ET V DM State - # 644-2 Thru 644-10 Combined

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Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 1 of 159
:ASE NO. CV06-00114

JATE, JUDGE
JFFICERS OF
:OURT PRESENT
)2/07/06
-JON. ROBERT H.
"ERRY
JEPT. NO. 9
3. Bartlett
Clerk)
-Chapen
Reporter)
ETREPPID TECH, INC. VS. DENNIS MONTGOMERY
APPEARANCES-HEARING
PRELIMINARY INJUNCTION
Plaintiff Etreppid Technologies, Inc., being represented by counsel, J. Stephen
Peek.
Warren Trepp and Doug Fry, representatives for Etreppid Technologies, Inc., also
present.
P~aintiff out of state attorneys David Alan Jakopin, also present.
Defendant Dennis Montgomery present with counsel, Ronald Logar and Eric Pulver.
Defendant out of state attorneys Michael Flynn and Phillip Stillman, also present.
Counsel Logar addressed the Court and moved to allow counsel Stillman to appear
on behalf of the Defendant; objection and response by counsel Peek.
COURT ORDERED: Motion to allow Phillip Stillman to appear is denied. Counsel
Stillman may confer with defense counsel.
Counsel Flynn discussed the classified information the Court will hear during this
hearing and moved to seal all transcripts and information to be sealed.
Court stated that he has not heard from the Federal Government to close hearing or
seal information.
COURT ORDERED: The rule of exclusion is invoked. All information and
transcripts are hereby sealed and can be only released by order from the Court.
Sloan Venables was called by counsel Jakopin, sworn, testified and crossexamined.
During the testimony of witness Venables, the following exhibit was ordered marked
and admitted by the Court:
Defendant's exhibit 1
Counsel Peek informed the Court that the Department of Defense presented
Etreppid Technologies, Inc. information that is now missing.
Further discussion between Court and respective counsel regarding classified
information.
Court made inquiries of witness Venables; Venables responded thereto.
Zing Sun was called by counsel Jakopin, sworn, testified and cross-examined.
Ken Roman was called by counsel Jakopin, sworn, testified and cross-examined.
Warren Trepp was called by counsel Jakopin, sworn, testified and cross-examined.
During the testimony of witness Trepp, the following exhibits was ordered marked
and admitted by the Court:
Plaintiff's exhibits 2 through 17

Defendant's exhibit 18
::ASE NO. CV06-00114

JATE,JUDGE
JFFICERS OF
:::OURT PRESENT
)2/07/06
-ION. ROBERT H.
"ERRY
JEPT. NO. 9
3. Bartlett
Clerk)
:::. Vohl
:Reporter)
ETREPPID TECH, INC. VS. DENNIS MONTGOMERY
APPEARANCES-HEARING
PRELIMINARY INJUCTION (Cont'd)

Plaintiff rests.
Dennis Montgomery was called by counsel Flynn, sworn, testified
and cross-examined.
Duriflg the testimony of witness Montgomery, the following exhibits
was ordered marked and admitted by the Court:
Defendant's exhibits 20 through 22
Plaintiff's exhibits 23 and 24
Court made inquiries of witness Montgomery; Montgomery
responded thereto.
Court and respective counsel further discussed as to reason said
case is not in Federal Court.
Court reporter Vohl informed the Court she can no longer continue.
COURT ORDERED: Temporary Restraining Order shall stand until
February 8, 2006 at 5:00 p.m. until Court can issue further order.
Respective counsel shall re-set matter for Preliminary Injunction to
be concluded.
EXHIBITS
PA TY: J. Stephen Peek
DATY: Ronald John Logar
PLTF: ETREPPID TECH, INC.

DEFT: DENNIS MONTGOMERY, ETAL.
Case No: CV06-00114 Dept. No: 9
Exhibit No.
2
3
Party
Clerk: G. Bartlett
Date: 217106
Marked
Offered
Admitted
Diagram of Etreppid office

and warehouse
217106
No obj.
217106
Pltf.
Operating Agreement of
Intrepid Technologies, LLC
217106
Obj.
217106
P1tr
Contribution Agreement
dated Sept. 28, 1998
217106
No obj.
217106
217106
No obj.
217106
Pltf.
Amended and Restated

Intrepid Technologies, LLC.
Dated Jan. 1, 1999
2/7/06
No obj.
217106
Pltf.
Amended and Restated

Intrepid Technologies, LLC.
Dated Nov. 1, 2001
217106
Obj.
217106
Pltf.
Declaration of John B.
Hennessey dated Feb. 7,
2006
217106
Obj.
217106
217106
Obj.
217106
Deft.
Description
Pltf.
Exhibit A to the Amended

and Restated Operating
Agreement of eTreppid
Technologies, LLC.
(Updated as of03/0l/03)
Assignment of U.S. Origin
Patent Application dated
3/7/02
217106
Obj.
217106
Pltf.

1/24/02
217106
Obj.
217106
Pltf.

6/12/01
7
Pltf.
8
10
Print Date: 2/8/2006
EXHIBITS
PATY: J. Stephen Peek
PLTF: ETREPPID TECH, INC.

Exhibit No.
Party
Date: 217106
Marked
Description
Offered
Admitted
217106
Obj.
217106
Pltf.

l/24/02
217106
Obj.
217106
Pit~

1124102
217106
Obj.
217106
Pltf.

1124102
217106
Obj.
217106
Pltf.

1124102
217106
Obj.
217106
Pltf.

3/20/01
217106
Obj.
217106
Pltf.

1124102
217106
Obj.
217106
Pltf.

1124102
217106
No obj.
217106
Deft.
Agreement and Modification

of Promissory Note and
Security Agreement
217106
Deft.
Automated Data
Management System for the
Critical Care Laboratory
User guide
Deft.
Copy of pages 18, 22, 32,

34, 89 from manual
2/7/06
Obj.
217106
217106
Obj.
217106
Deft.
Copy oflnformation
obtained from Library of
Congress Information Center
11
12
13
14
15
16
17
18
19
20
Clerk: G. Bartlett
21
,...,.,,
EXHIBITS
PATY: J. Stephen Peek
PL TF: ETREPPID TECH, INC.

Exhibit No.
22
Party
Clerk: G. Bartlett
Description
Date: 217106
Marked
Offered
Admitted
Deft.
Copy of check in the amount

of $975,000.29
217106
No obj.
217106
217106
Obj.
217106
Pltl'
Copy of United States

Copyright form for
Computermate Source Code
for Hewlett Packard
217106
No obj.
217106
Pltf.
Copy of United States

Copyright form for Cortex
Source Code for IBM
Personal Computers
217106
Pltf.
Copy of eTreppid
Technologies power point
presentation
23
24
25
;ASE NO. CV06-00114
,~
;'...._: l
'.'
ETREPPID TECHNOLOGIES, INC VS DENNIS MONTGOMERY
)ATE, JUDGE
)FFICERS OF
;OURT PRESENT
APPEARANCES-HEARING
11/24/06
INCHAMBERS TELEPHONIC CONFERENCE
iONORABLE
Counsel Jerry Snyder, Esq. was present telephonically on behalf of Etreppid
JEROME M.
Technologies , who was not present. Counsel Ronald Logar, Esq. was present on
>OLAHA
behalf of Dennis Montgomery, who was not present.
)EPT. NO. 3
Counsel Logar advised that he and Eric Pulver, Esq. will be representing the Defendant.
>_Meacham
Counsel Snyder addressed the Court advising that the TRO was requested last
Cli::lrk)
Thurs.;ay for 2 reasons. 1) To have the Defendant return the missing source codes.
\Jot Reported
2) To stop the Defendant from discussing, modifying or transferring the source codes in
Reporter)
any fashion. Counsel Snyder gave an overview of the history of the case, advising that
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the case was given to D10 and then D10 was pre-empted by defense counsel Pulver,
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and D9 is in a trial all week and can't hear the TRO. Counsel Snyder then advised that
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defense counsel and the Defendant won't be available on Wednesday, even if a hearing
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could be held.
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Court inquired if the Defendant would be available today.
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Counsel Snyder advised that he has no idea.
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COURT ORDERED: This Department can hear the matter today.
13~ ~
Counsel Logar addressed the Court advising that he doesn't know if the Defendant
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would be available today.
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COURT ORDERED: The Plaintiff needs more evidence to have a TRO granted.
-Oa.-GI
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Counsel Logar advised that the TRO was filed last Thursday and a supplement was
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given to Department 10 on Friday, that defense counsel received yesterday, and will
need time to review before a hearing.
COURT ORDERED: Court will be available Wednesday for a hearing. Defense counsel
can do an affidavit for the client if he is not available. Matter set for Wednesday, January
- -- 25, 2006 at 2:00 p.m.
Counsel Logar inquired about clarification from the 03 order of last week, asking if the
Plaintiff will need to file a new application for TRO.
COURT ORDERED: Court will proceed on original TRO application.
Counsel Logar requested that a preliminary order be done that makes anyperson that
signed an affidavit be available for Court, so that they may testify under oath.
COURT ORDERED: Plaintiff to discuss the affidavits with the parties involved.
:;;;;;;;;; IO (J)<J:,_,
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Court stood in recess.
:;ASE NO. CV06-00114
.....,,/i
ETREPPID TECHNOLOGIES INC, VS DENNIS MONTGOMERY
)ATE, JUDGE
)FFICERS OF
:;ouRT PRESENT
APPEARANCES-HEARING
IN CHAMBERS CONFERENCE ON TRO
11/19/06
-JONORABLE
Counsel Jerry Snyder, Esq. was present on behalf of Etreppid Technologies, Inc, who
was not present. Defendant Dennis Montgomery was present with counsel Eric Pulver,
JEROME M.
,OLAHA
Esq.
)EPT. NO. 3
Counsel Snyder argued in support of the TRO.
, . Meacham
Counsel Pulver argued in opposition of the TRO.
Clerk)
COUR.T ORDERED: TRO DENIED. Case to be transferred to Business Court. Full
minutes sealed and any documents other than the complaint are SEALED.
\lot Reported
Reporter)
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:ASE NO. CV06-00114
ETREPPID TECHNOLOGIES, INC VS DENNIS MONTGOMERY, ET AL
)ATE, JUDGE
JFFICERS OF
:ouRT PRESENT
APPEARANCES-HEARING
J1/19/06
-lONORABLE
Counsel Jerry Snyder, Esq. was present on behalf of Etreppid Technologies, Inc., who
was not present.
JEROME M.
"OLAHA
Defendant, Dennis Montgomery was present with counsel, Eric Pulver, Esq ..
JEPT. NO. 3
Counsel Snyder addressed the Court advising that this matter is of sever priority, and
P. Meacham
further advised that the Plaintiff is a video storage facility and the Defendant Mr.
:clerk)
Montgt>mery was a founder of the company. Last week it came to light that twice, the
Not Reported
Defendant had taken some of the storage devices home, and the Plaintiff, now has no
(Reporter)
access to the source codes needed to perform it's operations. Yesterday the
Defendant's employment was terminated and the TRO is requested in order to get the
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missing code information returned to the Plaintiff.
_ IB ... .r
Counsel Pulver addressed the Court opposing the TRO advising that the Plaintiff deals
" "
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with high security levels of the government and the Plaintiff wants to gain control of the
g:o!"
company.
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Counsel Pulver further advised that the technology was built by the Defendant and any
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information is with the Plaintiff. The Defendant invented a "pattern detection program"
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that is not part of the Plaintiff's company, but they want that product too. Defense
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counsel further advised that the Defendant is the only one to understand the code
;;~;;8
language and the Plaintiff believes that ttie Defendant took the codes. Defense counsel
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further advised that the Plaintiff must post a bond to proceed.
-i>w;:;c':
COURT ORDERED: The action belongs to Business Court.
Counsel Snyder requested a TRO with a hearing.
Counsel Pulver opposed the TRO and advised that this is a way to stop the Defendant
from gaining future employment and that will cause millions of dollars of harm to the
Defendant.

Counsel Snyder advised that the Plaintiff wants the return of the source codes or an
Order to Show Cause will be needed.
Counsel Pulver advised that the Defendant is under a security clearance and has a duty
to prevent the release of information and the Plaintiff has had non-securit{class
employees messing with the codes and the technology. Counsel Pulver further advised
that this action was filed in the wrong jurisdiction. Defendant Montgomery addressed the
Court advising that the building has tamper resistant alarms and others messed with the
systems and the tamper resistance took over and no back-up disks now exist and
Defendant don't have a copy of the codes. Mr. Montgomery further advised that the US
government had Defendant protect the systems, "and I did".
Counsel Snyder advised that the Defendant discussed back-ups for the source codes
but the copies weren't backed up. Counsel Snyder further requested a TRO to settle the
dispute.
Counsel Pulver opposed the TRO advising that the necessary compression technology
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::ASE NO. CV06-00114
ETREPPID TECHNOLOGIES, INC VS DENNIS MONTGOMERY, ET AL

Page 2
)ATE, JUDGE
)FFICERS OF
:;ouRT PRESENT
APPEARANCES-HEARING
)1/19/06
-JONORABLE
Is there and the Plaintiff has it.
JEROME M.
COURT ORDERED: TRO is DENIED. This case is transferred to D6 and counsel can
"OLAHA
contact them for a hearing tomorrow.
)EPT. NO. 3
Counsel Pulver addressed the Court advising that he will be out of town until Monday.
"Meacham
. Counsel Snyder requested a provisional TRO until Monday.
COUR.T ORDERED: No basis for a TRO and a bond will be required.
Clerk)
>Jot Reported
Counsel Snyder advised that a bond will be put up and the Plaintiff wants the missing
Reporter)
codes returned.
Defense counsel concurred with the transfer to Business Court.
COURT ORDERED: Minutes and documents other than the complaint are SEALED.
Counsel to be notified by the Court tomorrow of the department this matter will be
assigned to if D6B is not available, and counsel can contact them for a hearing.
-...., I
:}itJ
-3-+9S.
J. Stephen Peek, Esq. (NV Bar #1758)
Jerry M. Snyder, Esq. (NV Bar #6830)
Hale Lane Peek Dennison and Howard
5441 Kietzke Lane, Second Floor
Reno, NV 89511
Tel: (775) 327-3000
Fax: (775) 786-6179
PILLSBURY WINTHROP SHAW PITTMAN, LLP.

DAVID A JAKOPJN, CA Bar No. 209950
JONATHAN D. BUTLER, CA Bar No. 229638
2475 Hanover Street
Palo Alto, CA 94304-1114
Telephone: (6.50) 233-4500
Facsimile: (650) 233-4545
Attorneys for Plaintiff
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IN THE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA
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IN AND FOR THE COUNTY OF WASHOE
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ETREPPID TECHNOLOGIES, LLC., a Nevada

Limited Liability Company,
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CASE NO.
CV06-00l 14
DEPT. NO.
Plaintiff,
vs .
DENNIS MONTGOMERY, an individual; THE
MONTGOMERY FAMILY TRUST; DENNIS
MONTGOMERY and BRENDA
MONTGOMERY, as trustees for THE
MONTGOMERY FAMILY TRUST;.and DOES
1 through 20,
Defendants.
22
23
24
PLAINTIFF ETREPPID TECHNOLOGIES, L.L.C.'S MOTION TO

MODIFY ORDER GRANTING PRELIMINARY IN.JUNCTION AND
MOTION FOR ORDER SHORTENING TIME
25
Pursuant to NRS 600A070.3, Plaintiff eTreppid Technologies, LLC. ("eTreppid"), hereby
26
lodges the enclosed record conditionally under seal and will make a motion or application to the Court
27
for an order permitting the record to be filed under seal.
28
:ODMA\PCDOCSIH LRNODOCS\51579811
Page 1 ofS
_)
-)
eTreppid hereby files its Motion to Modify Order Granting Preliminary Injunction and Motion
2
for Order Shortening Time.
This Motion is supported by the following Points and Authorities.
POINTS AND AUTHORITIES
'O
@ ..,
I.
INTRODUCTION
As this court is well aware, the present action arises out of Defendant Dennis Montgomery's
theft of certain trade secret software from eTreppid. On rebrnary 7, 2006, this Court held a hearing on
eTreppid's Motion for a Preliminary Injunction.
entered an Order granting eTreppid's Motion for a Preliminary Injunction. While eTreppid believes
10
that the findings in this Order are substantially accurate, it submits that the Order should be modified
11
in order to(!) clarify the definition of"Source Code," as it is used in the Order, (2) clarify the scope of
On Febrnary 8, 2006, the above-entitled Court
~ 0
the Order and the parties to which it applies, and (3) require Montgomery or the Montgomery Trnst to
return to eTreppid any Source Code or other eTreppid property.
II.
STATEMENT OF RELEVANT FACTS

eTreppid initiated the present action by filing the Complaint and a Motion for a Temporary
Restraining Order and Preliminary Injunction on January 19, 2006. eTreppid alleges that Defendant
Montgomery, who was the Chief Technology Officer of eTreppid, engaged in a systematic effort to
first delete virtually all of eTreppid's Source Code from the storage media at eTreppid, and then to
abscond with the sole remaining, complete copy of eTreppid's Source Code.
eTreppid counsel had told the Court -the extent of the Preliminary Injunction Order it was
21
seeking, but since the proceedings did not finish, eTreppid had not submitted a version oflhe Order
22
with the requested relief.
23
destroying, discussing, transferring, or licensing the eTreppid Source Code, and (2) that Montgomery
24
be required to return to eTreppid all Source Code within his possession, custody, and control.
eTreppid requested that (1) Montgomery be enjoined from using,
25
In this Court's February 8, 2006 Order, in which this Court granted eTreppid's request for a
26
preliminary injunction, the Court found that eTreppid was likely to suffer a irreparable harm if a
27
preliminary injunction was not issued because:
28
The record reflects the Source Code is essential to the day-to-day business
operations of ETreppid, as evidenced by the testimony of Dr. Sun.
::OOMA\PCDOCS\HLRNODOCS\..515798\l
Page 2 of 5

.,_... !
--1
Furthermore, the technology at issue, including data compression
software, image detection software, and pattern recognition software,
which necessarily relies upon the Source Code for it's operation, is alleged
to be valued in excess of $ l 00,000,000 Without access to the Source
Code, ETreppid may be forced to forego entering into valuable contracts
for the use or sale of said technology, Lastly, the testimony indicates that
Plaintiff may suffer damages in excess of $10,000 per day (ten-thousand)
if he remains without possession of the Scurce Code_
2
3
4
5
The Order granted eTreppid's request for a preliminary injunction, incorporating the language
6
from the Temporary Restraining Order which was entered on February 2, 2006, However, the Court
7
did not discuss eTreppid's request that Montgomery be ordered to return to eTreppid any of the Source
8
Code within '!he Possession, Custody, and Control of Either Montgomery or the Montgomery Family
9
Trust In addition, the definition of Source Code, as described in the February 8, 2006 Order, may be
somewhat ambiguous, Accordingly, eTreppid requests that this Court should modify the February 8,
2006 Order in the manner described in Exhibit A
III.
ARGUMENT
A.
This Court Should Modify the Order Granting Preliminary Injunction
As this court has the authority to grant a preliminary injunction under NRCP 65 in the first
place, it clearly has the discretion to modify its own order under the same rule,
eTreppid submits that this Court should modify its February 8, 2006 Order in the manner set
forth on Exhibit A. The purpose of the modifications included in Exhibit A is as follows:
Clarify the definition of "Source Code," as it is used in lhe Order to mean, specificalty,
"without limitation, any pattern recognition, object tracking, and anomaly detection source
code used, modified, or created at eTreppid, including that whic'1 has been usedjn c,<:>nnection
21
with or deployed by eTreppid in the performance of government contracts;"
22
Clarify the scope of the Order and the parties to which it applies so that it is clear that both
23
Montgomery
and
The
Montgomery
Family
Trust
are
enjoined
from
"destroying,
24
hypothecating, transferring, modifying, licensing, using, duplicating, and/or assigning the
25
Source Code" and from "discussing or disclosing any of the Source Code or proprietary
26
ETreppid technology, with any third-party," except for experts retained in this litigation; and,
27
28
Ill
::ODMA\PCDOCS\HLRNODOCS\515798\l
Page 3 of 5

..._._)
Require Montgomery and The Montgomery Family Trust to return to eTreppid any Source
Code or other eTreppid property that is in their possession, custody, and control.
Here, the record indicates that eTreppid requested that Montgomery and The Montgomery
Family Trust be ordered to return the Source Code to eTreppid. This Court did not discuss this request
in its February 8, 2006 Order. However, the findings made by this Court clearly indicate that eTreppid
will suffer a substantial and irreparable hann if the Source Code is not returned.
The Present Motion Should Be Heard on Shortened Time
B.
Pursuant to WDCR 11, this Court may make an Order Shortening Time for this motion to be
..
decided upon a showing of"good cause."
10
Here, good cause exists to shorten the period of time in which the present motion is to be
11
heard. As the Court pointed out in its February 8, 2006 Order, eTreppid is losing a substantial amount
" "~ 12
of money every day that it does not have the Source Code to work with. As such, if this motion
'tl 'tl
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13
follows the usual briefing schedule, eTreppid will suffer substantial initial damages. Accordingly,
" a" "',.
14
eTreppid respectfully submits that the Defendants' Opposition to the present motion, if any, should be
z0
15
submitted on or before Friday, February 17 2006, with eTreppid's reply to be submitted by Tuesday,
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February 21, 2006.

IV.
CONCLUSION
For the foregoing reasons, eTreppid respectfully submits that the present"motion be granted.
Dated: February 13, 2006
20
21
(ephen P
evada
umber 1758
Jerry M. Snyder, Esquire
Nevada Bar Number 6830
Reno, Nevada 89511
775-327-3000 (tel.), 775-786-6179 (fax)
22
23
24
25
Attorneys for Plaintiff eTreppid Technologies, L.L.C.
26
27
28
::ODMA\PCDOCS\HLRNOOOCS\515798\1
Page 4 of 5

~-)
PROOF OF SERVICE
2
3
4
5
6
7
I, Gaylene Silva, declare:

I am employed in the City of Reno, County of Washoe, State of Nevada by the law offices of
Hale Lane Peek Dennison and Howard. My business address is 5441 Kietzke Lane, Second Floor,
Reno, Nevada 89511. I am over the age of 18 years and not a party to this action.
HAND DELIVERY ONLY I am readily familiar with Hale Lane Peek Dennison and
Howard's practice for collection and delivery of its hand-deliveries. Such practice in the ordinary
course of business provides for the delivery of all hand-deliveries on the same day requested.
On February 13, 2006, I caused the foregoing Plaintiff Etreppid Technologies,, L.L.C.'s
Motion to Modify Order Granting Preliminary Injunction and Motion for Order Shortening
Time to be band-delivered by providing a true and correct copy to Hale Lane Peek Dennison and
Howard's runners with instructions to hand-deliver the same to:
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Ronald J. Logar, Esquire

Eric A. Pulver, Esquire
The Law Offices ofLogar & Pulver
225 S. Arlington Avenue, Suite A
Reno, NV 89501
I declare under penalty of perjury under the laws of the United States of America that the
foregoing is true and correct, and that this declaration was executed on February 13, 2006 .
17
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ooODMA\PCDOCSIHLRNOOOCS\51579811
Page 5 of 5

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EXHIBIT A
3060
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IN AND FOR THE COUNTY OF WASH OE
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DEPT. NO.
B9

MONTGOMERY FAMILY TRUST; and DOES
1 through 20,
Defendant.
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CV06~00114
vs.
p.. " "
i-l <t
CASE NO.
Plaintiff,
11
::r:: ;
"
.....

17
ORl)ER
If)
18
This matter proceeded to a preliminary injunction hearing before this Court on February 7,
19
2006, on the issue of Defendant Montgomery's alleged destruction and/or possession of computer
20
software source code (hereinafter "Source Code"), allegedly belonging to Plaintiff ETreppid
21
Technologies.
22
exhibits filed therein.
23'
The Court has reviewed the entire file, the pleadings, points and authorities, and
In addition, the Court has considered the oral arguments of counsel, and
although the preliminary injunction hearing ultimately concluded before counsel had the opportunity to
24
finish the examination of one witness, the Court believes it has more than adequate information upon
25
which to decide the issues before it. The hearing was scheduled for one day. It began at 9:00 a.m. and
26
concluded at 9:30 p .m. Further examination of the final witness called to testify is urmecessary. See,
27
e.g., Zupanic v. Sierra Vista Rec., Inc., 625 P.2d 1177, 1180 (Nev. 1981). Accordingly, the Court
28
::ODMA\PCDOCS\J-fLRNODOCS\5 l 5 l 57\4
Page 1 of3
makes its Decision as set out below. 1
A preliminary injunction is available if an applicant can show a likelihood of success on the
merits and a reasonable probability that the non-moving party's conduct, if allowed to continue, will
cause irreparable harm for which compensatory damages is an inadequate remedy.
Holdings Nevada, L.L.C. v. Douglas County, 115 Nev. 129 (1999).
Dangberg-
First, the Court finds, pursuant to the employment agreement between the parties, the
subsequent undisputed conduct of the parties throughout the course of Montgomery's employment
with ETreppid, and Montgomery's acquiescence to and active participation in contractual agreements
entered into the ETreppid with third-parties involving the Source Code and technology at issue,
] ..,
10
Plaintiff is likely to prevail on the merits of his claims. See, Brooks v. Bates, 781 F.Supp. 202, 205-
~ g
:I: ii;
11
206 (S. DNY 1991) (rights may be acquired "by operation of law," such as in an employer-employee
..
relationship).
Second, the Court finds Plaintiff has demonstrated a reasonable probability that he will suffer
irreparable harm if a preliminary injunction does not issue. The record reflects the Source Code is
essential to the day-to-day business operations of ETreppid, as evidenced by the testimony of Dr. Sun.
Furthermore, the technology at issue, including data compression software, image detection software,
and pattern recognition software, which necessarily relics upon the Source Code for it's operation, is
alleged to be valued in excess of$100,000,000. Without access to the Source Code, ETreppid may be
forced to forego entering into valuable contracts for the use or sale of said technology. Lastly, the
testimony indicates that Plaintiff may suffer damages in excess of $10,000 (ten-thousand dollars) per
.
21
day if he remains without possession of the Source Code. This is not to say that Defendant may or
22
may not have a substantial counterclaim.
23
For the foregoing reasons, the Court concludes that a preliminary injunction is warranted in the
24
present context. Accordingly, pursuant to the requirements ofNRCP 65, Plaintiff is ordered to post a
25
bond in the amount of $50,000 (fifty-thousand dollars) to secure payment of such costs and damages
26
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The Court notes that Defendant gave notice approximately ten (10) hours into the hearing that it would be seeking federal
preemption of the issues at bar under the Copyright Act of 1967. While Defendant's position may indeed have merit, the
Court declines to address the issue of preemption, deferring such a determination for decision based upon application to the
proper Court. As such, this Court's Order solely addresses the merits of the preliminary injunction issue at hand.
"ODMA\PCDOCS~1LRNODOCS\5 I 515714
Page 2 of3

'r,_
- /
as may be incurred by Defendant if found to have been wrongfully enjoined or restrained. See, Arner.
Bonding Co. v. Roggen Enterprises, 584 P.2d 868, 870 (Nev. 1993). Good cause appearing, Plaintiffs
Motion for Preliminary Injunction against Dennis Montgomery and The Montgomery Family Trust is
GRANTED.
Until the conclusion of a trial on the merits or other order, Montgomery, The Montgomery
Family Trust, and all persons or entities in active concert or participation therewith, are enjoined and
restrained from destroying, hypothecating, transferring, modifying, licensing, using, duplicating,
and/or assig'ling the ETreppid Source Code, which includes, without limitation, any pattern
recognition, object tracking, and anomaly detection source code used, modified, or created at eTreppid,
...
JO
including that which has been used in connection with or deployed by eTreppid in the performance of
0
0 0
~
II
government contracts (hereinafter "Source Code"), arnl proprietary ETreppid technology relating
~
1111~
12
thereto, from discussing or disclosing any Source Code or proprietary ETreppid technology, with any
13
third party, except experts and other persons and witnesses necessary to Defendant's case and counsel,
" 14
"
a>
Q -1 z
provided, however that such persons shall be required to agree not disclose any information to othern
'O
...ol
is:
:r;
'O 'O
ol 0.,.,
11
'
"00
(j
0
00 'fJ. (lj
..... .. "d
ol
."i
" o'
" .~
OJ N 11
In addition, Montgomery and The
15
about the Source Code, or proprietary ETreppid technology.
0;2~
16
Montgomery Family Trust are hereby ordered to promptly return and deliver to ETreppid a copy of all
17
Source Code and any other ETreppid property, including any proprietary ETreppid technology in
18
tangible form, that is within the possession, custody, or_ control of either Montgomery or the
19
Montgomery Family Trust.
a:~
r-1
" <;
. ~'n
ol
tll
20
The Court issues this injunction to maintain the status quo and to avert any irreparable harm
21
that ETreppid may suffer and based on the risk that Mr. Montgomery could delete and/or transfer the
22
last version of the ETreppid Source Code that remains intact.
23
DATED this - - - day of February, 2006.
24
25
26
DISTRJCT JUDGE
27
28
ooODMA \PCDOCS\HLRNODOCS\515157\4
Page 3 of3

,_I
-,. ___ )
'-,
bSJ\1
ORIGINAL
FILED
CODE: 3370
\;(\
FEB 1 O2006
ROl"ALD
By:_,g_~Af!~~U-'-"-"--'

ETREPPID ~ECHNOLOGIES, L.L.C., a

California Corporation,
Plaintiff,
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13
14
15
CASE NO.:
CV06-00114
DEPT. NO.:
vs.
DENNIS MONTGOMERY, an individual;
And DOES 1 through 20,
Defendant.
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ORDER
The Court has considered the Ex-Pa rte Motion to Shorten Time for Plaintiff to file its
Opposition to Defendant's Motion to Dismiss on the grounds of preemption. The basis for
the Motion is that Defendant will be harmed by any delay in the resolution of this issue.
The Court notes that Plaintiff's Complaint was filed on January 19, 2006; _Defendant
filed a Complaint raising the issue of copyright upon which he claims preemption is based,
on or about January 31, 2006 and did not raise this issue to this Court until approximately
ten (10) hours into the hearing on the Preliminary Injunction conducted on Tuesday,
February 7, 2006. Moreover, this case was removed to Federal Court and then remanded.
According to the materials this Court received from the Federal Court, the sole issue raised
was Diversity. Preemption was never mentioned.
- 1-
'
The Court feels that Plaintiff is entitled to the usual time to respond to a Motion
2 which could terminate its case. See, Cheek v. FNF Construction. Inc., 924 P.2d 1347,
3
1349-1350 (Nev. 1996). Therefore, the Defendant's Motion is DENIED.

DATED this
/D
day of February, 2006.
~~
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The parties are asked to specifically address whether a motion to dismiss versus removal is the appropriate
vehicle. The Court is concerned that the Federal Court might be the Court with the most interest in deciding
preemption and jurisdiction.
-2-
"
1
CERTIFICATE OF SERVl_CE BY MAILING
3
4
Pursuant to NRCP 5(b), I hereby certify that I am an employee of the Second
day of
Judicial District Court, in and for the County of Washoe; and that on this /
February, 2006, I deposited in the County mailing system for postage and mailing with the
United States Postal Service in Reno, Nevada, and faxed, a true and correct copy of the
attached document addressed as follows:
J. StephenePeek, Esq.
Jerry M. Snyder, Esq.
Reno, Nevada 89511
Fax No.: (775) 786-6179
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David A. Jakopin, Esq.

Jonathan D. Butler, Esq.
2475 Hanover Street
Palo Alto, CA 94303
Fax No.: (650) 233-4545
Ronald J. Logar, Esq.
Eric A. Pulvar, Esq.
Law Offices of Logar & Pulvar, P.C.
Reno, Nevada 89501
Fax No.: (775) 786-7544
Michael J. Flynn, Esq.
Flynn & Stillman
224 Birmingham Drive, Suite 1A4
Cardiff, CA 92007
Fax No.: (888) 235-4279
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-3-
";:.. , ; ~
! f ~ ~ Filed 05/28/08
Case 3:06-cv-00056-PMP-VPC Documentl\
~= ~ Page 22 of 159
j 644-2
- ' J..J i
II
.... "'E: If.I

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10
(Application for Admission Pro Hae Vice forthcoming)
11
Attorneys for Defendant DENNIS MONTGOMERY
- - ............. u
~~ eo. o
==OD.-< QI
..- 1 w 1 . . . o
- - U)Q::..--..C
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03
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OG FEB -9 PM 5: 05
CODE: 1955
RONALD J. LOGAR, ESQ.
Nevada Bar #00303
ERIC A. PULVER, ESQ.
Nevada Bar# 07874
LAW OFFICES OF LOGAR & PULVER, PC
225 S. Arlington Ave,, Ste A
Reno, Nevada 89501
(775) 786-5040
--
'
Michael J. Flynn, Mass. State Bar No.: 172780

Philip H. Stillman, California State Bar No. 152861
FLYNN & STILLMAN
224 Birmingham Drive, Suite IA4
Cardiff, CA 92007
Tel:
(888) 235-4279
Fax: (888) 235-4279
r..--
--
'
. : """'
'
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ETREPPID TECHNOLOGIES, LLC, a

Nevada Limited Liability Company,
Plaintiff,
Case No.: CV06-00114

Dept No.: 9
16
VS.
17
18
19
20
21

THE MONTGOMERY FAMILY TRUST;
DENNIS MONTGOMERY and BRENDA
MONTGOMERY FAMILY TRUST;
and DOES 1 through 20,
Defendants.
22
23
24
25
26
27
. MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR LACK OF SUBJECT

MATTER JURISDICTION; MOTION FOR ORDER SHORTENING TIME FOR
PLAINTIFFS' RESPONSE
COMES NOW, Defendant, Dennis Montgomery by and through the Law Office ofLogar
& Pulver, PC, and hereby moves this Court to dismiss the First Amended Complaint pursuant to
Nev. R. Civ. P. 12(b) for lack of subject matter jurisdiction, which is based upon the Memorandum
28
-1-
of Authorities following, the exhibits attached hereto, and the file in this action.
2
3
Dated this -2"'_ day of February, 2006.
~7~

Attorney for Defendant, Dennis Montgomery
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-2-
MEMORANDUM OF POINTS AND AUTHORITIES RE:

LACK OF SUBJECT MATTER JURISDICTION
2
The factual background of this case is by now well-know to this Court. Despite being framed
3
as a "trade secrets" claim, this case actually turns on the ownership of certain technology, not the
4
disclosure of that technology to third parties. Because this case requires this Court to determine
5
matters of federal copyright law pursuant to the Copyright Act of 1976 regarding (I) whether the
6
software technology at issue in this action are derivative works of copyrights owned by Mr.
7
Montgomery, 17 U.S.C. IOI; (2) whether there is any written transfer of the Montgomery Family
8
9
10
Trust's ownership interests in the copyrights by means of a writing that complies with 17 U.S.C.
..
204(a) and (3) whether any software at issue is considered to be a "work for hire" pursuant to 17
U.S.C. 20l(b), this case is preempted by the Copyright Act and therefore this Court lacks subject
11
matter jurisdiction over the action. Particularly since Mr. Montgomery and the Montgomery Family
12
13
Trust currently have a copyright action now pending in the U.S. district court in Reno, this issue
must be reserved to the federal court.
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ARGUMENT
"Copyright preemption is both explicit and broad:"G.S. Rasmussen & Assoc. v. Ka/itta
Flying Service, Inc., 958 F.2d 896, 904 (9th Cir. 1992), cert. denied, 124 L. Ed. 2d 678, 113 S. Ct.
2927 (1993).
The key is whether the operation of state law " 'stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress.'" Kewanee Oil Co.
v Bicron Corp., 416 U.S. 470, 479, 40 L. Ed. 2d 315, 94 S. Ct. 1879, 181 U.S.P.Q. (BNA) 673
(1974) Section 30l(a) of the Copyright Act of 1976 states:
23
"all legal or equitable rights that are equivalent to any of the exclusive rights within
the general scope of copyright ... are governed exclusively by this title. No person
is entitled to any such nght or equivalent right in anv such work under the common
law or statutes of any State" (emphasis added)
24
That statute precludes enforcement of any state cause of action which is equivalent in
25
substance to a federal copyright infringement claim. Data Gen. Corp. v. Grumman Sys. Support
26
Corp., 36 F.3d 1147, 1164-65 (1" Cir. 1994); I Nimmer l.Ol[B][h], at 1-35 to 1-36.1. Put another
27
way, "Thus, a state common law or statutory claim is preempted by Section 301 if: "(!)the work is
28
within the scope of the 'subject matter of copyright' as specified in 17 U.S.C. 102 and 103; and (2)
22
the rights granted under state law are equivalent to any exclusive rights within the scope of federal
copyright as set out in 17 U.S.C. 106." Gates Rubber Co. v. Banda Chem. Indus., 91'.3d 823 (2"d Cir
-3-
1992) citingEhat v. Tanner, 780 F.2d 876, 878 (10th Cir. 1985), cert. denied, 479 U.S. 820, 93 L.
2
Ed. 2d 39, I 07 S. Ct. 86 (1986) (citing Harper & Row Publishers, Inc. v. Nation Enterprises, 723
F.2d 195, 199-200 (2d Cir. 1983), rev'd on other grounds, 471 U.S. 539, 85 L. Ed. 2d 588, 105 S.
Ct. 2218 (1985)).
In Patsy Aiken Designs, Inc. v. Baby Togs, Inc., 701 F. Supp. 108, I 10 (E.D.N.C.
I 988)(citingMayer v. Josiah Wedgwood & Sons, Ltd., 601 F. Supp. 1523, 1535 (S.D.N.Y. 1985)),
the court stated the general rule that "in order to escape preemption under I 7 U.S.C. 301, a state
law claim of unfair competition must include some qualitatively different 'extra element' besides
copying." In Patsy, the court held that "federal courts have repeatedly held that state law claims for
10
'misappropriation' or 'unfair trade practices,' are preempted by the Copyright Act of 1976." Id. at
11
Ill.
..
12
Section 106 of the Copyright Act grants to the copyright owner the exclusive rights to: (!)
13
reproduce the copyrighted work; (ii) prepare derivative works; (iii) distribute copies of the work; (iv)
14
perform the work publicly; and (v) display the work publicly. 17 U.S.C. 106. "Federal law will
15
preempt 'a state-created right if that right may be abridged by an act which, in and of itself, would
16
infringe one of the exclusive rights' established by federal law." G.S. Rasmussen & Assoc. v. Ka!itta
17
Flying Service, Inc., 958 F.2d 896, 904 (9th Cir. 1992), cert. denied, 124 L. Ed. 2d 678, 113 S. Ct..
18
2927 (1993). Artful pleading of state law causes of action cannot avoid the requirements of the
19
Copyright Act. See Miller v. CP Chemicals.Inc., 808 F. Supp. 1238, 1246 (D.S.C. 1992)(employee
20
could not avoid work for hire doctrine under the Copyright Act by alleging breach of employment
21
agreement); Saenger Org. v. Nationwide ins. Licensing Assocs., 119 F.3d 55 (1'1 Cir. 1997) (oral
22
agreement re partnership did not rebut work for hire).
23
In this case, the injunctive relief and trade secrets claim directly impacts the copyright
. 24
owner's exclusive rights. First, eTreppid is attempting to assert ownership rights in the Montgomery
25
Family Trust's derivative works. Thus, eTreppid's state law "trade secrets" claim is giving eTreppid
26
equivalent rights to those granted by the Copyright Act. Second, this Court must determine whether
27
the technology is a "derivative work" prepared by Mr. Montgomery. If the technology is a
28
derivative work, then his right to exploit it cannot be limited by this state law complaint. Third, the
requested relief - purportedly under the guise of "trade secret" claim - interferes with the
Montgomery Family Trust's right to distribute copies of the work, reproduce it,-and use it, once
-4-
again requiring preemption.
Fourth, since there is no writing transferring ownership of the
copyrights to eTreppid Technologies, this Court cannot impose a state law cause of action to excuse
the lack of a written transfer agreement without running afoul of Section 30 I. Fifth, this Court must
decide whether eTreppid is the owner of the derivative works as some sort of"work for hire." At
least as it applies to these copyrights, the Nevada statute relied upon, section 600.500, must be
preempted to the extent that it purports to transfer ownership of the copyrights to eTreppid without
a written agreement or without analyzing the ownership of the technology under the work for hire
provisions of the Copyright Act.
In addition, from a practical standpoint, there can be no trade secret misappropriation in this
10
case even if not preempted. The Fourth Circuit inAvtec Sys. v. Peiffer, 21F.3d568 (4th Cir. 1994),
II
held that the company could not have a state law trade secret claim when the company did not own
12
the copyrights. "There is no difficulty in finding the existence of a trade secret in the source or
13
object codes to computer programs where question of copyright ownership is not in issue or, even
14
more clearly, where the owner of the alleged trade secret also owns copyright in the material sought
15
to be protected." Id. at 575. Holding that at best, the company had an oral nonexclusive license to
16
the software because there was no writing transferring ownership, "We do not believe that a
17
nonexclusive use license in copyrighted material can support the reasonable expectation or right of
18
secrecy necessary to predicate a claim that the identical material is a trade secret protectible under
19
Virginia law." Id. InAvtec II, 38 U.S.P.Q.2D (BNA) 1922 (4th Cir. 1995), the court reaffirmed that
20
principle concisely, stating "As we held inAvtec I, one cannot-be guilty of misappropriating his owil.
21
property; so long as Peiffer is the owner of the copyright in the original version of the Program and
22
in its derivatives, including the 2.05 version, he cannot be guilty of misappropriating them. Based
23
on our holding that Peiffer is indeed the owner of the copyright in the Program, we therefore affirm
24
[the dismissal of the trade secret claim]."
25
26
For the foregoing reasons, Defendants respectfully request that this Court dismiss this action
for lack of subject matter jurisdiction.
27
MOTION FOR ORDER SHORTENING TIME
28
Time is of the essenc_e in this matter. On February 8, 2006, This Court just issued a sweeping
preliminary injunction, for which, Mr. Montgomery respectfully submits this Court lacked the
subject matter jurisdiction to entertain.
The sweeping preliminary injunction prevents Mr.

-5-
Montgomery from making a living on his copyrighted technology, and impennissibly treads on
2
federal copyright law. Mr. Montgomery is irreparably harmed everyday the preliminary injunction
remains in place.
Further, there is currently a virtually identical case pending in federal court, where subject
In th.is appropriate venue, the parties' rights regarding the
matter jurisdiction clearly exists.
copyrighted technology will be determined under copyright law and any appropriate state law
remedies without the danger of wrongful injunction or inconsistent results between the jurisdictions.
8
9
10
..
Wherefor, Mr. Montgomery requests an Order Shortening time for Plaintiffs' response to th.is
Motion.
CONCLUSION
11
12
For the foregoing reasons, Defendants respectfully request that Court issue an Order
13
Shortening Time for Plaintiffs response to this motion, and that this Court dismiss this action for
14
lack of subject matter jurisdiction.
15
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Respectfully submitted this 9th day of February, 2006.
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Attorney for Dennis Montgomery
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-6-
CERTIFICATE OF SERVICE
2
Pursuant to NRCP 5(b), I certify that I am an employee of the LAW OFFICE OF

LOGAR & PULVER, PC, and that on the lO'h day of February, 2006, I
__
deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto
__
sent via Federal Express or other overnight delivery service
6
7
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9
10
delivered via facsimile machine to fax number
_JL
personally delivered
caused to be delivered via Reno-Carson Messenger Service
the fore11.oing document, addressed to:

Via: Reno/Carson Messenger
Mr. Jerry M. Snyder, Esq.

Reno, NV 89511
Via: US Regular Mail:
Pillsbury Winthrop Shaw Pittman, L.L.P.

2475 Hanover Street
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2475 Hanover Street
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-7-
ORIGINAL
CODE: 3060
._)
FILED
FEB - 8 2006
RONALD A. LONGTIN, JR.,
By: :J;._~::L.,b~~:f,.J.--""~"'
IN THE SECOND JUDICIAL DISTRICT COURT OF THE STA TE OF NEVADA

IN AND FOR THE COUNTY OF WAS HOE
IO
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ETREPPID TECHNOLOGIES, L.L.C., a Nevada

Limited Lia'bility Company,
Defendants.
I
ORDER
This matter proceeded to a preliminary injunction hearing before this Court on February 7,
2006 on the issue of Defendant Montgomery's alleged destruction and/or possession of computer
.
software sour<;:e code (hereinafter "Source Code"), allegedly belonging to Plaintiff ETreppid
Technologies. The Court has reviewed the entire file, the pleadings, points and authorities, and
exhibits filed therein. In addition, the Court has considered the oral arguments of counsel, and
although the preliminary injunction hearing ultimately concluded before counsel had the opportunity
to finish the examination of one witness, the Court believes it has more than adequate information
upon which to decide the issues before it. The hearing was scheduled for one day. It began at 9:00
a.m. and concluded at 9:30 p.m. Further examination of the final witness called to testify is
-1-
__ )
unnecessary. See, e.g., Zupanic v. Sierra Vista Rec., Inc., 625 P.2d 1177, 1180 (Nev. 1981).
2
Accordingly, the Court makes its Decision as set out bclow. 1
A preliminary injunction is available if an applicant can show a likelihood of success on the
merits and a reasonable probability that the non-moving party's conduct, if allowed to continue, will
cause irreparable harm for which compensatory damages is an inadequate remedy. Dangberg-
Holdings Nevada, L.L.C. v. Douglas County, 115 Nev. 129 (1999).
First, the Court finds, pursuant to the employment agreement between the parties, the
subsequent undisputed conduct of the parties throughout the course of Montgomery's employment
with ETrepeid, and Montgomery's acquiescence to and active participation in contractual
10
agreements entered into by ETreppid with third-parties involving the Source Code and technology at
II
issue, Plaintiff is likely to prevail on the merits of his claims. See, Brooks v. Bates, 781F.Supp,202,
12
205-206 (S. DNY 1991) (rights may be acquired "by operation of law," such as in an employer-
l3
employee relationship).
14
Second, the Court finds Plaintiff has demonstrated a reasonable probability that he will suffer
15
irreparable harm if a preliminary injunction does not issue. The record reflects the Source Code is
16
essential to the day-to-day business operations of ETreppid, as evidenced by the testimony of Dr.
17
Sun. _Furthermore, the technology at issue, including data compression software, image detection
18
software, and pattern recognition software, which necessarily relies upon the Source Code for it's-
19
operation, is alleged to be valued in excess of$100,000,000. Without access to the Source Code,
20
ETreppid may be forced to forego entering into valuable contracts for the use or sale of said
21
technology. Lastly, the testimony indicates that Plaintiff may suffer damages in excess of $10,000
22
per day (ten-thousand) if he remains without possession of the Source Code. This is not_to
23
Defendant may or may not have a substantial counterclaim.
s~y
that
24
For the foregoing reasons, the Court concludes that a preliminary injunction is warranted in
25
the present context. Accordingly, pursuant to the requirements ofNRCP 65, Plaintiff is ordered to
26
27
28
The Court notes that Defendant gave notice approximately ten ( l 0) hours into the hearing that it would be seeking
federal preemption of the issues at bar under the Copyright Act of 1976. While Defendant's position may indeed have
merit, the Court declines to address the issue of preemption, deferring such a determination for decision base~ upon application to the proper Court. As such, this Court's Order solely addresses the merits of the preliminary injunction
issue at hand.
-2-

_)
--)
post a bond in the amount of$50,000 (fifty-thousand) to secure payment of such costs and damages
2
as may be incurred by Defendant if found to have been wrongfully enjoined or restrained. See,
Amer. Bonding Co. v. Roggen Enterprises, 584 P.2d 868, 870 (Nev. 1993). Good cause appearing,
Plaintiffs Motion for Preliminary Injunction against Dennis Montgomery and the Montgomery
Family Trust is GRANTED.
Until the conclusion of a trial on the merits or other Order, Montgomery and all persons or
entities in active concert or participation therewith, are enjoined and restrained from destroying,
hypothecating, transferring, modifying, and/or assigning the ETreppid Source Code, from discussing
any ETreppid technology, including anomaly detection and pattern recognition software, with any
10
third-party, except experts and other persons and witnesses necessary to Defendant's case and
II
counsel, provided, however that such witnesses and counsel shall not disclose any information to
12
others about ETreppid Source Code.
13
The Court issues this injunction to maintain the status quo and to avert any irreparable harm
14
that ETreppid may suffer and based on the risk that Mr. Montgomery could delete and/or transfer the
15
last version of the ETreppid Source Code that remains intact.
16
DATED this
ift..
17
~
JUD~
18
DISTRICT
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-3-
CERTIFICATE OF MAILING
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Pursuant to NRCP 5(b), I certify that I am an employee of the Second Judicial District Court
?(+J-. day of February, 2006, I deposited
of the State of Nevada, County of Washoe; that on this.
in the County mailing system for postage and mailing with the United States Postal Service in Reno,
Nevada, and faxed, a true copy of the attached document addressed to:
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J. Stephen Peek, Esq.

