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Affidavit of Greg Jones, as text
Monday, October 08 2007 @ 03:28 AM EDT

Here is the Affidavit of Greg Jones in Support of Motion for Relief From Automatic Stay and Motion for Order directing the Debtors to Remit Royalties [PDF] as text. The two motions this affidavit support are here and here. And here are the exhibits referenced, Exhibit A, the APA, and Exhibit B and B-1, the August 10 District Court ruling in SCO v. Novell.

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

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re:

The SCO Group, Inc., et al.,

Debtors.

_____________________________

Chapter 11

Case No. 07-11337 (KG)
(Jointly Administered)

_________________________________



AFFIDAVIT OF GREG JONES IN SUPPORT OF
MOTION FOR RELIEF FROM AUTOMATIC STAY AND
MOTION FOR ORDER DIRECTING THE DEBTORS TO REMIT ROYALTIES

Greg Jones, being duly sworn, deposes and states the following:

1. I am Vice President, Law-Technology, of Novell, Inc. ("Novell") and submit this affidavit in support of Novell's (a) Motion for Relief From Automatic Stay to Proceed With District Court Action to (I) Apportion Revenue From SCOsource Licenses and (II) Determine SCO'S Authority to Enter Into SCOsource Licenses; and (b) Motion for Order Directing the Debtors to Remit Undisputed Future SVRX Royalties to Novell upon Receipt. Unless otherwise indicated herein, I have personal knowledge of the facts set forth, in this affidavit.

The Asset Purchase Agreement

2. On or about September 19, 1995, Novell entered into an Asset Purchase Agreement (the "APA") with The Santa Cruz Operation, Inc. ("Santa Cruz"), who was The SCO Group, Inc.'s ("SCO") predecessor in interest.1 Pursuant to the APA, Novell transferred UNIX SVRX software licenses to SCO but retained all UNIX and UnixWare copyrights (the "Unix Copyrights"). Licenses to SVRX generate a royalty payment stream paid by licensees (the "SVRX Royalties"). A true and correct copy of the APA is attached hereto as Exhibit "A."

3. According to Section 1.2(b) of the APA, SCO agreed to collect and remit 100% of the SVRX Royalties to Novell. SCO is entitled to a 5% administration fee. The APA requires SCO to collect and remit the entire amount to Novell and then Novell would pay SCO the administrative fee. The parties' actual practice was for SCO to account for 100% of the SVRX Royalties and remit 95% to Novell. It is my understanding that SCO does not dispute its obligation to collect and remit SVRX Royalties from at least those SVRX licenses in existence at the execution of the APA (the "Undisputed SVRX Royalties").

4. According to Novell's books and records, Novell received from SCO $696,413.67 in Undisputed SVRX Royalties from the third quarter of 2006 through the second quarter of 2007.

5. Novell estimates that SCO will continue to remit to Novell between $500,000 and $800,000 annually in Undisputed SVRX Royalties (the "Undisputed Future SVRX Royalties").

6. Under the APA, SCO is given 45 days from the end of each fiscal quarter to remit the SVRX Royalties. The first payment of Undisputed Future SVRX Royalties is due on November 14, 2007, 45 days after the close of the third quarter of 2007.

7. Novell intended with the APA to retain all Unix Copyrights and to protect its interest in all SVRX Royalties. In the event that SCO ultimately went into bankruptcy, the Unix Copyrights and the SVRX Royalties would, thus, not be part of the bankruptcy estate. The retention of the Unix Copyrights also protected Novell's other Unix-related interests, including the rights to negotiate buyouts of SVRX licenses, receive future revenues, and ensure development of future versions of the UNIX operating system.

2

The District Court Action and Ruling

8. On or about January 20, 2004, SCO sued Novell for slander of title based on public statements Novell made claiming that it had retained UNIX and UnixWare copyrights pursuant to the APA.

9. Novell has pursued counterclaims to the action.

10. Both SCO and Novell submitted motions for summary judgment on the various claims and counterclaims (the "Summary Judgment Motions").

