Weather Underground, Incorporated v. Navigation Catalyst Systems, Incorporated et al

Filing 205

RESPONSE to 189 MOTION for Partial Summary Judgment filed by Weather Underground, Incorporated. (Attachments: # 1 Index of Exhibits, # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D, # 6 Exhibit E, # 7 Exhibit F, # 8 Exhibit G, # 9 Exhibit H, # 10 Exhibit I, (Schaefer, Enrico) Modified on 8/17/2011 (DWor). [EXHIBITS D THROUGH I ARE SEALED PURSUANT TO 208 ]

Confidential - Under Seal

1
2
3
4
5

THE WEATHER UNDERGROUND, INC., )

6

1

)

7
8
9
10
11
12

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN

a Michigan Corporation,

Plaintiff,
vs.

)
)
)

) Case No. 2:09-CV-10756

NAVIGATION CATALYST SYSTEMS,

INC., a Delaware corporation;

)

) Volume I
)

BASIC FUSION, INC., a Delaware )
corporation; CONNEXUS CORP., a )
Delaware corporation; and

)

corporation,

)

FIRSTLOOK, INC., a Delaware

Defendants.

)
)
)

13
14
15
16
17
18
19
20
21
22
23
24

_______________________________)

Reported by:

Linda D. White

25

NDS Job No.:

142760

- CONFIDENTIAL - UNDER SEAL DEPOSITION OF ARTHUR V. SHAW
Los Angeles, California
Wednesday, June 8, 2011

CSR No. 12009

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal
15

09:31:47

1

A.

Yes, CEO.

09:31:59

2

Q.

When was NetBlue created relative to your

3

affiliation with the company?

4

your affiliation?

I assume prior to

09:32:09

5

A.

Prior, yes.

09:32:11

6

Q.

How long had it been around?

09:32:16

7

A.

I don't know.

09:32:25

8

Q.

So it was a relatively new company?

09:32:28

9

A.

Yes.

09:32:31

10

Q.

And when you became affiliated with

I can estimate 18 months.

11

NetBlue, what was it doing?

12

did NetBlue do?

What kind of business

09:32:39

13

A.

Online marketing.

09:32:45

14

Q.

And when you joined NetBlue in 2005, did

15

it have any other subsidiary companies that it was

16

affiliated with?

09:33:01

17

A.

Did NetBlue have subsidiaries?

09:33:03

18

Q.

Correct.

09:33:04

19

A.

I don't recall.

09:33:14

20

Q.

When you joined NetBlue in 2005, was it

21

involved in the acquisition and monetization of high

22

traffic domain names?

09:33:32

23

A.

I'm not sure I understand the question.

09:33:34

24

Q.

All right.

25

We'll come back, because we're

going -- I want to discuss what eventually Connexus

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1

and Traffic Marketplace and Firstlook and Basic

2

Fusion and Navigation Catalyst all did, and what

3

their business model was.

4

easier to circle back.

09:33:57

5

A.

Okay.

09:33:58

6

Q.

All right.

7
09:34:12

8
9

09:34:18

16

10

And so it's probably

Sure.
At some point did NetBlue have

subsidiary companies underneath it?
A.

I don't recall the legal structure of

NetBlue.
Q.

Do you recall when you joined NetBlue,

11

whether Navigation Catalyst was affiliated with

12

NetBlue?

13

under your watch?

Or is that something that was created

09:34:27

14

A.

No.

09:34:30

15

Q.

I'm sorry.

09:34:30

16

A.

Not --

09:34:31

17

Q.

It was a poor -- it was a poor question,

18

because I asked you two questions --

09:34:33

19

A.

Two questions --

09:34:34

20

Q.

-- at one time.

09:34:35

21

A.

Navigation Catalyst was not part of

22
09:34:47

23
24

09:34:59

25

NetBlue.
Q.

Was Navigation Catalyst a company that was

created while you were at NetBlue?
A.

I don't know when Navigation Catalyst was

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
09:35:02

created.

2
3

17

Q.

Were you involved in the formation or

creation of Navigation Catalyst?

09:35:06

4

A.

No.

09:35:16

5

Q.

At some point did Navigation Catalyst

6
7
09:35:32

become a -- an affiliated subsidiary of NetBlue or
NetBlue Vendare, Media or Connexus?

8
9

09:35:41

A.

The best of my knowledge,

Navigation Catalyst was started by Vendare.

10
11

Yes to.

Q.

So when NetBlue merged, you inherited

Navigation Catalyst?

09:35:46

12

A.

Correct.

09:35:57

13

Q.

All right.

14

Are you familiar with Basic

Fusion, the company?

09:36:03

15

A.

Yes.

09:36:04

16

Q.

And what did Basic Fusion do or what do

17

they do?

09:36:17

18

A.

Well, I'm --

09:36:24

19

Q.

How would you personally describe what

20
09:36:30

21
22

09:36:40

they do?
A.

I'm not sure I have clarity on what was in

the Basic Fusion versus Navigation Catalyst.

23

MR. CLARK:

24

Okay.

25

And Will doesn't get to testify.

///

That's a fair answer.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
09:36:46

BY MR. CLARK:

2

Q.

18

So your comment was is that you're having

3

difficulty distinguishing which company performed

4

what function?

09:36:54

5

A.

Correct.

09:36:58

6

Q.

Okay.

7

Was Basic Fusion a Vendare Media

company, do you recall?

Did they bring that to --

09:37:06

8

A.

Yes, I believe so.

09:37:07

9

Q.

-- NetBlue?

09:37:08

10

A.

I believe so.

11
09:37:18

12
13

They bought that to the

combination of Vendare NetBlue.
Q.

All right.

What about a company called

Firstlook, are you familiar with Firstlook?

09:37:22

14

A.

Yes.

09:37:23

15

Q.

And how would you describe what Firstlook

16
09:37:29

17
18

09:37:52

19

does as a company?
A.

Firstlook owns domains.

And monetizes

traffic.
Q.

All right.

And was Firstlook a Vendare

20
21

I say "you," NetBlue, in the merger or is that

22
09:38:02

company that you inherited in the merger?

something that NetBlue created?

23
24

09:38:08

25

A.

Inherited under a different name.

And when

It was

renamed Firstlook.
Q.

