURT: Okay.

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MR. MACPETE: Good afternoon, Your Honor. John

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MacPete and Melissa Hayward on behalf of the Netsphere

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parties.

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THE COURT: Good morning.

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MS. PATEL: Good morning, Your Honor. Rakhee Patel

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on behalf of Pronske & Patel, P.C.

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THE COURT: Okay.

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MR. VOGEL: Good morning, Judge. Peter Vogel,

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special master for Judge Royal Furgeson.

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THE COURT: Good morning.

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All right.

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MR. TAUBE: Your Honor, this is Eric Taube. I'm on

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the phone on behalf of myself and my firm.

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THE COURT: All right, good morning. Anyone else on

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the phone want to make an appearance? Hello?

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MR. PURI: Hello?

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THE COURT: Yes, was that Mr. Puri?

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MR. PURI: Yes, yes, Your Honor. Thank you.

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THE COURT: Okay. All right. I bet you know what

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question I'm about to ask, but let me first make clear for the

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record why we are here, and I'm going to recap, Mr. Urbanik,

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where I think we were after the September 30th hearing we had

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in these matters. We had a global settlement agreement

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entered into by the estate and Jeff Baron, Manila/Netsphere,

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Village Trust, and many, many other entities; I believe it was

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July 28th that the Court signed the order or thereabouts. The

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Court has had status conferences on September 15th, 2010,

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September 22nd, and September 30th, and now today to hear

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reports from the trustee and other parties as to where things

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have stood on consummation of the global settlement because

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there were many, many events that needed to occur under the

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settlement, in addition to the flow of funds, payment of

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funds.

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We have not just another status conference set today

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to hear if things have been completed under the global

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settlement implementation, but we also have a continuing

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setting on a show cause order this Court issued as to Jeff

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Baron. The Court issued the show cause order on September

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17th, 2010 as to Jeff Baron because of concerns that he might

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not be fulfilling his obligations under the settlement

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agreement, or he might otherwise be frustrating other parties'

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efforts to consummate the settlement agreement. And it would

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be, potentially, contempt of court if he was interfering the

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settlement agreement or not fulfilling his obligations under

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the settlement agreement since the settlement agreement had

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been approved by a court order. It would, in this Court's

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view, be a violation of one of the orders of this Court.

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So we have the show cause hearing, today, the

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continued setting on the show cause matter; pursuant to the

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show cause, I ordered Jeff Baron's appearance and also ordered

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his counsel, Gary Lyon's, appearance. So we're going to hear

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about where Mr. Baron might be in a minute, I suppose.

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The third matter we have this morning is the motion

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to withdraw as attorney filed by Mr. Taube and his firm,

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wanting a court order blessing their withdrawal from the

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representation of their clients, Quantec and Novo Point, in

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this matter.

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All right, recapping where the Court understood

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things to stand after September 30th -- bless you -- the Court

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heard a report on September 30th that the trustee, Mr.

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Urbanik's client Mr. Sherman, had received 1,250,000 dollars

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from the Manila/Netsphere parties on or about Monday September

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27th. So that was very good news.

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Second, the Court heard that Trustee Sherman has been

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in the process of dismissing all of the various litigation

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that was to be dismissed under the settlement agreement. I

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think just about all that had been dismissed except the Judge

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Furgeson action which there was the need to keep it open.

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There was the perceived need to keep it open a bit long.

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Third, we heard that Adrian Taylor had resigned as

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trustee over the Village Trust, and I believe it was Brian

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Mason was the new trustee with some Southpac entity as the

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protector.

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Fourth, the trustee reported that he was working on

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coordinating future payments with Village Trust. And I think

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he was coordinating, he said, with Mr. Eckels and a Joshua Cox

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and was also coordinating on other go-forward operational

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issues.

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Fifth, there was a very important discussion of the

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fact that Ondova was still a registrar but wanted to be out of

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the business of being a registrar by the end of October, and

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we heard that the parties were working on transferring

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approximately 230,000 or so domain names that Ondova

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registrars on behalf of Quantec, Novo Point, and other Village

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Trust entities over to a new entity as registrar, called

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Fabulous, an Australian entity, I think it was.

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We heard a discussion that Quantec would be prepaying

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the entire month of October for the registrar fees so that

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Ondova could pay up with VeriSign, and hopefully we would have

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a break-off date on October 31st.

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I have a funds sheet up here that the trustee handed

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me, showing what funds the bankruptcy trustee was holding and

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what it owed to various parties.

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And last but not least, we had a discussion of how

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there would be a 50,000 dollar transfer fee owed to VeriSign

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in connection with the transfer of the 230,000 domain names in

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bulk, as opposed to if they were transferred manually, which

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would take weeks. And there was some discussion that Village

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Trust, or Quantec, or Jeff Baron did not want to pay for this

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or pay for it right away, and it was pointed out that the

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trustee was holding 208,000 dollars of funds owed to Village

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Trust that could perhaps easily be used for the transfer fee.

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So that is a recap of what I think we covered. I'm

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sure Mr. Urbanik will correct me if I am not remembering

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something correctly. I have as open issues for today, first,

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there was some wind-down agreement that Mr. Urbanik thought

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that the trustee and Quantec or Village Trust would be well-

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served to have in place.

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Second, I'm not sure we were at a closure on the

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50,000 dollar transfer fee issue and it being paid from the

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208,000 the trustee is holding. But I'm not sure we had

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completely had, let's say, a meeting of the minds that that

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was going to happen that way.

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Third, we do have this open issue of the trustee

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holding the 330,000 of Village Trust funds that I ordered to

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be transferred to Trustee Sherman as -- and I want to be clear

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about this -- as security for this bankruptcy estate, the

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Ondova bankruptcy estate, for possible civil contempt of

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court, that is, contempt of the Court's order approving the

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settlement agreement that I was concerned I might ultimately

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find was being committed, as to the Village Trust or its

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entities such as Quantec, or as to Jeff Baron, the beneficiary

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of the Village Trust. This Court has been very, very

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concerned at what looked like efforts to frustrate the

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settlement agreement or even worse, more overt acts to perhaps

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wiggle out of it altogether. So that fund was security in the

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event that I heard enough evidence ultimately to convince me

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that contempt of court had occurred.

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Now, we also have -- the Court has grave concern that

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there's been this parade of attorneys not getting paid by Jeff

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Baron and there being improper purposes behind that on his

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part. Certainly Rule 11 has been a concern of the Court,

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vexatious litigation has been a concern of the Court. But

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even, I threw out there, criminal theft of services at some

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point has to become a concern. Dozens of lawyers.

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So what I threw out there at the last hearing was

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that I was going to make a report and recommendation to Judge

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Furgeson that Mr. Vogel, his special master, be appointed by

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him as mediator. Because what the trustee was anticipating

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was, certain of these lawyers might have a Section 503

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substantial contribution to the estate claim for their efforts

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in getting the global settlement agreement past the goal line.

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And so that would be a reason to have a bankruptcy tie to all

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of this. And I will tell you, I plan on doing that. I have

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not gotten it out. I hope to get that report and

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recommendation out this afternoon to Judge Furgeson. We have

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just been tied up in court many hours this week.

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I also have one other thing. Mr. Thomas has filed a

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motion to reconsider an order I had issued that Jeffrey Baron

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personally should have no more attorneys appear for him in

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this matter. And I am going to allow Mr. Thomas to be

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involved, but no one else, and Mr. Lyon is not off the hook.

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So for the very, very, very small amount of activity that I

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would anticipate will be occurring to get this bankruptcy case

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to closure, I would allow Mr. Thomas to step in on that, even

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though I've not signed his order yet.

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All right. Well, that was a little longwinded of me,

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perhaps. With that, Mr. Urbanik, I'd like you to address the

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Court; correct me if I'm remembering anything wrong about

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where things stand; update me on anything new; and we'll go

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from there.

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MR. URBANIK: Good morning. Thank you, Your Honor.

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Well, in fact, that was a very thorough recap of all the

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different matters that are swirling around in Ondova. And I

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only have one minor suggested change. And that is that the

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sheet we gave you last week was only a recap of the Poker Star

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escrow. It wasn't --

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THE COURT: Okay.

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MR. URBANIK: -- of all the funds in the estate.

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THE COURT: Okay.

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MR. URBANIK: Mr. Sherman is holding more funds.

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Those were some funds we received from Manila and Netsphere

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pursuant to the settlement agreement. And that little sheet

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simply showed how some funds were -- some monies were setoff

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and then we were going to use some of those funds to pay

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VeriSign. So other than that correction, your recap is

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thorough and covers, I think, everything just pending in the

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courts.

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THE COURT: Not to get you off track, but where's Mr.

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Baron, do you know?

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MR. URBANIK: He is here. He was here.

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THE COURT: Oh, I'm sorry. You were kind of hidden

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back there. Okay. Thank you.

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MR. URBANIK: Well, Your Honor, since we were here

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last Thursday, September 30th, the trustee has been focusing

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on I would say operational and wind-down issues. But do

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want -- I'm going to address all the things that are pending

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as best as I can that impact the estate.

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But we -- since the 30th, the wind-down and movement

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of those domain names has been our -- that transition has been

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our biggest focus. There are a number of pending pleadings

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that are out there; motions folks have filed -- VeriSign

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motion, a motion Mr. Lyon filed. And I'll come back to those.

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But just to talk about the Ondova estate and

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operations. Since the -- I would say that during the hearing,

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I don't think people had fully understood or mapped out how

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you move these many domain names and do it under the

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cooperation and auspices of VeriSign and ICANN. So that's

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what we needed to sort of educate ourselves about. And it's a

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cooperative process.

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We do have a business manager, Mr. Nelson. He has

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been sort of taking the lead and working with the new

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registrar, Fabulous.com, and with VeriSign and ICANN, on how

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to do this, how to move these Internet domain names. And I've

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been really monitoring that. I've been on a few phone calls.

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Mr. Nelson has really taken the laboring oar on that

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transition of these domain names.

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Before I get into that, though, I will say this on

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the settlement. Again, it has been consummated. We did file

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dismissals of three litigation matters. The funds were

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received. Since receiving the funds, Mr. Sherman was able to

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pay the September and October VeriSign invoices. Since

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receiving the funds, Mr. Baron -- Mr. Sherman was able to get

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Munsch Hardt caught up. We had not been paid for quite a few

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months. So we've now been caught up through the end of

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August. And the settlement has been consummated.

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On the settlement, Mr. MacPete called me Wednesday

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evening on some issues regarding signatures and whether

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parties have signed the right version. And since Wednesday

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evening, I've not been able to communicate with my colleague,

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M'Lou Bell, about that issue on the signatures and whether

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people signed the right versions.

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I do know that they were very detail oriented in

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making sure people either signed the right version or had slip

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pages so they knew where changes had been made. That

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settlement agreement was sort of a nightmare to get finalized

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and signed by all the fifty-five parties or so. So I know Mr.

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MacPete has concerns. He may talk about those in a few

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minutes. But we will look into that. We'll address it.

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We'll answer his questions, satisfy his concerns and resolve

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it. I just haven't had time since he first called me

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Wednesday at 5 about that issue. But we will make sure that's

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addressed.

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THE COURT: Okay.

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MR. URBANIK: I don't really have much else on the

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settlement agreement itself. I know that Manila Netsphere is

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making their Poker Star payment early, you know, today, and we

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do need to visit with the trusts about some settlement monies

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coming in. But really our big focus since last Thursday has

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been this wind-down.

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Since that time, as I said before, Mr. Nelson's been

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working on it. I've had calls with VeriSign and ICANN. So

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you have Ondova, the trust, VeriSign, ICANN and Fabulous, all

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really in daily communication about how to move this number of

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domain names. It is complex. I'd like -- I want to report to

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the Court that everyone is cooperating. It is a cooperative

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process. And I can report that Quantec and Novo Point, they

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are working with us well in this effort.

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Our goal is to get these names moved by the end of

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October, come hell or high water. We -- this business has got

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to be wound down by then. So that is where a lot of our time

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and effort is focused. And we've got VeriSign paid, as I

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mentioned at the beginning, so that at this point, there's no

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risk that the estate will have a Section 503(b) claim come

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in -- administrative claim. And also, we're also looking at

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the fact that we don't want to have any exposure for the very

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large November bill.

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So right now, it is a big push to get all these names

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moved in the immediate future. That is what we're working on

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the most.

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With respect to the Ondova bankruptcy case, again, I

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think our goal is to get this transition under control and

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then we are happy to sit down with Mr. Baron's attorneys,

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whatever the right people are, and have, you know, a

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discussion. And if there's a compelling reason to consider a

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Chapter 11, we'll hear them out. But Mr. Sherman's strong,

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strong preference is to convert this case to a 7 and pay the

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claims based on the funds we have and to do that, you know,

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late -- in early November.

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But we'll meet with them. We'll sit down and discuss

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what their issues are regarding a possible 11. That would be,

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I think, expensive to do. It would delay things. But we will

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hear them out. We don't want to just not meet. But the

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strong inclination is to convert the case.

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Your Honor, one of the things that's there that, you

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know, maybe does not merit as much estate time is the attorney

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fee issue that has been raised by the Court and by all the

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lawyers who have sued Mr. Baron. We have not spent as much

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time on that, although Mr. Sherman and I have both talked with

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Mr. Vogel about the situation, about these law firm claims.