544.1. Kietzke Lane, Second Floor
Reno, NV 89511
Fax No.: (775) 786-6179
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18

2475 Hanover St.
Palo Alto, CA 94303
Fax No.: (650) 233-4545
Ronald J. Logar, Esq
Eric A. Pulver, Esq.
225 S. Arlington Ave., Ste. A
Reno, NV 89501
Fax No.: (775) 786-7544
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.4.
II 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 33 of 159

Case
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Code 2540
Nevada Bar #00303
ERJC A. PULVER, ESQ.
Nevada Bar# 07874
LAW OFFICE OF LOGAR & PULVER, PC
225 S. Arlington Ave., Ste A
Reno, Nevada 89501
(77 5) 786-5040

8 Philip H. Stillman, California State Bar No. 152861
FLYNN & STILLMAN
9 224 BirtWngharn Drive, Suite 1A4
l O Cardiff, CA 92007
Tel:
(888) 235-4279
11 Fax: (888) 235-4279
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ETREPPID TECHNOLOGIES, L.L.C., a

17 Nevada Limited Liability Company,

Dept. No.: 9
Plaintiff,
18
19
vs.
20 DENNIS MONTGOMERY, an individual;

21 DENNIS MONTGOMERY and BRENDA
22 MONTGOMERY FAMILY TRUST;
23
Defendants.
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11---~~~~~~~~~~~~~~~~~~/
NOTICE OF ENTRY OF ORDER
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0:
Plaintiff, eTreppid Technologies, et. al., and their Attorney's ofrecord:

PLEASE TAKE NOTICE that on the 7"' day ofFebniary, 2006, the above-entitled Court
ntered its ORDER ADMITTING TO PRACTICE, MICHAEL J. FLYNN, ESQ.
-1-
Case
11. 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 34 of 159
..,-)
1
A copy of said has been sent to all counsel of record.
DATED: This 81h day of February, 2006.
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""
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Ill
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wci::
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ItON~I
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3:
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<
....I
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-2-
Case
. II 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 35 of 159
I
2
Pursuant to NRCP 5(b ), I certify that I am an employee of the LAW OFFICE OF LOG AR
3
& PULVER, PC, and that on the 9"' day of February, 2006, I
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_ _ deposited for mailing in the U.S Mail, with sufficient postage affixed thereto
5
_ _ sent via Federal Express or other overnight delivery service
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..
the foregoing document, addressed to:

Sent US Regular Mail:

Reno, NV 89511

David A. Jakopiri, Esq.
2475 Hanover Street
Pa.lo Alto, CA 94304-1114
l~~C.- 6~
Lega.l Assistant toe
Law Office ofLogar & Pulver, PC
-3-

-- '
10
CODE:
Nevada Bar #00303
JENNIFER CHRJSTIE, ESQ.
Nevada Bar# 8025
LAW OFFICES OF LOG AR & PULVER, PC
Reno, Nevada 89501
(775) 786-5040
FLYNN & STILLMAN
Cardiff, CA 92007
Tel:
(888) 235-4279
Fax: (888) 235-4279
13
14
15
16

Nevada Liniited Liability Company,
Plaintiff,
vs.
i.
_C7?
. . . ._nd~
)
~~-~~-

Dept. No.: 9
Defendants.
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20
1.-
*****
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19
~' i""
_; ')?
\..-

11
12
.--,
NOTICE OF MOTION
TO:
All Interested Parties; and
TO:
All Counsel of Record

PLEASE TAKE NOTICE that Defendant, Dennis Montgomery will bring the foregoing
21
MOTION TO ASSOCIATE COUNSEL on for decision on the 7th day of February,
io06, in
22
Department 9 of the above-entitled Court.

23
24
Dated this_~7h_ _ d,yofFobru~
25

Attorney for Defendant Dennis Mo!ltgomery
1
2
LO GAR & PULVER, PC, and that on the
7th
day of February, 2006, I
_ _ deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto
6
7
8

..
the foregoing dQ(;ument, addressed to:
Personally Delivered to:

10

Hale Lme Peek Dennison and Howard
Reno, NV 8951 I
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Sent US Regular Mail to:

2475 Hanover Street
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-~~
M:LaS
Lezlie
Legal Assistant to the
Law Office of Logar & Pulver, PC
.,.. .)
CODE: 1955
RONALD J_ LOGAR, ESQ.
Nevada Bar #00303
ERJC A. PULVER, ESQ.
Nevada Bar# 07874
Reno, Nevada 89501
(775) 786-5040
FILED
FEB - 7 2005
RON~~~~~"
Michael J. Flynn, Mass. State Bar No.

FLYNN & STILLMAN
Cardiff, CA 92007
Tel: (888) 235-4279
Fax: (ll88) 235-4279
LO
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TY
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ETREPPID TECHNOLOGIES, LLC., a

Plaintiff,

Dept No.: 9
vs.
21
Defendants._
I
22
23
PREEMPTION BRIEF
24
COMES NOW, Defendant, Dennis Montgomery by and through the Law Office ofLogar
25
& Pulver, PC, and hereby submits his Preemption Brief, which is based upon the Memorandum of
26
Authorities following,
27
Dated this
VE.exhibits attached hereto, and the file in this action.
'f day of February, 2006.
28
RONALD J. LOG
ESQ.
Attorney for Defen ant, Deil!lis Montgomery
-1-
MEMORANDUM OF POINTS AND AUTHORITIES RE:

LACK OF SUBJECT MATTER JURISDICTION
2
Because this case requires this Court to detem1ine matters offederal copyright law pursuant
3
to the Copyright Act of 1976 regarding (I) whether the software technology at issue in this action
4
are derivative works of copyrights owned by Mr. Montgomery, 17 U .S.C. I 01; (2) whether there
5
is any written transfer of the Montgomery Family Trust's ownership interests in the copyrights by
6
means of a writing that complies with 17 U.S.C. 204(a) and (3) whether any software at issue is
7
considered to be a "work for hire" pursuant to 17 lJ.S.C. 20l(b), this case is preempted by the
8
Copyright Act and therefore this Court lacks subject matter jurisdiction over the action. Particularly
9
since M1. Montgomery and the Montgomery Family Trust currently have a copyright action now
10
pending in the U.S. district court in Reno, this issue must be reserved to the federal court.
11
ARGUMENT
12
"Copyright preemption is both explicit and broad:"G.S. Rasmussen & Assoc. v. Kalitta
13
Flying Service, Inc., 958 F.2d 896, 904 (9'h Cir. 1992), cert. denied, 124 L. Ed. 2d 678, 113 S. Ct.
14
2927 (1993). The key is whether the operation of state law " 'stands as an obstacle to the
15
16
17
18
accomplishment and execution of the full purposes and objectives of Congress.'" Kewanee Oil Co:
v Bicron Corp., 416 U.S. 470, 479, 40 L. Ed. 2d 3 l5, 94 S. Ct. 1879, 181 U.S.P.Q. (BNA) 673
(1974) Section 301(a) of the Copyright Act of 1976 states:
20
"all legal or equitable rights that are equivalent to any of the exclusive rights within
the general scope of copyright ... are governed exclusively by this title. No person
is entitled to any such nght or equivalent right in any such work under the common
law or statutes of any State" (emphasis added)
21
That statute precludes enforcement of any state cause of action which is equivalent in
22
substance to a federal copyright infringement claim. Data Gen. Corp. v. Grumman Sys. Support
23
Corp., 36 F.3d 114 7, 1164-65 (1" Cir. 1994); 1 Ninlrner 1.01 [B][h], at 1-35 to 1-36.1. Put another
24
way, "Thus, a state common law or statutory claim is preempted by Section 301 if: "(1 )the work is
25
within the scope ofilie 'subject matter of copyright' as specified in 17 U.S.C. 102 and 103; and (2)
26
tile rights granted under state law are equivalent to any exclusive rights within the scope of federal
27
copyright as set out in 17 U.S.C. I 06." Gates Rubber Co. v. Banda Chem. Indus., 9 F.3d 823 (2nd Cir
28
1992) citing Ehat v. Tanner, 780 F.2d 876, 878 (I 0th Cir. 1985), cert. denied, 479 U.S. 820, 93 L.
19
Ed. 2d 39, 107 S. Ct. 86 (1986) (citing Harper & Row Publishers, Inc. v. Nation Enterprises, 723
F.2d 195, 199-200 (2d Cir. 1983), rev'd on other grounds, 471 U.S. 539, 85 L. EO. 2d 588, 105 S.
-2-
t:)
'<:;--)
Ct. 2218 (1985)).

2
Section 106 of the Copyright Act grants to the copyright owner the exclusive rights to: (I)
reproduce the copyrighted work; (ii) prepare derivative works; (iii) distribute copies of the work; (iv)
perform the work publicly; and (v) display the work publicly. 17 U.S.C. 106. "Federal law will
preempt "a state-created right if that right may be abridged by an act which, in and of itself, would
infringe one of the exclusive rights" established by federal law." G.S. Rasmussen &Assoc. v. Kalitta
Flying Service, Inc., 958 F.2d 896, 904 (9 1h Cir. 1992), cert. denied, 124 L. Ed. 2d 678, 113 S. Ct.
2927 (1993). Artful pleading of state law causes of action cannot avoid the requirements of the
Copyri&l't Act. See Miller v. CF Chemicals, Inc., 808 F. Supp. 1238, 1246 (D.S.C. 1992) (employee
10
could not avoid work for hire doctrine under the Copyright Act by alleging breach of employment
11
agreement); Saenger Org. v. Nationwide Ins. Licensing Assocs., 119 F.3d 55 (l ' 1 Cir. 1997) (oral
12
agreement re partnership did not rebut work for hire).
13
In this case, the injunctive relief and trade secrets claim directly impacts the copyright
14
owner's exclusive rights. First, this Court must determine whether the technology is a "derivative
15
work" prepared by Mr. Montgomery. If the technology is a derivative work, then his right to exploit
16
it cannot be limited by this state law complaint. Second, the requested relief-purportedly underthe
17
guise of"trade secret" claim-interferes with the Montgomery Family Trust's right to distribute
18
copies of the work, reproduce it, and use it, once again requiring preemption. Third, since there is
19
no writing transferring ownership of the copyrights to eTreppid Technologies, this Court cannot
20
impose a state law cause of action to excuse the lack of a written transfer agreement without running
21
afoulofSection301. Fourth, this Court must decide whethereTreppid is the owner of the derivative
22
works as some sort of"work for hire." At least as it applies to these copyrights, the Nevada stafute
23
relied upon, section 600.500, must be preempted to the extent that it purports to transfer ownership
24
of the copyrights to eTreppid without a written agreement or without analyzing the ownership of the
25
technology under the work for hire provisions of the Copyright Act.
26
In addition, from a practical standpoint, there can be no trade secret misappropriation in this
27
case even if not preempted. The Fourth Circuit inAvtec Sys. v. Peiffer, 21F.3d568 (4th Cir. 1994),
28
held that the company could not have a state law trade secret claim when the company did not own
the copyrights. "There is no difficulty in finding the existence of a trade secret in the source or
object codes to computer programs where question of copyright ownership is nofin issue or, even
-3-
more clearly, where the owner of the alleged trade secret also owns copyright in the material sought
2
to be protected." Id_ at 575_ Holding that at best, the company had an oral nonexclusive license to
the software because there was no writing transferring ownership, "We do not believe that a
nonexclusive use license in copyrighted material can support the reasonable expectation or right of
secrecy necessary to predicate a claim that the identical material is a trade secret protectible under
Virginia law." Id InAvtec II, 38 U.S.P.Q.2D (BNA) 1922 (4th Cir. 1995), the court reaffirmed that
principle concisely, stating "As we held inAvtec I, one cannot be guilty of misappropriating his own
property; so long as Peiffer is the owner of the copyright in the original version of the Program and
in its dei;lvatives, including the 2.05 version, he cannot be guilty of misappropriating them. Based
JO
on our holding that Peiffer is indeed the owner of the copyright in the Program, we therefore affirm
11
[the dismissal of the trade secret claim]."
12
Respectfully submitted this 7'h day of February, 2006.
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IS
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-4-
CERTIFICATE or SERVICE
2
3
Pursuant to NRCP 5(b ), I certify that I am an employee of the LAW OFFICE OF LOGAR
& PULVER, PC, and that on the 7"' day of February. 2006, I
deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto
__
6
7
8
9
10

_X _ personally delivered

Reno, NV 89511

2475 Hanover Street
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-5
I
Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08
Page 43 of 159
_)
..,.)
2
m E<'>
:;,,,,, 8 ~"fD
=
'mN
==ma."':':
;;;: ~:::
~;;; ~~&
--01 -._
"'=cl~:;;
==o
::::'~ !ii::l

Nevada Bar #00303
Nevada Bar# 7874
..125 S . Ari"1ngton Ave., Ste A
R.eno, Nevada 89501
}15) 786-5040
FILED
FEB - 7 2005
RONALD~A
G
By:
--maN

;;;; ~
FLYNN & STILLMAN
I>"<'.,.
224
Birrningham Drive, Suite 1A4
-W::J-'
~~ ~ 1- 8 Cardiff, CA 92007
;:;:;;;; ~~ 0 8 Tel:
(888) 235-4279
~~'I~~~ Fax:
(888) 235-4279
~~~ttfPK
D PUTY
==
- - <DO::...,
::=:=g1;j_~;;
0
0
"
Attorneys for D~fendant DENNIS MONTGOMERY
10
IN TIIE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA

11
12
*****
ETIR.EPPID TECHNOLOGIES, L.L.C., a
13
Plaintiff,
14
vs.
15
16
17
18
19
20
21
22
23
24
25
Dept. No.: 9
Defendants.
ORDER ADMITTING TO PRACTICE

MICHAEL J. FLYNN, ESQ. having filed his Motion to Associate Counsel under
Nevada Supreme Court Rule 42, together with a Verified Application for Association of
Counsel, a Certificate of Good Standing for the state of Massachusetts, and the State Bar of
Nevada Statement; said application having been noticed, no objections having been made, and
the Court being fully apprised in the premises, and good cause appearing, it is hereby
ORDERED, that said application is hereby granted, and MICHAEL J. FLYNN, ESQ.
is hereby admitted to practice in the above entitled Court for the purposes of the above entitled
matter only.
Dated this
r?..dayof
5
6
7
:~
10
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14
15
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17
18
19
20
21
22
23
24
25

Nevada Bar No.: 0303
225 S. Arlington Avenue
Suite A
Reno, NV 89501
. 0\ Case 3:06-cv-00056-PMP-VPC
\ v !\
\
1
2
3
8
9
Document 644-2 Filed 05/28/08 Page 45 of 159
-)
CODE:
Nevada Bar #00303
JENNIFER CHRJSTIE, ESQ.
Nevada Bar# 8025
Reno, Nevada 89501
(775) 786-5040
',, .

FLYNN & STILLMAN
Cardiff, CA 92007
Tel:
(888) 235-4279
Fax: (i88) 235-4279
10
11
IN THE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEV ADA

12
*****
13
14
15
16
17
18
19

Plaintiff,
vs.

Dept. No.: 9
Defendants.
20
21
MOTION TO ASSOCIATE COUNSEL
22
Defendant, Dennis Montgomery, et. al., hereby move the Court for an order permitting
23
Michael J. Flynn, Esq., to practice in Nevada pursuant to Nevada Supreme Court Rule 42 (SCR
24
42). This motion is supported by the attached "Verified Application for Association of Counsel"
25
(Exhibit A), "Certificates of Good Standing" from the State Bar of Massachusetts (Exhibit B)
and the State Bar of Nevada Statement. (Exhibit C)
Dated this
7th

Submitted by:
G~g~
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..

Nevada Bar No.: 0303
1
2
LOGAR & PULVER, PC, and that on the
7th
day of February, 2006, I

..

10

Reno, NV 89511
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Sent US Regular Mail to:

2475 Hanover Street

IN THE FAMILY DfVISION OF THE SECOND JUDICIAL DISTRICT COURT
OF THE ST ATE OF NEVADA IN AND FOR THE COUNTY OF WASH OE
' **
FAMILY COURT
MOTION/OPPOSITION NOTICE
ETREPPID TECHNOLOGIES, ET.AL

vs.
(REQUIRED)
DENNIS MONTGOMERY ET. AL
CASE NO. CV06-00114

DEPT. NO. 9
-
NOTICE:
THIS MOTION/OPPOSITION NOTICE MUST BE ATTACHED AS THE

LAST PAGE to every motion or other paper filed pursuant to chapter 125, I25B
~r 125C ofNRS and to any answer or response to such a motion or other paper.
A. Mark the CORRECT ANSWER with an
YES
X.
1. Has a final decree or custody order been entered in this

case? If~. then continue to Question 2. If .!!Q, you do not
need to answer any other questions.
-
2. ls this a motion or an opposition to a motion filed to

change a final order? If~. then continue to Question 3. If
.!!Q, you do not need to answer any other questions.
D
D
3. Is this a motion or an opposition to a motion filed only to

.
change the amount of child support?
4. Is this a motion or an opposition to a motion for

reconsideration or a new trial and the motion was filed
within 10 days of the Judge's Order?
NO
[Z]
D
D
D
Date
IF the answer to Question 4 is YES, write in the .fi[illg
date found on the front page of the Judge's Order.
B. If you answered NO to either Question 1 or 2 or YES to Question 3 or 4, you are exempt
from the $25.00 filing fee. However, if the Court later determines you should have paid the
filing fee, your motion will not be decided until the $25.00 fee is paid.
I affirm that the answers provided on this Notice are true.
Date: February 7
2006
Signature:
Print Name:
Print Address:
Telephone Number:
Reno, NV 89501
775-786-5040
Rev. 10/2412002
EXHIBIT A
VAPP
***
Plaintiff,
Case No.:
CV06-00114
Dept. No:
vs.
DENNIS MON"fGOMERY, an individual;
TIIE MONTGOMERY FAMILY TRUST;
and DOES I through 20,
Defendants.
VERIFIED APPLICATION FOR ASSOCIATION
OF COUNSEL UNDER NEVADA SUPREME COURT RULE 42
Michael
First
Flynn,
James
Middle Name
-Petitioner, respectfully represents:
Last
l. Petitioner resides at --~l,__,6"'8,_.4"'-3--'V'-'i00

a_,,,D~e,_.S"-'an=ta,,_F,,_e~-- - - - - - - - - - - Street Address
Rancho Santa Fe
City
San Diego
CA
92067
County
State
Zip Code
(858) 775-7624
Telephone
2. Petitioner is an attorney at law and a member of the law firm of: ---"'-F""'lynn=~&=S=ti=ll=man~_
with offices at --~~~~~~~--------------------One Center Plaza
Street Address
Boston
Suffolk
City
(858 ) 775-7624
Telephone.
County
MA
State
Zip Code

.-1
3. Petitioner has been retained personally or asa member of the above named law firm by Law
Office ofLogar & Pulver, PC., to provide legal representation in connection with the above-entitled
matter now pending before the above referenced court.
4. Since November 24
of 1970
, petitioner has been, and presently is, a member of good
standing of the bar of the highest court of the State of
Ma,-;~s~ac~h~u=s=e=tt~s________
where
petitioner regularly practices law.
..
5. Petitioner was admitted to practice before the following United States District Courts, United
States Circuit Courts of Appeal, the Supreme Court of the United States, and/or courts of other states
on the dates indicated for each, and is presently a member in good standing of the bars of said Courts:
DATE ADMITTED
U.S. District Court for the District of Massachusetts
November 1970
U.S. Court of Appeals for the First Circuit
1972
6. Petitioner is not currently suspended or disbarred in any court except as hereinafter provided
(Give particulars; e.g., Court, jurisdiction, date):
NIA
7. Petitioner is not currently subject to any disciplinary proceedings by any organization with
authority at law except as hereinafter provided (give particulars, e.g. court, discipline authority, date,
status):
NIA
8. Petitioner has never received public discipline including, but not limited to, suspension or
disbarment, by any organization with authority to discipline attorneys at law except as hereinafter

''--~
provided (give particulars, e.g. court, discipline authority, date, status):
-~N=/A~------~
9. Petitioner has never had any certificate or privilege to appear and practice before any regulatory
administrative body suspended or revoked except as hereinafter provided (give particulars, e.g. date,
administrative body, date of suspension or reinstatement): ___N~/~A~------------
..
10. Petitioner, either by resignation, withdrawal, or otherwise, has never terminated or attempted to
terminate Petitioner's office as an attorney in order to avoid administrative, disciplinary, disbarment,
or suspension proceedings except as hereinafter provided; --~N~/A~-------------
11. Petitioner or any member of Petitioner's firm with which Petitioner is associated has/have filed
application(s) to appear as counsel under Supreme Court Rule 42 during the past three (3) years in
the following matters:
Title of Court
Administrative Body
or Arbjtrator
Date of
Application
Was Application
Granted or
Denied
~J_,,un=e~3~2=0=0~3_ _~C~VN~0"'3~-=00~4'""6'-'-Ho=D=M-"--~V-"-P~C'---~U""'.=S~.l;>istrict Court, D. Nev.
Michael J. Flynn, Applicant
(If necessary, please attach a statement of additional applications)
Granted
12. Nevada Counsel of Record for Petition in this matter is:

Ronald
, who has offices at
Lo gar
J.
First Name
Last Name
Middle Name
Reno
Washoe
City
County
-----'~~------~~~~---~
Street Address
( 775) 786-5040
89504
Zip Code
Phone Number
13. The following accurately represents the names and addresses of each party in this matter,
WHETHER OR NOT REPRESENTED BY COUNSEL, and the names and addresses of each
counsel of record who appeared for said parties:
MAILING ADDRESSS
NAME
=e=T~re~p=p=id~T~e~chn=o~l=o=g1~e=s~,e=t~a=l,~P~l=am==ti=f~f_ _ _ _ _~7~7=5~1.:rademark
Drive, Reno, NV 89512
Attorney's for Plaintiff: Pillsbury Winthrop Shaw, et al 2475 Hanover Street, Palo Alto, Ca 94304
Hale Lane Peek Dennison & Howard
Montgomery, et. al., Defendant
5441 Kietzke Llll1.e, Second Floor Reno 89511 Dennis

C/O 225 S. Arlington Ave. Ste A Reno NV 89501
Attorney for Defendant:Law Office of Lo gar & Pulver, PC, 2;25 S. Arlington Ave, Ste A Reno 89501
Flynn & Stillman
224 Birmingham Drive Suite 1A4, Cardiff CA 92007
14. Petitioner agrees to comply with the provisions ofNevada Supreme Court Rule 42(3) and (13)
and Petitioner consents to the jurisdiction of the courts and disciplinary boards of the State of
Nevada in accordance with provisions as set forth in SCR 42(3) and (13). Petitioner respectfully
requests that Petitioner be admitted to practice in the above-entitled court FOR THE PURPOSES OF
THIS MATTER ONLY.
15. Petitioner has disclosed in writing to the client that the applicant is not admitted to
practice in this jurisdiction and that the client has consented to such representation.
I, Michael l Flynn
, do hereby swear/affirm under penalty of perjury that the
assertions of this application are true:
That I am the Petitioner in the above entitled matter; that I have read the foregoing and know
the contents thereof; that the same is true of my own knowledge. except as to those matters therein
stated on information and belief, and as to the matter I believe them to be true.
That I further certify that I am subject to the jurisdiction of the Courts and disciplinary boards
of this state with respect to the law of this state governing the conduct of attorneys to the same extent
as a member of the State Bar of Nevada; that I understand and shall comply with the standards of
professional conduct required by members of the State Bar of Nevada; and that I am subject to the
disciplinary jurisdiction to the State Bar of Nevada with respect to any of my actions occurring in the
course of such appearance.
?n~
!)._
Petitio~ffia
STATE OF NEVADA
COUNTY OF WASHOE
) SS
Subscribed and sworn to before me

this r'._ day of February 2006,
by Michael l Flynn
'
"~
-"'"'"!
I
f...~~~~:~~.I
LEZLIE M. LUCAS Mids
I Ronald J. Logar, Esq., hereby consent as Nevada Counsel of Record to the designation of
Petitioner to associate in this cause pursuant to SCR 42.
DATED
STATE OF NEVADA
COUNTY OF WASHOE
) SS

thisfi.""'" day of February, 2006,
by Ronald J. Logar, Esq.
~~~
Notary Public
..
EXHIBITB
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS.
BE IT REMEMBERED, that at the Supreme Judicial Court holden at Boston

within an<J for said County of Suffolk, on the
day of
November
A.O.
1970
twenty-fourth
, said Court being the highest
Court of Record in said Commonwealth:
Michael J. Fl~1_n_ _ __
being found duly qualified in that behalf, and having taken and subscribed
the oaths required by law, was admitted to practice as an Attorney, and, by
virtue thereof, as a Counsellor at Law, in any of the Courts of the said
Commonwealth: that said Attorney is at present a member of the Bar, and
is in good standing according to the records of this Court*.
In testimony whereof, I have hereunto set my hand and affixed the

seal of said Court, this second day of February
in the year of our Lord two thousand and six.
MAU
Records of private discipline, if any, such$ a priwte ~imposed by the Boan:! of Bilf C>vesseers a by any court, are not covered by this~cation.
X3J16
..
EXHIBIT C
-1
STAT
2
IN THE SECOND JUDICIAL DISTRICT COURT OF
THE STATE OF NEVADA
Case No.
CV06-00114
Dept. No.
9
5
6
7
8
9
10
Etreppid Technologies,
L.L.C.
..
vs.
Dennis Montgomery,
an individual
11
12
13
STATE BAR OF NEVADA STATEMENT PURSUANT TO SUPREME COURT RULE

42 (3) (b)
14
15
THE STATE BAR OF NEVADA, in response to the application of

Petitioner, submits the following statement pursuant to SCR42(3):
16
17
18
19
20
21
22
23
24
25
SCR42{6)Discretion. The granting or denial of a motion to associate

counsel pursuant to this rule by the court is discretionary. The
court may revoke the authority of the person permitted to appear as
counsel pursuant to this rule ("out-of-sta-te-counsel") to make
continued appearances pursuant to this rule.
Absent special
circumstances, repeated appearances by any person or firm of
attorneys pursuant to this rule shall be cause for denial of the
motion to associate such person.
(a)
Limitations.
It shall be presumed, absent special
circumstances, that more than five appearances by any
person or firm of attorneys granted under this rule in a
three-year period is excessive use of this rule.
{b)
Burden on applicant.
The burden to establish special
circumstances in excess of the limitations set forth in
subsection 6(b) of this rule shall be upon the
applicant, shall be fully set forth by affidavit, and
shall accompany the original verified application.
26
1. DATE OF APPLICATION:
2/2/2006
27
28
2. APPLYING ATTORNEY: Michael James Flynn, Esq.

3. FIRM NAME AND ADDRESS: Flynn & Stillman, One Center Plaza,
Boston, MA 02108-1887
0
1
2
3
4
4. NEVADA COUNSEL OF RECORD: Ronald John Logar, Esq.,

Arlington Ave., Ste. A, Reno, NV 89501
225 S.
5. There is no record of previous applications for appearance by

petitioner or other attorney members of the petitioner's firm
made within the last three(3) years.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DATED this February 6, 2006
,..'-~=""-'oi-r'~S'l'L~~""
Mary Jo; ,
Member S. i:v'ces
Pro Hae Vice Processor
STATE BAR OF NEVADA
:::. J11 \.
t)
3060
J. Stephen Peek, Esq. (NV Bar No. 1758)
Jerry M. Snyder, Esq. (NV Bar No. 6830)
Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
8
9
'O
FILED

David A. Jakopin, Esq. (CA Bar No. 209950 >
Jonathan D. Butler, Esq. (CA Bar No. 229638)
2475 Hanover Street
Palo Alto, California 94304-1114
Telephone: (6,'jO) 233-4500
Facsimile: (650) 233-4545
Application for Admission Pro Hae Vice forthcoming
FEB - 6 2006
lJ
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11
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CV06-00114
DEPT. NO.
B9
vs .
1 through 20,
Defendant.
~~~~~~~~~~~~~~~~~/
23
24
CASE NO.
Plaintiff,
<U V
Jonathan Dale Butler, Esq., having filed his Motion to Associate Counsel under Nevada
Supreme Court Rule 42, together with a Verified Application for Association of Counsel, Certificate of
26
Good Standing from the State of California, and the State Bar of Nevada Statement; said motion
27
having been duly served on all parties, no objections having been made, and the Court being fully
28
apprised in the premises, and good cause appearing therefor,
ooODMA \PCDOCSIHLRNODOCS\51236611
Page 1 of2
(::::;
IT JS HEREBY ORDERED, that said application is granted, and Jonathan Dale Butler, Esq., is
2
3
admitted to practice in the above-entitled Court for the purposes of the above-entitled matter only.
DATED this ~L~~_day of
,./;f.JAM_'{_, 2006.
~~
5
6
7
9
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::ODMAIPCDOCS\HLRNODOCS\51236611
Page 2 of2

'.'--=- ~'
3795
r~
:.. :.
'
2006 FEB -6 PM 12: 17

Reno, NV 89511
Tel: (775) 327-3000
Fax: (775) 786-6179
r-
:" s ~~!>. i:~: LC
PILLSBURY WINTHROP SHAW PITTMAN, L.L.P.

DA YID A. JAKOPIN, CA Bar No. 209950
JONA THAN D. BUTLER, CA Bar No. 229638
24 75 Hanover Street
Telephone: (650) 233-4500
Facsimile: (6SO) 233-4545
(Application for Admission Pro Hae Vice Pending)
10
11

ETREPPID TECHNOLOGIES, L.L.C., a Nevada

CASE NO.
CV06-00114
DEPT.NO.
Plaintiff,
vs.
21
22
23
24
25
26
27
28

I through 20,
Defendants.
PLAINTIFF ETREPPID TECHNOLOGIES, L.L.C.'S REPLY TO OPPOSITION
IN RE EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER AND
MOTION FOR A PRELIMINARY INJUNCTION AGAINST DENNIS MONTGOMERY AND
THE MONTGOMERY FAMILY TRUST; AND,
MEMORANDUM OF POINTS AND AUTHORITIES
Pursuant to NRS 600A.070.3, Plaintiff eTreppid Technologies, L.L.C., hereby lodges the
enclosed record conditionally under seal and will make a motion or application to-the Court for an
order permitting the record to be filed under seal.
ooODMAIPC!XlCSIHLRNODOCS\513735\2
Page I of 12
IICase 3:06-cv-00056-PMP-VPC
\~
-~
Plaintiff eTrcppid Technologies, L.L.C. ("eTrcppid" or the ''Company") hereby submits its
] ~
Reply to Opposition in re Ex Parle Application for a Temporary Restraining Order and Motion for a
Preliminary Injunction Against Dennis Montgomery ("Montgomery") and The Montgomery Family
Trust (the "Trust" or "Montgomery Trust'}
I. INTRODUCTION.
This matter arises out of Montgomery's destruction and theft of eTreppid's proprietary Source
Code.
software, which eTreppid uses to fulfill obligations to its customers - including the Federal
Government -- for security and defense applications.
10
The present reply brief serves to clarify the facts and law which demonstrate eTreppid's
11
ownership of, and righl~ to, the technology in question. The present reply also serves to request a writ
~ 0
The technology at issue includes compression. anomaly detection, and pattern recognition
of possession pursuant to NRS 31.856.

II. ADDITIONAL FACTUAL BACKGROUND.
This section supplements the factual background provided in eTreppid's Ex Parle Application
for a Temporary Restraining Order and Motion for Preliminary Injunction (the "eTreppid Motion"),
which was filed on January 19, 2006. The present reply hereby incorporates by reference all factual
background information from the eTreppid Motion.
A. Montgomery's Obligations to eTreppid.
Montgomery's obligations as Chief Technical Officer ("CTO") of eTreppid were governed by
the terms of the Amended and Restated Operating Agreement, executed on November 1, 2001 (the
21
"2001 Operating Agreement"), in which Mr. Montgomery agreed that "the services af Dennis
22
Montgomery ... so long as he is serving as a Committee Member and/or Chief Technology Officer,
23
pursuant to this agreement, shall be exclusive to the LLC, and he shall devote substantially all of his
24
full time and attention and efforts to the Business and affairs of the LLC." Declaration of Jerry M.
25
Snyder ih Support of eTreppid Technologies, L.L.C. 's Reply to Opposition in re Ex Parle Application
26
for a Temporary Restraining Order and Order to Show Cause Re Preliminary Injunction Against
27
Dennis Montgomery ("Snyder Deel."),
28
agreed in the 2001 Operating Agreement that he would not "compete with the- LLC ... (1) by
: :ODMA\PCDOCS\HLRNODOCS\513735\2
2 (2001 Operating Agreement,
Page 2 ofl2
6.5). Montgomery also
developing, licensing or exploiting in any manner any software programs or other technology which is
competitive with the Technology or the Business of the LLC." Id. (200 l Operating Agreement,
Montgomery further agreed that "the Property that the LLC may own or have an interest in is not
suitable for partition." Id. (2001 Operating
B. Procedural Background.
Although the subject dispute has only been in litigation for less than two weeks, it already has
a rich and varied procedural history arising out of the Defendants' apparent efforts to avoid entry of a
Temporary Restraining Order ("TRO") and Preliminary Injunction.
Agreement,~
6.6)
15.14).
The actions of Defendant

.
included seeking removal of this case to Federal Court based upon Diversity of Citizenship, as well as
10
Federal Copyright law, based upon a Counterclaim filed by Montgomery. eTreppid filed an Ex Parle
11
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Motion for Summary Remand in response to such Motion for Removal, which Ex Parle Motion was
13
February I, 2006, eTreppid filed its First Amended Complaint in this matter to address different
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set for a hearing before both parties, and the District Court remanded the case to State Court. On
parties that Montgomery alleged were necessary (e.g., the Montgomery Trust), and other issues.
,>I] 15
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On February I, 2006, Judge Perry, with counsel for both parties present, finding sufficient
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16
cause, granted eTreppid's requested TRO and set the hearing on the Motion for Preliminary Injunction
...:i :;;:
17
for February 7, 2006.
:.:
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18
eTreppid now seeks a preliminary injunction to prevent Montgomery from resummg his
19
harmful activities before full resolution of this dispute and to require the return of eTreppid
20
Technology, including eTreppid's Source Co.de, improperly removed from eTreppid's premises by
21
Montgomery.
22
documents, the Court should grant eTreppid's Motion for a Preliminary Injunction against
23
Montgomery and The Montgomery Family Trust.
24
C.
For the reasons described herein and in eTreppid's other pleadings a:nd supporting
The Allegations of Montgomery's Counterclaim.
25
Montgomery and the Trust assert, in their Counterclaim, and in a separate Complaint
26
filed in Federal Court after the present case was remanded, that pattern recognition and anomaly
27
detection technologies are derivative works of certain copyrighted software source code owned by foe
28
Trust.
The Trust alleges that it is the owner of twelve (12) particular copyrights, which were
"ODMA\PCOOCSIHLRNODOCS\513 73512
Page 3of12
registered between 1982 and 1987. Montgomery Complaint, attached as Exhibit I to Montgomery's
'1:l
...
Opposition to the present motion, ~7.
order to rule on the pending state law claims, Montgomery has not provided any evidence of either (I)
ownership of these copyrights; or (2) the subject matter of these copyrights, and the inclusion of them
in the eTreppid Source Code. Without such evidence, he cannot prevail, and eTreppid cannot address
his assertions. The fact that Montgomery's counsel has refused eTreppid's requests to review the
underlying copyrighted materials still further suggests that these copyrights are not relevant to these
proceedings.
III. ETREPPID IS ENTITLED TO A PRELIMINARY INJUNCTION.
Although the Court need not address the copyright issues in
...
10
The parties agree that "[a] preliminary injunction is available if an applicant can show a
::r: p;
11
likelihood of success on the merits and a reasonable probability that the non-moving party's conduct,
12
if allowed to continue, will cause irreparable ham1 for which compensatory damage is an inadequate
13
remedy." Dangberg Holdings Nevada, LLC. v. Douglas County, 115 Nev. 129, 142 (1999) (citations
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omitted). As discussed below and in the eTreppid Motion, eTreppid is likely to prevail on the merits
0
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and there is a reasonable probability that the conduct of Montgomery and/or the Trust, if allowed to
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continue, will cause irreparable harm to eTreppid. Accordingly, the Court should grant eTreppid's
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requested Preliminary Injunction.
V)
18
19
Contrary to Montgomery's assertions that he or the Trust owns any pattern recognition and
20
anomaly detection software that Montgomery .created, while employed at eTreppid, the facts and law
21
lead to a different conclusion, for a number of independently based reasons.
22
eTreppid Will Prevail on the Merits.
I.
Montgomery's employment agreement illustrates eTreppid's ownership.
23
Montgomery agreed that, while employed as COO and CTO of eTreppid, his services "shall be
24
exclusive to the LLC, and he shall devote substantially all of his full time and attention and efforts to
25
the Business and affairs of the LLC." Snyder Deel.,~ 2 (2001 Operating Agreement, Article 6.5). In
26
each of the Company's Operating Agreements (from 1998, 1999 and 2001), Mr. Montgomery further
27
agreed that while employed, he would not "compete with the LLC ... by: (1) developing, licensing or
28
exploiting in any manner any software programs or other technology which is competitive with the
"ODMAIPCDOCS\HLRNODOCS\513735\2
Page 4of12

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Technology or the Business of the LLC."
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Article 6.5; 2001 Agreement, Article 6.6)).
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Operating Agreement, that "the Property that the LLC may own or have an interest in is not suitable
for partition." Id. (2001 Operating Agreement, '1! 15.14).
Under the terms of the Operating Agreement, Montgomery agreed that he would both refrain
from competing with eTreppid, and that he would devote his full time and attention to the Business
and affairs of eTreppid. So while the "Business" of the Company under the Operating Agreements
was defined in terms of software compression technology, the inclusion of the phrase "and affaiis"
illustrates that Montgomery's obligations exceeded the literal scope of that definition. Further, for his
10
services as the CTO of eTreppid, Montgomery was paid a substantial amount of money. Still further,
11
the Operating Agreements highlight that the technology cannot be partitioned.
12
Montgomery's employment agreement and the Operating Agreements themselves all illustrate that
13
eTreppid owns this technology.
14
2.
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As a matter of law, eTreppid owns any software and source code that Montgomery
developed while employed at eTreppicL
Section 600.500 of the Nevada Revised Statutes ("Section 600.500") explicitly provides as
16
follows:
17
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Montgomery also agreed, at Paragraph 15.14 of the
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18
19
Except as otherwise provided by express written agreement, an employer

is the sole owner of any patentable invention or trade secret developed by
his employee during the course and scope of the employment that relates
directly to work performed during the course and scope of the
employment.
20
This 2001 Nevada law is consistent with the common law rule that employers own any inventions
.
21
created or developed by an employee who was hired to invent. See also Mary LaFrance, Nevada's
22
Employee Inventions Statute: Novel, Nonobvious, and Patently Wrong, p. l (2002) ("if an employee is
23
hired for the purpose of inventing, the law will recognize an implied contract giving the employer
24
ownership of contracted-for inventions."). eTreppid employed Montgomery as CTO for the purposes
25
of inventing and developing such tools as the eTreppid Source Code, and the Company regularly paid
26
him a generous salary for his services. Trepp Deel., '1! 3 (attached to eTreppid Motion).
27
None of the Operating Agreements - including the 2001 Operating Agreement, which
28
Montgomery signed after the effective date of the above-referenced Nevada law - alter the default"ODMAIPCDOCSIHLRNODOCS\513 73512
Page 5 of l2
statutory rule for employer ownership of employee inventions. Had Montgomery wanted to alter this
default statutory rule, he could have done so in the Operating Agreements by specifying that he would
own any patentable inventions or trade secrets. Absent such an express provision, the default statutory
rule provides that Montgomery's work belongs to his employer, eTreppid. Montgomery has failed to
identify any express written provision or other evidence that the parties altered the default statutory
rule in his employment relationship with eTreppid. Accordingly, the 2001 Agreement must be read in
conjunction with Section 600.500. Under controlling law, eTreppid owns Montgomery's work and
inventions, including the eTreppid Source Code .
3.
] ,.
Montgomery's work belon~o eTreppid because he was hired to invent.
IO
Although the Employment Agreements and Seclion 600.500 illustrate that eTreppid owns the
11
eTreppid Source Code and related technology, the Company would still own Montgomery's work and
'"d 'O ....

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12
inventions under the 'hired to invent' rule. The Company's Operating Agreements, discussed above,
S, ~ ~ 13
and the parties' conduct throughout Montgomery's employment establish that Montgomery was hired
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to invent for eTreppid.
15
Company's Manager. Snyder Deel., 12 (1998 A!,>reemcnt, Article 6.1.1). Later, he became CTO and
i: ::2
16
the majority of his duties involved research and development of various software technologies,
" ....
17
including the eTreppid Source Code.
18
Article 6.5). Likewise, Montgomery's numerous assignments of patent rights, as well as the broad
19
scope of inventions included therein, suggest that Mr. Montgomery knew and agreed that his
20
inventions belong to eTreppid.
21
handsomely for his research, development and invention activities - thereby trading The speculative
22
value of his creativity and productivity for a guaranteed salary (approximately $300,000).
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Specifically, in the Company's formative stages, Montgomery was the
Snyder Deel., 1 2 (1999 Agreement, 6.5; 2001 Agreement,
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23
24
25
26
27
28
Snyder Deel., 1 3.
Additionally, eTreppid paid Montgomery
The District Court for the U.S. Federal Circuit recently described the 'hired to invent' rule as
follows:
[C]ontract law allows individuals to freely structure their transactions and
employee relationships. An employee may thus freely consent by contract
to assign all rights in inventive ideas to the employer. Without such an
express assignment, employers may still claim an employee's inventive
work where the employer specifically hires or directs the employee to
exercise inventive faculties. When the purpose for employmenr thus
focuses on invention, the emp Joyce has received full compensation for his
"O DMAIPCDOCSIHLRNODOCS\51373512
Page 6of12
I 3:06-cv-00056-PMP-VPC
Case
I
. I
2
3
or her inventive work. To apply this contract principle, a court must

examine the employment relationship at the time of the inventive work to
determine if the parties entered an implied -in-fact contract to assign patent
rights.
Teets v. Chromalloy Gas Turbine Corporation, 83 F.ld 403, 408 (Fed. Cir. 1996), cert. den.,
4
117 S. Ct. 513 (1996) (citations omitted) (emphasis added); see also Gasser v. In/anti Int'!, Inc., 353 F.
5
Supp. 2d 342, 353 (E.D.N.Y. 2005) ("where an employee is hired to invent something or solve a
6
particular problem, the invention of the employee, and the Patent for it, belongs to the employer."); Q
7
CO Industries, Inc. v. Hoffman, 625 F. Supp. 608, 617 (S.D.N.Y. 1985) ("[w]hen an individual is
8
expressly em'flloyed 'to devote his time to the development of process and machinery and was to
9
receive therefore a stated compensation,' the resulting development is the property 'of him who
10
engage the services and paid for them."'). Because Montgomery was employed as CTO to 'exercise
11
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belong to eTreppid.
4.
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his inventive faculties,' he was hired to invent by eTrcppid. Accordingly, his inventions and work
eTreppid owns the technology due to Montgomery's fiduciary obligations.
As an officer (CTO) and director (Manager) of eTreppid, Montgomery owed - and continues to
15
owe - a fiduciary duty of the loyalty and fairness to cTreppid. Originally he was a 50% owner in
i:l
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eTreppid, which over time has been diluted to about 30%. This ownership interest, coupled with his
position as a Manager of company, illustrate that he owed a duty of loyalty to the company. See e.g.,
'fl
18
Gasser v. In/anti Int'/, Inc., 353 F. Supp. 2d 342, 352 (E.D.N.Y. 2005) ("an officer or director of a
19
corporation generally has a fiduciary duty to assign patents to that corporation"); Kennedy v. Wright,
20
676 F. Supp. 888 (C.D. Ill. 1988) (owner of closely-held corporatio.n was its 'alter.. egQ', so his
21
inventions were assets of corporation); Great Lakes Press Corp. v. Froom, 695 F. Supp. 1440
22
(W.D.N.Y. 1987) (although not hired to invent and employment contact was silent as to inventions,
23
president had fiduciary duty to assign patents to company). Under these circumstances, Montgomery
24
cannot now credibly assert that he personally owns the technology he assisted in developing at
25
eTreppid. This is further reinforced by the fact that this technology, including the eTreppid Source
26
Code, was not developed solely by him, but was developed using eTreppid engineers and eTreppid
27
facilities and hardware and other resources.
28
"ODMA\PCDOCSIHLRNODOCS\51373512
Page 7of12
I'

. 1
l
5.
No evidence supports Montgomery's claim for copyright infringement.
Montgomery and the Trust assert that pattern recognition and anomaly detection technologies
are derivative works of certain copyrighted software source code owned by the Trust.
alleges that it is the owner of twelve (12) particular copyrights, which were registered in 1982 and
1987. Although the Court need not address the copyright issues in order to Rule on the pending state
law claims, Montgomery has not provided any evidence of either (1) ownership of these copyrights; or
(2) the subject matter of these copyrights, and the inclusion of them in the eTreppid Source Code.
Without such evidence, he cannot prevail, and eTreppid cannot address his assertions
6.
The Trust
Even if Montgomery is deemed to "own" the eTreppid Source Code, eTreppid

is entitled to an irrevocable, royalty-free 'shop right' to the technology.
Even if the Court determines that Montgomery was not hired to invent and that Montgomery
owns the eTreppid Source Code, the Company is still entitled to a 'shop right' license to the
technology.
A 'shop right' is an irrevocable, royalty-free, non-assignable right to use the employee's
invention. "(T]he basic premise justifying the creation of shop rights [is] that the employer should
receive a share in an invention he has financed. Use by the employee of the employer's tools and
materials has always been considered a touchstone of a shop right." Mechmetals Corp. v. Telex
Computer Products, Inc., 709 F.2d 1287, 1293 (9th Cir. 1983); see also McElmurry v. Arkansas Power
& Light Co., 995 F.2d 1576 (Fed. Cir. 1993); Wommack v. Durham Pecan Co., Inc., 715 F.2d 962,
966-967 (5th Cir. 1983) (the principal consideration is the employee's consent, which may be shown
either by the employee's actual consent to the employer's use, or b the employee's us,e of the
21
employer's time and facilities to make the invention; essentially, the employee is estopped to sue the
22
employer for patent infringement because of employee's own conduct).
23
As discussed in the present Reply and in the eTreppid Motion, Montgomery created and/or
24
developed the eTreppid Source Code using the Company's facilities, equipment, and personnel.
25
Further, he made use of eTreppid's facilities, equipment and personnel in the regular course of
26
business, during the same period of time for which he was paid a significant salary.
27
28
///
::ODMA\PCDOCSIHLRNODOCS\51373512
Page 8of12
Accordingly, if the Court determines that Montgomery owns the eTreppid Source Code, the
2
Court should nonetheless grant eTreppid's requested Preliminary injunction on the grounds that
eTreppid has an irrevocable 'shop right' to the teclmology.
It ls Reasonably Probable that Montgomery's Conduct, If Allowed To Continue,
B.
Will Cause Irreparable Harm To eTreppid.
I.
Montgomery has misappropriated eTreppid's trade secrets.
For the reasons set forth in the eTreppid Motion, the eTreppid Source Code is a trade secret.
Montgomery has not seriously contested this fact; rather, he apparently asserts that (1) he, not
eTreppid, is entitled to exclusive use and possession of the eTreppid Source Code and related
'O
10
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<II>-<
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technologies, and (2) he is not in possession of the eTreppid Source Code.
II
Based on Montgomery's actions so far in this dispute, it is reasonably probable that he would
12
cause irreparable harm to eTreppid if the Court does not rein him in. He is responsible for deleting all
13
copies of the eTreppid Source Code from the Company's servers, and he took the last remaining copy
'" "'
p @
;> 14
0 i-1 '"
of the eTreppid Source Code from the Company's offices. Montgomery then returned to state his
15
intention of holding the eTreppid Source Code hostage until he is paid "big money." Under these
'"-~
p ::.<:
ll:i 16
circumstances, there is a substantial reason to think that Montgomery, if not reined in by the Court,
i-1"'~
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17
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18
19
may destroy or conceal the RAID unit at issue before this dispute has been fully resolved.
2.
The evidence strongly suggests that Montgomery 1s m possess10n of the

eTreppid Source Code.
20
The evidence submitted in support of eTreppid's Motion for a TRO provides a powerful reason
21
to believe that Montgomery took a RAID (Redundant Array Independent Disk) storage device,
22
containing the eTreppid source code, from eTreppid's facility. Venables, Bal and Kalluri declared that
23
during the month of December 2005, Montgomery apparently deleted any source code saved on
24
individual workstations at eTreppid.
25
individuals who had access to eTreppid's SRCSERVER and ISASERVER, where full copies of the
26
source code were saved. Venables further testified that before Christmas in 2005, Montgomery told
27
Venables that he had taken home a workstation and a RAID storage device. This RAID box appears
28
to contain the only complete copy of the eTreppid Source Code.

:cODMAIPCDOCS\HLRNODOCS\51373512
Venables declared that he and Montgomery were the only
Page 9 of 12
Moreover, Montgomery has
I
i
repeatedly insisted that he or the Trust owns the subject software. See"-&, Montgomery's Opposition,
at 3:24-4:3.
IV.
ETREPPID IS ENTITLED TO A WRIT OF POSSESSION.
Pursuant to Nevada's claim and delivery statute, NRS 31.840 et seq., in order to obtain a writ
of possession, eTreppid must show through affidavit or declaration that ( 1) eTreppid owns a RAID
unit upon which the source code is stored, (2) Montgomery has wrongfully detained the source code
and devices upon which the source code is stored, (3) the reason for Montgomery's detainer, to the
best of eTreppid's information and belief; (4) that the RAID unit has not been taken for an assessment
or fine, or seized under an execution or an attachment, and (5) the value of the RAID unit and the
10
source code stored thereon. NRS 31.850. After reviewing this afiidavit and determining that it is
:i:: :;
11
adequate, "the court ... shall issue an order to show cause why the property should not be taken from
""""-
12
the defendant and delivered to the plaintiff." NRS 31.853.
""..."' ...
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13
Pursuant to NRS 31.856(l)(c)(2), a writ of possession may issued prior to a hearing upon a
14
showing that the property to be returned "by reason of threatened action by the holder, such property is
",.,. 0 15
in immediate danger of destruction, serious harm, concealment, removal from this state, or sale to an
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innocent purchaser."
17
The Court should issue an order to show cause. As set forth above, the declarations submiited
18
in this matter demonstrate that eTreppid owns the source code at issue, and that Montgomery has
19
wrongfully detained the subject property. The evidence further shows that Montgomery has detained
20
the source code in order to extract money from eTreppid; Montgomery told Venables that eTreppid
21
would only recover its source code back if it paid "big money'' to Montgomery. In additton,the RAID
22
unit was not taken by Montgomery as assessment of a fine, or seized under an execution or
23
attachment.
" '<t
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:i::
24
For purposes of setting a bond pursuant to NRS 31.863(2), the value of the detained property
25
is the intellectual property value of the source code, which while it has potential value, still requires
26
modification and enhancement in order to meet that potential. In addition, the value of the source
27
code as a revenue source for eTreppid is inextricably linked with the context of eTreppid as an
28
existing company; the value of the source code is dependent upon the ability
::ODMA\rCDOCS\HLRNODOCS\513735\2
Page 10ofl2
of other
eTreppid
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employees to market and support eTreppid's technology. Accordingly, for purposes of setting a bond,
the value of the current existing contracts should set the outer limits for determining the value of the
source code.
Given the difficulty in valuing the subject source code, Plaintiffs submit that this Court should
base the amount of the bond on the potential harm that Montgomery could suffer from being unable to
use, transfer, or license the subject source code while this action is pending. In addition, in order to
protect both parties against a loss of the subject source code, Montgomery should be ordered to deliver
one copy of the source code to eTreppid and one copy into the possession of a third party escrow
agent. Such a mechanism would allow for the value of the underlying property to be secured without
10
..
requiring this court to undertake the uncertain task of setting a value on the source code itself
Accord ingly, eTreppid respectfully requests that pursuant to NRS 31.863, this Court issue a
11
writ of possession requiring Montgomery to return the RAID device, along with the source code stored
thereon, to eTreppid. eTreppid further asks that this Court issue a preliminary injunction to prevent
Montgomery and the Trust from (1) discussing the eTreppid source code or underlying technology
with any third party, (2) allowing any third party access to view the eTreppid source code, (3)
transferring, hypothecating, or licensing the source code, or (4) modifying or destroying the source
code.
V.
CONCLUSION.
In conclusion, it is noteworthy that neither Montgomery nor the Trust has provided a signed
declaration or any other shred of evidence to support the allegations in its Opposition to the eTreppid
21
Motion.
22
preliminary injunction sought by eTreppid.
23
For this lack of evidence and for the foregoing reasons; the Court should enter the
Dated: February 6, 2006
24
25
~::;?i
f.StePhell~eeusqtlife

Jerry M. Sn yd er, Esquire
544 l Kietzke Lane, Second Floor
Reno, Nevada 89511
775-327-3000 (tel.), 775-786-6179 (fax)
26
27
28

o:ODMA\PCDOCSIHLRNODOCS\513735\2
Page 11of12
. I!Case 3:06-cv-00056-PMP-VPC
PROOF OF SERVICE
2
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On February 6, 2006, I caused the foregoing PLAINTIFF ETREPPID TECHNOLOGIES,
LLC's REPLY TO OPPOSITION IN RE EX PARTE APPLICATION FOR A TEMPORARY
RESTRAINING ORDER AND ORDER TO SHO\V CAUSE RE PRELIMINARY
INJUNCTH'N to be hand-delivered by providing a true and correct copy to Hale Lane Peek
Dennison and Howard's runners with instructions to hand-deliver the same to:
Ronald J. Logar, Esquire
Eric A. Pulver, Esquire
The Law Offices of Lo gar & Pulver
Reno, NV 89501
i::
13
2"' (/)o"'d"
i:: i:: "
" " :>
foregoing is true and correct, and that this declaration was executed on February 6, 2006.
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oDDMA IPCDOCS\HLRNODOCS\513735\2
Page 12of12
'
ORIGINAL
CODE: 2665
,.~:>
FILED
FEB - 3 2006

10
ETREPRID-TECHNOLOGIES, L.L.C., a
Plaintiff,
11
12
13
14
15
CASE NO.:
CV06-00114
DEPT. NO.:
vs.
Defendants.
16
17
18
19
20
21
22
23
ORDER ACCEPTING RANDOM REASSIGNMENT OF CASE

On January 23, 2006, a Case Assignment Notification was filed forwarding this
matter to Department No. 9 for consideration of acceptance. NOW, THEREFORE, IT IS HEREBY ORDERED that Department 9 accepts the random
reassignment of the above-entitled action.
Dated this
:3
24
25
26
27
28
-1-
1
2
CERTIFICATE OF SERVICE BY MAILING
3
4
5
Pursuant to NRCP 5(b), I hereby certify that I am an employee of the Second
Judicial District Court, in and for the County of Washoe; and that on this
February, 2006, I deposited in the County mailing system for postage and mailing with the
United States Postal Service in Reno, Nevada, a true and correct copy of the attached
document addressed as follows:
..
10
11
12
13

Law Offices of Logar & Pulvar, P.C.
Reno, Nevada 89501
14
15
16

Reno, Nevada 89511
17
-
18
Sheila Mansfield
19
20
21
22
23
24
25
26
27
28
-2-
day of
r
1
...
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10
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3060
Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
FILED

David A. Jakopin, Esq. (CA Bar No. 209950 1
24 7 5 Hanover Street
Telephone: (6o60) 233-4500
Facsimile: ( 650) 233-4545
FEB - 6 2006
RONALDA.
By:~~~~"'-""-1-.{,,A..~/
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DEPT.NO.
B9

1 through 20,
Defendant.
23
25
CV06-00114
vs.
22
24
CASE NO.
Plaintiff,

David Alan Jakopin, Esq., having filed his Motion to Associate Counsel under Nevada
Supreme Court Rule 42, together with a Verified Application for Association of Counsel, Certificates
of Good Standing from the State of California, the State of Illinois, and the District of Columbia Court
of Appeals, and the State Bar of Nevada Statement; said motion having been duly senred on all parties,
28
"ODMAIPCDOCS\HLRNODOCS\5123 71 \I
Page 1 of2
qCase 3:06-cv-00056-PMP-VPC
CJ
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no objections having been made, and the Court being fully apprised in the premises, and good cause
appearing therefor,
3
4
5
IT IS HEREBY ORDERED, that said application is granted, and David Alan Jakopin, Esq., is
admitted to practice in the above-entitled Court for the purposes of the above-entitled matter only.
DATED this
(a
day of
6
7
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Case 3:06-cv-00056-PMP-VPC Document

.. :644-2
:\I.'\ Filed 05/28/08 Page 79 of 159
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Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
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IN THE SECOND JUDICIAL DISTRICT COURT OF THE ST ATE OF NEV ADA
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David A. Jakopin, Esq. (CA Bar No. 209950)
2475 Hanover Street
1 Telephone: (6~0) 233-4500
Facsimile: (650) 233-4545
10 Attorneys for Plaintiff
1-<
il:
18
19
20

CASE NO.
CV06-00l 14
DEPT.NO.
B9
Plaintiff,
vs.
I through 20,
21
Defendant.
22
MOTION TO ASSOCIATE COUNSEL
23
COMES NOW plaintiff, by and through its undersigned counsel, J. Stephen Peek, Esq. and
24
25
Jerry M. Snyder, Esq., of the firm of Hale Lane Peek Dennison and Howard, and hereby move this
26
Court for an order permitting Jonathan Dale Butler, Esq. to practice in this court for the purposes of
27
this case only, pursuant to Nevada Supreme Court Rule 42 (SCR 42).
28
I !I
::ODMAIPCDOCSIHLRNODOCS\512346\ I
Page 1 of3
Out-of-state counsel, Jonathan Dale Butler, Esq., having complied with the requirements as set
forth by SCR 42, hereby submits a "Verified Application for Association of Counsel" (attached hereto
as Exhibit "A"), "Certificate of Good Standing" from the State of California (attached hereto as
Exhibit "B"), and the "State Bar of Nevada Statement" (attached hereto as Exhibit "C").
DATED this 3rd day of February, 2006.
7
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evada Bar Number 1758
Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
Attorneys for Plaintiff eTreppid Technologies, L.L. C.
12
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28
'ODMAIPCDOCS\HLRNODOCS\51234611
Page 2 of3
PROOF OF SERVICE
1
2
3
4

l am employed in the City of Reno, County of Washoe, State of Nevada by the law offices of
Hale Lane Peek Dennison and Howard. My business address is 544 l Kietzke Lane, Second Floor,
Reno, Nevada 895 l l. I am over the age of 18 years and not a party to this action.
5
6
7
8
9
'O
On F1"!xuary 3, 2006, I served the foregoing MOTION TO ASSOCIATE COUNSEL by

placing a true copy thereof in Hale Lane Peck Dennison and Howard's outgoing mail in a scaled
envelope, addressed as follows:
10
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I am readily familiar with Hale Lane Peek Dennison and Howard's practice for collection and
processing of its outgoing mail with the United States Postal Service. Such practice in the ordinary
course of business provides for the deposit of all outgoing mail with the United States Postal Service
on the same day it is collected and processed for mailing.
r/J.. "d
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The Law Offices ofLogar & Pulver
Reno, Nevada 89501
13
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"ODMA\PCDOCS\HLRNODOCS\512346\1
Page 3 of3
EXHIBIT A

CODE 4255
IN THE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEV ADA

ETREPPID TECHNOLOGIES, L.L.C,

a California corporation
Plaintiff,
Case No. CV-06-00114
vs.
Dept. No. B9
..
DENNIS MONTGOMERY, et al.

Defendants.
VERIFIED APPLICATION FOR ASSOCIATION OF COUNSEL UNDER

NEVADA SUPREME COURT RULE 42
~J~O~N~A~T~H~AN~~~D~AL=E~~B~U~T~L=E=R~------'
First
Middle Name
Petitioner, respectfully represents:
Last
L Petitioner resides at 1378 Jackson Street
Street Address
San Francisco
City
San Francisco
County
---
California
State
94109
Zip Code
(415) 596-9123
Telephone
2. Petitioner is an attorney at law and an associate of the law firm of
PILLSBURY WINTHROP SHAW PITTMAN LLP
with offices at
50 Fremont Street
Street Address
San Francisco
City
(415) 983-1000
Telephone
San Francisco
County
CA
State
94105
Zip
3. Petitioner has been retained personally or as an associate of the above named law firm by
ETREPPID TECHNOLOGIES LLC
_________ to provide legal
representation in connection with the above-entitled matter now pending before the above referenced
court.
4. Since December of2003, petitioner has been, and presently is, a member of good standing of the
bar of the highest court of the State of _ _ _ _~C~a=l~i=o=rm~a _ _ _ _ where petitioner regularly
practices law.
DATE ADMITTED
United States District Court-Northern District of California
12-2004
--------~~~~-~
(Give particulars; e.g., Court, jurisdiction, date): _ _ _ _ --~:N~o~t~a~p"'p~li=c=ab=l=e~-----
status): _ _ _ _ _ _ _ __,N"-o"-t"-"a,,.p"'p"h"'c,,,a"'b"'le'--------------------8. Petitioner has never received public discipline including, but not limited to, suspension or
provided (give particulars, e.g. court, discipline authority, date, status): _ _,N=o~ta,,,p"'p""'l~ic=a=b~le'----

9. Petitioner has never lt-')my certificate or privilege to appear m..._-)ractice before any regulatory
administrative body, date of suspension or reinstatement): .. --~N=o~ta~P~o~l=ic=a=b~l~e------~
terminate Petitioner's office as an attorney in order to avoid administrative, disciplinary, disbarment, or
suspension proceedings except as hereinafter provided;
Not applicable
..
application(s) to appear as counsel under Supreme Court Rule 42 during the past three (3) years in the
following matters:
Title of Court
Administrative Body
or Arbitrator
Date of
Application
=0=8-~2=3~-2~0~0~4~-~S=h=o~e=n~v~~S=A=C~H=ol~d=in,,,g~_ _S~u=preme. Court of Nevada
Was Application
Granted or
Denied
Granted 03-08-2005
Case No. 41563

12. Nevada Counsel
Jerry
First Name
ofR~-ro
tor Petition in this matter is:
M.
Snyder (Hale, Lane Peek Dennison And IJ=o=w=ar=d)~-Middle Name Last Name
~5~4~4~l~K~ie~tz~k~e~L~an~e~-~2""__,_Fl~oo,,,r~- ---~R~e~no~--- ~f]..,,.sh~ooce_ __

Street Address
City
County
( 775

89511
Zip Code
327-3000
Phone Number
13.
The following accurately represents the names and addresses of each party in this matter,
WHETHER OR NOT REPRESENTED BY COUNSEL, and the names and addresses of each counsel of
record who appeared for said parties:
NAME
..
MAlLlNG ADDRESSS
E~T=RE~P~P=ID~T=E=C=HN~O=L=O=G=IE=S~L=LecC~------~725 Trademark Drive, Reno, NV 89521
DENNIS MONTGOMERY
14. Petitioner agrees to comply with the provisions of Nevada Supreme Court Rule 42(3) and (13) and Petitioner consents to the jurisdiction of the courts and disciplinary boards of the State of Nevada in
accordance with provisions as set forth in SCR 42(3) and (13). Petitioner respectfully requests that
_Petitioner be admitted to practice in the above-entitled court FOR_Tl:fE PURPOSES OF THIS MATIER
ONLY.
15. Petitioner has disclosed in writing to the client that the applicant is not.admitted to prac~ice _in this
jurisdiction and that the client has consented to such representation.
I, JONA THAN D. BUTLER, do hereby swear/affirm under penalty of perjury that the assertions of this
application are true:
That I am the Petitioner in the above entitled matter; that I have read the foregoing and know the
contents thereof; that the same is true of my own knowledge except as to those matters therein stated on
information and belief, and as to the matter I believe them to be true.
That I further certify that I am subject to the jurisdiction of the Courts and disciplinary boards of this
state with respect to the law of this state governing the conduct of attorneys to the same extent as a
member of the State Bar of Nevada; that I understand and shall comply with the standards of
disciplinary jurisdiction to the State Bar of Nevada with respect to any of my actions occurring in the
DATED this
2- ~ . day of
January , 2006
~~
--Petitioner/Affiant
STATE OF
CALIFORNIA
)
) SS
COUNTY OF
San Francisco
I, Jerry M. Snyder, hereby consent as Nevada Counsel of Record to the designation of Petitioner
to associate in this cause pursuant to SCR 42.
DA TED this _J.,t_ day of
February
Counsel of Record
STATE OF NE~ ADA
COUNTY OF WASH OE
) SS
TANYA L. JA\/!ecS
Notary PL'b!ic . S!A' _ ,
Appointment :~c--v1~~i:: iil.~/a~h~f-~:aa
No: 03-831002 Expires August 19:~~~j
, 20 06.

'!"'" )
'
EXHIBITB
THE
STATE BAR
OF CALIFORNIA
180 HOWARD STREET

SAN FRANCISCO, CALIFORNIA 94105-1639
TELEPHONE (415) 538-2000
January 30, 2006
TO WHOM IT MAY CONCERN:
This is to certify that according to the records of the State Bar, JONATHAN DALE
BUTLER, #229638, was admitted to the practice of law in this state by the Supreme
Court of California on December 22, 2003; and has been since that date, and is at
date hereof, an ACTIVE member of the State Bar of California; and that no
recommendation for discipline for professional or other misconduct has ever been
made by the Board of Governors or a Disciplinary Board to the Supreme Court of
the State of California.
THE STATE BAR OF CAUFORNIA
Custodian of Membership Records
EXHIBIT C
STAT

THE STATE OF NEVADA
Case No.
CV-06-00114
Dept. No. B9
5
6
8
9
10
L.L.C., a California
corporation
vs.
Dennis Montgomery
11
12
13

42(3) (b)
14
15
THE STATE BAR OF NEVADA, in response to the application of

16
17
18
19
20
21
22
23
24
25
SCR42(6)Discretion.
The granting or denLal of a motion to associate
counsel pursuant to this rule ("out-of-state counsel") to make
continued appearances pursuant to this rule-. -Absent special
(a)
Limitations.
It shall be presumed, absent special
circumstances, that more than five appearances by any
(b)
Burden on applicant. The burden to establish special
26
2/1/2006
27
28
2. APPLYING ATTORNEY: Jonathan Dale Butler, Esq.

3. FIRM NAME AND ADDRESS: Pillsbury Winthrop Shaw Pittman LLP, 50
Fremont St., San Francisco, CA 94105
\""')
1
3
4
5
4. NEVADA COUNSEL OF RECORD: Jerry M. Snyder, Esq., 5441 Kietzke

Lane, Ste. 200, Reno, NV 89511
5. In addition to the present application, petitioner and/or other
firm members made the following previous applications within
the last three years:
08/23/2004
02/01/2006
(2)GRANTED
FILED SIMULTANEOUSLY
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
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DATED this Febr.uary 2, 2006
.
'v
Cu
Mary Jo
Member
ices
STATE BAR OF NEVADA
....) On1G~.-il~JA l

I ,/ \
''
*****
ETREPPID TECHNOLOGIES, LLC et. al.,
Plaintiff,
vs.

Dept. No.: B9
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-,
'lOOb FEB - 3 Pl'\ 3: 4 I
~-
IN TIIE SECOND JUDICIAL DISTRICT COURT oFJfikls \_.

IN AND FOR TIIE COUNTY OF WA~~~~P'iVb'"-"-
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Code: 4085
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DENNIS-"'10NTGOMERY, et.al.,
Defendant.
~~~~~~~~~~~/
SUMMONS
TOTHECOUNTERDEFENDANTWARRENTREPP: YOUHAJIEBEENSUED. THE COURT MAY
DECIDE AGAINST YOU WITHOUT YOUR BEING HEARD UNLESS YOU RESPOND, IN WRITING,
WITHIN 20 DAYS. READ THE INFORMATION BEi.OW VERY CAREFULLY.
A Civil complaint or petition has been filed by the plaintiff against you for the relief as set forth in that
document (see complaint or petition on file). When service is by publication, add a brief statement of the
object of the action. See Rules of Civil Procedure, Rule 4 (b). The object of this action is: SUMMONS:
ANSWER AND COUNTERCLAIM.
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I.
If you intend to defend this lawsuit, you must do the following within 20 days after service of this
summons, exclusive of the day of service:
a.
File with the Clerk of the Court, whose address is shown below, a formal written answer to
the complaint or petition, along with the appropriate filing fees, in accordance with the rules
of the Court; and
b.
Serve a copy of your answer upon the attorney or plaintiff whose name and address is shown
below.
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2.
Unless you respond, a default will be ehtered upon application of the plaintiff and this Court may enter
a judgment against you for the relief demanded in the complaint
Dated
this~ay of February, 2006
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Issued on behalf of plaintiff or plaintiffcs attorney:
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Name: Law Office ofLogar & Pulver