All right.

What was it when the companies

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
09:38:12

merged?

2

A.

3
09:38:40

19
I believe it was called New.net.

And,

yes, it was inherit -- it was from the Vendare side.

4

Q.

When NetBlue and Vendare merged companies,

5
6
09:38:52

what was the name of the survivor company of that
merger?

7

A.

8
09:39:05

Vendare NetBlue.

9
10

I believe the parent company was called

Q.

Can you describe in general terms what the

merger entailed?

11

Was it a stock transfer where one company

12

offered stock to the other in exchange for as a --

13

and resulted in the merger of the companies, or was

14

it a purchase acquisition?

15

it?

How would you describe

09:39:44

16

A.

I don't recall.

09:39:46

17

Q.

Were you involved in the discussions or

18

negotiations concerning that merger?

09:39:53

19

A.

Yes, I was.

09:39:53

20

Q.

All right.

And from the NetBlue

21

perspective, what was attractive about what Vendare

22

was doing at the time of the merger that interested

23

your company?

09:40:08

24

A.

It was a breath of online businesses.

09:40:21

25

Q.

And what did Vendare do in general terms?

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
09:40:27

2

If you could -- if you would list those for me.
A.

20

There was a business called Traffic

3

Marketplace, which was predominantly a display

4

business.

09:40:39

5

Q.

Advertising display?

09:40:40

6

A.

Yeah.

Display is the picture that shows

7
8
09:40:53

up on a website, generally speaking.
New.net business.

9
10

Q.

There was the

There was an affiliate business.

Now, the New.net, that was what eventually

became Firstlook?

09:40:59

11

A.

Correct.

09:41:00

12

Q.

And you referenced that they own and

13

monetize a domain names or sites?

09:41:09

14

A.

Correct.

09:41:13

15

Q.

Can you tell me a little bit more about

16
09:41:22

17

the New.net/Firstlook business model, what was that?
A.

The business was the registration of

18
19

domain.

20
09:41:57

domains.

essentially the primary sole source of the revenue.

21
22

Q.

A process of optimization around the
And a Yahoo feed, which was the --

All right.

The Yahoo feed would result in

the monetization aspect of the -- of the model?

09:42:03

23

A.

Correct.

09:42:10

24

Q.

All right.

25

And that model came to NetBlue

intact from Vendare; is that correct?

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal
21

09:42:20

1

A.

Correct.

09:42:23

2

Q.

Did you indicate that that was a --

3

shortly after you became CEO in '05, that that

4

merger took place or did it take place?

09:42:30

5

A.

Middle of 2006.

09:42:32

6

Q.

2006.

When you inherited the -- we'll

7

just call it the Firstlook, I guess, business model,

8

just so we can keep it straight.

9

Did you -- do you also inherit the systems

10

that were in place for selecting and acquiring the

11

domains that were being monetized?

09:43:07

12

A.

Yes.

09:43:07

13

Q.

Did you inherit -- and when I say "you,"

14

of course I mean NetBlue.

15
16

Did you inherit employees that went along
with that process?

09:43:22

17

A.

Yes.

09:43:31

18

Q.

Was Chris Pirrone a part of NetBlue at the

19

time of that merger?

20

correctly?

Am I saying the name

09:43:45

21

A.

Pirrone.

09:43:45

22

Q.

Pirrone.

09:43:46

23

A.

I believe not.

09:43:51

24

Q.

And did NetBlue Vendare Media hire Chris

25

at some later time?

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal
22

09:43:56

1

A.

Yes.

09:43:57

2

Q.

Do you know approximately when?

3
09:44:07

4

In

relationship to the merger.
A.

Six months to a year after the merger.

5
6

at the merger, he was there for a few months.

7
09:44:24

There was an existing general counsel from Vendare

then Chris -- and then I recruited Chris.

8
9

Q.

And

Were you familiar with Chris from some

other employment?

09:44:27

10

A.

No.

09:44:39

11

Q.

When the merger took place between Vendare

12

and NetBlue, did you inherit with the merger?

13

again, did NetBlue inherit any lawsuits that claimed

14

trademark infringement from the registration of the

15

domain and monetization of the domain names, do you

16

recall?

09:45:05

17

A.

I don't recall.

09:45:12

18

Q.

All right.

19

Marketplace.

You indicated that they were the

20

display side.

Tell me a little bit about what

21

Traffic Marketplace did when you acquired it.

09:45:28

22

A.

And,

Let's talk about Traffic

At the time of acquisition Traffic

23

Marketplace would work with brand advertisers and

24

display their ads on the Internet -- across the

25

Internet, across sites on the Internet.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

09:45:52

1

Q.

In the five years or so since the

2

acquisition, has Traffic Marketplace's basic

3
09:46:03

business model changed at all?

4
5

09:46:14

23

6

A.

That part hasn't changed.

How we do that

has changed significant.
Q.

At the time of the merger between NetBlue

7
8
09:46:26

and Vendare, what was NetBlue's primary business at
that time?

9

A.

It was -- it was delivering cost

10

performance -- cost per performance advertising.

11

advertisers would pay when someone would perform an

12

action.

09:46:45

13

Q.

Such as what?

09:46:46

14

A.

Such as sign up for Netflix.

09:46:55

15

Q.

And explain to me a little bit more about

16
17

NetBlue would set up and own or was that something

18
09:47:11

how that would work.

So

different?

19

A.

Was that a website that

It was both a website that NetBlue would

20
21

have a direct relationship with the advertiser, like

22

Netflix, they wouldn't.

23

up on their site.

24
09:47:32

have and people who would have websites, we would

up, they would get paid.

25

Q.

But they could put that ad

And so -- and if someone signed

I see.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

09:47:33

1
2

09:47:36

A.

with the client.

3
4

Because we had a direct relationship often

24

Q.

So it wasn't necessarily paper click, they

actually had to sign up?

09:47:40

5

A.

For something, yes.

09:47:41

6

Q.

In order for the revenue to generate?

09:47:44

7

A.

Generally speaking, correct.

09:47:52

8

Q.

And was it when you acquired Firstlook and

9

its business model that you began incorporating, for

10

instance, a pure paper click revenue side business

11

model into NetBlue or NetBlue Vendare?

09:48:16

12

A.