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We keep kind of getting dragged into it in some ways.

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What we did, Your Honor, is we prepared some

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procedures, some suggested procedures for Mr. Vogel to use if

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he is going to be mediator to address the legal fee issues.

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He can tweak them, work on them, present them to Judge

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Furgeson, whatever makes sense. We have been in constant, you

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know, sort of communication with him. He's still willing to

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take on that role. It's just a matter of sort of mapping out

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what are the procedures for him doing it, who's all involved,

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who's not, how are these attorneys going to be paid, how is

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Mr. Vogel going to be paid. So we'll continue to work with

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him, you know, as much as needed, to assist in that issue --

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in that transition.

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Your Honor, there are pending pleadings. And I don't

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know whether the Court -- if anyone's sort of prepared or

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ready to take them up today. I think what we might need to do

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is maybe just have one status conference or hearing where we

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sort of have a pretrial about the Baron's pleading regarding

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the show cause order. Mr. Taube's motion on payment of fees.

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There's a VeriSign motion out there pending regarding the

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executory contract. There's the motion for determination of

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pricing of the domain name contract. So there -- and those

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matters, Judge, I'm not sure we need to get into today.

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We're working just as much as we can to get the

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transition done. And, you know, many of these things may go

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by the wayside if we're able to get that transition worked

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through.

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THE COURT: Well, I -- the only thing we have set

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besides a status conference today is the show cause -- the

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continued show cause hearing.

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MR. URBANIK: Right.

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THE COURT: We have Mr. Taube's motion to withdraw.

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As to the VeriSign executory contract motion, it is set

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October 28th.

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MR. URBANIK: Right, that's set later. Yes.

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THE COURT: And it's kind of perfect timing, because

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we'll be at the end of October --

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MR. URBANIK: Yes.

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THE COURT: -- and we'll know where we are on the

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transition.

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You said something about a Jeff Baron pleading

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regarding the show cause. I don't know if I --

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MR. URBANIK: The September 30th motion filed by Mr.

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Lyon. I wasn't even aware it was filed until I got back from

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court that day. But there was a -- I could tell you the

20

docket number on that one. Docket 463. And maybe the

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Court -- it might be something you mentioned in your

22

introduction -- which is the objection of Jeff Baron on why he

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should not be held in contempt -- 463. You may have -- this

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might have been one you mentioned when you were going through

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your list at the beginning.

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THE COURT: Laura, should I have that in my pile?

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THE CLERK: No, you don't have it.

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THE COURT: Okay. Is that -- can you hand me that

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copy?

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MR. URBANIK: Yes, of course.

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MS. HAYWARD: Your honor, I think it might have just

7

incorporated -- mostly incorporated the objections or attached

8

to the notice of appearance that was filed by Mr. Thomas. It

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was an exhibit that was attached to that that laid out

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assorted objections.

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THE COURT: Okay. Thank you. All right. We'll --

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MR. URBANIK: That's our -- that's the trustee's

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update as of right now, Your Honor. The -- we're going to

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continue to work with these parties on these issues and try

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to, you know, get this transition worked through consensually,

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cooperatively.

17

I do not have a new letter agreement with the Quantec

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and Novo Point folks, primarily because we needed to

19

understand better if these --

20

THE COURT: You're talking about the so-called wind-

21

down agreement?

22

MR. URBANIK: -- the wind-down agreement. We needed

23

to understand, can we get these names moved. There are some

24

VeriSign and ICANN periods for moving names. I think one

25

company has like this thirty-day period to move names. The

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other one has a fifteen-day period. We are trying to work

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with both companies to streamline that, since this is a

3

registrar-to-registrar move with one -- essentially one

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client, and we're not dealing with the public.

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We're going to work with VeriSign and ICANN to

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streamline and efficiently move the names and not have too

7

many credits, debits, refunds. Just, how can we move the

8

names working with those two companies and efficiently get

9

them all moved without a whole lot of accounting nightmare.

10

So my team, we -- essentially, Mr. Nelson -- let's

11

get all the facts down on how to move them. Let's work with

12

VeriSign and ICANN on how they get moved to make sure it's

13

doable by the end of October. And then once that's all

14

understood really well by everybody and we know who's paying

15

what -- who's paying the fifty, who's not paying the fifty,

16

who's getting a refund, then I can be better prepared to say,

17

okay, we've got it mapped out; we know how these names are

18

getting moved, and it's going to happen on this weekend; here

19

are the other fine points of our agreement, and we're done.

20

But until that sort of research is finished, that's

21

why we've been holding off on doing sort of the final wind-

22

down on the movement of the names.

23

THE COURT: Okay. Help me better understand, I mean,

24

really why this is so complicated? Because eight days --

25

maybe Mr. Schnabel can do it -- but eight days ago, we were

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1

pretty adamant this was going to happen by the end of October,

2

and now I'm hearing a little bit of equivocation on, you know,

3

we want it to, but it's complicated. We're trying to make it

4

happen.

5

MR. URBANIK: I think these -- there are some --

6

what's happened is we've looked at the rules on moving some

7

domain names, and they have some, you know, provisions in them

8

that maybe we weren't aware of. But I think both companies

9

are going to work with us to achieve that. I don't think I'm

10

going to -- I'm not expecting any delays or hindrances from

11

ICANN or VeriSign to move the names. I don't think we all

12

kind of knew the mechanism very well when we were here

13

September 30th.

14

Now we've learned a lot more about how this is done.

15

So our goal was to get it done, not have any delays. Mr.

16

Schnabel is here today from VeriSign.

17

THE COURT: Well, but do we have Plan B yet, if it

18

can't happen?

19

MR. URBANIK: We don't have a Plan B. I mean, if --

20

THE COURT: And that's not spelled out in the

21

settlement agreement?

22

MR. URBANIK: I think our Plan B right now,

23

informally, off the record is, if these aren't moved by the

24

end of October, we're going send a letter to VeriSign saying

25

we're closing -- you know, we aren't renewing the names. I

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1

mean, we don't want to do any damage to the value, but we

2

would have to work that out. Right now, it's getting it moved

3

by October at all costs. If we can't --

4

THE COURT: Okay. But, again, I just want to nail

5

down the settlement agreement on this.

6

MR. URBANIK: Yes.

7

THE COURT: The settlement agreement didn't give a

8

drop-dead date per se.

9

MR. URBANIK: No.

10

THE COURT: What it did contemplate was there would

11

be a pricing agreement for what price Ondova charged as

12

registrar, so long as it had to stay in place as registrar.

13

MR. URBANIK: That's correct.

14

THE COURT: And if you all couldn't agree on the

15

pricing, then the Court would determine the pricing.

16

MR. URBANIK: That is correct.

17

THE COURT: So is that, in fact, really Plan B?

18

MR. URBANIK: It's in the settlement agreement and is

19

sort of an option for us. I think we're trying to be as

20

efficient as we can in preserving the estate assets and not

21

having to stay open. But that would be one approach, would be

22

to continue Ondova as a registrar and charge them that price.

23

I'm concerned about getting the payments from them.

24

We don't have the same trustee as we did before. So all our

25

efforts are focused on the October 30th deadline. But we

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1

probably need to start evaluating what happens if they can't.

2

So far we've not heard any reason these can't be moved by the

3

30th.

4

THE COURT: Okay.

5

MR. URBANIK: But a Plan B, Judge, is a good idea for

6

us to --

7

THE COURT: Well, you know, I don't know. Again, we

8

have the VeriSign motion set on the 28th.

9

MR. URBANIK: Yes.

10

THE COURT: So maybe that's -- I mean, I don't know

11

what obligation the trustee has if October 28th comes along

12

and the names aren't transferred with regard to opposing that.

13

Again, is the settlement agreement -- does it address that?

14

MR. URBANIK: It does not. I mean, Your Honor, if

15

we -- I think the sequence would be, if we became aware that

16

that deadline was not going to be met, we would likely send a

17

demand letter to the trust saying these names don't seem like

18

they're getting moved; we've got to pay VeriSign a large check

19

in early November; are you going to send us the funds so we

20

can in turn pay them. And if they wrote back that they

21

couldn't, then we may end up having sort of a rush conversion

22

where there's a little bit of just shutting down the estate.

23

THE COURT: Okay.

24

MR. URBANIK: They would need to pay us so we could

25

pay VeriSign.

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1

THE COURT: I think Mr. Sherman was wanting to add

2

something.

3

MR. URBANIK: Sure.

4

MR. SHERMAN: The settlement agreement didn't really

5

contemplate this end game here, so. But it seems to me that

6

it's a fairly simple deal here. We've got the lawyers here in

7

the room. They can all come on the record and tell us what

8

their understanding of it is.

9

Bottom line is, there is absolutely no trust between

10

me, Mr. Baron and his new trustee. So it's no offense

11

intended to Mr. Eckels or to Mr. Thomas. But without any

12

trust on that deal, I don't want to be playing a game where

13

they say we're going to get all this done, and twenty-four,

14

forty-eight hours intervenes; it doesn't happen; now I've got

15

Mr. Schnabel here presenting me with a 300,000 dollar admin

16

claim on November the 1st. I mean, we have --

17

THE COURT: And is that likely what --

18

MR. SHERMAN: No, I don't know that that's --

19

THE COURT: -- the fee would be?

20

MR. SHERMAN: -- likely. I mean, I talked to Mr.

21

Schnabel and he can explain this. VeriSign is -- they're

22

going to cooperate. They're ready to do it. ICANN apparently

23

is -- must be somewhere higher on the food chain in this deal,

24

and they require a fifteen-day demand or request, if I

25

understood that correctly. Eric can come up here and correct

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1

me.

2

They have, in the past, waived that in certain

3

situations. I can't imagine why this wouldn't qualify as one

4

of those. And I don't think he thinks that it won't either.

5

But they haven't given anything yet in writing that says you

6

make the demand to us on Monday, October the 11th, and we will

7

have it -- we will agree everything can happen by the 29th or

8

something like that. I don't know that.

9

But what I'd like to know, though, from Quantec and

10

Novo Point, is that if for some reason or another this

11

thing -- we trip and stumble into November 1st and November

12

2nd, that they're going to pay that or prepay it.

13

Now, they're whining and crying about being out of

14

cash. And if that's the case, then I'd just as soon trot down

15

here and say you've been carrying my motion to convert, upload

16

the order, let's convert this to a 7, because I don't care

17

anymore about their problems.

18

And so that's the end game at this point. I mean,

19

when we were negotiating the settlement, I never realized that

20

the last two or three steps in this dance would come down to

21

this. We didn't choreograph those last two or three steps.

22

But it's going to be a game of --

23

THE COURT: Okay. Well, I am going to ask other

24

parties their view of the world on the settlement agreement

25

terms. Am I hearing that your view of the world is, if we get

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1

to the end of October and they have not funded the money --

2

MR. SHERMAN: Right.

3

THE COURT: -- for the estate to pay VeriSign --

4

MR. SHERMAN: Right.

5

THE COURT: -- the November fee, that the trustee

6

could simply consent to the termination of the VeriSign

7

executory contract and --

8

MR. SHERMAN: We're converting to a 7. We're done.

9

THE COURT: -- convert to a 7 --

10

MR. SHERMAN: -- we're doing nothing.

11

THE COURT: -- let whatever happens --

12

MR. SHERMAN: Yeah, whatever happens happens.

13

THE COURT: -- to the names. There's no any --

14

MR. SHERMAN: They -- you know, I suppose it's

15

possible, though as I stand here right now I don't know what

16

it is, that they could give us sufficiently adequate assurance

17

that they had the money and it was --

18

THE COURT: I think that --

19

MR. SHERMAN: -- coming.

20

THE COURT: -- 330 that the trustee's holding, that's

21

what their thought is.

22

MR. SHERMAN: Okay. Well, I hadn't thought about

23

that.

24

THE COURT: They don't want it to go to the lawyers.

25

MR. SHERMAN: Okay. Something like that.

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THE COURT: Has that occurred to you?

2

MR. SHERMAN: No, I --

3

THE COURT: Okay.

4

MR. SHERMAN: -- I had that out of my mind --

5

THE COURT: Okay.

6

MR. SHERMAN: -- in thinking that that was -- had

7

been set aside for something else. But if it was available

8

for that, that would take some of the pressure off, for sure.

9

THE COURT: No, that's not what I -- well, anyway.

10

We'll see.

11

MR. SHERMAN: All right.

12

THE COURT: I'm just suspecting that's where -- we'll

13

hear from them, though. Okay.

14

Mr. Schnabel?

15

MR. SCHNABEL: Good morning, Your Honor. For the

16

record, Eric Lopez Schnabel of Dorsey & Witney on behalf of

17

VeriSign. Your Honor, let me start off, I think, by trying to

18

explain a couple of process things in terms of transfers.

19

THE COURT: Good.

20

MR. SCHNABEL: So we can be clear. You know, at the

21

last hearing, where I appeared telephonically, I wasn't

22

exactly sure what they wanted to do, what the registrant,

23

Quantec, wanted to do. And there were a variety of

24

hypotheticals which could all be handled in a different way.

