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Wait a Minute. What Was That Darl Said About New Deals in 2003? - Updated
Sunday, July 26 2009 @ 08:10 AM EDT

Something clicked in my brain when I was slogging through the list of contracts SCO says it would like to transfer to unXis and its list of licensees going back to the '70s, which you can find as Exhibit A here and as Exhibit A continued here.

For some reason, it made me think about the 4Q teleconference SCO held on December 22, 2003 when it announced SCOsource and CEO Darl McBride listed customer deals during "the previous quarter". Would Exhibit A match his 2003 list? The exhibit does provide the years for most of the deals, so why not see?

Here are the SCO deals he mentioned as happening in that quarter of 2003:

Before we move on to today's SCOsource announcements, I'd like to make a few comments on our core Unix operating business. In our OpenServer and UnixWare product lines, we continue to see good uptake from existing customers while attracting new customers in our key vertical markets, which encompass large as well as small to medium businesses. Let me just rattle off a few of the customer deals that we completed transactions with during the previous quarter.

In North America the list would include organizations such as: the Department of Justice, Lockheed Martin, US Air Force, Accent Oil, Goodyear, AT&T, Avaya, CSK Auto, Pinkertons, 84 Lumber, Cracker Barrel Restaurants. McDonald's, GE Aircraft Engines, Daimler-Chrysler, and NASDAQ. To move on to Europe, we are looking at organizations like Barcrest, Marconi, Dolond and Atchison, Fleet Air Army, and Argos; in Germany BMW; out of Italy, Ministry of Finance. Moving on to AsiaPac area: out of Japan, we have companies like Toshiba, Matsushita Electronics, and Image Partner. Out of Taiwan: LCC, Taiwan educational training group. In China: China Central Bank, Peoples Bank of China, Highway Administration, and Shandong Province. In India: India Overseas Bank, Bank of Pakistan, and Bank of India.

You'll notice that he mentioned DaimlerChrysler as doing a deal in that quarter, but later, when SCO sued DaimlerChrysler, it said, and proved in court, that it had not used SCO's software in many years, almost a decade. Was anything on that list accurate? I thought it would be useful to take a look, now that we have Exhibit A available.

Did SCO really get all that new business in 2003? If it did, I can't find it on the exhibit. Of course, we know from the exhibits to the proposed APA that there is a schedule called Excluded Assets, which says SCO is retaining or not assuming all contracts not on the Exhibit A list. But when I show you all that is missing, it will have you scratching your head, if that is the explanation. If it isn't, it leaves two possibilities: 1) it wasn't true what he said, for whatever reason; or 2) SCO doesn't keep track of its deals very well, and Exhibit A is not complete. Both of those possibilities are disturbing, of course, but one is worse than the other.

Shouldn't there be a list of contracts that are excluded? It explains why Novell's lawyer ended up emailing SCO's lawyer to ask, what about the 1995 APA? Is it going to be assumed or not? He asked for an answer so he wouldn't have to "wade through" Exhibit A. I get that. Totally.

Here's the list again from the teleconference, but alphabetized, to make it easier to compare with SCO's Exhibit A, in all its many parts. (Note that the Exhibit A continued [PDF] is identical, as far as I can tell, with Ex. A, Part 1 [PDF].)

I've made some notations. If I couldn't find any agreement with the named entity on Exhibit A, it will be marked 'No'. If, on the other hand, there wasn't a 2003 deal, but there was one earlier or later with that entity, you'll find it so marked, with the details on where to find it in the exhibit. And some, particularly on the list of packaged products customers, had no dates at all, so on those I put a question mark. Here's the list from the teleconference and what I found on Exhibit A:

  • 84 Lumber - ? (Unknown, as no date is provided, but you'll find them as having bought a packaged product -- more precisely as a "Packaged Product Cure Customer -- on page 2 of Ex. A, Part 2 [PDF].)

  • Accent Oil - No

  • Argos - ? (There's a team services agreement in 2002, found on page 24 of Ex. A, Part 1 [PDF] and they are on the packaged product customer list on page 3 of Ex. A, Part 2 [PDF], but no year given)

  • AT&T - ? (It is listed as a packaged product customer on page 30 of Ex. A, Part 2 [PDF], but no year is given, and other than that there are agreements and supplements in the '80s and '90s on page 33 and 34 of Ex. A, Part 4 [PDF], but the most recent was in 1994. AT&T Singapore signed a deal in 1993, which you will find in Ex. A, Part 1 [PDF] on page 3, and AT&T Global California Software signed in 1995, found on page 18 of Part 1. On pages 37 and 38 of Part 1, there are also some source licenses from the '90s. And it is on the packaged product list on p. 4 of Ex. A, Part 2 [PDF].)

  • Avaya - Yes (A custom engineering agreement in 2003 is listed on page 7 of Ex. A, Part 1 [PDF] and an engineering services agreement in 2004 on page 16. It is also listed as a packaged product customer on page 4 of Ex. A, Part 2 [PDF] but no year given.)