I'm not sure the question.

09:48:19

13

Q.

Well --

09:48:20

14

A.

Is it the First -- sorry.

09:48:21

15

Q.

You described the Firstlook business model

16

in general terms and indicated it involved the

17

registration of domains.

09:48:29

18

A.

Correct.

09:48:29

19

Q.

Which were generally, as I understand it,

20
21
09:48:40

higher traffic domain so that people would go to
them.

22
23

Yes, or is that a misunderstanding?
A.

We would purchase domains.

I don't know

how you would define higher traffic.

09:48:50

24

Q.

09:48:50

25

THE REPORTER:

All right.
Are you saying higher, hiring

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
09:48:50

25

traffic?

2

THE WITNESS:

3

Higher, H-I-G-H-E-R.

The NetBlue model was not predominantly a

4

cost per click model.

5

BY MR. CLARK:

09:48:58

6

Q.

All right.

09:48:59

7

A.

That's the --

09:49:00

8

Q.

How would you describe it, in terms of the

9

nomenclature?

09:49:04

10

A.

Cost per action.

09:49:06

11

Q.

Cost per action.

09:49:11

12

A.

So -- so generally speaking, there's a

And --

13
14

someone to see your ad, that's what Traffic

15

Marketplace did.

16

someone does something, and there's a cost per

17

click, which was what the Firstlook model was based

18
09:49:36

cost per impression, where you tend to pay for

on.

19

Q.

All right.

I think I understand.

All right.

20
21

It's a cost per action where

You indicated that you -- you

were the CEO of the merged Vendare NetBlue merger?

09:49:50

22

A.

Correct.

09:49:51

23

Q.

Did Vendare's CEO play a role in the new

24
09:49:57

25

company at all?
A.

No.

There was an acting CEO when the

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
2
09:50:14

merger occurred, who had been a board member, who

26

went back to becoming a board member.

3
4

Q.

And you indicated that Vendare NetBlue

eventually became Connexus?

09:50:19

5

A.

Correct.

09:50:20

6

Q.

By way of a name change?

09:50:22

7

A.

Correct.

09:50:22

8

Q.

All right.

9

Was that -- was that in '07?

Does that sound about right?

09:50:29

10

A.

That sounds about right.

09:50:32

11

Q.

I won't hold you to it.

12

I just remember

--

09:50:35

13

A.

It's a good estimate.

09:50:36

14

Q.

-- looking at documentation that rings

15

familiar.

16

All right.

Let's say in 2007, when the

17
18
09:50:54

name change occurred -- and, by the way, why did the
name change occur?

19

A.

We thought the name Connexus, which sounds

20
21
09:51:08

like connection, Connexus, was a more powerful name
than a name that was a combination of prior names.

22
23

09:51:13

24
25

Q.

All right.

Did it have anything to do

with branding then?
A.

Yes.

It was -- we thought was a better

corporate brand.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

09:51:16

1
2

Q.

All right.

In '07, what companies were

underneath the Connexus umbrella, if you will?

3

We talked about Firstlook, Basic Fusion,

4

Traffic Marketplace.

5

you inherited Navigation Catalyst as well; is that

6
09:51:47

correct?

7
8

09:51:53

27

9

A.

Now, you also indicated that

I believe the Basic Fusion and Navigation

Catalyst were under Firstlook.
Q.

Okay.

Did there ever come a point in time

10

where Basic Fusion and Navigation Catalyst were not

11

a subsidiary of Firstlook?

09:52:15

12

A.

I don't know the legal structure.

09:52:24

13

Q.

What was the function or business model of

14
09:52:41

15
16

09:52:46

17

Navigation Catalyst, if you know?
A.

I don't know the distinction between Basic

Fusion and Navigation Catalyst.
Q.

All right.

So in terms of the function of

18

each one of those entities, you're not sure which

19

one does what?

09:52:54

20

A.

Correct.

09:52:55

21

Q.

Okay.

22

Are there two functions that you're

aware of that -- that those two businesses would do?

09:53:08

23

A.

There are multiple functions --

09:53:10

24

Q.

Okay.

09:53:11

25

A.

-- in Firstlook.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

09:53:18

1
2

Q.

All right.

Is one of the functions that

28

Firstlook does is the registration of domain names?

09:53:23

3

A.

Yes.

09:53:24

4

Q.

Okay.

5
09:53:33

09:53:38

Navigation Catalyst, if you know?

6
7

A.

I believe so.

I don't know.

I guess I

should say, I'm not sure.

8
9

Is that also a function of

Q.

Okay.

And that's a fair answer.

If

you're not sure, you don't know.

09:53:42

10

A.

Of the legal structure, correct.

09:53:44

11

Q.

All right.

It's an acceptable answer.

All right.

Tell me a little bit about

12
13

Basic Fusion.

14

do?

What did -- as a company, what did it

What was it responsible for?

09:54:03

15

A.

Same answer.

09:54:07

16

Q.

Not -- not quite certain?

09:54:08

17

A.

Not clear what existed within Basic Fusion

18
09:54:16

19

separate from Navigation Catalyst.
Q.

As the CEO of the combined enterprise

20

NetBlue and Vendare, was it important to you to have

21

an entity that held and registered the domain names?

09:54:42

22

MR. DELGADO:

09:54:47

23

MR. CLARK:

24
09:54:50

25

Objection.

Vague and ambiguous.

You can go ahead and answer if you

understand the question.
THE WITNESS:

I'm not going to answer, if he

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
09:54:52

2
3

09:54:55

4

29

wants to object.
MR. DELGADO:

No, no, no.

You should answer,

unless I instruct you not to answer.
MR. CLARK:

From time to time -- and I should

5
6

and myself, if Will's asking the questions or

7
09:55:06

have said this in the ground rules, Mr. Shaw, Will

happens to -- might object to a question.

8
9

THE WITNESS:

I should still answer it

and someone will decide later?

10
09:55:09

Right.

BY MR. CLARK:

11

Q.

Yeah.

And usually -- and usually it as to

12
13

the question, you can go ahead and answer.

14

Mr. Delgado instructs you not to answer, it would be

15

because of privilege or confidentiality or some

16

other objection.

17

answer, based upon the instruction of your own

18
09:55:30

form, the form of the question.

counsel.