25

But I think it's pretty clear now, and I think

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1

everyone agrees that this is a bulk transfer scenario in terms

2

of getting these names out. And in a bulk transfer scenario,

3

that does require ICANN approval. And that's a thirty-day

4

process. But I did have a call with ICANN and their counsel,

5

and they have, in the past, and could here, waive that thirty-

6

day requirement and give approval for the transfer earlier if

7

the circumstances are appropriate.

8

So as Mr. Urbanik and Sherman had, I believe, stated,

9

this would seem like one of those situations, given where this

10

registrar is and what's happening in its bankruptcy case.

11

That approval process starts off with a letter

12

request by the current or the losing registrar, which is

13

Ondova the estate, so the Chapter 11 trustee sending it to

14

ICANN saying we're converting at the end of the month, or

15

we're shutting this down at the end of the month. We're in

16

bankruptcy. I'm the authorized representative pursuant to

17

court order, blah, blah, blah. And we need to transfer all

18

these names on an expedited basis, and we are transferring

19

to -- if there is one, which actually helps the process -- and

20

here do have one -- we have a gaining registrar that's been

21

identified, Fabulous.com.

22

Both my client and ICANN know who Fabulous.com is.

23

So that's a good thing. It's not an unknown entity. And then

24

ICANN can go through whatever their approval process is and

25

make a determination whether to give that on a more expedited

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1

basis and waive this thirty-day requirement.

2

While that process is going on, Your Honor, they can

3

work on the other things. You don't have to wait for them to

4

say okay before you can work on the other things. And the

5

other things, which is a technical term -- the other things

6

are -- a joke -- the other things are basically a lot of just

7

logistics between the losing registrar, Ondova the estate, and

8

the gaining registrar, Fabulous.com.

9

There's customer information that has to be

10

transferred which is also held in escrow by ICANN. In this

11

scenario, I believe there's only one customer. So that's

12

actually a very simple process. Again, another reason why

13

this approval process might be able to be expedited. There's

14

notice that to all the registrees have to go out. VeriSign is

15

a registree. But there's only two names -- types of names in

16

this estate. There's the dot.com and the dot.net. That's

17

both VeriSign, so that's very simple. We already know about

18

this and we're already aware, obviously, of the situation.

19

There's not a dot.de or a dot.uk which would bring in other

20

parties like VeriSign, who who knows what their processes are.

21

And then there's just, you know, regular logistical

22

handoff. You know, there's an operational basis here, and

23

Fabulous.com has to have everything ready so they know what's

24

up for renewals in November and they can be ready to do that

25

and things like that.

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1

Once this logistical stuff is all sorted away -- and

2

there are some forms that can be filled out or -- you know,

3

they just have to kind of agree and set that up -- they can

4

come to VeriSign. And if ICANN has given the approval, they

5

can say we're ready to go, and Fabulous.com, the gaining

6

registrar, is ready to take the stuff, and everyone says it's

7

all green-lit, we're process-wise ready, then VeriSign

8

actually has to change things in terms of the recordkeeping,

9

if you will. And that we can do in a matter of days, once

10

they are actually ready to initiate the transfer.

11

So, it seems like all this can happen in that way --

12

within this timeframe. And frankly, I don't think it's that

13

complicated. And they can do it. But both ICANN and VeriSign

14

are kind of dependent on the trustee and Fabulous.com to react

15

to all this and to get it done.

16

Like I said, ICANN needs that letter to start its

17

process, and it needs it to come from the current registrar;

18

not a registrant, not the beneficiary, if you will, and so

19

forth.

20

In terms of fees, because there was some discussion

21

about that, the only -- there's obviously renewal fees. So

22

whoever -- whether the names stay here or get picked up,

23

somebody has to pay or risk deletion of a significant amount

24

of names that are up for renewal in November. And there's

25

also December. This gets into kind of the big peak of these

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1

230,000 dollar names. There's over 310,000 or so dollars

2

worth of renewals in November. There's 300,000 in December.

3

But that's just -- whoever gets that has to deal with that

4

issue.

5

The only other real fee is this 50,000 dollar bulk

6

transfer fee, and it applies to names -- over 50,000 names.

7

And here there's two types of names: there's the dot.com and

8

the dot.net. I'm told that the dot.net names are a really de

9

minimis amount of the 230,000. I had heard once maybe only a

10

couple hundred or a couple thousand. But in any event, it's

11

less than 50,000. So then there's only one 50,000 dollar fee

12

here, not two, because the dot.nets are below 50,000 names,

13

and there's no charge in a bulk -- ICANN-approved bulk

14

transfer process.

15

So that's the 50,000 dollar fee. That fee is

16

actually paid by the gaining registrar. So that would be

17

Fabulous.com. So it would not be paid by the losing

18

registrar, the estate.

19

Although I haven't confirmed this, but obviously, you

20

know, Mr. Urbanik and Mr. Sherman's representations are worth

21

the amount that they say they've wired to us, we have been

22

paid or are in the process of receiving the wire that fully

23

pays our September invoice and has paid us for what will be

24

our October charges that some have yet to fully accrue. And

25

to the extent these names are transferred before the end of

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1

October or right at the end, and there's some money left over,

2

so that we are not owed any money by the estate, we will --

3

the document says issue a credit, but we would actually

4

convert that to an actual check and return money to the

5

estate.

6

So if we're overpaid, we will return the check. If

7

we're not overpaid, we'll have a claim. But as of right now,

8

through October, we don't think that there is any claim; that

9

we have received funds that will pay us in full.

10

So the one other piece I wanted to say before I

11

talked about Plan B, unless Your Honor has questions about

12

this part, is that there is also an issue for VeriSign in

13

terms of timing here as well. If we receive the notification

14

that the failing registrar is going to cease operation by X

15

date and that the transfer is supposed to happen, and then it

16

doesn't happen -- because, again, this is something that's

17

effectuated between the registrars -- there comes a period of

18

time -- and it's thirty days or even if it's within days, it's

19

a longer period -- in which we will start refusing to auto-

20

renew. We will start to -- the names will be at risk, because

21

we can't look to the old registrar, and no one's actually

22

picked up responsibility for it. So there is an actual time

23

concern on our part as well.

24

But I don't think that will come into play if we're

25

all moving in the month of October. That would all happen

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1

before our concern on timing would become an issue.

2

And just as a general statement in terms of the

3

transfer, you know, I don't represent ICANN but I do represent

4

VeriSign, but I do know that both entities -- you know, we

5

are -- again, this is a registrar-to-registrar largely driven

6

process. But we are completely -- my client is ready to do

7

what it can to help this. We want to facilitate this. We're

8

not in any way trying to be a roadblock to it. And I think

9

ICANN, as they have their rules, but they have waived this

10

thirty-day period before, and they're -- I had a call with

11

them with their counsel and businesspeople, and they are --

12

they have watched this case, but they were also more aware --

13

I brought them up to speed in terms of some of the dynamics of

14

what happened at the last hearing and so forth.

15

So I think, as long as the estate and Fabulous.com

16

can do what they're supposed to do, VeriSign, and I believe

17

ICANN, can react to facilitate that, not to be a roadblock to

18

it.

19

In terms of Plan B, you know, we have our motion

20

which I think we filed in May. And as Your Honor is well

21

aware, through -- because of some of the pressure you were

22

able to put on through some of these hearings since May and

23

the cooperation of the trustee, we've been caught up out of

24

almost a million dollar hole we were in back this spring.

25

But the issues for us going forward, if we're getting

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1

into November, is -- especially hearing the trustee's

2

comments -- you know, if they don't have any confidence of

3

where their money is coming from to pay us, then obviously we

4

don't have a lot of confidence in terms of how we're going to

5

prevent to having a claim.

6

So we don't want to get into the situation of, you

7

know, now that we've finally gotten ourselves paid up and

8

we're no longer a problem for the estate, if you will, from an

9

admin expense claim perspective, we don't want to be put back

10

into that situation. But I think we won't, as long as the

11

parties can do what they're supposed to do so that we can

12

react promptly.

13

THE COURT: Okay. Thank you.

14

MR. SCHNABEL: Thank you, Your Honor.

15

THE COURT: All right. So we're keeping that setting

16

on October 28th.

17

Before I hear from others, Mr. Urbanik, let me ask

18

you -- I mean, there's not been a letter request from Ondova

19

to ICANN obviously, regarding the transfer?

20

MR. URBANIK: Not yet. Just -- we're getting -- as

21

we've learned how this works, we're going to prepare that and

22

send it early next week. I don't think we even knew about

23

that letter requirement until yesterday. And so, you know,

24

this has been a learning process. I've been on the phone with

25

Mr. Schnabel all week. I've tried to reach ICANN yesterday,

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34

1

but we just never connected. They're in California.

2

But we're going to get this done. If they need a

3

letter, it will be sent out Monday, so.

4

THE COURT: Okay.

5

MR. URBANIK: Today.

6

THE COURT: All right. Who do you deal with at

7

Fabulous?

8

MR. URBANIK: Mike Robertson. He's in Brisbane,

9

Australia.

10

THE COURT: Is he an in-house lawyer there or an

11

outside lawyer or not a lawyer?

12

MR. URBANIK: I think he's one of the principals of

13

the business, and he's been our principal contact. And I've

14

had several calls with him. Mr. Nelson's had calls with him

15

almost every night this week. So they appear to be ready to

16

take on this portfolio. They have the means to accept all

17

these domain names. And we've not had any hiccups with them.

18

You know, again, this is sort of a learning process

19

for them too. So they've also been talking to VeriSign. But

20

nothing so far has gotten us any concern or leads us to any

21

concern about Fabulous.com.

22

THE COURT: Okay. All right. Mr. Schnabel is

23

getting up again.

24

MR. SCHNABEL: Thank you, Your Honor. I did want to

25

add two things that I forgot to mention. First of all, I have

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35

1

received some communications from Quantec and others regarding

2

different ways of doing this, and I think that caused a lot of

3

confusion. And so the one thing I did want to say on the

4

record is, you know, when you -- VeriSign has a helpdesk.

5

That's an 800 number that you can call and ask them questions.

6

If you're asking the wrong questions, you're not going to get

7

the right answer to the situation.

8

So I just wanted to put parties on notice that you

9

just can't call the helpdesk and think you've found a new way

10

to do this. You know, the bulk transfer, which is a term of

11

art in these documents, is the way to get this done. And the

12

procedures for that are pretty clear in the documentation of

13

VeriSign and ICANN, and they should just follow that. So I

14

think they're all there on that, but I just wanted to set that

15

out for the record.

16

The other thing I just wanted to say, Your Honor, is

17

we haven't agreed -- as you can imagine, given our motion --

18

we haven't agreed to waive anything that we're owed to under

19

the applicable agreement. So I did want to state that that

20

Quantec motion that Your Honor struck, the paragraph 23

21

representation in terms of what counsel to VeriSign had said

22

it might be willing to waive, it's not accurate. We haven't

23

agreed to waive any fees. We don't agree to waive fees. We

24

treat all of our registrars the same, and the charges are what

25

they are. And people have to pay them. And that's how we

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1

operate.

2

THE COURT: Okay.

3

MR. SCHNABEL: Thank you, Your Honor.

4

THE COURT: Thank you. All right. Before I ask to

5

hear from the Quantec and Baron parties, Mr. MacPete, are you

6

good? Are you clients good right now?

7

MR. MACPETE: I have some materials, Your Honor, with

8

respect to the order to show cause. And I do have the concern

9

about the signatures, which I'm prepared to talk to the Court

10

about if you want to hear about that right now. And I'd be

11

happy to answer any of the Court's questions about what I

12

think the settlement agreement provides with respect to this

13

transfer issue. I think that's all up to the Court.

14

THE COURT: Okay. So materials concerning the show

15

cause matter?

16

MR. MACPETE: I have two continuing breaches from Mr.

17

Baron. So we're going to be asking the Court to sanction Mr.

18

Baron for failing to consummate the settlement agreement on at

19

least two bases. And I'm prepared to put evidence on to

20

support Your Honor's show cause order on those two points.

21

THE COURT: Okay. Mr. Urbanik, do you know what this

22

is about?

23

MR. URBANIK: No, Your Honor. I do not. And we're

24

focusing so much on the operations, I've not spent as much

25

time with Manila Netsphere people on that issue. I'm aware of

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1

the signature issue and the document issue, which we're going

2

to work cooperatively, but I don't know much about the Baron

3

defaults. I do not.

4

THE COURT: All right. Mr. MacPete, I'm going to ask

5

you to come to the podium and very briefly present your

6

issues, okay, and we'll figure out from an evidentiary

7

standpoint where we may or may not go. But just kind of

8

outline your issues for me.

9

MR. MACPETE: Thank you, Your Honor. The first issue

10

I have, I'm going to just talk about the signature issue. So

11

Mr. Urbanik is correct, and I called him on Wednesday, because

12

I was trying to get the final-final version of the settlement

13

agreement, if you will, with all the exhibits, with all the

14

signatures and the orders, et cetera.

15

And when I started to put it together, I realized

16

that there was a problem. Ms. Bell, with Mr. Urbanik's

17

office, essentially was sort of the hub, if you will, of

18

various versions going out and signatures coming in and that

19

sort of thing. So I called her and I said basically, I have

20

something that Mr. Urbanik sent me, I have what I think is the

21

final settlement agreement, can you send me what you think is

22

the final. And she's kind of been the repository.