  • Bank of India - No

  • Bank of Pakistan - No

  • Barcrest - No

  • BMW - No (There is an agreement in 1989 and supplements up to 1991, found on page 39 of Ex. A, Part 4 [PDF].)

  • China Central Bank - No

  • Cracker Barrel Restaurants - No

  • CSK Auto - ? (There is an agreement in 1997, found on page 5 of Ex. A, Part 1 [PDF] and on page 21 there are two, in 2004 and 2005 and on page 24 another one in 2004, a team services agreement, and on page 54 another two dated 1987 and supplemented in that year and 1990. Also it is listed as a packaged product customer on npage 8 of Ex. A, Part 2 [PDF].)

  • Daimler-Chrysler - No (Agreements in 1988 and 1997 by Chrysler; supplements in the same years in Ex. A, Part 4 [PDF] and on page 7 of Ex. A, Part 1 [PDF])

  • Dollond & Aitchison - No

  • Fleet Air Arm - No

  • GE Aircraft Engines - No

  • Goodyear - ? (It is listed as a packaged product customer on page 12 of Ex. A, Part 2 [PDF], but no year given.

  • Highway Administration - No (This one is unclear, but the only highway anything I noticed was on page 27 of Ex. A, Part 1 [PDF], an agreement in 1997 with a Delaware entity, General Instrument Corporation of Delaware Highway Information.)

  • Image Partner - No (There's an Imag Industries and an Imagen on p. 17 of Exhibit A, Part 5 [PDF], but neither has licensed anything since the '80s)

  • India Overseas Bank - No

  • Italy, Ministry of Finance - No

  • LCC - No

  • Lockheed Martin - ? (It is listed as a packaged product customer on page 15 of Ex. A, Part 2 [PDF], but no year is given.)

  • Marconi - No (There is an agreement on page 17 of Ex. A, Part 1 [PDF], but it's for the year 2000.)

  • Matsushita Electronics - No

  • McDonald's - ? (There is an agreement listed on page 7 of Ex. A, Part 1 [PDF] was in 2002 and on page 25 there is a team services agreement in 2004. But it is also listed, without a year given, as a packaged product customer on page 16 of Ex. A, Part 2 [PDF].)

  • NASDAQ - ? (It is listed as a packaged product customer on page 18 of Ex. A, Part 2 [PDF], but no year is provided.)

  • Peoples Bank of China - No

  • Pinkertons - No

  • Shandong Province - No

  • Taiwan educational training group - No

  • Toshiba - No (Agreements found in Ex. A, Part 3 [PDF], on pps. 51-53, in the years 1982, 1984, 1985, and 1986; supplements in 1987-1994 and also on p. 50 of Ex. A, Part 6 for 1986, and on page 17 of Ex. A, Part 1 [PDF] for the year 2002.)

  • US Department of Justice - No

  • US Air Force - No (Agreements in 1977, 1979, and 1984; updated most recently in 1988 found on page 54 of Ex. A, Part 6 [PDF] and on page 55, agreements for 1982, 1983, 1985, 1987, 1990, 1991, 1992. Supplements listed but no years provided, but the most recent release of Unix System V is Release 3.1. The Air Force Institute of Technology licensed in the 80s, found on page 27 of Ex. A, Part 4 p[PDF].)
The Air Force is the most surprising, considering the letter from a contractor saying the Air Force can't make it without OpenServer. But look at all the No's on the list, almost the entire list. And that's excluding all the unknowns, who probably aren't all 2003 deals, if any of them are.

Avaya's did happen in 2003. The only substantive deal I can find in 2003, although not on Darl's list, is with Gallo Winery. That's on page 6 of Ex. A, Part 1 [PDF].

What does it mean? Maybe nothing. Maybe something. It's a mystery. Perhaps others who have done discovery or can do it will be able to solve the puzzle someday.

I also couldn't help but notice that the 1999 Master Distributor Agreement with SCO China is being sent to UnXis, should SCO's ship come in on the 27th. What exactly is the deal with SCO China (Dascom)? That is found on page 18 of Ex. A, Part 1 [PDF], along with a separately listed Dascom distribution agreement in 1998 and on page 58 three Dascom (Holdings), Ltd. source licenses in 1990 and 1992. And SCO Software China, in the Dascom Bldg, is also listed as a packaged product customer -- "AFFILIATED DISTRI" -- on page 23 of Ex. A, Part 2 [PDF]. I mention this because it occurs to me that a couple of the items mentioned by McBride in that teleconference in 2003 might have been deals done by SCO China and so maybe are not on the list for that reason.

And I see USIS listed as a packaged product customer on page 27 of Ex. A, Part 2 [PDF]. There was a USIS affiliated with the Carlyle Group at one time. I used to see them on the logs, visiting Groklaw in the early days, which at the time puzzled me greatly. But now, with Steve Norris having been at Carlyle once, could that be the missing link as to how they knew about SCO?

