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Baystar Sends SCO a Letter
Friday, April 16 2004 @ 03:12 PM EDT

Now it's getting interesting. BayStar wants SCO to immediately redeem BayStar's 20,000 shares of SCO's A-1 Convertible Preferred Stock. They say SCO has breached their agreement. SCO denies any breach. Here is the agreement that they are fighting over. (Here is the original from October.) My, this was a short honeymoon.

Dion Cornett is quoted in TheStreet.com:

"'I look at this as bad news for SCO,' said Dion Cornett, an analyst for Decatur Jones Equity Partners - Soleil. 'I don't think BayStar is going to be very successful in getting their money back. It's very difficult for a private equity investor to force a redemption on a company that doesn't want to redeem. But it makes it very difficult for SCO to raise future financing.' . . .

"Reflecting SCO's diminutive size, Cornett is the only sellside analyst covering the stock, according to Thomson First Call."

Melanie Hollands' assessment is here.

And Stephen Shankland has info on what the alleged breach involves -- publicity:

"The move means at a minimum that SCO has more legal wrangling in its future, but it also raises the possibility that the Royal Bank of Canada, which chipped in $30 million alongside BayStar's investment in October, could follow suit.

"RBC is keeping its options open. 'We haven't requested a redemption. We're reviewing the situation and will arrive at a decision shortly,' said spokesman Paul Wilson.

"BayStar said SCO violated provisions governing disclosure of information about SCO and publicity of the exchange agreement."

There is one confusing thing in the press release. They mention certain sections of the agreement that BayStar alleges SCO has breached, but they list 2(b)(viii) twice, so I'm not sure if that was a mistaken repetition or if they meant to list (vii). That makes it tough to analyze, but if you look at the sections that are clearly mentioned, it isn't just publicity at issue. It seems to be a matter of whether SCO was altogether forthcoming in telling them everything. Like the Novell letters, maybe? Remember how they weren't listed in their SEC filings? Or could the publicity issue be about the leaked memo revealing Microsoft's involvement? Or check this out about Blepp, on Heise.de, with translation by JeR:

"Für Gregory Blepp kommt die Veröffentlichung dieser Unstimmigkeiten durchaus ungelegen. . . . So sollen Baystar-Emissäre in dieser Woche bei Münchner Venture-Kapitalgeber angerufen und sich nach früheren Arbeitsproben von Blepp erkundigt haben."

"For Gregory Blepp, the publication of these contrary assertions [that Blepp has the proof in his suitcase] are highly inconvenient. The SCO investor Baystar Capital has aspired to a more professional image for months. . . . It is said that this week, Baystar representatives called venture capitalists in Munich and inquired into Blepp's former assignments."

Here are the sections that Bay Star says they have breached:

"2(b)(v) Original Purchase Agreement -  Excluding the representations and warranties set forth in Sections 3(a), (b), (d), (e), (i), (y) and (z) of the Original Purchase Agreement, the representations and warranties of the Company set forth in Section 3 of the Original Purchase Agreement (the 'Original Representations and Warranties') are each true and correct as of the Closing Date, in each case as if made on the Closing Date. . . .

"2(b)(viii) Disclosure -  All information relating to or concerning the Company and/or any of its Subsidiaries set forth in this Agreement or provided to the Purchasers in connection with the transactions contemplated hereby is true and correct in all material respects, and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading.  No event or circumstance has occurred or exists with respect to the Company or its Subsidiaries or their respective businesses, properties, prospects, operations and financial conditions, which has not been publicly disclosed but, under applicable law, rule or regulation, would now be required to be disclosed by the Company in the Company’s Annual Report on Form 10-K.

"3 (g) Press Release; Publicity -  The Company shall issue a press release (the 'Press Release') describing in reasonable detail the transactions contemplated hereby as soon as practicable on or after the date hereof, but in no event later than the commencement of the first trading day following the date hereof.  The Press Release shall be subject to prior review and comment from BayStar Capital II, LP ('BayStar'). Within two days after the Closing Date, the Company shall file a Form 8-K with the SEC concerning this Agreement and the transactions contemplated hereby, which Form 8-K shall attach this Agreement as an exhibit to such Form 8-K (the '8-K Filing').  From and after the Press Release, the Company hereby acknowledges that no Purchaser shall be in possession of any material nonpublic information received from the Company, any of its subsidiaries or any of its respective officers, directors, employees or agents, that is not disclosed in the Press Release.  The Company shall not, and shall cause each of its subsidiaries and its and each of their respective officers, directors, employees and agents not to, provide any Purchaser with any material nonpublic information regarding the Company or any of its subsidiaries from and after the Press Release without the express written consent of such Purchaser; provided, however, that a Purchaser that exercises its rights under Section 4(n) of the Original Purchase Agreement shall be deemed to have given such express written consent.  No Purchaser shall have any liability to the Company, its subsidiaries or any of its or their respective officers, directors, employees, shareholders or agents for any such disclosure.  Subject to the foregoing, neither the Company nor any Purchaser shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of any Purchaser, to make any press release or other public disclosure with respect to such transactions as is required by applicable law and regulations (provided that any such press release or other public disclosure shall be subject to prior review and comment by BayStar provided such review and comment is timely and reasonable)."

If they meant to add 2(b)(vii) also, it reads like this:

" (vii)          Absence of Certain Changes -  Except as set forth in the Select SEC Documents (as defined in Section 2(b)(v) of this Agreement), since October 31, 2003, there has been no material adverse change and no material adverse development in the business, properties, operations, prospects, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole.  The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy or receivership law, nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings with respect to the Company or any of its Subsidiaries."

UPDATE:

Stowell has confirmed that it is (vii):

"SCO would have breached this provision if there were in fact a material adverse change or development in its business that had not been disclosed in the SEC filings described above. Again, BayStar has not provided specific information about what it allegedly views is the material adverse change or development that occurred in the period between October 31, 2003 and February 5, 2004."

And Heise.de has one more tidbit:

"Von Baystar selbst gibt es derzeit noch keine Stellungnahme zu dem Vorfall. Möglicherweise sieht Baystar die Entwicklung in jüngster Zeit so, dass das vereinbarte Mitspracherecht bei allen wichtigen Entscheidungen gebrochen wurde. Emissäre von Baystar waren in dieser Woche auch in Deutschland unterwegs und haben sich wenig zufrieden mit der europäischen Entwicklung ihres Investitionspartners gezeigt."

Sherlock on my iMac makes this out of that:

"From Baystar gives it at present still no statement to the incident. Possibly Baystar sees the development in recent time in such a way that the agreed upon say was broken with all important decisions. Emissaries from Baystar were in this week also in Germany on the way and a little contently with the European development of their investment partner showed up."

JeR suggests this translation of the last part: "Emissaries from Baystar were on the road in Germany this week and showed little satisfaction with the European development of its investment partner."

Here is SCO's press release:

*****************************************************

The SCO(R) Group, Inc. Receives Request From BayStar Capital II, L.P. to Redeem Shares of Series A-1 Convertible Preferred Stock

LINDON, Utah, April 16 /PRNewswire-FirstCall/ -- The SCO Group, Inc. ("SCO") (Nasdaq: SCOX - News), the owner of the UNIX operating system, received a letter on April 15, 2004 from BayStar Capital II, L.P. requesting that SCO immediately redeem BayStar's 20,000 shares of SCO's Series A-1 Convertible Preferred Stock. The letter asserts that BayStar is entitled to the redemption of its shares under Article VII.A(vii) of the Certificate of Designation, Preferences and Rights of the Series A-1 Convertible Preferred Stock because SCO has allegedly breached Sections 2(b)(v), 2(b)(viii), 2(b)(viii) and 3(g) of the Exchange Agreement dated February 5 2004 among SCO, BayStar and Royal Bank of Canada, which also holds shares SCO's Series A-1 Convertible Preferred Stock.

BayStar's letter did not provide specific information regarding SCO's alleged breaches of the Exchange Agreement. SCO is attempting to obtain specific information from BayStar and is evaluating its obligations and options with respect to the redemption notice. However, SCO does not believe it has breached any of the referenced provisions of the Exchange Agreement. As a result, SCO does not believe it is obligated to redeem BayStar's shares of Series A-1 Convertible Preferred Stock.

Forward-Looking Statements

This press release contains forward looking statements related to SCO's belief that it has not breached any of the provisions of the Exchange Agreement described in BayStar's letter and its belief that it is not obligated to redeem BayStar's shares of Series A-1 Convertible Preferred Stock. SCO wishes to advise readers that a number of important factors could cause actual results to differ materially from those anticipated in such forward-looking statements including a finding that SCO has breached the referenced provisions of the Exchange Agreement entitling BayStar to redemption. These and other factors that could cause actual results to differ materially from those anticipated are discussed in more detail in SCO's filings with the Securities and Exchange Commission.


  


Baystar Sends SCO a Letter | 763 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Baystar Sends SCO a Letter
Authored by: J.F. on Friday, April 16 2004 @ 03:20 PM EDT
Can you say bankruptcy boys and girls? I knew you could.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 03:21 PM EDT
Note that it's 20,000 shares of the preferred A stock

That's $1k stock plus a little bit for investment. $20million.

One nice big dint in their warchest.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 03:22 PM EDT
so whats the redemption price? 20,000 x current market value doesn't seem like
big bucks...

[ Reply to This | # ]

URLs
Authored by: Anonymous on Friday, April 16 2004 @ 03:22 PM EDT
For other stuff.

--Bill P

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: TerryC on Friday, April 16 2004 @ 03:23 PM EDT
This could be a pretty big nail in SCO's coffin. According to Dion Cornett at
Decatur Jones (see http://www.thestreet.com/tech/software/10154573.html), no-one
is likley to fund them again.

Stock down below 10% a few minutes ago.

---
Terry

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 03:23 PM EDT
This is a bad thing for SCO. Why would they post this? Looking at all their
other press releases, this seems to be the only negative one. I'm confused.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: resst on Friday, April 16 2004 @ 03:23 PM EDT
Take a look at today's stocks. SCOX is at $8.62 at this moment. Down $1.02 from
yesterday's close.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: brenda banks on Friday, April 16 2004 @ 03:24 PM EDT
about time something good happened that shows the problems with scox
hehehehe


---
br3n

irc.fdfnet.net #groklaw
"sco's proof of one million lines of code are just as believable as the
raelians proof of the cloned baby"

[ Reply to This | # ]

Baystar is SO unfair....
Authored by: the_flatlander on Friday, April 16 2004 @ 03:25 PM EDT
Imagine... Baystar hasn't specified what the breech is... how can the poor,
down-trodden SCOundrels be expected to cope?


[laughs][turns red][falls on floor]

The Flatlander

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: leguirerj on Friday, April 16 2004 @ 03:25 PM EDT
How much does anyone want to bet SCO doesn't give them their money back. Maybe
Microsoft will introduce Baystar to some good lawyers. I don't have much
sympathy for Baystar.

[ Reply to This | # ]

Is SCO REQUIRED to publicize this info?
Authored by: Anonymous on Friday, April 16 2004 @ 03:25 PM EDT
Before the market closes today or within some number of hours after they receive
it?

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 03:26 PM EDT
<i>However, SCO does not believe it has breached any of the referenced
provisions of the Exchange Agreement. As a result, SCO does not believe it is
obligated to redeem BayStar's shares of Series A-1 Convertible Preferred
Stock.</i>

That'll be a fun trial to watch. I wonder what they'll pay their lawyers? $2.00
and a sandwich, maybe, if their caterer will still let 'em sign a chit.