Address: 225 S. Arlington Avenue
Suite A
Reno NV 89501
Phone: 775-786-5040
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6J, Tiffi COURT
RONALD A. LO
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CTCQJ:JRT
75 Court Street
Reno, NV 8950 I
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CODE:
Nevada Bar #00303
JENNIFER CHRISTIE, ESQ.
Nevada Bar# 8025
Reno, Nevada 89501
(775) 786-5040
Michael J. Flynn, Mass. State Bar No.:
FLYNN & STILLMAN
Cardiff, CA 92007
Tel: . (888) 235-4279
Fax: (888) 235-4279
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*****
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Plaintiff,
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CV06-00114
Dept. No:
vs.
THEMONTGOMERYFAMILYTRUST;
Defendants.
~~~~~~~~~~~~-'---~~~'/
RECEIPT OF ACKNOWLEDGMENT AND

ACCEPTANCE OF SERVICE
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Case No.:
I, JERRY M. SNYDER, hereby acknowledge receipt of and ~ccept service on behalf of

Defendant, WARREN TREPP, an Individual of a Summons; Answer and Counterclaim in the
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above-captioned matter.
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DATED: This
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David A. Jakopin, Esq. {CA Bar No. 209950)
2475 Hanover Street
Telephone: (6.;jO) 233-4500
Facsimile: (650) 233-4545
;Application for Admission Pro Hae Vice forthcoming
0 0
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I. Stephen Peek, Esq. (NV Bar No. 1758)
Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile : (775) 786-6179
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CV06-00l 14
DEPT. NO.
B9
vs .
17
tr,
CASE NO.
Plaintiff,

1 tluough 20,
21
Defendant.
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MOTION TO ASSOCIATE
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COMES NOW plaintiff, by and through its undersigned counsel, J. Stephen Peek, Esq. and
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COUNSEi~
Jerry M. Snyder, Esq., of the firm of Hale Lane Peek Dennison and Howard, and hereby move this
Court for an order permitting David Alan Jakopin, Esq. to practice in this court for the purposes of this
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case only, pursuant to Nevada Supreme Court Rule 42 (SCR 42).
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I II
::ODMAIPCDOCSIHLRNODOCS\512361\1
Page 1 of3
Out-of-state counsel, David Alan Jakopin, Esq., having complied with the requirements as set
2
forth by SCR 42, hereby submits a "Verified Application for Association of Counsel" (attached hereto
as Exhibit "A"), "Certificates of Good Standing" from the State of California, State of Illinois, and the
District of Columbia Court of Appeals (attached hereto as Exhibit "B"), and the "State Bar of Nevada
Statement" (attached hereto as Exhibit "C").
DATED this 3'd day ofFebmary, 2006.
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~~---Nev~:Bar:mber
1758
Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
Attorneys for Plaintiff eTreppid Technologies, L.L.C
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"ODMA\PCOOCSIHLRNODOCS\51236 l \ l
Page 2 of3
PROOF OF SERVICE
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l am readily familiar with Hale Lane Peek Dennison and Howard's practice for collection and
processing of its outgoing mail with the United States Postal Service. Such practice in the ordinary
course of business provides for the deposit of all outgoing mail with the United States Postal Service
on the same day it is collected and processed for mailing.
On Fe~ruary 3, 2006, I served the foregoing MOTION TO ASSOCIATE COUNSEL by
placing a true copy thereof in Hale Lane Peck Dennison and Howard's outgoing mail in a scaled
envelope, addressed as follows:
Reno, Nevada 89501
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"ODMA\PCDOCSIHLRNODOCS\512361 II
Page 3 of3
EXHIBIT A
CODE 4255
IN THE SECOND JUDICIAL DISTRlCT COURT OF THE STA TE OF NEVADA

ETREPPID TECHNOLOGIES, L.L.C.,

a California corporation
Plaintiff,
Case No. CV-06-00114
vs.
Dept. No. B9
DENNIS MONTGOMERY, et al.
Defendants.
VERIF1ED APPLICATION FOR ASSOCIATION OF COUNSEL UNDER

NEV ADA SUPREME COURT RULE 42
-~D~A=V~ID~~AL==AN~--J=A=K=O=P=I=N~_ _ _ _ _ _ _; Petitioner,
First
Middle Name
respectfully represents:
Last
I. Petitioner resides at 365 Forest Avenue #4-D

Street Address
Palo Alto
City
Santa Clara
County
California
State
94301
Zip Code
(650)
533-4448
Telephone
2. Petitioner is an attorney at law and a member of the law firm of
PILLSBURY WINTHROP SHAW PITTMAN LLP
with offices at
Palo Alto
City
( 650) 233-4790
Telephone
2475 Hanover Street

Street Address
Santa Clara
County
CA
State
94304
Zip
3. Petitioner has been retained personally or as a member of the above named law firm by
_________ to provide legal
ETREPPID TECHNOLOGIES LLC
representation in connection with the above-entitled matter now pending before the above referenced
court.
4. Since February 15, 2002, petitioner has been, and presently is, a member of good standing of
the bar of the highest court of the State of
practices law .
Califom.i~a~___
where petitioner regularly
..
DATE ADMITTED
United States District Court-Southern District of California
--------~0~4-~1~4~-2~0~0~3'-----
United States District Court-Central District of California
02-05-2003
United States District Court-Northern District of California
02-15-2002
United States District Court-District of Arizona
12-23-2002
District of Columbia Court of Appeals
08-17-1988
United States District Court-Northern District of Illinois
07-24-2002
Supreme Court of Illinois
11-17-198-7 -
(Give particulars; e.g., Court, jurisdiction, date): _ _ _ _ _ _ _~N~o~t~a,,pp"-l~ic~a=b~l~e_ _ _ __
status): _ _ _ _ _ _ _ _~N~o~t~a"'p"p~li~c~a~b~le~----- ______________
. ".'.")
8. Petitioner has never received public discipline including, but not limited to, suspension or
provided (give particulars, e.g. court, discipline authority, date, status):
Not applicable
9. Petitioner has never had any certificate or privilege to appear and practice before any regulatory
administrative body, date of suspension or reinstatement):- --~N=o~t=ap"-p"-l=ic=a=b~l=e_ _ _ _ __
..
terminate Petitioner's office as an attorney in order to avoid administrative, disciplinary, disbarment,
or suspension proceedings except as hereinafter provided;
Not applicable
application(s)to appear as counsel under Supreme Court Rule 42 during the past three (3) years in
the following matters:
Title of Court
Administrative Body
or Arbitrator
Date of
Application
08-23-2004
Shoen v. SAC Holding
Supreme Court of Nevada
Was Application
Granted or
Denied
Granted 03-08~2005
Case No. 41563
12. Nevada Counsel of Record for Petition in this matter is:

Jerry
First Name
M.
Snyder (Hale. Lane Peek Dennison And Jioward)
Middle Name Last Name
5441 Kietzke Lane - 2"' Floor

Street Address
---~R~e~n~o_ _ _ , _.\Ya~s~ho~e~---- -~89~5~1~1_ _ __
City
County
Zip Code
327-3000
( 775
)
Phone Nwnber
13. The following accurately represents the names and addresses of each party in this matter,
WHETHER OR NOT REPRESENTED BY COUNSEL, and the names and addresses of each
counsel ofrecord who appeared for said parties:

NAME
MAILING ADDRESSS
=E=T=RE=P=P=ID~T~E~C=HN~~O=L=O~G=IE=S~L=L=C_ _ _ _ _ _ _~75.5
Trademark Drive, Reno, NV 89521
=D=E~NNl~=S~M=O=N~T=G~O=M=E=R=Y_ _ _ _ _ _ _ _ _~lZ720 Buckthorn Lane, Reno,
NV 89511
14. Petitioner agrees to comply with the provisions of Nevada Supreme Court Rule 42(3) and (13)
and Petitioner consents to the jurisdiction of the courts and discip1inafy boards of the State of
Nevada in accordance with provisions as set forth in SCR 42(3) and (13). Petitioner respectfully
requests that Petitioner be admitted to practice in the above-entitled court FOR.THE PURPOSE""$ OF
THIS MATTER ONLY.
15. Petitioner has disclosed in writing to the client that the applicant is not admitted to practice in
this jurisdiction and that the client has consented to such representation.

._,I'
.
__ /
I, DAVID A. JAKOPIN, do hereby swear/affirm under penalty of perjury that the assertions of
this application are true:
That I am the Petitioner in the above entitled matter; that l have read the foregoing and know the
contents thereof; that the same is true of my own knowledge except as to those matters therein stated
on information and belief, and as to the matter I believe them to be true.
That I further certify that I am subject to the jurisdiction of the Courts and disciplinary boards of
..
this state with respect to the law of this state governing the conduct of attorneys to the same extent as
a member of the State Bar of Nevada; that I understand and shall comply with the standards of
disciplinary jurisdiction to the State Bar ofNevada with respect to any of my actions occurring in the
DATED this
STATE OF
CALIFORNIA
1J
.;? ~--day of
January , 2006
)
) SS
COUNTY OF
Santa Clara
)
" K;H~EE~
~ ;ill~ "~t
~
Notary Pub!lc - California ~
Santo Clora County
MyComm. EYpiresSep 18, 2000~
Commission# 1375224
1d
thi~~day ofJ<invu~oo(;;,
~~
.>=~
"\'.")
I, Jerry M. Snyder, hereby consent as Nevada Counsel of Record to the designation of Petitioner
to associate in this cause pursuant to SCR 42.
DATED this _lsL day of
February
, 20 06.
~----T--;~-fRecordSTATE OF NE" ADA
)
) SS
COUNTY OF WASH OE
TANYA L. JAMES
Notary Public State of Nevada
Appointment Recorded in Washoe County
No: 03-837002 Expires Augu~ 19, 2007
4. NEVADA COUNSEL OF RECORD: Jerry M. Snyder, Esq., 5441 Kietzke

Lane, Ste. 200, Reno, NV 89511
5. In addition to the present application,
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5
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petitioner and/or other

firm members made the following previous applications within
the last three years:
08/23/2004
02/01/2006
(2) GRANTED
FILED SIMULTANEOUSLY
DATED this February 2,. 2006
..
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STATE BAR OF NEVADA
EXHIBITB

1
THE
:J
STATE BAR
OF CALIFORNIA
180 HOWARD STREET

SAN FRANCISCO, CALIFORNIA 94!05-1639
TELEPHONE (415) 538-2000
January 30, 2006
.
TO WHOM IT MAY CONCERN:
This is to certify that according to the records of the State Bar, DAVID ALAN
JAKOPIN, #209950, was admitted to the practice of law in this state by the
Supreme Court of California on December 1, 2000; and has been since that date,
and is at date hereof, an ACTIVE member of the State Bar of California; and that
no recommendation for discipline for professional or other misconduct has ever
been made by the Board of Governors or a Disciplinary Board to the Supreme Court
of the State of California.
THE STATE BAR OF CALIFORNIA
Custodian of Membership Records
Certificate of Admission
To the Bar of Illinois
I, Juleann Homyak, Clerk of the Supreme Court of Illinois, do hereby certify that
..
David Alan Jakopin
has been duly licensed and admitted to practice as an Attorney and Counselor of Law
within this State; has duly taken the required oath to support the CONSTITUTION OF
1TIE UNITED STATES and of the STATE OF ILLINOIS, and also the oath of office
prescribed by law, that said name was entered upon the Roll of Attorneys and Counselors
. in my office on November 17, 1987 and is in good standing, so far as the records of this
office disclose.
In Witness Whereo_f, I lrnve hereunto

placed my hand and affixed the seal
of said Supreme Court, at Springfield,
in sajd State, this Monday, January 23, 2006.
Clerk
c!flisirid of ffiolumhia ffiourt of J\ppeafa

Olammiltee an J\omissians
500 ~nllimm l\uetute, ;l'l)ll!I. - ;Jilaam 4200
;lll!lasqingtan, ~l. 01. 2ll001
202 I 879-2710
I, GARLAND PINKSTON, JR., Clerk of the District of Columbia

4
Court of Appeals, do hereby certify that

DAVID A. JAKOPIN
was on the
duly
AUGUST, 1988
qualified
entitled
to
and
admitted
practice
before
as
an
this
attorney
Court
and
and
is,
counselor
on
the
and
date
indicated below, an active member in good standing of this Bar.
In Testimony Whereof, I have

hereunto subscribed my name
and affixed the seal of this
Court
at
the
City
of
.
Washington, D.C., on January

31, 2006.
GARLAND PINKSTON, JR., CLJ;:RK
By:
,,_,
)
,_
..
-- -
EXHIBIT C
STAT
2
THE STATE OF NEVADA
Case No.
CV-06-00114
Dept. No.
B9
5
6
7
8
9
10
L.L.C., a California
corporation
..
vs.
Dennis Montgomery
11
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42(3) (b)
14
15
THE STATE BAR OF NEVADA, in responne to the application of

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SCR42(6)Discretion. The granting or denial of a motion to associate

counsel pursuant to this rule ("out-of-ntate counsel") to make
continued appearances pursuant to this rule. Allsent special
(a)
Limitations.
It shall be presumed, absent special circumstances, that more than five appearances by any
(b)
Burden on applicant. The burden to establish special
26
2/1/2006
27
28
2. APPLYING ATTORNEY: David Alan Jakopin, Esq.

3. FIRM NAME AND ADDRESS: Pillsbury Winthrop Shaw Pittman LLP,
2475 Hanover Street, Palo Alto, CA 94304
!I
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1005

Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
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David A. Jakopin, Esq. (CA Bar No. 2099501
2475 Hanover Street
Telephone: (660) 233-4500
Facsimile: (650) 233-4545
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CASE NO.
CV06-00114
DEPT. NO.
B9
Plaintiff,
vs .
I through 20,
21
Defendant.
22
ACCEPTANCE OF SERVICE
23
The undersigned hereby acknowledges receipt and accepts service by copy of the Summons
24
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26
and Plaintiff Etreppid Technologies, LLC'S First Amended Complaint on behalf of Defendant,
DENNIS MONTGOMERY, an individual; and, THE MONTGOMERY FAMILY TRUST, in the
27
Ill
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Ill
:DDMA\PCDOCS\HLRNODOCS\51 3093\l
Page I of2
1
2
above-entitled matter.
DATED: This _-1:__day of February, 2006.
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Romld J. Logar, Esq.

225 S. Arlington Avenue, Ste. A
Reno, NV 89501
Telephone: (775) 786-5040
Facsimile: (775) 786-5044
Attorneys for Defendant Dennis Montgomery and
The Montgomery Family Trust
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:ODMAIPCDOCSIHLRNODOCS\5 l 3093\l
Page 2 of2
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2610
J_ Stephen Peck, Esq. (NV Bar No_ 1758)
Jerry M. Snyder, Esq. (NV Bar No_ 6830)
Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
10
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Pillsbury Winthrop Shaw Pittman, LL.P.

David A. Jakopin, Esq_ (CA Bar No. 209950 1
Jonathan D_ Butler, Esq. (CA Bar No_ 229638)
2475 Hanover Street
Telephone: (Q,50) 233-4500
Facsimile: (650) 233-4545
11


CASE NO_
CV06-00l l4
DEPT_ NO.
B9
Plaintiff,
vs_
20

I through 20,
21
Defendant.
I
22
NOTICE OF DEPOSIT OF SECURITY
23
24
TO:
NOTICE IS HEREBY GIVEN that Plaintiff eTreppid Technologies, LLC has deposited with
25
26
DEFENDANTS, and their attorneys of record:
the Clerk of the Court a check in the amount of $10,000.00 as security for the Temporary Restraining
27
Ill
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Ill
"ODMAIPCDOCS\HLRNODOCS\51287411
Page I of3
~)
Order issued on February 2, 2006, at approximately 9:45 a.m.

DATED: This 2"<fuyofFch'""Y''
~ePee;
bq.
Nevad:::r Number 1758

5441 K.ietzke Lane, Second Floor
Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
Attorneys for Plaintiff eTreppid Technologies,
LLC.
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,,QDMA\PCOOCS\HLRNODOCS\512874\1
Page 2 of3

..,... I
PROOF OF SERVICE
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On February 2, 2006, I caused the foregoing NOTICE OF DEPOSIT OF SECURITY FOR
TRO to be hand-delivered by providing a true and correct copy to Hale Lane Peek Dennison and
Howard's runners with instructions to hand-deliver the same to:
Facsimile: (775) 786-7544

Reno, Nevada 89501
12
13
1 declare under penalty of perjury under the laws of the United States of America that the
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::ODMA\PCOOCS\HLRNODOCS\5 12874\1
Page 3 of3
.._,.,)
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ode:
ONALD J. LOGAR, ESQ.
evada Bar #00303
NNIFER CHRISTIE, ESQ.
cvada Bar # 8025
AW OFFICES OF LOG AR & PULVER, PC
eno, Nevada 89501
775) 786-5040
2006 FEB -2 PM 3: 44
F<OHALIJ~~
sv_Y~--=-=:
'=-DEPUTY
ichael J. Flynn, Mass. State Bar No.:

hilip H. Stillman, California State Bar No. 15286 J
7 LYNN & STILLMAN
8 ardiff, CA 92007
fel:
(888) 235-4279
9 ax: (888) 235-4279
6
03
10 Application for Admission Pro Hae Vice forthcoming)

11
ttorneys for Defondant DENNIS MONTGOMERY
12

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15
*****
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TREPPID TECHNOLOGIES, L.L.C., a

evada Limited Liability Company,
Plaintiff,
vs.
Case No.:
Dept. No:
CV06-00l 14
9
19
20
21
22
ENNIS MONTGOMERY, an individual;

HE MONTGOMERY FAMILY TRUST;
ENNIS MONTGOMERY and BRENDA
ONTGOMERY, as trustees for THE
ONTGOMERY FAMILY TRUST;
d DOES I through 20,
23
Defendants.
24n--~~~~~--~~~~~~~~~~1
25
DEFENDANT DENNIS MONTGOMERY, et. al.,

DEMANDFOR.JURYTRIAL
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Demand is hereby made by Defendant, Dennis Montgomery, et. al., for trial by jury in the

~j
bove captioned matter. Attorney certifies that all fees for this demand bas been paid.
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dZ
Dated thiscl'_'. day of February, 2006.
(~iii:~
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RONALD J. LOAR, ESQ

Attorney for Defendant
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-.
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Pursuant to NRCP 5(b), I certify that I am an employee of the LAW OFFICE OF LOGAR
PULVER, PC, and that on the 2"' day of February, 2006, I
7
8
__2L personally delivered

9 he fore~oing document, addressed to:

IO
ersonally Delivered to:

Hale Lane Peek Dermison and Howard
5441 K.ietzke Lane, Second Floor
Reno, NV 89511
ent US Regular Mail to:

2475 Hanover Street
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-)
1
CODE NO. 4170
ORfGf~JAl
FILED
FEB - 2 006

* * *

Limited Liabi1!ty Company,
10
Plaintiff,
Case No. CV06-00114
11
Dept. No.
vs.
12
13
14

MONTGOMERY and BRENDA MONTGOMERY,
as trustees for THE MONTGOMERY FAMILY
TRUST; and DOES 1 through 20,
15
Defendants.
16
~~~~~~~~-~~~~~~~~~-'
17
18
ORDER GRANTING ETREPPID TECHNOLOGIES, LLC. APPLICATION FOR A TEMPORARY

RESTRAINING ORDER AND SETTING HEARING ON MOTION FOR PRELIMINARY INJUNCTION
CONDITIONALLY UNDER SEAL
19
20
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TO DEFENDANT, DENNIS MONTGOMERY: WHEREAS, the Court having considered eTreppid's Complaint, its Ex Parle
22
Application for a Temporary Restraining Order and Motion for Preliminary Injunction, its
23
Memorandum of Points and Authorities, the declarations of various eTreppid employees, all
24
pleadings, papers, and records on file in this action, and for other good cause having been shown,
25
Until the date set for a hearing on the Motion for Preliminary Injunction, you and all
26
persons or entities in active concert or participation with you are TEMPORARILY ENJOINED AND
27
RESTRAINED FROM destroying, hypothecating, transferring, modifying, and/or assigning the
28
eTreppid Source Code, which eTreppid is informed and believes is currently in your possession

-_)
1
and/or control, from discussing any eTreppid Technology, including anomaly detection and pattern
recognition software, with any third party, except experts and other persons and witnesses
necessary to Defendant's case and counsel, provided, however that such witnesses and counsel
shall not disclose any information to others about eTreppid Source Code. This temporary restraining
order shall be effective when Plaintiff posts a bond in the amount of Ten Thousand Dollars
($10,000.00).
The hearing on Plaintiff's Motion for a Preliminary Injunction is set for February 7,
2006 at 9:00 a.m., or as soon thereafter as counsel may be heard. Any responsive pleadings or
other papers.in opposition shall be personally served on eTreppid's attorneys, Hale Lane Peek
10
11
Dennison and Howard, 5441 Kietzke Lane, Second Floor, Reno, NV 89511.
The Court issues this temporary restraining order with notice to Mr. Montgomery in
12
order to maintain the status quo until the preliminary injunction hearing and to avert any irreparable
13
harm that eTreppid may suffer and based on the risk that Mr. Montgomery could delete and/or
14
transfer the last version of eTreppid Source Code that remains intact.
15
DATED this 2nd day of February, 2006.
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CERTIFICATE OF MAILING
Pursuant to NRCP 5(8), I hereby certify that I am an employee of the Second
Judicial District Court of the State of Nevada, in and for the County of Washoe; that on the
4
5
d<1Gbay of February, 2006, I faxed a copy of the attached document and deposited the
same for mailing addressed to:
Stephen Peek, Esq.

Reno, NV 89511
FAX: (775j 786-6179
8
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Ronald Logar, Esq.

Eric Pulver, Esq.
Reno, NV 89501
FAX: (775) 786-7544
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DA TED this
_a n..d
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Deputy Court Clerk

Department Nine
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-1-
CaseII 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 124 of 159
\
1
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10
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Nevada Bar #00303
ERIC A PULVER, ESQ.
Nevada Bar# 07874
Reno, Nevada 89501
(775) 786-5040
,,-,,,,FEB - I P:\
L_;,_!J
l,:
2S

FLYNN & STILLMAN
224 Birmingham D_rive, Suite 1A4
Cardiff, !;:A 92007
Tel:
(888) 235-4279
Fax: (888) 235-4279
(Application for Admission Pro Hae Viceforthcoming)
12
13
Attorneys for Defendant DENN1S MONTGOMERY
14
15
16 ETREPPID TECHNOLOGIES, INC., a

17 California corporation,
18
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20
Plaintiff,
) CASE NO. CV06-00114

) DEPT. 9
)
vs.
DENNIS MONTGOMERY,
21
22
)
)
)
)
Defendant.
)
)
If--~~~~~-~~~~~~~~)
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VERIFICATION TO OPPOSITION TO PLA.INTIFF'S ET~EPPID TECHNOLOGIES,

L.L.C.'S EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER
AND MOTJON FOR A PRELIMINARY INJUNCTJON AGAINST DENNIS
MONTGOMERY; MEMORANDUM Of POINTS AND AUTHORITIES
CaseII 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 125 of 159
STATE OF NEVADA
3
COUNTY OF WASHOE
)
)ss.
)
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5
I, DENNIS MONTGOMERY, being first duly sworn, depose and state under penalty of
perjury as follows: That I am the Plaintiff in the foregoing action; that I have read the foregoing:
OPPOSITION TO PLAINTIFF'S ETREPPID TECHNOLOGIES, L.L.C.'S EX PARTE
APPLICATION FOR A TEMPORARY RESTRAINING ORDER AND MOTION FOR A
12 and know the contents thereof and all matters set forth therein are true to the best of my present
!3 knowledge, information and belief and as to any matters stated therein based upon information and
14
belief, !believe them to be true.
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ERY
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19 SIGNED AND SWORN TO OR AFFIRMED
20 efore me this !st day of February, 2006,
y DENNIS MqNTGOMERY.
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ZACHARY DRAPER
Notary PubJicSrate or Nevada

APPT. NO. 05-99113-2
My App. ExpiresAugWI 22, 2009
CERTIFICATE OF SERVICE,
Pursuant to NRCP S(b), I certify that I am an employee of the LAW OFFICE OF LOGAR
3
4
& PULVER, PC, and that on the r d a y ofFebrnary, 2006, I
deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto.
sent via Federal Express or other overnight delivery service.
6
7
delivered via facsimile machine to fax number: 786-61 79
J"Crsonally delivered.
10
caused to be delivered via Reno-Carson Messenger Service.
11
the foregoing document addressed to:

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Hale Lane Peek Dermison and Howard
Reno, NV 89511
!I
--)
ORIGIN,4L -

Reno, Nevada 89511
Telephone: (775) 327-3000
Facsimile: (775) 786-6179
David A. Jakopin, Esq. (CA Bar No. 2099501
2475 Hanover Street
Telephone: ((J!;O) 233-4500
Facsimile: (650) 233-4545
IN THE SECOND JUDICIAL DISTRICT COURT OF THE ST ATE OF NEVADA

CASE NO.
CV06-00114
DEPT. NO.
B9
Plaintiff,
vs.
19
20

I through 20,
21
Defendant.
22
23
ORDER GRANTING STIPULATION TO FILE FIRST AMENDED COMPLAINT
24
Based npon the Stipulation of the parties entered into on Febrnary 1, 2006, by and through their
25
respective counsel, with good cause appearing therefore,
26
Ill
27
Ill
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Ill
oDDMAIPCDOCS\HLRNODOCS\51268 I\ I
Page 1 of2
!I
1
2
3
IT IS HEREBY ORDERED that Plaintiff eTreppid Technologies, LLC may file its First
Amended Complaint in the above-entitled matter.
Dated: This
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"ODMA\PCDOCS\HLRNODOCS\512681 II
Page 2 of2

DAVID A. JAKOPIN, CA Bar No. 209950
2475 Hanover Street
Palo Alto, CA 94304- l l l 4
Telephone: (650) 233-4500
Facsimile: (65'o) 233-4545
(Applicat;on for Admission Pro Hae Vice Forthcoming)
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J. Stephen Peek, Esq. (\IV Bar #1758)

5441 Kictzke Lane, Second Floor
Reno, NV 895 l l
Tel: (775) 327-3000
Fax: (775) 786-6179

16
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cvo<cocrty
DEPT. NO.
!)~
vs .
1 through 20,
Defendants.
22
23
CASENO.
Plaintiff,
PLAINTIFF'S ETREPPID TECHNOLOGIES, L.L.C.'s FIRST AMENDED COMPLAINT
24
(Arbitration Exemptions: Declaratory Relief Sought,

Amount in Controversy Exceeds $40,000)
25
26
Pursuant to NRS 600A.070.3, Plaintiff hereby lodges the enclosed record conditionally under
27
seal and will make a motion or application to the Court for an order permitting the record to be filed
28
under seal.
oDDMAIPCDOCS\HLRNODOCSIS J089711
Page 1 of 15
Plaintiff eTreppid Technologies, L.L.C. ("eTreppid" or "Plaintiff') alleges as follows:
2
3
NATURE OF THE ACTION

I.
Defendants Dennis Montgomery ("Montgomery"), the Montgomery Family Trust,
Dennis and Brenda Montgomery, as trustees for the Montgomery Family Trust, and DOES 1-20
(collectively, "Defenda.nts") misappropriated trade secrets, have engaged and threatened to blackmail
6
7
8
eTreppid by wrongfully converting and withholding eTreppid's sensitive proprietary information,

and/or have breached contractual agreements with eTreppid.
2.
.. Certain
of eTreppid's employees, including Montgomery, are given access to
eTreppid's sensitive proprietary information on specific terms and conditions designed to allow them
to perform their duties while protecting eTreppid's proprietary information, including eTreppid
technology, Source Code, confidential information, and trade secrets related to eTreppid products
(collectively, the "eTreppid Confidential lnfomtation").
Prior to January 18, 2006, Defendant
Montgomery was employed by eTreppid. While an eTreppid employee, Montgomery had the ability
to access eTreppid Confidential Information.
3.
Montgomery, having had access to eTrcppid Confidential Information, in December
of the eTreppid Source Code that had

2005 through January, 2006, knowingly destroyed all versions
.
.
been located at the Company, and also took a complete current version of the eTreppid Source Code
20
and other eTreppid Confidential Information for his own personal use and benefit.
21
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23
24
25
26
27
4.
On information and belief, Montgomery has his alleged ownership in the complete
current version of the eTreppid Source Code and other eTreppid Confidential Information to the
Montgomery Family Trust.
5.
Because Montgomery is in possession of the only intact current version of the eTreppid
Source Code, and Defendants are continuing to misappropriate and convert this eTreppid Source Code
and other eTreppid Confidential Information to suit their own interests, eTreppid seeks the return of all
28
of the eTreppid Confidential Information in Defendants' possession or control and seeks to enjoin
"ODMAIPCDOCSIHLRNODOCS\510897\1
Page 2of15
.Case
I 3:06-cv-00056-PMP-VPC
them from obtaining 2.ny commercial advantage or unjust enrichment from their misappropriation.
2
eTreppid also seeks damages for Defendants' wrongful conduct.
GENERAL FACTUAL ALLEGATIONS

The Parties
4
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Plaintiff eTreppid Technologies, L.L.C is a privately-held limited liability company
6.
organized under the laws of the state of Nevada.

eTreppid is in the business of developing software for such applications as data
7.
compression and pattern recognition. Its corporate headquarters are located in Reno, Nevada .
9
8.
Individual Defendant Dennis Montgomery ("Montgomery") was employed by eTreppid
as its Chief Technology Officer.

committee.
9.
Montgomery was also a member of eTreppid's management
eTreppid is informed and believes that Montgomery resides in Reno, Nevada.