11. Hearings on the Summary Judgment Motions were held on January 23, 2007, May 31, 2007, and June 4, 2007.

12. On August 10, 2007, the Honorable Dale A. Kimball, United States District Judge for the District of Utah, Central Division, issued a Memorandum Decision and Order in the matter of The SCO Group, Inc. vs. Novell, Inc. (the "District Court Rulings") on the Summary Judgment Motions. A true and correct copy of the District Court Rulings is attached hereto as Exhibit "B."

13. The District Court Rulings determined that at least two types of licenses of assets transferred under the APA generate or will generate SVRX Royalties: (1) SVRX licenses Novell assigned to SCO pursuant to the APA; and (2) SCOsource buyout licenses SCO entered into with others, including Sun Microsystems, Inc. and Microsoft Corp. in 2003 (the "Sun and Microsoft Licenses"), Exhibit B at 2, 89, 96.

14. The District Court Rulings determined that Novell is the owner of the Unix Copyrights and that SCO was in breach of the APA and owed the SVRX Royalties it had collected to Novell because of SCO's breach of fiduciary duty, conversion, unjust enrichment and breach of express contract. Exhibit B at 62, 96-97. The District Court Rulings dismissed the

3

majority of SCO's causes of action, including the underlying slander allegations. Exhibit B at 99-102.

15. Following entry of the District Court Rulings, the District Court scheduled a trial for September 17, 2007 to determine the amount of SVRX Royalties SCO owes to Novell for the Sun and Microsoft Licenses, as well as entitlement to revenue from additional SCOsource licenses, among other issues.

_______[signature]____

Sworn to before me this 4th day of October, 2007

___[signature]___
Notary Public

1 This Affidavit shall hereinafter refer to obligations under the APA as obligations of SCO.

  


Affidavit of Greg Jones, as text | 187 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Affidavit of Greg Jones, as text
Authored by: PJ on Monday, October 08 2007 @ 03:30 AM EDT
This is a bit embarrassing, but could whoever
sent me the OCR of SCOGBK-E.pdf, the creditor
matrix list with the addresses redacted, please
can you resend? I can't find it readily.

[ Reply to This | # ]

Off topic thread starts here
Authored by: Totosplatz on Monday, October 08 2007 @ 03:33 AM EDT
Please make links clicky.



---
Greetings from Zhuhai, Guangdong, China; or Portland, Oregon, USA (location
varies).

All the best to one and all.

[ Reply to This | # ]

Corrections thread here (sense of duty)
Authored by: Totosplatz on Monday, October 08 2007 @ 03:41 AM EDT
Post corrections here - suggest the correction in the title, please!

---
Greetings from Zhuhai, Guangdong, China; or Portland, Oregon, USA (location
varies).

All the best to one and all.

[ Reply to This | # ]

News Picks thread
Authored by: Totosplatz on Monday, October 08 2007 @ 03:43 AM EDT
Here is the news picks thread ---

Please make links clicky!



---
Greetings from Zhuhai, Guangdong, China; or Portland, Oregon, USA (location
varies).

All the best to one and all.

[ Reply to This | # ]

Affidavit of Greg Jones, as text
Authored by: Ian Al on Monday, October 08 2007 @ 04:44 AM EDT
If Judge Gross thought the Novell lawyers were laying it on a bit thick, this
terse and unemotional affidavit puts the SCOG business/litigation activities
into high relief.

We now see if he can keep his temper in check in the face of SCOG proposing that
they can reorganise themselves into a successful company with the same
management as before.

I have pictured Judge Gross as having the patience of St. Kimball, but I have
been wrong in the past. I hope I am not wrong this time as SCOG receiving a good
cluestick beating on the steps of the court might be good for the soul, but not
for the law.

---
Regards
Ian Al

Linux: Genuine Advantage

[ Reply to This | # ]

Affidavit of Greg Jones, as text
Authored by: The Mad Hatter r on Monday, October 08 2007 @ 07:10 AM EDT

Nice. Can't wait to see what Judge Gross decides. I rather suspect that it won't
be anything TSCOG will like, and that we'll soon start hearing about all of
Judge Gross's rulings that have been overturned...