19

A.

If you understand

And then, in fact, you would not

As part of the Firstlook entity we had an

20

entity that would register names.

21
09:55:43

Firstlook business I should say.

22
23

09:55:52

If

24
25

Q.

All right.

As part of the

Why have an entity that would

simply register names, do you know?
A.

I'm not familiar with the why behind the

legal structure.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

09:56:06

1

Q.

All right.

Let's go back and take a look

2

at Exhibit 285.

3

inaccuracies relative to your biography.

4

indicates up at the top that you're serving as the

5

co-chief executive officer of Epic Advertising, Inc.

6

30

Alternate name is Epic Media Group.

7
8

I think we went over some of the
It also

To your knowledge, is there a company
called Epic Advertising, Inc., an entity?

09:56:47

9

A.

I believe there is.

09:56:49

10

Q.

Do you know?

11
12

I'm not trying to trick you -- I haven't been able

13

to find it, which doesn't mean it doesn't exist, it

14

just means that I haven't been able to locate the

15
09:57:09

And the reason I ask you the question --

registration for that entity.

16
17

A.

So Epic Advertising, Inc. I believe was

the company that acquired Connexus.

09:57:25

18

Q.

All right.

09:57:27

19

A.

And I became co CEO.

First I became CEO

20

and then I became chairman and co CEO of the

21

combined companies.

09:57:41

22

Q.

All right.

09:57:42

23

A.

Which we named, for branding purposes,

24
09:57:47

25

Let's --

Epic Media Group.
Q.

All right.

And as I understand it, the

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
2
10:10:54

and put him under Mark as well, for streamlining the

40

process of operations.

3
4

Q.

I see.

Did it have anything do with the

pending discussions with Epic?

10:11:12

5

A.

I don't believe so.

10:11:26

6

Q.

When you were employed with Connexus, did

7

you receive a paycheck?

10:11:35

8

A.

Yes.

10:11:35

9

Q.

All right.

10

Which company?

Who issued the paycheck?

Was it Connexus?

10:11:43

11

A.

I believe so.

10:11:45

12

Q.

You say "I believe so," are you uncertain?

10:11:49

13

A.

I'm not 100 percent sure.

10:11:51

14

Q.

If it -- if --

10:11:53

15

A.

But I believe it was Connexus.

10:11:55

16

Q.

All right.

Were there other entities

17

under the Connexus umbrella that would have issued

18

paychecks to employees of Connexus and any one of

19

those subsidiaries other than Connexus, do you know?

10:12:09

20

A.

I don't know that.

10:12:20

21

Q.

So you're not sure what the accounting

22
23
10:12:31

side was with respect to payroll issues, with
respect to yourself first off; is that correct?

24
25

A.

I'm not positive.

paid by Connexus.

My belief is that I was

That's -- that's my

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

10:15:58

1

THE WITNESS:

2
10:16:05

BY MR. CLARK:

3

Q.

(Witness complies.)

43

Dated June 13th, 2008.

It indicates, by

4

way of the resolution, that Arthur Shaw is elected

5

as the sole director of Navigation Catalyst Systems,

6

Inc.

Is that accurate?

10:16:37

7

A.

I believe that that's what that indicates.

10:16:39

8

Q.

All right.

9

This is as of 2008, but do you

believe that the business structure was as is since

10

the acquisition of Navigation Catalyst Systems?

11

Were you the sole director of that company during

12

your tenure with Connexus?

10:17:03

13

A.

I don't know that.

10:17:11

14

Q.

Okay.

10:17:13

15

A.

I believe Chris Pirrone would know this

16

Who would know, do you know?

and other issues of legal structure.

10:17:21

17

Q.

All right.

10:17:22

18

A.

And corporate structure.

10:17:23

19

Q.

So back in 2008, as general counsel, would

20

Chris have been responsible for, for instance,

21

drafting these documents, or what that be something

22

outside counsel would do?

10:17:34

23

A.

10:17:41

24

MR. CLARK:

25

I believe Chris would do that.
All right.

Let's mark and label

this as 289.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
10:17:55

2
3

(Whereupon Exhibit 289 was marked for identification)
THE VIDEOGRAPHER:

5

(A break was taken)
THE VIDEOGRAPHER:

6

Q.

We

BY MR. CLARK:

8

The time is 10:30 a.m.

are on the record.

7
10:30:36

We are

off the record.

4
10:30:30

Time is 10:17 a.m.

44

9

Very good.

I think when we left we were

looking at Deposition Exhibit 289.

And, Mr. Shaw,

10

you want to take a look at that document for just a

11

minute, and we'll ask you some questions about it.

10:30:50

12

A.

(Witness complies.)

10:31:46

13

Q.

All right.

Okay.

And it purports to be a

14

written consent again from Navigation Catalyst

15

Systems.

16

involves this time the election of officers as

17

opposed to the election of you as the director of

18

Navigation Catalyst.

19

And it says, as of April 9th, 2007, and it

And it appears as though the resolution

20

provides, insofar as corporate officers are

21

concerned, that you would be the chief executive

22

officer and president, and Chris Pirrone the vice

23

president and secretary of Navigation Catalyst

24

Systems, Inc.

25

Do you recall that?

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

10:32:35

1
2

A.

I don't recall it, but that is my

45

signature.

10:32:38

3

Q.

All right.

10:32:39

4

A.

I'm confident I signed this.

10:32:41

5

Q.

All right.

And my question to you is

6

this:

7

System -- Systems, Inc., at least as of 2007/2008

8

time frame, were set up to where you were the

9

director, and then you were the chief executive

It appears as though Navigation Catalyst

10

officer and president, and Chris Pirrone vice

11

president and secretary with respect to officers.

12

And I'm wondering, were the other Connexus

13

companies set up the same way in terms of

14

directorship and officers?

10:33:24

15

A.

I don't know.

10:33:25

16

Q.

All right.

10:33:27

17

A.

Similarly, I didn't recall this, but I --

18
10:33:35

19

that is my signature.
Q.

All right.

So you -- in terms of

20

Firstlook, Traffic Marketplace, those other

21

companies, you don't -- you're not sure whether it's

22

set up in a similar fashion for officers and

23

directors?

10:33:48

24

A.

Correct.

10:33:51

25

Q.