[ Reply to This | # ]

w00t
Authored by: Scriptwriter on Friday, April 16 2004 @ 03:26 PM EDT
that's really all I have to say about that.

I don't think this is the complete end, though. If Baystar does redeem their
shares and RBC does likewise (which the regulars on #groklaw seem to think is
likely), this spells the end for SCO, so they're going to fight as hard as they
can to hang on to whatever they have left.

It couldn't happen to a more deserving company in my opinion, though.

---
Only the heir to the throne of the kingdom of idiots would fight a war on twelve
fronts.

irc.fdfnet.net #groklaw

[ Reply to This | # ]

We need to confirm the typo
Authored by: MikeA on Friday, April 16 2004 @ 03:28 PM EDT
We need to confirm from somewhere what the typo was supposed to be related to
the duplicate "2(b)(vi)" listings. It could make a big difference. I
looked to see if there was anything from BayStar on it, but couldn't find it.

Someone (TheMohel) in the previous discussion group found a paragraph of the
agreement which talked about copyright and patents being confirmed, but I dont
know where they got it from - not sure if it has anything to do with BayStar's
complaint.



---
Change is merely the opportunity for improvement.

[ Reply to This | # ]

Info here
Authored by: Anonymous on Friday, April 16 2004 @ 03:30 PM EDT
This is 20000 preferred shares, very different from common shares. Face value
of those is 20 million dollars. Redemption includes a 20% penalty, so BayStar
is demanding back 24 million dollars here.

RBC holds 30000 preferred shares. How it reacts will be interesting. If it
also demands cash back, SCO most likely cannot pay. The total it would be
required to pay is 60 million dollars.

People talk about conversion for stock. That won't happen with SCO's stock
price tanking. The investors are demanding back cash.

SCO for now is fighting it. This may mean more lawsuits. It will get
interesting. The investors will move to get SCO's bank account under control,.
SCO may need to go into bankruptcy.

It's interesting because there was previously some kind of arrangement to
overlook some of the redemption events, specifically the one about no broker.
Check out the Series A-1 certificate of designation and the exchange agreement
which refer to new warranties and exclude the old warranties. The new
warranties incorporate certain of the old warranties but specifically exclude a
few. This may be related to the veto BS/RBC negotiated after BS&F got its
10 million dollar payment partly in stock. Morgan Keegan also got a fee and so
too S2/Anderer, perhaps.

There is very interesting stuff about the derivative accounting of the deal, but
it is also complicated.

[ Reply to This | # ]

Buisness Partners (TSG style)
Authored by: phrostie on Friday, April 16 2004 @ 03:32 PM EDT

TSG: what part of the agreement did we break?

Baystar: I'm sorry but we can't tell you for reasons that are really too
complcated to explain with out going to court and suing you for 20 times the
value of the stock.

TSG: but, but, yesterday we were friends? we were on the same side. sitting
around the campfire together singing kombiya. what happened?

Baystar: we're sorry, but you'll have to talk to our lawyers. btw, the longer
you take the more they will want.

TSG: but, but, but,,,,,you can't do this! we are the great and mighty owners
of nondisclosed IP!

Baystar: not good enough.

TSG: btw, what kinda of servers are you running?

Baystar: any attempt to determine that information will be a violation of the
DMCA. we have lawyers for that as well.

TSG: did i tell you i KNOW people in redmond?

Baystar: <yawn>



---
=====
phrostie
Oh I have slipped the surly bonds of DOS
and danced the skies on Linux silvered wings.
http://www.freelists.org/webpage/snafuu

[ Reply to This | # ]

The Best Quote in the Press Release
Authored by: Anonymous on Friday, April 16 2004 @ 03:33 PM EDT
According to the press release, "BayStar's letter did not provide specific
information regarding SCO's alleged breaches of the Exchange Agreement. SCO is
attempting to obtain specific information from BayStar ...."

Now, there's a switch!

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 03:34 PM EDT
For those keeping score at home, these are my guesses for the clauses that
BayStar cites. The (v) and (viii) cites are not in section 2(b), though, so it
is very likely that I'm incorrect -- or perhaps SCO's press release is
incorrect.

This is from the Form 8-K of October 16,

http://ir.sco.com/EdgarDetail.cfm?CompanyID=CALD&CIK=1102542&FID=1104659
-03-23055&SID=03-00


2(b)(v) the Corporation or any subsidiary of the Corporation shall make an
assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be
appointed;

2(b)(viii) the Company shall either (i) fail to pay, when due, or within
any applicable grace period, any payment with respect to any indebtedness of the
Corporation in excess of $1,000,000 due to any third party, other than payments
contested by the Corporation in good faith, or
otherwise be in breach or violation of any agreement for monies owed or owing in
an amount in excess of $1,000,000 which breach or violation permits the other
party thereto to declare a default or otherwise accelerate amounts due
thereunder, or (ii) suffer to exist any other default or event of default under
any agreement binding the Corporation which default or event of default would or
is likely to have a material adverse effect on the business, operations,
properties, prospects or financial condition of the Corporation;


3(g) The Company shall permit a single firm of counsel designated by the
Initial Investors to review any Registration Statement required to be filed
hereunder and all amendments and supplements thereto a reasonable period of time
prior to its filing with the SEC, and not file any document in a form to which
such counsel reasonably objects (the “Initial Investors’ Counsel”).


Thad

[ Reply to This | # ]

Chapter 11 or 7?
Authored by: Anonymous on Friday, April 16 2004 @ 03:35 PM EDT
All part of secret deal so that IBM can pick up the assets in chapter 7

[ Reply to This | # ]

Reasons coming...
Authored by: Anonymous on Friday, April 16 2004 @ 03:38 PM EDT
According to ZDNET
BayStar said SCO violated provisions governing disclosure of information about
SCO and publicity of the exchange agreement.

It's a start of the information flow

[ Reply to This | # ]

Specific Breaches
Authored by: Jeff on Friday, April 16 2004 @ 03:41 PM EDT
BayStar's letter did not provide specific information regarding SCO's alleged breaches of the Exchange Agreement.

I think that is funny, considering all the claims SCO has made without being specific.

[ Reply to This | # ]

Unix Ownership
Authored by: Jeff on Friday, April 16 2004 @ 03:44 PM EDT
Since Unix is a specification that the Open Groups owns, shouldn't SCO's press release say: the owner of A UNIX operating system.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: bsm2003 on Friday, April 16 2004 @ 03:46 PM EDT
I think BayStar has been reading GL

0111011101101000011001010110111000100000011000010110 110001101100001 0000001100101011011000111001101100101 001000000110011001100001011010010110110001 1100110010 0000011001110110010101110100001000000110000100100000 0110100001100001 01101101011011010110010101110010

Converter

[ Reply to This | # ]

O Baystar Just Wrote Me A Letter
Authored by: gleef on Friday, April 16 2004 @ 03:46 PM EDT

The Letter
Sung to the tune of The Letter, by the A-Teens

Give me a ticket for an aeroplane, leaving the country on a fast plane
Solvent days are gone, I'm a going down, 'cause Baystar just wrote me a letter

I don’t care how much money I gotta spend. I got to give it back to Baystar
Solvent days are gone, I'm a going down, 'cause Baystar just wrote me a letter


(sadly, that's all I got so far)

[ Reply to This | # ]

Is this bad news?
Authored by: Anonymous on Friday, April 16 2004 @ 03:49 PM EDT
<conspiracy mode>

Can this possibly be an orchestrated move so that SCO goes under and some
undisclosed company picks up their assets at a fire sale?

</conspiracy mode>

Just some wild, unfounded speculation from the peanut gallery.

[ Reply to This | # ]

Irony
Authored by: vito on Friday, April 16 2004 @ 03:51 PM EDT
"BayStar's letter did not provide specific information regarding SCO's alleged breaches of the Exchange Agreement. SCO is attempting to obtain specific information from BayStar and is evaluating its obligations and options with respect to the redemption notice."
I find this part to be very ironic. I wonder how they like not being told what they did to violate the agreement.

[ Reply to This | # ]

Looking for the rabbit hole
Authored by: dkpatrick on Friday, April 16 2004 @ 03:51 PM EDT
Right or wrong, Baystar certainly has been looking for a way out of the
agreement. If they had wished to stay bound to SCO, this would have been
discussed and resolved behind the scenes. Baystar, instead, has chosen to
publically announce "We want out!"

Royal Bank is thinking it over, according to zdnet.

---
"Keep your friends close but your enemies closer!" -- Sun Tzu

[ Reply to This | # ]

The Letter & Why nothing Specific...
Authored by: Anonymous on Friday, April 16 2004 @ 03:53 PM EDT
is it possible that SCO and Baystar have had 'issues' for some time and are
implied from previous discussions they have had?

[ Reply to This | # ]

  • SCO's "buyback" - Authored by: Anonymous on Friday, April 16 2004 @ 05:11 PM EDT
could just be the price
Authored by: ajrs on Friday, April 16 2004 @ 04:02 PM EDT
from the 8 - K:

D. Optional Redemption by the Corporation .

(i) The Corporation shall have the following rights to redeem shares of the Series A-1 Preferred Stock:

(b) If the Closing Sales Price of the Common Stock is less than $10.50 (as adjusted to reflect any stock dividends, distributions, combinations, reclassifications and other similar transactions effected by the Corporation in respect to its Common Stock) for at least twenty (20) consecutive trading days, the Corporation shall have the right to redeem any shares of Series A-1 Preferred Stock then outstanding at price per share of Series A-1 Preferred Stock equal to the Face Amount plus all accrued and unpaid Dividends thereon through the closing date of such redemption.

[ Reply to This | # ]

Guess who's getting sued next?
Authored by: mobrien_12 on Friday, April 16 2004 @ 04:03 PM EDT
Given SCO's history of suing former business partners who see that their
relationship with SCO is useless, I wouldn't be suprised if SCO sues Baystar for
something related to their magic IP.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: TerryC on Friday, April 16 2004 @ 04:04 PM EDT
New 8-k filed:

http://www.google.com/search?hl=en&lr=&ie=UTF-8&edition=uk&prev=
/search%3Fq%3DSCOX%26hl%3Den%26lr%3D%26ie%3DUTF-8%26edition%3Duk&q=stocks:SC
OX+

---
Terry

[ Reply to This | # ]

  • SEC Filing - Authored by: MikeA on Friday, April 16 2004 @ 04:32 PM EDT
    • SEC Filing - Authored by: jog on Friday, April 16 2004 @ 04:39 PM EDT
    • SEC Filing - Authored by: rand on Friday, April 16 2004 @ 05:26 PM EDT
My, this was a short honeymoon.
Authored by: Anonymous on Friday, April 16 2004 @ 04:05 PM EDT
"When love is over, how little of love even the lover understands"

[ Reply to This | # ]

I suppose this means I should think about selling my SCO stock....
Authored by: MikeA on Friday, April 16 2004 @ 04:06 PM EDT
...it's a shame though because i bought the stock at almost $18 a share. Can you say Tax Deduction?

This is probably really good news because it will allow SCO to forfeit the IBM trial and never have to go through the expense of a long lawsuit. In the end, IBM wont get much out of their countersuits against an insolvent company and the Linux code issue will never get resolved. Frankly, this is good for the consumers because we no longer have to wait for the outcome of the trial, and can get back to the business of doing business. Nothing hampers a consumer economy more than the idea that there may be a revolution. Companies like Microsoft and IBM can get back to doing what they do best - licensing products, and that is only going to help the economy recover.