23

So she sent me what she thought was the final

24

version. What she says is the final version is the document

25

which has a document number on it of 2767771_1, and the _1, I

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guess is a version number. The final version that was sent

2

out prior to the hearing in the version, if you will, that was

3

submitted to this Court for the approval of the 9019 hearing,

4

is document number 2609061_21. So it was the twenty-first

5

version of the settlement agreements that had been negotiated

6

for months and months.

7

You may remember, Your Honor, at the 9019 hearing,

8

there were certain agreements that were read into the record.

9

And so subsequent to that hearing, another version -- another

10

execution version was sent out to some people for them to sign

11

with those changes that were read into the record. So that's

12

how we ended up with essentially two different versions.

13

The problem as I identified it on Wednesday is, about

14

half of the signatures that I have on the "final version" from

15

Ms. Bell, are on document number 2767771_1, and half of them

16

are on document number 2609061_21, including my client's

17

signatures are on the version 21.

18

Now, ultimately, I would hope this isn't going to be

19

a problem. But what I don't want is a situation where we have

20

to come back here later at some point and we get an argument

21

from Mr. Baron, as I'm sure you could anticipate, Your Honor,

22

that well, there's not really a settlement agreement because

23

half of the people signed one version and half of the people

24

signed another version that has material changes in it, and so

25

there was no meeting of the minds. And I want to cut off that

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1

argument before it ever becomes relevant, if you will.

2

Now, I've talked with Mr. Eckels about -- because all

3

the Quantec and the trust-related signatures are on the wrong

4

version just like my clients. So my clients, that's easy.

5

I'm just going to ask them to sign the correct version and

6

we'll fix that problem. The trusts, obviously, are gone, if

7

you will -- the previously constituted trust. Mr. Taylor and

8

Mr. Taube and Mr. Capula (ph.) and Ms. Schurig are all gone.

9

So getting them to re-sign is not really an effective

10

possibility, now.

11

So what I talked with Mr. Eckels about was whether or

12

not we could get an e-mail from -- I guess Mr. Capula is the

13

one who provided the signatures -- that could be appended to

14

the settlement agreement, that says the signature pages on

15

document 2609061 version 21 are intended to be used for the

16

agreement at 2767771_1. That'll solve that problem.

17

However, there are also four individuals who are not

18

represented by counsel: Byron Dean; Bud Branstetter (ph.);

19

Ron Sheridan; and Nina Devassal (ph.), who all signed on the

20

wrong version as well. Mr. Capula secured those signatures.

21

I think we need to get new signatures on the correct version

22

so nobody comes back and says they didn't actually sign what's

23

the "final version".

24

So that's the signature issue, which I just want to

25

anticipate a future problem if we ever have to enforce this,

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1

with somebody saying well, you haven't actually got a fully

2

executed settlement agreement. So that's that issue. I'm

3

working cooperatively with Mr. Eckels and Mr. Urbanik on that.

4

We need to figure out what to do about the four individuals.

5

THE COURT: Okay.

6

MR. MACPETE: With respect to Your Honor's show cause

7

order, I have two issues, basically. And you heard about one

8

of them last week on the 30th. And that had to do with these

9

USVI tax returns.

10

So under paragraph 20 of the settlement agreement,

11

which was an extensively negotiated provision on taxes, and

12

unfortunately, Mr. Pronske had to go to Houston this morning,

13

so he's not here. But he had actually offered to testify for

14

me with respect to all of the time that went into negotiating

15

these provisions. Each and every word in paragraph 20 was

16

extensively negotiated. And paragraph (b) basically says that

17

the unanimous consent of NewCo LLC, which is an entity

18

controlled by my client, set up pursuant to the settlement

19

agreement, is required for any discussion with the U.S. Virgin

20

Islands Bureau of Internal Revenue.

21

And the reason for that provision is because Ms.

22

Schurig, on behalf of Mr. Baron, had tax positions which my

23

client violently disagreed with, and did not want discussed

24

with the USVIR with respect to entities that we had an

25

ownership interest in. So it was specifically negotiated that

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1

unanimous consent was required.

2

About three weeks ago, on September 15th, Ms. Schurig

3

contacted me right before we had a hearing with this Court on

4

that day, with proposed tax returns to file for those three

5

U.S. Virgin Islands C-corporations that my clients own half of

6

and said they needed to be filed today. So I literally got it

7

hours before she wanted to send them out.

8

My partner, Mr. Hinderliter, who is a tax partner at

9

Locke, actually looked at the returns and sent her a message

10

back that said, technically they're due today, but no fine

11

would actually be imposed for the next sixty days. So we have

12

actual time to discuss this, and we do not authorize you to

13

serve those tax returns -- communicate with the BIR.

14

Notwithstanding that instruction from our side, Ms.

15

Schurig went ahead and filed them with the U.S. Virgin Islands

16

BIR, and also checked the box on those tax returns indicating

17

that she is the paid preparer, who would be the person that

18

they would contact to discuss those returns. Again, something

19

which we didn't consent to and we would not have consented to,

20

because we don't want her talking to the USBIR, because we

21

don't agree with her positions.

22

So that is the first violation of the settlement

23

agreement that has occurred. And her indication when asked

24

why did you go ahead and file these, was she was required to

25

do so by Mr. Baron in the supplemental agreement. I don't

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1

find anything in the supplemental agreement that required her

2

to file tax returns on behalf of the U.S. Virgin Island C-

3

corps. And we didn't agree to that. So that's the first

4

issue.

5

The second issue is under paragraph 13(b). And in

6

13(b) -- this has to do with the Phone Card settlement. And

7

the Phone Card settlement basically ended up with that

8

particular domain name, phonecards.com, being jointly owned by

9

my client and Mr. Baron through is self-directed IRA at Equity

10

Trust.

11

As of the 9019 filing date, all revenues from that

12

domain name are supposed to be split fifty-fifty, and the

13

money is supposed to be paid to us by the 5th day of the

14

month. Under the date operation, if you will, payments were

15

supposed to start on September 5th. And that September 5th

16

payment was supposed to pay for July -- from July 2nd all the

17

way through the end of July, and also for August. We got a

18

payment on September 5th for August. We did not receive a

19

payment for July.

20

When that happened, I contacted Mr. Lyon and I said,

21

there's been a breach of the settlement agreement. I don't

22

want to make a big deal out of it, maybe it was an oversight.

23

Why don't you see if you can fix it? He said he would look

24

into it and try to get it fixed before the 9/30 settlement

25

status conference. Okay? It didn't happen. He didn't get it

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1

fixed by then. He was still working on it.

2

I talked to him after that hearing, and I said okay,

3

I didn't raise it with the Court because you told me you're

4

going to try to get this fixed, but you need to get it fixed

5

before next Friday or I'm going to have to raise it in

6

conjunction with the Court's show cause order. So I gave him

7

another week. And unfortunately, he hasn't been able to fix

8

it.

9

Now, the key point on all of this, Your Honor --

10

we're talking about 1,100 dollars, so it's not a lot money,

11

but there is a requirement in the settlement agreement that if

12

the company who is monetizing the domain name does not pay the

13

money directly to my client, then it remains the obligation of

14

Mr. Baron and his IRA to pay that money directly. And they

15

haven't done that, even though they've been put on notice.

16

Now, what Mr. Lyon is likely to tell you is well,

17

Equity Trust is difficult to deal with. What you need to know

18

about Equity Trust is it's a self-directed IRA company. So

19

basically they don't do anything, they're completely passive.

20

They do whatever Mr. Baron tells them to do, whatever he sends

21

them the document, and sign, giving them directions. So,

22

basically, there is an intermediary through which Mr. Baron

23

has to work, but it is completely at Mr. Baron's control as to

24

what that IRA does. And they have not paid that money. And

25

so, again, they have not timely consummated.

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Now, by contrast, I would point out, and you heard

2

Mr. Urbanik say this, Your Honor. My clients have paid early.

3

We paid the 1.25 million early, we paid --

4

THE COURT: Right.

5

MR. MACPETE: -- we paid the Poker Star money to

6

Quantec earlier this week.

7

THE COURT: Right.

8

MR. MACPETE: And we paid the Chapter 11 trustee

9

their Poker Star money earlier this week.

10

I'm not saying Mr. Baron need to pay early, but he's

11

now more than two weeks behind and I have no idea when I'm

12

going to get that money.

13

THE COURT: Okay.

14

MR. MACPETE: And I think my client's perspective on

15

your show cause order is that lots of courts have threatened

16

Mr. Baron, Your Honor. And to be honest with you, he's

17

managed to escape with no court every having sanctioned him

18

for any of his behavior. And I think for this settlement

19

agreement to go forward I think this Court has indicated a

20

willingness to actually back up the threats that you've made

21

to Mr. Baron with action. And action is all he understands.

22

He's very clever about ignoring what courts say and just

23

watching what they do. Most other courts have not ever

24

actually sanctioned him. They've just threatened and he

25

doesn't react to that.

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1

So my clients would like the settlement to go

2

through, we'd like it to work. And we think the way to do

3

that is for this Court to show Mr. Baron that you are serious

4

about he will obey this settlement agreement. And right now

5

it's not happening. There may be small issues, but I think

6

now is the time to make the point so we don't have big issues

7

later.

8

THE COURT: All right, thank you.

9

MR. MACPETE: Thank you, Your Honor.

10

THE COURT: All right, Mr. Eckels, let me hear from

11

you next on -- I want to hear, obviously, first and foremost,

12

about the transfer issues.

13

MR. ECKELS: Thank you, Your Honor. James Eckels for

14

Quantec.

15

Your Honor, as the other counsel have advised, the

16

domain registrant is really the party that has the least

17

involvement in effectuating the transfer. The important

18

parties are the losing registrar, are the gaining registrar,

19

VeriSign and ICANN. So I have been and I am continuing to be

20

ready, willing and able to help facilitate whatever is needed

21

from the registrant to effect the transfer.

22

Wednesday, Mr. Nelson, myself, Mr. Robertson have a

23

teleconference. Last night Mr. Nelson spoke with Mr.

24

Robertson, I spoke with Mr. Robertson. As Mr. Urbanik has

25

told you we're working cooperatively and we will continue to

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1

do so. But our concern, if there is any, is simply that the

2

November registration fees that are due, and that other

3

counsel and the trustee, himself, have told you they want

4

prepaid in the event these are not transferred, is largely out

5

of my control. The transfer, itself, is out of my control.

6

You've already asked Mr. Urbanik about the -- really

7

the key piece of information that needs to be sent from the

8

losing registrar; Ondova to VeriSign. That hasn't been done.

9

And I think my concern is that even if I, as the domain

10

registrant, representing the domain registry, do everything

11

that the domain registrant is supposed to do, it is possible

12

that Ondova may not do everything they're supposed to do.

13

I actually have a bulk transfer checklist that I'd

14

like to share with the Court that identifies all of the things

15

that the losing registrar and the gaining registrar are

16

supposed to do. I think it encapsulates, really, all of those

17

supporting documents that Mr. Schnabel mentioned, and all of

18

the other things. So with your permission, I'd like to

19

present that to you.

20

THE COURT: Okay. Do you have copies for the other

21

people?

22

MR. ECKELS: Your Honor, I do. I do, indeed.

23

THE COURT: Okay. You may approach.

24

Who prepared this?

25

MR. ECKELS: This is from VeriSign. This was sent

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1

from VeriSign to the gaining registrar.

2

THE COURT: Okay.

3

MR. ECKELS: As you look at the checklist, there are

4

a number of things that both -- like I said, the gaining

5

registrar and the losing registrar have to do. The domain

6

registrant merely sends a transfer request, that's our

7

obligation. The rest of it is up to the gaining and losing

8

registrar and VeriSign.

9

So, again, conceptually, and as has been demonstrated

10

thus far --

11

THE COURT: First, has your client submitted the

12

transfer request?

13

MR. ECKELS: Yes, Your Honor. But I'm willing to

14

submit an official quote transfer request. I've done so

15

through e-mails. We've done through a number of discussions,

16

dialogues that we want everything transferred.

17

THE COURT: Okay. I -- that was a complicated

18

answer. Has the transfer request they need to get the process

19

going been sent?

20

MR. ECKELS: I believe --

21

THE COURT: By the registrant?

22

MR. ECKELS: I believe it has. That's what has

23

initiated everything.

24

THE COURT: You don't know for sure?

25

MR. ECKELS: There's not an official transfer request

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1

form that I've sent. But through a number of e-mails and

2

correspondence and discussions with Mr. Urbanik, Mr. Nelson,

3

Mr. Cox and myself. We have expressed that all of the names

4

need to be transferred.

5

THE COURT: Mr. Schnabel, can you address is that

6

good enough? A bunch of e-mails and other communications

7

expressing the desire to transfer, or is there a magic form

8

that needs to be submitted?

9

MR. SCHNABEL: Your Honor, I don't believe there's a

10

magic form. This document, is obviously probably something

11

off of one of our websites in terms of what to do. It seems

12

to say that a regi -- you know, there's two ways, right, for

13

qualifying event, and that the registrant has to request in

14

writing that a move happen. But then it says responsibility

15

gaining registrar, not registrant.

16

I mean, because I think the gaining registrar which

17

is going to be -- which in this scenario is Avis.com (ph.),

18

then has to go to the losing registrar, which is Ondova, and

19

say hey, okay, I've just been told by somebody that they want

20

to send this stuff to me, okay. And they say okay.