Now, what about Connexus, the parent

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1

company?

2

correct?

You're the chief executive officer there,

10:34:02

3

MR. DELGADO:

10:34:05

4

MR. CLARK:

10:34:06

5

THE WITNESS:

6
10:34:07

46

Q.

Were.
Were.

Yes, I was.

BY MR. CLARK:

7

Did you say you were or you are?

8

All right.

And let's talk about premerger

acquisition, Epic now.

10:34:13

9

A.

Okay.

10:34:14

10

Q.

Same time frame, 2007/2008.

11

You were also on the board, correct?

10:34:21

12

A.

Correct.

10:34:22

13

Q.

And you've testified that you were not --

14

you didn't hold a position on the board other than

15

board member; is that correct?

10:34:42

16

A.

17

10:34:31

board member.

18

Q.

Or did you?

19

I was CEO of the company Connexus and

Who composed the Connexus board of

directors in that time frame, say, 2008?

10:34:49

20

A.

I believe there were seven folks.

10:34:54

21

Q.

You remember their names?

10:34:55

22

A.

Yes.

Myself, Linda Levinschien, Deven

23
24
10:35:34

Parekh, Marcia Goodstein, Fred Harmon, Mark Flynn,
and Bill Gross.

25

Q.

That's seven.

Was the board the same in

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1

a -- also a Connexus board intact after the Epic

2

49

Advertising deal, correct or incorrect?

10:39:09

3

A.

There was a board of --

10:39:12

4

Q.

Directors?

10:39:12

5

A.

-- Epic Media Group.

10:39:14

6

Q.

I see.

All right.

Let me ask you this

7

question, while we're on the topic:

8

board of directors after the -- after the Epic

9

Advertising deal in place with Connexus?

10
10:39:42

11
12

10:39:47

13

Or, I'm

sorry -MR. DELGADO:

Objection to the extent it calls

for speculation.
THE WITNESS:

14
10:39:49

Was there a

BY MR. CLARK:

15

Q.

Can you repeat the question.

16

Sure.

After the deal, was there -- was

there a Connexus board of directors?

10:39:58

17

MR. DELGADO:

Same objection.

10:40:04

18

THE WITNESS:

I don't know.

19
10:40:16

BY MR. CLARK:

20

Q.

21

You remained the CEO of Connexus after the

Epic Advertising deal, correct?

10:40:25

22

A.

I became CEO of Epic Media Group.

10:40:30

23

Q.

Co CEO?

10:40:31

24

A.

Co -- I became CEO.

10:40:34

25

Q.

Okay.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
10:45:40

2

(Whereupon Exhibit 290 was marked for identification)
THE WITNESS:

3
10:46:15

BY MR. CLARK:

5

Q.

I have 289.

Excuse me.

4

Do you have 289?

53

All right.

Take a look at that, Mr. Shaw.

6

It's entitled, A Memorandum of Understanding between

7

Azoogle, Inc., dba, Epic Advertising and Connexus

8

Corporation, dated January 2010.

9

the document that proposed conceptually the deal.

10

And I'll ask you a couple of questions about that.

11
12

All right.

And it looks like

Your signature's on that

document, correct?

10:50:07

13

A.

Yes, it is.

10:50:08

14

Q.

And it's entitled A Memorandum of

15

Understanding.

10:50:11

16

A.

Yes.

10:50:12

17

Q.

And describe for me what this document is

18
10:50:21

19

or your understanding of what the document is.
A.

It -- it basically by agreeing to the

20

consideration points that I referenced before.

21

Again, the three being most important, the preferred

22

ratio, the preference amount, and the common ratio.

23

It essentially then put us into a period

24

of essentially exclusive due diligence without

25

shopping for another deal.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal
54

10:50:52

1

Q.

All right.

10:50:52

2

A.

And it also set, essentially, that the

3
4
10:51:02

Epic side would have a majority of the board of
directors.

5

Q.

All right.

And it looks like the -- the

6

points that you've referenced, in terms of ratios,

7

it didn't change a whole lot between the Memorandum

8

of Understanding and the actual deal; is that

9

accurate or not?

10:51:14

10

A.

I think that's correct.

10:51:22

11

Q.

What is your understanding of how the deal

12

actually was consummated?

13

This Memorandum of Understanding, for

14
15

that the companies might form a new company, and

16

each have the stock ratios that you've indicated.

17

Was that what happened?

18
10:51:53

instance, references the fact that it's possible

deal structure, do you know?

19

A.

Or was this a different

My understanding is that the Epic lawyers

20
21

as the structure, and wrote the documents, which

22

were then distributed to the Connexus lawyers for

23
10:52:25

reviewed legal structures and chose the acquisition

review.

24

Q.

25

All right.

Ultimately, Mr. Shaw, did you

receive Epic stock as a result of the transaction?

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
2

waiting for someone to come looking, we thought

3
10:59:40

purchases.

59

scale would be helpful.

4

Q.

So to create our own destiny, without

Now, we talked about the fact that the

5

resultant company was going to have four Epic board

6

seats and three Connexus board seats.

7

fact, happen?

10:59:58

8

A.

Yes.

10:59:58

9

Q.

All right.

11:00:02

10

A.

Yes.

11:00:03

11

Q.

Who were the Connexus board members that

12

Did that, in

Who -- right after the merger?

sat on the Epic board of directors?

11:00:09

13

A.

Myself, Deven Parekh and Marcia Goodstein.

11:00:21

14

Q.

Are you still on the board?

11:00:23

15

A.

I am not.

11:00:24

16

Q.

Who replaced you, Art, do you know?

11:00:26

17

A.

I don't believe anyone has.

11:00:28

18

Q.

What about Deven and Marcia?

11:00:30

19

A.

I believe they're still on the board.

11:00:39

20

Q.

Did the Epic board have seven board member

21
11:00:49

22

seats prior to the deal, do you know?
A.

I don't recall the number.

I do recall

23

they had more board members that ended up on the

24

post transaction board.

25

board members prior to the transaction.

They had more than four
I don't

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

11:02:35

1

Q.

All right.

61

So after the merger,

2
3
11:02:57

immediately after the -- the deal, you remained the
CEO of Connexus or no?

4
5

A.

I don't know.

I know I became the CEO.