It wouldn't surprise me one bit if Microsoft was the one that initiated this movement by BayStar - a smart move on their part. Admitting to the fact that they indeed were responsible for the BayStar financing emails is the icing on the cake! Pure genius! It is no wonder they are such a successful company - perhaps I will transfer the rest of my investments back into MS where they belong.

Like the RIAA, SCO has shown us that stealing is wrong, and small companies (like SCO) get badly damaged and even go bankrupt because of it. Perhaps they are even martyrs. We have all learned a valuable lesson from this, and since the issue of code stealing remains unresolved, the many IT specialists around the world will likely abondon the risky ideas of free software and piracy that surround Linux and get back to the basics.

Laura DiDio

---
Change is merely the opportunity for improvement.

[ Reply to This | # ]

OT - MS and Anti Linux FUD
Authored by: HawkEye on Friday, April 16 2004 @ 04:09 PM EDT
As good a place as any to post this.A while ago here I posted about the MS Linux
v W2K3 server comparison (Linux on mainframe W2K3 on Intel) and someone
suggested contacting ASA (advertising standards authority), which I did.

Got a reply back today:-

"Thank you for your recent email. We are already investigating this
advertisment and your complaint will be added to our file"

Not as fun an announcement as the topic of this post but I thought it might be
of interest.

---
Regards

Neil

[ Reply to This | # ]

it reminds me of...
Authored by: Anonymous on Friday, April 16 2004 @ 04:11 PM EDT
...the collapse of the SCOviet Union.

[ Reply to This | # ]

Not Lost, No money to fight.
Authored by: Anonymous on Friday, April 16 2004 @ 04:15 PM EDT
I remember someone posting a while back when SCOs SEC wrangling first started,
that their strategy would be to make as much noise on the way up the legal
ladder, then just before being handed an unfavorable verdict would just drop the
case, citing 'we can't afford to fight on'.

Oh the bashings, and beatings that evil GLinux community inflicted on our poor
poor innocent souls.

Sounds like Darls open letter was speaking of his own, well known fate. Maybe he
can drive his point home soon.

eleete

[ Reply to This | # ]

SCO wants proof !!
Authored by: Anonymous on Friday, April 16 2004 @ 04:18 PM EDT
SCO wants proof...

"Even though we received this letter, unless BayStar can prove we violated
or breached the terms of the Exchange Agreement, our company is not under
obligation to redeem those shares," Stowell said.

I cant actually blame them on this one, but all the same it's sheer hypocracy.

ROFL

Paul, UK



[ Reply to This | # ]

Baystar still shows SCO on website.
Authored by: Anonymous on Friday, April 16 2004 @ 04:21 PM EDT

I dont know how long it will be there.. But when you go to baystars website, on
the bottom left of the home page it cycles the "Featured" investments,
as of 4:30pm Friday it still has SCO as one of its proud investments.. I wonder
how long that will last..


[ Reply to This | # ]

Is Baystar accusing SCO...
Authored by: Anonymous on Friday, April 16 2004 @ 04:22 PM EDT
of leaking "the memo?" Many have speculated on this, given how
quickly SCO confirmed its validity, and how it shows potential investors that
SCO has the deepest of pockets behind them.

Either way, it looks like Microsoft wants to get off this runaway train.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Nuke on Friday, April 16 2004 @ 04:23 PM EDT
BayStar's letter did not provide specific information regarding SCO's alleged breaches of the Exchange Agreement.

Now where have we heard that before? Perhaps Baystar will show the breaches only to a select group under an NDA.

[ Reply to This | # ]

Boies and Co?
Authored by: Anonymous on Friday, April 16 2004 @ 04:23 PM EDT
Since they already got their piece of the financing, do they have to pay back
their commission, or does SCO wind up holding the bag both in terms of
redemption of Baystar's preferred shares and this?

[ Reply to This | # ]

Advice To Investors And Investment Companies
Authored by: dmscvc123 on Friday, April 16 2004 @ 04:25 PM EDT
When Microsoft suggests investing in some company, you'd better thing twice
unless you want to take a bath with your money.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 04:30 PM EDT
Maybe the SCO lawsuits have gone as far as Microsoft would like to see them go.
If things procede much farthur there might be court decisions that clarify
Linux's legal status in a way that Microsoft does not like. If things end here,
there is a cloud of uncertainty perfect for FUD.

[ Reply to This | # ]

How will Darl spin this one?
Authored by: moogy on Friday, April 16 2004 @ 04:32 PM EDT
He turns everything into "good news". Maybe...

"This will give SCOG the opportunity to buy back part of it's
ownership, thus making us a stronger company."

---
Mike Tuxford - irc.fdfnet.net #Groklaw
First they ignore you, then they laugh at you,
then they fight you, then you win. --Gandhi

[ Reply to This | # ]

IBM's example
Authored by: technoCon on Friday, April 16 2004 @ 04:34 PM EDT
I heard a story last night: While Apple was settling product liability law suits
against the Geoffrey Fiegers' and John Edwards' of this world, (Keyboards hurt
people!) IBM was fought and won in court AND THEN the Nazgul brought suit
against the Law Firms who'd filed those nuisance law suits. What a marvelous way
to effect tort reform!

If SCO's long predicted implosion is at hand, then IBM, RedHat, Chrysler,
AutoZone and Novell should modify their discovery requests so as to identify the
deep pockets enabled SCO's legal adventure. (Does anybody recall who was
involved in the MS antitrust case, Mr. Gore's Florida recount litigation, and
the SCO case?)

Note to self: never *ever* screw with the Nazgul.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: DeepBlue on Friday, April 16 2004 @ 04:34 PM EDT
Well 15th April was my 40th birthday and I think Baystar just sent me a lovely
birthday present. :-)

---
Even David needed some stones in his sling to topple Goliath ........

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Nick_UK on Friday, April 16 2004 @ 04:37 PM EDT
Ummm. What has happened here is M$ is breaking the chain.

They have told them to get OUT.

That then (and when it 'breaks') leaves the monies M$ shored up Baystar with
back home in the nest.

There is then no 'backtrack' to M$ at all - as the deal never happened.

It's like all the claws come out, but when they found the prey is too resilient,
slowly, one by one, all the claws retract and try to wander off innocently - and
the paw that spurs them hops it.

Nick

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 04:39 PM EDT
According to ZDNet

A classic Darl quote :

The investment has been crucial to raise cash for SCO's operations. "A year ago we had (about) $6 million, and now we have $60 million--$50 million of that coming in through the investment. We have a war chest to defend our rights and to fight our claims in the courtroom," Chief Executive Darl McBride said in a March interview


So if they have a war chest of $60 Million, they wont have any problem giving BayStar back their $20 Million ;-)

[ Reply to This | # ]

Ties to IBM's request for summary judgement?
Authored by: penhead on Friday, April 16 2004 @ 04:40 PM EDT
Just a disclaimer: I don't know what info BayStar legals are privvy to.


This seems to come hot on the heels of IBM's declaration to seek summary
judgement at the end of discovery --- which kinda signals an opinion on the
strength of the SCO legal case.

This was the final nail in the coffin for those who hoped for (a) a short fight
ending in a buyout of SCO from IBM, and/or (b) a prolonged fight with some
ambiguity about SCOs legal strength, as a strategic asset in other fights
(reads: microsoft).

The rats are now leaving the sinking ship. This might be the time to stop
thinking of SCO in terms of "threats" and "defences" and
start taking some pity in those poor coders and receptionists who rely on the
company for a living. In Utah, no less...

[ Reply to This | # ]

Jurisdiction?
Authored by: whoever57 on Friday, April 16 2004 @ 04:45 PM EDT
If Baystar is forced to sue, what court would hear it? Utah state courts, or
Delaware Chancery court?

---
-----
For a few laughs, see "Simon's Comic Online Source" at http://scosource.com/

[ Reply to This | # ]

Now the big question is;
Authored by: rsmith on Friday, April 16 2004 @ 04:46 PM EDT
Will SCOG sue Baystar or the other way around?

I would think that Baystar isn't very happy right now with their
"friends" from MSFT.

This whole affair has generated a lot of publicity for Baystar, most of it
negative, IMHO.

Combine that with a dawning realization of very long odds on ever seeing their
money again, and the result is this decision.

---
Never ascribe to malice that which is adequately explained by incompetence.

[ Reply to This | # ]

Could someone explore what Bankruptcy would mean for IBM/GPL?
Authored by: Anonymous on Friday, April 16 2004 @ 04:47 PM EDT
I'm guessing in many cases there isn't much point to allowing a case to go
forward against a company that's folding. But in this case, if _I_ was IBM, I'd

almost be willing to pay full court costs just to get a ruling on this.

So, if the-company-who-wants-to-be-called-SCO folds, what happens to the
lawsuits?

[ Reply to This | # ]

Baystar Figured out SCO lied
Authored by: kawabago on Friday, April 16 2004 @ 04:48 PM EDT
If you read the relevant sections of the Agreement, it would seem to point to
SCO misrepresenting something to Baystar in order to get the money. I can think
of a whole bunch of things they've misrepresented so the list from Baystar
might be very long!

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Yunichi on Friday, April 16 2004 @ 04:48 PM EDT
The letter states that:

"...SCO has allegedly breached Sections 2(b)(v), 2(b)(viii), 2(b)(viii) and 3(g) of the Exchange Agreement dated February 5 2004 among SCO, BayStar and Royal Bank of Canada, ..." Section 2 is the REPRESENTATIONS AND WARRANTIES.

"2(b)(v)Original Purchase Agreement . Excluding the representations and warranties set forth in Sections 3(a), (b), (d), (e), (i), (y) and (z) of the Original Purchase Agreement, the representations and warranties of the Company set forth in Section 3 of the Original Purchase Agreement (the “ Original Representations and Warranties ”) are each true and correct as of the Closing Date, in each case as if made on the Closing Date. ... For purposes of this Agreement, the term “2002 Annual Report” as used in the Original Representations and Warranties shall refer to the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2003"

-> What was disclosed in the "2002 Annual Report" that has been found to be false? Maybe they are refering to the "Unix ownership"? (or the fact that Novell might not agree with that disputable statement of ownership).

"(viii) Disclosure. All information relating to or concerning the Company and/or any of its Subsidiaries set forth in this Agreement or provided to the Purchasers in connection with the transactions contemplated hereby is true and correct in all material respects, and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or its Subsidiaries or their respective businesses, properties, prospects, operations and financial conditions, which has not been publicly disclosed but, under applicable law, rule or regulation, would now be required to be disclosed by the Company in the Company’s Annual Report on Form 10-K."

-> Maybe SCO "Accidentally" failed to disclose all obligations they had with Novell.. (Royalty collections comes to mind)

Section 2(b)(viii) is repeated twice. It seems to be a typo, we'll need to confirm this.

Section 3 is OTHER COVENANTS AND AGREEMENTS. "(g)... From and after the Press Release, the Company hereby acknowledges that no Purchaser shall be in possession of any material nonpublic information received from the Company, any of its subsidiaries or any of its respective officers, directors, employees or agents, that is not disclosed in the Press Release. ... "

-> Could this be because of the statement from SCO confirming the uncovered links to Microsoft and Anderer? Maybe they wanted that information of how BayStar ended up financing their lawsuit fund kept secret?

Just my $ 0.02, but I may be wrong... Yunichi ------- IANAL, etc

[ Reply to This | # ]

If SCO folds....
Authored by: kberrien on Friday, April 16 2004 @ 04:51 PM EDT
Not that its necessarily going to happen, but, if SCO where to to fold prior to
trial (IBM case), does this not make the IBM counter-offensive look like the
right move.

Discovery (or probably enough of it) will be over soon, and with a declaratory
judgement to settle the "infringement" portions of the case, IBM would
likely get their judgement regardless of SCO's ability to actively defend
itself?