21

I don't think there's magic forms in this part.

22

THE COURT: Okay.

23

MR. SCHNABEL: I kind of think that's probably

24

already happened informally.

25

THE COURT: Okay.

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1

MR. SCHNABEL: And I don't think it's a VeriSign --

2

THE COURT: Yeah.

3

MR. SCHNABEL: I don't think this is a VeriSign

4

notice.

5

THE COURT: Okay. It just sounded like Mr. Eckels

6

was saying there was a form from the registrant that needed to

7

be sent to start the process. And --

8

MR. SCHNABEL: I don't think --

9

THE COURT: -- you're kind of disagreeing with that.

10

MR. SCHNABEL: Yeah, I don't think there's a specific

11

form --

12

THE COURT: Okay.

13

MR. SCHNABEL: -- that the registrant --

14

THE COURT: Okay.

15

MR. SCHNABEL: -- has to do.

16

THE COURT: Okay. All right. So the gist, you're

17

saying that your client is cooperating with the gaining and

18

losing registrar and intends to cooperate to make this happen

19

by the end of the month.

20

MR. ECKELS: Yes, Your Honor.

21

THE COURT: Any qualms, any concerns, reservations

22

that it's not going to happen by the end of the month?

23

MR. ECKELS: No, as long as the parties do everything

24

they need to do.

25

THE COURT: Okay. What is your view of the

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1

settlement agreement if it doesn't happen by the end of the

2

month.

3

MR. ECKELS: Your Honor, as has also been expressed

4

by the counsel, plan B really hasn't been on the radar. But

5

having heard what I've heard thus far, I'm prepared to go back

6

to my client and discuss that very issue with them. And work

7

again cooperatively with Mr. Urbanik and whoever else I need

8

to work with to make sure that there is a plan B set up, and

9

that it's carried out.

10

THE COURT: Okay. Are -- I need more clarity than

11

that, as far as the payment of the November fees. Is your

12

client prepared to get those prepaid before November 1st hit

13

so that the trustee can pay VeriSign, if these names are still

14

with Ondova as the registrar.

15

MR. ECKELS: I will certainly make that request of

16

the trust.

17

THE COURT: I need to know today. We've had days and

18

days to think about this.

19

MR. ECKELS: Your Honor, I haven't put in a request

20

for the November fees. But I will do so if they are needed.

21

If they are not transferred to Fabulous, who is going to pay

22

them to VeriSign if they are transferred.

23

The only reason that those fees would have to be paid

24

to Ondova, who would pay them to VeriSign, is if they're not

25

transferred.

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1

THE COURT: Exactly.

2

MR. ECKELS: And I have not asked the trust are you

3

going to send the check, because that hasn't been needed to be

4

asked. I will definitely --

5

THE COURT: Of course it's been needed to be asked.

6

MR. ECKELS: I will defin --

7

THE COURT: It's the question not just of the hour,

8

but it was the question on September 30th.

9

MR. ECKELS: Nothing has been expressed to me from

10

the trust that they will resist a request. They have

11

responded to each of the requests thus far for renewal fees.

12

And I will make the request for the November fees.

13

THE COURT: All right. Well, here's the scenario.

14

We get here on October 28th on the VeriSign motion, and the

15

transfer is not complete, and it's not going to happen by the

16

end of the month, the Court grants the motion. This is a

17

hypothetical, The Court grants the motion, allows the

18

termination of the agreements between Ondova and VeriSign and

19

allows the trustee to walk away from responsibility as a

20

registrar.

21

MR. ECKELS: Uh-huh.

22

THE COURT: What is your position?

23

MR. ECKELS: Before that occurs I will already know

24

that that is what is going to happen and will have, therefore,

25

already addressed that with the trust. We need to pay these

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1

fees.

2

Ondova, are you willing to continue to be registrar

3

in November. They say yes, then I will submit a fee request

4

from the trust to pay Ondova, so that they can pay those fees.

5

THE COURT: Okay.

6

MR. ECKELS: It's not going to happen blindly, in

7

other words. I'm not going to be oh, man, the 28th is here

8

and I don't know the answer. I will know the answer well

9

before then because we're continuing to work cooperatively.

10

And we will know from a timing standpoint are we going to get

11

these transferred before that.

12

THE COURT: Okay. Because you say that seems like

13

the likely scenario here. That if the names are not

14

transferred and the money has not been received by Ondova from

15

the registrant to pay November fees to VeriSign, I just let

16

the agreements terminate and let the estate walk at that

17

point.

18

MR. ECKELS: I heard Mr. Sherman say that very thing,

19

Your Honor.

20

THE COURT: And do I hear that you don't think the

21

settlement agreement addresses this?

22

MR. ECKELS: I don't believe it does. I don't

23

believe it contemplates an endgame beyond that.

24

THE COURT: Okay.

25

MR. ECKELS: But I do want to just underscore that I

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1

believe Mr. Schnabel said that the November fees normally

2

wouldn't even be billed until the end of November. But to

3

prepay them, they would have to be prepaid by November 1st, it

4

sounds like. So if that is still the scenario I go back again

5

to the point that we will know before the 28th, well before

6

the 28th, whether that is even on the radar. And, if so, I

7

will do everything that is necessary to make sure that funds

8

for renewal fees are paid.

9

THE COURT: Okay. Otherwise, the names fall out of

10

the estate, and fall into wherever they fall.

11

MR. ECKELS: Yes, Your Honor.

12

THE COURT: All right. Mr. Thomas, I saw you getting

13

up, do you want to speak for your client now?

14

MR. THOMAS: Your Honor, thank you. Martin Thomas on

15

behalf of the -- of Mr. Baron. And just to be clear, I didn't

16

announce earlier when everybody else did because I wasn't sure

17

you were going to allow me to appear.

18

THE COURT: Okay.

19

MR. THOMAS: So that's what happened.

20

And what I was talking to Mr. Urbanik about is there

21

is some money that he's holding that should be transferred to

22

the trust, and hasn't been yet. And it's not as much as I

23

thought. And I was hoping that would be his potential answer

24

for this problem.

25

In terms of what happens at the end of October if

000095000095

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it's not done, Mr. Urbanik and I have talked and are intending

2

to meet hopefully next Tuesday. Mr. Sherman and I have

3

exchanged some comments and voicemails about the end result.

4

And I think a lot of this issue can be dealt with in that

5

scenario. I understand that Mr. Sherman believes that there's

6

sufficient money in the estate right now to pay virtually all

7

unobjected claims. And I can't -- I haven't got those

8

details.

9

The question then becomes how do we do that in terms

10

of a -- and I've always said an agreed Chapter 11 plan,

11

because this case is not going to survive a cramdown attempt

12

of any kind and we won't be suggesting that.

13

But I think for the -- I've asked Mr. Sherman for

14

those numbers, and hopefully by Tuesday he'll have those and

15

we can start looking. Obviously, if there's an administrative

16

claim that a -- that would occur on November 1st, the estate

17

won't let that happen. And we understand that and we have to

18

deal with that.

19

Everything that I've been told, and I've talked to

20

Mr. Eckels a number of times, and Mr. Baron a number of times,

21

is that the full intention and virtual -- I mean, it's our

22

intention that the names be transferred by the end of this

23

month. And I've heard no reason that they won't be. I heard

24

what you heard today in terms of some of the detail, but I'm

25

still hoping that that will get worked out. But we're

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1

certainly working with Mr. Urbanik, Mr. Sherman, Mr. Eckels

2

and everybody to try and do that, or address it as part of an

3

endgame. And that may mean -- we're like sort of saying that

4

we think a conversion is appropriate yet, but it may be, I

5

don't know.

6

In terms of the show cause issues, if you want me to

7

start addressing those just a little bit.

8

THE COURT: If you would, uh-huh.

9

MR. THOMAS: And I was little unclear from Mr.

10

MacPete about the signatures, it's the first time I've heard

11

that, I don't know what that means to anything. Obviously, it

12

would appear that everybody needed to sign the same document

13

and I don't know the significance to that. But happy to

14

pursue that immediately.

15

Mr. Baron had no knowledge of that. What he heard in

16

the courtroom there either. I asked him and we'll certainly

17

try and figure out what happened, and if it means anything at

18

all.

19

On the tax returns, first of all, the only obligation

20

ordered by the Court of all the parties was that they execute

21

the document. On the tax returns there's contractual

22

obligation, it's not something that's required of the Court's

23

order to be done. And, frankly, I don't know the answer to

24

that. Ms. Schurig was dealing with that. It was not on

25

behalf of Mr. Baron, that is a trust issue and I think that

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1

has to be dealt with. But, again, in the courtroom today was

2

the first I heard that mentioned as a violation.

3

I did hear last week that there was some problem with

4

the tax return, but I didn't understand it. There was an

5

accusation that Mr. Baron would be potentially in contempt of

6

court over that. So that has to be pursued.

7

On the phone cards, Mr. Lyon has been dealing with

8

that, and I'll let him address everybody's he talked to, and

9

what not. But what he's told me this morning is that is an

10

accounting, it does appear to be simply an 1,100 dollar issue.

11

And, again, it would be a contractual obligation not of Mr.

12

Baron, but of his IRA. And not something that -- in Mr.

13

Baron's opinion, would -- is ordered by the Court to occur.

14

But we're expecting it to occur. And for an 1,100 dollar

15

issue I'm hoping that Mr. Lyon doesn't have to talk to it very

16

much more, or that Mr. MacPete has to read anymore documents

17

or take the Court's time.

18

And if you'd like Mr. Lyon could address exactly what

19

he's done on that issue.

20

THE COURT: Okay, I would like that. Mr. Lyon, if

21

you can come up here? Mr. MacPete, while he's coming up here,

22

you talked about payments being due on the 5th of the month.

23

I assume the payment that was due on October 5th, I guess for

24

September, was made.

25

MR. MACPETE: That's correct, Your Honor.

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THE COURT: It was made, okay. Thank you.

2

MR. MACPETE: And I don't know whether that was made

3

or not. Mr. Puri is on the phone and he may have the answer

4

to that question.

5

THE COURT: Mr. Puri.

6

MR. PURI: The October 5th payment was made.

7

THE COURT: Okay, it was made, he said. All right,

8

Mr. Lyon, what do you know about this?

9

MR. LYON: Your Honor, on this one, once I was

10

informed by -- I'm Gary Lyon appearing for Jeff Baron.

11

Once I was informed Mr. MacPete of the issue I've

12

been trying to get contact with SpeedyPin.com. And when you

13

call them -- the only number we have is their webpage. But I

14

have finally talked to their accounting department. They do

15

have now a copy of the settlement agreement. And they're just

16

basically doing the accounting to make sure what happened to

17

the money and then to get it to the right people.

18

The difficulty was on July 2nd we had the 9019

19

motion. We did not confirm the case, as this Court knows,

20

until the order until July 28th. That was their concern.

21

They didn't know what date. So as I informed them yesterday,

22

again, that you guys need to give us an accounting, and you

23

need to get the money properly -- get July payment, the one-

24

half of the revenue, to CC.com (ph.).

25

And at that point they're just going to do it. I

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said you don't need to call me anymore, just do it and get a

2

payment to them of one-half of the revenue for July run, it's

3

supposed to go to CC.com. They just paid it all to Equity

4

Trust because they did not understand the settlement

5

agreement. Once I've explained it to them, they're now good,

6

they're going to go ahead and do it. There may be a refund

7

that they're -- they asked me which way I would like to do it.

8

Do they want to give me a credit and debit it out of equity

9

trust for September -- I mean, for November. Or do they want

10

to just go ahead and do a reversing entry to Equity Trust, get

11

the money back from Equity Trust and then pay it to CC. I

12

said whatever way it works best for you guys. They're due the

13

money, go ahead and get it to them.

14

So I actually stipulate the amount of money, whatever

15

it is, that would be owed, that's not a problem.

16

So I'm working on trying to get that solved. So that

17

is not a big issue, and that's why we're addressing it.

18

THE COURT: Okay.

19

MR. LYON: It's just an accounting issue. Because

20

there's an IRA and there's form you got to fill them to make

21

money back out of an IRA, and things like that as well.

22

THE COURT: All right. So your all going to get that

23

fixed.

24

MR. LYON: Absolutely.

25

THE COURT: Promptly. Okay. Do you have anything to

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1

say about the tax return issue?

2

MR. LYON: The tax returns, Your Honor, as I

3

understand and I have not talked to Ms. Schurig. This was

4

filed at her direction and in her --

5

THE COURT: Okay. Okay.

6

MR. LYON: So I have nothing to know. So I apologize

7

I don't have anymore information from that. So, you know, we

8

can address it with Ms. Schurig, and I will be glad to take

9

that up or we can take it with the new accountant from the

10

information he has, I think Mr. Harbin. I'll do whatever

11

this --

12

THE COURT: Okay.

13

MR. LYON: -- Court wants me to do.

14

THE COURT: Okay. What is your client's position on

15

the October 31st drop-dead date, as far as just the settlement

16

agreement. Address it, and what -- yes or no. And then what

17

type of position would your client take if we show up here on

18

October 28th, the transfer hadn't happened.

19

MR. LYON: Could I answer the first question.