I

believe I became the CEO of Epic Media Group.

11:03:07

6

Q.

As -- as the deal concluded?

11:03:09

7

A.

Yes.

8

I don't know if I remained CEO of a

unit called Connexus or not.
Q.

subsidiaries?

11

that you were on a board and officers of those

12
11:03:27

9
10

11:03:18

subsidiaries?

13

A.

14
11:03:38

15

Would that hold true of any Connexus

Yes.

Assuming that the document suggests

I don't know how those changed, from

a legal standpoint, as a result of the transaction.
Q.

After the transaction, do you recall

16

attending any board meetings for Connexus or any of

17

the subsidiaries?

11:03:45

18

A.

Board meetings?

11:03:47

19

Q.

Board meetings.

11:03:48

20

A.

No, I don't recall doing that.

11:03:53

21

Q.

What happened, then, on the date of

22

closing to Don Mathis, who was the former CEO, and

23

is now the current CEO of Epic Media Group?

24
25

Your testimony was, is that you became the
CEO for a period of time, and you became the co CEO

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

11:14:47

1

Q.

Were there any Connexus employees after

2
11:15:08

the deal was done or did they all become Epic

3

70

employees or some other company?

4

A.

I don't know.

I believe they were paid --

5

the Connexus employees were paid by Connexus through

6

the end of the year, at least.

11:15:19

7

Q.

Of -- of 2010?

11:15:21

8

A.

Yes.

11:15:27

9

Q.

And -- and do you know thereafter, did

10
11:15:36

11
12

11:15:40

13

they become employees of Epic or no?
A.

I don't know the legal structure of the

employees.
Q.

All right.

Do you know whether your

14

paycheck, January 1st of '11, came from a different

15

source or no?

11:15:54

16

A.

I can find out.

11:15:58

17

Q.

Just wondered if you knew if you sat -- as

18

you sat here.

11:16:11

19

A.

I don't know for sure.

11:16:12

20

Q.

Okay.

21

questions to flush that out a little bit.

22
23

Let me see if we can ask some more

Did Connexus maintain any bank accounts
after the -- after the deal?

11:16:26

24

A.

Yes, I believe so.

11:16:27

25

Q.

Okay.

Did it maintain any bank accounts

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
11:16:34

2

71

after the first of this year 2011?
A.

3

I don't know.

No, I don't know.

Yes, I believe we maintained -- to the

4
5
11:16:49

best of my knowledge, we maintain -- Connexus
maintains separate bank accounts.

6

Q.

Okay.

That was going to be one of my

7

questions on the accounting side.

8

take a look at that here in just a minute.

9

follow up the other line of questioning.

10

And maybe we'll
Let's

When you became a director of Epic --

11:17:07

11

A.

Correct.

11:17:08

12

Q.

Did you attend some board meetings after

13

the merger?

11:17:11

14

A.

I did.

11:17:11

15

Q.

All right.

And you didn't -- you didn't,

16

as I understand it, attend any board meetings for

17

Connexus after the merger or the deal, whatever you

18

want to call it?

11:17:24

19

A.

Correct.

11:17:38

20

Q.

And you indicated you didn't -- you don't

21
22
11:17:48

know whether you retained the CEO title at Connexus
after the deal; is that correct?

23
24

11:17:59

25

A.

Correct.

What I do know, as I said, is I

became CEO of Epic Media Group.
Q.

Right.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

11:17:59

1
2

11:18:06

3

A.

My holdings in the subsidiary companies, I

72

don't know the structure of that.
Q.

Sure.

And what I'm trying to get a

4

conceptual framework around is, after the deal, you

5

would be at an Epic board meeting, for instance.

6

And you would be reviewing the performance of the

7

different subsidiary companies.

8

terms of Connexus, you know, would you sit there and

9

review the Connexus numbers and point at somebody,

And, you know, in

10

and say, this is the guy who needs to step it up, or

11

he's doing a great job or --

11:18:42

12

A.

So we would --

11:18:43

13

Q.

Structure wise, I'm trying to get my brain

14
11:18:49

15
16

11:18:54

17
18

about how that whole thing worked.
A.

So to the question how did -- what would I

review at a board meeting?
Q.

Well, if you were attending Epic

Advertising board meetings after the transaction --

11:18:59

19

A.

Epic Media Group.

11:19:01

20

Q.

Epic Media Group.

11:19:02

21

A.

Yeah.

11:19:03

22

Q.

And you were reviewing performance of

23
24
11:19:15

subsidiaries like Connexus or Basic Fusion or
whatever, and I assume that stuff went on?

25

A.

So what we would do is, we would review

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1

business units with the knowledge that Firstlook as

2

a business unit was a Connexus business unit.

3

Traffic Marketplace was a Connexus unit.

4

balance sheets we would review as separate balance

5

sheets, Connexus.

6

business unit, called Epic Direct, and the Epic

7

Advertising.

8

picture.

73

The

And then we would review the Epic

And then we would show a consolidated

And that was the process.

11:20:01

9

Q.

Okay.

11:20:02

10

A.

And it was a business unit discussion,

So the --

11
12

they had existed before.

13
11:20:16

which tied to our knowledge of the businesses as

legal structure of that.

14

Q.

But I can't speak to the

Who's the guy who was accountable for

15
16
11:20:21

Connexus, if it wasn't you?
don't know.

17

A.

18

Maybe it was you.

I

Well, there was a guy accountable for

Traffic Marketplace.

11:20:25

19

Q.

Okay.

11:20:26

20

A.

And there was a guy accountable for

21

Firstlook.

11:20:29

22

Q.

Seth Jacoby?

11:20:31

23

A.

And there's a guy accountable for Epic

24
11:20:40

25

Direct but, yeah.
Q.

All right.

Seth Jacoby was the president

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1

in -- since the merger concerning the issue of

2

80

holdback?

11:38:21

3

A.

Any discussions?

11:38:23

4

Q.

Let me rephrase the question.

5

It's very

general.

11:38:25

6

A.

Yeah.

11:38:25

7

Q.

Have you been involved in any

8

conversations or discussions with anyone at either

9

Epic or Connexus or associated with those companies,

10

since the plan of merger, that involved whether or

11

not the -- the stock shares were -- were or were not

12

going to be released in terms of, hey, you guys

13

misrepresented something concerning your company and

14

we're going to holdback some stock?