Montgomery Family Trust transferred all of then existing and future rights to the
compression software technology that is found within the eTreppid Source Code to eTreppid in the
Contribution Agreement dated September 28, 1998.
10.
Under the terms of Montgomery's employment that existed from September 28, 1998
until January 1, 1999 and are set forth in the 1998 Intrepid Operating Agreement, Montgomery agreed
to devote "substantially all of his time and attention and efforts to the Business and affairs of the LLC
during reasonable business hours."
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22
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11.
Under the terms of Montgomery's employment that existed from September-28, 1998
until January 1, 1999 and are set forth in the 1998 Intrepid Operating Agreement, Montgomery agreed
to not to compete with Intrepid by "(i) developing, licensing, or exploiting in any manner any software
24
programs or other technology which is competitive with the Technology or Business of the LLC, ... or
25
26
27
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(ii) purchasing or otherwise acquiring, owning, holding, operating, managing, investing, in or

otherwise disposing of a like business of the LLC's Business and interests t~erein of any kind, or (iii)
otherwise engaging in any or all aspects of a like business of the LLC's Business."
"ODMAIPCDOCSIHLRNODOCS 151 089711
Page 3of15
---12.
2
3
Under the terms of Montgomery's employment that existed from January l, 1999 until
November l, 2001 and are set forth in the 1999 Intrepid Operating Agreement, Montgomery agreed to
devote "substantially all of his time and attention and efforts to the Business and affairs of the LLC
during reasonable business hours."
13.
Under the terms of Montgomery's employment that existed from January I, 1999 until
6
7
November I, l 999 and are set forth in the 1999 Intrepid Operating Agreement, Montgomery agreed to
..
not to compete with Intrepid by "(i) developing, licensing, or exploiting in any manner any software
(ii) purchasing or otherwise acquiring, owning, holding, operating, managing, investing, in or
otherwise disposing of a like business of the LLC's Business and interests therein of any kind, or (iii)
otherwise engaging in any or all aspects ofa like business of the LLC's Business.
14.
Under the terms of Montgomery's employment that have existed since November, 2001
and are set forth in the 2001 eTreppid Operating Agreement, Montgomery agreed to devote
"substantially all of his time and attention and efforts to the Business and affairs of the LLC during
reasonable business hours."
15.
Under the terms of Montgomery's employment, -which have existed since November,
2001 and are set forth in the 2001 eTreppid Operating Agreement Montgomery agreed to not to
compete with eTreppicl by "(i) developing, licensing, or exploiting in any manner -any_ software
21
22
23
(ii) purchasing or otherwise. acquiring, owning, holding, operating, managing, investing, in or
24
otherwise disposing of a like business of the LLC's Business and interests therein of any kind, or (iii)
25
otherwise engaging in any or all aspects of a like business of the LLC's Business.
26
27
16.
eTreppid is informed and believes, and on that basis alleges, that the Montgomery
Family Trust is a California Trust.
28
Page 4 of J 5
17.
eTreppid is informed and believes that Dennis Montgomery and Brenda Montgomery,
trustees of the Montgomery Family Trust, are residents of the state of Nevada.
18.
eTreppid is unaware of the true names and capacities, whether individual, corporate or
otherwise, of the defendants sued herein as DOES I through 20, and therefore sues these defendants by
5
such fictitious names. eTreppid will amend this complaint to state the true names and capacities of
6
"CJ
a ..
basis alleges, that each of such fictitiously named defendants was acting as the agent, partner, joint
venturer or potential business partner or acquirer of eTreppid and is jointly and severally responsible
10
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for the acts and omissions alleged herein.
19.
eTreppid is informed and believes. and on that basis alleges, that the Defendants and
each of them were the agents, servants and employees of their co-defendants and each of them, and in
13
.-4
II
:r: ~
"CJ "CJ
such fictitiously named defendants when ascertained. eTrcppid is informed and believes, and on that
doing the things alleged herein were acting within the course and scope of their authority as such
agents, servants and employees and with the permission and consent of their co-defendants, and each
of them.
17
18
19
20
The Nature of eTreppid's Business
20.
The eTreppid Source Code is the source code used to implement the various functions
performed by eTreppid Software, which functions include compression, pattern recognition and
anomaly detection. All of eTreppid 's revenues derive from eTreppid Software.
21
22
23
24
25
26
27
21.
Given the critical importance of eTreppid Source Code to eTreppid, as Chief Technical
Officer Dennis Montgomery was solely responsible for maintaining a current version of the eTreppid
Source Code and for backing-up (i.e., saving a copy) of the eTreppid Source Code.
22.
To protect the valuable eTreppid Source Code, eTreppid controls access to the eTreppid
Source Code and other eTreppid Confidential Information to maintain its security and confidentiality.
As discussed further below, these controls include limiting access to its facilities, to its computer
28
servers, and to its tangible and intangible intellectual property.
"ODMAIPCDOCS\HLRNODOCS\51089711
Page 5of15
Security Measures Governing Access to cTreppid Source Code.

2
3
4
23.
The eTreppid Source Code, prior to its being deleted,. was stored in on-site computer
servers, including the SRCSERVER and ISASERVER as well as two different workstations.
Associated with each of these servers and workstations was a different RAID (Redundant Array of
Independent Disks) storage box, which actually stored the eTreppid Source Code. Access to these
6
7
8
9
servers is controlled by an Administrator password. Only Montgomery and Mr. Venables knew the
correct Administrator password.
24.
The eTreppid servers are stored in a server room that is accessible by only a small
group of personnel.
25.
As of December, 2005, the most current version of the eTreppid Source Code was
stored in the SRCSERVER. Backup copies of the eTreppid Source Code were stored in multiple other
locations, including a backup server referred to as ISASERVER as well as two (2) different backup
workstations.
26.
For overall building security of eTreppid, only a few employees have access to the
building, and turning on and off of the alarm is electronically monitored.

27.
Further, video cameras monitor the activities, including the access doors to the building
and the server room, and the video files from these cameras is stored on computers that record this
20
footage. On or soon after January 10, 2006, Mr. Venables discovered that the footage
i:_eco~!ed
from
21
22
23
these cameras had been deleted from the computers.

28.
Montgomery regularly provided compact discs, DVD's and/or hard disks ("Backup
24
CD's") to eTreppid's Chairman, Mr. Warren Trepp ("Mr. Trepp"), which he informed Mr. Trepp
25
contained the most current version of the eTreppid Source Code.
26
27
Misappropriation of Trade Secrets.

29.
Historically, programmers developing eTreppid Smrrce Code store pieces of the
28
eTreppid Source Code they are working on at their personal workstations.
::ODMA\PCDOCS\HLRNODOCS\5 l 0897\l
Page 6 ofl5
30.
2
3
4
eTreppid maintained a network of computers that also allowed these progranuners to
access a version of the eTreppid Source Code that was maintained on a shared directory.
Around December 19 or 20, 2005, Montgomery began deleting certain eTreppid Source
31.
Code files that were located on the hard drive for certain workstation that had not been recently used.
Montgomery told Mr. Bal, an eTreppid employee, that he was deleting the files on his workstation for
6
7
security reasons, and that there remained copies of these files on the SRCSERVER that I would still be
able to access. Also, at that time, there still remained on the hard drive of Mr. Eal's workstation other
eTreppid Source Code files that he had been using more recently in the performance of his duties at
eTreppid.
32.
When Mr. Bal arrived at work on Monday, January 2, 2006 all of the eTreppid Source
Code that he had been using more recently and which had still been on the hard drive for his
workstation the previous week had been deleted.
33.
Another programmer/software developer, Mr. Kalluri, also discovered that another
collection of eTreppid Source Code files stored at his workstation had been deleted.
34.
Mr. Kalluri asked Montgomery about the missing eTreppid Source Code, expressing
m1sg1vmgs about the difficulty of continuing to work without access to the files.
Montgomery
responded that he was performing a daily backup so that he'd have the most recent files, and that
20
would provide the eTreppid Source Code Mr. Kalluri required on an as-needed basis.
21
22
23
35.
On December 21, 2005, Mr. Venables had a phone conversation with Montgomery,
where Montgomery suggested that Mr. Venables did not need to come to the office. Mr. Venables
24
went to the office anyway, and at that time Mr. Venables noticed that one of the workstations that was
25
used to store a backup copy of the eTreppid Source was missing. Mr. Venables asked Montgomery
26
about this, and Montgomery explained that he had taken this workstation and the associated RAID
27
28
storage home.
36.
Mr. Venables took a vacation from December 22, 2005 to January 3, 2006.
oDDMA IPCDOCSIHLRNODOCS\51089711
Page 7of15
37.
During the time period between Christmas and New Year's Day, Montgomery provided
Mr. Kalluri with specific files of the eTreppid Source Code upon demand. To provide the requested
files, Montgomery copied the files to a shared drive that Mr. Kalluri could access. After Mr. Kalluri
accessed the file and copied it to his workstation, the copy in the shared drive was deleted. When he
completed his work on the files, Mr. Kalluri copied them back into the shared drive and informed
6
7
8
9
Montgomery - who would then be responsible for copying that file to the eTreppid Source Server.
38.
Upon returning from his vacation on January 3, 2006, Mr. Venables checked the status
of the SRCSERVER and the ISASERVER. From this check, he determined that all of the eTreppid
Source Code stored on each of these servers had been deleted. He was informed by another employee,
Jesse Anderson, that portions of the eTreppid Source Code that had previously been stored on the
programmers workstations had been deleted as well.
39.
On January 3, 2006, Mr. Venables asked Montgomery what was going on, and Mr.
Montgomery said that he was "cleaning stuff up," and that this included deleted files that "weren't
needed."
40.
As of January 9, 2006, Mr. Trepp and Mr. Venables discovered that substantially all of
the eTreppid Source Code was missing, as none of the programmers had access to the pieces of the
eTreppid Source Code they worked on at their personal workstations. Mr. Venables looked for the
eTreppid Source Code in the building, but could not find it. Mr. Trepp also directed employees to look
21
for a complete copy of the eTreppid Source Code, to no avail. When Mr. Trepp had the Backup CD's
22
23
24
25
26
27
28
examined, it was discovered that they did not and never had contained a complete copy of the eTreppid
Source Code for any period of time, contrary to Montgomery's representations.
41.
On January 10, 2006, during a brief time during the morning when Montgomery was in
the building, Mr. Venables asked Montgomery where the eTreppid Source Code had gone.
Montgomery said it was stored on certain "320 Gigabyte hard Drives" in the building. Searches by
Mr. Venables and others have failed to locate these 320 Gigabyte hard Drives.
::ODMA\I'CDOCS\HLRNODOCS\51 0897\\
Page 8 of IS
Case 3:06-cv-00056-PMP-VPC
\
........ / '
42.
Later on Jannary 10, 2006, Montgomery returned to the building and spoke with the
Chairman, Mr. Warren Trepp. After they talked, Montgomery spoke with Mr. Venables, stating that if
Mr. Trcpp "needs lo give me big money if he wants" to recover the missing eTreppid Source Code.
43.
eTreppid is infonned and believes, and on that basis alleges, that Montgomery has
attempted or will attempt to transfer eTreppid's trade secrets and other intellectual property to third
6
7
8
9
parties, including the Montgomery Family Trust.

eTreppid is Suffering Irreparable Harm Due to Mr. Montgomery's Misappropriation.
44.
.. Withom the eTreppid Source Code, eTreppid's programmers cannot perform their
ordinary duties. As a result, eTreppid is currently losing over $10,000.00 per day on wages and other
administrative costs in order to retain key personnel, even though these personnel cannot perform their
ordinary duties because the eTreppid Source Code is missing ..
45.
Further, eTreppid currently has various contractual obligations that it will be unable to
meet without obtaining the eTreppid Source Code. For example, eTreppid has a contract with LLH &
Associates worth over One Million Dollars that has been worked on by employees at eTreppid since
May 2005. Work on this contract requires the eTreppid Source Code.
46.
eTreppid also has spent
signific~1t
time and effort to secure monetarily significant
additional contracts with customers that it has had in the past. At the present moment, certain ones of
20
these additional governmental contracts are very close to being agreed upon, but Montgomery's
21
22
actions have forced eTreppid to cancel the previously-scheduled discussions.
24
FIRST CAUSE OF ACTION

(All Defendants)
(Misappropriation Of Trade Secrets - Nevada Revised Statutes 600A.010 et seq.)
25
47.
23
26
27
eTreppid re-alleges each and every allegation set forth in Paragraphs 1 through 46,
inclusive, and incorporates them herein by reference.

48.
The eTreppid Confidential Info1mation is comprised of trade secret materials,
28
including, but not limited to, eTreppid's Source Code for compression, pattern recognition and
,cQDMAIPCDOCS\HLRNODOCS\51089711
Page 9of15
--
-\
anomaly detection technology. These trade secrets arc not generally known to the public or to other
persons who can obtain economic value from their disclosure or use. These trade secrets are the
3
4
subject of reasonable efforts by eTreppid to maintain their secrecy, and they derive independent
economic value from not being generally known. The information destroyed, deleted and/or taken by
5
Montgomery constitutes eTreppid's "trade secrets'" under Nevada Revised Statutes section
6
7
8
9
600A.030(5).
49.
.. On information
and belief, Defendants willfully and maliciously misappropriated
eTreppid's trade secrets.

50.
By reason of the above-alleged acts and conduct of Defendants, eTreppid has been
damaged severely, and will suffer great and irreparable harm and damage in the future. The precise
amount of this irreparable harm will be difficult to ascertain, and cTreppid is without an adequate
remedy at law to redress its injuries.
51.
eTreppid is entitled to an injunction restraining Defendants, their employers, attorneys,
agents, employees, and all persons acting in concert with them, from using, copying, publishing,
disclosing, transferring, selling or otherwise distributing eTreppid's trade secrets, or any product or
services based on or incorporating all or part of eTreppid's trade secrets, and restraining them from
obtaining any commercial advantage or unjust enrichment from the misappropriation of eTreppid's
trade secrets.
21
22
23
52.
eTreppid is further entitled to an order requiring Defendants, their employers, attorneys,
agents, employees, and all persons acting in concert with them, to return to eTreppid any and all of its
24
trade secrets and confidential, proprietary materials, including but not limited to the eTreppid
25
Confidential lnformation.
26
27
53.
eTreppid is further entitled to recover from Defendants the actual damages sustained by
eTreppid as a result of Defendants' wrongful acts described in this complaint. The amount of such
28
damages cannot be determined precisely at this time.
o:ODMA IPCDOCS\HLRNODOCS\51089711
Page 10ofl5
,.,.. )
54.
2
3
4
Defendants' acts of misappropriation were both willful and malicious, and eTreppid is
entitled to an award of punitive damages and attorney's fees against Defendants. N.R.S. 600A.050060. eTreppid is further entitled to recover from Defendants the gains, profits, advantages, and unjust
enrichment that they h.ave obtained as a result of their wrongful acts as described herein. N.R.S.
5
600A.050. eTreppid is at present unable to ascertain the full extent of these gains, profits, advantages
6
7
and unjust enrichment but, on information and belief, they are substantial and in excess of $10,000.00.
SECOND CAUSE OF ACTION

(Defendant Montgomery)
(Breach of Contract)
..
9
55.
eTreppid re-alleges each and every allegation contained in paragraphs I through 46,

56.
Montgomery breached the terms of his contribution at,>reement by which he assigned to
eTreppid any and all of his rights to compression software technology in the eTreppid Source Code
and to the terms of his employment agreement
57.
As a direct and proximate result of Montgomery's breaches of these agreements,
eTreppid has been damaged in an amount and entitled to recover a sum of money according to proof at
the time of trial.
THIRD CAUSE ffF ACTION
(Montgomery)
(Conversion)
20
21
22
23
24
58.
eTreppid re-alleges each and every allegation contained in paragraphs l through 46,

59.
eTreppid is informed and believes that Defendants have improperly taken and
25
converted eTreppid Confidential Information to their use. The value of the eTreppid Confidential
26
Information is, on information and belief, substantial and in excess of the jurisdictional minimum of
27
this Court.
28
>.ODMA\PCDOCSIHLRNODOCS\51089711
Page 11of15
60.
2
3
eTreppid is informed and believes that in committing the acts alleged herein,
Defendants are guilty of oppression, fraud or malice in that Defendants wrongfully and unlawfully
obtained eTreppid Confidential Information in order to benefit themselves al eTreppid's expense.
eTreppid is therefore entitled to an award of punitive damages and attorney's fees against Defendants.
FOURTH CAUSE OF ACTION

(Breach of Fiduciary Duty)
(All Defendants)
6
7
8
9
61.
eTreppid re-alleges each and every allegation contained in paragraphs 1 through 46,

62.
Defendant Montgomery owed a fiduciary duty to eTreppid, as an officer and
management committee member of eTreppid.

63.
The Montgomery Family Trust, Dennis Montgomery, and Brenda Montgomery, as
trustees, owed a fiduciary duty to eTreppid as members of eTreppid.

64.
Through the actions set forth above, defendants have breached. their fiduciary duty to
eTreppid.
65.
As a result of Defendants' breach of fiduciary duty, Plaintiffs have suffered damages in
an amount to be proven at trial but which exceed $10,000.00.

66.
Defendants are guilty of oppression, fraud or. malice in that Defendants wrongfully and unlawfully
21
22
23
obtained eTreppid Confidential Information in order to benefit themselves at eTreppid's expense.

eTreppid is therefore entitled to an award of punitive damages and attorney's fees against Defendants.
FIFfH CAUSE OF ACTION

(Bad Faith -- Tortious and Contractual)
(Montgomery)
24
25
26
27
67.
28
"ODMAIPCDOCS\HLRNODOCS\510897\1
Page 12 ofl5
2
3
4
68.
There exists m every contract entered into within the state of Nevada an implied
covenant of good faith and fair dealing.

69.
As an officer and manager ofeTreppid, Montgomery owed eTreppid a fiduciary duty.
70.
Through the actions described above, Montgomery has breached the implied covenant
of good faith and fair dealing.

6
7
8
9
'O
JO
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i?; 0
0 0
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71.
Plaintiffs have suffered damages in an amount to be proven at trial but which exceed $10,000.00.
72.
"
14
~"~"zo
15
Q ....! "
SIXTH CAUSE OF ACTION

(Declaratory RelieQ
(Montgomery and the Montgomery Family Trust)
13
;>
is informed and believes that in committing the acts alleged herein,
punitive damages and attorney's fees against Defendants .
V)
"
.. eTreppid
Defendants are guilty of oppression, fraud or malice. eTreppid is therefore entitled to an award of
cc12
I 0
c0 "00
() '
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.....
""O
As a result of Defendants' breach of the covenant of good faith and fair dealing,
73.
V N C
~ d}
OJ
'M
c ::4
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....! 't
"ii"
::r:
16
17

74.
An actual dispute exists between eTreppid, on one hand and Montgomery and the
't
V)
18
19
Montgomery Family Tmst, on the other, regarding the ownership of the eTreppid Source Code.
75.
Pursuant to NRS 30.040, a judicial detennination of the rights, duties and obligations of
20
the parties under the Operating Agreement and/or the state statutes and local ordinances is required
21
22
23
with a determination and/or declaration that eTreppid holds all rights to any technology that
Montgomery developed while he was an employee of eTreppid.
SEVENTH CAUSE OF ACTION
(Intentional Interference with Contract)
(Montgomery)
24
25
26
27
76.
eTreppicl re-alleges each and every allegation contained in paragraphs 1 through 46,
28
"ODMA\PCDOCS\HLRNODOCS\510897\1
Page 13 ofl5
\':"")
I
2
3
4
77.
Montgomery was aware of certain contracts between eTreppid and a number of third
parties, including LLH & Associates, a prime governmental contractor.

78.
Through the conduct set forth above, Montgomery intended to interfere with and
disrupt the contractual relationship between eTreppid and these third parties.
79.
Through the conduct as set forth above, Montgomery has m fact disrupted the
6
7
contractual relationship between eTreppid and these third parties by hampering eTreppid's ability to
fulfill its contractual obligations.
80.
.. As a result of Montgomery's conduct, eTreppid has incurred damages in an amount to
be determined at trial but which exceeds $10,000.00.

81.
Defendants are guilty of oppression, fraud or malice. eTreppid is therefore entitled to an award of
punitive damages and attorney's fees against Defendants
WHEREFORE, eTreppid requests judgment against Defendants, and each of them, and all
those acting in concert with them as follows:
I.
A permanent injunction restraining and enJommg Defendants from continuing the
wrongful acts and conduct set forth above;

2.
A permanent injunction requiring Defondants to return the eTreppid Confidential
Information;
21
22
23
24
25
26
27
3.
During the pendency of this action, a preliminary injunction enjoining and restraining
Defend:!nts from the wrongful acts and conduct set forth above;
4.
During the pendency of this action, a writ of possession requiring Defendants to return
the eTreppid personal property;

5.
Restitut10n;
6.
Declaratory relief providing that eTreppid holds all rights to any technology developed
28
by Montgomery while he was an employee of eTreppid;
oDDMA\PCDOCSIHLRNODOCS\51089711
Page 14 of 15
1
2
3
7.
Compensatory damages in an amount to be proven at trial, including but not limited to
damages recoverable pursuant to N.R.S. 600A.050. I;

8.
Punitive damages pursuant to N.R.S. 600A.050.2;
9.
Reasonable attorneys' fees;
10.
All costs of suit herein incurred; and
11.
Such other and further relief as the Cour1 may deem proper.
5
6
7
8
Dated: January 19, 2006
..
9
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Reno, Nevada 89511
775-327-3000 (tel.), 775- 786-6179 (fax)
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ooODMAU'CDOCSIHLRNODOCS\51089711
Page 15of15

I
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10
t<l ...
1520
J. Stephen Peek, Esq. (NY Bar #1758)
Jerry M. Snyder, Esq. ('N Bar #6830)
Reno, NV 89511
Tel: (775) 327-3000
Fax: (775) 786-6179

DA YID A. JAKOPIN, CA Bar No. 209950
2475 Hanover Street
Telephone: (650) 233-4500
Facsimile: (6)0) 233-4545
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CASE NO. CV06-00114