20

THE COURT: Well, we're in --

21

MR. LYON: No, Your Honor, we do not believe that

22

settlement agreement --

23

THE COURT: Okay.

24

MR. LYON: -- anticipated it. But, again, we're

25

cooperating fully and we'll make sure whatever request we'll

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1

support it. If Quantec needs us to do a request to the trust

2

to pay those fees, we'll do so. So there's no problem there,

3

we're going to cooperate fully with the Court.

4

THE COURT: Okay. Because that -- that's the

5

scenario I'm envisioning.

6

MR. LYON: Right.

7

THE COURT: If we don't have the names transferred or

8

in a position to be definitely transferred to Fabulous by the

9

end of October, and we show up here on the October 28th

10

Verizon setting --

11

MR. LYON: Exactly, Your Honor. And that's why I've

12

also --

13

THE COURT: And you will have it all ready --

14

MR. LYON: Yes.

15

THE COURT: -- you know, wired the money for Ondova

16

to wire the money to VeriSign, I'm just going to grant the

17

motion.

18

MR. LYON: Right.

19

THE COURT: Let it terminate.

20

MR. LYON: Let it terminate.

21

THE COURT: And --

22

MR. LYON: And they go out into that big pool of

23

reserve and there's additional fees charged, if you want to

24

pull them back in. So he understands that position and that's

25

why we've worked really close with the trust, worked really

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1

close with the bankruptcy trustee, giving them full

2

information on the new trustee, new protectors, so they have

3

all that as well. And we just got yesterday, finally got all

4

the bank accounts start to be transferred, so there's not

5

going to be an issue, none, whatsoever.

6

THE COURT: Okay. What about on the signatures

7

with --

8

MR. LYON: Signatures, we are. We signed the correct

9

version. So we're not even going to oppose that, it's not an

10

issue. And I -- I'm a little offended that I would be told

11

that Jeff's going to oppose it. We want the right signatures

12

as well. So if we're going to have a signing party up here on

13

Monday, everybody sign the right one, I don't care, we're

14

willing to do that.

15

THE COURT: I'm not using my courtroom to host it.

16

MR. LYON: I'm just saying, Your Honor, we're willing

17

to cooperate. Whatever signatures we need to do, we're

18

willing to get them.

19

THE COURT: Okay. Very good. All right, Mr. Taube,

20

you want to say anything about any of this, in particular, the

21

tax return issue? Do you have anything to say on that?

22

MR. TAUBE: Your Honor, I really don't. I knew that

23

this issue was going on, but I don't know the circumstances

24

under which it was filed or not. I have -- I do have a little

25

information in terms of the signatures, Your Honor.

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THE COURT: Okay.

2

MR. TAUBE: That the Court may recall that there were

3

various versions of the settlement agreement as Mr. MacPete

4

has described that were being promulgated over a period of

5

time. And it did continue to -- it continued to evolve.

6

Part of the problem is, of course, that Mr. Capua, in

7

trying to obtain some of the signatures we were dealing with

8

people who were out of the country, et cetera, et cetera. So

9

it was my understanding that there was a communication sent by

10

Mr. Capua which affirmed that the signatures that are on the

11

prior form were effective and could be utilized with respect

12

to the final version of the settlement.

13

So I think, as Mr. MacPete may have suggested, it's a

14

nonissue. Because I don't think there's any contemplation

15

that the signatures were ineffective in any way, and they were

16

effectively slip-sheeted into the final version.

17

THE COURT: Okay. All right, you have a motion to

18

withdraw on file.

19

MR. TAUBE: I do, Your Honor.

20

THE COURT: It appears you complied with our local

21

rules in that regard, we don't have any opposition. Is there

22

anyone who wanted to speak with regard to that motion to

23

withdraw?

24

All right. Well, your motion to withdraw will be

25

granted, Mr. Taube.

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1

MR. TAUBE: Thank you, Your Honor. And if I might

2

mention, from time to time, the Court may recall that Mr.

3

Capua for West & Associates also appeared. And if the Court

4

will permit, I would like to provide that order for Mr. Capua

5

as well, and I'll provide the Court a revised order.

6

THE COURT: Okay, that's fine.

7

MR. TAUBE: Thank you, Your Honor.

8

THE COURT: That's fine. All right. Yes?

9

MR. SCHNABEL: For the record, Eric Lopez Schnabel on

10

behalf of VeriSign.

11

Your Honor, I just wanted to comment on one thing Mr.

12

Eckels said, just in case it's not clear.

13

Our motion that we filed, which included part of the

14

relief caused lift stay to terminate the agreement is a

15

breaches. You know, there's a security deposit requirement

16

under our contract. And we don't have a security deposit at

17

this point in time. And part of that is to prevent us from

18

actually extending any credit to a registrar. So we kind of

19

have, you know -- we bill in arrears due at the end of the

20

month, but we have a security deposit to cover us for that

21

period, basically.

22

And so given what the trustee's comments were to the

23

Court, I think it's -- and what the Court's comments today

24

are, is it's absolutely clear -- it should be clear to Mr.

25

Eckels and his client that there is -- it doesn't sound like

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1

there's any way any of this could go forward into November,

2

unless there is a prepayment or some payment which would

3

actually secure on the obligations that would be owed to

4

VeriSign that would accrue and be due in November. And that's

5

over 300,000 dollars.

6

So I just -- he said something about, you know, if

7

he's informed that that's the case later on. I think you

8

should be on notice that is the case right now. So if the

9

names aren't transferred, you know, we're going to want some

10

sort of security to make sure we don't have a claim. And I

11

think the trustee is in line with us on that.

12

So it sounds like there will either be a termination

13

or there will be a requirement for security. So I don't think

14

he needs to know anything more than what he knows today, is

15

that that's going to be a requirement if there's anyway this

16

is going to past October.

17

THE COURT: Okay. Well, the court does not intend to

18

allow any risk prospect of administrative expense claim being

19

asserted by VeriSign without there being funds submitted by

20

the registrant to cover that.

21

We talked at the very beginning, Mr. Urbanik, about

22

how much funds the trustee is holding. You clarified that the

23

little hand up you gave me at the last hearing was only Poker

24

Star money. Why don't you give me a report just so I'm clear

25

about what he's holding and let's clarify the component.

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1

MR. URBANIK: Why don't I do that.

2

THE COURT: Okay.

3

MR. URBANIK: I've got about a million-three in the

4

bank right now.

5

THE COURT: Okay.

6

MR. URBANIK: And that's the net of the VeriSign

7

payments for September and October. I've also got the other

8

330 sitting in there in a separate account as well. And I may

9

be receiving, I think today, the Poker Star payment as well as

10

it looks like River Cruise has said they're getting back on

11

stream. Although, I didn't -- when I left this morning, I

12

hadn't received any wire notices yet that it had come in. But

13

roughly about a million-three sitting in there right now.

14

THE COURT: I don't want to go too far down this

15

trail but Mr. Thomas had made a comment that there was enough

16

money to pay all unobjected to claims in the estate but that

17

begs the question of what is the universe of what he considers

18

objected to claims.

19

MR. SHERMAN: Well, yes. I mean --

20

THE COURT: I guess the thirty or so lawyers --

21

MR. SHERMAN: -- there's more than that. There's

22

more than a million three in claims filed. Some of them,

23

obviously, are going to be withdrawn or dealt with; Quantec,

24

Novo Point, filed some claims.

25

Mr. Thomas, although he and I didn't get a chance to

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1

speak, we do leave each other long e-mail -- voicemails and he

2

says that Mr. Baron has identified at least four claims which

3

I believe are probably attorneys' fees claims that he believes

4

need to be objected to. I'm kind of at the point now where,

5

you know, any lawyer that worked for Baron that has a

6

presumption that they did good work and need to be paid, and

7

it may be a rebuttable presumption but I begin with that

8

presumption. So, we haven't had a chance to talk about that

9

yet.

10

If those fees were allowed, Grupo's filed a claim for

11

600,000 dollars, I have looked at that and, you know, as it's

12

filed right now it really says we may have a claim and so

13

we're going to file this just to hold our place. That would

14

be just be objectionable just on those grounds alone. I don't

15

know if they're going to be able to amend it and bootstrap up

16

from there or not, but that's a 600,000 dollar claim.

17

You know, University of Texas is locked in solid at

18

about 270. Razansky, all this, is locked in solid at 200. I

19

should have brought the claims register with me. But there's

20

prob -- I mean my guesstimation right now, we're going to be

21

looking at somewhere in the neighborhood of 750, 800,000 in

22

claims that will probably be allowed and we'll see what

23

happens with Grupo.

24

THE COURT: And at this point, you haven't had any of

25

these lawyers file substantial contribution claims --

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1

MR. SHERMAN: No, no.

2

THE COURT: -- that any of the Jeff Baron --

3

MR. SHERMAN: They've told me about them.

4

THE COURT: -- Village Trust lawyers.

5

MR. SHERMAN: No. They've told me I haven't -- no, I

6

haven't had a chance to deal with those yet. But I've had

7

conversations with Mr. Pronske about it and, you know, I

8

would, if called to the stand, testify that when he was paying

9

attention he made a -- he made a significant contribution, he

10

did.

11

THE COURT: Okay.

12

MR. SHERMAN: It's good when he's focused. And he

13

did a lot on this particular deal.

14

THE COURT: And I guess I should make the

15

clarification point once again on the record about, you know,

16

the original purpose of that 330 was really, again to be

17

security against a potential civil contempt finding that I was

18

afraid I was going to get to and then there'd be no reachable

19

money.

20

MR. SHERMAN: I thought it was for attorneys' fees.

21

But I -- I just thought --

22

THE COURT: Well, but no, I'm not finished. I'm

23

going down that trail, now.

24

MR. SHERMAN: Okay.

25

THE COURT: But it's gotten more complicated and now

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1

it's kind of extended to the attorney fee issue because we've

2

got a prospect of substantial contribution claims --

3

MR. SHERMAN: Yes.

4

THE COURT: -- you made against the estate, i.e., the

5

estate and its creditors benefitted from the efforts of these

6

lawyers from Baron or Village Trust and I think the estate

7

would have a claim for contribution and reimbursement back

8

against the Village Trust and Baron if that happened. So,

9

that is the jurisdictional hook, if you will, to recommend to

10

Judge Furgeson that he appoint Mr. Vogel to just nip all this

11

in the bud before we have contested hearings on all this.

12

MR. SHERMAN: Splendid idea.

13

THE COURT: There is no way I think it's the right

14

result for that money, that 330, to be packed into to pay for

15

fees that the registrar would have to pay to VeriSign if

16

Ondova is still the registrar in November.

17

I've heard from every fee party that the settlement

18

agreement doesn't address this scenario if we don't have a

19

break-off on October 31st. So, again, I'm just trying to make

20

as clear as I can to people that if we hit October 28th or

21

hear from VeriSign motion we're not ready to transfer those

22

names out of the estate, I see it as poof, they're gone,

23

they're out of the estate.

24

MR. SHERMAN: I agree. And I think because you've

25

said that they will be very motivated to get this done.

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1

THE COURT: Okay. All right. Well, it sounds like

2

this is what we need to do.

3

First, Mr. Baron, I'm not going to call you to the

4

stand but I do want you to stand in place and raise your right

5

hand.

6

Do you swear that the statement made by your counsel

7

today, Mr. Thomas, Mr. Lyon, were true and correct and are the

8

same as you would have testified if asked these questions that

9

they were asked? Do you swear to that?

10

MR. BARON: Yes, everything that I have personal

11

knowledge of.

12

THE COURT: Yes or no.

13

MR. BARON: Some of the things I didn't have personal

14

knowledge about that they talked about at the time.

15

THE COURT: Okay. Well, come forward then. Just

16

come to the podium. Mr. Thomas, you can come up here.

17

MR. THOMAS: Your Honor, I think he's --

18

THE COURT: Wait, let me just --

19

(Witness sworn)

20

MR. BARON: Yes.

21

THE COURT: Okay. Take a seat. I want him to

22

clarify what he doesn't have personal knowledge of --

23

MR. THOMAS: Yes, Your Honor.

24

THE COURT: -- and what he might disagree with. So,

25

you can take it.

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1

MR. THOMAS: Yes, Your Honor.

2

DIRECT EXAMINATION BY

3

MR. THOMAS:

4

Q. Mr. Baron, you heard the judge, would you clarify for her

5

what you do not have personal knowledge of that you heard Mr.

6

Lyon or myself speak about today.

7

A. I just remember some conversations regarding Ms. Schurig,

8

regarding some conversations with Speedy Pin, conversations

9

with the trustee, I believe. I just haven't -- and part of --

10

or party to those. So, those are the ones that I'm

11

remembering that --

12

Q. And those are things that Mr. Lyon spoke about. Is that

13

correct?

14

A. I believe that's right. I'm trying to remember, yeah.

15

Q. Everything else that you heard Mr. Lyon and myself say to

16

the Court today is in your personal knowledge and you would

17

give the same testimony?

18

A. Best I can remember that's -- everything else was --

19

Q. Did you hear anything else that you did not agree with?

20

A. Nothing I didn't agree with.

21

MR. THOMAS: Does that solve it, Your Honor?

22

THE COURT: That's fine. All right. Thank you, Mr.

23

Baron.