11:38:54

15

A.

Not to my knowledge.

11:38:57

16

Q.

Those -- those issues, to your knowledge,

17

haven't been raised, at least as far as you know?

11:39:04

18

A.

Correct.

11:39:06

19

Q.

All right.

20

When you were in the process

of --

11:39:11

21

A.

Or not to me.

11:39:12

22

Q.

Not to you, right.

23
24
11:39:17

25

If they were discussed, you don't have any
knowledge of it?
A.

Correct.

About whether or not the stock

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
11:39:22

2

81

would actually be moved.
Q.

Correct.

Or whether there were any issues

3
4
11:39:40

that may prevent the stock from -- from being moved,
that you were involved in?

5
6

11:39:46

7

A.

I -- I don't remember all the -- I don't

recall, I guess is the clearest.
Q.

All right.

When you were doing the

8

negotiations, after you signed the Letter of

9

Understanding, saying everybody wants to go forward

10
11

were doing your due diligence, so to speak, and they

12

were doing their due diligence, was there

13

information requested by Epic concerning pending

14
11:40:15

with the deal provided everything checks out, you

lawsuits?

15

A.

In the due diligence, was there

16
17
11:40:23

information requested by Epic about lawsuits?
I believe there was.

18
19

Q.

All right.

Yes,

Did it matter to you that Epic

had -- may have had lawsuits pending?

11:40:34

20

A.

Yes, it did.

11:40:35

21

Q.

Okay.

On your end, the Connexus end, what

22
23
11:40:50

did you guys do to investigate pending litigation
that they -- they had ongoing at the time?

24
25

A.

Chris basically looked at their lawsuits

and met with their general counsel.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

11:41:03

1

Q.

Okay.

Did they do the same thing with

2

respect to any lawsuits that you may have had going

3

82

on -- ongoing at the time?

11:41:10

4

A.

I believe so.

11:41:11

5

Q.

Okay.

6

And would Chris have been involved

in that -- those disclosures?

11:41:17

7

A.

Yes.

11:41:17

8

Q.

And due diligence?

11:41:18

9

A.

Yes.

11:41:21

10

Q.

Were you directly involved?

11:41:25

11

A.

On legal issues?

11:41:27

12

Q.

Correct.

11:41:28

13

A.

I don't recall being directly involved.

11:41:35

14

Q.

At the time that the deal was signed in

15
16

and I don't want you to disclose any amounts -- have

17
11:41:56

March of 2009, did Connexus -- I'm not asking you,

a reserve on the Weather Underground lawsuit?

18
19

MR. DELGADO:

Can I get that read back.

(The requested testimony was read back)

11:42:15

20

MR. CLARK:

11:42:17

21

MR. DELGADO:

A loss reserve.
I'm going to object to the date.

22

I think you're off on a year.

23

want to rephrase your question.

11:42:24

24

MR. CLARK:

11:42:24

25

MR. DELGADO:

I don't know if you

I will.
Okay.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
11:42:24

BY MR. CLARK:

2

Q.

83

So we got -- we got -- we got March of

3

2010 as the date.

4

discussions at the time that this deal was signed in

5

March of 2010, or was there a loss -- was there a

6

loss reserve put on the Weather Underground lawsuit

7

or not?

11:42:50

8

A.

I don't believe so.

11:43:05

9

Q.

During the due diligence, did Epic ask you

10

Were there -- were there any

There may or may not have been.

to put one on?

A loss reserve on the case?

11:43:12

11

A.

I do not believe so.

11:43:24

12

Q.

As of the time that you left in March of

13

this year, which entity, if you know, was paying the

14

legal fees associated with the Weather Underground

15

lawsuit?

11:43:43

16

A.

I don't know that for sure.

11:44:13

17

Q.

As you sit here today, do you know whether

18

there has been a loss reserve placed on the Weather

19

Underground lawsuit?

11:45:27

20

A.

21

11:44:23

placed.

22

I do not know that there has been one

MR. CLARK:

Let's have this one marked and

23
24
11:45:46

labeled.

not going to -- back this.

25

I don't have a third copy of this.

MR. DELGADO:

I'm

Okay.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal
90

11:55:13

1

A.

Correct.

11:55:20

2

Q.

Now, am I correct, Connexus itself was a

3
4

didn't really have any ongoing business on its own;

5
11:55:35

parent company and it really wasn't a unit and

is that accurate?

6

A.

From a descriptive point of view, Connexus

7

was a -- yes, three with Matchpoint, two without

8

Matchpoint business lines.

9

Connexus level.

The corporate was at the

11:55:48

10

Q.

Right.

11:55:49

11

A.

One legal team under Chris.

One HR team,

12

which became under Chris as he -- but separate

13

technologies in the groups.

14

separate businesses within the two.

Separate sales,

11:56:03

15

Q.

Right.

11:56:03

16

A.

So there was no sale staff for business

17
18

line, separate from those three and then two

19
11:56:14

line that reported into Connexus with a revenue

businesses.

20

Q.

So am I correct, that there probably

21
22

reporting to Don, it would simply be the units, or

23
11:56:26

wouldn't be an operating unit committee of Connexus

do you know?

24

A.

25

I don't believe there is one but -- I

believe it would be a collection of the folks on

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1

91

that page.

11:56:38

2

Q.

A collection of the folks?

11:56:40

3

A.

Who are on his page reporting to Don.

11:56:45

4

Q.

In the prior page that we looked at?

11:56:47

5

A.

Correct.

11:56:48

6

Q.

I understand.

7

Okay.

The next page is a page entitled

8

"Immediate Cost Reductions."

9

folks didn't make the cut relative to the

And it looks like some

10
11
11:57:16

combination of the companies.

correct, is that what we're looking at?

12

A.

Is that -- am I

We're looking at three, two founders from

13

the Epic side, and the chair from Epic side, who

14

were making salary that were no longer going to be

15

making salary, or the founders case, as much salary

16

as they had before.

17

One director of distribution that wasn't

18
19

from the Connexus side, as we consolidated the

20
11:57:56

replaced.

corporate staff units.

21
22

Q.

And then we're looking at corporate staff

All right.