---
Wayne

http://sourceforge.net/projects/twgs-toolkit/

[ Reply to This | # ]

Affidavit of Greg Jones, as text
Authored by: Harry Nicholls on Monday, October 08 2007 @ 09:04 AM EDT
I don't understand why Greg Jones would submit as an exhibit the APA in its
original form without reference to, or attaching also the amendments 1 and 2. He
references the payment schedule for royalties collected as 45 days following
each fiscal quarter, but did not amendment 1 change that to within one calender
month of each calendar month, SCO shall remit 100% of all royalties collected,
except those SCO was entitled to retain ... 4.16(a)?

Harry Nicholls

[ Reply to This | # ]

SCO's confusing tactics pay a small dividend
Authored by: Anonymous on Monday, October 08 2007 @ 09:26 AM EDT
I notice that even the SCO Group, Inc.'s adversary have fallen into the trap the
set when they changed their name from Caldera to SCO. In the memo Greg say that
"Novell transferred UNIX SVRX software licenses to SCO" when he should
have said 'Novell transferred UNIX SVRX software licenses to Santa Cruz'.

A small mistake, but one that someone new to the litigation may not catch, and
thus give more weight to any claim SCO makes in reference to the APA.

Not that it's going to help much in the end.

I hope Greg is reading Groklaw so he can fix this minor oversight.

[ Reply to This | # ]

Novell motion is for a subset of the collected royalties
Authored by: Anonymous on Monday, October 08 2007 @ 10:29 AM EDT
The Novell motion is restricted to royalties collected by the two bankrupt organizations and not its world wide affilitates (viz. Note 3 on the Docket 90 filing.)

3. SCO and some of its affiliated entities are required to remit SVRX Royalties generated worldwide. The only SVRX Royalties subject to this Motion are those remitted by SCO, not by its affiliated entities.
Groklaw text of Docket 90

Observation of the restricted cash payable to Novell liability on the SEC 10-Q forms shows the flux in this account payable is 1.5 to 2.5 million dollars every six months. This indicates the majority of the payable to Novell royalties are paid outside the scope of this motion, which cites a historic payment of $696 thousand for 2006-2007.

The strategic and procedural reasons Novell and SCOX have both excluded the overseas royalty streams are worth watching.

From Edgar 10-Q and !0-K filings
Restricted cash at end of SCO fiscal quarters (year end Oct 31):
Q1 2003 .... 1,250,000
Q2 2003 .... 1,779,000
Q3 2003 .... 1,428,000
Q4 2003 .... 2,025,000

Q1 2004 ...... 550,000
Q2 2004 .... 3,203,000
Q3 2004 ...... 506,000
Q4 2004 .... 3,283,000

Q1 2005 ...... 604,000
Q2 2005 .... 4,007,000
Q3 2005 ...... 425,000
Q4 2005 .... 2,815,000

Q1 2006 ...... 912,000
Q2 2006 .... 3,200,000
Q3 2006 ...... 449,000
Q4 2006 .....2,978,000

Q1 2007 ...... 519,000
Q2 2007 .... 1,995,000
Q3 2007 ...... 431,000

(stats not logged in)

[ Reply to This | # ]

SCOG Bankruptcy Docket # 108 TeHe
Authored by: Anonymous on Monday, October 08 2007 @ 02:52 PM EDT
This is new (to me):
The SEC is on the (Service List).

[ Reply to This | # ]

Yoo Hoo Mr Bankruptcy Judge
Authored by: Anonymous on Monday, October 08 2007 @ 03:01 PM EDT
Daryl spews SCO's business outline
We haven't had a new product in our OpenServer base in years and years. The
second dial is the 2.5 million Linux servers out there today that are paired
with our intellectual property in them. We have a licensed product $699, $1,399.
Chris is driving that and that's another multi-billion-dollar revenue
opportunity. The third bucket has to do with the IBM settlement. We filed that
at $3 billion. Every day they don't resolve this, the AIX meter is still
ticking." 11/18/2003

OpenSewer was abandonware. The only revenue was from conversion , and lawsuits.



[ Reply to This | # ]
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