Plaintiff,
16
DEPT. NO. 10
vs.
17
" '1'
;r: "'
ETREPPID TECHNOLOGIES, LLC., a

18
DENNIS MONTGOMERY, an individual; and

DOES I through 20,
19
20
Defendant.
~~~~~~~~--~~~~~~~~/
21
STIPULATION TO FILE JllRST AMENDED COMPLAINT
22
23
24
25
26
27
28
IT IS HEREBY STIPULATED by and between Plaintiff, eTreppid Technologies, LLC,

trough its counsel, the w1dersigned of Hale Lane Peek Dennison and Howard; and, Defendant, Dennis
Montgomery, through his coilllsel, the undersigned ofThe Law Offices ofLogar and Pulver, PC, that
Ill
Ill
Ill
Ill
Page l of2
__ I
:_/
Plaintiff cTreppid Technologies, LLC may file its First Amended Complaint in the above-entitled
2
matter.
---
ephen
, Esquire
evada Bar Number 1758
Verry M. Snyder, Esquire
Reno, Neva~ 89511
775/327-3000 (tel.), 775/786-6179 (fax)
~__Q;~#-A' --~
Ronald J. Logar, Esqu),re

Eric Pulver, Esquire
Nevada Bar No. 7874
Reno, Nevada 89501
775'786-5040 (tel.); 775/786-7544 (fax.)
Attorneys for Defendant
20
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24
25
26
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L)
Page 2 of2
OR/Glf'JA.L
1
2
3
4
5
6
Code 1650
Nevada Bar #00303
Nevada Bar# 07874
Reno, Nevada 89501
(775) 786-5040

8
FLYNN & STILLMAN
9 224 Binmngham Drive, Suite IA4
Cardiff, CA 92007
(888) 235-4279
10 Tel:
l l Fax: (888) 235-4279
7
12 (Application for Admission Pro Hae Vice forthcoming)

13 Attorneys for Defendant DENNIS MONTGOMERY
14
15
16
17
18
TREPPID TECHNULOGIES, INC.,

California corporntion,
19
20
21
Plaintiff,
Case No.:
CV06-00! 14
DepfNo.:
vs.
ENNIS MONTGOMERY,
Defendant.
ERRATUM TO OPPOSITION TO PLAINTIFF'S ETREPPID TECHNOLOGIES, L.L.C.'S EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER
24 AND MOTION FOR A PRELIMINARY PRELl[\1INARY Csi~:) INJUNCTION AGAINST
DENNIS MONTGOMERY; MEMORANDUfyf OF POINTS AND AUTHORITIES
25
23
26
COMES NO-W, Defendant, Dennis Montgomery by and through his undersigned counsel,
27
28
-1-
~)
..
1
2
and files this Errntum to Opposition to Plaintiffs Etreppid Technologies, L.L.C. 's Ex Parle
Application for a Temporary Restraining Order and Motion for a Preliminary Preliminary (sic)
4
5
Injunction Against Dennis Montgomery; Memorandum of Points and Authorities filed on February,
1, 2006.
THIS ERRATUM is intended to include a missing page in Opposition to Plaintiffs Etreppid
Technologies, L.L.C. 's Ex Parle Application for a Temporary Restraining Order and Motion for a
PrelimiQil!Y Preliminary (sic) Injunction Against Dennis Montgomery; Memorandum of Points and
10
11
12
13
Authorities.
Page three (3) was inadvertently left off of the document, which is now attached hereto as
Exhibit "A".
DATED: This 1" day of February, 2006.
14
15
16
ERIC A. PlJLVER, ESQ.

17
18
19
20
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22
23
24
25
26
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28
-2-
~/
CERTIFICATE OJ' SERVICE
2
Pursuant to NRCP 5(b), I certify that I am an employee of the LAW OFFICE OF LOGAR &
3
4
PULVER, PC, and that on the I" day of February, 2006, I
_X _ delivered via facsimile machine to fax number 786-6179
8
9
IO
11
12
13
14
_..X_ personally delivered

Reno, NV 89511
15
16
~/.?,,-~
~UC
17
18
Legal AssistanUfue
19
. 20
21
22
23
24
25
26
27
28
-3-
.....,)
..
EXHIBIT A

~)
MEMORANDUM OF
POINT~ __AND
AUTllORlTIES
This case deals with eTreppid Technologies and its managing shareholder, Mr. Warren
Trepp, attempting to improperly gain control and ownership of software that Mr. Dennis
Montgomery authoced, and never valid! y assigned to the eTreppid or Warren Trepp. On I anuary 19,
6
2006, eTreppid filed, among other things, an Application for Temporary Restraining Order and
7
8
9
'
..
Motion for a Preliminary Injunction Against Dennis Montgomery.
The Application for TRO
requested that Mr. Montgomery be ordered to return the "source code" that Mr. Montgomery
I 0 authored, and that Mr. Montgomery be prevented from "using, disseminating or deleting information
II
that is eTreppid's Technology."
12
However,"eTreppid's Application forTRO, etc., fails to demonstrate that Mr. Montgomery
13
14 has any c0ntrol or ownership interest in the software that Mr. Montgomery authored.
Further
15 eTreppid has failed to demonstrate that it has any righUo preveril Mr. Montgomery from using,
16 disseminating or otherwise, the software that belongs to him. Thus, eTreppid's Application for
17
TRO, etc., will fail underNRCP 65 (a)(2), (b), and (c).
18
19
This Court must not allow eTreppid and Mr. Trepp to request a TRO and an injunction based -
20 on the most tenuous legal grounds to prevent Mr. Montgomery from earning a living with the
-,
21 technology he authored and owns.
22
23
L BACKGROUND
On or around 1982, Mr. Montgomery developed certain software technologies. These
24
25
26
oftware progr~s
will be referred to as software compression technology, filtering process and
attem recognition software, and anomaly detection software. Mr. Montgomery copyrighted, from
27 1982-1987, the "source code" which the filtering process and pattern recognition software, and
28
-3-
....,)
2
3
4
5

Nevada Bar #00303
ERlC A. PULVER, ESQ.
Nevada Bar# 07874
Reno, Nevada 89501
(775) 786-5040
Z~Ofi FEB - I AM IO: 49

7 Philip H. Stillman, California State Bar No. 152861.
FLYNN & STILLMAN
l 224 Birmingham Drive, Suite !A4
Cardiff, CA 92007
(~8) 235-4279
Tel:
1 Fax:
(888) 235-4279
11
12
13
14
15
16 ETREPPID TECHNOLOGIES, INC., a

California corporation,
17
Plaintiff,
18
vs.
19
) CASE NO. cv06-0114
Otp\-. q
)
)
)
)
20 DENNIS MONTGOMERY,
21
)
)
Defendant.
22 11--~~~~~--~~~~~~~-)
23
24
nppoSITION TO PLAINTIFF'S ETREPPID TECHNOLOGIES, L.L.C.'S EX PARTE

25 "-PPLICATION FOR A TEMPORARY RESTRA.!NING ORD.ER AND MOTION FOR A
r>RELIMINARY PRELIMINARY INJUNCTION AGAINST ~ENNIS MONTGOMERY;
26 \1EMORANDUM OF POINTS AND AUTHORITIES
27
~O
PLAINTIFF ETREPPID TECHNOLOGIES, INC. and its attorneys ofrecord:
28
-]-

,_,)
/
COMES NOW, Defendant, DENNIS MONTGOMERY, by and through his undersigned
2
3
4
counsei of the Law Office ofLogar and Pulver, APC., in Opposition to Plaintiff's Etreppid
Technologies, LLC. 's Ex Parte Application for a Temporary Restraining Order and Motion for
5 a Preliminary Preliminary Injunction Against Dennis Montgomery; Memorandum of Points and

6
Authorities. This Opposition is supported by the attached Memorandum of Points and
7
Authorities, and the papers, pleadings, and affidavits on file in this matter.
8
9
D~ted this I" day of February, 2006.
10
11
12

13
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-2-

The ownership of all of Mr. Montgomery's
anomaly detection software was derived from.
technologies was transferred to the Montgomery Family Trust. The situs of the Montgomery Family
Trust is California.
4
Mr. Trepp <md Mr. Montgomery decided that the software compression technology had many
5
6
applications, and decided to form an LLC, eTrcppid, 1 to exploit the software compression
7 technology. Mr. Trepp contributed certain capital contributions to secure his 50% interest in the
8 corporation. The Montgomery Family Trust contributed bis software compression technology
9
contained on CD No. 1., to the LLC, in exchange for 50% of the stock in eTreppid. 2 Article 1.2.1
10
of the Contribution Agreement, which is attached as Exhibit 1 to Plaintiff's Declaration of Warren
11
12
Trepp in Support of eTreppid Technologies, LLC, Application for TRO, etc., filed on January 19,
13 2006, demonstrates that the Montgomery Family Trust contributed the software compression
14
15
echnology contained on CD No. I., to eTreppid.

However, that is the only software technology the Montgomery Family Trust contributed to
16
17
Treppid. Article 1.3 of the Contribution Agreement, entitled Excluded Assets and Liabilities,
18
pecifically states tl1at the Montgomery Family Trust was not contributing "any other tangible or
19
tangible assets" not expressly contributed in the Contribution.Agreement. Thus, the Montgomery
20
amily Trust has only contributed the software compression technology on CD No. 1., to eTreppid.
21
e Compression Software Technology contained on CD No. l ., remains with eTreppi4 to this day.
22
23
e reserved,
and the Contribution Agreement so confirms, that the Montgomery Family Trust kept
.
.. -.
24
nitially, the LLC, was named iTreppid, but that name was already being utilized by other companies, so theLLC simply
25 hanged its name to eTreppid.

26
27
t the time the LLC was being fo_rmed, Mr. Montgomery offered to contribute the filtering process and patterp
ognition software and anomaly detection software to the LLC in exchange for five million dollars. Mr. Trepp refused
e offer and wanted to focus only on the software compression technology.
28
-4-
all other tangible and intangible assets for himself
Thus, eTreppid utilized the software c:omprcssion technology to secure lucrative contracts
in casino surveillance systems and for analyzing data on unmanned flying vehicles. 'There came a
4
time after 2002, when certain government contractors approached Mr. Trepp and Mr. Moutgomery
to identify patterns in certain classified materials and to detect anomalies in certain classified
materials. eTreppid began improperly sublicensing the filtering process and pattern recognition
software, and anomaly detection software to various contractors including the United States
..
Government. At no time did Mr. Montgomery or the Montgomery Family Trust provide a written
10
11
12
license for eTreppid to exploit the filtering process and pattern recognition software, and anomaly
detection software
13
eTreppid collected the profits from these government contracts and Mr. Treppkept the profits
14
for himself He did not pay any royalties to Mr. Montgomery or the Montgomery Family Trust. For
15
example the company made approximately Twelve Million Dollars in 2005. Mr. Montgomery was
16
17
18
never paid anything other than a relatively small salary ($300,000.00) for his work at eTreppid.
Beginning in late 2005, Mr. Trepp begar1 to demand that Mr. Montgomery deliver to him the
19 source codes for the filtering process and pattern recognition software, and anomaly detectiou-
20 software. Mr.. Montgomery refused, and again offered to discuss selling and/or licensing the
21
technologies to eTreppid. Mr. Trepp began surreptitiously contacting other employee~ in the
. 22
23
compariy arid asking them to secure the source code for him. 3 Believing that his other employees
24 could isolate the source code from the compariy computers, secure it for him, and reverse engineer
25
26
27
28
If-~~~~~~-~~~
,.
these government contracts were classified, and many of the employees did not have security clearance, and many
fthe employees were foreign nationals, Mr. Montgomery and Mr. Trepp were instructed to hide the true nature of
uch of eTreppid's work from these employees. Further, Mr. Montgomery and Mr. Trepp were instructed to provide
e employees with disinformation about the classified work that eTreppid performed.
5-
the software Mr. Trepp locked Mr. Montgomery out of the company.
2
3
As stated above, these government contracts were highly classified, and the contractors
insisted that Mr. Montgomery set up a security protocol which would destroy the "source code" at
eTreppid which ran the filtering process and pattern recognition software, and anomaly detection
5
6
software used at the company. When Mr. Trepp ordered his other employees to secure the source
code for him, the employees attempting to locate the source code on the company computers and
inadvertently activated the security measures. The security measures destroyed the source code on
..
eTreppid's computers.
IO
II
Realizing that his actions had destroyed the source codes, Mr. Trepp renewed his demands
I2
that Mr. Montgomery return the source codes to eTreppid. eTreppid also concocted allegations that
13
Mr. Montgomery removed the source code from eTreppid, destroyed and deleted the source code
I4
on various employee stations, and erased surveillance video tape.
I5
Specifically, eTreppid alleges that Mr. Montgomery removed a raid box containing the
I6
17
source code from eTreppid. Mr. Montgome1y categorically denies that he removed anything
I 8 improperly from eTreppid. He did not remove a RAID box from the facility.
RAID boxes are
I 9 attached to a certain workstation in eTreppid, and they are used from time to time to storn
20 "temporary work." A RAID box can only hold "approximately' 1.7 terabyte of data. The source
21
code was stored on on-site servers at eTreppid occupied about I2 terabytes of informatien. It is
22
23
simply impossible to store 12 terabytes of information on a I. 7 terabyte Raid box. Thus, even if Mr.
24 Montgomery were td have taken the RAID box, and he certainly did not, it could not have contained
25 the source code.
26
Further, Mr. Montgomery denies deleting information from employees work stations.
27
Programmer's workstations contained bits of source code pertaining to the projects they were
28
-6-
working on. At the end of each day, all of their hard drives were to be transferred to the main
servers. Even if the workstations had failed, their previous day work would have been available.
This process was not followed all of the time, and at times over the years, work was lost on the
4
workstations. Fwiher, it is likely that eTreppid's employees work was deleted as a result of Mr.
5
6
Trepp's failed attempt to steal Mr. Montgomery's software.

Mr. Montgomery denies erasing surveillance tapes.
For overall building security, the
8 following employees had access to the alarm system, Dennis Montgomery, Sloan Veneables, Warren
Trepp, Jesse Andersen, Patty Gray, Jim Bauder, Steven Montgomery, Barjinder Bal, and others.
10
11
Those persons represent 3 0% of the company employees. Anyone of these employees could have
12 entered the building at night and removed any of the equipment, source code or erased the
13 surveillance video. Also, only one employee had a remote direct connection to all of the "servers"
14 - and that is Mr. Venables. Mr. Venables had a VPN (Virtual Private Network) connection to the
15
servers. This direct connection acted as a gateway, and allowed Mr. Venables to work at home, as
16
17
if he were actually in the building. He could do anything from his home as if he were in the
18 building! No one else, had this type of connection!

19
Very simply, Mr. Montgomery did not improperly remove.or delete anything from eTreppid._
20
. Trepp attempted to ste171 the source co_de associated with Mr. Montgomery's filtering process
21
d pattern recognition software, and anomaly detection software. Mr. Trepp's actions_ofallowing
22
23
oreign national employees' to search for Mr. Montgomery's source codes on.the servers, initiated
24 ecurity protocols put in place to secure the classified information contained therein, and caused the
25 ource code to be lost.
26
Mr. Montgomery was terminated by eTreppid on January 19, 2006.
27
eTreppid now demands that Mr. Montgomery return source code he did not take. More
28
-7-
importantly, eTreppid demands that Mr. Montgomery not use, disseminate, or delete the source code
for the filtering process and pattern recognition software, and anomaly detection software which
belongs solely to Mr. Montgomery and was never validly assigned to eTreppid.
4
5
6
II. ETREPPID'S APPLICATION FOR TEMPORARY RE_STRAINING ORDER, ETC,

WAS DENIED AND ETREPPID HAS NOT Dl~MONSTRA:rED ANY NEW EVIDENCE
,JUSTIFYING A TRO OR AN INJUNCTION.
On January 19, 2006, Honorable Jerry Polalia of the Second Judicial District Court of the
8 State of Nevada in and for Washoe County denied without prejudice Plaintiffs Application for
9
..
Temporary Restraining Order, etc. After a review of the Plaintiffs application and a meeting with
10
11
counsel, the court found that Plaintiff had failed to meet its burden of proof under NRCP 65 (b) and
12 (c)
13
n~cessary
before a temporary restraining order could lawfully be issued.
Since the Court Denied the Application for TRO, etc., Plaintiff has not produced any new
14 evidence demonstrating that grounds for a TRO exist. On January 20, 2006, Plaintiff filed a
15
Supplemental Declaration of Jerry Snyder in Support of Motion (sic) for Temporary Restraining
16
_
17
Order. As described in section III. (a)(l), below, the new information contained in Mr. Snyder's
18 Supplemental Declaration does not demonstrate that eTreppid has any rights to the Montgomery
19
20
21
arnily Trust's patt<:m filtering and detection software, and the anmnaly detec.tion software.
. ETREPPID'S APPLICATION FOR TEMP(>RARY RESTRAINING, ETC., ORDER
STBEDENIEJ>ASITFAILSTOSATISFYTHEREOUIR!~MENTSOFNRCP65U!}ill.,
:-fi:~~:
and c.
22
23
The Court may issue a preliminary injunction under NRCP 65 _(a)(2) only if the applicant can
24
how a likelihood of success on the merits and a reasonable probability the non-moving party's
25
nduct, if allowed to continue, will cause irreparable harm for which compensatory damages are
26
inadequate remedy. DangbergHolding, Nev., L.L.C:. v. Douglas ('.ountv, 115 Nev. 129, 142-143,
27
78 P.2d 311 (1999). The District Court may also weigh the public interest and relative hardships
28
-8-
'
-.:..
i: .

~)
of the parties in deciding whether to grant a preliminary injunction. Clark County School District
v. Buchanan, 112 Nev. 1146, 1150, 924 P.2d 716 (1996).
In addition, NRCP 65 (b) states that a preliminary injunction shall define the injury, state
4
5
6
why the injury is L'Teparable, and why compensatory damages are an insufficient remedy. While
the granting of a preliminary injunction lies within the discretion of the District Court, the reasons
7 for its issuance must be sufficiently clear. Buchanar:i at 1150.

8
Finally, no restraining order or preliminary injunction shall issue upon the giving of security
9
..
by the applicant, in such sum as the court deems proper, for the payment of costs and damages as
10
may be incurred or suffered by any party who is found to have been wrongfully enjoined or
11
12 restrained.
13 Ill. (a)., eTreppid Failed to Show a Likelihood of _Success on the Merits in its Application for
Temporary Restraining Order, and Will Not Be Able to Show Succ_ess on the Merits at the Hearing
14 on the Temporary Restraining Order.
15
eTreppid failed to allege specific facts which show a likeli110od of success on the merits in
16
17
any action involving the ownership of the Montgomery Family Trust's filtering process and pattern
18 recognition software, and anomaly detection software.
Without a written assigrunent of the
19 technology to the eTreppid, the technology belongs to Mr. Montgomery under 17 U.S.C. 204,-
Further, the technology cannot be said to belong to eTreppid under the work for hire doctrine, or a
21
trade secret
22
UL (a)(!) eTreppid has no ownership interest in Mr. Montgomery's filtering process and
pattern recognition software, and anomaly detection software as Mi:. Montgomery did not provide
. 24 a si<med writin!! conveying the technology to eTreppid.
23
25
26
Under the Copyright Act of 1976, the author of copyrightable material, as general rule, is
party who actually creates the wbrk Community for Creative Non-Violence v Reid, 490 US 730, I 04
27
L Ed 2d 811, 109 S Ct 2166 (1989).
28
-9-
17 U.S.C. 204. Execution of transfers of copyright ownership states in pertinent part:
(a) A transfer of copyright ownership, other than by operation of law, is not valid
unless an instrument of conveyance, or a note or memorandum of the transfer, is in
writing and signed by the owner of the rights conveyed or such owner's duly
authorized agent.
Pursuant to 17 USCS 201 (b ), any agret.ment that purports to transfer copyrightable material
from the author to another must he in writing and must be signed by both parties. Manning v Board
7
8
ofTrustees 109 F Supp 2d 976, 55 USPQ2d 1666 (CD
Ill 2000).
Further, mere reference to a deal
9 between jiarties without any information about deal itself fails to satisfy simple requirements of I 7
10 USCS 204(a). Radio TV Espanola S.A. vNew World Entertainment, Ltd., 183 F3d 922, 99 CDOS
ll
5688, (1999, CA9 Cal). In Brown v Flowers 297 F Supp 2d 846 (MD NC 2003)., the court held that
12
a music producer failed to establish original copyright ownership, he also failed to allege effective
13
14
transfer of copyright ownership from songwriter under 17 USCS 204(a); the parties oral
15 partnership agreement did not meet requirements for written transfer, and while agreement to
16 incorporate partners:hip was written, it did not meet requirements for transfer including any mention
17
of transfer of copyright ownership.
18
Similarly, in Pamfiloff v Giant Records, Inc. 794 F Supp 933, 23 USPQ2d 1540.( :ND Cal
19
20
1992), a Plaintiff publisher's case for ownership of copyright in musical compositions authored by
21 defendants failed for lack of written assignment and his claim for ownership was not supported by
22 the parties' recording agreement which did not contain any assignment.
23
1n the present case, Mr. Montgomery developed all of this technology before eTreppid was
24
created and he did not assign it to the LLC. In fact, the Contribution Agreement dated September
25
26
27
8, 1998, and the Amended and Restated Operating Agreement, dated November 1, 2001,
emonstrate that the Montgomery Family Trust only contributed its software compression
28
-10-
1 technology contained on CD No. 1., to eTreppid. Article 1.2.1 of the Contribution Agreement states
2
3
that the Montgomery Family Trust contributed the software compression technology to eTreppid.
However, the compression technology the is only software technology the Montgomery Family
4
5
6
Trust contributed to eTreppid.
Further, Aiiicle 1.3 of the Contribution Agreement entitled
"Excluded Assets and Liabilities," specifically states that Mr. Montgomery was not contributing
7 "any other tangible or intangible assets" not expressly contributed in the Contribution Agreement.
8
In fact, the Montgomery Family Trust offored to sell the filtering process and pattern
recognition software, and anomaly detection software to the eTreppid in exchange for five million
IO
11
dollars. Mr. Trepp refused. Thus, the Montgomery Family Trust has only contributed the software
12 compression technology contained on CD No. 1., to eTreppid.
The Trust reserved, and the
13 Contribution Agreement so confirms, that the Trust keep all other tangible and intangible assets for
14
himself. The Compression Software Technology contained on CD No. 1., remains with eTreppid
15
to this day, and Mr. Montgomery and the Trust will stipulate to the assignment of that technology.
16
17
However, since there was no writing signed by Mr. Montgomery or the Trust transferring the
18 filtering process and pattern recoi;nition software, and anomaly detection software to eTreppid or
19 anyone else, the Trust owns that technology. Since, the Montgomery Family Trust owns the filtering
2Q
rocess and pattern recognition software, and anomaly detection software, and eTreppid has no
21
wnership rights to d1etechnology, eTreppid cannot succeed on the merits of their complaint against
22
23
24
. Montgomery.4
On January 20, 2006, after Hon. Judge Polaha denied eTreppid's Application for TRO for
25
26
27
28
otice that eTreppid re:fr~rs to the source code as ''eTreppid' s source code." It makes no distinction between the software
ompression technology and the disputed technology. If eTreppid believes it has ownership rights to the copyrighted
chnology it has offered no proof.
-11-
_)
failing to meet the showing necessary for a TRO and injunction, eTreppid then filed another
2
3
document entitled, Supplemental Declaration of Jerry M. Snyder in Support of Motion for

Temporary Restraining Order. Attached as Exhibit l to that document is an amended
Amended
4
5
and Restated Operating Agreement, dated November I, 2001. eTreppid asserts that the Amended
Restated Operating Agreement somehow gives eTreppid an ownership interest in the filtering
process and pattern recognition software, and anomaly detection software. First, eTreppid argues
that under paragraph 6.5 of the Operating Agreement, that "the services ofMr. Montgomery SO long
as he is a Committee Member and/or Chief Technology Officer pursuant to this agreement, shall be
10
11
12
exclusive to the LLC, and he shall devote substantially all of his full time and efforts to the business
and affairs of the LLC." eTreppid's argument is fatally flawed. First, Mr. Montgomery's duty to
' "Business" is
13. devote his full time and efforts to the LLC is limited to the efforts of the Business.
14
a specifically defined term by the paragraph 2.6 of the Amended Operating Agreement. Paragraph
15
2.6 defines Business and/or Business of the LLC, as follows:

16
17
18
19
20
21
The purpose and business of the LLC shall be to develop, patent, distribute, license
and exploit in any marmer and on a worldwide basis that certain software
compression technology owned by the LLC (the "Technology") and to finance any
and all of the foregoing activities (collectively, the "Business"). The LLC may
conduct or engage in any other lawful activity that the LLC deems in necessary,
incidental or desirable in connection with the Business of the LLC.
Thus, the "business" of the corporation was to exploit software compression technology. Mr..
22 Montgomery only owed his full time and efforts to the LLC for work on the compression
23
technology.
The Amended Operating Agreement does not give eTreppid any interest in Mr.
24
25
26
Montgomery's filtering process and pattern recognition software, and anomaly detection software.
Further, nothing in the Operating Agreement demonstrates a work for hire situation where eTreppid
27 would have a right to the Montgomery Family Trust's filtering process and pattern recognition
28
-12-
_J
'
._ '
software, and anomaly detection software. The work for hire doctrine will be discussed more
thoroughly in section III. (a) (2)below.
eTreppid', next distraction was to state that so long as Mr. Montgomery was an Committee
4
5
Member and/or ChiefTechnology Officer he was bound by a agreement not to compete. Again, this
argument is fatally flawed. The Agreement Not to Compete is contained in paragraph 6.6 of the
Amended Operating Agreement. Paragraph 6.6 specifically limits the Agreement not to Compete
to the "Business of the LLC,'' and the definition of Business as stated in the Amended Operating
Agreement. As demonstrated in Paragraph 2.6, quoted above, the definition of eTreppid's business
10
11
is limited to the exploitation of software compression technology. Thus, Mr. Montgomery is under
12 no duty not to compete with the LLC on the Trust's filtering process and pattern recognition
13 software, and anomaly deteetion software.
14
Notice also that any duties created by the Paragraph 6.5 and Paragraph 6.6 of the Amended
15
Operating Agreement are limited to when Mr. Montgc1mery was a Corrunittee Member and/or Chief
16
17
Technology Officer. Mr. Montgomery was terminated on January 18, 2006. Further, as the
18 managing Committee member Mr. Trepp never allowed any committee meetings, or any of the
19 Committee members to perform any of their duties as set foi:th in the Amended Operating
20 Agreement.
Thus, as eTreppid was in breach of the Amended Operation Agreement as to the
21
Committee Members, and excluded committee members cannot be bound to any obligations.set forth
22
23
in the Amended Operation Agreement.
24
eTreppid cannot demonstrate a likelihood of success on the merits for any claim of ownership
25
ey have in Mr. Montgomery's filtering process and pattern recognition software, and anomaly
26
election software. Thus, eTreppid's Application for TRO must fail.
27
III. (a)(2) eTreppid does not have a ownership interest
28
-13-
ill
Mr. Montgomery's filtering

\
_..)
1
2
3
-)
process and pattern recognition software, and anon1aly detection ,software under the work for hire
doctrine.
The work for hire doctrine is succinctly stated inAvtec Sys. v Peiffer (1994, CA4 Va) 21 F3d
568, 9 BNA IER Cas 532, 30 USPQ2d 1365:
employment only 1J: (a) it is of the kind he or she is employed to perform; (b) it occurs substantially
A servant's conduct is within the scope of
within the authorized time and space limits; and (c) it is actuated, at least in part, hy a purpose to
7
8
9
serve the master. !nAvtec, the District court erred in distinguishing a commercial and demonstrator
uses foi;. computer software in determining whether software was created within scope of
10 employment, so that issue was remanded for detemiination of controlling factor of whether initial
11
version was within scope of employment and therefore owned by plaintiff.
12
The work for hire definition should be literally interpreted to cover works by employees and
13
14
independent contractors falling into enumerated categories and having expressed written agreements
15 designating work for hire, and district court erred in concluding that sculptural work was made for
16 hire, when sculpture is not. an enumerated category and there was no work for hire agreement.
17
Community for Creative Non-Violence v Reid (1988, App DC) 270 US App DC 26, 846 F2d 1485,
18
6 USPQ2d 1990, affd (1989) 490 US 730, I 04 L Ed 2d 811, 109 S Ct 2166, 16 Media LR 1769, 10
19
20
21
USPQ2d 1985.
In this case, the filtering process and pattern recognition software, and anomaly detection
22 software. does not fall wjthin the work for hire doctrine. It is clear from the Contribution Agreement
23
'
and Amended Operation Agreement that Mr. Montgomery was employed to exploit software
24
compression technology only, and not for filtering process and pattern recognition software, and
25
26
27
anomaly detection software. Thus, under the first prong of the work for hire doctrine, "it is of the
'nd he or she is employed to perforni," the filtering process and pattern recognition software, and
28
-14-
-)
1
2
3
anomaly detection software is excluded.

Under the second prong of the work for hire doctrine, "it occurs substantially within the
authorized time and space limits," the filtering process and pattern recognition software, and
5
6
anomaly detection software is excluded as Mr. Montgomery developed the technology in the 1980s.
Mr. Montgomery copyrighted the technology from which the filtering process and pattern
7 recognition software, and anomaly detection software was derived. These copyrights were obtained
8 over a decade before Mr. Montgomery had any association with Mr. Trepp and eTreppid. Further,
9
..
even if the technology was adapted for use at eTreppid, the technology does not fall within the work
IO
11
for hire doctrine. In other words, eTreppid does not have an ownership interest in the technology
12 simply because it was used at the company. This is especially true when there was not written
13
14
assignment of the technology to the corporation. See Kenbrooke Fabrics, Inc. v Material Things
(1984, SD NY) 223 USPQ 1039. In Kenbrooke, an independent contractor who created fabric
15
design at request of plaintiff who bought design from creator without acquiring copyright by written
16
17
transfer and who then modified design slightly to make it repeatable is not author of work, and has
18 not supervised or contributed to work sufficiently to become author, and for lack of written transfer,
19 has not acquired copyright in work. Kenbrooke Fabrics, Inc. v.Material Things (1984, SD NY) 223.
20
USPQ 1039.
21
Finally, the filtering process and pattern recognition software, and anomaly detection
22
23
24
software does not fall within the third prong of the work for hire doctrine, "it is actuated, at least in
art, by a purpose to serve the master." A copyright does not vest in the employer solely because
25 the subject matter of the work bears upon or arises out of the employee's activities for his or her
26
mployer. Avtec, supra. Thus, plaintiff had to show that defendant was at least "appreciably"
27
otivated by a desire to further its corporate goals in order to satisfy the third element of the 28
-15-
..,..,)
-)
1 work-for-hire test. Id. Mr. Montgomery did not utilize the filtering process and pattern recognition
2
software, and anomaly detection software to further the corporate. goals of eTreppid, which are
defined as the exploitation of software compression technology. Rather, Mr. Montgomery allowed
4
5
the use of the filtering process and pattern recognition software, and anomaly detection software to
6 prepare it for sale to the corporation, government or other potential buyers. In fact, Mr. Trepp
7 promised Mr. Montgomery millions of dollars for the technolof,>y. Mr. Trepp would never go
8
9
through the sale. Thus, Mr. Montgomery was not appreciably motivated by the eTreppid's goals
..
rather, be was motivated to sell his tecb.Oology for a substantial amount of money to eTreppid or
10
II
12
otherwise.
eTreppid will be unable to demonstrate that it bas any ownership interest in the filtering
13 process and pattern recognition software, and anomaly detection software under any prong of the
14
work for hire doctrine.
15
III.Ca)(3) The Trust's filtering process and pattern recognition software, and anomaly
16 detection software is not a trade secret of eTreppid l1ut of the Montgomery Family Trust.
17
Under the definition of Trade secret as set forth in 600A.030, et seq, the disputed
18
19
technologies are the trade secret of the Montgomery Family Trust, as Mr. Montgomery developed
20 the technology before any association with eTreppid. The Trust never granted eTreppid any
21 ownership interest in the technology. eireppid's actions have satisfied the requirements for
22 misappropriation. of trade secrets. The requirements for misappropriation of trade secrets are set
23
fm;th in Hutchinson v. KFC Corp., 809 Supp: 68, (D. Nev. 1992): (I) a valuable commercial design;
24
25
(2) a confidential relationship between the party asserting the trade secret protection and the party
26
ho disclosed the information; and (3) the key features of the design were the creative production
27
f the party asserting protection.
The fact that the Trust's technology is a valuable design is
28
-16-
-)
1
undisputed. There existed a confidential relationship between the Trust and eTreppid of the highest
and classified magnitude. Most importantly the key features of the technology were designed,
3
created, and copyrighted by Mr. Montgomery in the 1980s. Thus, the disputed technology
4
5
6
represents the trade secret of the Trusts' and not eTreppid. Thus, any TRO or injunction requested
by eTreppid against Mr. Montgomery on a theory related to trade secrets will fail.
7
8
eTreppid, cannot show that it has likelihood of success on the merits in any action against
Mr. Montgomery asserting ownership rights over the filtering process and pattern recognition
9
software, and anomaly detection software. Mr. Montgomery filed a copyright for the source code
10
11
from which the filtering process and pattern recognition software, and anomaly detection software
12
derived. eTreppid's claim of an ownership interest in that technology fails under 17 U.S.C. 204,
13
because there was no transfer of Mr. Montgomery's copyright ownership in a signed writing to the
14
corporation, and the technology was expressly excluded from transfer in the Contribution agreement.
15
Further, eTreppid cannot demonstrate that it received a ownership interest in the technology under
16
17
the work for hire doctrine. Finally, eTreppid cannot demonstrate that the disputed technology is a
18
trade secret of eTreppid.
19
itS Application for a TRO etc., must fail.
20
21
22
23
IV.
ETREPPIO
eTreppid cannot demonstrate a likelihood of success on the merits and
FAil,ED
TO
SHOW
IRREPARABLE
HARM
FOR WIDCH
COMPENSATORY DAMAGES ARE AN INAD_EQUATE REMEDY AT LAW.

The face of Plaintiff's application fails to show irreparable harm for which compensatory
damages are an inadequate remedy at law.
24
25
As demonstrated above, eTreppid, as a matter of law, does not have an ownership interest
26 in Mr. Montgomery's copyrighted technology. Since eTreppid has no ownership interest in the
27 technology, there is simply no harm to eTreppid. Jn other words there is no harm to eTreppid
28
-17-
-1
j
because it is denied the use of property it does not own. eTreppid is free to pursue its contracts based
on software compression technology, and it can receive the revenue therefore. However, eTreppid
cannot demonstrate any evidence threat of future haim for which compensatory damages would be
4
5
an insufficient remedy.
Further, any TRO or injunction contemplated could not satisfy the NRCP 65 (b) and
Buchnan, supra requirements that a solid foundation is needed to establish and continue a TRO, and
that the Court shall define the injury and state why it is irreparable.
Conversely, Mr. Montgomery will suffer irreparable harm if he is not allowed to use his
10
11
copyrighted technology as he deems appropriate. eTreppid has terminated his employment and
12 prevented Mr. Montgomery from making a living with his own property! Mr. lylontgomery's wife
13
14
is has a tumor. Mr. Montgomery is having to borrow money upon which to live and pay his ever
increasing legal costs.
15
eTreppid has failed to demonstrate that it will_ suffer irreparable harm for which
16
17
compensatory damages are an inadequate remedy at law. Its Application for TRO must fail.
18 The face ofPlaintiff's application fails to show immediate irreparable harm for which compensatory
19 damages are an inadequate remedy at law, or that warrant- injunctive relief.
20
V.
IN ORDER TO RECEIVE A TRO, ETREPPID MUST POST A BOND WHICH IS
21 SUFFICIENT FOR THE PAYMENT OF SUCH COSTS AND DAMAGES AS MAY BE

INCURRED OR SUFFERED BY MR. MONTGOMERY. RESTRAINED."
22
23
Temporary Restraining Orders must accompanied_ bonds as they greatly impact on the
24 parties' civil and contractual rights. NRCP 65 (c) states that:
25
26
27
"No restraining order or preliminary injunction shall issue except upon the giving of
security by the applicant, is such sum as the court deems proper, for the payment of
such costs and damages as may be incurred or suffered by any party who is found to
have been wrongfully enjoined or restrained." (Emphasis supplied.)
28
-18-
The Nevada Supreme Court has consistently held that an order granting a temporary
restraining order must contain a provision for a bond_ If no provision for bond has been made, the
order is void_ State ex reL Hersh v_ First Judicial District Court, 86 Nev_ 73, 464 P .2d 783 (1970);
4
5
Brunzell Construction Co_ v_ Harrah's Club, 81 Nev. 414, 404 P.2d 902 (1965).
Further, case law requires that the bond be filed before the order is made and therefor should
be posted with the Clerk of the Court before the TRO is filed_ See State ex_ reL Culinaty Workers
Union, Local No_ 226 v_ Eighth Judicial District C<2urt, 66 Nev_ 166, 207 P .2d 990 (1949).
In
9
10
ll
discussing the necessity of sufficient bond Nintendo of Am_ V_ Lewis Galoob Toys, 16 F -3d I 032
(1994), states: one goal is discouraging parties from requesting injunctions based on tenuous
12 legal grounds. Furthermore, a presumption that damages will be awarded from the bond assured
13
district court judges that defendants will receive compensation for their damages in cases where
14
it is later determined a party was wrongfully enjoined_ Moreover, demands on judicial resources
15
16
may be relieved fo some extent, because a defendant who can recover damages against a
17 preliminary inJunction bond will be less likely to file a separate malicious prosecution action.
18 Finally, tbis standard provides an equitable means by which courts decline to impose damages on
19
20
the rare party who has lost a case on the merits but nevertheless sliould not suffer the execution of
'
.
the preliminary injunction.
21
22
Mr_ Montgomery's technology is worth $100,000,000.00. Tuterested parties-offered that
23 amount for the techr.ologywhile Dennis was at eTreppid. Without authority to either accept or deny
24 the offer, a meeting with interested parties without Mr. Montgomery's knowledge, Mr. Trepp turned
25
down the offer and requested $500,000,000.00 for the technology. For each month that eTreppid
26
27
used Mr. Montgomery's copyrighted filtering process arid pattern recognition software, and anomaly
28
-19-
detection software, the interested parties paid no less than no less that $250,000. Other than paying
Mr. Montgomery a relatively minimal salary, Mr. Trepp appears to have taken the remainder of the
money.
4
5
Thus, the bond that eTreppid would have to post to prevent Mr. Montgomery from using
disseminating or other, his copyrighted technologies would be at least $100,000,000.00-the loss of
the contract for the technology.
VI. THECOURTSHOULDHOLDTHIS_MATTERINABEYANCEASTHESAME
9 ISSUE WILL BE LITIGATED IN FEDERAL COURT.
10
11
On January 31, 2006, Mr. Montgomery, as an individual and the Montgomery Family Trust
filed suit against eTreppid and Mr. Trepp, as an individual, in the United States Distnct Court of
12
13
Nevada. A copy of the complaint is attached as Exhibit "A". The complaint alleged the following
14 federal questions: copyright infringement; unlawfol distribution of copyrighted work and for
15
injunction; a declaration of rights with regard to the copyrighted technology; and an accounting of
16 all profits derived from Defendant's exploitation of the copyri['..,hted technology. Further, the
17
Complaint alleged the following state law issues: Fraud against Mr. Trepp; Breach of Contraet;
18
19
Misappropriation of Trade Secret; and Conversion.
20
Obviously the federal action will adjudicate facts and issues of law that are necessary to
21
determine the parties' ownership rights, liceilsee rights, sublicensee rights, and royalty rights among
22 other things to the dl.sputed technology. The federal action will determine if the disputed technology
23
is a derivative work. Under the federal court's supplemental jurisdiction the state court matters will
24
25
be determined. The two case will largely deal with the same nucleus of operative facts and be
26 decided on the same questions oflaw.

27
An ternpormy restraining order or injunction t,>ranted by the state court would be a premature
28
-20-
state court determination of the merits of the federal ligation of which a necessary part of the
copyright infringement claims is a determination of ownership/licensee rights. This leads to all sorts
3
of problems with lack of consistency, contrary rulings and uncertainty. The court should hold any
4
5
hearing on the Temporary Protective Order and injunction in abeyance.
6 VIL CONCLUSION
7
8
eTreppid's Application on a TRO to
The Application for TRO requested that Mr.
Montgomery be ordered to return the "source code" that Mr. Montgomery authored and copyrighted,
9
and that Mr. Montgomery be prevented from "using, disseminating or deleting information that is
10
11
eTreppid's Technology must be denied as follows. Mr. Montgomery does not possess the source
12 code for the Technology that eTreppidowns-the software compression technology. That technology
13 contained on CD no. 1 in eTreppid's possession and Mr. Montgomery will stipulate to eTreppid's
14
ownership of that software compression technology. However, Mr. Montgomery copyrighted the
15
technology filtering process and pattern recognition software, and anomaly detection software in
16
17
1985. He never transferred it to the eTreppid as a matter of law. eTreppid did not receive an
18 ownership interest in the copyrighted technology under the work for hire doctrine. Thus, any attempt
19 to enjoin Mr. Montgomery from the use, dissemination or sale of his property will fail as eTreppiil
.
20
cannot demonstrate a likelihood of success on the merits on any claim for ownership of the
21
22
copyrighted technology. Further, eTreppid cannot demonstrate fails io show irreparable liarm for
23 which compensatory damages are an inadequate remedy at law. A temporary restraining order or
24 injunction would be a premature determination of copyright issues more properly determined in
25 federal court.
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Simply put, eTreppid cannot allege any harm that would result in not be allowed to
use property that does not belong to him.
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II
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Respectfully submitted this l ' 1 day of February, 2006.
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Pursuant to NRCP 5(b), I certify that I am an employee of the LAW OFFICE OF LOGAR
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& PULVER, PC, and that on the I" day of February, 2006, I
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deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto.
sent via Federal Express or other overnight delivery service.
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delivered via facsimile machine to fax number: 786-6179
personally delivered.
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caused to be delivered via Reno-Carson Messenger Service.
Qie foregoing document addressed to:
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Mr. Jerry "M. Snyder, Esq.

Reno, NV 89511
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EXHIBIT A

Case 3:06-cv-i:::-)6
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Document 1-1
Filecl 01/31/::C,'":')
Page 1 of12
Ronald J. Logar-State Bar No. 303

Eric Pulver-State Bar No. 7874
225 S. Arlington Ave., Ste. A
Reno , NV 8950 l
Tel:
(775) 786-5040
Fax: (775) 786-7544
FLYNN & STILLMAN
224 Birmingham Drive, Suite JA4
Carctiff, CA 92007
(888) 235-4279
. Tel:
Fax: (888) 235-4279
(Applit!htionfor Admission Pro Hae Vice forthcoming}
Attorneys for Plaintiff DENNIS MONTGOMERY, an individual
and MONTGOMERY FAMILY TRUST,
a California Trust
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UNITED STATES DISTRICT COURT
12
FOR THE DISTRICT OF NEVADA

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DENNIS MONTGOMERY, an' individual;

and MONTGOMERY FAMILY TRUST, a
California Trust,
Plaintiff;
) CASE NO.:
)
)
) COMPLAINT FOR:
)
vs.
) ].
eTREPPID TECHNOLOGIES, LLC., a

Nevada Limited Liability Company;
WARREN TREPP, an individual;
Defendants.
) 2.
)
) 3.
) 4.
) 5.
) 6.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ ) 7.
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8.
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9.
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24.
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COPYRIGHT INFRINGEMENT; .
COPY RIGHT INFRINGEMENT BY
DISTRIBUTION;
DECLARATORY JUDGMENT;
ACCOUNTING;
BREACH OF FIDUCIARY DUTY;
FRAUD;
.
BREACH OFCONTRACT; MISAPPROPRIATION OF TRADE
SECRETS;
CONVERSION.

Case 3:06-cv-lt"")6 Document 1-1
Filed 01/31/2,-:) Page 2of12
Plaintiffs, Dennis Montgomery and the Montgomery Family Trust, hereby allege against
Defendant, eTreppid Technologies, LLC, and Defendant, Warren Trepp, the following Claims for
Relief:
INTRODUCTION
This is an action arising out ofthe unauthorized use of extremely valuable copyrighted
computer software technology by Defendant eTreppid Technologies, LLC and Defendant, Warren
7
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Trepp. Not content to reap millions of dollars on the technology without a license, the majority
'
shareh.,lder of eTreppid Technologies, Defendant Warren Trepp, used his majority position to
squeeze out, dilute and misappropriate vast sums of money from the inventor and fellow shareholder,.
10
Dennis Montgomery, and the Montgomery Family Trust.
11
those breaches of fiduciary duty did not satisfy Mr. Trepp. He went further by trying to obtain
12
plaintiff Montgomery Family Trust's extremely valuable technology through a knowingly false claim
13
that the Montgomery Family Trust's technology was contributed to the company by Mr.
14
Montgomery, then attempting to reverse engineer the software in direct violation offederalcopyright
15
laws. Accordingly, in addition to all other remedies, Plaintiff seeks not only a declaration of
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ownership under the 1976 Copyright Act of the software at issue in this litigation, but irrjunctive relief
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against any further use of the technology without a license and an accounting of all profits obtained
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as a result of the unauthorized exploitation of the copyrights and those derivative works therefrom
20
2.
Moreover, as fully stated below, even
Plaintiff, Dennis Montgomery is an individual who resides in Washoe County, Nevada
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and is the inventor.of all technology that is subject to this action. Montgomery is also-a minority
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shareholder in eTreppid Technologies, LLC, Defendant above named.
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3.
Plaintiff Montgomery Family Trust (the "Trust") is a California irrevocable trust
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formed and operated under the laws of the State of California and is the owner of the copyrights at
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issue in this action
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4.
Defendant, e T reppid T echno lo gies, L LC, ( e T reppid), is upon irrforrnation and belief
a Nevada limited liability company, with its principle place of business in Washoe County, Nevada,
-1-

Case 3:06-cv-Ct'"]6
, __ _,
l
2
Filed 01/3112()
Page 3of12
Defendant Warren Trepp ("Trepp") is, upon infonnation and belief, an individual who resides in
Washoe County, Nevada and is the majority shareholder in eTreppid Technologies, LLC.
5.
Plaintiffi; are presently unaware of the true names and capacities of Defendants sued
herein as DOES l through I 0, inclusive, and therefore sue said Defendants under such fictitious
names. Plaintiffs are informed and believe that such fictitious Defendants are responsi)Jle in some
manner for the events and happenings herein refen-ed to, and proximately caused the damage to
Plaintiffs as herein alleged. Plaintif!S will seek leave to amend this Complaint to allege their true
names llnd capacities when the same have been ascertained.
JURISDICTION AND VENUE
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6.
Plaintif!S raise a claim under the federal Copyright Act of 1976. Accordingly, this
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Court has jurisdiction pursuant to 28 U.S.C. 1338(a) and 1338(b). The Court also has jurisdiction
12
pursuant to 28 U.S.C. 133.1 (federal question jurisdiction) and over the state law claims pursuant
13
to 28 U.S.C. 1367 (supplementaljurisdiction). Venue is properpursuantto 28 U.S.C. 139l(b) and
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28 U.S.C. 1400.
FACTUAL ALLJ;GATIONS
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Document 1-1
7.
Dennis Montgomery (Montgomery) is an inventor and software developer. In or
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about 1982, Montgomery developed certain pattern recognition software for which .the U.S.
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Copyright Office granted a series of copyrights. The Montgomery Family Trust (Trust) is the owner .
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ofCopyright Registration Nos. TXu-98-018, TXu-98-699, TXu-98-727, TXu-98-728, TXu-98-731,
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TXu-117-868, TXu-119-540, TX-1-983-147, TX-1-992-867, TX-2-000-234, TX-2-083-750and
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TX-2-095-009 (the "Copyrights").
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8.
After the registration of these copyrights, Montgomery developed

Derivative
.
. Works
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based on the pattern recognition technology originally copyrighted between 1982 and January 1987
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(the "Derivative Works"). Those uniquely important Derivative Works were fully developed prior
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to 1998 and are the exclusive property of the Trust.
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9.
In or about September 1998, Montgomery and Defendant Trepp, formed Intrepid
Technologies, LLC, a Limited Liability Company, which name was later changed to eTreppid
-2-

Case 3:06-cv-IQ6
Document 1-1
Filed 01/31/20
Page 4 of 12
Technologies, LLC (hereafter referred to as eTreppid.) Pursuant to a "Contnbution Agreement"

2
dated September 28, 1998, between Trepp, Montgomery and the Trust, in exchange for a fifty
percent interest in eTreppid Technologies, LLC to Montgomery, the Trust contributed specific
technology to eTreppid that is identified in paragraph I _2_ I of the Contnbution Agreement

10.
That Paragraph specifically identifies the contnbuted technology as "the software
compression technology contained on that certain Software Compression Engine Development
Program contained on CD No_ L"
1L
Significantly, because the Trust owned other technology, Paragraph 1-3 of the
Contribution Agreement states that the Trust is expressly not "contributing, transferring or conveying
10
to eTreppid under this agreement or by any other means, nor_ is eTrcppid acquiring from [the Trust]
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any other tangible and intangible assets of' the Trust or Mont_gomery_
12.
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acquired the software compression technology contained on CD No_ I and nothing else.
13 _
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Thus, pursuant to the express terms of the Contribution Agreement, Intrepid only
In particular, the Derivative Works were not part of the software compression:
technology contained on CD No_ l that is subject to the Contnbution Agreement_
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14_
Subsequently, Trepp began to dilute Montgomery's share in eTreppid and, used his
17
majority interest in eTreppid to obtain favorable treatment for himself as a majority shareholder at the
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expense of Montgomery_
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15.
In or about 2003, eTreppid began sublicensing the Derivative Works to various
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entities, including the United States government and collecting licensing fees for the sublicenses.
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eTreppid was never granted a license to the Derivative Works by, and failed to pay royalties to, the
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Trust
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16_
At no time did any of the Defendants have a written license to exploit the Trust's
u_s_c_ 204(a)_
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Derivative Works as required by 17
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(if anything) an ora~ non-exclusive license to exploit the Derivative Works_
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17_
As a result, at best, eTreppid only can claim
Although the Trust denies that it granted any oral nonexclusive license to eTrnppid,
any such oral license was terminated by the Trust on January 19, 2006, orally and by letter dated
-3-

Case 3:06-cv-it)6
January 25, 2006.
18.
Document 1-1
Filed 0113112\J
Page 5of12
eTrcppid has failed to and refuses to cease exploitation of the Derivative Works and
has so far refused to account for any profits obtained as a result ofits unlicensed exploitation of the
Derivative works.
19.
Moreover, because of the highly confidential and sensitive nature of the Derivative
Works, the Derivative Works are protected from reverse engineering and/or tampering by
sophisticated safeguards. As a result of eTreppid's improper attempts to obtain and reverse engineer
the De~vative Works, Defendants have, upon infonnation and belief, destroyed part of the ;,source
code" of the Derivative Works, further harming Plaintiffs.
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FIRST CLAIM FOR RELIEF
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(Copyright Infringement against all Defendants)
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20.
Pbintiffs incorporate by reference the foregoing allegations contained in Paragraphs
1 through 19 as though restated herein in full
21.
Tice Montgomery Family Trust is the owner of Copyright Registration Nos.
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TXu-98-018,
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Txu-119-540 and the Derivative Works created therefrom.
17
18
19
22.
TXu-98-699,
TXu-98-727,
TXu-98-728,
TXu-98-731,
TXu-117-868,
and
Defendants have for the past three years and continuing to the present, exploited the
Trust's derivative works without any license therefor and .witlwut paying royalties.
23.
Defendant Trepp, as Manager of eTreppid, knowingly and intentionally directed
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eTreppid's willful infringement. on the TruSt's copyrights and Derivative works.

.
24.
As a direct and proximate result ofthe Defendants' willful infringement on the Trust's
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Derivative works, the Trust has sujfered and continues to suffer damages in an amount to be
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detennined at trial.
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25.
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Pursuant to the Copyright Act of 1976, _the Trust is entitled to actual damages,
statutory damages as. provided therein, and its reasonable attorney's fees.
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SECOND CLAIM FOR RELIEF
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(Copyright Infringement - Unlawful Distribution of Copyrighted Work - Injunction
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Case 3:06-cv-Ct'.)6
Document 1-1
2
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Filed 01/31/21'--)
Page 6of12
17 U.SC. 106(3))
26.
Plaintif!S incorporate into this claim for relief the allegations contained in each and
every preceding paragraph of this Complaint as if the same were set out at length herein.
27.
PbintiffTrust is the owner and author of the Derivative Works
28.
In doing the acts alleged, Defendants violated the Trust's right and interest to
distribute copies of the Derivative Works to the public under 17 U.S.C. 106(3), and said acts were
and are infringements of the Trusts' copyrights.
~9.
PlaintiffS have been and are being substantially damaged by said infringement,
particularly, upon information and belief, the unauthorized use of the Derivative Works by
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Defendants. Further harm and injury to Plaintif!S is imminent, and Plaintif!S are without adequate
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remedy at law unless Defendants' infringement is enjoined by the court.
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THIRD CLAIM F!)R RELIEF
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(Declaratory Relief)
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30.
Plaintif!S reallege and incorporate by reference each and every allegation in paragraphs
1 through 29 set forth herein.

31.
An actual controversy bas arisen aod exists among Plaintif!S and Defendants under the
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Copyright Act of J 976. The Trust contends that it is the exclusive owner of the Derivative Works
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at issue in this action. The Defendants dispute this contention"_
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32.
Plaintif!S desire a judicial declaration that Plaintif!S are the.owners of the Derivative
Work and further, that any actual or implied oral nonexclusive license is terminated.
33.
Furthermore, as Plaintif!S have never validly assigned any interest in the copyrights
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or the Derivative \Vories to Defendants, Plaintiffi; are entitled to a declaration that the Trust is entitled
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to 100% of the license fees obtained by the exploitation and sublicensing ofthe Derivative Works as
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matter of federal copyright law.
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34.
A declaration of rights is necessary and appropriate at this time in order that Plaintif!S
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may ascertain their .rights and duties with respect to Defendants, and with respect to any third parties
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who may claim an interest in either the Copyrights or the Derivative Works either by license or-
-5-

Case 3:06-cv-tt:.)6
Document 1-1
Filed
01/31/2~-)
, ___ /
alleged sublicense.
FOURTH CLAIM FOR RELIE~:
(Accounting)
Page 7of12
35.
Phintiffi; reallege and incorporate by reference each and every allegation in
paragraphs 1 through 34 set forth herein.
36.
PhintiffTrust is the exclusive owner of the Copyrights and the Derivative Works.
37.
Defendants have wrongfully exploited the Copyrights and Derivative Works without
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payrnei1t to the Tmst therefor.
38.
As a result, the T_rust is entitled to an accounting of all income and profits derived.
from Defendants' exploitation of the Copynghts and the Derivative Works.
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FIFTH CAUSE QF ACTION
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(Breach of Fiduciary Duty)
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39.
PlaintiflS reallege and incorporate by reference each and every allegation in
paragraphs 1 through 38 set forth herein.

40.
As the maj~rity shareholder in eTreppid Technologies, Trepp owed a fiduciary duty
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of utmost loyalty and good fuith to Plaintiff Dennis Montgomery, including within that duty, an
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obligation not to use his majority interest to the detriment of the minority shareholder, and an
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obligation not to further his own interests at the expense_ of the minority shareholder, Dennis _
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Montgomery.
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41.
In violation of his fiduciaryduties to Plaintiff; Trepp improperly used his majority
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interest in order to among other things, attempt to reduce Montgomery's shares relativeto hiS own,
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devalue the holdings of Montgomery while at the same time increasing the value of his shares, pay
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himself exorbitant dividends from the company without paying equal dividends. to plaintiff
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Montgomery, and to misappropriate millions of dollars at Montgomery's expense from the company
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accounts.
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42.
As a direct and proximate result of Trepp's breach of fiduciary duty, Plaintiff
Montgomery has suffered and continues to suffer damages in an amount to be determined at trial but
-6-
3:06-cv-0~6
Case
43_
Montgomery requests that punitive damages be awarded against Trepp.

SIXTH CAUSE OF ACTION
(Fraud against Trepp)

44_
Page 8of12
Because Trepp 's actions were willfol, malicious, in bad faith and oppressive,
4-
Filed 01/31/2Cl'J
in any event no less than $6 million.
Document 1-1
Plaintiffu reallege and incorporate by reference each and every allegation in
paragraphs I through 4 3 set forth herein_
45_
At the time of the formation of eTreppid Technologies, LLC, and the execution by
Plaintiffu of the Contribution Agreement, Trepp orally and in writing promised Plaintiffu that
10
Montgomery would be a 50% shareholder in eTreppid Technologies with Trepp. He further
11
represented that Montgomery would share equally with Trepp in the profits of the company.
12
46_
At the time that Trepp made the foregoing representations to Montgomery and the
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Montgomery Family Trust; Trepp knew them to be false_ Moreover, he made said representations
14
in order to induce Plaintiffu to contnbute valuable software compression technology to the company.
15
47_
In reliance on those representations, Montgomery and the Montgomery Family Trust
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contnbuted the "software compression technology'' to the company in reliance on Trepp's promise
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to share the profits therefrom
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48.
However, Trepp has failed to share the profitsequally and has instead failed to pay_
equal dividenps or royalties.
49_
As a direct and proximate result ofTrepp's fraud, Plaintiffu have suffered and continue
to suffer damages in an amount to be determined at trial but in any event no less than $6 million.
50.
Because Trepp' s actions were willfol, malicious, in bad faith and oppressive,
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SEVENTH CAUSE OF ACTION
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(Breach of Contract)
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Plaintiffu reallege and incorporate by reference each and every allegation in
paragraphs 1 through 50 set forth herein_

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Case 3:06-cv-U6
. 1
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52.
Document 1-1
Filed 01/31/20
Page 9 of 12
Plaintiffs and Defendant Trepp entered into a written contract titled "Contnbution
Agreement."
53.
In pertinent part, in exchange for Plaintiffs contnbuting the "software compression"
technology to the company, Plaintiff Montgomery was to receive 50% of the company.
54.
Plaintif!S performed all obligations under the contract.
55.
However, Trepp breached the contract by fuiling to maintain Montgomery's 50%
..56.
As a direct and proximate result ofTrepp's breach ofcontract, Plaintiffu have suffered
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interest, and instead, attempted to reduce his ownership interest in the company .
and continue to suffer damages in an amount to be determined at trial but in any event no less than
$6 million.
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EIGHTH CAUSE OF ACTION
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(Misappropriation of Trade Secret)
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14
57.
Plaintif!S reallege and incorporate by reference each and every allegation in paragraphs
I through 56 set forth herein.
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58.
The Derivative Works constitute trade secrets of Plaintif!S.
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59.
By the actions alleged above, Defendants Trepp and eTreppid Technologies have
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wrongfully attempted to misappropriate and cmivert Plaintiffu' Derivative Works.

60.
As a direct and proximate result of Defendants' misappropriation of Plaintiffu' trade -
secrets, PlaintiffS have suffered and continue to suffer damages in an amount to be determined at trial
61.
Because Defendants' actions were
willfui
malicious, _in bad fuith and oprressive,
22
NINTH CAUSE O:F ACTION
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(Conversion)
24
25
62.
Plaintif!S reallege and incorporate by reference each and every allegation in
paragraphs I through 61 set forth herein.
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63.
Plaintif!S own the Derivative Works currently in the possession of Defendants.
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64.
Defendants converted Plaintiffu' property for their own use and have :tailed and
-8-

Case 3:06-cv-o(y
Document 1-1
Filed 01/31/2cXJ Page 10of12

--~
1
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refused to return it to PlaintiffS or give Plaintiffi; access to their property.

65.
As a direct and proxnnate result of Defendants' conversion, plaintiffi; have suffered
and continue to suffer damages in an amount to be determined at trial but in any event no less than
$500 million.
66.
Because Defendants' actions were willful, malicious, in bad faith.and oppressive,
Montgomery requests that punitive damages be awarded against Defendants.
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JURY DEMAND
Pursuant to Federal Rule of Civil Procedure 38(b), Plaintiffi; hereby demand ajury trial on all
issues in the Complaint so triable.
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PRAYER FOR RELIEF
WHEREFORE, Plaintiffi; pray to the court for:

I.
Temporarily and preliminarily enjoin Defendants during the pendency of this action
and permanently thereafter as follows:

a.
Prolnoit Defendants from infringing, conspiring to infunge, or contributing to
or participating in the infringement by others of PlaintiffS' copyrighted and derivative works;

b.
Prohibit Defendants from possessing any of the copyrighted or Derivative
17
Works owned by Plaintiffs Trust, and any Derivative Works thereof; and in this regard, that
18
Defendants be required to deliver upon oath, to be impoundecLduring the pendency of this action, all
19
such copies in their possession., as are alleged to infringe upon Plaintiffs' copyrights together with all
20
recordings, tapes, eds , dvds, masters, pririt or digital documents and media, or any other means for
21
recording and storing the Trust's copyrighted and Derivative Works that allow Defendants to make
22
infringing copies, and Writs of Seiiure be issued by this court in the manner provided by the
23
Copyright Act and by the rules of the Supreme Court of the United States fur Practice and Procedure
24
in Copyright Cases, and that at the conclusion of this action, the court order all such matters be held
25
to be surrendered to Plaintiffs or destroyed under Writs of Destruction, whichever shall seem to the
26
court 16 be the most just and proper;
27
c.
Order Defendants to pay Plaintiffs such damages as PlaintiffS have sustained

-9-

Case 3:06-cv-OU
Document 1-1
Filed 01 '31 /20(] Page 11 of 12
in consequence ofDefendants' infiingement of the Trust's copyrights and to account for and pay over
to the Trust all the profits that Defendants have derived from their willful infringement of Plaintiffs'
copyrights;
d.
4
5
Order Defendants to pay such damages to Plaintiffs as this court shall consider
just and proper within the provisions of the Copyright Act; and
e.
Order Defendants to pay Plaintiffu for Defendants' intentionai willfu~ and
malicious infringement of plaintiff's copyrighted and Derivative Works, such damages as this court
shall deem just and proper with the provisions of the Copyright Act, but not less than $150,000 for
each separate infringement of Plaintiff's copyright.
JO
11
2.
Award Plaintiffu their attorneys' fees according to_ proof and/or as required or
permitted by the Copyright Act;
12
3.
Award Plaintiffs their costs; and
13
4.
Grant such other and further relief as the court deems just and proper.
14
DATED this 31" day ofJanuary, 2006.
15
LAW OFFICE OF LOGAR & PULVER PC
16
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By: _ _(RJL)
Attorney for Plaintiff Dennis Montgomery
and Plaintiff Montgomery Family Trust
Nevada Bar No. 303
225 S. Arlington Ave. Ste. A
Reno, Nevada 89501
Phone: 775-786-5040
Fax: 775-786-7544
Email Lezlie@Renofamilylaw.com
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-10-

Case 3:06-cv-oO
Document 1-1
Filed 01/31/2o'Q Page 12of12
PROOF OF SE:RVICE
I, Lezlie M. Lucas declare:
I am an employee in the City of Reno, County of Washoe, State of Nevada, of the LAW
OFFICE OF LOG AR & PULVER, PC, with the business address at 225 S. Arlington Avenue, Suite
A, Reno, NV 89501. I am over the age of 18 years old and not a party to this action,
and that on the 31"
.._X_ deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto via U.
7
8
day ofJanuary, 2006, I
S. Regular Mail.
9
10
delivered via facsimile machine to fax number:
11
_ _ personally delivered
12
_ _ caused to be delivered via Reno-Carson Messenger Service
13
the foregoing document addressed to:

5441 Kietzke Lane
Second Floor
Reno, NV 89511
14.
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17
1.8
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and
Pillsbury Winthrop Shaw Pittman, LL. P.

Jonathan D. Butler, Esq ..
2475 Hanover Street
Facsimile: 650-233-4545
Via: Facsimile 775-786-6179

Copy to Follow US Regular Mail
Via: Copy Regular US Mail
{LML)
21
LEZLIE M. LUCAS
Legal Assistant fo the
22.
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-11-
Page 1 of 1
Main Identity
From:
To:
Sent:
Subject:
<cmecf@nvd.uscourts.gov>
<cmecfhelpdesk@nvd.uscourts.gov>
Tuesday, January 31, 2006 5:32 PM
Activity in Case 3:06-cv-00056 Montgomery et al v. eTreppid Technologies et al "Complaint"
***NOTE TO PUBLIC ACCESS USERS*** You may view the filed documents once without charge. To avoid
later charges, download a copy of each document during this first viewing.
United States District Court
District of Nevada
Notice of Electronic Filing
The following transaction was received from Logar, Ronald J entered on 1/31/2006 at 5:31 PM PST and filed on
1/31/2006
Montgomery et al v. eTreppid Technologies et al
Case Name:
3:06-cv-56
Case Number:
Dennis Montgomery
Filer:
Document Number:l
Docket Text:
COMPLAINT for Copyright Infringment; Copy Right Infringement by DistributionDeclaratory Judgment; et al against
all defendants (Filing fee$ 250 receipt number 98651), filed by Dennis Montgomery. Certificate of Interested Parties
due by 2/10/2006. (Attachments: # (1) Civil Cover Sheet)(Logar, Ronald)
The following document(s) are associated with this transaction:
Document description: Main Document
Original filename:n/a
Electronic document Stamp:
[STAMP dcecfStamp_ID=l 101333072 [Date=l/31/2006] [FileNumber=2979205-0
) [ 592b50b3al 1e194ef666b54be3 7cl c6f2c3349ff502789dec6327 502270fl dO 14f6
840f8624366a419c 1fc020f5c2c50cffb8ace92261a94ef966l34 7 cdc325e]]
Document description:Civil Cover Sheet
Original filename:n/a
Electronic document Stamp:
(STAMP dcecfStamp_ID=l101333072 [Date=l/31/2006] [FileNumber=2979205-l
l [bbe3fb1ed6a4e7 659f5bef9f3 b25be3 d83 c94b4220abf7b8faf2483 9cd6d0a90092
jcda012199bf9b565616f50773382498b706a2492bc39ad8eec37bac8db6fj]
'-
3:06-cv-56 Notice will be electronically mailed to:

'-.onald J Logar
Lezlie@Renofamilylaw.com
l:06-cv-56 Notice will be delivered by other means to:

\fontgomery Family Trust
leno, NV 89521
r\ 11
/,...f\f'\L

~)
Nevada Bar #00303
Nevada Bar# 8025
LAW OFFICES OF LOG AR & PULVER, PC
Reno, Nevada 89501
(775) 786-5040
2JD& JM/ 25 PH I: 38

FLYNN & STILLMAN
224 Binningham Drive, Suite I A4
Cardiff, CA 92007
Tel:
(888) 235-4279
Fax: (888) 235-4279
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IN AND 1''0R THE COUNTY OF WASHOE
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ETREPPID TECHNOLOGIES, INC., a

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Plaintiff,
vs.
DENNIS MONTGOMERY,
Defendant.
) CASE NO. cv06-0I 14

)
) NOTICE TO ADVERSE PARTY OF REMOVAL OF
) ACTION UNDER 28 U.S.C. 1441(8) (DIVERSITY)
)
)
)
)
)
)
~~~~~~~~~~~~~~)
TO PLAINTIFF ETREPPID TECHNOLOGIES, INC. and its attorneys of record:

PLEASE TAKE NOTICE that a Notice of Removal of this action was filed in the United States
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District Court for the District of Nevada at Reno, Nevada on January 25, 2006.
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Removal is attached to this Notice and is served and filed herewith.
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.. Dated.: January 25, 2006
LOGAR & PULVER
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A copy of the Notice of
By:
~f
(}
Ronald Logar, Esq.
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__,,.,,:r
/A _
-f<:-day of January, 2006,
LOG AR & PULVER, PC, and that on th~>
_ _ deposited for mailing in the U.S. Ma[[, with sufficient postage affixed thereto via
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Certified Mail, Return Receipt requested.
_j.L_
delivered via facsimile machine to fax number _ _ _ _ _ _ _ __
_k_
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12 the foregoing document, addressed to:

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5441 Kietzke Lane
Second Floor
Reno, NV 89511
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and
Pillsbu...ry Wint..hrop Sha\v Pitt.rna..n..,

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L.L.P.
Jonaihan D. Butler, Esq.
Facsimile: 650-233-4545
L~Cwat~