True?

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 04:55 PM EDT

They can complain about the omission of Novell's copyright claims even before the Slander of Title lawsuit is complete.

By omitting that the copyrights are in question, they are hiding very significant risks from the investors. Without the copyrights, the billions of dollars in windfall profits are far less likely.

Though of course, most groklaw readers may say that SCO never had a chance in the first place...

[ Reply to This | # ]

SCO’s case will never be seen through…
Authored by: moopster on Friday, April 16 2004 @ 04:56 PM EDT
… and that is by design.

The enemies of OSS can’t afford a big IBM win.

SCO will file bankruptcy and withdraw their complaint, because they lack the
funds.

Another company financed through shady back room deals will emerge with similar
claims.

I work for a very large company, and was on several projects looking to
implement Linux. They have all been put on hold. The proponents of the Microsoft
solution screamed, “Linux is a corporate liability,” and the PHB (who are
naturally risk adverse) said, “put all of those projects on hold indefinitely.”

This is the way it is designed to happen.

SCO is the branch of tree whose strategy is OS domination. We can hack away at
SCO, and any other company that comes forward with these claims, but we are not
hitting the root, and therefore we will not fix the problem.



** *** ***** ******* ***********

[ Reply to This | # ]

Executive Liability
Authored by: kberrien on Friday, April 16 2004 @ 05:03 PM EDT
In the Baystar SCO relationship, what kind of Executive liability applies to
Darl and crew? Lets assume they were vague, spun, and lied to Baystar as much
as they have to everyone else?

[ Reply to This | # ]

In other words...
Authored by: pajamian on Friday, April 16 2004 @ 05:04 PM EDT
"BayStar said SCO violated provisions governing disclosure of information about SCO and publicity of the exchange agreement."

...Darl couldn't keep his big mouth shut ... Geez, no surprise there.

---
Windows is a bonfire, Linux is the sun. Linux only looks smaller if you lack perspective.

[ Reply to This | # ]

The power of one
Authored by: blacklight on Friday, April 16 2004 @ 05:05 PM EDT
"Reflecting SCO's diminutive size, Cornett is the only sellside analyst
covering the stock, according to Thomson First Call."

Dion Cornett may be just one man, but we are all better off with one good man
like Dion Cornett than a small army of jackasses.


[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 05:12 PM EDT
In any case I think SCO will have a real hard time raising any more money. IBM
looking to hand them there head. Novell standing by to help. Everyone else
waiting for there turn if they can't get the job done.... ouch If I know IBM.
There going to finish off SCO with copyright charges of there own before this is
over. They have already started ...

[ Reply to This | # ]

So who needs details anyway?
Authored by: Rcomian on Friday, April 16 2004 @ 05:13 PM EDT
BayStar's letter did not provide specific information regarding SCO's alleged breaches of the Exchange Agreement.
Personally, I don't think Baystar should need to give SCO any specific information about SCO's alleged breaches :) Can you spell irony?

[ Reply to This | # ]

Cringely's predictions for 2004
Authored by: Jadeclaw on Friday, April 16 2004 @ 05:14 PM EDT
Normally, when analysts and journos make predictions, I'll be very careful, but
Robert Cringely has obviously a finer nose...
Ok, let's see:
"" 6) As for SCO, they'll continue to make noise until the middle of
the year, at which point the legal case will implode and the company will give
up. By that time, the company executives, insiders, and major investors will
have all sold their positions at a handsome profit. This was never more than a
stock scam, pushing the price of SCO shares up by more than 15 times. The clever
part is how they used a legal case to make public claims that would have caused
serious regulatory problems in any other context. We'll see more of this ploy in
the future. ""
It seems, this one will be fulfilled. Without money, SCO won't go very far,
especially when considering the contracts with the lawyers...
Another hit:
"" 9) The U.S. IT industry will see some real growth except for
Hewlett- Packard and Sun, which will continue their declines. Dell will start to
compete in new market segments and those might drive some of their low end
products (MP3 players, especially, but also possibly TVs) into the retail
channel. Dell service and support will suffer, but the company will still do
well. ""
True for Sun, they reported record losses.
True for Dell as well, they showed their Plasma-TV offerings at CeBit this year.
Traditional TV-makers will have to work harder...
The whole thing is here:
http://www.pbs.org/cringely/pulpit/pulpit20040101.html
Oh, 3, 14 and 15 had realized as well, just check the news from the past weeks.
For 3, I get more Spam than ever - Worm-ridden as well as body-part
extensions... *Grmpf*


---
---------------------------
include('IANAL.php');
---------------------------

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 05:20 PM EDT
Sounds like the Investors have also figured out that SCO is run by a bunch of
fools. Sounds like they understand that SCO has no chance to win anything. Hum
Darl do you get it yet?

hello . McBride. You took some real bad advice and are on a hopeless path? You
there?

[ Reply to This | # ]

  • Fools? - Authored by: Anonymous on Saturday, April 17 2004 @ 12:59 PM EDT
Interesting
Authored by: Anonymous on Friday, April 16 2004 @ 05:30 PM EDT
If SCO feels that Baystar is acting on groundless claims,
then they should now understand the position of what we as
Open Source developers feel about them. The only exception is we are correct in
our position of groundless claims
against them.

SCO can only blame Darl and themselves for this. He has run
his mouth and made accusations all over the place
poor-mouthing F/OSS and all involved.

Anyone have an analogy/comparison how this can be related to
cattle stealing??? I would love one right about now. How
about this as a first cut:

"Well, you see, it's like they gave us money to buy the cows
so we can frame some would-be cattle thieves. And ya see,
we don't want to give up the cattle but the banks think that
we are not completely honest and MAYBE we gave away our
cattle so they want their money back. Besides, we done
branded all the cattle. They are ours, I tell ya!"

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: IharFilipau on Friday, April 16 2004 @ 05:33 PM EDT
BTW about investors.

Is it possible in general to trace back-stage involvement of M$ in deals
like BayStar?

This question have arised after announcement of Sun & M$ deal - could it be

some games on part of M$ with investors?

Having amount of cash as M$ has at moment, makes it biggest investor (and
obviously shareholder). I wouldn't be surprised if it will turns out that M$ own

whole software industry. HW industry bit bigger - but SW industry is of right
size and price ;-)

Could it be that M$ influence investors/shareholders in let say private
meetings? I expect that Sun's execs would be much more willing to negotiate
with M$ if deal would be pushed by Sun's shareholders and investors.

Is it possible to track investments and involment in investments of M$?
Make it sense to analyze SEC fillings of M$?

[ Reply to This | # ]

Looks like SCO
Authored by: Anonymous on Friday, April 16 2004 @ 05:33 PM EDT
PR may soon have to change their 'Forward-Looking Statements' into 'Coroner's
Reports'. Maybe they'll argue that Baystar should have read Groklaw before
lending them dough.

[ Reply to This | # ]

Baystar browsing Groklaw?
Authored by: Anonymous on Friday, April 16 2004 @ 05:35 PM EDT

One has to wonder if the Baystar folks have been browsing Groklaw for a sanity
check on SCO's propaganda?

Just a thought...

[ Reply to This | # ]

Baystar has a good legal position
Authored by: codswallop on Friday, April 16 2004 @ 05:40 PM EDT
The PIPE agreement has the section below, that makes it much easier to get an
injunction. As far as I can see, they only have to demonstrate they're likely to
prevail. SCO has stipulated all the rest.

The remedies provided in this Certificate of Designation shall be cumulative and
in addition to all other remedies available under this Certificate of
Designation, at law or in equity (including a decree of specific performance
and/or other injunctive relief), and nothing herein shall limit a holder’s right
to pursue actual damages for any failure by the Corporation to comply with the
terms of this Certificate of Designation. The Corporation acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
holders of Series A-1 Preferred Stock and that the remedy at law for any such
breach may be inadequate. The Corporation therefore agrees, in the event of any
such breach or threatened breach, that the holders of Series A-1 Preferred Stock
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required

[ Reply to This | # ]

Stowell pops up
Authored by: Anonymous on Friday, April 16 2004 @ 05:41 PM EDT
From McMillan of IDG's report:

"We received a letter from BayStar (Thursday) indicating that they believe
that we had breached some sections of the exchange agreement that we had entered
into in February," said SCO spokesman Blake Stowell. "They are asking
us to redeem their shares based on the allegation that we've breached their
agreement."

SCO declined to provide copies of the BayStar letter, but claimed that it did
not provide specific information on the alleged breaches. "There isn't a
single person at our company that knows today why (BayStar) believes we've
breached some terms of the agreement," Stowell said.

[ Reply to This | # ]

SEC Form-8K filing
Authored by: Anonymous on Friday, April 16 2004 @ 05:44 PM EDT
SCO have filed form-8K presumably to report this.
Does anyone have an account on EDGAR to get it?

[ Reply to This | # ]

Baystar and RBC control of SCO legal actions.
Authored by: Galen on Friday, April 16 2004 @ 05:46 PM EDT
I believe I read elsewhere that Baystar retained control/approval over SCO's
legal actions:

"According to a filing Monday by the SCO Group, RBC and baystar now have
veto power over any SCO action that would trigger the 20-per-cent payment to
SCO's attorneys at Boies, Schiller & Flexner LLP."

If thats so how can SCO refuse?
If Baystar or RBC could shut down their participation in the law suits it would
appear that SCO is tost.

.Galen.

*Who are you? Where are you going?
Who do you serve? And who do you trust?*

[ Reply to This | # ]

SCO ANNUAL MEETING OF STOCKHOLDERS
Authored by: geoff lane on Friday, April 16 2004 @ 05:59 PM EDT
There's supposed to be a shareholders meeting next Tuesday, 20th April 2004 at the Provo Marriott Hotel.

Should be a fun day for all?

[ Reply to This | # ]

1y Target Est = $5.00
Authored by: grumpy on Friday, April 16 2004 @ 06:01 PM EDT
... for SCOX on Yahoo Finance.

It is no longer $25.00, which means that Deutsche Bank's $45.00 forward looking
statement is removed so the one and only analyst for the time being is Decatur
Jones.

Is this today's news or did I miss it earlier?

What is the standard procedure to phase out an estimate?

[ Reply to This | # ]

To Quote Star Wars
Authored by: red floyd on Friday, April 16 2004 @ 06:02 PM EDT

Darth Baystar (to Lando SCOlrissian): I am altering the deal. Pray I don't
alter it further.

---
The only reason we retain the rights we have is because people *JUST LIKE US*
died to preserve those rights.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 06:07 PM EDT
YESSSSSSSSS!!!!!!!! BWWWWAAAAHAHAHAHAHA!!!!!!!!!!! (Evil LOL!)

[ Reply to This | # ]

OT: {MS snicker}
Authored by: Asynchronous on Friday, April 16 2004 @ 06:34 PM EDT
Lawtech Guru Blog has a nice meta data observation on a PDF about MS Office vs Open Office. (a FUD peice) Seems it was written on a Mac.

[ Reply to This | # ]

SCO Indemnification of Executives?
Authored by: Anonymous on Friday, April 16 2004 @ 06:45 PM EDT
ISTR that some time ago last year, during the start of
this fiaSCO, SCO specifically indemnified their executives
for certain things. Unfortunately I can't find a link to
that article.

[ Reply to This | # ]

SSSSSSSTRIKE
Authored by: ABM_rulez on Friday, April 16 2004 @ 06:46 PM EDT
I guess that's it. Mr. Blepps suitcase (including the millions of red and blue
marked lines of source code) could become a major collectors item at ebay.
Perhaps that's his plan B ;-)

I am wondering what happens to the management team in the US if the do not file
for bankruptcy on time. According to our (German) rules some of them would run
into a lot of trouble if they know they can not pay back their debts and are
playing games instead.