Is Sandeep still with the

company?

11:57:59

23

A.

No, he's not.

11:58:01

24

Q.

He was the controller.

25

Did he find a spot

with another company prior to the merger?

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

11:58:07

1

A.

No.

11:58:09

2

Q.

Mark Lambert.

11:58:10

3

A.

Who was the CFO.

92

That was Mark Lambert.

Sandeep worked for Mark

4
5

be here, and we gave him a package after he stayed

6
11:58:25

and Sandeep stayed, and we told Sandeep, you won't

for some time.

7

Q.

Okay.

So.
Let's go to the next page under

8

Finance and Accounting.

9

are projected cost savings, I presume?

Future cost savings.

These

11:58:37

10

A.

Correct.

11:58:38

11

Q.

Let's take a look at those and see what

12

they say.

13

Connexus NOLs, and I assume that's Net Operating

14

Loss?

Finance and accounting:

11:58:49

15

A.

Yes.

11:58:49

16

Q.

All right.

Deployment of

17
11:58:55

18

Tell me what the deployment of

the Connexus NOLs were?
A.

So Connexus over time had losses that were

19

not able to be used, to the best of my

20

understanding, against income.

21

the combined entity had income, that was once a

22

worthless asset to Connexus, is now potentially an

23

asset to be leveraged and save tax over time

24

appropriately, as they could be deployed.

25

there's a lot of finance rules what can and can't be

To the extent that

Which

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
2

And as is appropriate, that would be what was once

3
11:59:36

done.

93

not worth something, is now worth something.

4

So we have to put it through that process.

Q.

All right.

Were these prior carryover

5

losses from Connexus that could now be used for the

6

benefit of the Epic entity?

11:59:47

7

A.

Correct.

11:59:48

8

Q.

Okay.

11:59:49

9

A.

I believe so.

11:59:55

10

Q.

All right.

And it says, the next -- next

11

one is, "One audit, one tax firm expected by end of

12

year."

13

And I think you already -- you touched on

14
15
12:00:15

that.

and the Epic folks assumed that role?

16

You moved out the Connexus accounting folks

A.

Yeah.

So the Epic systems became the

17
18

were still Connexus systems.

19

that is now.

20
12:00:36

finance and accounting systems over time.

the audit firm.

21

Q.

There

I don't know where

The Epic audit firm became over time

Sure.

We only need one tax firm so, yes.
One valuation.

And I think that

22

dovetails back into the question of Connexus when --

23

obviously when it was its own entity and its own

24

parent company, had a consolidated financial

25

statement.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

1
2

says, "Financials combined."

3
12:29:49

of -- all of those items are projections, but it

108

What's going to happen there?

4

A.

What's that mean?

We -- my sense was, I'll have to go back

5

in time a year.

6

were presenting it as Epic legacy and Connexus

7

legacy.

8

Media Group, which would include both of those.

9

My sense was that meant was, we

We were now going to present it as Epic

So it would say Firstlook, Epic Direct,

10

and Traffic Marketplace, as units going to an Epic

11

revenue line, consolidated -- Epic consolidated

12

expense line.

13

be one.

12:30:30

14

Q.

All right.

12:30:32

15

A.

That's my sense.

As opposed to two pages, it would now

I think, I believe it

16

did not mean balance sheets combined.

17

remain separate, but the presentations of the P & L

18

would be one P & L now called consolidated Epic

19

Media Group as opposed to --

12:30:49

20

THE REPORTER:

12:30:53

21

THE WITNESS:

12:30:54

22

THE REPORTER:

Epic Group?

12:30:54

23

THE WITNESS:

Media Group.

I think those

24
12:30:57

Q.

Consolidated?

Consolidated -- sorry.

I'm sorry.

BY MR. CLARK:

25

Now called what?

All right.

Let's look at slide number 11.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal
109

12:31:01

1

A.

(Witness complies.)

12:31:06

2

Q.

And that looks like the second quarter

3

2010 financials, Epic Media Group total.

4

Group total, Page 11.

5

second quarter revenue totals.

6

and also margin totals, it has Epic Direct, TMP,

7

which is Traffic Marketplace, Firstlook, and then

8

the same categories under gross margin.

9

And my question is:

10
12:31:55

11
12

Epic Media

And it has first quarter and
And under revenue

It doesn't say

Connexus, how come?
A.

We didn't use the labels Epic Advertising,

we used Epic Direct.

12:31:59

13

Q.

All right.

12:32:00

14

A.

And we didn't use Connexus because it

15

didn't have a revenue line.

16

prior.

17

Marketplace and Firstlook.

18

As we talked about

The revenue lines for Connexus were Traffic

So you could say Connexus with those two

19

points or you could just list those two, as those

20

were the operating revenue units of Connexus.

12:32:23

21

Q.

All right.

12:32:34

22

A.

(Witness complies.)

23

Do you mind if I just leaf through this

24
12:32:39

Let's look at Page 19.

real quick --

25

Q.

Sure.

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO

Confidential - Under Seal

12:35:11

1

Q.

Okay.

All right.

We talked about the

2

loss carryovers of Connexus being able to be

3

utilized by Epic, I guess.

12:35:48

A.
entity.

6

Q.

7

12:35:37

4
5

12:35:34

to Page 38.

8

A.

9
12:36:31

12:36:45

Yes.

By the combined consolidated

All right.

Let's -- let's move on

(Witness complies.)

MR. CLARK:

Let's go ahead and mark the next

one.

12
13

Correct.

Just give me a second.

10
11

12:36:45

THE WITNESS:

Okay.

(Whereupon Exhibit 295 was marked for identification)

14

MR. CLARK:

Mr. Shaw, before I ask you the

15

question about this page, I want to ask you a quick

16

question about what we've marked and labeled as

17

Exhibit 295.

12:36:52

18

THE WITNESS:

12:36:53

19

MR. CLARK:

Okay.
It's entitled Minutes of a Meeting

20

of the Board of Directors of Connexus, June 30th of

21
12:37:00

2008.

22

THE WITNESS:

23
12:37:00

112

BY MR. CLARK:

24

Q.

Okay.

25

And it was really just a small part of

this document that I want to look at.

On the first

Network Deposition Services, Inc. • networkdepo.com • 866-NET-DEPO