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LOGAR & PULVER, PC, and that on the
_ _ deposited for mailing in the U.S. Mail, with sufficieut postage affixed thereto via
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QJSty of January, 2006,
____ sent via Federal Express or other overn.ight delivery service
_l{_ delivered via facsim.ile maclllne to fax number
~~~~~~~~~
_j{___ personally delivered
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Jerry M. Snyder, Esq. t/t0- ft!.CS:/~'1_,,
5441 Kietzke Lane
Second Floor
Reno, NV 89511
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PillsbU..JT \Xli.."lt..lrro_p Sha\.v Pittm&.'1} L.L.P.

2475 Hanover Street
Facsim.ile: 650-233-4545
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EXHIBIT A

644-3 Filed 05/28/08 Page 32 of 115
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U.S. DISTRICT COURT

DISTRICT OF NEVADA
FILED
JAN 2 5 '00
CLERI(. U.S. DISTRICT COUtrr
BY_
DEPuTy

UNITED ST A TE:
FOR THE DISTi
ETREPPID TECHNOLOGIES, INC., a

Plaintiff,
vs.
DENNIS MONTGOMERY,
Defendant.
3:06--cv-00041
) Cf
)
) NOTICE OF REMOVAL OF ACTION UNDER 28
) U.S.C. 144l(B) (DIVERSITY)
)
)
)
)
)
)
~~-~~~~~~~~~~~-)
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Michael J. J<'lynn, Mass. State Bar No.

FLYNN & STILLMAN
224 Binningham Drive, Suite IA4
Cardiff, CA 92007
Tel:
(888) 235-4279
Fax: (888) 235-4279
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Nevada Bar #00303
Nevada Bar# 8025
Reno, Nevada 89501
(775) 786-5040
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TO THE CLERK OF THE ABOVE-ENTITLED COURT:

PLEASE TAKE NOTICE that defendant Dennis Montgomery hereby removes to this Court the state
court action described below.
I.
On January 19, 2006, an action was commenced in the Superior Conrt of the State of Nevada
in and for the city of Reno, Washoe County, Nevada, entitled eTreppid Technologies, Inc. v. Dennis
Montgomery, Case No. CV06-0l 14. A copy of the pleadings filed in the state court are attached hereto as
Exhibit A.
2.
The first date upon which defendant Dennis Montgomery received a copy of said complaint
was January 19, 2006, when defendant was served with a copy of the complaint from said state court. No
summons was provided.
3.
This action is a civil action of which this Court has original jurisdiction under 28 U.S.C.
1332, and is one which may be removed to this Court by defendant pursuant to the provisions of28 U.S.C.
144l(b) in that it is a civil action alleged to be between citizens of different states and the matter in
controversy exceeds $75,000, exclusive of interest and costs because the technology at issue in this action
has been alleged by plaintiff to have a value in excess of $100 million dollars.
4.
Defendant is informed and believes that plaintiff eTreppid Technologies, Inc. was and still
is a citizen of the state of California, based on eTreppid Tehcnologies, Inc.'s party allegation contained in
the complaint. Defendant was, at the time of the filing of this action, and still is, a citizen of Nevada and is
the only defendant other than "Doe" defendants named in the complaint and served with a copy of the
complaint.
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BC~Q_JJ
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Ronald Logar, Esq.

Attorneys for Defendant Dennis Montgomery
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-1-
,..-,.....,,D,.,....YT:1...-,..-. ......,....,. ,,-,...-.,,
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Pursuant to NRCP 5(b ), I certify that I am an employee of the LAW OFFICE OF
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LOGAR & PULVER, PC, _and that on
thed~day of January, 2006,
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_ _ deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto via
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t/t"--
ft.cs.-,,,._.'/_,,
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JerryM. Snyder, Esq.
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5441 Kietzke Lane
Second Floor
Reno, NV 89511
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Pillsbu......-.1 \l/i..'1.throp Sh5!\V Pittman, L.L.P.

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2475 Hanover Street
Facsimile: 650-233-4545
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CODE: 3370
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2006 JMJ 2 0 P1'l 3: 3 J
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Plaintiff,
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CV06-00114
Dept. No:
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vs.
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Case No.:
Defendants.
II-~~~~~~~~~~~~~~~-/
ORDER DENYING TEMPORARY RESTRAINING ORDER;
ORDER ASSIGNING MATTER TO BUSINESS COURT FOR HEARING
THE MATTER of Plaintiff's eTreppid Technologies, L.L.C.'s Ex Parte Application for a
17 Temporary Restraining Order and Motion for a Preliminary Injunction Against Dennis Montgomery,
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me before this Court in chambers on January 19, 2006.
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Jerry M. Snyder, Esq., appeared for Plaintiff, eTreppid Technologies, L.L.C., and Eric A.
ulver, Esq., appeared for Defendant, Dennis Montgomery.
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The Court reviewed Plaintiff's eTreppid Technologies, L.L.C.'s Complaint, Ex Parle
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pplication for a Temporary Restraining Order and Motion for a Preliminary Injunction Against
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ennis Montgomery, and various Declarations submitted by Plaintiff. After being fully advised in
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he premises and after considering argument by counsel, and good cause appearing, the Court enters
e following order:
Page I of 2
NOW, THEREFORE, IT IS HEREBY ORDERED:

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1.
Plaintiff's eTreppid Technologies, LL.C.'s Ex-Parte Application for a
Temporary Restraining Order is hereby DENIED without prejudice, since
Plaintiff has not met the standard of proof as required by NRCP 65(b) and (c)
at the meeting with the Court;
2.
That this matter is hereby assigned to Department 10, one of the Business
Court Departments, Honorable Steven P. Elliott presiding, who shall set a
hearing on Plaintiffs application for a Temporary Restraining Order, on or
before Wednesday, January 25, 2006. Both parties to be noticed and the
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application is to be renewed if the Plaintiff so desires.

Dated this 201h day of January, 2006.
CODE 1312
zoor, JAN 23 PH I: 53
RONALD A. LONGTIN. JR.
BY
~?=r
1
OEPUTY

ETREPRID TECHNOLOGIES, LLC .. , a

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Plaintiff,
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Case No. CVOG-00114
vs.
Dept. No. 810
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13

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Defendants.
~---------------~'
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CASE ASSIGNMENT NOTIFICATION
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I hereby certify the above-entitled matter has been randomly reassigned to
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Department No. 89, from Department No. 810, and is this forwarded to the Department,
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for consideration of acceptance.
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Additional information:
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On the day of 20th, January, 2006, a Peremptory Challenge of Judge was
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filed.
Dated this 23rd day of January, 2006.
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... -.
.........
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.. ,,. .... ""."
RONALDJ(.LONGTiN, JR'..
C!erk pf the Court '
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By
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Location: [DC
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jRtf'J jR.oJiDOM ASSIGT-iMEt:T - GENERJ,1
Ca$6 ID: jRAN06-00022
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Party Twe:
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puoG
jCV06-D0114
Shott Docket
ClaimNalue:\,_,,Filing: jzJJAN-2006
Security:
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Prefix: jHONORABl Suffix:
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Case No. CV06-00114

Pursuant to NRCP 5 (b), I certify that I am an employee of the Second
Judicial District Court, and that on the 23rd day of January, 2006, I deposited in the
Washoe County mailing system for postage and mailing with the U.S. Postal Service in
Reno, Nevada, a true copy of the attached document, addresses to:

Jennifer Christie, Esq.
LAW OFFICES OF LOGAR & PULVAR, PC
Reno, NV 89501
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5441 Kietzke Lane
Second Floor
Reno, NV 89511
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And hand delivered to the following:
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Judge Robert H. Perry
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Dated this 23rd day of January, 2006.
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mo";:;.
CJ ~"= '2f
Mario A. Lopez
r-)
'-----
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Code $3375
RONALD J_ LOGAR, ESQ.
Nevada Bar #00303
ERJC A.PULVER, ESQ.
Nevada Bar #07874
Nevada Bar# 8025
Reno, Nevada 89501
(775) 786-5040
Attorney for Respondent
2006JMl20 Pli3:33
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IN THE SECOND JUDICIAL DISTRICT COURT IN THE STATE OF NEVADA


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Plaintiff,
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vs.
14 and DOES 1through20,
Defendants.
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*****
Case No.:
Dept. No:
CV06-00114
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~~~~~~~~~~~~~~~~~/
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PEREMPTORY CHALLENGE OF JUDGE

NOTICE TO: eTreppid Technologies, L.L.C., and their attorney Jerry M_ Snyder, Esq.
Notice of Peremptory Challenge of Judge:
Notice is hereby given that Defendant, Dennis Montgomery, by and through his attorney
ERIC A.PULVER, ESQ., pursuant to Supreme Court Rule 48.1, hereby submits his fee of $300.00
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d peremptory challenges the Honorable Steven P. Elliot as judge in the above-captioned matter.
DATED this 20"' day of January, 2006.
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c A. Pulver, Esq.
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Pursuant to NRCP 5(b ), I certify that 1 am an employee of the LAW OFFICE OF
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LOGAR & PULVER, APC, and that on thee:>\~ day of January, 2006, I
_ _ deposited for mailing in the U.S. Mail, with sufficient postage affixed thereto via
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_ _ personally delivered
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IS
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5441 Kietzke Lane
Second Floor
Reno, NV 89511
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~el{/fo~,
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LEZL:Luci
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-2-
,,/i Case 3:06-cv-00056-PMP-VPC
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1520
zcnri JAH 20

Reno, NV 89511
Tel: (775) 327-3000
Fax: (775) 786-6179
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PH 12: 52
ROHALD A.. UJ}iGTiN, JR.

2475 Hanover Street
Telephone: (650) 233-4500
Facsimile: (650) 233-4545
Application for Admission Pro !lac Vice forthcoming
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ETREPP!D TECHNOLOGIES, LLC., a

CASE NO. CV06-00114
Plaintiff,
DEPT. NO. JO
vs.

DOES I through 20,
Defendant.
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SUPPLEMENTAL DECLARATION OF JERRY M. SNYDER IN SUPPORT OF MOTION

FOR TEMPORARY RESTRAINING ORDER
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Pursuant to N.R.S. 600A.070.3, Plaintiff hereby lodges the enclosed record conditionally under
under seal.
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Ill
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Ill
::ODMA\PCDOCS\HLRNODOCS\508732\1
Page I of3

\-')
!, Jerry M. Snyder, declare under penalty of perjury under the laws of the State of Nevada:
...
I am an attorney duly licensed to practice in the State of Nevada and am an associate
with the law firm of Hale Lane Peek Dennison and Howard. I represent eTreppid Technologies, LLC
("eTreppid") in the above-captioned matter.
competently testify as to, the matters contained herein_
'O
1.
2.
I have personal knowledge of, and if called, could
eTreppid has alleged that Defendant Dennis Montgomery was the former Chief
Technology Officer at eTreppid_ Mr. Montgomery held this position since 1998, when the company
was founded. ETreppid is currently developing and marketing various different products, including
anomaly detection and pattern recognition software.
'"
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in Department 3 to (1) enjoin defendant Dennis Montgomery, eTreppid's former Chief Technology
a oa12
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Officer, from "destroying the eTreppid Source Code, which eTreppid is informed and believes is
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3.
On Thursday, January 19, 2006, Plaintiff eTreppid sought a temporary restraining order
13
currently in your possession and/or control, and you and all persons or entities in active concert or
p " '"
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participation with you are hereby ORDERED to immediately provide eTreppid with the portion of the
,,." _,." zo'
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eTreppid Source Code known as the 'FOOS eTreppid Source Code portion', for Filtering and Other
~ t) {I
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Output Steps combination of programs that are used for two separate Department of Defense
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government development efforts."
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4.
The undersigned counsel, Mr. Montgomery, and Montgomery's attorney, Eric Pulver,
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Esq. met in Judge Polaha's Chambers to discuss eTreppid's request for a TRO. During such meeting,
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Montgomery represented to the Court that (!)he did not have the subject storage device on which a
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backup copy of the eTreppid Source Code was stored, or any of the eTreppid Source Code, and (2) that
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the underlying technology for this source code, which includes anomaly detection and pattern
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recognition software, belongs to Montgomery.
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anomaly detection and pa_ttem recognition software technology to eTreppid, rather, he assigned only
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certain video compression technology to eTreppid.
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5_
Montgomery asserted that he did not assign this
Montgomery's assertion that he owns the underlying technology is not true. Not only
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did he use eTreppid facilities, computers, employees and other tools as set forth in the moving papers,
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as well as was paid for his services, but furthermore, as Montgomery had a fiduciary duty to eTreppid,
::ODMAIPCDOCSIHLRNODOCS\50873211
Page 2 of3
-e)
illustrating further that eTreppid owns this technology. Attached hereto as Exhibit I is a true and
2
coffect copy of the eTreppid Operating Agreement, which was signed by Mr. Montgomery. At
Paragraph 6.5 of this agreement, Mr. Montgomery agrees that "the services of Dennis Montgomery...
so long as he is serving as a Committee Member and/or Chief Technology Officer pursuant to this
agreement, shall be exclusive to the LLC, and he shall devote substantially all of his full time and
attention and efforts to the Business and affairs of the LLC."
CTO, he would not "compete with the LLC .
manner any software programs or other technology which is competitive with the technology or the
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Mr. Montgomery further agrees, in the Operating Agreement, that while he was the
10
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6.
. (1) by developing, licensing or exploiting in any
business of the LLC."

7.
Thus, Mr. Montgomery's assertion that he owns the subject pattern recognition and
12
anomaly detection technology is further contradicted by the eTreppid Operating Agreement, which Mr.
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Montgomery executed.
aa "a >-"' 14
DATED: This
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ooODMA\PCDOCSIHLRNODOCS\50873211
Page 3 of3
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EXHIBIT 1
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No.11~1
P. J/o9
uous1as J. rrYe. tsQ.
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I JUrM
AMENDED AND RESTATED OPERA TING AGREEMENT

01
eTreppid Technologies, LLC
A Nevada Limited-Liability Company
Dated and Adopted
Effective as of November 1, 2001
Case
3:06-cv-00056-PMP-VPC Document 644-3 Filed 05/28/08 Page 47 of 115
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\_""""'
AMENDED AND RESTATED OPERATING AGREEMENT
OF
eTreppid Technoloeies, LLC
THISAMENDEDANDRESTATEDOPERATINGAGREEMENTismadeandenlered
into and effective as of NOVEMBER 1, 2001, hy and among those Members (defined below)
executing this Agrecmcnl, eTreppid Technologies, LLC, a Nevada limited-liability company (lhe
"Company" or "LLC"), and any other Persons (defined below) who shall in the future become bound
by the tcnns hereof.
This Agreement is made with reference to the following facts:
STATEMENTS OF FACT:
cTrcppi<l Technologies, U..C was formed by the filing of the Articles of Organization
with the Nevada Secretary of State on September 28, 1998, for the fonnation pursuant to the
applicable provisions of the NRS (as defined herein).
A.
B.
Effective September 28, 1998, the Company and its Members entered into and
adopted the Operating Agreement of eTrcppid Technologies, LLC (formerly known as "Intrepid
Technologie.~. LLC") (the "01iginal Agreement").
C.
Effective January 1, 1999, the Company and its Members adopted the Amended and
Restated Operating Agreement of eTreppid Technologies, I.LC to amend and restate the Original
Agreement in its entirety (the "Restated Agreement").
D.
The Restated Agreement was amended by First Amendment dated effective July 7,
2000, and by Second Amenr.lment dated effective May 25, 2001 (the "Amended Agreement").
E.
The Management Committee and its Members who are entitled to Vote have deemed
that it is in the best interests of the Company and all of its Members lo amend and restate the
Amended Agreement in its entirety as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual

covenants and conditions contained herein, and with the intention of being legally bound
hereby, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Except as otherwise separate] y defined elsewhere in this Agreement, following are the tenns
and meanings as used throughout this Agreement:
I.I.
"Additional Units" shall have the meaning set forth in Section 3.8.
1.2.
"Adjusted Caoital Account Deficit" means, with respect to any Member, the deficit
balance, if any, in such Member's Capital Account as of the end of the relevant Fiscal Year, after
giving effect to the following adjustments:
1.2.l. Increase such Capital Account by any amounts which such Member is
obligated to contribute to the LLC (pursuant to the terms of this Agreement or otherwise) or is
deemed to be obligated to contribute lo the LLC pursuant to Regulations Sections l.704-2(g)(i) and
l.704-2(i)(5); and
1.2.2. Reduce such Capital Account by the amount of the items described in
Regulations Sections l.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.3. "Affiliate" means, when used with reference to a specified Person, (i) the Principal of
the Person, (ii) any Person directly or indirectly controlling, controlled by or under common control
with such Person, (iii) any Person owning or controlling TEN PERCENT (10%) or more of the
outstanding voting interests of such Person, and (iv) any relative or spouse of such Person.
1.4. "Agreement" means lhi~ Amended and Restated Operating Agreement of the Ll.,
us originally executed and as amended from time to time hereafter, as the context requires. Words
such. as "herein," "hereinafter," "hereto," "hereby" and "hereunder," when used with reference to
this Agreement, refer to this Agreement as a whole, unless the context otherwise requires.
1.5. "Articles of Organization" means, collectively, the Articles of Organization filed
with the Secretary of State (hereinafter defined) on SEPTEMBER 28, 1998, Filing No.
LLC-5563-98 for the purpose of fanning the LLC, as amended by Certificate of Amendment filed
with the Secretary of State on April 19, 2000, to change the name of the LLC. and any subsequent
certificates and restatements to the Articles of Organization duly adopted in accordance with this
Agreement and properly filed and endorsed by the Secretary of State.
1.6. "Available Cash Flow" means, with respect to any Fiscal Year or other period, the
sum of all cash receipts of the LLC from any and all sources, less all cash disbursements (including
loan repayments, capital improvements and replacements) and a reasonable allowance for Reserves,
contingencies and anticipated obligations as determined by the Management Collillittee.
1.7. "Book J>epreclation" means for each Fiscal Ycar or other period, an amount equal to
the Depreciation, except that if the Gross Asset Value of any usset differs from its adjusted basis for
federal income tax purposes at the beginning of such year or other period, "book depreciation" with
respect to such asset shall, except as otherwise required by Regulations Section l.704-3(d), be an
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amount which bears the same ratio to such beginning Gross Asset Value as the Depreciation with
respect to such asset for such year or other period bears to such beginning adjusted tax basis.
However, if the federal income tax Depreciation with respect to such asset for such year is "zero,"
book depreciation shall be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the LLC.
l.8. "Business" or "Busiuess of the LLC" means the business of the LLC as defined in
Seel ion 2.6 hereof.
1.9. "Capital Account" ofa Member at any given date shall have the meaning set forth in
Section 3.4.3 hereof and shall be determined in accordance with Section 3.5 hereof.
l.10. "Capital Contribution" shall have the meaning set forth in Section 3.6.l hereof.
1.11. "Class A Member(s)" means those Members receiving a Priority Return (defined
below) and having priority over the Class B Members in distributions from the LLC and in voting
rights.
1.12. "Class B Member(s)" means those Members receiving a P1iority Return and
receiving subordinated distributions from the LLC until the Class A Members and Class CMembers
have received their Priority Return and a return oftheir aggregate Capital Contributions to the LLC.
The Class B Members shall have no voting rights.
1.13. "Class C Member(s)" means those Members receiving a Priority Retumand having
priority over Ute Class B Members in distributions from the LLC. The Class C Members shall have
no vcting tights.
_ _ _ _ __] 14 "~" mean~ueedeof 1986, asamcnded;onmy cottespondmg
provision or provisions of any succeeding Jaw.
1.15. "Committee Member(s)" means any or all of the three (3) Persons appointed by the
Class A Members to serve on the Management Committee pursuant to Section 6.1.4 of this
Agreement. The Committee Members shall at all times act collectively as the Management
Comrnittee, which shall be charged with those powers, duties and responsibilities as set forth in
Article 6 and elsewhere in this Agreement.
I. 16. "Depreciation" means, for each Fiscal Year oroth~r period, an amount equal to the
depredation, amortization or other cost recovery reduction allowable with respect to an asset for
such Fiscal Year or other period.
LI 7. "Dissolution" means (i) when used with reference to the LLC, the earlierof(a) the
date upon which the LLC is terminated pursuant to this Agreement, the NRS, or any similar
ptovision enacted in lieu thereof, or (b) the dale upon which the LLC ceases to be a going concern,
and (ii) when used with reference to any Member, the earlier of (a) the date upon which there is a
Dissolution of the LLC or (b) the date upon which such Member's entire Interest in the LLC is
tenninated by means of a distribution or series of distributions by the LLC to such Member.
e:.~1.1 alld sc1~S1J..oW s..um11\Tfl\l!MV1 lntci1ld Pit"\O~orA c1u.o1).v6.dacA.mended a11d Restated Opel'tlting Agreemetst -
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1.18. "Economic Interest" means a Person's right to share in the Net Profits, Net Losses
or similar items pursuant to Sections 4.1.l .4 and4.1.2.5 hereof, and to receive distributions from the
LLC pursuant to Sections 5.2.5 and 10.4.5 hereof, which the assignor of such economic interest
wo1J!d otherwise be entitled, but does not include any other rights of a Member including, without
limitation, the right to Vote, to participate in the management of the Business and the affairs of the
LLC, or any right to information concerning the Business of the LLC.
1.19. "Fiscal Year" means the fiscal year of lhe LLC, nmning for the period of
JANUARY I to and including DECEMBER 31 of each calendar year.
1.20. "Gross Asset Value" means, with respect to any asset of the LLC, the asset's
adju1sted basis for federal income tax purposes, er.cept as follows:
1.20.1. The initial Gross Asset Value of any asset contributed by a Member to the
LLC shall be the gross fair market value of such asset, as agreed between the LLC and tllc
contributing Member.
l.20.2. The Gross Asset Value of all LLC assets shall be adjusted to equal their
respective gross fair market values, as mutually agreed between the 1LC and the affected Membcr(s)
upon the occurrence of the following events:
I .20 .2.1. The acquisition of an additional Interest in the LLC by any new or
existing Member in exchange for more than a de minirnis Capital Contribution;
1.20.2.2.
The distribution by the LLC to a Member of more than a de
minimis amount of cash or property as considerntion for the acquisition of all or a portion of such
Member's Interest in the LLC if the 1LC reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Members in the LLC; and
1.20.2.3. The liquidation of the LLC within the meaning of Regulations
Sectinn l.704-l(b)(2)(ii){g);
1.20.3. The Gross Asset Value of any LLC asset distributed to any Member shall be
the gross fair market value of such asset as mutually agreed by the LLC and the affected Member(s)
on the date of distribution.
l.20.4. The Gross Asset Value of the LLC assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code section 734(b) or Code
section 743(b), but only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant Regulations Section 1.704-J(b)(2)(iv)(m) and Section 4.9 hereof;
provided, however, that Gross Asset Value shall not be adjusted pursuant to this Section 1.20.4 to
the extent the LLC determines that an adjustment pursuant to Section 1.20.2 above is necessary nr
appropriate in connection with the transaction that would otherwise result in an adjustment under
this S1~tion 1.20.4.
No.7191 p. 6/59
Oouglas J. Frye, Esq.
If the Gross Asset Value of an asset has been determined or adjusted pursuant
to Sections 1.18.1, 1.18.2 or 1.18.4 above, such Gross Asset Value shaJI thereafter be adjusted by the
Book Depreciation taken into account with respect to such asset for purposes of computiug profits
and losses.
l.20.5. If the LLC and any affected Member pursuant to Sections l.!8.1, 1.18.2 or
1.18.3 above are unable to agree on the Gross Asset Value of any asset for purposes of this
Agreement, a mutually acceptable appraiser shall be selected by them for this purpose, and the value
established by such appraisal shall be hinding upon the LLC and the affected Member.
1.21. "Guaranteed Payment" has the meaning set forth in Section 6.7.2 of this
Agn:ernent.
1.22. "LLC" or "Company" means eTreppid Technologies, LLC, lhe Nevada limitedliability company formed pursuant lo the Articles of Organization,
1.23, "LLC Loans" shall refer to any loans, lines of credit or advances made by any
Member to the LLC. Except as otherwise specified in this Agreement, such LLC Loans shall bear
inter}St at the rate agreed to between the Member and the Management Colillilittee.
1.24. "LLC Minimum Gain" means the amount determined by computing with respect to
each non recourse liability of the LLC, the amount of gain (of whatever character), if any, that would
be realii.ed by the LLC if it disposed (in a taxable transaction) of the Property subject to such
liability in full satisfaction thereof, and forno other consideration, and subject to the other rnlcs ~et
forth in Regulations Section 1.704-2, and by then aggregating the amounts so computed as set forth
in Regulations Section l.704-2(d).
1.25. "Majority In lntei-e!.1" or "Majority In Interest of the Members" means, unless
otherwise provided in the Agreement, the Percentage Interests of the Class A Members, which, taken
together, exceed FIFI'Y PERCENT (50%) of the aggregate of all Percenlage Interests held by all
Class A Members entitled to Vote or grant consent with respect to the matter in question.
1.26. "Management Committee" means, collectively, the three (3) Committee Members
appointed by the Class A Members to manage the U..C pursuant to Section 6.1 of this Agreement
acting together to manage the LLC in accordance with the terms and conditions of this Agreement.
The Management Committee shall be charged with those powers, duties and responsibilities !IS set
forth in Article 6 and elsewhere in this Agreement.
1.27. "Manager'' means the Person appointed under Section 6.1.1 of this Agreement to
manage the LLC. The Manager shall be charged with those powers, duties and responsibilities as set
forth in Article 6 and elsewhere in this Agreement.
l.28,
"Member'' means a Person who:
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1.28.1. Has been admitted to the LLC as a Class A Member, a Class B Member or a
Class C Member in accordance with this Agreement. and who has become a Member pursuant to
Section 8.3 hereof.
1.28.2. Has not resigned, withdrawn or been expelled as a Member or, if other tlrnn an
individual, has been dissolved.
1.28.3. Has paid his Capital Contribution to the LLC in exchange for Units in the
LLC, or, in the case of a transferee Member, ha'l succeeded to the Capital Account of the transferor
Member, and who has become a party to this Agreement by executing and submitting to the
Manager a counterpart signature page to this Agreement accepting the terms and conditions of, and
agreeing to be bound by, this Agreement.
Reference to a "Member" shall be to any one of the Class A Members, the Class B
Members or the Class C Members of the LLC identified in Section 3.1 below or as otherwise
supplemented and identified on EXHIBIT A attached to and made a part of this Agreement, which
exhibit may be amended or modified from time tn time without the consent of the Members.
1.29. "Member Nonrecourse Debt'' has the meaning set forth in Regulations Section
1.704-2(b)(4) for "partner nonrecourse debt."
l.30. "Member Nonrecoursc Debt Minimum Gain" means an amount, with respect to
each Member Nonrecourse Debt, equal to the LLC Minimum Gain that would result if such Member
Nonrecourse Debt were treated as u nonrecourse liability of the LLC, determined in accordance with
Regulations Sections l.704-2(i)(2) and (3).
1.31. "Member Nonrecourse Deductions" has the meaning set forth in Regulations
Section l. 704-2(i)(2) for "partner nonrecoursc deductions." The amount of Member Nonrecourse
Deductions with respect to a Member Nonrecourse Debt for a Fiscal Year of the LLC equals the
excess (if any) of the net increase (if any) in the amount of Member Nonrecourse Debt Minimum
Gain attributable to such Member Nonrecourse Debt during that Fiscal Year over the aggregate
amount of any distributions during that Fiscal Year to the Member that bears (or is deemed to bear)
the economic loss for such Member Nonrecourse Debt to the extent such distributions a(e from the
proceeds of such Member Nonrecoursc Debt und ure allocable to an increase in Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determinoo in
accordance with Regulations Section l.704-2(i)(2).
1.32. "Membership Interest" or "Interest" means an ownership interest in the LLC,
which includes a Member's Economic Interest, the right to Vote or participate in the management of
the LLC, and the right to information concerning the affairs and Business of the LLC as provided in
this Agreement and under the NRS. The Membership Interest of a Member (including the E.conomic
IntereHt) constitutes the personal property of the Member. No Member, by virtue of his ownership of
a Membership Interest, has or owns, or is deemed to have or own, an interest in all or any part of the
LLC's Property.
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l.33. "Net Capital Contribution" means a Member's Capital Contribution, as of any date,
REDUCED BY all prior distributions of a Member;s Capital pursuant to Article 5 and/or Article 10
hereof.
J.34. "Net Profit(s)" and "Net Losses(es)" mean, for each Fiscal Year or other period, an
amount equal to the LLC's taxable income or loss for such year or period, determined in accordance
witb Code section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be
slated separately pursuant to Code section 703(a)(l) shall be included in taxable income or loss),
with lhe following adjustments:
1.34. l. Any income of the LLC that b exempt from Federal income tax and not
otherwise taken into account in computing Net Profits or Ne1 losses shall be added to such taxahle
income or loss;
1.34.2. Any expenditures of the Ll,C desc1ihed in Code section 705(b)(2)(B) or
trealed as Code section 705(b)(2)(B) expenditures pursuant to Regulations Section
l.704-l(b)(2)(iv)(i) and not otherwise taken into account in computing Net Profits or Net Losses
shaJ:: be subtracted from such taxable income or loss;
l.34.3. Gain or loss resulting from any disposition of Property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by reference to the fair
market value of the Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its fair market value;
1.34.4. ln lieu of depreciation, amortization, and other cost recovery deductions tllkcn
into account in computing 'such taxable income or Joss, there shall be taken into account
Depreciation for such Fiscal Year or other period, computed in accordance with the subsection
hereof entitled "Depreciation"; and
1.34.5. Notwithstanding any other provision of this subsection, any items of income,
gain, loss or deduction that are specifically allocated shall not be taken into account in computing
Net Profits or Net Losses,
1.35. "NRS" means Chapter 86, Sections 86.011 to 86.590, of the Nevada Revised
Statutes, as amended, or any corresponding provision or provisions of any succeeding law.
1.36. "Percenta2e Interest(s)" means a frnction, expressed as a petcentage, the numerator

of which is the number of Units owned of record by a Member and the denominator of which is the
aggregate number of all issued and outstanding Units of the Members at the time of the calculation.
The Percentage Interests of the Members shall be set forth on EXH (BIT A attached hereto and made
a part of this Agreement, which exhibit may be amended and modified from time to time by the
Manager without the consent of the Members.
l.37. "Person" means an individual, partnership, limited partnership, corporation, trust,
estate, association, limited-liability company, or other entity, whether domestic or foreign.
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1.38. "Principal" means the Person that is in ultimate control of a Member.
1.39. "Priority Return" means the priority return to each of the Class A Memhers, the
Class B Members and the Class C Members of a.n accrued cumulative return on each of their
respective Net Capital Contributions in an amount equal to FIFTEEN PERCENT (15%) per annum,
accruing cumulatively from the dale of contribution of the LLC, but not compounded, pro rated for
any period which is a partial year.
l .40. "Property" means all or any personal property and other assets of the LLC, both
tangible and intangible, including, but not limited to, the Technology (defined below), or any portion
thereof.
l.41. "Regulations" or "Treasury Regulations" means the federal income taK regulations
promulgated by the Treasury Department under the Code, as such regulations may be amended fmm
time to time. All references herein to a specific section of the Regulations shall be deemed also to
refer to any corresponding provisions of succeeding Regulations.
I .42. "Revaluation Event" means any of the following occurrences: (1) the contribution
of cash or other property (other than a de minimis amount) by a new or existing Member to the
capital of the Company as a consideration for the issuance of Additional Units; or(2) the distribution
of cash or Property(other than a de minimis amount) to a Member in eKchange for an Interest in the
Company; provided that such event shall not constitute a Revalualion Event if the Management
Committee reasonably determines that it is not necessary to adjust the book basis of Property or the
Members' Capital Accounts in connection with the occurrence of any such event. The intent of this
provision is to comply with the provisions of Regulations Section l.704-l(b)(2)(iv)(f) Rnd shall be
interpreted consistently therewith.
l .43. "Reserves" means funds set aside from Capital Contributions orrevenues as reserves.
Such Reserves shall be maintained in amounts reasonably deemed sufficient by the Management
Committee for working capital and the payment of taxes, insurance, debt service, repairs.
replacements renewals, or other costs or el\penses incident to the Business of the LLC, or in the
alternative, the Dissolution of the LLC.
1.44. "Secretary of State" means the Secretary of State of tile State of Nevada.
1.45. "UnitfsY' means a unit of Membership Interest as a Class A Member, a Class B
Member or a Class C Member in the LLC.
1.46.
"Unit Option Plan" shall have the meaning set forth in Section 3.8.
1.47. "Unit Value" shall have the meaning set forth in Section 3.11.
1.48. "Vote" means, except where superseded by another section of this Agreement, or as
muy be required under the applicable provisions of the NRS. the Code or applicable Regulations
thereunder, the votes of the Class A Members, whether by ballot, written consent or a voice vote,
wherein each Class A Member shall have and cast a number of votes equal to that Class A Member's
Percentage Interest
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ARTICLE2
INTRODUCTORY MATTER~
2.1.
Formation of the LLC; Adoption of Aercement. The LLC was legally organiied
pursuant to Sections 86.151 and 86.201.l of the NRS by executing, acknowledging and filing the
Articles of Organization and the certificate of acceptance of the resident agent with the Secretary of
State, and paying the required filing fees therefor. The Members executing this Agreement and any
Persons who in the future become bound by this Agreement hereby adopt this Agreement as the
Operating Agreement of the LLC.
2.2.
~ The name of the LLC is "eTreppid Technologies, LLC." The Members
shall operate the Business of the LLC under such name or use such other or additional names as the
Members may deem necessary or desirable, provided all such name or names shall be in compliance
with the NRS and other applicable laws.
2.3.
Principal Business Office. The LLC shall maintain its principal business office at
590 LAKESHORE BOULEVARD, INCLINE VILLAGE.NEVADA 89451, with a mailing address
of P 0. BOX 4964, INCLINE VILLAGE, NEVADA 89450, or any other location as determined
from time to time by tbe Management Committee.
2.4.
Resident Agent; Registered Office. The name and address of the LLC's resident
agent upon whom prncess may be served, or a notice or demand authorized by law to be served upon
the LLC may be served, is GKL RESIDENT AGENT/FILINGS, INC., a Nevada corporation, whose
street address in Nevada is 1100 EAST WIILlAM STREET, SUITE 207, CARSON CITY,
NEV ADA 89701, and whose mailing address is P.O. BOX 3679, CARSON CITY, NEVADA
89702. The registered office of the LLC in Nevada shall be the address of the LLC' s resident agent.
The location of the LLC's registered office or the name and address of its resident agent, or both,
may only be changed by filing a certificate of change with the Secretary of Slate in the form and
manner required by such office.
2.5.
Perpetual Existence. As set forth in the Articles of Organization of the LLC, the
LLC shall have perpetual existence, until the LLC is terminated or dissolved in accordance with this
Agreement. The existence of the LLC shall commence as of the effective date of this Agreement,
SEPIBMBER 28, 1998.

2.6,
Purpose and Business of the LLC. The purpose and business of the LLC shall be to
develop, patent, distribute, license and exploit in any manner and on a worldwide basis that certain
software compression technology owned by the LLC (the "1.echnology") and to finance any and all
of the foregoing activities (collectively, the "Business"). The LLC may conduct or engage in any
other lawful activity that the LLC deems is necessary, incidental to or desirable in connection with
the Business oftheLLC.
2.7.
No Individual Authority of a Member or Committee Member, No Member or
Committee Member, acting alone or with the Manager, any other Conunittee Member, officer or
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other non-manager Member, shall have the authority to act for, or to undertake or assume, any
obligation, debt, duty or responsibility on behalf of tJ1c LLC.
2.8. Title to Property In the Name of the LLC. All Prope1tyowned by the LLCshall be
held and owned and conveyance made in the name of the LLC. All agreements, documents,
certificates and other instruments providing for the acquisition or other disposition of Property of the
T.LC shall be valid and binding upon it, except as otherwise provided herein, if approved by the
Management Committee and executed by the President of the LLC as provided for herein.
2.9. Maintenance of Company Minute Book; Record KeeuingDuties. The Manager
(or the Secretary, if one is appointed by the Management Committee) shall keep and maintain or
cause to be kept and maintained a company minute book to include the Articles of Organif.ation or
the LLC and this Agreement, and any amendments thereto, and minutes of all meetings (or consents
in lieu of meetings) of the Management Committee, written consents of the Members, and other
important documents of the LLC.
ARTICLE3
MEMBERS, CAPITAL CONTRIBUTIONS
AND CAPITAL ACCOUNTS
3.1.
Names, Addresses and Classes of the Members. The complete names, addresses
and classes of the Members of the LLC are set forth on EXHlBIT A attached he1'Clo andmade a part
of thi& Agreement, which exhibit may be amended or modified from lime to time without the consent
of the Members.
3.Z. Member Capital Contributions. All Capital Contributions of the Members shall be
sel forth on EXHIBIT A attached hereto and made a part of this Agreement, which exhibit maybe
amended or modified from time to time without the consent of the Members. The Members' Capital
Contributions shall be in exchange for Units in the LLC as set forth on EXHIBIT A attached hereto.
Additional Capital Contributions and LLC Loans. In the event the Management
Committee determines that additional funds are required for the operation of the Company
(including capital expenditures and debt service). the Management Committee may call for
additional Capital Contributions from the Members (the "Additional Capital Contributions"). Any
call for Additional Capital Contributions shall be by written notice to the Members setting forth the
amount of Additional Contributions needed and the date by which the Members shall contribute,
which date shall not be sooner than ten (10) days of receipt of such notice. Additional Capital
Contributions shall be pro rata based on the Members' respective Percentage Interests. Each
Member shall have the right, but not the obligation, to make an Additional Capital Contribution at
the time specified in the Management Committee's notice. If any Member does not make the full
amount of a requested Additional Capital Contribution, the Management Committee may elect any
one, or any combination of, the following options:
3.3.
3.3.1.
The other Members shall have the right to muke the contribution requested
from the non-contributing Member on a pro rata basis (based on the contributing Members' relative
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Percentage Interests) or as they otherwige agree. U Additional Capital Contributions are made by
some, but not all Members, no distribution of Distributable Cush or any return of Capital
Contributions shall be made lo any non-contributing Member until an amount equal to One Hundred
Fifty Percent (150%) of such Additional Capital Contributions are returned to those Members who
made such Additional Capital Contributions.
3.3.2. The Class A Members shall have the right lo make the Additional Capital
Contdbution requested from the non-contributing Member on a pro rata basis (based on the
contributing Class A Members' relative Percentage Interests) or as they otherwise agree; or
3.3.3. Jf no other Class A Member makes the Additional Capital Contribution
requested from the non-conhibuting Member, then the Class 8 Members shall have the right to mllke
the Additional Capital Contribution requested from the non-contributing Member on a pro rata basis
(based on the contributing Class B Members' relative Percentage Interests) or as they otherwise
agree.
In the case of either Section 3.3.2 or 3.3.3 above, the Company shall issue lo each
contributing Member the number of Units determined by dividing (i) the amount of cash or the
Gross Asset Value of other Prope1ty contributed by such contributing Member by (ii) the Unit
Value, as determined by the Management Committee in connection with such requests for
Additional Capital Contributions.
Tflhe Management Committee detem1ines that the Company needs additional funds,
but detemtines not to request Additional Capital Contributions therefor, the Management Committee
may cause the Company to sell additional Units pursuant to Section 3.8 below or borrow such funds
from any Person, including any Member or Members, upon such terms and conditions as may be
agreed to at the time. No such loan to the Company from a Member shall be deemed lo constitute a
Capital Contribution and shall not increase the Capital Account(s) of the Member(s) making the
loan.
None of the terms, covenants, obligations or rights cont~e(] in this Section 3.3 is or
shall be deemed to be for the benefit of any Person, other than the Members and the Company, and
no such third Person shall under any circumstances have any right to compel any actions or
payments by the Management Committee and/or the Members.
3.4.
Right.~
With Respect to Capital.
3.4.1. LLC Capital. No Member shall have the right to withdraw or receive any
return of its Capital Contribution, and no Capital Contribution may be returned in the form of
Property other than cash, except as specilically provided herein.
3.4.2. No Interest on Capital Contributions. Except as expressly provided for in

this Agreement, no Capital Contribution of any Member shall bear any interest or otherwise entitle
the contributing Member to any compensation for use of the contributed capital.
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3.4.3. Establishment of Capital Account.~. A separate Capital Account shall be
established and maintained for each Member. For record keeping purposes, each Member's C!lpital
Account will be separated into a contribution account and an income (loss) account and will be
maintained according to generally accepted accounting principles. Sections 3.5 and 3.6 below
describe the appropriate accounting treatment for tax purposes of the Capital Accounts.
3.4.4. No Payment of Salaries or Draws. No Member shall receive or be entitled
to receive any payment of salaries or draws with respect to its Capital Contribution or the balance in
its Capital Account or for services rendcre<l on behalf of the LLC or othetwise in its capacity as a
Member of the LLC, except as expressly provided tor in this Agreement.
General Rules for Determining Capital Accounts. The Capital Account of each
3.5.
Member shall be determined as follows:
3.5.1. Increases. The Capital Account of a Member shall be increased by:
3.5.1.1. The amount of money contributed by such Member to the Comp<111y;
3.5.1.2. The Gross Asset Value of property contributed by such Member (net
of liabilities secured by such contributed property that the LLC is considered to assume or take
subject lo under Code section 752);
3.5. l .3. All liabilities of thelLC assumed by such Member, excluding those
provided for in Section 3.5.2.2 below;
3.5.1.4. All Net Profits of the LLC allocated to such Member pursuant to
Article 4 or other items in the nature of income or gain specially allocated hereunder, and in each
case, appropriately adjusted to take into account book and tax differences; and
3.5.1.5. Any increase resulting from a Revaluation Event
3.5.2. Decreases. The Capital Account of a Member shall be decreased by:
3.5.2.L The amount of cash distributed to such Member;
3.5.2.2. The Gross Asset Value of all actual and deemed distributions of
property made to such Member pursuant to this Agreement (net of liabilities secured by such
distributed property that the Member is considered to assume or take subject to under Code section
752);
3.5.2.3. All liabilities of the Member assumed by the LLC, excluding those
provided for in Section 3.5.l.2 above;
3.5.2.4. All Net Losses of the ILC allocated to such Member pursuant to
Article 4 or other items in the nature of loss or deduction specially allocated hereunder, and in each
case, ar;iproptiately adjusted to take into account book and tax differences: and
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3.5.2.5. Any decreuse resulting from a Revaluation Event.
3.6.
Special Rules With Respect to Capital Accounts.
3.6.1. Time of Adjustment for Capital Contributions. For purposes of computing

the balance in a Member's Capital Account, no credit shall be given for any Capital Contribution
that such Member is to make until such contribution is actually made. For purposes of this
Agreement, the term "Capital Contribution" means the total amount of cash and/or the Gross Asset
Value (net of liabilities) of property initially contributed or obligated to be contributed to the LLC by
that Member and any subsequent contributions of cash and/or the Gross Asset Value (net of
liabilities) of any other property subsequently contributed or obhgated to be con![ibutcd to the I.LC
by that Member, including Additional Capital Contributions.
3.6.2. Intent to Contply With Trea.~ury Regulations. The foregoing provisions of
Sections 3.4 and 3.5 and the other provisions or this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Regulations Section l.704-l(b), and shall be
interpreted and applied in a manner consistent with such Regulations Section. To the extent such
provisions are inconsistent with such Regulations Section or are incomplete with respect thereto,
Capital Accounts shall be maintained in accordance with such Regulations Section.
3.7. Transferee's Capital Account. In the event a Member transfers his Units in
accordance with the terms of this Agreement, the transferee Member shall succeed to the Capital
Account of the transferor Member to the extent it relates to the transferred Units in accordance with
Regulations Section 1.704-l(b)(a)(iv). In the event of a transfer of an Economic Interest, the
transferee shall not succeed to any portion of the Capital Account of the transferor.
3.8.
Additional Units. By approval of the Management Committee, the Company is
authorized to raise additional capital for any purpose by offering and selling Units lo any Person
under the terms and conditions and at &uch Unit Value approved by the Management Committee (the
"Additional Units"). If approved by the Management Committee, the Company may also offer
Additional Units to employees, to any class of Members, Economic Interest holders, Managers,
officers, consultants, and advisors pursuant to any Unit option plan (or any Unit option agreement
outside of a plan) or restrictive Unit purchase agreement or any other equity incentive plan adopted
by the Management Committee (a "Unit Option Plan")_
3.9.
Preemptive Rights.
3.9.1. Right of First Refusal. The Company hereby grants to each Member the
right of first refusal to purchase his pro rata share (as detenn.ined by relative Percentage Interests) of
all or any purtof any Additional Units which the Company may from time to time propose to sell or
issue, other than the initial issuance of Class C Units and any Additional Units which ure set aside,
sold or issued under any Unit Option Plan adopted by the Management Committee and which do not
exceed ten percent (10%) of the issued and outstanding Units.
3.9.2. Notice. In the event the Company proposes to undertake an issuance of Units,
it sha.11 give each Member written notice of its intention, describing the type of Units and the price
and tt:rms upon which the Company proposes to issue the same. Each Member shall have fifteen
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(15) days from the date of receipt of any such notice to agree to purchase up to the Member's
respective pro rata share (as determined by relative Percentage Interests) of such Units for the price
and upon the terms specified in the notice by giving written notice to the Company and stating
therein the quantity of Units to be purchased.
3.9.3. Assignment of Right~ of First Refusal; Limitation. The right offirst refusal
set forth in this Section 3.9 is not assignable. No Member shall have any rights under this Section
3.9 for any issuance of Units or Economic Interests by the Company under the Original Agreement,
the Restated Agreement or the Amended Agreement prior lo the date hereof.
3.10. Limitations on Liability and Oblieations of the Members and Mangers. Except
for a Member's liability to the UC pursuant to NRS Section 86.391, und the rights of judgment
creditors to charge a Member's Economic Interest for certain unsutisfiedjudgments of a Member
pursuant to NRS Section 86.4-01, and unless otherwise provided for in an agreement signed by a
Member, the Manager or Committee Member to be charged, no Member, Manager or Committee
Member shall be individually liable under a judgment, decree or order of court, or in any other
manner, for any debt, obligation or liability of the LLC whether or not that liability or obligation
arises in contract or tort. No Member shall be required to loan any funds to the LI, except as
provided for in this Agreement. No Member shall be required to make any contribution to the LLC
by reason of any negative balance in his Capital Account, nor shall any negative balance in a
Member's Capital Account create any liability on the part of the Member to any third party.
3.11. Unit Value. Upon the occurrence of any Revaluation Event, the value of the Units
(the "Unit Value") shall be the value of all issued and outstanding Units (without giving effect to (i)
any options to acquire Unit> that may be outstanding from time to time or (ii) any distributions or
contributions giving rise to the Revaluation Event) divided by the number of Units then issued and
outstanding (without giving effect w any Units issued or to be issued in consideration of any
contributions giving rise to the Revaluation Event). After the Unit Value has been so determined,
each Member's Capital Account shall be adjusted in accordance with Section 3.5, based on such
Unit Value. The Management Commiltee shall use commercially reasonable efforts to establish the
fair value of the Units in accordance with this Section 3.1 l.
ARTICLE4
ALLOCATION OF NET PROFITS ANO NET LOSSES
4.l.
Allocation of Net Profits and Net Losses. Except as otherwise provided in this
Article 4, Net Profits and Net Losses of the LLC in each Fiscal Year shall be allocated among the
Members as set forth in Sections 4.1. l and 4.1.2 below.
4.1.1. Net Profits. Net Profits shall be allocated among the Members as follows;
4.1.1.1. First, Net Profits shall be allocated among the Members in the
proportion in which the Members shared in the Net Losses until an amount of cumulative Net Profits
has been allocated equal to the total of cumulative Net Losses previously allocated to the Members.
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4.1.1.2. Second, an amount of Net Profits equal to the aggregate Priority
Return, which ha$ not been previously allocated to the Class A Members and Class C Members
entitled to a Priority Return pursuant IO chis Section 4. J.1.2 shall be allocated, pro rata, to the Class
A Members and the Class C Members in accordance with thcirrespective Net Capital Contributions.
4.1.l.3. Third, an amount of Net Profits equal to the aggregate Priority
Return, which has not been previously allocated to the Class B Memhers, entitled to a Priority
Return pursuant to this Section 4.1.1.3 shall be allocated, pro rata, to the Class B Members in
accordance with their rcspecti ve Percentage Interests.
4.1.l.4. Thereafter, Net Profits shall be allocated among the Members in

accordance with their respective Percentage lntcrexls.
4.1.2. Net Lo~ses. Except as otlle1wisc provided in this Article 4, Net Losses shall
he allocated among the Members as follows:
4.1.2.1. First, Nel Losses shall he allocated among the Members in the
proportion in which the Members shared in tl1c Net Profits until an amount of cumulative Net Losses
has been allocated equal to the totul cumulative Net Profits previously allocated to the Members.
4.1.2.2. Second, pro rata, tu FRIENDLY CAPtrAL PARTNERS, L.P.

("FCf") and WARREN TREPP, AS TRUSTEE OF THE PREMONT TRUST ("rREMONT"), as
Class A Members, in proportion to their po~itive balances, if any, in their respective Capital
Accounts, until their respective Capital Account balances are reduced to zero.
4.1.2.3. Third, to DENNIS MONTGOMERY and BRENDA K.
MONTGOMERY, as Trustees of the MONTGOMERY FAMILY TRUST (the "MONTGOMERY
TRUST'), as a Class A Member, in proportion to its positive balance, if any, in its Capital Account,
until its Capital Account balance is reduced to zero.
4.1.2.4. Fourth, Net Losses shall be allocated to the Class B Members and
Class C Mcrnhers in proportion to tl1c positive balances, if any, in the Members' respective Capital
Accounts, until such balances are reduced to zero.
4.1.2.5. Thereafter, Net Losses shall be allocated to the Members in
proportion to the positive balances, if any, in the Members' respective Capital Accounts, un!il such
halances are reduced to :1.ero.
The Members intend that the allocations provided for in this Section 4.1 shall
result in the parties obtaining distributions over the life of the ll.C (including upon liquidation)
which. will be identical to those provided for in Section 5.2 hereof, and will also result in the parties'