[ Reply to This | # ]

Don't let SCOG die! Fund it so that it can be beaten in the courtroom.
Authored by: Anonymous on Friday, April 16 2004 @ 06:56 PM EDT
Seriously. I mean it. If SCOG dies before the shroud of FUD is lifted by
rulings, MS will have been successfull in what it wanted to achieve: imprint the
message "use Linux and run legal risks" in the minds of corporate
decision makers.

We should keep SCOG afloat, we should fund it, so that the judge's rulings will
expose SCOG lies for what they are in the eyes of CXO's.

[ Reply to This | # ]

Unlikely To Get Money Back?
Authored by: dmscvc123 on Friday, April 16 2004 @ 06:58 PM EDT
From the InfoWorld article that PJ links to:
"Cornett said that it was unlikely that BayStar would get its money back,
because BayStar's agreement with SCO does not include contractual terms allowing
BayStar to demand redemption."
http://www.infoworld.com/article/04/04/16/HNscoinvestor_1.html

Is this accurate? Why would they do it if it wasn't true - like were they
shorting the stock big-time when they sent this letter?

[ Reply to This | # ]

Baystar Sends SCO a Letter/Boies Implications ?
Authored by: Hygrocybe on Friday, April 16 2004 @ 06:59 PM EDT
I might have my wires crossed, but didn't the deal with Boies' legal firm
involve shares as part payment for legal services ?

If so, would this have implications ?



---
Blackbutt, Australia

[ Reply to This | # ]

if sco went bankrupt
Authored by: tammobuss on Friday, April 16 2004 @ 07:19 PM EDT
if sco went bankrupt, what would happen to the ibm case? maybe ibm saw this
coming and wants to get a declaratory judgement before sco is dead and gone?

[ Reply to This | # ]

OT: NewsWeek article
Authored by: _Arthur on Friday, April 16 2004 @ 07:20 PM EDT
Steven Levy wrote a very well-crafted article in NewsWeek:
http://www.msnbc.msn.com/id/4670537/

I wrote him a "Well done!" E-mail, you can see a copy of it in the
following
self-post.

_Arthur

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: brendthess on Friday, April 16 2004 @ 07:29 PM EDT
Although SCOX is denying the charges, the violation of 2(v) seems clear. Since 2(v) of the amended agreement states that all of the warranties (except for specificly identified sections) that were in the original agreement still were true.... Well, look at

3.(l) Intellectual Property . Each of the Company and its Subsidiaries owns or is duly licensed (and, in such event, has the unfettered right to grant sublicenses) to use all patents, patent applications, trademarks, trademark applications, trade names, service marks, copyrights, copyright applications, licenses, permits, inventions, discoveries, processes, scientific, technical, engineering and marketing data, object and source codes, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other similar rights and proprietary knowledge (collectively, “ Intangibles ”) necessary for the conduct of its business as now being conducted and as presently contemplated to be conducted in the future. Section 3(l) of the Disclosure Schedule sets forth a list of all material patents, patent applications, trademarks, trademark applications, copyrights, licenses, sublicenses, and copyright applications owned and/or used by the Company in its business. Neither the Company nor any Subsidiary of the Company infringes or is in conflict with any right of any other person with respect to any third party Intangibles. Neither the Company nor any of its Subsidiaries has received written notice of any pending conflict with or infringement upon such third party Intangibles. Purchaser is aware of and acknowledges the pending and threatened litigation regarding Company’s intellectual property rights disclosed in the Select SEC Documents. Neither the Company nor any of its Subsidiaries has entered into any consent agreement, indemnification agreement, forbearance to sue or settlement agreement with respect to the validity of the Company’s or its Subsidiaries’ ownership of or right to use its Intangibles. The Intangibles of the Company and its Subsidiaries are valid and enforceable and no registration relating thereto has lapsed, expired or been abandoned or canceled or is the subject of cancellation or other adversarial proceedings, and all applications therefor are pending and in good standing, except where such abandonment or cancellation would not result in a Material Adverse Effect. The Company and its Subsidiaries have complied, in all material respects, with their respective contractual obligations relating to the protection of the their respective

And how does this square with the letters and other communications from Novel in re: Copyright ownership? As far as I can tell, it does not. This alone would seem to be sufficient violation to be cause.

I can hardly wait to see what the other reasons are....

---
I am not even vaguely trained as a lawyer. Why are you listening to me?

[ Reply to This | # ]

Baystar replies to SCO
Authored by: Anonymous on Friday, April 16 2004 @ 07:31 PM EDT
'Dort legt man nicht von Anfang an alles auf den Tisch, sondern bringt Argumente
und Beweise nach und nach.'

Translated roughly, "In the US, one doesn't start
out by disclosing everything, instead showing evidence and arguments by and by."

[ Reply to This | # ]

Anticipated Event
Authored by: DrHow on Friday, April 16 2004 @ 07:33 PM EDT
We had a little discussion about this possibility a couple weeks ago: Earlier Thread
I had posted the parent article for that thread, suspecting that Baystar was in a position to take some sort of action.
stdsoft correctly anticipated the redemption approach which Baystar has pursued.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 07:35 PM EDT


2(b)(v) "You didn't outright lie to us about what you said about yourself
in the original purchase agreement."

2(b)(viii) "You didn't omit any material fact that would make what you say
about yourself misleading. You also haven't withheld from the public information
you are required to disclose by law."

3(g) "You won't provide non-public information to anyone after the press
release."

[ Reply to This | # ]

Put on your Aluminum Fedora
Authored by: Anonymous on Friday, April 16 2004 @ 07:41 PM EDT
Hmmmm,
(Thought A) Open source users back an attack on Microsoft's would be patents.

(Thought B) We have the puppet demanding payment from SCO.

I am sure, thought A has nothing to do with thought B.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 07:55 PM EDT
One quick reaction, without having read everything...

ha ha!

ha ha ha!

ha ha ha ha!

ROFLMAO is too appropriate here.

"Chickens coming home to roost" also comes to mind...

t_t_b

---

Mad cow? You'd be mad, too, if someone was trying to eat you.

[ Reply to This | # ]

Fat chance for Baystar......
Authored by: Stumbles on Friday, April 16 2004 @ 07:59 PM EDT
Lol. I swear, this just gets better and better.

BayStar has a good a chance of getting their money, as we have
trying to find the MIT spectralwhatever analyst's.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: sjf on Friday, April 16 2004 @ 08:12 PM EDT
Hmmm if I were paranoid man. I'd wonder if M$ wanted to bankrupt SCO before
they actually lost. That way they could leave the whole stink hanging over
Linux.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 08:21 PM EDT
Dion Cornett: I don't think BayStar is going to be very successful in getting their money back. It's very difficult for a private equity investor to force a redemption on a company that doesn't want to redeem.

It doesn't matter if BayStar gets their money back. SCO is still screwed. SCO is using this money to fund lawsuits. Now suppose SCO says to a law firm it want to hire it for a suit, and tells them they will pay for it out of the 20 million that BayStar wants back. What chance is there the law firm would sign on under those circumstances?

[ Reply to This | # ]

  • Easy answer.... - Authored by: Anonymous on Friday, April 16 2004 @ 09:25 PM EDT
    • Easy answer.... - Authored by: Anonymous on Saturday, April 17 2004 @ 12:29 PM EDT
Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 08:23 PM EDT
Maybe what happened is when SCO filed its lawsuit against Novell, BayStar took a
look at the APA and decided SCO might not own the code.

[ Reply to This | # ]

Bankruptcy and unidirectional discovery
Authored by: mk270 on Friday, April 16 2004 @ 08:24 PM EDT
Is there a chance SCO will file for bankruptcy, not submit its infringing code
to the IBM court, and receive IBM's response and some breathing time to analyse
it?

[ Reply to This | # ]

One conspiracy theory about Why Now
Authored by: mcstafford on Friday, April 16 2004 @ 08:24 PM EDT
One possible reason this happened now:

Phase 1: Microsoft says "Fund these SCO clowns, and we'll support their
stock & do other good things to be sure the deal works out well for
you."

Phase 2: Anderer memo becomes public; Microsoft can't follow through on phase-1
quid-pro-quo promises due to increased scrutiny.

Phase 3: Baystar bails as it becomes clear that the soft landing promised by MS
is becoming a splatter event with Baystar providing the splatter.

[ Reply to This | # ]

This will trigger the SCOX stock price clause
Authored by: Anonymous on Friday, April 16 2004 @ 08:34 PM EDT
Baystar can also redeem, if the stock price falls low enough for several weeks.
This letter should do the trick.

By puncturing the stock balloon now they can force a redemption while there is
still some money left to get.
RBOC will have to follow suit lest Baystar will drain out cash leaving them
holding the bag.

[ Reply to This | # ]

RBC "will arrive at a decision shortly."
Authored by: Anonymous on Friday, April 16 2004 @ 08:44 PM EDT
Spokesman Paul Wilson of the Royal Bank of Canada, which funded the remaining $30 million of the private investment in public equity (PIPE) deal, said the bank "has not yet requested a redemption, but we are reviewing the investment and will arrive at a decision shortly."

Melanie Hollands, OSDN's IT stock analyst, told NewsForge that "it is possible that the (whole) PIPE deal is about to fall apart. ... I certainly think that Royal Bank of Canada may have cause to ask for a cash redemption Monday or soon."
says IT Manager's Journal here

I would bet that SCO gets another letter on Monday.

[ Reply to This | # ]

Recycling funding for the next round of Linux bashing?
Authored by: cheros on Friday, April 16 2004 @ 08:45 PM EDT
Call me a cynic, but wouldn't this be an excellent way to drain the funding from
SCO and ensure they can be recycled into the next company that comes up with a
good anti-Linux scam? If the company folds due to bankruptcy, Darl and buddies
will walk away with clean hands as it was BayStar rather than Darl who
(allegedly) zapped the funding.

And yes, as someone observed previously, it could maybe prevent a judgement if
this collapse happened fast enough, as IANAL I can't determine if it was
possible to stay this until a verdict has been given.

I'm VERY eager to hear I'm over-paranoid here (yes, I know they're still out to
get me ;-) so please expose the weaknesses in this conspiracy theory. It adds
up to nicely for my liking ;-(.

= Ch =

[ Reply to This | # ]

Just one darn minute!
Authored by: garbage on Friday, April 16 2004 @ 08:48 PM EDT
Let's put aside all the emotion.

Is'nt this just a little too convenient?

IBM announces they want summary judgement & the
'investors' _sudddenly_
get a clue & pull out, SCOX goes
'pfft in a cloud fud before IBM gets a
judgement.

Come _on_, who do they think they are kidding?

I do not believe
for one second that BAYSTAR handed over
20 million bucks withuout knowing what
they were doing.

Call me cynical but this whole thing from the get go has
had the appearance of orchestration about it.

[ Reply to This | # ]

Isn't it over?
Authored by: solman on Friday, April 16 2004 @ 08:55 PM EDT
I'm kind of disappointed that this killing blow came from SCO's investors, and
not from the Linux community or IBM, but realistically this is the end of the
road.

[ Reply to This | # ]

Maybe not a such a bad plan
Authored by: tdarkelf on Friday, April 16 2004 @ 09:10 PM EDT
Try this ...

SCO admits that the letter is real, confirming the MS connection. Baystar wants
their money back, based on SCO's admission. SCO goes belly up, no one is
blamed.