24

That's all we're going to do today as far as the show

25

cause matters. While I certainly, Mr. MacPete, take very

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1

seriously your concerns, I don't think it makes sense to use

2

court time today to delve any further into this. It hopefully

3

is going to be the case that when we show up on the 28th, I'm

4

going to continue this show cause hearing, by the way, to

5

October 28th at the same setting we have the VeriSign matter.

6

Laura, can you tell us -- can you look up what time

7

we have the VeriSign sitting or maybe Mr. Schnabel knows. I

8

don't know if it's 9:30 --

9

MR. SCHNABEL: 10:30, Your Honor.

10

THE COURT: It's 10:30?

11

MR. SCHNABEL: Oh, sorry. It's 9:30.

12

THE COURT: Okay. 9:30 Central Time. We were going

13

to continue the show cause hearing. And Mr. MacPete and

14

everyone concerned we'll delve more into any potential

15

noncompliance issues that we have allegedly with regard to the

16

settlement agreement at that time. But I just don't think the

17

best use of court time today is to probe into that any more

18

since hopefully the 1,100s will be paid by then and -- and

19

we'll just see what new developments, if any, we have to

20

report on the tax return issues.

21

I'm going to say the signature issue is a nonissue as

22

far as this Court is concerned. We had a settlement

23

agreement. We nailed that down like never in the history of

24

my career has that ever been nailed down in a court with

25

regard to a settlement agreement. We all had concerns many

000113000113

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times over will lead to closure on that settlement agreement.

2

We've got pages and pages of transcripts we can look to if

3

anyone tries to ever suggest we didn't have a meeting of the

4

mind. But it's a nonissue. It's an irritating issue, it's an

5

annoyance, it's an issue we'd rather not have but it's a

6

nonissue. We'll get the housekeeping matter cleared up and to

7

the extent needed to make everyone feel comfortable but we

8

don't have an issue there.

9

So, we're going to continue -- hang on -- I'll get to

10

that in a minute -- we're going to continue the show cause

11

hearing. It will be a continuing order that we'll issue in

12

that regard making clear that Mr. Baron is to show up on

13

October 28th as well as his counsel and be prepared to give

14

testimony to the extent needed with regard to performance

15

under the settlement agreement of the obligations. I'm also

16

going to set these motions Mr. Lyon, I think, filed on behalf

17

of Mr. Baron to seal various transcripts that have been

18

lingering out there. I'm just going to set that at -- on the

19

28th as an add-on issue. I don't like motions to seal and I

20

have sealed a few things in this case but I'm just -- I don't

21

know, I think we're overflowing maybe privacy concerns but

22

I'll let you argue those motions on the 28th so I can finally

23

have resolution of those.

24

So, we're going to come here for -- continuing show

25

cause and find out what's going to happen to the names on the

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28th. But I think we're crystal clear that absent the

2

prepayment by the registrant to the estate so that the estate

3

can pay VeriSign. The names aren't going to stay in the

4

estate past October 31st and it's not going to be anybody's

5

breach of the settlement agreement if the names drop out of

6

the estate on October 31st.

7

I'm going to finally get the report recommendation to

8

Judge Furgeson regarding the mediation. I'm going to finally

9

sign Mr. Thomas' order. I'm going to do this order setting

10

status conference. Is there any other housekeeping matter,

11

Mr. Urbanik or anyone else? You're going to get that letter

12

out Monday?

13

MR. URBANIK: Yes, Your Honor. We'll probably send

14

it today.

15

There are a few other pending motions. There's a

16

motion for Mr. Taube. We have that motion regarding domain

17

name pricing. So, I don't -- right now, I think they're

18

all --

19

THE COURT: Which motion of Mr. Taube?

20

MR. URBANIK: I think -- Mr. Taube filed a motion to

21

modify the settlement agreement to pay some fees.

22

MR. TAUBE: Your Honor, if I could. It's not a

23

modification. It's a motion pursuant to the terms of the

24

supplemental agreement to allow additional fees to free firms.

25

THE COURT: Okay.

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MR. TAUBE: And I'm happy, Your Honor, to include

2

that as part of whatever the Court is going to do with respect

3

to the fees --

4

THE COURT: The mediation.

5

MR. TAUBE: -- and the issue of the fees, Your Honor.

6

Obviously, we would to the -- it could be considered a

7

substantial contribution motion, Your Honor.

8

THE COURT: Right.

9

MR. TAUBE: There is a provision in the supplemental

10

agreement that says that fees are limited unless ordered by

11

the Court.

12

THE COURT: Okay. So, that would be encompassed by

13

the mediation.

14

MR. URBANIK: Yes, Judge.

15

THE COURT: Okay.

16

MR. URBANIK: And there's our domain name pricing

17

which may end up being withdrawn if everything is resolved and

18

settled with the transition of the names.

19

What I would like to do on behalf of the trustee is

20

our office review every pending motion out there regarding

21

sealing documents, some show cause motions, and if -- if

22

there's -- after discussions with Mr. Sherman, if we need --

23

if we feel that the estate needs to have a voice with the

24

trustee we will reply to those before the 28th. There seem to

25

be about four or five sort of dangling motions out there, so,

000116000116

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we'll examine all those and if the trustee has a position

2

we'll file responses before October 28th.

3

THE COURT: Okay. The pricing agreement motion,

4

should be go ahead and perhaps set that for hearing on the

5

28th?

6

MR. URBANIK: Yes, Judge.

7

THE COURT: Because that could be one scenario that

8

the trustee agrees to keep the names --

9

MR. URBANIK: If they -- yes --

10

THE COURT: -- to the estate.

11

MR. URBANIK: -- if they find us, we would stay open

12

but we would need their payment to stay open so we could set

13

that for the 28th.

14

THE COURT: Okay. All right. We will do that.

15

MR. URBANIK: But all these other things regarding

16

sealing or show cause, if Mr. Sherman feels we need to reply

17

we'll kind of review all those and get something on file if we

18

have a position.

19

THE COURT: Okay. All right. Very good.

20

MR. URBANIK: Also, on their settlement agreement,

21

Judge, Mr. Taube is right. When the document was revised, we

22

would use slip sheets and all those people that signed a

23

different version received the changes in e-mails and I would

24

get dozens of e-mails from Ms. Bell about modifications that

25

were made during that final two weeks. So, we think it's a

000117000117

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nonissue too but what I was advising the Court yesterday was I

2

didn't have time yet to kind of track it down and make sure I

3

could say that with confidence. But we did our best job to

4

make sure if somebody signed a different version, they'd

5

gotten the changed pages. And, you know, until I confirmed

6

with Ms. Bell, I'm still not a hundred percent certain but

7

that's what we did to make sure no one signed the wrong

8

document.

9

THE COURT: Thank you. Mr. Vogel? You're still

10

ready, willing and able to do the mediation?

11

MR. VOGEL: Yes, Your Honor.

12

THE COURT: Okay.

13

MR. VOGEL: As I told you in the last hearing and I

14

conveyed that message to Judge Furgeson as well.

15

THE COURT: Okay. Very good. All right. Anything

16

else?

17

MR. MACPETE: Your Honor, I just had one

18

clarification. You said that Mr. Baron was ordered to appear

19

with counsel and be prepared to give testimony about

20

performance under the settlement agreement. And as we heard,

21

a lot of the issues that I raised today about the performance

22

under the settlement agreement, Mr. Baron has said, "Well, I

23

don't have to perform, I don't think I need that. So, is the

24

Court ordering him to actually avail himself of the

25

information that's available to him so he's actually able to

000118000118

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testify to something other than just I don't know?

2

THE COURT: Okay. We're just continuing the show

3

cause hearing. He will be ordered to testify as deemed

4

appropriate if necessary depending on where we are on final

5

consummation and where we are on alleged breaches, okay. So,

6

if we have to delve into things and he gives evasive answers,

7

that in and of itself may be contempt of court if I don't

8

think he's being forthcoming with the Court, okay? So, this

9

issue is still out there, okay.

10

MR. ECKELS: Your Honor, very briefly, I'm sorry.

11

James Eckels for Quantec. Mr. Taube just made a request that

12

he be included within that mediation, Mr. Vogel's mediation of

13

the attorneys' fees issues. I'm wondering if because he's so

14

differently situated in that he did not represent Mr. Baron as

15

did the rest of the attorneys that are going to go to that

16

mediation, if Mr. Taube's issue actually should be separated

17

from those others?

18

THE COURT: It's not separate at all. It's not

19

separate at all in the Court's view. Either way, it's a

20

potential substantial contribution to the estate.

21

MR. ECKELS: Understood, Your Honor

22

THE COURT: Okay?

23

MR. ECKELS: I'm looking for clarification. Thank

24

you.

25

THE COURT: Thank you. We stand adjourned.

000119000119

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THE CLERK: All rise.

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(Whereupon these proceedings concluded at 12:27 PM)

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I N D E X

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TESTIMONY: Direct Cross Redirect Recross

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Jeffrey Baron 70

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RULING: Page Line

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Motion by Hohmann, Taube & Summers 62 24

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To Withdraw As Attorney Granted

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000121000121

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C E R T I F I C A T I O N

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I, Dena Page, the court-approved transcriber, do hereby

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certify the foregoing is a true and correct transcript from

6

the official electronic sound recording of the proceedings in

7

the above-entitled matter.

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December 10, 2010

______________________________ ____________________

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DENA PAGE DATE

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6: 6, 7,12,15,16,24;7: 2,

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21;61: 6,15,19;62: 1, 2,

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25;74: 2, 4, 8,11,12,15;

75: 3, 7,10,14,19;76: 1,

9,12,15,24;77: 2, 7, 8,

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73:24

First (15)

4: 4;5:14;8:24;13:25;

34:25;37: 9;41:22;42: 3;

45:11;47:11;55:10,19;

56: 2;59:19;69: 3

five (1)

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fix (3)

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flow (1)

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focus (2)

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focused (3)

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food (1)

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fulfilling (2)

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fully (6)

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fund (1)

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funded (1)

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funds (20)

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11:13,15,16,18,19;13: 4,

5, 7;15:12;22:19;31: 9;

53: 7;64:19,22

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5: 3;7:12;10: 7,15;

16: 5;68:10;73: 8;76:14

further (1)

71: 2

future (3)

7:19;15: 3;39:25

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gaining (12)

27:20;28: 8;29: 5;

30:16;45:18;46:15;

47: 1, 4, 7;48:15,16;

49:17

game (4)

23: 5,12;24:18,22

Gary (3)

4:12;6:20;57:10

gave (3)

11:10;43: 6;64:23

general (1)

32: 2

gets (2)

29:25;30: 3

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gist (1)

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given (5)

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18,20,23,24;5: 2, 4, 8;

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grave (1)

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Grupo's (1)

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guess (5)

38: 1;39:12;56:23;

65:20;67:14

guesstimation (1)

66:20

guys (2)

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half (6)

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hand (3)

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Hardt (2)

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hearing (24)

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64:23;71: 4,13;72:11;

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hearings (2)

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held (2)

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hell (1)

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Hello (2)

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helpdesk (2)

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history (1)

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hit (2)

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hold (1)

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holding (10)

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19:21;25:20;53:21;

64:22,25

hole (1)

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honest (1)

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Honor (73)

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5: 6,12;11: 6;12: 3;

15:19;16: 1,13;18: 6,13;

22:14;26:15,17;28: 2;

31:11;32:20;33:14;

34:24;35:16,20;36: 3, 7,

23;37: 9;38: 7,21;43: 9;

44: 2,16;45: 9,13,15;

46:22;47:13;48: 9;

49:20;50: 3,19;52:19;

53:11,14;56:25;57: 9;

59: 2,21;60:11;61:16,22,

25;62:19;63: 1, 7,11;

69:17,23;70: 1,21;71: 9;

73:13,22;74: 1, 5, 7;

76:11,17;77:10,21

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hook (2)

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hope (2)

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hub (1)

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hundred (2)

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hypotheticals (1)

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I

ICANN (25)

12:17,22;14:11,12;

18:24;19: 5,12;20:11;

23:22;27: 3, 4,14,22,24;

28:10;29: 4,13,16;32: 3,

9,17;33:19,25;35:13;

45:19

ICANN-approved (1)

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idea (3)

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identified (3)

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ie (1)

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ignoring (1)

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imagine (2)

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immediate (1)

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immediately (1)

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impact (1)

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implementation (1)

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important (2)

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imposed (1)

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improper (1)

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inclination (1)

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include (1)

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including (1)

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incorporated (2)

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indeed (1)

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indicating (1)

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indication (1)

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individuals (2)

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ineffective (1)

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informally (2)

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information (7)

28: 9;46: 7;59: 7,10;

61: 2,25;76:25

informed (4)

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in-house (1)

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initiate (1)

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initiated (1)

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instruction (1)

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intend (1)

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intended (2)

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intending (1)

54: 1

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intention (2)

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interest (1)

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interfering (1)

6:12

intermediary (1)

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Internal (1)

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Internet (1)

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intervenes (1)

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into (24)

5:18;13: 2,23;15:25;

16:22;24:11;29:25;

31:24;33: 1, 6,10;38: 8,

11;40:14;42:24;53:10;

60:22;62:16;64: 1;

68:14;71: 2,14,17;77: 6

introduction (1)

17:22

invoice (1)

30:23

invoices (1)

13: 6

involved (2)

10:21;16: 8

involvement (1)