adjusted Capital Account balances upon liquidation being in propo1tion to those necessary to achieve
such distributions were the ILC to make final liquidating distributions to the Members in
accordance with their relative adjusted positive Capital Account balances. Accordingly, to the extent
necessary to ensure that the allocations provided for in this Article 4 result in distributions over the
life of the LLC which are identical to those provided for in Section 5,2 hereof, the Manager shall
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make such adjustments to the allocations provided for in Article 4 as are rcasonahly necessary lo
achieve the foregoing result.
4.2.
Residual Allocations. Except as otherwise provided in this Agreement, all Items of
LLC income, gain, loss, deduction, and any olher allocations not otherwise provided for shall be
divided between the Members in the same proportions as they sham Net Profits or Net Losses, as the
case may be, for the Fiscal Year.
4.3.
Qualified Income Offset, If any Mcmher unexpectedly receives any adjustments,
alloc.ations or distributions described in clauses (4), (5) or (6) of Regulations Sec1ion
L704-l(b)(2)(ii)(d), items of LLC income shall be specially allocated to such Member in un amount
and manner sufficient to eliminate the Adjusted Capital Account Deficit neated by such
adjustments, allocations or distributions as quickly as possible. This Section 4.3 is intended to
constitute a "qualified income offset" within the meaning of Regulations Section
1. 704-1 (h)(2)(ii)( d)(3).
Minimum Gain Chargeback. If there is a net dccrl;)ase in LLC Minimum Gain
4.4.
during a Fiscal Year, each Member will be allocated, before any other allocation under this Article 4,
items of income and gain for such Fiscal Year (and if necessary, subsequent years) in proportion to
and to the extent of an amount equal to such Member's share of the net decrease in LLCMinimum
Gain detc11T1ined in accordance with Regulations Section I .704-2(g)(2). This Section 4.4 is intended
to comply with, and shall be interpreted consistently with, the "minimum gain chargeback"
prov.isions of Regulations Section 1.704-2(t).
4.5.
Member Nonrccourse Dehl Minimum Gain Chargehnck. Notwithstanding any
other provision of this Article 4, but except Section 4.4, if there is a net decrease in Member
Nonrccourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal
Ycar of the LLC, each Member who has a share of the Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrccourse Debt, determined in accordance with Treasury Regulations
Section 1.704-2(i)(5), shall be specially allocated items of LLC income and gain for such year (and,
if nece.%ary, subsequent years) in an amount equal such Member's share of the net decrease in
Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecoursc Debt,
detennined in accordance with Regulations Section l.704-2{i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respccti ve IUilounts required to he allocated to
each Member pursuant thereto. The items to be so allocuted shall be detemtincd in accordance wilh
Regulations Section l.704-2(i)(4). This Section 4.5 is intended to comply with a minimum gain
chargeback requirement of that Section of the Regulations and shall be interpreted consistently
therewith.
4.6.
Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any
Fiscal Year or other period shall be specially allocated lo the Member who bears (or is deemed to
bear) the economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with Regulations Section
l.704-2(i )(2).
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4.7.
Soccial Allocations. Any special allocations or items of Net Profits pursuant to
Sections 4.4, 4.5 and 4.6 shall be taken into account in computing subsequent allocations of Net
Profits pursuant to Section 4.1, so that the net amount of any items so allocated and the gain, loss
and any other item allocated to each Member pursuant to Section 4.1 shall, to the extent possible, be
equal to the net amount that would have been allocated to each such Member pursuant to the
provisions of this Article 4 if such special allocations had not occurred.
4.8.
Fees to Members or Affiliates. Notwithstanding the provisions of Section 4.1, in the
event that any fees, interest, or other amounts paid to any Member or any Affiliate thereof pursuant
to this Agreement or any other agreement between the LLC and any Member or Affiliate thereof
providing for the payment of such amount, <md deducted by the LLC in reliance on Code section
707(a) and/or Co<le section 707(c), are disallowed as deductions rn the TLC on its federal income tax
return and are treated as LLC distributions, then:
4.8.1. The Net Profits or Net Losses, as the case may he, for the Fiscal Year in
which such fees, interest, or other amounts were paid shall be increased or decreased, as the case
may be, by the amount of such fees, interest, or other amounts that arc treated as LLC distributions;
and
4.8.2. There shall be al.located to the Member to which (or to whose Affiliate) such
fees, interest, or other amounts were paid, prior to the allocations pursuant lo Section 4.1, an amount
of gross income for the Fiscal Year equal to the amount of such fees, interest, or other amounts that
are treated as LLC distributions.
4.9.
Section 704(c) Allocation. Any item of income, gain, loss, and deduction with
respect to any property (other than cash) that has been contributed by a Member to the capital of the
LLC and which is required or permitted to he allocated to such Member for income tax purposes
under Code section 704(c) so as to take into account the variation between the tITT!. basis of such
property and its Gross Asset Value at the time of its contribution shall be allocated to such Member
solely for income tax purposes in the manner so required orpeanitted. In the event the Gross Asset
Va!L1e of any of the LLC' s Property is adjusted in accordance with Section 1.20.2, subsequent
alloc:ations of income, gain, loss and deduction with respect to such Property shall take into account
any variation between the adjusted basis of such Property for federal income t11x purposes and its
Gross Asset Value in the same manner as under section 704(c) and the Regulations promulgated
thereunder. Any elections or other decisions relating to such allocations shall be made in any
manner that reasonably reflcclll the purpose and intention ofthis Agreement. To the extent pennitted
by Regulations Section l.704-l(b)(4)(i), all items of income, gain, loss !llld deduction for federal and
state tax purposes shall be allocated in accordunce with the corresponding book items.
ARTICLES
DISTRllllJ1'lONS OF AVAILABLE CASH FLOW
5.1.
Distributions of Available C;i.~h Flow. Subject to Section 5.3 below, distributions
from the LLC to the Members shall be made from time to time to the extent of Available Cash Flow
as determined by the Management Committee. Prior to the determination of the amount of
e:'\DuclJmlmtl mSc.u1ng"1J~M.S\l.Delll ~eulntl\T~~ u.t.;t"~ Flli."11\0LX11l.in<ppidARorA (1().01).
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distributions, provisions shall be made for all known reasonable obligations and liabilities of the
W~. whether or not such obligations and liabilities arc due or contingent, except that provision need
not be made for any portion of any LLC financing, the amount of which can be reasonably expected
to be satisfied from the proceeds of the sale of the then remaining Property of the LLC.
5.2.
Priority and Manner of Distributions to Memhers. Subject to Section 5.3 below,
all distributions of Available Cash Flow shall be made tu the Members in the following priority and
manner:
5.2.1. First, pro rata, to the Class A Members and the Cla.% C Members in
accordance with the respective amounts of their accrued but undistributed Priority Return until they
have received an amount equal to their undistributed Priority Return accrued through the date of
such distribution.
5.2.2. Second, pro rata, to the Cla.~s B Members in accordance with their respective
Percentage Interests until they have received an amount equal to their undistributed Pdority Return
accrued through the dale of such distribution.
5.2.3. Third, pro rata, to the Class A Members and the Class C Members in
accordance with their re.~pective Capital Contributions until they have received an aggregate amount
equal their respective Capital Contributions to the LLC.
5.2.4. Forth, pro nita, to the Class B Members in accordance with their respective
Percentage Interests until they have received an uggregate amount equal to theirrespective Capital
Contributions lo the LLC.
5.2.5. Thereafter, pro rata, to the Members in accordance with their respective
Percentage Interests.
5.3. Tax Distributions. Except as otherwise may be prohibited by any agreement~

between the LLC and its lenders, within ninety (90) days atler the conclusion of each Fiscal Year,
the Management Committee shall determine and provide written notice to the Members of the
amount (the "Tax Liability Shortfall Amount''), if any, by which (a) the aggregate federal and state
tax liability (if any) incurred by the Members with respect to the net income of the lLC for such
prec~illng Fiscal Year (which tax liability shall be determined by applying the highest effective
individual tax rates then in effect for the Fiscal Year in question), exceeds (b) the aggregate
distributions of Distributable Cash made by the LLC with respect to such Fiscal Year(including any
distributions made to the Members with re.~pect to the final fiscal quarter of such Fiscal Yeru} The
Management Committee shall use all reasonable efforts to cause the ILC to distribute the Tax
Liability Shortfall Amount to the Members in the time and manner required hereunder, including,
but not limited to, borrowing on behalf of the LLC sufficient funds to enable the LLC to distribute
such Tax Liability Shortfall Amount. Each such distribution shall be made to the Members as soon
as prncticable after such funds are available, It is the objective of the Members that while the Tax
Liability Shortfall Amount will be determined at the end of each Fiscal Year, to the extent possible
and subject to the foregoing, distributions will be made in respect thereof on a quarterly basis to
facilitate the Members' ubility to make quarterly estimated tax payments with respect to their net
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income from the LLC. Distributions made pursuant to this Section 5.3 shall be taken into account in
connection with any subsequent distributions under Sections 5.1 and 5.2 above so that, to the extent
possible, the Members shall obtain distributions in the same order and priority they would have
obtained if this Section 5.3 were not in Utis Agreement. At the end of each Fiscal Year as
contemplated above, final adjustments shall be made to reflect the actual results of such Fiscal Year.
ARTICLE 6
MANAGEMENT OF TH~: LLC
6.1.
Manafement of the LLC. Subject to U1e provisions of the NRS, the Articles of
Organization and to any limitations set forth in this Agreement (as may be an1endcd from time to
time) relating to actions required to be approved by the Members, the Business and affairs of the
LLC shall be managed, and all Company powers shall be vested in the Management Committee.
The day to-day operations of the LLC shall be implemented by one (1) Manager designated or
appointed pursuant to Section 6.1.1 below, who shall act as the President of the LLC and shall
conduct U1c Business in accordance with and subject to the policies, procedures, decisions and
directives of the Management Committee.
6.1. I. Designation of "Manager.'' The Manager of the LLC shall be DOUGLAS
J. FRYE, an individual, or his successor as appointed by the Management Committee pursuant to
Section 6.1.2 below.
6.1.2. Election of Successor Manager. Upon lhe Manager's resignation from office
or removal from office by the Management Commiuee, the Management Committee shall appoint a
successor Manager.
6.1.3. Subordinate Officers. The Management Committee may, in its discretion,
appoint a secretary, a chief financial officer, a chief technology officer, and such other officers of the
LLC as the Business of the LLC may require, each of whom shall hold office for such period, have
such authority and perform such duties as provided for in this Agreement or as the Management
Committee may determine from time to time.
The Committee Members, as evidenced by their acknowledgment to this
Agreement, hereby appoint DENNIS MONTGOMERY to the office of Chief Technology Officer lo
hold office until his resignation, removal or other disqualification from service, or until his successor
has been duly appointed by the Management Committee in accordance with this Agreement.
6.1.4. Management Commlttee.1beManagement Committee shall consist of three

(3) Committee Members. Each of the Class A Members, so long as they arc Members, shall appoint
one (l) Committee Member. Each Class A Member may appoint one or more alternates for the
Committee Members appointed by il An alternate shall have all the powers of the Committee
Member in his absence or inability to serve. Each Conunittee Member may vote by delivering his
proxy to another Committee Member. Each Class A Member shall have the power to remove any
Committee Member appointed by it by delivering written notice of such removal to such Conunittec
Member and to the other Committee Members. Vacancies on the Management Committee shall be
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filled by the Class A Member who appointed the Committee Member previously holding the
position that is then vacant.
The Class A Members executing this Agreement hereby appoint those persons
set forth opposite their respective name below as their designated Committee Member to serve on
the Management Committee of the Company, each of whom shall serve at the pleasure of the
respective appointing Member and shall hold their respective offices until their resignation, removal
or other disqualification from service, or until their respective successors have been duly appointed
in accordance with this Agreement:
Name of Appointing
Cl ai;s A Member
Appointed
Committee Member
Friendly Capital Partners, LP.

The Fremont Tmst
Dennis Montgomery
Douglas J. Frye
Warren Trcpp
Dennis Montgomery
6.1.S. Management Committee Chairman. The Management Committee shall

have a chairman (the "Chairman"), who shall be one of the Committee Members designated by a
majority of the Committee Members. The Chairman initial! y shall be WARREN TREPP, an
individual, or his successor as appointed by the Management Committee in accordance with this
Section 6.15. The Chairman shall (i) preside al MWJagement Committee meetings; {ii) have lhe
authotity to execute and deliver on behalf of and in the name of the LLC any agreements. contracts,
notes, mortgages, evidence of indebtedness, certificates, statements, conveyances or other
instruments in writing, and any assignment or endorsement !hereof; and (iii) exercise such tights or
perform such duties as are otherwise provided in this Agreement or as may be approved from time to
time by lhe Management Committee. The Chairman may only be removed from office by a majority
of the Committee Members. In the event the Chairman resigns or is removed, a majority of the
Committee Members shall elect a replacement Chairman.
6.1.6. Delegation of Powers and Duties. The Management Comrni tlee may by
written resolution from time to time delegate any of it1 powers to the Manager, the Chairman,
officers, employees of a Member, or to any other Person. Such delegation of powers may include,
but 1101 be limited to, the authority to execute and deliver on behalf of and in the name of the LLC
any agreements, contracts, notes, mortgages, evidence of indebtedness, certificates, statements,
conveyances or other instruments in writing, and any assignment or endorsement thereof.
6.1. 7. Management Committee Meetlnes.

6.1.7.1. The Management Committee sh.all meet at least once each qullrler in
Incline Village, Nevada, or such other times or places as the Chairman shall determine (unless such
meeting shall be waived by all Committee Members) or on the call of the Chairman or the Manager.
Such meetings shall be called upon at least ten (10) days prior written notice, except in the case of
an emergency, in which event such a meeting may be called upon prior notice as the Chaiunan
deems appropriate, but in no event less than fortydght (48) hours. An agenda for each meeting
shall be prepared in advance by the Chairman or the Manager, as the case may be, and circulated to
c~ ....t s.m,s\ul:!,.N~ &uTm'f'On&ry 1~ 1'11<:-VJLKZ'\l.:(.,,,11pidAllorA(ta.o1>.vLi.Mniended
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the Committee Members. Approval of the Management Committee shall require a majority in
number of the Committee Members. The Management Committee may act without a meeting if (i)
the action taken is approved in writing by the number of Committee Members necessary to take such
action, and (ii) written notice of such action is given to the Committee Members who did not provide
such written consent. Written minutes of all meetings shall be maintained, and the minutes for each
meeting shall be approved at a subsequent meeting of the Management Committee.
6.1.7.2. The Management Commiltee may adopt whatever rules 1md
pnKedures relating to its activities as it may deem appropriate, provided that such mlcs and
procedures shall not be inconsistent with or violate the provisions of this Agreement, and provided
that such rules and regulations shall permit meelings by telephone, video conferencing or the like,
and shall permit Committee Members to participate in meetings by telephone or video conference or
the like or by written proxy, and such participation shall be deemed attendance for purposes of
determining whether a quomm is present.
6.1.8 1Jability for Certain Acts. The Manager and the Committee Members shall
perform their managerial duties in good faith, in a manner they reasonably believe to be in the best
interests of the LLC, and wilh such care as an ordinarily prudent person in a like position would use
under similar circumstances. A Manager or Committee Member who so petforms the duties of
Manager or Conunittee Member shall not have any liability by reason of being or having been 11
Manager or Committee Member of the llC. A Manager or Committee Member shall not be liable
to the LLC or to any Member for any loss or damage sustained by the Company or any Member,
unless the loss or dafllllge shall have been proved by a non-appealable court order, judgment, decree
or dedsion to he the result of fraud, deceit, gross negligence, willful misconduct, breach of a
fiduciary duty, or a wrongful taking by the Managcror the respective Committee Member. Neither
the Manager nor the Management Committee shall be liable for any loss or damage to the Company
caused by strikes, labor u-oublei;, riot, fires, explosions, tornadoes, floods, acts of a public enemy,
insurrections, acts of God, failure to carry out the provisions hereof due lo provisions of law or rules
or regulations promulgated by any governmental agency or any other demand or requisition of any
government, or from any other cause beyond the control of the Manager or the Management
Committee. The Management Committee does not, in any way, gum:1U1tee the return of the
Members' Capital Contributions or a profit for the Members from the operations of the Com.puny
6.2.
Power~. Duties and Responsihililics of the Management Committee. The
Management Committee shall have all of the rights, duties and powers as specified in this
Agreement, including without limitation, the general powers and duties of management typically
vested in the board of directors and the office of a chief executive officer of a corporation. Matters
requiting lhe approval of the Management Committee shall include, without limitation, the
following:
6.2. l. The authorization, negotiation, execution and deli very on behalf of the IlC of
any l!Ild all conlrncts or agreements, verbal or written, having a contract value orobligation amount
of more than Fifty Thousand Dollars ($50,000.00), which are necessary or appropriate for the
development or exploitation of the Technology or are in furtherance of the Business of the LLC,
including, but not limited to, but expressly subject to the limitations requiting Member approval
pursuant to Section 6.4 hereof, contracts or agreements between the LLC and/or its Affiliates or any
other Person to provide the LLC with goods or services of lilly kind in which the LLC or its Manager
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may have an actual or potential conflict of interest, and including any amendments or modifications
thereto, or renewals or terminations thereof.
6.2.2. The approval, execution, delivery and performance on behalf of the LLC of
the Montgomery Trust Contribution Agreement, and amendments or modifications thereto.
6.2.3. The approval of detailed line-item budgets for the operation of the LLC and its
Business or for the development or exploitation of the Technology, and any amendments,
modifications, supplements or renewals thereto. Each such budget (and any amendments thereto
from time Lo time), after approval by the Management Committee, shall be referred to herein as an
"Approved Budget."
6.2.4. Subject to the Approved Budgets, borrowing funds from any lender to operate
or maintain the Business or for any other purpose which is in furtherance of Lhe Business of the I.LC,
other than trade payables in the ordinary course of business; to issue evidences of indebtedness in
connection therewith; lo refinance, increa5e the amount of, modify, amend or change the terms of, or
extend the time for the payment of, any indebtedness or obligation of the LLC; and to secure any
indebtedness or obligation of the UC by mortgage, pledge, granting a security interest in or other
lien on the LLC' s assets.
6.2.5. The appointment and termination of officers, hiring and firing of employees,
or the engagement of contractors, subcontractors, consultants, experts find other Persons necessary or
apprnpriate to carry out the Business of the LLC, including the selection and engagement of an
independent certified public accounting firm and legal counsel for the LLC, and to approve the terms
of any such appointment, employment or engagement, including approval of the terms and payment
of crnnpensation.
6.2.6. The approval of the amount and timing of any Additional Capital
Contributions required by theLLC to conduct its Business, including, without limitation, all capital
required to be expended with respect to the Technology.
6.2. 7. Subject to the approval by the Members pursuant to Section 6.4.2 below, the
sale, license, lease, renLal, assignment, transfer or other disposition of all or any material part of the
assets of the LLC, including the Technology lllld any patent rights thereto, whether as a single
transaction or a series of transactions as part of a plan.
6.2.8. Any material decisions relating to the tesL marketing, manufacture,
distribution, licensurc or exploitation of the Technology.
6.3.
Powers, Duties and Responsibillties of the Manager. The Manager shall act as the
President of the LLC and shall be charged with the rights, duties and powers as specified in this
Agreement, subject to the limitations set forth in this Article 6 and elsewhere in this Agreement. The
Manager shall have responsibility for conducting the day-to-day operations of the Business and the
LLC and for implementing the decisions and directives of the Management Commiueein connection
therewith, subject to the supervision, direction and control of the Management Committee
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The Manager shall have the general powers and duties of management typically
vested in the office of a chief operating officer of a corporation. Subject to the provisions and
limitations set forth in Sections 6.2 and 6.4 hereof, the Manager shall have responsibility for the
following matters (listed by way of example and not in limitation thereof) and shall have the
authority on behalf of and in lhe name of the LLC to do or perfmm, or cause to be done or
pe1formed, such acts or thlngs and to negotiate, execute, acknowledge and deliver all agreements,
documents and instruments in connection therewith:
6.3.1. Prepare, execute and file on behalf of the LLC all applications (including
patent applications), licenses, permits, registrations, and consents, and to otherwise communicate
and deal with any and all governmental agencies having jurisdiction over, or in any way affecting,
the Technology, the Business or any part thereof.
6.3.2. Make ordinary and necessary expenditures and incur reasonable obligations
necessary for the conduct of the activities of the LLC's Business, all in al:cordance with and subject
lo Approved Budgets.
63.3. Authorize, negotiate, execute and deliver on behalf of the J LC any and all
contracts or agreements, vernal or written, having a contract value or obligation amount of less than
Fifty Thousand Dollars ($50,000.00), which the Manager deems are necessary or appropriate for the
development or exploitation of the Technology, or are in furtherance of Lhe Business, including, but
not limited to, but expressly subject to the limitations requiring Member approval pursuant to
SectJon 6.4 below, contracts or agreements between the Ll.C and/or it~ Affiliates or any other Person
to provide the LLC with goods or services of any kind, in which the LLC or its Manager may have
an actual or potential contlict of interest, and including any amendments or modifications thereto, or
renewals or tenninations thereof.
6.3.4. Subject to the prior approval by the Members pursuaotto Section 6.4,2 below
und !he Management Committee pursuant to Section 6.2.7 above, the sale, license, lease, rental,
assignment, transfer or other disposition of all or any material part of the a.~sets of the LLC,
including the Technology and any patent rights thereto, whether as a single transaction or a series of
related transactions as part of a plan.
6.3.5. To confess a judgment against the LLC, or approve the filing of or settlement
of any claims, including litigation matters, for or against the LLC, of less than Fifty Thousand
Dollars ($50,000.00).
6.3.6. Execute WJd deliver bonds and indenmities by or on behalf of !Im LLC as may
be required for the ownership and/or sale of any Property, as expressly directed to do so on a caseby-case basis by the .Management Committee.
6.3.7. To purchase liability and other insurance to protect the Technology, the
Property and Business of the LLC.
O.\l~mitSeiilnall\n6.NNISllni:.alSettiognT~n~,Jutmi.t~s\OLKl'an:i 1 oiJAROrAuc-ot).V6.~n1ended and Restated Operating Agreement -
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6.3.8. The Manager, subject to the reasonable approval of the Management
Committee, shall select technical engineers, programmers and othercomputertechnicians to develop
or exploit the Technology.
6.3.9. From time to time, amend EXHIBIT A to this Agreement to reflect any
change in the information contained therein, and prepare, execute and file a Certificate of
Amendment or Correction to the Articles of Organization to reflect any change or correction in the
LLC, its Manager, Members, principal office, registered agent, or the latest date upon which the
LLC may he dissolved.
6.3. l 0. Prepare, execute and file on behalf of the LLC the Annual List of Managers,
Members and Agent with the Secretary of State and to pay all filing fees therefor.
6.3.l L As directed from lime to time by the Management Committee, lo invest the
funds of the ILC in hank ce1tificates of deposit, short-term government securities or other short-term
securities, including money market funds, pnor to the expenditure of such capital in connection with
Business operations
6.3.12. lf the Manager deems it necessary or appropriate, to adopt a Company seal,

circular in form containing the words "eTreppid Technologies, LLC," together with the date of
formation of the LLC, and such other information as shall be appropriate for banking and other
Business purposes.
6.3.13. Maintain a minute book to include the Articles of Organization of the LLC,
this Agreement and any amendments or supplements hereto, and the minutes of meetings (or
consents in lieu of meetings) of the Management Committee, written consents of the Members, and
other important documents of the ILC.
6.4.
Limitations on the Management Committee and Manager. Neither the
Management Committee nor the Manager shall have the authority to do any of the following without
the prior Vote of a Majority in Interest of the Members:
6.4. L Except for the limited authority of the Manager to amend EXHIBIT A hereto
and the Articles of Organization pursuant to Section 6.3.9 above, materially amend restate this
Agreement or the Articles of Organization, in whole or in part, including any increase in the number
of Committee Members of the llC pursuant to Section 6, 1 ubove.
or
6.4.2. Sell, license, lease, rent, transfer, assign or otherwise dispose of all or
substantially "11 of the assets of the LLC, including the Technology or any patent rights thereto,
whether in a single transaction or a series of related transactions as part of a plan.
6.4.3. Approve the Transfer of a Member's Interest (except for lhe Transfer ofup to
10% of a Member's Economic Interest pursuant to Section 8.1.3 hereof).
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6.4.4. Approve any transaction involving the payment of compensation by the LLC
to a Member or an Affiliate of a Member, unless otherwise expressly authorized and approved
pursuant to this Agreement.
6.4.5. Any merger, consolidation, divestiture or dissolution and winding up of the
Business and affairs of the llC.
6.4.6. Any mated al change in the charncter of the Business of the I.LC.
6.4.7. The admission of new or Substitute Members (defined herein) to the LLC.
6.4.8. Any act in contravention of this Agreement or any valid amendment hereto,
the Articles of Organization or any amendment thereof.
6.4.9. Knowingly perform any act (other than any act required by this Agreement or
by law or an act taken in good faith) that would, at the time of such act, subject any Memberof the
!LC to any personal liability in any jurisdiction.
6.5. Time Devoted to Management. Unless othe1wisc determined by the Managemelll
Committee to be in the best interests of the LLC and its Members, the Munager' s se1vices shull be
nonexclusive to lhe LLC. The Managerneeds to devote only sucb lime and attention to the Business
and affairs of the LLC as he shall deem necessary and appropriate, in the exercise of his own
reasonable judgment The Manager may be required t() travel from time to time in furtherance of his
duties and responsibilities hereunder.
Unless an alternative schedule is determined from time to time by the Management
Committee to be in the best interests of the LLC and its Members, the services of DENNIS
MONTGOMERY, an individual ("MONTGOMERY"), so long as he is serving as a Committee
Member and/or Chief Technology Officer pursuant to this Agreernel\t, shall be exclusive to the LLC,
and he shall devote substantially all of his full time and attention and efforts to the Business and
affairs of the LLC during reasonable business hours. MONTGOMERY may be required to travel
from time to time in furtherance of his duties and responsibilities hereunder. MONTGOMERY
agrees, as acknowledged by his signat= to this Agreement, that he shall provide his services in a
manner consistent with the policies of the LLC as may be adopted from time to time by the
Management Committee.
6.6. Restriction on Independent Activities; Agreement Not to Compete. So long as
MONTGOMERY is appointed as a Committee Member and/or as Chief Technology Officer
pursuant to this Agreement, MONTGOMERY and his AffJliates agree that, during the temI of this
Agreement, none of them shall compete with the LLC, whether for their own account and/or for the
account of others, individually, jointly with others, or as a part of any other limited liability
company, limited partnership, general partnership, joint venture, corporation or other entity, by: {i)
developing, licensing or exploiting in any manner any software programs or other technology which
is competitive with the Technology or the Business of the ILC, or providing any seivices or supplies
which are encompassed within the definition of the "Business" of the LLC 118 set forth in this
Agreement; (ii) purchasing or otherwise acquiring, owning, holding, operating, managing, investing
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in or otherwise disposing of a like business of the LLC's Business and interests therein of any kind
or 11ature; or (iii) otherwise engaging in any or ail aspect~ of a like business of the LLC's Business.
MONTGOMERY's or his Affiliates' participation .in any of the activities restricted by this paragraph
shall be deemed a breach of his duties and obligations as a Committee Member hereunder.
6.7.
Compensation to Management or Members.
6.7.1. Manager's Compensation. The Manager shall not receive compensation for
his services hereunder, unless otherwise approved by the Management Committee.
6.7.2. Officers' Compensation. Except for any compensation to be paid to the
Chief Technology Officer as set forth bcl ow, no officer of the LLC shall receive compensation for
his or her services unless otherwise approved by the Management Committee. In consideration for
his full-time, exclusive services to the LLC, MONTGOMERY, as Chief Technology Officer, shall
receive, in addition to any reimbursement for costs as provided fur in Section 6.8 below, a
Guaranteed Payment (as that term is defined in section 707(c) of the Code). The payment, amount
and term n[ such Guaranteed Payment or other compensation to be paid to MONTGOMERY a.~
CltiefTechnology Officer for his services shall be established, adjusted, renewed or terminated by
the Management Committee from time to time.
6.7.3. Members' Compensation. Except as expressly permitted by this Agreement
or any other written agreement, the I.LC shall pay no compensation to any Member or any Principal
of any Member for their services as a Manager to the LLC.
6.8.
Expense Reimbursements. TI1e LLC shall reimburse the Manage<, officers,
Committee Members, Members or their Affiliates for any expense paid by them on behalf or the
LLC, that is to be properly borne by the LLC, as provided for in an Approved Budget or as otherwise
appmved from time to time hy the Management Committee.
6.9.
Restrictions on Disldbutions. No distribution to the LLC' s Members is valid unless
the Management Committee has approved such distribution either immediately before or
immr.diately after such distribution.
6.10. Rights of Inspection. The Manager and Committee Members shall have the absolute
right at any reasonable time to inspect and copy all books, records and documents of every kind, and
to inspect the physical properties of the LLC and also of its subsidiary limited liability companies,
domestic or foreign. Such inspection by the Manager or any Committee Member may be made in
person or by agent or attorney and includes the right to copy and obtain abstracts.
6.11. Fnrnishing LLC Information. The Manager may release such information
concerning the Business and operations of the LLC lo such sources as is customary or required by
law or by rule or regulation or order of any regulatory body.
6.12. Authority to Settle with IRS. If there arc more than one hundred (100) Members of
the Ll..C, the "Tax Matters Manager" (as appointed in Section 9.4 below) shall have the authority to
enter into a settlement with the Internal Revenue Service on behalf of those Members having less
No. 71 91 P. 2S/5 9
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Document
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Page 73 of 115
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than a ONE PERCENT (J %) interest in the profit5 of the LLC. except where a Member files a
statement with the IRS, in accordance with applicable Treasury regulations, stating that the Tax
Matters Manager hru; no such authority to act on that Member's behalf. Any Member filing such a
statement with the lRS shall notify the Manager thereof within thirty (30) days of such filing.
ARTlCLE7
MEMBERS' MEETINGS; ACTIONS WITHOUT MEETINGS
7.1.
Meetings. The Members shall not be re<Juircd lo hold any regular, a11nual or special
meetings in order to approve any action of the LLC as required by this Agreement or the NRS.
7.2.
Actions Without a Meeting.
7.2.l. Any action requi.ring approval of the Members pursuant to this Agreement
may be approved without the conduct of a meeting and without prior notice if a written consent,
setting forth the action or uctions so taken, is signed by Members holding, in the aggregate, a
Majority in Interest or more of the Members, unless a greater Vnte is required under, or a lesser Vote
is provided for in, this Agreement or the NRS.
7.2.2. Unless the unanimous written consent of the Members has been given, notice
of any such action approved by le.~s than all of the Members shall be given to those Members who
did not participate in or approve of such action within teu ( 10) days following lhe approval thereof.
7.2.3. Any Member giving a written consent may revoke the consent by giving
written notice to the LLC prior lo the time that written consents of the Members holding, in the
aggregate, the Vote required to autJ1orize the proposed action huve been filed with the llC. Such
revocation is effective only upon its receipt by the LLC.
7.3.
Exclusion of Vote. If, pursuant lo the NRS or the tenns of this Agreement, a
Member is not entitled to Vote on a specific matter, then such Member's number of Votes shall not
be considered for purposes of determining whether approval by Vote of the Members has been
obtained in respect of such specific matter.
ARTICLES
RESTRICTIONS ON TRANSFER OF MEMBERSHIP INTERESTS;
ADMISSION ANO SUBSTITUTION OF NEW MEMBERS
8.1. Transfer or Assignment of Member's Interest. The Interest of each Member and
the Economic Interest of a Person who is not a Member constitutes the personal property of the
Member or &onomic interest holder. No Member or Economic Interest holder has any interest in
the Property of the LLC.
8.1.1. A Member's Interest or an Economic Interest may only be transferred or
assigned in strict accordance with this Agreement.
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8.1.2. Except as otherwise provided in Sections 8.5.1 and 8.5.2 below, no sale,
transfer, hypothecation, encumbrance or assignment (a "Transfer") of a Member's Interest or un
Economic Interest in the LLC will be valid unless approved by aManugement Commillee, in its sole
discrcti on.
8.L3. Except for any Transfer of a Class A Member's Interest to another existing
Class A Member of the LLC, upon the Transfcrof any Class A Member's Interest (but not a transfer
of an fa:onomic Interest), the transferee shall automatically become a Class B Member and the Class
A Units so transferred shall automatically be converted to Class B Units. Notwithstanding the
foregoing, with the approval. of the Management Committee, such converted Class B Units may
maintain the allocation and distribution priority rights of a Class A Member pursuant to Sections
4.1.l.2, 5.2.1 and 5.2.3.
8.2.
Void Transfers. Any Transfer of an Interest that does not satisfy the requirements of
Section 8.1.2 above shall be null and void, shall not confer any rights upon the proposed transferee,
and the transfening Member shall continue to be a Member of the LLC and to be obligated under
each and every provision of this Agreement.
8.3.
Admission of New Members. Subject to the approval of a Majority in Interest of the

Members pursuant to Section 6.4.7 hereof, a new Member may he admitted into the LLC only upon
approval by the Management Committee and upon satisfaction of the requirements set forth in this
Section 8.3. The Management Committee shall determine the amount of Capital Contlibution that
must be made by a new Member. A new Member shall not be deemed admitted into the LLC until
the Capital Contribution required of such Person shall have been made and such Person has become
a party to this Agreement by executing and delivering lo the LLC a counterpart signature page to this
Agreement acknowledging his acceptance of, and agreeing to be bound by, the terms and conditions
of this Agreement
8.4. Substitution of Members. Upon the death of aMemberoru[Xm the valid Transfer of
a Member's Units in accordance with Section 8. I .2 above, a Person may be substituted as a Member
and admitted to the LLC, succeeding to all of !he rights of any Member (a "Substitute Member").
The Substitute Member shall have all the rights and powers and shall be subject to il1I the restrictions
and liabilities of the transferring Member, except !hat the substitution of the transferee Member shall
not release the transferring Mcmher from liability to the LLC pursuant to NRS Section 86.351. No
Substitute Member shall be deemed admitted into the LLC until such Substitute Member has become
a party to this Agreement by executing und delivering to the U..C a counterpart signature page to this
Agreement, acknowledging hls acceptance of, and agreeing to be bound by, the tenns and conditions
of this Agreement.
8.5.
Exceptions to the Restrictions on Transfer.
8.5,I. The restrictions on Transfer contained in this Article 8 shall not apply to (I) a
gift of all or any portion of a Member's Units by a Member to his spouse, child, or grandchild
("Family") or of a Transfer of all or any portion of such Interest by a Member to (i) a trust solely for
the benefit of the Member or his Family or (ii) any other entity at least 80% of lhe value and voting
power of which is owned (directly or indirectly) by such Member and his Family (except no such
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transfers shall be made pursuant to any divorce or separation proceedings, unless the Management
Committee has approved such Transfer); (2) a distribution from any Member that is a limited
liability company or partnership to its members or partners (so long as such distribution does not
occur within one year of such Member's purchase of the Interest being transferred and so long as all
of such Members or partners are "accredited investors" as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended; or (3) any gift by will to
any entity that qualifies as a charitable organization under section 50I(c)(3) under the Code;
provided, however, that such Interest shall remain subject to this Agreement and such transferee
shall, as a condition to Transfer, agree in writing to be bound hy the terms of this Agreement by the
execution of a counterpart sig1iaturc page to this Agreement.
8.5.2. One or more Transfers of up to an aggregate of ten percent (10%) of a
Member's Economic Interest may be done without the consent of the other Members, the Manager
or the Management Committee, provided that the transferring Member notifies the Manager in
writing at least ten (JO) days in advance of his intent to Transfer an Economic Tnlerest. Such notice
shall contain the dale and amount of the transferred Economic Interest, and the name, address,
facsimile number and taxpayer identification number of the transferee. The transferee of an
Economic Tntercst shall not have any tight to Vote, participate in the management of the Business
and affairs of the LLC, or to become a Member. No rights as the holder of an Economic Interest
shall be conferred upon the transferee until the transferee agrees to be bound by all of the terms and
provisions of this Agreement. Notwithstanding the foregoing, any Transfer by a Member of an
Economic Interest in excess of an aggregate of 10% shall be deemed a Transfer of such Member's
interest and shall be subject to Section 8, 1.2 above.
8.5.3. Notwithstanding any right of Members, including right~ of first refusal
contained herein, if a Majority in Interest of the Members determines to sell the Company, whether
by merger, consolidation, sale of all or substantially 1111 of its assets, sale of all of the outstanding
Units of the Company or otherwise to an nonaffilialed third party (an "Approved Sale"), all of the
Members shall consent to and raise no objection against such Approved Sale (induding refraining
from exercising any rights of appraisal, if any) and shall take all necessary and desirable actions in
their capacity as Members in connection with the consummation of such Approved Sale. The
Members shall agree to sell their pro rata amount of Units which are subject to such Approved Sale
on the tenns and conditions as provided by a Majority in Interest of the Members. The obligations
of the Members with respect to any Approved Sale are subject to the condition that, upon the
consummation of such Approved Sale, all of the holders of Units will receive !he same fonn and
amount of consideration per Unit, orif any Member!: are given an option as to the fonn and amount
of consideration to be received, all Members will be given the same option, on a pro rata basis, in
accordance with their respective Percentage Interests.
Requirements on Transfer. Notwithstanding anything in this Article 8, no Member
8.6.
may Transfer any Interest (other than pursuant to an effective registration statement under the
Securities Act) without first complying with the following:
8.6.1, Delivering to the Company upon its request an opinion of counsel addressed
to tlu: Company reasonably acceptable in form and substance to the Company that registration under
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the Securities Act is nol required in connection with such transfer and that such transfer is exempt
from all applicable state securities laws; and
8.6.2. Every Person (including such Person's spouse, if any), other than the
Company, lo whom such lnteresl is transferred in compliance with this Article 8 shall be required to
execute and deliver lo the Company a counterpart signature page to this Agreement, acknowledging
his acceptance of, and agreeing to be bound by, the lerrns and conditions of this Agreement and
agreeing to become u party to this Agreement. At the lime of execution and delivery to the
Company of such counterpart signature page, such Person shall be admitted as a Substitute Member.
ARTICLE9
ADMINISTRATION ANO ACCOUNTING MATTERS
9. I.
Maintenance of Books and Record~. The llC shall cause hooks and records of the
LLC to be maintained in accordance with generally accepted accounting principles, and shall give
reports to the Members in accordance with prndcnt business practices and the NRS. The
determination of the Management Committee as tu adjustments to the financial reports, books,
records and returns of the LLC, in the absence of fraud or gross negligence, shall be final and
binding upon the LLC and all of the Members. There shall be kept at the principal business office of
the LLC, as well as at the registered office of the LLC specified in Section 2.5 (if different), any
info11nation required to be maintained by the LLC pursuant to NRS Section 86.241, as amended
from time to time.
9 .2. Annual Accounting. Within one hundred twenty (120) days after the close of each
Fiscu:I Year of the LLC, the LLC shall provide to the Members all information necessary for them to
complete federal and state rax returns.
9.3. Inspection and Audit Rights. Each Member, al its own expense, has the right, upon
reasonable request and for purposes rea.5onably related to the Interest of that Member, to inspect and
copy during normal business hours any of the LLC books and records required to be maintained in
accordance with Section 9.1 above. Such righL5 may be exercised by the Member or that Member's
agent or attorney.
9.4. Tax Matters Handled by Manager. The Management Committee shall designate a
Person to be the LLC' s "Tax Matters Manager" (defined as "Tax Matters Partner" in Code section
6231) to represent the TLC (at the LLC's expense) in connection with all examinations of the LLC's
affairs by tax authorities, including resultingjudicial and administrative proceedings, and to expend
ILC funds for professional services and costs associated therewith. In its capacity us "Tax Matters
Manager," the designated Person shall oversee the LLC tax affairs in the overall best interests of the
ILC.
9.5. Establishment of Bank Accounts; Authorized Signatories. The Management
Committee shall authorize the establishment of one or more depository accounts in Nevada and
elsewhere for the funds of the LLC. All disbursements from the ILC' s bank accounts shall be in
accordance with this Agreement. Any checks, drafts, and other instruments ohligating the LLC to
pay money up to a maximum amount of Twenty-Five Thousand Dollars ($25,000.00), including
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instruments payable to the Manager or other Persons authorized to sign them, may be signed on the
LLC's behalf by the Manager, acting alone. Any such checks, drafts orother instruments obligating
the LLC to pay money in excess of $25,000.00, whether as a single check or a series of checks, shall
require the joint signatures of the Manager and a Person designated from time to time hy the
Management Committee.
Cash balances on hand may be invested by the Management Committee on behalf of
the LLC as provided for in this Agreement. LLC funds shall not be commingled with the funds of
the Manager, any Committee Member, Member, officer or any other Person or used as compensating
balances for any other obligations of the Manager, any Committee Member, uny Member, officeror
any other Person.
9.6.
Federal Income Tax Elections. The Management Committee on behalf of the LLC
may make all elections for federal income tax purposes, including but not limited to, the following:
9.6. l. Entity Classification Election. As a domestic eligible entity, the
Management Committee shall cause the LLC to elect to be classified as a partnership for federal tax
purposes by filing Form 8832, Entity Classification ElecLion, with the Internal Revenue Service in
the time and manner prescribed by the applicable regulations. The election for such classification
shall be effective as of the elate of filing the Article~ of Organization.
9.6.2. Use or Accelerated Depreciation Methods. To the extent permitted by
applicable law and regulations, the LLC niay elect to use an accelerated depreciation method on any
depreciable unit of the assets of the LLC.
9.6.3. Accounting Method. For financial reporting purposes, the books and records
of the LLC shall be kept on the CASH METHOD OF ACCOUNTTNG applied in a consistent
manner and shall reflect all transactions of the LLC and be appropriate and adequate for the purposes
oftheLLC.
9.6.4. Obligations of Members to ReportAUocations. The Members are aware of
the income tax consequences of the allocations made by this Agreement and hereby agree to be
bound by the provisions or this Section 9.6 in rep011ing their shares of the LLC income and loss for
income tax purposes.
9.6.5. Tax Year. The Management Committee will cuuse the LLC to adopt the
CALENDAR YEAR as its taxable year.
9.6.6. Other mections. The Management Committee shall have the right in its sole
discretion at any time to make or not to make such other elections as are authorized or permitted by
any law or regulation for income tax purposes (including, but not limited to, any election under
sections 734, 743 and 754 of the Code to adjust the basis oflhe Property of the LLC in the event of a
Transfer of all or part of the Interest of any Member). Notwithstanding the above, no Member, nor
the ILC, shall make an election to be excluded from the application of Subchapter K of the Code or
any similar provisions of state law.
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ARTICLE 10
TERMINATION AND DISSOLUTION
10.L Dissolution. Pursuant to NRS Section 86.491, the LLC shall be dissolved and its
affairs wound up upon the occurrence of any of the following events:
10.l.l.
The affirmative Vote by a Majority in Interest of the Members; or
10. L2.
Th.e sale, license, lease, rental, assignment or other disposition of all or
substantially all of the assets of the LLC, inclucJ.ing the Technology or any patent rights thereto,
whether occurring in a single transaction or a series of related transact.ions as pait of a plan; or
10.1.3.
Upon entry of a decree of judicial dissolution pursuant to the applicable
provisions of the NRS.
10.2. Continuation and Conduct of Business After Dissolution. Upon the occurrence of
any dissolution event spcci fled in Section 10.1 above, the LLC 5hall cease to carry on its Business,
eJ1cept insofar as may be necessary for the winding up of i!s Business. The LLC shall continue as a
company for the purpose of prosecuting and defending suits, actions, proceedings and claims of any
kind or nature by or aguinst it and of enabling it gradually to settle and close its Business, to collect
and discharge its obligations, to dispose of and convey its Property and to disttibutc its assets und
Property, but not for continuing the Business for which it was established.
10.3.
Limitation on Actions by or Against Dissolved LLC. The dissolution of the LLC

shall not impair any remedy or cause of action available to or against it or its Manager, Committee
Members or Members arising before its dissolution and commenced with two (2) years after the date
of Lhe dissolution.
10.4. Dlstl'ibution of Net Proceeds Upon Liquidation. The Members shall continue lo
divide Net Profits and Net Losses and Available Cash Flow during the winding-up period in the
same manner and the same priorities as provided for in Articles 4 and 5 hereof. The proceeds from
the liquidation of Property shall he applied to liabilities of the TLC in the following order:
10.4.1.
First, to the payment of creditors, in the order of priority as provided by
Jaw, except to Members on account of their contributions;
10.4.2.
Second, to the payment ofloaos or advances that may bave been made by
uny of the Members or their Principals for working capital or other requirements of the LLC;
10.4.3.
Third, pro rata, to the Class A Members and the Class C Members in
accordance with their positive Capital Account balances;
10.4.4.
Fourth, to the Class B Members in accordance with their positive Capital
Account balances; and
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10.4.5,
Thereafter, pro rata, to the Members in accordance with their positive
Capital Account balances, as determined after taking intn acwunt all Capital Account adjustments
for lhe Fiscal Year during which the liquidation occurs.
Liquidation proceed5 will be paid within 60 days after the end or the Fiscal Year (or, if
later, within 120 days after the date of the liquidation). The Company may offset damages for
breach of this Agreement by any Member whose Units arc liquidated upon the l.iquidation of the
Company against the amount otherwise distributable lo such Member.
Where the distribution pursuant to this Section l0.4 consists both of cash (or cash
equivalents) and non-cash assets, the cash (or cash equivalents) shall first be distributed, in a
descending order, to fully satisfy each category starting with the most preferred category above. in
the case of noncash assets, the distribution values are lo be based on the fair market value thereof as
detemlined in good faith by the liquidator, and the sho1test maturity portion of such non-cash assets
(e.g., notes or other indebtedness) shall, to the extent such non-cush assets arc readily divisible, he
distributed, in a descending order, lo fully satisfy each categmy above, starting with the most
preferred category.
ARTICLE 11
ISSUANCE OF LLC CERTIFICATES
11. L
Issuance of LLC Certificates. The Uni ts of each Member in the LLC may be
represented by an LLC certificate designating lhe classes of membership and Units. Upon the
e!lecution of this Agreement and the payment of the Capital Contributions by the Members pursuant
to Article 3 hereof, the Manager may cause the LLC to issue one or more certificates in the name of
each Memher certifying that the Member named therein is the record holder of the Units ofTnterest5
set forth therein. For purposes of this Agreement, the term "r&ord holder" shall mean the Member
whose name appears in Section 3.1 M the Member owning the Units at issue.
11.2. Transfer of LLC Certificates. A Membership Interest which is transferred in
accordance with the terms of Article 8 of this Agreement shall be transferable on the books of the
LLC by the record holder thereof in person or by such record holder's duly authorized attorney, but,
e!\cepl as provided in Section 11.3 below with respect to lost, stolen or destroyed certificates, no
transfer of UniL~ of Membership Interest shall be entered until the previously issued LLC certificate
repre.qenting such Units shall have been surrendered to the llC and canceled and a replacement
llC ce1tifieate issued to the transferee of such Mcmbershi p Interest in accordance with such
procedures as the Members may from time to time establish. The Members shall cause the Manager
to issue to the transferring Member a new LLC certificate representing the Units of Membership
Interests not being transferred by the Member, in the event such Member only transferred some, but
nol all, of the Units represented by the original LLC certificate. Except a.q otherwise required by
law, the LLC shall be entitled to treat the record holder of an LLC certificate on its books as the
owner thereof for all purposes regardless of any notice or knowledge to the contrary.
11.3. Lost, Stolen or Destroyed Certificates. The LLC shall issue a new LLC certificate
in place of any LLC Certificate previously issued if the record holder of the LLC Certificate:
c.~11u Ill.Id ~~IDBNNJS\Loud s.ttini;1\Tempir.v'J' 1a1emet~"LXl--rridA1o:o""' c11J-01). v<...wA metuled
and RestaJed Operating Agreement - 33
NO./l~I
p. 08/8~
uouoias J. ~rye, uq.
LUUD
/0/YM
Jdlll:J
11.3. l.
Makes proof by affidavit, in form and substance satisfaclory to the
Mariager that a previously issued LLC certificate has been lost, destroyed or stolen;
11.3.2.
Reque:;ts the issuance of a new LLC certificate before the lLC has notice
thal the LLC certificate has been acquired by a purchaser for value in good faith and without notice
of an adverse claim;
I l.3.3.
If requested by the remaining Members, delivers to the I.LC a bond, in
form and subsl<lnce reasonably satisfactory to the remaining Members, with such surety or sureties
and with fixed or open penalty as the remaining Members may direct, in their reasonable discretion,
to indemnify the LLC against any claim tliat may be made on account of the alleged loss, destruction
or thefl of the LLC certific:ite; and
Satisfies any other reasonable requirements imposed by the Members or
the Management Committee.
11.3.4.
U a Member fails to notify the LLC within a reasonable time after it has notice of the
Joss, de6lruction or theft of an LLC certificate, and a transfer of the Units of Member:;hip Interest
rept1::;ented by the LLC certificate is registered before receiving such notification, the LLC shall
have no liability with respect to any claim against the LLC for such tramfer or for a new LLC
certificate.
ARTICLE12
INDEMNIFICATION
Indemnification of the Members and Their Principals. The LLC shall indemnify
and hold hannless each of the Members, the Manager, the Committee Members, their Affiliates and
each of their iespectivc officern, directors, managers, trustees, members, shureho!ders, partners,
employees, agents and Principals (individually, an "lndemnltec") from and against any and all
losses, claims, demands, costs, damages, liabilities, joint and several, expenses of any nature
(including reasonable attorneys' fees and disbursements), judgments, fines, settlements and other
amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or invcstigati ve, in which the Indemnitcc is involved as a pwty arising out of