FUD for 13 months. GPL is not validated by court. UNIX/Linux future still in
doubt. Nothing is resolved.

and Longhorn is a year closer.

Seems like this was planned from the start.

[ Reply to This | # ]

Baystar-SCO-?-?-?
Authored by: icebarron on Friday, April 16 2004 @ 09:14 PM EDT
Tic-Tic-Tic...I think I hear a clock ticking...Tic.Tic.Tock



Dan

[ Reply to This | # ]

Show us the lines!
Authored by: Anonymous on Friday, April 16 2004 @ 09:17 PM EDT
I think Baystar should be required to show SCO the exact lines of contract
that they allegedly have infringed before SCO is forced to redeem their
shares. It seems that it's only a very few lines. Perhaps SCO can rewrite
those few lines to avoid infringing on Baystar's contract ...

Gawd, I love this dispute!

---
Jim

[ Reply to This | # ]

Bay$tar sticks it to SCOG!!!
Authored by: SilverWave on Friday, April 16 2004 @ 09:43 PM EDT

Irony ALERT!

Came too see why SCOX was down to $8.37. Could hardly believe the article... (Too much like wish fulfilment.)

But its true!

Bay$tar sticks it to SCOG!!!

Too funny! LOL

See also...

Chickens coming home to roost..

What goes around comes around..

Live by the sword die by the sword...

.....Sorry can't add any more as I’m laughing too much!!!

Good riddance SCOG the world will be a better place without you!

---
Oxymoron of the day is … “SCO's Ethics”

LOL!

I dare you to say it and not laugh!!!


[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Friday, April 16 2004 @ 09:44 PM EDT
"I knew it. I knew it. Well, not in the sense of having the slightest idea,
but I knew there was something I didn't know." -- Willow Rosenberg (Buffy
the Vampire Slayer)

[ Reply to This | # ]

At last... Somebody says it...
Authored by: red floyd on Friday, April 16 2004 @ 10:14 PM EDT
However, I do want to mention that it is possible (although I have no direct evidence at all) that this is a stock that may have been "ramped" from time to time. Stock ramping is a form of price manipulation, and occurs when some market participants act simultaneously to push up a stock price. This kind of action can be done at times when a stock price threatens to fall below, or stay below, important threshold levels such as a conversion ratio connected with a merger or convertible deal, or redemption level associated with, say, a PIPE deal.
Where is the SEC? The bounceback after 19 days below the threshold stinks of ramping.

---
The only reason we retain the rights we have is because people *JUST LIKE US* died to preserve those rights.

[ Reply to This | # ]

Lies, Disinformation, and Misdirection
Authored by: Anonymous on Friday, April 16 2004 @ 10:16 PM EDT
TSG must comply with the judge's discovery order by April 17th or so.

So, the week before, Blepp is creating a noisy media event in Germany with
his briefcase full of millions of lines (so, which shell has the pea?).

Next, two days before the judge's deadline, BayStar reneges on its funding,
and RBC is publicly stating that they are considering it also.

This is contrived like all the other major surprises TSG has pulled. They
do not try to say anything useful. They want to immobilize their victims so
no one takes the optimum actions in response.

IT IS TIME TO PIERCE THE VEIL WITH CANOPY. Put Canopy's money on the
table and play cards. Canopy has hotseating executives and boards. Canopy
is pulling money out of their shell companies regularly. Canopy is forming
shell companies to funnel money.

IT IS TIME FOR TSG TO PROVIDE COMPLETE, PRECISE, AND ACCURATE PROOF.
Force TSG to show all SVRx source files and lines of code in Linux. Ignore
all AIX or other source files since they cannot matter to AT&T copyrights.

This is yet another rat sighting in broad daylight. These people are serious
threats to the whole industry and economy.

[ Reply to This | # ]

Several quotes come to mind
Authored by: Anonymous on Friday, April 16 2004 @ 10:16 PM EDT
First, there's little sorrow for BayStar because
"When you lay with dogs, you get fleas."
and second,
"You can't get blood out of a turnip."
That's what IBM is going to find out in their counter claims.

And finally,
"The form of the monster on whom I had bestowed existence was forever before my eyes, and I raved incessantly concerning him." -- Dr. Frankenstein
Must be what BayStar is thinking. They created the monster, and now must fight it.

One more, but not about BayStar. Just one I've used since all this started,
"It is a tale told by an idiot, full of sound and fury, signifying nothing. -- MacBeth
My opinion of anything that Darl says :->

[ Reply to This | # ]

OT Microshucks
Authored by: bsm2003 on Friday, April 16 2004 @ 10:19 PM EDT
Microsoft Shows Openings, DoJ Not Impressed

[ Reply to This | # ]

Could the Breach be due to Novell?
Authored by: codswallop on Friday, April 16 2004 @ 10:57 PM EDT
We know that Novell was asking for an audit (which never got into an 8K filing
as far as I know - very naughty if so.) If they found more than $1,000,000 due,
that would violate the PIPE agreement.

There's been speculation here as to whether money from the Sun and Microsoft
licenses should have gone to Novell. The APA section 4.16(b) is a bit vague,
and nobody has seen the license agreements, so we don't know exactly what was
licensed. There might also be other money owed.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: mdchaney on Friday, April 16 2004 @ 11:08 PM EDT
Okay, a few thoughts:

1. Uh, Baystar, your money is needed to pay IBM's legal fees. You're even
dumber than we thought if you think you'll see any of it again.

2. They didn't know some of this information because it wasn't in the SEC
filings? It *was* here on Groklaw. A 10 second Google search for "sco
group" would have lead them here to find out about Novell and more. There
is no excuse for not doing that.

3. Blake says "Again, BayStar has not provided specific information about
what it allegedly views is the material adverse change or development..."
That's right, buddy. But, they have evidence of about a million breaches, and
they will share those with you when the time is right. Yeah, they have the
evidence, buddy, just can't show it yet. Hey, they showed it to Laura Didio,
and she's convinced that you breached it. What a schmuck.

[ Reply to This | # ]

Do they mean it?
Authored by: Anonymous on Friday, April 16 2004 @ 11:16 PM EDT
I question whether BayStar actually expect to get their money back, or whether
they just want to establish distance between themselves and SCO. The fact that
SCO promply released this suggests that they were told that either SCO put it
out with their spin, or BayStar would put it out with theirs.
While this makes iot difficult for SCO to get more financing, it seems to me
that they have enough to complete their current plans, win or lose.

[ Reply to This | # ]

Irony goes into overdrive
Authored by: Anonymous on Friday, April 16 2004 @ 11:18 PM EDT
http://www.eweek.com/article2/0,1759,1569643,00.asp

In an interview with eWEEK.com late Friday, Blake Stowell, director of corporate communications for the Lindon, Utah-based SCO, said BayStar's "move came as a complete surprise."

"We received a letter from BayStar [on Thursday]," he said. "In that letter, they indicated to us that we had breached four different sections of the exchange agreement that had been finalized in early February this year. They gave us no hints on how SCO had breached the agreement."
And, if true, that would be how much like SCO's 6 March 2003 letter to IBM, giving notice that SCO would purport to terminate IBM's "AIX license" in 100 days?

According to Stowell, BayStar claims that SCO has breached four sections of the February 5, 2004, agreement, which exchanged BayStar's shares from one type of preferred stock to another. This agreement among SCO, BayStar and the Royal Bank of Canada, which also holds shares of SCO's Series A-1 Convertible Preferred Stock, provided SCO with $50 million.

According to Stowell, BayStar claims that SCO has breached four sections of the February 5, 2004, agreement, which exchanged BayStar's shares from one type of preferred stock to another. This agreement among SCO, BayStar and the Royal Bank of Canada, which also holds shares of SCO's Series A-1 Convertible Preferred Stock, provided SCO with $50 million.
No comment! Except we know the typo
Stowell insisted that SCO has not violated any of the sections.
As IBM do about SCO's claims of breach of contract.

As one example, he said, "the press release about the exchange agreement was sent in draft form to BayStar for their approval and only afterward, on February 6, did we send it."

"How [BayStar] could take issue with this is a mystery to me," he said.


How SCO could have an issue with Linux users who obtained Linux from SCO under the GPL, is a mystery to me too!

Stowell said the company was still in an information-gathering mode and was trying to find out where it stands. Because of this, Stowell said, SCO does not plan to immediately redeem the shares, which would amount to BayStar's entire $20 million and had been meant for use as part of SCO's war chest for its litigation against IBM and Linux customers that had not signed a SCO Unix intellectual property license.

"It's our belief that they'd have to prove we breached the agreement before we'd redeem those shares."
And it's also SCO's belief that they can terminate IBM's "AIX license" without any proof, even when finding proof in the words of their lawyer (Heise) is literally impossible, and they are not able to specify any breach even when ordered to do so by a court.

[ Reply to This | # ]

  • ms cya - Authored by: kelargo2000 on Friday, April 16 2004 @ 11:24 PM EDT
    • ms cya - yep - Authored by: Anonymous on Saturday, April 17 2004 @ 12:25 AM EDT
For the tinfoil-hat crowd...
Authored by: Anonymous on Friday, April 16 2004 @ 11:26 PM EDT
Finally it all makes sense. No, really, it does. All the strange moves, all the crazy twists and turns - every bit of it makes sense now.

But how can it make sense, you ask? I mean, some of this stuff is too wild even for a novel. You wouldn't believe it if you read it in fiction. It all reads like a way-over-the-top financial/legal thriller. Who would write stuff like this?

PJ would.

PJ not only would, she has stated that she will. She's going to write a book about all this, once the dust settles.

Don't you see? It's PJ's fault!

She's the one pulling all the strings, making up crazier and crazier twists and turns, and driving us all nuts. She's orchestrating all of this just to make her book better.

[Note to the humor impaired: It's a joke, not a serious post.]

MSS

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: fireman_sam on Friday, April 16 2004 @ 11:59 PM EDT
Well, let me tell you, I'll be buying the tickets to see the movie when it is
made. This *should* be much better than Antitrust.

The plot:

Huge global company hides in the shadows, playing puppet master to SCO, who
wants the world to believe they hold the rights to the software that will free
computers everywhere.

The resistance of the FOSS community is strong, too strong. SCO's allies begin
retreating until it is just SCO (and the puppet master).

<spoiler warning=yes>
Closure:
A warehouse, on a dock somewhere. Commander Darl is sitting in a chair which is
lit from above by a dirty light hanging from the high ceiling. From the shadows
appears a man wearing a black overcoat, and thick glasses. He speaks "Mr
McBride, you have failed. The FOSS community grows stronger as we speak, and you
have grown weak."

"Your proofs were disected, and disproved by a group of people whom rarely
even meet. The world knows; But they will not know it all, for you will not be
here to tell them of me and mine."

"The fight will continue Mr McBride, I will see to that. No government in
any country can compare to my strength, no company can measure. Although the
fight will continue Mr McBride, you will not. You have served your purpose, and
you did not serve me well. Goodbye, Mr McBride."

The man moves back to the shadows, and Darl is alone, but not for long.
*chik-chik* !BOOM!


Oops, I kinda got carried away at the end there, sorry bout that :)

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: jkondis on Saturday, April 17 2004 @ 12:00 AM EDT
Might this be a reason to think that M$ did *not* underwrite the BayStar
investment, as some have speculated? (Above and beyond just giving Baystar
"good friendly investment advice".)

Or better yet, might this suggest that Baystar/TSG want to just give the
impression that M$ did not underwrite the investment?

---
-----------
Don't steal. Microsoft hates competition.