Microsoft Licensing is listed on page 30 of Part 2 also, under the heading "Packaged Product Cure for 3PR", as is Novell. There is also a listing for Microsoft on page 30 of Ex. A cont., Part 1 [PDF] for Xenix code, but it's listed for $44,395, not $158,000+, the amount Microsoft Licensing just transferred to LNS.

If you see anything I missed, let me know, so I can correct any mistakes. I'm guessing though that you'd rather have a tooth pulled than wade through all those lists. I'm perhaps the only person on earth who has done it, and I am for sure a bit cross-eyed from all the effort to be accurate. But not too exhausted that I can't find this email from a guy at DTR reporting on June 15th that SCO had been sold to Norris, which of course turns out to be not precisely true:

---------- Forwarded message ----------
Date: Sun, 21 Jun 2009 10:00:08 -0700
From: Jack Cipriano
Subject: SCO Group Inc has been SOLD

Here is GREAT news for the SCO Community.

On Monday 6-15-09 SCO was purchased by the Steven Norris Group.

Novelle and IBM's bid to force SCO into closing their doors failed, as a last minute deal was worked out to keep SCO in business, and the Court decided it was in everyone's best interest to allow the purchase to go through.

All creditors will be paid in full.

SCO will come out of Chapter 11 as a viable company.

SCO Unix licenses will continue to flow.

An official announcement will be sent in the next few weeks.

Rene Beltran, Executive Vice President of DTR Business Systems, was asked by SCO to appear in Court to give the Court some compelling reasons why SCO should not be forced into Chapter 7 Bankruptcy.

Although Rene's voice was not needed due to the last minute buyout, he was ready and willing to do his best to sway the Court in SCO's favor.

Jeff Hunsaker, President of SCO said "DTR's loyality will forever be appreciated by every one at SCO".



Visit our "Entirely NEW" Web site at:
Jack Cipriano

Beltran was one of the individuals that IBM deposed. SCO Group also portrayed the deal as "definitive" on its website, if you recall, the page that explains the proposed deal []. I wonder how they will explain that on the 27th?

Update: Groklaw member sumzero points out something I had never thought of, about the claim to have closed a deal with DaimlerChrysler in late 2003:

if scog had just completed a deal with dc in the previous year, why did they then send the correspondence re: the suit to an out of date dc business address? surely they would have updated their records upon closing that deal if it had actually happened.
Keep in mind that SCO sued DaimlerChrysler on March 3, 2004. Would they have forgotten or misplaced a new address that fast? But it gets even stranger. When DaimlerChrysler answered SCO's complaint with a Motion for Summary Dismissal, DaimlerChrysler said this is what happened:

1. In 1988 Chrysler Motors Corporation ("Chrysler"), and AT&T Information Systems, Inc. ("AT&T-IS") entered into the AT&T Information Systems, Inc. Software Agreement, Agreement No. SOFT-01341 (the "License Agreement") for the license of certain AT&T-IS software products. See Complaint ("Cmpl.") Exhibit A (License Agreement) at 1.

2. DaimlerChrysler is Chrysler's successor-in-interest to the License Agreement. See Affidavit of Paul R. Eichbauer ("Eichbauer Aff.") (attached hereto as Exhibit A) Exhibit 1.

3. The software products that AT&T-IS licensed to DaimlerChrysler pursuant to the License Agreement included "UNIX System V Release 3.0 Source Code" and certain modifications and certain derivative works based thereon. See Compl. Exhibit A (License Agreement) 2.01 and attached Schedule at 4, 5, 6.

4. Section 2.05 of the License Agreement provides:

On AT&T-IS's request, but no more frequently than annually, Licensee shall furnish to [AT&T-IS] a statement, certified by an authorized representative of Licensee, listing the location, type and serial number of all Designated CPUs hereunder and stating that the use by Licensee of Software Products subject to this Agreement has been reviewed and that each such Software Product is being used solely on such Designated CPUs (or temporarily on back-up CPS) for such Software Products in full compliance with the provisions of this Agreement.
Compl. Exhibit A (License Agreement) 2.05 (emphasis added).

5. SCO claims to be the successor to AT&T-IS's rights under the License Agreement. See Compl. 19 and Exhibit B (Letter from Bill Broderick to Chrysler Motors Corp. dated December 18, 2003 ("SCO Letter")).

6. On or about December 18, 2003, SCO sent a letter addressed to the "Chief Executive Officer of Chrysler Motors Corporation" in Highland Park, Michigan purporting to seek a certification from DaimlerChrysler pursuant to Section 2.05 of the License Agreement. See Cmpl. Exhibit B (SCO Letter).

Notice the date? December 18, 2003. It means that the letter to "Chief Executive Officer of Chrysler Motors Corporation" to a wrong address in Michigan was sent 4 days prior to the press conference on December 22nd, at which Darl claimed a deal with DaimlerChrysler had closed in the last quarter of 2003. And I note he didn't call them Chrysler Motors, which would have matched the letter they sent.

Things that make you go Hmm.

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