45:17

IRA (7)

42: 9;43:14,18,24;

56:12;58:20,21

Min-U-Script® eScribers (6) gist - IRA

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irritating (1)

72: 4

Island (1)

42: 2

Islands (3)

40:20;41: 5,15

issue (44)

9: 4, 8;13:15;14: 1;

15:21;16:11;30: 4;31: 3,

12;32: 1;36:13,25;37: 1,

1, 9,10;39:24;40: 2;

42: 4, 5;50: 6;54: 4;

55:25;56:10,15,19;

57:11;58:17,19;59: 1;

61: 5,10,21,23;68: 1;

71:21;72: 4, 5, 8,11,19;

74: 5;77: 9,16

issued (3)

6: 6, 7;10:18

issues (19)

7:22;8:24;12: 5;13:12;

15:15;16: 3;18:14;

32:25;37: 6, 8;40: 7;

45: 5, 6,12;55: 6;71:15,

20;76:21;77:13

J

James (3)

4: 9;45:13;77:11

Jeff (11)

5:18;6: 6, 8,19;8:18;

9:16,24;17:15,22;57:10;

67: 2

Jeffrey (2)

4:13;10:18

Jeff's (1)

61:11

job (1)

76: 3

John (1)

4:20

jointly (1)

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joke (1)

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Joshua (1)

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Judge (15)

5: 2, 3;7:11;10: 6,15;

16: 4,22;22: 5;68:10;

70: 4;73: 8;74:14;75: 6,

21;76:14

July (9)

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57:18,20,23;58: 2

jurisdictional (1)

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K

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key (2)

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kind (17)

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63:18;66: 4;68: 1;75:17;

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knew (4)

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61:22

knowledge (6)

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71: 7

L

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Laura (2)

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leads (1)

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legal (1)

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letter (9)

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27:11;29:16;33:18,23;

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lift (1)

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likely (5)

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limited (1)

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line (3)

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lingering (1)

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list (1)

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LLC (1)

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local (1)

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Locke (1)

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77:23

looks (1)

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Lopez (2)

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45:18;46: 8,15;47: 5, 7;

48:18;49:18

lot (10)

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28: 6;33: 4;35: 2;43:10;

54: 4;67:13;76:21

lots (1)

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Lyon (35)

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17:18;42:20;43:16;

56: 7,15,18,20;57: 8, 9,

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19,21,24;60: 6,11,14,18,

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70: 6,12,15;72:16

Lyon's (1)

6:20

M

MACPETE (25)

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40: 6;44: 5, 8,14;45: 9;

55:10;56:16,21,25;57: 2,

11;62: 3,13;70:25;

71:13;76:17

magic (3)

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man (1)

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Manila (3)

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Manila/Netsphere (2)

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manually (1)

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mapped (2)

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Martin (1)

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55: 3, 4;57: 3;58: 6;

62: 2,13;63: 2;65: 8;

66: 7,12;74:17;77: 7

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19:25;20: 8;22:10;30: 9;

42:22;71: 7;72:21

mean (15)

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22:10,14;23:16,20;

24:18;33:18;48:16;

54:21;55: 3;58: 9;65:19;

66:20

means (3)

34:16;55:11,17

mechanism (1)

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mediation (7)

73: 8;74: 4,13;76:10;

77:12,12,16

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meet (3)

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meeting (3)

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Melissa (1)

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mention (2)

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mentioned (5)

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56: 2

merely (1)

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merit (1)

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message (2)

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met (1)

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might (13)

6: 8,10,21;9:14;10: 9;

16:15;17:21,24;18: 6;

28:13;35:22;63: 1;69:24

Mike (1)

34: 8

million (3)

32:24;44: 3;65:22

million-three (2)

65: 3,13

mind (2)

Min-U-Script® eScribers (7) irritating - mind

Case 3:13-cv-03461-O Document 26-2 Filed 10/21/13 Page 87 of 113 PageID 6901

October 8, 2010

26: 4;72: 4

minds (2)

9: 6;38:25

minimis (1)

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minor (1)

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minutes (1)

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M'Lou (1)

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modification (1)

73:23

modifications (1)

75:24

modify (1)

73:21

Monday (5)

7: 6;24: 6;34: 3;61:13;

73:12

monetizing (1)

43:12

money (29)

25: 1,17;31: 1, 2, 4;

33: 3;42:13;43:10,13,14,

24;44: 5, 9,12;52:14;

53:21;54: 6;57:17,23;

58:11,13,14,21;60:15,

16;64:24;65:16;67:19;

68:14

monies (2)

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monitoring (1)

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42:14;49:19,22;50: 2;

51:16;54:23;56:22;

63:20

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more (15)

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20:14;27:25;32:12;

44:11;50:10;56:16;

64:14;65:21,22;67:25;

71:14,17

morning (19)

4: 5, 9,11,12,14,15,17,

18,23,24;5: 2, 4, 8;6:22;

11: 6;26:15;40:12;56: 9;

65:11

most (2)

15: 4;44:23

mostly (1)

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motion (33)

6:22;10:18;12:12,12;

16:18,19,20;17: 6, 7,17;

22: 8;24:15;32:19;

35:17,20;51:14,16,17;

57:19;60:17;62:17,22,

24;63:13;68:21;73:16,

16,19,20,23;74: 7,20;

75: 3

motions (7)

12:11;72:16,19,22;

73:15;74:21,25

motivated (1)

68:25

move (10)

12:16,23;14:13;18:25;

19: 3, 6, 7,11;20:11;

48:14

moved (10)

14:18;15: 3;18:23;

19: 9,12,18;20:23;21: 2;

22: 2,18

movement (2)

12: 8;19:22

moving (3)

18:24;20: 6;31:25

much (11)

14: 4;15:20,22;16:11,

23;36:24,24;37: 2;

53:22;56:16;64:22

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4: 6;13: 8

must (1)

23:23

myself (5)

5: 7;45:22;48: 3;70: 6,

15

N

nail (1)

21: 4

nailed (2)

71:23,24

name (6)

16:21;42: 8,12;43:12;

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names (50)

8: 2,15;12: 9,16,23;

13: 1;14:14,18;15: 2;

18:23,24,25;19: 6, 8,17,

22;20: 7,11,25;22:12,17;

25:13;27: 2,18;28:15,15;

29:22,24;30: 1, 6, 6, 7, 8,

12,25;31:20;34:17;

48: 3;50:13;52:13;53: 9;

54:22;60: 7;64: 9;68:22;

72:25;73: 3, 5;74:18;

75: 8

necessary (2)

53: 7;77: 4

need (32)

7:12,13;14: 7;16:15,

22;22: 1,24;27:17;34: 2;

39:21;40: 4;43: 4,17;

44:10;47:18;48: 4;

49:24;50: 7,10,17;51:25;

57:22,23;58: 1;61:17;

66: 4, 6;69: 2;74:22;

75:12,16;76:23

needed (14)

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49: 6;50:20;51: 3, 5;

55:12;72: 7,14

needs (7)

29:16,17;46: 7;48: 8;

60: 1;64:14;74:23

negotiated (4)

38: 5;40:11,16,25

negotiating (2)

24:19;40:14

neighborhood (1)

66:21

Nelson (6)

12:20,25;19:10;45:22,

23;48: 2

Nelson's (2)

14:10;34:14

net (1)

65: 6

Netsphere (4)

4:21;11:16;14: 5;

36:25

new (12)

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Min-U-Script® eScribers (8) minds - opinion

Case 3:13-cv-03461-O Document 26-2 Filed 10/21/13 Page 88 of 113 PageID 6902

October 8, 2010

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Min-U-Script® eScribers (9) oppose - problem

Case 3:13-cv-03461-O Document 26-2 Filed 10/21/13 Page 89 of 113 PageID 6903

October 8, 2010

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Min-U-Script® eScribers (10) problems - right

Case 3:13-cv-03461-O Document 26-2 Filed 10/21/13 Page 90 of 113 PageID 6904

October 8, 2010

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

In Re: ) Case No. 09-34784-sgj-11

) Chapter 11

ONDOVA LIMITED COMPANY, )

) Dallas, Texas

Debtor. ) November 14, 2011

)

) CONFIRMATION HEARING

)

) Excerpt: Daniel Sherman

) Testimony

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE STACEY G.C. JERNIGAN,

UNITED STATES BANKRUPTCY JUDGE.

APPEARANCES:

For Jeffrey Baron: Stephen Rudolph Cochell

THE COCHELL LAW FIRM

7026 Old Katy Road, Suite 259

Houston, TX 77024

(713) 980-8796

For Peter S. Vogel, Jeffrey R. Fine

Receiver: Christopher Kratovil

DYKEMA GOSSETT, PLLC

1717 Main Street, Suite 4000

Dallas, TX 75201

(214) 462-6455

For Daniel J. Sherman, Raymond J. Urbanik

Chapter 11 Trustee: MUNSCH, HARDT, KOPF & HARR P.C.

500 N. Akard Street, Suite 3800

Dallas, TX 75201-6659

(214) 855-7590

For the U.S. Trustee: Lisa Laura Lambert

OFFICE OF THE UNITED STATES TRUSTEE

1100 Commerce Street, Room 976

Dallas, TX 75242

(214) 767-8967 Ext. 1080

For Manila Industries, John W. MacPete

Inc. and Netsphere, Inc.: P.O. Box 224726

Dallas, TX 75222

(214) 564-5205

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APPEARANCES, cont'd.:

Court Recorder: Dennis Baird

UNITED STATES BANKRUPTCY COURT

1100 Commerce Street, 12th Floor

Dallas, TX 75242

(214) 753-2006

Transcription Service: Kathy Rehling

311 Paradise Cove

Shady Shores, TX 76208

(940)_498-2402

Proceedings recorded by digital sound recording;

transcript produced by transcription service.

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Sherman - Cross

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BY MR. MACPETE:

Q Isn't it true that Mr. Baron didn't actually owe any

performance under the global settlement agreement directly to

the Chapter 11 Trustee?

A Maybe not.

Q In fact, isn't it true that the payments that were being

made to the Chapter 11 Trustee were essentially being made by

my client, Netsphere?

A True.

Q The bottom line is Mr. Baron hasn't breached any obligation

to the Chapter 11 Trustee under the global settlement agreement

because he didn't have any. Isn't that right?

A Maybe not.

Q Thank you.

MR. MACPETE: I have nothing further.

THE COURT: All right.

MR. MACPETE: Oh, wait. Actually, I need to move this

into evidence as Netsphere Exhibit 1.

THE COURT: I assume no one has any objection?

MR. URBANIK: No objection.

MR. KRATOVIL: None, Your Honor.

THE COURT: N-1 is admitted.

(Netsphere's Exhibit 1 is received into evidence.)

THE COURT: All right. Mr. Cochell?

MR. COCHELL: May I have a brief break, Your Honor?

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NOTICE OF APPEAL TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT - Page 1

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

NETSPHERE, INC., )

MANILA INDUSTRIES, INC., and )

MUNISH KRISHAN, )

Plaintiffs, )

)

vs. ) Civil Action No. 3-09CV0988-F

)

JEFFREY BARON, and )

ONDOVA LIMITED COMPANY, )

Defendants. )

NOTICE OF APPEAL TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

______________________________

Notice is hereby given that JEFFREY BARON, defendant in the above-named

case hereby appeals to the United States Court of Appeals for the Fifth Circuit from the

District Court’s Order Appointing Receiver signed on November 24, 2010 [Docket #124,

and Docket #130, Entered 11/30/2010].

This appeal is taken pursuant to 28 U.S.C. §1292(a)(2).

The parties to the order appealed from and the names, addresses, and telephone

numbers of their respective attorneys are as follows:

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NOTICE OF APPEAL TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT - Page 2

Appellant: Defendant JEFFREY BARON

Represented on Appeal by:

Gary N. Schepps

Drawer 670804

Dallas, Texas 75367

Telephone (214) 210-5940

Facsimile (214) 347-4031

legal@schepps.net

Appellee: Defendant ONDOVA LIMITED COMPANY

c/o DANIEL J. SHERMAN, Trustee

Represented by: Raymond J. Urbanik

Munsch, Hardt, Koph & Harr, PC

500 N. Akard Street, Suite 3800

Dallas, Texas 75201-6659

Telephone (214) 855-7500

Facsimile (214) 855-7584

rurbanik@munsch.com

Dated: December 2, 2010.

Respectfully submitted,

/s/ Gary N. Schepps

Gary N. Schepps

State Bar No. 00791608

Drawer 670804

Dallas, Texas 75367

Telephone (214) 210-5940

Facsimile (214) 347-4031

legal@schepps.net

APPELLATE COUNSEL

FOR JEFFREY BARON

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NOTICE OF APPEAL TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT - Page 3

CERTIFICATE OF SERVICE

This is to certify that this was served on all parties who receive notification

through the Court’s electronic filing system and including:

Gary G. Lyon Raymond J. Urbanik

PO Box 1227 Munsch, Hardt, Koph & Harr, PC

Anna, Texas 75409 500 N. Akard Street, Suite 3800

glyon.attorney@gmail.com Dallas, Texas 75201-6659

rurbanik@munsch.com

Martin Thomas

PO Box 36528

Dallas, Texas 75235

thomas12@swbell.net

/s/ Gary N. Schepps

Gary N. Schepps

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