[ Reply to This | # ]

Is this a good thing?
Authored by: Anonymous on Saturday, April 17 2004 @ 12:32 AM EDT
While wouldn't miss SCO if they folded, do we really want this to all happen
before the end of the IBM lawsuit? Seems like the easy way out to me... What
happens to the lawsuit if SCO dissolves? Will there be a decision and some
finality? What's to stop this from happening all over again with another M$
puppet company?

[ Reply to This | # ]

nonrefundable SCO IP license
Authored by: Anonymous on Saturday, April 17 2004 @ 12:47 AM EDT
EV1 must be looking at their SCO IP license and wondering how soon it will
become a worthless piece of paper. If they were smart (for a change), maybe
their payments are spread out instead of a lump sum.

[ Reply to This | # ]

One Tentacle gone but monster still there? Follow through!
Authored by: spiff on Saturday, April 17 2004 @ 02:34 AM EDT
Whether the Baystar bailout was planned or not, one tentacle looks to have been
ripped off the monster. However is the monster still there, with plenty of other
tentacles waving around? The FOSS community needs to finish the job, otherwise
the next tentacle will just start attacking.

The fight with the first tentacle by all accounts seems to have made the FOSS
community that much stronger; good allies, new communities like Groklaw,
cleanups of potentially grey areas in projects etc. etc. etc.

But what we really need to do is follow through. we need to rip all the other
tentacles off, and rip them off now. We have to sort out the other
vulnerabilities and make sure the tentacles don't get there first, otherwise
this will all start again.

This isn't a finishing trip for vulnerabilities. This is a request to the
community to do something very self-possessed; sort out our own problems before
the monster uses them against us. if we can do that, we'll be absolutely
unstoppable.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Saturday, April 17 2004 @ 03:29 AM EDT
Ten little UNIX lines,
were going to the law
the Grecian line was for the birds
as everybody saw.

Nine little UNIX lines,
presented at the court,
one was not found in LINUX code,
in spite of great effort.

Eight little UNIX lines
the trueness for to see,
one of them instead of this
belonged to BSD.

Seven little UNIX lines,
but one did not cumcumber,
apparently to everyone
it was an error number

Six little UNIX lines,
should support the claim
one GPLed by SCO
could not achieve the aim.

Five little UNIX lines,
as piece of evidence,
the one of former System III
was inapplicable, hence.

Four little UNIX lines,
good tale to be told twice
wasn't code but just comment
bad luck for Mr. Heise

Three little UNIX lines
so sorry, one of them,
was programmed for AIX
and owned by IBM.

Two little UNIX lines
McBride in seventh heaven,
but great letdown: one came from tape
labelled Version Seven.

One little UNIX line,
was not a plus, but minus,
it eaysily was clarified
that's code of good old Linus.

Without any UNIX line,
none left on McBride's behalf,
but everyone have to admit
we had a lot of laugh.

Final remark:
A nursery rhyme shows obviously,
that McBride acts untruthfully.

HelpDesk

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Avenger on Saturday, April 17 2004 @ 03:54 AM EDT
First i thought this is a joke, but it is 15 days after 1st of April.

I guess this means that M$ has no more need of SCO, whatever they needed from
SCO, they already got it. Or BayStar realized it cannot get the money back if it
waits a little more. After the big pumping of the stock this might have come as
a big shock to some poor suckers, not like I pity those who bet on SCO.

[ Reply to This | # ]

What if they told the truth
Authored by: Anonymous on Saturday, April 17 2004 @ 04:47 AM EDT
1) Jr. exec loose cannon at MS calls Baystar, says do us a favor, invest in
SCO.
2) Bill and Steve find out when it went public, just like us.
3) Bill calls Baystar, says do you know what this does to our antitrust cases? I
do not know who you are doing this for, but it is not me or MS.
4) Baystar realizes the deal is only worth what its worth. PANICS!

second point, is Brian Sikaba's exit from Dusche bank releated to this? BTW,
what are the odds Brian was thrown, pushed, jumped?

Dennis

[ Reply to This | # ]

The heise news article
Authored by: Anonymous on Saturday, April 17 2004 @ 06:00 AM EDT

I will attempt a complete translation of the heise news article referred to in the posting.


SCO vs. Linux: A suitcase full of Problems

By way of his statement publicized by Spiegel Online that he has the red-marked proofs of the Linux code theft with him, Gregory Blepp has caused confusion. Blepp is in charge of the SCO Group's worldwide license business outside of North America. In several interviews on the occasion of the CeBIT, Blepp has tried to highlight the position of SCO in the legal dispute with IBM and Novell. Blepp mentioned the proofs in his suitcase to heise online, too, however without showing excerpts from the 1.5 million lines of code that are, according to Blepp, clear proof for the code theft. Now, after an article on Newsforge one is pressed for an explanation. Is it really possible that proofs for a billion dollar dispute are traveling through Germany in a suitcase?

For Gregory Blepp, the publication of these inconsistensies comes at an inconvenient time. For months, SCO investor Baystar Capital has demanded a more professional appearance in Europe. Blepp, who after the investment of Baystar is getting a higher compensation from SCO than originally agreed, is supposed to show more presence and pursue SCO's interests more agressively. Consequently, Baystar emissaries are supposed to have called venture capitalists from Munich this week and asked for records of Blepp's previous work.

Before coming to SCO, Blepp was responsible for Suse's sales. According to a person close to Suse, he came into the company "by order" of the VC Group Apax Partners, in order to execute some layoffs deemed necessary in collaboration with a few Apax specialists. "In fact, he was for some time the real boss appointed by Apax", sais one employee familiar with the activities. Before his appearance at Suse, Blepp managed Blaxxun until its bankruptcy, where he was installed by order of another VC company in order to relive the founder Franz Buchenberger. Previous to that, Blepp worked a few days for Tobit Software to enhance international sales. Other stations of his career were Network Associates and Cheyenne software. In numerous events, Blepp earned the image of a "callous angel".

Blepp's hopes for a stronger SCO presence in Europe now lie with an opinion being furnished by a spanish law firm. It is supposed to prove that Novell's arguments in the dispute for exclusive rights are void by the somewhat different European and international IP law, too.


There you go. Hope it is somewhat clear.

[ Reply to This | # ]

BayStar's letter did not provide specific information regarding SCO's alleged breaches ...
Authored by: Anonymous on Saturday, April 17 2004 @ 06:25 AM EDT
Of course this is only SCO's interpretation of the letter. We can not know for
sure until we see the letter. I expect they send out the press release so they
could attach the press release too the SEC filing and not the original letter.

I'm also wondering if SCO send the press release to Baystar for approval.

H@ns

[ Reply to This | # ]

DiDiot is sad! almost crying
Authored by: ravenII on Saturday, April 17 2004 @ 06:50 AM EDT
Laura DiDio, an analyst with the Yankee Group, called the BayStar development
"distressing to SCO, its customers and other investors.
"If SCO is forced to comply, it could have an adverse impact on the
company's financials and its ability to continue to wage the myriad high-profile
legal battles," she said.
DiDio also noted that BayStar's allegations that, essentially, SCO had not
lived up to the terms of its deal could "make other SCO investors extremely
nervous."

---
"Snowflakes are one of nature's most fragile things,
but just look what they can do when they stick together."

[ Reply to This | # ]

As Gomer Pile would say : Surrprarz, Surrprarz, Surrprarz!
Authored by: garbage on Saturday, April 17 2004 @ 07:34 AM EDT
For those who don't think this is'nt an orchestrated
abusive of the legal &
financial systems - yet ANOTHER
FREAKIN DELAY :

http://www.utd.uscourts.gov/documents/ibm_hist.html

Plaintiff The SCO Group,
Inc. ("SCO") and Defendant
International Business Machines Corporation ("IBM")
jointly stipulate to enlarge time for SCO to respond to
IBM's Amended
Counterclaims ot April 23, 2004, and to
enlarge the time for IBM to respond to
SCO's Motion to
Amend the Scheduling Order to April 30, 2004.

This matter
having come before this Court upon the
stipulation of the parties and for good
cause being found
therefore, the Court hereby ORDERS as follows:

1. SCO
shall have until April 23, 2004, to respond to
IBM's Amended Counterclaims.

2. IBM shall have until April 30, 2004, to respond to
SCO's Motion to Amend
the Scheduling Order.

ENTERED this 15th day of April, 2004
BY THE COURT:

Honorable Dale A. Kimball

[ Reply to This | # ]

  • Discovery? - Authored by: Anonymous on Saturday, April 17 2004 @ 09:27 AM EDT
Did you know they own C++ too?
Authored by: Anonymous on Saturday, April 17 2004 @ 08:00 AM EDT
Sorry for being off topic here, but I really must share
this golden quotation from our friend Darl McBride:

"And C++ programming languages, we own those, have
licensed them out multiple times, obviously. We have a lot
of royalties coming to us from C++."

This was in an interview in 2002 for ZDNet. (You'll easily
find it on Google.) I just can't stop laughing! I had to
share it with you! :)

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TSG playbook
Authored by: phrostie on Saturday, April 17 2004 @ 08:09 AM EDT
according to the TSG Playbook they will need a PR / play ready first thing
monday morning. so what are everyones guesses?

punt?
run it out of bounds?
hand off / fake?

i'm guessing they will be in serious negociations with RBC over the weekend and
they will have a joint annoucement that the world is a wonderful place and that
neither of them understand what BayStar's problem is.

guess that would fall under hand off / fake.

anyone else?


---
=====
phrostie
Oh I have slipped the surly bonds of DOS
and danced the skies on Linux silvered wings.
http://www.freelists.org/webpage/snafuu

[ Reply to This | # ]

  • TSG playbook - Authored by: Anonymous on Saturday, April 17 2004 @ 09:42 AM EDT
  • TSG playbook - Authored by: Anonymous on Saturday, April 17 2004 @ 09:47 AM EDT
Only 2 from former 200 SCO partner left in Germany
Authored by: Anonymous on Saturday, April 17 2004 @ 08:13 AM EDT
Baystar didn´`t need to traval to Europe to reconice that SCO is
losing his clients and economic base in Europe rapidly:

"JeR suggests this translation of the last part: "Emissaries from
Baystar were on the road in Germany this week and showed
little satisfaction with the European development of its
investment partner.""

I would tranlate "wenig Zufrieden" = "unsatisfied". In
September
2003 I was wondering why the SCO Partners in Germany wasn´t
engcouraged to write SCO a letter to concentrate back on their
business IT solutions. On the SCO webpage I found over 200
SCO Partners in the SCO db:

http://wdb1.sco.com/sdir_web/owa/ptrLocator.search
-> Germany

One manager of a SCO partner of my town was surpriced that
SCO is making PR with his name and saw that SCO spend time
to bring this db uptodate - his some weeks old new phonnuber
was on the webpage - but does not have time for patches and
support. He told me that he has already written a resign of his
partnership but is still thinking about the consequences for his
customers - I advice migration from SCO to an trustable *nix -
in my eyes SCO cares only about their FUD and stocks but not
about IT.

Yesterday I found no SCO partner anymore in this db and on
the German SCO webpage there are only two partners left:
http://www.sco.de/partner/distributoren.html

But these partners do not mention SCO on their webpages
anymore. So Baystar needed only to phone all these former
SCO partners anonymous and ask them if they could advice
SCO as *nix solution, if the suport and development of the SCO
productes are still up to date or if they advice other *nix
solutions for a new project.

But it seems that they haven`t made a backup of this partnerlist.
But also a google search "SCO Parter" should made Baystar
fear about their investment:
http://www.google.de/search?q=SCO+Partner&hl=de

From Germany the google hit number one is my critical mail
about SCO Partners in Germany ;) - and this placement is not
manipulated - "SCO Partner" no business advantage anymore.

Baystar would have come more early to the conclusion, SCO is
has become a layer an liar company and isn´t a IT company
that manager would chose for new IT projects.

SCO has lost his partners, his clients and the trust of the IT
branche and was only a "potemkin village" a PR-bubble over
the last 6 (12?) month - but the emissaries wanted to belief in
the PR-boubble and SCO FUD.

So what is the result of the SCO stock manipulation:
- IT people has got a economic lesson
- Economic people has become a lesson that an IT company
will not live longe when they focus on PR, FUD and good IT
products/solutions/support by PR and FUD.

Probably there are other companies with a "potemkin village" of
PR and and a share of the market that could collapse in short
time like SCOs did. ;)

Rob, Aachen, Europe

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MS needs to prserve copyright uncertainty
Authored by: Anonymous on Saturday, April 17 2004 @ 08:54 AM EDT
As an earlier poster said, the last thing that MS needs is to have Linux found
free of all copyright infringement.

So they have cynically decided to sacrifice SCO before that can happen.

But why? My guess is their key weapon in the battle against FOSS is DRM tied to
the CPU. This DRM link to the CPU will be encrypted and MS proprietary
technology. The DCMA rovisions will prevent reverse engineering the link. Thus
the only way for Linux to run on a DRM enabled CPU would be to buy an(expensive)
per CPU licence from MS, and voila, Linux is no longer free!! Btw, expect Sun to
sell these DRM CPU licences in the Unix/Linux world (on MS behalf of course)

Now where does SCO fit in all this? Legislative backing for this scheme is
needed from Congress (we need to protect USA's intellectual property from the
greedy world of thieves) The SCO case was intended to demonstrate rampant
software copyright theft and that therefore software was equally deserving of
protection, along with music and video

[ Reply to This | # ]

SCO vs IBM date moved to April 23
Authored by: Anonymous on Saturday, April 17 2004 @ 10:02 AM EDT
Don't have the link...but read a few days ago and again today...that the date
SCO has to have its stuff in court was moved to April 23 and IBM was moved to
April 30

Also read that IBM lawyers asked for something they didn't get...and weren't
happy when they came out of the court chambers of Judge Kimball...I believe its
in the pacer

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Baystar Sends SCO a Letter
Authored by: Anonymous on Saturday, April 17 2004 @ 10:11 AM EDT
Whait goes around, comes around.
SCO has a lot more to go through in the near future

[ Reply to This | # ]

My response to the story in Cnet: SEC reports
Authored by: Thomas Frayne on Saturday, April 17 2004 @ 10:47 AM EDT
SCOG filed several SEC reports after its controversy with Novell over copyright
ownership started last June. These reports failed to mention the controversy
until Novell published correspondence and Groklaw published an article
mentioning the ommission.

Surely this was a material ommission that breached SCOG's contract with Baystar.
In my opinion, it was also a criminal violation of securities laws.

I filed several complaints with the SEC, starting last September. My January
complaint mentioned this violation.

[ Reply to This | # ]

Why This Timing for Baystar?
Authored by: Scorpio on Saturday, April 17 2004 @ 11:35 AM EDT
Baystar probably has recognized this is NOT a good investment in terms of
capital gains potential and/or they are not getting the respect from SCO they
think they deserve. If Baystar has found any deviations from the
representations made at the time of closing, they would need to take action in a
timely manner. Otherwise, it is assumed they were willing to live with the
mis-representation.

The likely outcomes are (a) either Baystar gets their $20 miilion back promptly
or (b) they squeeze SCO or M$ for "pain and suffering payments."

[ Reply to This | # ]

Why This Timing for Baystar?
Authored by: Scorpio on Saturday, April 17 2004 @ 11:45 AM EDT
Baystar probably has recognized this is NOT a good investment in terms of
capital gains potential and/or they are not getting the respect from SCO they
think they deserve. If Baystar has found any deviations from the
representations made at the time of closing, they would need to take action in a
timely manner. Otherwise, it is assumed they were willing to live with the
mis-representation.

The likely outcomes are (a) either Baystar gets their $20 miilion back promptly
or (b) they squeeze SCO or M$ for "pain and suffering payments."

After writing the above, I found the redemption price is $24 million. Looks
like a good move by Baystar.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Saturday, April 17 2004 @ 01:06 PM EDT
Tomorrow and tomorrow and tomorrow
Creeps in the court's pace from day to day,
Until the last syllables of SCOG's time
And all our Baystars have lighted the fools their way to dusty death...
Out, Out brief SCOG,
Your life is but a poor Darl, who struts and FUDS his hour on the stage...
'Tis an IP Tale, told by an Didiot, full of Stowell and Enderly...
Signifying nothing.


*poof*


With apologies to Wm. Shakespeare


...D

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Baystar Sends SCO a Letter
Authored by: Anonymous on Saturday, April 17 2004 @ 01:22 PM EDT
I don't know if this relevant . In the following form december 2003 PDF:

At baystar There is the following text:

Goldfarb insist that the pendinglawsuit-or -settlement was
not the only reason for the investment:" on the core
bussiness side we liked the entire licensing business,
that SCO was creating. We liked the Credit - they burned no
debt,expenses are low. The Pipe structure we put in place
fit well. And we liked the convertible structure and the
way the dividents fit. Should SCO fail in its lawsuis,
investors are still "pretty well protected".


What i found curious is their stament 'their burned no debt'.
(btw i think the investors proberly found this a high risk
imvestmen, with some good insurance).

That SCo supously did violate the agreement shouldn't be
the only reason why baystar pulled the plug, but also
that the investors didn't have any trust in SCO any more.
This must be so because after sco started all thisuntil
there was no success in court, the burn rate is now much
higher, their unix bussines was failing.

[ Reply to This | # ]

Bay Star verry clever
Authored by: waltish on Saturday, April 17 2004 @ 01:35 PM EDT
ME thinks BayStar didnt make specific allegations cause what they really want is
for SCO stock to plummet below the threshold of the redemption triggers related
to stockprice.

SCO's stockprice was defying gravity by SCO throwing BayStars and RBC money at
the market, buying enough stock to avoid the aforementioned triggers .

I suppose BayStar decided to FUD the market so they could get their money back
before SCO spent it avoiding having to give it back.

You might say SCO got SCOed.
LOL

---
To speak the truth plainly and without fear,
Is a powerfull thing.
PS:Beware the Gestank of SCO.
PPS:SCO's argument does not withstand analysis.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Saturday, April 17 2004 @ 01:39 PM EDT
I didn't read all the comments.

I view this as bad news for open source community. So Microsoft decides to
throw money to create FUD against Linux via SCO. Now that it seems like SCO is
losing, Microsoft decides to take their money back so SCO can stop sueing
everyone and this FUD will never be resolved.

[ Reply to This | # ]

Question re legal fees
Authored by: Anonymous on Saturday, April 17 2004 @ 02:11 PM EDT
Several comments have pointed out that this Baystar letter won't prevent the
discovery, now slated for Apr 24 and 30, I think.

Can SCOG ask for a delay because of "cashflow" problems ('We can't pay
our lawyers for a little while') or some similar excuse?

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: schmuck on Saturday, April 17 2004 @ 03:36 PM EDT
Intel makes too much money off linux
for them to effectively kill it.
(Itanium anyone?)

Anyone who implements such restrictions
is just asking for their market share
to decrease (and even a 5% decline in
market share is huge in this cut-throat
business).

Basically, even thought linux is still a small
part of the market, 2-3% is significant.

[ Reply to This | # ]

Baystar Sends SCO a Letter
Authored by: Anonymous on Saturday, April 17 2004 @ 03:44 PM EDT
Can we do better than Cringley's predictions? SCO drops the case and implodes.
MircoSoft dies of senssience in the distant future.

Can Linux get durable protection from patent infringment from IBM? Can the UNIX
IP be place in the public domain or some benevolent hands? Can the FOSS
community provide would be Darl McBrides of the horrible consequences of
attacking the integrity of the FOSS community? Can we chasten Microsoft or
hasten the end of its nefarious practices?

I would be a Microsoft customer today if I thought that they were an ethical,
with concern for quality and security despitet their monopoly position.

[ Reply to This | # ]

Anybody want to buy some rally cheap IP?
Authored by: Anonymous on Saturday, April 17 2004 @ 03:58 PM EDT
Sold "as is"

Caveat Emptor

P.S. If SCOG files for bankruptcy within 90 days of any payment to Baystar
and/or RBC, would such payments have to be returned for the benefit of Creditors
(Lawyers??)

[ Reply to This | # ]

Baystar Letter - what MS wants
Authored by: phill_wall on Saturday, April 17 2004 @ 07:31 PM EDT
OK.. please shoot me down in flames here BUT ... lets say Baystar and RBC get
their money back. Lets then say that SCO declares bankruptcy.... and someone
buys them out.... like... UMMM MS for example.... or more likely an MS ally.
Then the FUD can continue and continue.. they [the new owner of SCO's IP] can
talk about law suits for 6 - 12 months before actually filing one.. and they
could file very different ones.. etc etc. I mean the ideal would be IBM or
Novell to but it out... but no one can force SCO to sell itself to IBM rather
than someone else (???)

Dont we really want the court actions to be decided - rather than for SCO to die
Just before so the legal answers are put out there for General Business (and
politicians) to see ?

Just a thought...
Phill

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SCO "puzzled" by Baystar Letter
Authored by: yorkshireman on Sunday, April 18 2004 @ 05:36 AM EDT
On IT Managers Journal Stowell expresses puzzlement about the letter.

Stowell told NewsForge: "We're puzzled at what this is about. We believe we have been completely forthright in our disclosures to BayStar all along."

It just doesn't seem likely that BayStar would send this out of the blue unless they were really trying to embarass SCOX in which case they would surely have published the letter.

How unusual do people think it is to file your press release with the SEC BK instead of a copy of the letter which prompted the press release?

It would not surprise me if discussions have been going on for several weeks/months and perhaps SCOX should have filed details with the SEC before Friday.

Is it only when a formal written redemption request is received that SCOX is required to inform the SEC?

[ Reply to This | # ]

A different take on BayStar and MS
Authored by: Thomas Downing on Sunday, April 18 2004 @ 10:12 AM EDT

This may be a bit tin-hat, may be a bit fantasy, but I don't think it is completely out of the realm of possibility.

Item: BayStar has acknowledged that there is at least some (possibly extremely) tenuous connection between MS executives (or ex-executives) and the PIPE deal.

Item:: The Anderer memo surfaces, and is acknowledged to be genuine.

Item:: IBM has requested some pretty far reaching info in discovery. Possibly this might shed some light on the SCO-Anderer-MS connection.

So here's my speculation as to a possible cause of the BayStar bail-out. BayStar is approached by one or more high-level people from MS who say that they think an investment in SCO is a great idea. BayStar does some level of due diligence, which relies heavily on statements of those same MS execs. At the closing of the PIPE deal, BayStar has no idea of the SCO-Anderer-MS connection, nor the Novell complication: BayStar is acting in good faith, they are not shills.

After the Anderer memo is acknowledged, BayStar gets nervous (SEC worries), and starts asking SCO for information. Not happy with what they hear, or don't hear, they get even more nervous. To avoid possible troubles with the SEC, they decide to get out. The the omission of the Novell situation (as evidenced by the Novell-SCO letters) is the pretext they need.

This would be really lovely, but unfortunately the odds are probably rather low.

---
Thomas Downing
Principal Member Technical Staff
IPC Information Systems, Inc.

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