the Business of the LLC, excluding liabilities to any Member, regardless of whether the lndemnitee
continues to be a Member, an Affiliate, or an officer, director, employee, agent or Principal of the
Member at the time any such liability or expense is paid ot incurred, to t11e fullest extent permilted
by the NRS and all other applicable laws, provided that the Member or such Person acted in good
faith, within what is reasonably believed to be the scope of its authority and for a purpose which it
reasonably believed to be in the best interests of the LLC and the Members or otherwise in
compliance with the provisions of this Agreement; provided, however (i) that the LLC shall not be
required to indemnify any Indemnitee, and any such Indemnitee shall be liable, for any loss, expense
or damage which the LLC may suffer as a result of (A) such Inderonitee' s willful misconduct, gross
negligence or bad faith in failing to perform its duties hereunder, (B) actions taken by such
Indemnitcc in violation of this Agreement, (C) the receipt by ~uch Indemnitee of any financial
benefits to which it is not entitled pursuant to this Agteement, or (D) the vote by such Indemnitee for
12.1.
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a distribution of funds of the LLC in violation of this Agreement or the Act; (ii) the ILC shall not be
required to indemnify any Indemnitee for any breach of the provisions of this Agreement, or forany
loss, expense or damage which it may suffer as a result of the breach of this Agreement by the
Member to which the Indemnitee is related; and (iii) any liability hereunder shall be limited solely to
the assets and properties of the LLC, and no Membcr(or any Affiliate of any Memhcr} shall have
any liability or obligation by reason of these indemnification provisions.
The foregoing provisions of this Article 12 shall survive for a period of four (4} years
from the date of dissolution of the LLC; provided, if at the end of such period, there are any actions,
proceedings or investigations then pending, the Manager shall so notify the Members at such time
(which notice shall include a brief description of each such action, proceeding or investigation and of
(he liabilities asserted therein), and the foregoing provisions of this Article 12 shall survive with
respect to each such action, proceeding or investigation set forth in such notice (or any related
action, proceeding or investigation based upon the same or similar claims) until such date as such
action, proceeding or investigation is ultimately resolved.
The llC shall not incur the cost of the portion of any insurance, other than public
liability insurance, which iosu(es the Manager or Committee Members against any liability as to
which the Manager or Conunittee Members are herein prohibited from being indemnified.
12.2. Expenses. Expenses incmTed by an Indcmnitce in defending any chum, demand,
action, suit or proceeding subject to Section 12. l above may, from time to time, be advanced by the
llC prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by
the LLC of an undertaking by or on behalf of the Indemnitcc to repay such amount if it shall be
determined that such Person is not entitled to be indemnified as authorized in Section 12.1.
12.3. Indemnification Rights Non-Exclusive. 'l'he indemnification provided by
Section 12.1 shall be in addition to any other rights to which those indemnified may be entitled
under any agreement. Vote of the Members, as a matter of Jaw or equity nr otherwise, both as to
action in the Indemnitee's capacity as a Member, as an Affiliate nr as un officer, director, employee,
agent or Principal of a Member and as to any action in another capacity, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Jndemnitee.
12.4. Errors and Omissions lnsu~nuce. The llC may purchase and maintain insurance,
at the LLC's ellpense, on behalf of the Members and such other Persons as the Members shall
detennine, against any liability that may be asserted against, or any expense that may be incurred by,
such Person in conoeclion with the activities of the I.LC and/or the Members' acts or omissions as
the Members of the I.LC regardless of whether the LLC would have the power to indemnify such
Person against such liability under the provisions of this Agreement
~m1<tSdtlnc~\lJENNt.WMt1~1J11.1::\T~1\'('l..,-Iut\tlll..1.Fib~iJAROrAur>-0L).v6.w.A.me11deJ and Restated Operating Agreement
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7191 P 37/59
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82 of 115
ARTICLE13
AMENDMENTS
13. l. Amendment or Modification of the Al!reernent. Except for the authority granted to
the Manager hereunder to amend EXHIBIT A to this Agreement from time to time without the
necessity of a fomial amendment lo this Agreement, the tenns and provisions of this Agreement may
not be adopted, altered, amended, or repealed and a new operating agreement adopted without the
approval by a Majority in Interest of the Members.
13.2. Amendment or Modification of Articles of Organization. Except for the authority
granted to the Manager hereunder to amend or correct the Articles o [ Organization, and
notwithstanding any other provision to the contrary in the Articles of Organization or this
Agreement, in no event shall the Articles of Organization be amended without the approval by a
Majority in Interest of the Members.
ARTICLE 14
NOTICES; WAIVER OF NOTICE
14.1. Method of Notice. Any notice vr commnnication required or permitted to be given

hereunder shall be in writing and may be either (i) personally delivered, which shall be deemed
recei.vcd at the time of actual receipt thereof; or (ii) sent by registered vr certified mail, with postage
and charges prepaid, which shall be deemed delivered seventy-two (72) hours after deposit in the
United States mail; or (iii) delivered by facsimile transmission, which shall be deemed received on
the date and at the lime of electronic wnfirmation of such transmission, provided an original
mechanical signed copy of such notice or other communication is also immediately deposited in the
Unitc<l States mail with first-class postage and charges prepaid; or (iv) delivered by messenger,
FedEx or other trackable courier service, which shall be deemed delivered on the date and at the time
as trncked and confirmed by such courier service; and in each case, addressed or delivered to the
party to whom the same is directed at such party s address and/or facsimile number set forth below,
or at such other address and/or facsimile number as that partymuy specify by written nvtice given to
the other parties in accordance with this paragraph:
It' to the LLC:
cTreppid Technologies, LLC
Attn: Warren Trepp, Its Management Committee Chairman
590 Lal<eshore Boulevard
fodine Village, Nevada 89451
Mailing Address:
P.O. Box 4964

Incline Village, Nevada 89450
Facsimile: (775) 831-4395
c~am1.sdiingtM.1BNN!S\141eaL*'-l~a\T...'1JP.mqllllmlNF11.ea\Ol.1t.l-.,uqiri-1A11fJtA<10-01J.v6.o.xA.mendecl and Restated Operating Agreement- 36
7191 83 of
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With a Courtesy Copy to:

Frye & fuieh, LU'
Attn: Douglas J. Frye, Esq.
24955 Pacific Coast Highway, Suite A201
Malibu, California 90265-4747
Facsimile: (310) 456-0808
If to the Members:
To the address of each Member as set
forth on EXHIBIT A attruohed hereto and
made a part of this Agreement, which
exhibit may be amended from lime to
time as appropriate.
Where courtesy copies arc provided for, the service of any such comtesy copy shall not constitute
notice to the party hereunder. If the United States Postal Service returns to the T.LC or the registered
agent any notice as undeliverable, aU future notices to that Member shall be deemed duly given if
kept available for that Member at the LLC's principal place of business for one (1) year.
14.2. Waiver of Notice. Notwithstanding the foregoing, when, pursuant to the provisions
of the NRS, the Articles of Organization or this Agreement, notice is required to be given lo a
Member or to the Manager of the LLC, a waiver in writing signed by the Person or Persons entitled
to the notice, whether before or after the time stated in it, is equivalent to the giving of notice.
ARTICLE IS
MISCELLANEOUS PROVISIONS
15.1. Couittemarts. This Agreement may be execuLed in several counterparts, including
any counterpart signature pages executed by a new Member or Substitute Member after the
execution hereof, and all counterparts so eKecuted shall constitute one Agreement, binding on all of
the piuties hereto, notwithstanding that all of the parties are not signatory to the original or the same
counterpart.
15.2. Survival of Rights. This Agreement shall be binding upon, and, as to permitted or
accepted successors, transferees and assigns, inure to the benefit of the Members and tl1e llC and
their rcspecti ve heirs, legatees, legal reprcsentati ves, successors, transferees and assigns, in all cases
whether by tl1e laws of descent and distribution, merger, reverse merger, consn)jdation, sale of
assets, other sale, operation of law or otherwise_
15.3. Severability. In the event any section, subsection or any sentence within any section
or subsection hereunder is declared by u court of competent jurisdiction to be void or unenforceable,
such section, subsection or sentence shall be deemed severed from the remainder of this Agreement
and the balance of this Agreement shall remain in full force and effect
No.719184 ofP.115
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15.4. Construction. The language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning and not strictly for or against any of the Members.
15.5. Section Headings. The captions of the Articles, Sections or subsections in this
Agreement are for convenience only and in no way define, limit, extend or describe the scope or
intent of any of the provisions hereof, shall not be deemed pai1 of this Agreement and shall not he
used in construing or interpreting this Agreement.
15.6. Governing Law. This Agreement and any amendments or exhjbits hereto, and the
rights and obligations of the parties hereunder, is executed under and in conformity with the laws of
the Slate of NEV ADA relating to limited-liability companies and is to he construed, enforced and
govemed in accordance therewith without giving effect W any conflict of law provision.
15.7. Addition11l Document~. Each Member, upon the request of another Member, agrees
to perform all further act.I and execute, acknowledge and deliver all documents which may be
reasonably necessary, appropriate or desirable to carry out the provisions of tills Agreement,
including but not limited to acknowledging before a notary public any signature heretofore or
hereafter made hy a Member.
15.8. Pronouns and Plurals. Whenever the context may require, any pwnoun used in this
i\gmernent shall include the corresponding masculine, feminine and neuler forms, and the singular
fomt of nouns, pronouns aiid verbs shall include the plural and vice versa.
15.9. Time of the Essence. Except as otherwise provided herein, time is of the essence in
connection with each and every provision of this Agreement.
15.JO. Further Actions. Each of the Members agrees to execute, acknowledge and deliver
such additional documents, and take such further actions, as may reasonably be required from time
to time to carry out each of the pm visions, and the intent, of this Agreement, und every agreement or
document relating hereto, or entered into in connection herewith.
15.11. ARBITRATION OF DISPUTES. ANY MEMBER HERETO MAY REQUIRE

TIIE ARDTI'RATION OF ANY DISPlITE ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY RELATED AGREEMENT. SUCH MEMBER MAY INTTIA1E AND
REQUIRE ARBITRATION BY GIVING NOTICE TO THE OTHER PARTIES SPECWYING
THE MATIER TO BE ARBffRATED. IF LEGAL ACTION IS ALREADY PENDINGON ANY
MATI'ER CONCERNING WHICH THE NOTICE IS GIVEN, TIIB NOTICE SHALL NOT BE
EFFECrIVE UNLESS GTVENBYTHEDEFENDANTTHEREIN AND GIVEN BEFORE THE
EXPIRATION OF TWENTY (20) DAYS AFTER SERVICE OF PROCESS ON THE PERSON
GIVlNG THE NOTICE. EXCEPT AS PROVIDED TO THE CONTRARY IN THESE
PROVISIONS ON ARBITRATION, TIIE ARBrfRATlON SHALL BE IN CONFORMITY wrrH
AND SUBJECT TO APPLICABLE RULES AND PROCEDURES OF THE AMERICAN
. ARBITRATION ASSOCIATION (OR ANY SUCCESSOR TIIBRETO). IF THE AMERICAN
ARBITRATION ASSOCIATION IS NOT THEN IN EXISTENCE AND THERE IS NO
SUCCESSOR, OR IF FOR ANY REASON THE AMERICAN ARBITRATION ASSOCIATION
FAILS OR REFUSES TO ACT, TIIB ARBITRATION SHALL BE IN CONFORMITY wrrn
"''""'""'""'"""'"'"""'''"~""'~"'"""""'"'"""'F"""""".._;i""orw0-00.vo<lo<Amended and Restated Operating Agreement- 38
p. 40/59
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AND SUBJECT TO THE PROVISIONS OF APPLICABLE NEV ADA STATUTES (IF ANY)
RELATING TO ARBITRATION AT Tiffi TlME OF THE NOTICE. THE ARBITRATORS
SI-Wl BE BOUND BY THIS AGREEMENT AND ALL RELATED AGREEMENTS.
PLEADINGS IN ANY ACTION PENDING ON THE SAME MATIER SHALL, IF
ARBITRATION IS REQUIRED AS AFORESAID, BE DEEMED AMENDED TO LIMIT THE
ISSUES TO THOSE CONIBMPLATED BY THE RULES PRESCRIBED ABOVE. EACH
MEMBER SHALL PAY THE COSTS OF ARBffRATION, INCLUDING ARBITRATOR'S
FEES, AS AWARDED BY THE ARBITRATOR(S ). THE NUMBER AND SELECTION OP
ARBITRATOR(S) SHALL BE IN ACCORDANCE WTI1ITHE RULES PRESCRIBED ABOVE,
EXCEPTTHAT(i)EACHARBITRATORSELECfEDSHALLBENElITRALANDFAMILIAR
WITH THE PRINCIPAL SUBJECTMA1"l'ER OF THE ISSUES TO BE ARBITRATED, SUCH
AS, BYWAY OFEXAMPlli ONLY, TECHNOLOGY AND SOFTWARE DEVELOPMENT, OR
SUCH OTHER SUBJECT MATIER AS MAY BE AT ISSUE, (ii) THE TESTIMONY OF
WITNESSES SHALL BE GIVEN UNDER OATH, AND (iii) DEPOSITIONS AND OTIIBR
DISCOVERY MAY BE ORDERED BY THE ARBITRATOR(S).
THE PROVISIONS OFTiflS SECTION SHALL lN NOWAY LIMIT THE RIGIIT
OF THE Ll..C OR ANY MEMBER TO OBTAIN PROVISIONAL OR ANCTLLARY REMEDIES
FROM A COURT OF COMPETENT JURISDICTION BEFORE, AFTER, OR DURING THE
PENDENCY OP ANY ARBITRATION PROCEEDING. TITE EXF..RCISE OF SUCH REMEDY
SHALL NOT WAIVE THE RIGHT OF THE ANY OF THE LLC OR ANY MEMBER TO
ARBITRATE.
NOTICE: BY EXECUTlNG THIS AGREEMENT, YOU ARE AGREEING TO
HA VE ANY DISPUTE AR1SING OTJT OF THE MATTERS INCLUDED IN THE
AARBITRATION OF DISPUTES" PROvis!ON DECIDED BY NEurnAL ARBil'RATlON
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGT-IT POSSESS TO HAVE THE DlSPUfE
LITIGATEDINACOURTORJURYTRIAL. BYINTTTALTNGINTHESPACEBEWWYOU
ARE GIVING UP YOUR JUDICIALRIGITTS TO DISCOVERY AND APPEAL. UNLR')S SUCH
RIGHTS ARE SPECIFICALLY INCLUDED IN THE ARBITRATION OF DISPlJI'ES'
PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION YOU MAY BE COMPELlliD TO ARBITRATE UNDER THE AUTHORITY OF
THE APPLlCABLE STATE STATUTE. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY. NOTHlNG CONTATNED HEREIN SHALL PREVENT ANY
MEMBER FROM SEEKING EQUrT ABLE RE11EDIBS l'ROM A COURT OF COMPETENT
JURISDICTION.
15.12. WAIVER OF JURY TRIAL. WITH RESPECT TO ANY DISPUTE ARISING
UNDER OR IN CONNECTION WlTH THIS AGREEMENT OR ANY RELATED AGREF.MENf,
AS TO WHICH NO MEMBER INVOKES Tiffi RIGHT TO ARBITRATION HEREIN
PROVIDED, OR AS TO WHICH LEGAL ACTION NEVERTHELESS OCCURS, EACH
MEMBERHEREBYIRREVOCABLYWAIVESALl..RlGHTSITMAYHAVETODEMANDA
JURY TRIAL. THIS W AIYER IS KNOWINGLY. INTENTIONALLY, AND VOLUNTARILY
MADEBYTHEMEMBERSANDEACHMEMBERACKNOWLEDGESTHATNONEOFTHE
OTHER MEMBERS NOR ANY PERSON ACTING ON BEHALF OF THE OTHER PARTIES
HASMADEANYREPRESENTATIONOFFACfTOlNDUCETHISWATVEROFTRIALBY
C\J)oQ.ailMD w
S6ttlnpUJ~L"'~ :icu~T"~~"ll'lll'r lid-m.>i Fil.:..\OJ..Uooln.ppillAR011.(1G-01).vG.i1ncAn1ended and Restated Operating Agreernent -
39
No.7191
P. 41/5f
Douglas J. FrYe.
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644-3 Filed 05/28/08 Page 86 of 115
'\:'.')
JURY OR IN ANY WAY TO MODTFY OR NULLIFY ITS EFFECT. THE MEMBERS EACH
FURTIIBR ACKNOWLEDGE THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN
THE MAKING OF TIIlS WArvER BY INDEPENDENT LEGAL COUNSEL. SELECTED OF
ITS OWN FREE wn.L, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS TffiS
WAIVER WITH COUNSEL. THE MEMBERS EACH FURTHER ACKNOWLEDGES THAT IT
HAS READ AND UNDERSTANDS THE MEANING AND RAMfFllCATIONS OF THIS
WAIVER PROVISION.
15.13. Third Party Beneficiaries. There are no third party beneficiaries of this Agreement
except (i) Affiliates and Principals of the Members and (ti) any other Persons as may be entitled to
the benefits of Article 12. l hereof.
15.14. No Partition. The Mcmhers agree that the Property that the ILC may own or have
an interest in is not suitable for partition. Eacho( the Members hereby irrevocably waives any and
all rights that it may have to maintain any action for partition of any Property the ILC may at any
time have an interest in.
15.15. Entire Agreement This Agreement, together with all exhibits hereto, and the
Articles of Organization constitute the entire agreement of the Members with respect lo, and
supersedes all prior written and oral agreement~. understandings and negotiations with respect to, the
subject matter hereof.
15.16. Waiver. No failure by any party to insist upon the strict performance of any
covenant, duty. agreement or condition of this Agreement or to exercise any tight or remedy
consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant,
duty, agreement or condition.
15 .17, Attorneys' Fees. In the event of any litigation, arbitration or other dispute arising as
a result of or by reason of this Agreement, the prevailing party ia any such litigation, arbitration or
other dispute shall be entitled to, in addition to any other damages assessed, its rea~onable attorneys'
fees, and all other costs and expenses incuncd in connection with settling or resolving such dispute.
The attorneys' fees which the prevailing party is entitled to recover shall include fees for prosecuting
or defending any appeal and shall be awarded for any supplemental proceedings until the final
judgment is satisfied in full. In addition to the foregoing uward of attorneys' fees to the prevailing
patty, the prevailing party in any lawsuit or arbitration procedure on this Agreement shall be entitled
to its reasonable attorneys' fees incurred in any post judgment proceedings to collect or enforce the
judgment. This attorneys' fees provision is separate and several and shall survive the merger of this
Agreement into any judgment.
15.18. Anthority. Each signatory to this Agreement represents and wl!ITllnts that he or she
possesses all necessary capacity and authority to act for, sign, and bind the respective entity on
whose behalf he or she is signing.
e:'Du~11aidtka1P1.1~&.d11tAI,,.~J111aNtt11~ua"'lnfPidA1tOl'A(10--01).v6.ibAmended and Restated Operating Agree1nent -40
No.7191
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Douslas J. Frve,
Esq.
Jan. Case
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(The remainder of this page intentionally left blank.

This Agreement continued and signed on the following pages.)
7191 88 P.
43/59
Douglas J. Fr Document
re. Esq. 644-3 Filed 05/28/08 NoPage
Jan.19
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SIGNATURES OF THE PARTIES

IN WITNESS WHEREOI<', the parties hereto have executed and delivered, ot caused to be
executed and delivered by a duly authorized representative, this AMENDED AND RESTATIJD
OPERATING AGREEMENT of eTreppid Technologies, LLC as of the day and year first above
written and certify that this Amended and Re.~laled Operating Agreement is hereby approveu and
duly adopted hy the undersigned Class A Members entitled to Vote effective as of NOVEMBER I,
200!..
Further, the undersigned, as Members of the LLC, acknowledge they have rwd and
understand the foregoing Amended and Restated Operating Agreement for eTreppid
Technologies, LLC, including specifically, but not limited to, Sections 15.11 and 15.12,
"Arbitration of Di~putes," and "Waiver of Jury Trial," re.~pcctively, and, as evidenced by their
signature~ below, the undersigned hereby acknowledge and agree to the provMons contained.
herein.
A Nevada Limited-Liability Company
By It~ Voting Class A Members

CLASS A MEMBERS:
FRIENDLY CAPITAL PARTNERS, L.P.

A California Limited Parlnership
By: Fri ly Capital, c., A Nevada Corporation
Its
eral Pa
THEFREMONTTRU 'T, DATED MAY 16, 1994

A Nevada
p' 44/b~J
No. 11 ~I
Douglas J. FrYe, Esq.
Jan.J9. ;'005 J:39PM
ACCEPTANCE OF APPOINTMENT
OF THE MANAGER, COMMITTEE MEMBEKS
AND CJfl EF TECHNOLOGY OFFICER
Each of the undersigned hereby (i) accepts his respective appointment as a Manager,
Committee Member or officer of the LLC for the term stated in this Operating Agreement or as
otherwise set by the Management Committee; (ii) ~cknowlcdges he bas read and understands the
foregoing Operating Agreement of the LLC, particularly the resllictions contained in Article 6
tbc~of, and agrees to he bound by the tel1llS, provisions, covenants and restrictions set forth in said
Operating Agreement, as amended from time to time; and (iii) hereby agrees to undertake the
pe1fonnance of his duties, responsibilities and obligations of each respective office in accordance
with tel1lls of this Operating Agreement, the Articles of Organiiation and the applicable provisions
of Nevada law, as any and all may he amended fro time to time
. ,RY, as to his appointment as

logy Officer and Committee
P. 45/59
Dou!las J. Frie.
Esq. 644-3 Filed 05/28/08 No.7191
Jan.19.
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\1
eTrcppid Technologies, LLC
POST-EFFECI'IVE EXECUTION PAGE
By his, her or its signature below, the undersigned hereby consents to and agrees to be
bound by the tenns and provisions of that certain Amended and Restated Operating Agreement
dated effective as of November I, 2001 between eTreppid Technologies, LLC, a Nevada limited
liability company (the "Company"), and its Members (as amended from time to time, the
"Qperating Agreemet"), a current copy of which has been received by the undersigned from the
Company.
The undersigned hereby acknowledges that the undersigned has received and reviewed
the Operating Agreement. The undersigned hereby further acknowledges and agrees that the
undersigned shall have all of the rights, preferences and obligations under the Operating
Agreement a5 a "Class A Member," "Class B Member," or "Class C Member" or, generally as a
"Member," as defined and used therein. The undersigned's execution of this Amended and
Restated Operating Agreement Post-Effective Execution Page constitutes the undersigned's
execution and acceptance of the Operating Agreement, and this Amended and Restated
Operating-Agreement Post-Effective Execution Page shall constitute an executed counterpart to
the Operating Agreement, including any future amendments, restatements or modifications
thereof which may be duly approved and adopted in accordance therewith.
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement PostEffective Execution Page has been executed by the undersigned as of
December 1
, 2001.
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:
L~~S
:
(Pri
'L----
Signature
SIGNATURE BLOCK FOR JOINT
SIGNATURE BLOCK FOR ENTITY

MEMBER:
Name of Entity or Trust

By:_-'-------------Signature
MEMBER (TF ANY):
----------------Name of Authorized Representative
Name (Print or Type)
Tille or Authorized Capacity
Sigra\ure
P. 115
46/5'l
Douglas J. Frie.
Esq. 644-3 Filed 05/28/08 No.7191
Jan Case
I 9. :) 03:06-cv-00056-PMP-VPC
06 7 39PM
Document
Page 91 of
\.._/\

POST-EFFECTIVE EXECUTION PAGE
dated effective as of November 1, 2001 between eTreppid Technologies, LLC, a Nevada limited
"QJ1.erating Agreement"), a current copy of which has been received by the undersigned from the
Company.
the Operating Agreement The undersigned hereby further acknowledges and agrees that the
Agreement as a "Class A Member," "Class B Member," or "Class C Member" or, generally as a
Operating Agreement Post-Effective Execution Page shall constitute an executed counterpart to
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement PostDEC 1 2001 , 200 L
Effective Execution Page has been executed by the undersigned as of
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:
~_s(A\f.

MEMBER:
5::> TQe W
Signa~
By: _ _ _ _ _ _ _ _ _ _ _ _ __
Signature

MEMBER (IF ANY):
Name of Authorized Representative
Name (Print or !ypc)
Title or Authorized Capacity
Signature
P. 47/59
Douelas J. FrYe,
Esq. 644-3 Filed 05/28/08 No.7191
Jan Case
19 2006
J :39PM
3:06-cv-00056-PMP-VPC
Document
Page 92 of 115

bound by the terms and provisions of that certain Amended and Restated Operating Agreement
"Qi1.erating Agreement"), a current copy of which has been received by the undersigned from the
Company.
Operating Agreement Post-Effective Execution Page shall constitute an executed countelpart to
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement PostEffective Execution Page has been executed by the undersigned as of DEC 1 2001
, 2001.
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:

MEMBER:
THE WARREW EDWARD TREPP PERMAIIBllT

Signature

MEMBER (rF ANY):
Try5tee
Signature
P. 48/59
Douglas J. frve.
Esq. 644-3 Filed 05/28/08 No.7191
Jai.19.
7:39PM
Case:005
3:06-cv-00056-PMP-VPC
Document
Page 93 of 115
tJ ->SB MEMBER SIGNATURE P~t2
_ _ _ _ _ INTREPID TECHNOLOGIES, LLC _ _ _ __
THE UNDERSIGNED hereby certifies and states that: (i) he or she is an original subscribing
or transferee Class B Member of INTREPID TECHNOLOGIES, LLC, a Nevada limited liability
company (the "Comp!llly"); (ii) he or she has read the Amended and Restated Operating Agreement of
the Company dated and adopted as of January I, 1999 (the "Intrepid Operating Ai:reement"),
specifically including Article 9. "Restrictions on Transfer of Membership Interestlr Admission and
fu!lwtitutjon of New Members "and Sections 16. l l and 16.12 "Arbitration of Disputes," and "Waiver
of Jurv Trial," re:wectjyely thereof; (iii) upon the prior approval by a Majority in Interest of the
Members entitled to Vote concerning the Transfer of any Units of the Company or admission of any new
Member to the Company pursuant to Article 9 of the Intrepid Operating Agreement (if so required), and
upon executing and delivering this counteq>at1 signature page to the Management Committee of the
Company, he or she will become a new or substituted Class B Member, as the case may be, of the
Company; and (iv) the execution of this Class B Member Signature Page shall constitute the
undersigned's execution and delivery of the Intrepid Operating Agreement as a party thereto and shall
constitute his acceptance and agreement to be bound by the tem1s and conditions thereof.
IN WITNESS WHEREOF, the undersigned, individually or by an authorized representative,
has executed and delivered this CLASS B MEMBER SIGNATIJRE PAGE as of the day and year set
forth below, which document shall be attached to and become a part of the Intrepid Operating
Agreement.
DATED AND EXECUTED ON:
__,_,_/(_f
~_,_'l--'1_ _, ~
NUMBER AND CLASS OF UNITS AND
PERCENTAGE INTEREST PURCHASED OR
TRANSFERRED:
" ro
---=0_--',,l_'~----Class A Unil!l
SIGNATIJREBLOCKFORINDIVIDUAL MEMBER:
:re;
<'..-
SIGNATURE BT,OCK FOR JOINT MEMBER

(IF ANY):
_ _ _ _ _ _ _ _ _ ClassD Units
D . J? J
Percentage Interest
Signature
AMOUNT OF ORIGINAL CAPITAL

CONTRIBUTION OR PRO RA'l'A AMOUNT OF
ASSIGNED CAPITAL CONTRIBUTION:
SIGNATURE BLOCK FOR ENTITY MEMBER:

A _ _ _ __
Name ofEntity or Tiust

By: _ _ _ _ --~----------
Signature
Title or Authorized Cpacity
CLASS D MEMDERSIGNA11JRE PAGR. rage I
49/59
Douglas J. FrYe,
Esq.
Jan.J9.
7:39PM
Case2006
3:06-cv-00056-PMP-VPC
Document
644-3 Filed 05/28/08 No.7191
Page 94 P.
of 115
&> JS B MEMBER SIGNATURE PAh2

_ _ _ _ _ INTREPID TECHNOLOGIES, LLC _ _ _ __
or transferee Class B Member of INTREPID TECHNOLOGIES, LLC, a Nevada limited liability
company (the "Oimpany"); (ii) he or she has read the Amended and Restated Operating Agreement of
the Company dated and adopted as of January 1, 1999 (the "Intrepid Operating Agreement"),
specifically including Article 9. "Restrictions on Transfer of Membership Interests: Ad!njssjon and
Suhstiti1tion ofNew Members." and Sections 16.11 and 16 12 "Arbitration of Dij,!utes" and "Waiver
l![Jyry Trial" respectively thereof; (iii) upon the prior approval by a Majority in Interest of the
Members entitled to Vote concerning the Transfer of any Unil of the Company or admission of any new
Member to the Company pursuant to Article 9 of the Intrepid Operating Agreement (if so required), and
upon executing and delivering this counterpart signature page to the Management Committee of the
Company, he or she will become a new or substituted Class fl Member, as the case may be, of the
Company; and (iv) the execution of this Class B Member Signature Page shall constitute the
undersigned's execution and delivery of the Intrepid Operating Agreement as a party thereto and shall
constitute his acceptance and agreement to be bound by the terms and conditions thereof.
IN WITNESS WHEREOF, the undersigned, individually or by an authorized representative,

has executed and delivered this CLASS B MEMBER SIGNATURE PAGE as of the day and year set
forth below, which document shall be attached lo and become a part of the Intrepid Opemting
Agreement.
_VX__..\\~0~1)~11.we~~~~a~- ..citL
NUMBER AND CLASS OF UNITS AND
TRANSFERRED:
_ _ _ _ _ _ _ _ _ Class A Units
...
-----~ S~n~Class B Units
Name (Print o~)
~11&.~
SIGNATURE BLOCK FOR JOINT MEMBER

(IF ANY):
-----'''-";;;i'-''5=-% Percentage Interest
. Signature
AMOUNT OF ORlGINAL CAPITAL
CONTRIBUTION OR PRO RATA AMOUNT OF
s lD.$co. !'!
'
SIGNATURE BLOCK FOR ENTITY MEMBER.:
A_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
By:_ __
Signture
--------------Name of Authorized Representative
CLASS B MllMMR
$~A1'URH PAOE
- Pag< t
No. 7191 P. 50/59

Dou1las J. Frie.
Esq.
Jan Case
19. :'006
7:40PM
3:06-cv-00056-PMP-VPC
Document
644-3 Filed 05/28/08 Page 95 of 115
cTreppld Technologies, LLC

hound by the tenns and provisions of that certain A.mended and Restated Operating Agreement
liability company (the "Company"), and its Members (as amended from time lo time, the
"Qi!erating Agreement"), a current copy of which has been received by the undersigned from the
Company.
1be undersigned hereby acknowledges that tile undersigned has received and reviewed
Agreement as a "Class A Member," "Class B Member,'' or "Class C Member" or, generally as a
therC".ofwhich may be duly approved and adopted in accordance therewith.
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement Post. 2001.
Effective Execution Page has been executed by the undersigned as of/)'_ S
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:
~~!lo~

MEMBER:

By: _ _ _ _ _ _ _ _ _ _ _ _ __
Signature

MEMBER (IF ANY):
Signature
No . 7I 91
P. 5I/5 J
Douglas J. FrYe, Esq .
.Jan.19.
7:40PM
Case1006
3:06-cv-00056-PMP-VPC
J'
~-)
\ ..
AMENDED AND RESTAl'ED OPERATING AGREEMENT

liability company (the "Company"), and its Members {as amended from time to time, the
"Qp_erating Agreement"), a current copy of which has been received by the undersigned from the
Company.
Rest:lted Operating Agreement Post-Effective Execution Page constitutes the undersigned's
DEC 1 2001 , 2001.
SIGNATURE BLOCK FOR

INDIVIDUAL MEMBER:

MEMBER:
$"N'..v 4. o.-.-N"~.,....e--=- (;.;.,."".J

By~"2,~.L...,,
Signature
/Siil1ature

MEMBER (IF ANY):
!z;... .t. .J
Signature
P 52/5!1
Douglas J. Frie.
Eso. 644-3 Filed 05/28/08 No.7191
Jan Case
19. 2006
J:40PM
3:06-cv-00056-PMP-VPC
Document
Page 97 of 115
-
\
'.

POST-EFFECTIVE KXECUTION PAGE
dated effective as of November 1, 2001 between eTrcppid Technologies, LLC, a Nevada limited
"Qrulrating Agreement"), a current copy of which has been received by the undersigned from the
Company.
Agreement as a "Class A Member," "Class B Member," or "Class C Member'' or, generally as a
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement PostEffective Execution Page has been executed by the undersigned as of 1:;.'\J>e,, d>-u: , 2001.
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:

MEMBER:
NameofEntityorTrust
Signature
'
By:~
Signature
JL
~

MEMBER (IF ANY):
f\ll.llo12.C.c ss... ~T<?tt

Signature
Stc,t.>ftUl1
P. 115
53/59
Do11glas J. FrYe,
Esq . 644-3 Filed 05/28/08 No.7191
.Jan.19.
7:40PM
Case2006
3:06-cv-00056-PMP-VPC
Document
Page 98 of
cTrcppid Technologies, LLC

liability company (the "Company"), and its Members (a~ amended from time to time, the
"OperatingAgrcement"), a current copy of which has been received by the undersigned from the
Company.
Agreement as a "Class !I. Member," "Class n Member," or "Class C Member" or, generally as a
Operating Agreement Post-Effective Execution Page shall constitute an executed counletpart to
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement PostEffectivc Execution Page has been executed by the undersigned as of
December 1
, 2001.
SIGNATURE BLOCK FOR
INDIVIDUAi, MEMBER:

MEMBER:
CAPITAL LLC
Nam. e (Print or Type)
Signature
DOUGLAS J. FRYE
MEMBER (IF ANY):
MANAGER
Signature
No.7191 P 54/59
Douglas J. Frie,
Esq.
Jao.19.
7:40PM
Case2006
3:06-cv-00056-PMP-VPC
Document
644-3 Filed 05/28/08 Page 99 of 115

liability company (the "Company''), and its Members (as amended from time to time, the
"Operating Agreement"), a current copy of which has been received by the undersigned from the
Company.
underaigned shall have all of the righ~~. preferences and obligations under the Opernting
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement PostEfTective Execution Page has been executed by the undersigned as of 6" ~ ~ 2001.
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:
~- M. O.l'H'1"/\
MEMBER:
r;.-,,/
~~4
Siif/'
.....a_
,v.,..,l
-----~----------
Namc of Entity or Trust
By: _ _ _ _ _~-------Signature

MEMBER (IF ANY):
Signature
7191100Pof 55/5S
Douglas J. FrYe.
Esq
Jin Case
19. 2006
J:40PM
3:06-cv-00056-PMP-VPC
Document
644-3 Filed 05/28/08 No
Page
115
eTreppld Technologies, LLC

POST-F:FFECTIVE EXECUTION PAGE
bound by the terms and provisions of that ce1tain Amended and Restated Operating Agreement
"~rating Agreement"), a current copy of which has been received by the undersigned from the
Company.
Agreement as a "Class A Memher," "Class B Member," or "Class C Member" or, generally as a
December l _, 2001.
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:
Signature
'SIGNATURE BLOCK FOR JOINT
DOUGLAS J. FRYE
MEMBER(ll' ANY):
TRUSTEE
Signature
p. 56/59
7191
Dou1las J. Fr Document
re. [sq 644-3 Filed 05/28/08 No.
hn Case
19 2006
7 41PM
3:06-cv-00056-PMP-VPC
Page 101 of 115
(';,)
~S B MEMBER SIGNATURE P A(;',l
-----~eTreppid
Technologies, LLC _ _ _ _ __
or transferee Class B Member ofcTreppid Technologies, LLC, a Nevada limited liability company (the
"Qirnpany"); (ii) he or she has read the Amended and Restated Operating Agreement of the Company
dated and adopted as of January I, 1999, as amended by First Amendment on July 7, 2000 (the
"eTreppid Operating Agreement"), specifically including Article 9. "Restrictions on Transfer of
Membership Interests; Admission and Substitution of New Memb<;rs." and Sections 16.1 I and 16, 12,
'.'.8!:!1itration ofDisputes," and "Waiver of JuryTrial.''respectively, thereof; (iii) upon thepriorapproval
by a Majority in Interest of the Members entitled to Vote concerning the Transfer of any Units of the
Company or admission of any new Member to the Company pursuant to Article 9 of the eTreppid
Operating Agreement (if so required), and upon executing and delivering !his counterpartsignaturepage
to the Management Committee of the Company, he or she will become a new or substituted Class B
Member, as the case may be, of the Company; and (iv) the execution of this Class B Member Signature
Page shall constitute the undersigned's execution and delivery of the eTreppid Operating Agreement as
a party thereto and shall constitute his or her acceptance and agreement to be bound by the terms and
conditions thereof.
IN WITNF..SS WHEREOF, the undersigned, individually or by an authorized representative,

has executed and delivered this CLASS B MEMBER SIGNATURE PAGE as of the day and year set
forth below, which document shall be attached to and become a part of the eTreppid Operating
Agreement.
DATED AND EXECIITED ON:
SIGNATURE BLOCK FOR INDIVIDUAL

MEMBER;
WLY27.2000
Name (Print o< Type)
NUMBER ANO CLASS OF UNITS AND
TRANSFERRED;
__-_----'-'11"'1"'.1'-"1------------- Closs B Units

NI A
Signature
(IF ANY);
% Percentage Interest

AMOUNT OF ORIGINAL CAPITAL
CONTRIBUTION OR PRO RATA AMOUNT OF
Signature
CK FOR ENTITY MEMBER:
9,999.90
n
ignature
Harvey A. Booklltein .
Name of Authoriz.ed Representative
Trusto
CLASS B MllMBBRSlGNATUl\B PAOE Page l
Mo.7191
P. 57/5!1
Oou!las J. Frie.
[sq.
,'an Case
19 :'006
J 41PM
3:06-cv-00056-PMP-VPC
~l
-)

dated effective as or November 1, 200 l between eTreppid Technologies, LLC, a Nevada limited
liability company (the "Company"), and its Members (a~ amended from time to time, the
"Qpcraling Agreement"), u current copy of which has been received by the undersigned rrom the
Company.
Agreement as a "Class A Member," "Class B Member," or "Class C Member" or, generally llS a
IN WITNESS WHEREOF, this Amended and Restated Operating Agreement Post, 2001.
Effective Execution Page has been executed by the undersigned as or
SIGNATURE BLOCK FOR
INDIVIDUAL MEMBER:

MEMBER:
KENNY ROGERS
Signature
Signature
MEMBER (IF ANY):
Signature
p 58/59
JI 91
DouKlas J. Frie.
[sq 644-3 Filed 05/28/08 No
,anCase
19 2006
J 41PM
3:06-cv-00056-PMP-VPC
Document
Page 103 of 115
"'\:) )SC MEMBER SIGNATURE PAGb
------
-------
THE UNDERSIGNED hereby certifies and states that: (i) he or she is an original subscribing or
transforee Cla5s C Member of eTreppid Technologies, LLC, a Nevada limited liability company (the
"ComQW"); (ii} he or she has read the Amended and Restated Operating Agreement of the Company dated
and adopted as of November I, 2001 (the "Operating }.greement"), specifically including Article 9,
"Restiictions on Transfer of Membership Interests: Agmission and Substitution of New Members," and
SectiQ!.l~. 16. 11 and 16. l 2, "Arbitrati9n of Disputes," and "Waiver of Jury Trial,''respecti vely. thereof; (iii)
upon the prior approval by a Majority in Interest of the Members entitled to Vote concerning the Transfer of
any Units of the Company or admission of any new Member to the Company pursuant to Article 9 of the
Operating Agreement (if so required), and upon executing and delivering this counterpart signature page to the
Company, he or she will become a new or substitute Class C Member, as the case may be, of the Company;
and (iv} the execution of this Class C Member Signature Page shall constitute the undersigned's execution and
delivery of the Operating Agreement as a party thereto and shall constitute his her acceptan~ and agreement
to be bound by tbe terms and conditions thereof, including any future amendments, restatements or
modifications thereof which may be duly approved and adopted.
or
IN WITNESS WHEREOF, the undersignod, individually or by an authorized representative, has

executed and delivered this CLASS C MEMBER SIGNATURE PAGE as of the day and year set forth below.
which document shall be attached to and become a part of the Operating Agreement of eTreppid Technologies,
LLC.
SIGNATURE BLOCK FOll INDIVIDUAL
MEMBER:
NOV 6- ZDOT
Name (Print or TYPe)
Signature

(IF ANY):

Signature
SIGNATURE BLOCK FOR ENTITY MEMBER:

G/e1Jbrook Partners, a Nevada partnership
By Prim Venture~. Inc., [ts General Partr1er
Name ofEntity or Trusl

By:
VJ
44
:fa.., VJ
[)<00-~
Signature
Wayne Prim

.chaii;man
Class C Member's
Sig11ature Page - 1
Douglas J. frve, [sq

Ln !9. 2006 7 41PM
No. 1191
~. bY/bY
-. .
-- , IS C MEMBER SIGNATURE PAG._..

_ _ _ _ _ _ eTreppid Technologies, LLC _ _ _ _ __
THE LINDERSIGNED hereby certifies and states that: (i) he or she is an original subscribing or
transfrree Class C Member of cTreppid Technologies, LLC, a Nevada limited liability company (the
"Company"); (ii) he or she has read the Amended and Restated Operating Agreement of the Compil!ly dated
and adopted as of November I, 2001 (the "Operating Agreement"), specifically including Article 9,
"Restrictions on Transfer of Membership Interests Admission and Substitution of New Members." and
Sections 16. II and 16. 12. "Arbitration of Disputes." !!lld ''Wajver ofJury Trial," respectively, thereof; (iii)
upon the prior approval by a Majority in interest of the Members entitled to Vote concerning the Transfer of
any Units of the Company or iu!rnission of any new Member to the Company pursuant to Article 9 of the
Operating Agreement (if so required), and upon executing and delivering this counterpart signature page to the
Company, he or she will become a new or substitute Class C Member, as the case may be, of the Company;
and (iv) the execution of this Class C Member Signature Page shall constitute the undersigned's execution and
delivery of the Operating Agreement as a party thereto and shall constitute his or her acceptance and
agreement to be bound by the terms and conditions thereof, including any future amendments, restatements or
modifications thereof which may be duly approved and adopted.
IN WITNESS WHEREOF, the undersigned, individually or by an authorized representative, bas
executedpd delivered this CLASS C MEMBER SIGNATURE PAGE as oftbe day and year set for:th below,
which document shall be attached to and become a part of the Operating Agreement of eTreppid
Technologies, LLC.
DATEDANDEXEJEDON:
/CJ;/ 6 /;; 2c
SJGNATlJRE BLOCK FOR INDIVIDUAL

MEMBER:

Signature
(IF ANY):

Signature
-1 \ : ,,
'Jt \18 ~~

.--- _ \ t 11644-3
\j /'J: Filed 05/28/08 Page 105 of 115
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ETREPP!D TECHNOLOGIES, INC., a

CASE NO.
Plaintiff,
DEPT.NO.
vs.
DOES 1 throngh 20,
Defendant.
20
21
22
23
24
25
26
27
28
ATTORNEY CERTIFICATION IN SUPPORT OF ETREPPID TECHNOLOGIES, L.L.C.'S

EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER MOTION FOR
A PRELIMINARY INJUNCTION AGAINST DENNIS MONTGOMERY
Pursuant to N.R.S. 600A.070.3, Plaintiff hereby lodges the enclosed record conditionally under
under seal.
I, JERRY M. SNYDER, declare as follows:
I am an attorney for eTreppid Technologies, L.L.C. ("eTreppid"), Plaintiff in the above-
entitled action. I have read the ETREPPID TECHNOLOGIES, L.L.C. 'S EX P ARTE APPLICATION
::ODMA\PCDOCS\HLRNODOCS\5084 l 6\ I
Page l of2
FOR A TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE
PRELIMINARY INJUNCTION AGAINST DENNIS MONTGOMERY, and know its contents. Prior
to filing the Complaint in this action and seeking a Temporary Restraining Order, I advised Eric
Pulver, counsel for Defendant Dennis Montgomery, that Plaintiff eTreppid intended to appear in court
on Thursday; January 19, 2006, to seek a TRO.
6
7
8
I certify under penalty of perjury under the laws of the State of Nevada that the foregoing is
true and correct.
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2 JONATHAN D. BUTLER, CA Bar No. 229638
3 Palo Alto, CA 94304-1114
Telephone: (650) 233-4500
4 Facsimile: (650) 233-4545
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7 Telephone: (775) 327-3000
Fa:simile: (775) 786-6179
8
9 ETREPPID TECHNOLOGIES, L.L.C.
10
IN THE JUSTICE COURT OF RENO TOWNSHIP

11
COUNTY OF WASHOE, STATE OF NEVADA

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14 ETREPPID TECHNOLOGIES, L.L.C., a
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Plaintiff,
16
vs.
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19
Defendants.
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DECLARATION OF BARJINDER
BAL IN SUPPORT OF ETREPPID
TECHNOLOGIES. L.L.C.'S EX PARTE
APPLICATION FOR A TEMPORARY
RESTRAINING ORDER AND ORDER
TO SHOW CAUSE RE
PRELIMINARY INJUNCTION
AGAINST DENNIS MONTGOMERY
Date: January_, 2006
Time: _:00 . .
Dept.:
Complaint Filed: January 19, 2006
Trial Date: None
-------------~)
24
25
No.

Pursuant to NRS 600A.070.3, Plaintiff hereby lodges the enclosed record
26 conditionally under seal and will make a motion or application to the Court for an order
27 pemtitting the record to be filed under seal.
28
US __SW_600106527_1 bal.doc
- 1-
BAL DECL. ISO ETREPPID'S EXP ARTE APPLICATION FOR TRO AND OSC
I, Barjinder Bal, do hereby declare that:
1.
3
4
I am a programmer/software developer for eTreppid Technologies, L.L.C.
("eTreppid"). I have worked at eTreppid since March, 2000.

2.
Historically, in working al eTreppid, eTreppid Source Code that I work on is
copied from the central storage for the eTreppid Source Code to a local storage that is
as;ociated with the workstation that I work at. As a result, over time, a collection of the
different eTreppid Source Code files that I have worked on was stored on my workstation.
8
9
.3.
Around December 19 or 20, 2005, Mr. Montgomery began deleting certain
eTreppid Source Code files that were located on the hard drive for my workstation and
10
which I had not recently used. Mr. Montgomery told me he was deleting the files on my
11
workstation for security reasons, and that there remained copies of these files on the
12
SRCSERVER that I would still be able to access. Also, at that time, there still remained on
13
the hard drive for my workstation other eTreppid Source Code files that I had been using
14
more recently in the performance of my duties at eTreppid.
15
4.
When I arrived at work on Monday, January 2, 2006 all of the eTreppid
16
Source Code that I had been using more recently and which had still been on the hard drive
17
for my workstation the previous week had been deleted.
18
19
20
I declare under penalty of perjury under the laws of the State of Nevada that the
foregoing is true and correct.
Executed this jJ_ day of January, 2006, at Reno, Nevada.
21
22
1
23
Barjinder Bal
24
25
26
27
28
US __SW_600106527_l bat.doc
-2-
BAL DECL. ISO ETREPPID'S EX PARTE APPLICATION FOR TRO AND OSC
'\

1 PILLSBURY WINTHROP SHAW PITTMAN, L.LP.
2475 Hanover Street
3 Palo Alto, CA 94304-1114
2%6 JM/ 19 PH 4= 32
Telephone: (650) 233-4500
4 Facsimile: (650) 233-4545
01 l'ILO
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Jerry M. Snyder, NV Bar No. 6830
Reno, NV 89511
7 Telephone: (775) 327-3000
Facsimile: (775) 786-6179
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9 ETREPPID TECHNOLOGIES, LLC
10
11
COUNTY OF WASHOE, STATE OF NEVADA

12
GVOS 00114
13
14 ETREPPID TECHNOLOGIES, L.LC, a
15
Plaintiff,
16
vs.
17
19
Defendants.
20
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)
)
)
)
)
)
)
)
)
)
)
)
)
21
)
)
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22
23
No.
>
DECLARATION OF VENKATA
KALLURI IN SUPPORT OF
ETREPPID TECHNOLOGIES, LLC.'S
EX PARTE APPLICATION FOR A
TEMPORARY RESTRAINING
ORDER AND ORDER TO SHOW
CAUSE RE PRELIMINARY
INJUNCTION AGAINST DENNIS
MONTGOMERY
Date:
Time:
Dept:
January_, 2006
:00 ___ _

Trial Date: None
24
25
Pursuant to NRS 600A.070.3, Plaintiff hereby lodges the enclosed record

26
conditionally under seal and will make a motion or application to the Court for an order
27
permitting the record to be filed under seaL

28
US_.SW_600106524_1 kalluri.doc
- 1-
KALLURI DECL. ISO ETREPPID'S EX PARTE APPLICATION FOR TRO AND OSC
I, Venkata Kalluri, do hereby declare that:
3
4
I am a programmer and software developer for eTreppid Technologies,
L.L.C. ("eTreppid"). I have worked at eTreppid since 2001.

2.
Historically, in working at eTreppid, eTreppid Source Code that I work on is
copied from the central storage for the eTreppid Source Code to a local storage that is
associated with the workstation that I work at. As a result, over time, a collection of the
different eTreppid Source Code files that I have worked on was stored on my workstation.
3.
In December, 2005, right before the Christmas holiday, I noticed that this
collection of different eTreppid Source code files that was stored on my workstation was
10
deleted. I asked Mr. Montgomery about this, and he explained that he was backing up the
11
eTreppid Source Code, and would provide to me the portion of the eTreppid Source Code
12
that I needed to work on.
13
4.
During the time between Christmas and New Year's day, if I needed an
14
eTreppid Source Code file, I would request if from Mr. Montgomery, he would copy that
15
file from a location that he knew (the eTreppid Source Server I believed), to a shared drive
16
that I could access. I would access that file and copy it to my workstation, and the copy in
17
the shared drive was then deleted. Upon my completing work on a particular eTreppid
18
Source Code file, I would copy the file back into the shared drive, and inform Mr.
19
Montgomery. He was then responsible for copying that file to the eTreppid Source Server.
20
5.
Sometime during the work week of January 3-6, after not having the
21
eTreppid Source Code files I needed available, I attempted to go to the share directory of
22
the eTreppid Source Code Server, to which I had access. When I made this attempt, I
23
discovered that the eTreppid Source Code files that had previously been stored in the share
24
directory were just not there.
25
26
27
28
US_.SW_600106524_1 kalluri.doc
-2-
1
2
I declare under penalty of perjury under the laws of the State of Nevada that the
foregoing is true and conect.
Executed this
_\j_ day of January, 2006, at Reno, Nevada.
4
5
6
Venkata Kalluri
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
US __ SW_600106524_1 kalluri.doc
-3-

1 PILLSBURY WINTHROP SHAW PTITMAN, L.L.P.
DAVID A JAKOPIN, CA Bar No. 209950
2475 Hanover Street
3 Palo Alto, CA 94304-1114
Telephone: (650) 233-4500
4 Facsimile: (650) 233-4545
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Jeny M. Snyder, NV Bar No. 6830
Reno, NV 89511
7 Telephone: (775) 327-3000
Facsimile: (775) 786-6179
8
9 ETREPPID TECHNOLOGIES, L.L.C.
BY__
10
11
COUNTY OF WAS HOE, STATE OF NEV ADA
12
CV06 C0114
13
14 ETREPPID TECHNOLOGIES, L.L.C, a
15
Plaintiff,
16
VS.
17
19
Defendants.
20
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)
)
)
)
)
)
)
)
)
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21
22
23
24
)
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No.
DECLARATION OF SLOAN
VENABLES IN SUPPORT OF
ETREPPID TECHNOLOGIES, L.L.C.'S
EX PARTE APPLICATION FOR A
TEMPORARY RESTRAINING
ORDERANDORDERTOSHOW
CAUSE RE PRELIMINARY
INJUNCTION AGAINST DENNIS
MONTGOMERY
Date: January _, 2006
Time: :00 ..
Dept.:
Trial Date: None
-------------~.)
25
Pursuant to N.R.S. 600A.070.3, Plaintiff hereby lodges the enclosed record

26
conditionally under seal and will make a motion or application to the Court for an order
27
pennitting the record to be filed under seal.
28
US_SW_600106522_1.DOC
- 1-
VENABLES DECL ISO ETREPPID'S EX PARTE APPLICATION FOR TRO AND OSC

I
I, Sloan Venables, do hereby declare that:
I.
I have been an employee of eTreppid Technologies, L.L.C. ("eTreppid")
since 1999. My current position is Director of Research and Development, which I have
had since joining the company.

eTreppid is a privately-held company that develops software that relates
5
6
7
generally to data compression and pattern recognition, among other things.

3.
"Source code" is a technical term to refer to the human-readable computer
code that is written by programmers to implement the functions performed by the Boftware.
Source code is converted to a "binary" executable form that a computer can operate upon.
IO
"eTreppid Source Code" is the source code that is used to implement the functions
11
performed by eTreppid Software. The eTreppid Source Code is valuable because it is not
12
known to the general public and competitors who could obtain economic value from its use.
13
4.
All of the revenue generated by eTreppid rely on the eTreppid Software.
14
5.
Due to the critical importance of the eTreppid Source Code to the Company,
15
the Chief Technical Officer of the company, Mr. Dennis Montgomery, had sole
16
responsibility for maintaining the most current version of the eTreppid Source Code, as
17
well as sole responsibility for backing-up (i.e. saving a copy) of the eTreppid Source Code.
18
To my knowledge, this arrangement has not changed since I started working for eTreppid
19
until the present.
20
6.
I have worked with Mr. Montgomery in relation to the backup of the
21
eTreppid Source Code by building the hardware that is used to store the eTreppid Source
22
Code. I am also the only person other than Mr. Montgomery with password access to the
23
eTreppid Administrator password for the various servers, including SRCSERVER,
24
ISASERVER, and DEVSERVER. I have this password because I maintain the physical
25
hardware and because I am also responsible for the backup of information other than
26
eTreppid Source Code on the company's servers.
27
28
7.
The most-current version of the eTreppid Source Code has historically been
stored in a server referred to as the SRCSER VER. Backup copies of the eTreppid Source
US..SW_600106522_1.DOC
2-
VENABLES DECL. ISO ETREPPID'S EX PARTE APPLICATION FOR TRO AND OSC

1
Code were historically stored in multiple different locations, with two different backup
workstations being used for this purpose. On December 21, 2005, I took the initiative to
store an additional back-up copy of the eTreppid Source Code on a backup server referred
to as the ISASER VER. Associated with each of these servers and workstations was a
different RAID storage box, which actually stored the eTreppid Source Code. The
SRCSERVER and the ISASERVER had an eTrcppid administrator password known only
to myself and Mr. Montgomery. Accordingly, we are the only personnel who could access
these servers (other than the share drive on SRCSERVER, which was accessible over the
internal network). Further, these servers are stored in a server room that is accessible by
10
11
only a small group of personnel.

8.
Historically, programmers developing eTreppid Source Code store pieces of
12
the eTreppid Source Code they are working on at their personal workstations. eTreppid
13
maintained a network of computers that also allowed these programmers to access a version
14
of the eTreppid Source Code that was maintained on the share directory of SRCSERVER.
15
9.
On December 21, 2005, I had a phone conversation with Mr. Montgomery
16
wherein he suggested I did not need to come to the office. I went in anyway, and at that
17
time I noticed that one of the workstations and its RAID storage box - which was used to
18
store a backup copy of the eTreppid Source Code - was missing. I asked Mr. Montgomery
19
about this, and he explained that he had taken this workstation and its RAID storage box to
20
his home.
21
IO.
I took a vacation from December 22, 2005 to January 3, 2006.
22
11.
Upon my return from vacation on January 3, 2006, I checked the status of
23
the SR CSER VER and the ISASERVER. From this check, I determined that all of the
24
eTreppid Source Code stored on each of these servers had been deleted. I was informed by
25
another employee, Jesse Anderson, that some of the eTreppid Source Code that had
26
previously been stored on many of the programmers' personal workstations had been
27
deleted as well.
28
US_SW_600106522_1.DOC
-3-
VENABLES DECL. ISO ETREPPID' S EX P ARTE APPLICATION FOR TRO AND OSC
12.
On January 3, 2006, I inquired with Mr. Montgomery what was going on, he
said that he was "cleaning stuff up," and this included deleting files that "weren't needed"
from the SRCSERVER.
13.
By Monday, January 9, 2006, I was informed that all of the Etreppid Source
Code was missing, and that none of the programmers had access to the pieces of the
eTreppid Source Code they worked on at their personal workstations. I, along with others,
spent most of the January 10-12, 2006 timeframe searching for eTreppid Source Code in
the building, but could not find it.
14.
On January 10, 2006, during a brief time in the morning when Mr.
10
Montgomery was in the building, I asked him where the eTreppid Source Code had gone.
11
He said it was stored on certain "320 Gigabyte hard Drives" in the building. Searches by
12
myself and others have failed to locate any 320 Gigabyte hard Drives that contain eTreppid
13
Source Code.
14
15.
Later on January 10, 2006, Mr. Montgomery returned to the building and I
15
saw him talking with the Chairman, Mr. Warren Trepp. After they talked, Mr.
16
Montgomery passed by my office and we spoke. I asked him again about a certain part of
17
the eTreppid Source Code that was missing, and Mr. Montgomery stated "he needs to give
18
me big money if he wants it."
19
16.
For overall building security of eTreppid, only a few employees have access
20
to alarm codes that can turn the building alarm on and off, which is electronically
21
monitored by ADT. Mr. Montgomery is one of those few employees. As a result of this
22
monitoring, eTreppid was able to detennine that Mr. Montgomery was the only employee
23
to turn the alarm off and on during the weekend prior to January 10, 2006. Further, video
24
cameras monitor the activities, including the access doors to the building and the server
25
room, and the video files from these cameras is stored on computers that record this
26
footage. On or shortly after January 10, 2006, I checked these computers and the recorded
27
footage from these cameras had been deleted.
28
US_SW_600106522_1.DOC
-4-
VENABLES DECL. ISO ETREPPID'S EX PARTE APPLICATION FOR TRO AND OSC

.
'qx.p'
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ldeclareunderpenaltyofperjuryundertheIawsoftheStateofNevadathatthe
2 foregoing istrue and correct.

3
Executed this
day ofJanuary,2006,atReno,Nevada.
5
6
Sloan Venables
7
8
9
' 10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Us-sw-6 IY522-1.
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-5 -
VEN ABLESDECL.lSO ETREPPID 'SEX PAIW E APPLICATION FOR TRO AND O SC
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Document
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Filed 05/28/08
'If'Case' 3:06-cv-00056-PMP-VPC2
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IN THE SECOND JUDICIAL DISTRICT COURT OFTHESTATE OFNEVADA

IN AND FOR THE COUNTY OFW ASHOE
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18 DENNIS M ONTGOM ERY

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20
an individual;and
D efendant.
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21
PLM NTIFF'S ETR EPPID TEC H NO LO GIESPL .L.C .'SEX PAR TE A PPLICATION
22
FOR A TEM POIU RY RESTRAINING ORDER AND M OTION FOR A PRELIM INARY
PR ELIM INA RY INJUNC TIO N AG M NST D ENN IS M O NT G O M E RY'
,
23
M EM O RA N IIIJM o lvPo lx'

rs A N D AIJTH O R ITJES
24
25
26
Pursuantto N R.
S 600A .070.3,Plaintiffhereby lodges the enclosed record conditionally tm der
sealand w illm ake a m otion or application to the Courtfor an orderperm itting the record to be filed
underseal.
27
Pursuantto R ule 65 of the N evada RulesofCivilProcedure and N RS 600A .0l0 etseq.ofthe
28 N
evada Revised Statutes, e'

rreppid Teclmologies,L.L.C.(4te-l-reppid'')hereby appliesexparteforan
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Page 1 of 13
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l order enjoining Dennis M ontgomery (dxM ontgomery'') from any further misappropriation,
2
dissem ination and/or conversion ofe'rreppid's proprietary trade secrets, as defined herein,and for an
ordercom pelling M r.M ontgom ery to im m ediately retum any and a11eTreppid trade secrets and other
property.
This application is m ade on the grounds that M r. M ontgom ery m isappropliated eTreppid's
6 trade secrets in the fonn ofsoftware source code (the tte-rreppid Source Code'');he intentionally
11
pt
O .2
If
.td
deleted a11othercopies ofthose trade secrets from e-rreppid's com puter servers;and he has stated his
intention to blackm ail e'freppid by holding hostage the linal intact version of the e-rreppid Source
Code.
10
11 aversthatlack ofnoticeisexcusableand, indeed,necessary to preventany furtherdam age to its trade
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Although M ontgomery has notbeen provided notice of this ex parte application,e'

l-reppid
18
secrets ln addition,M ontgom ery,scounselwasadvised thatPlaintiffsw ereseeking the presentTRO

.
This Application is based upon the Complainttiled by e'rreppid in this action;this Application;the
Memorandum ofPointsandAuthorities, filedinsupportoftheApplication;theDeclarationsofSloan

Venables,W arrenTrepp,BatinderBal,andVenkataKalluri,filedin supportoftheApplication'
, al1
pleadings,papers,and records on file in thisaction;and such evidence and argumentasmay be
presentedatthehearing
.
Dated:January 19,2006
19
20
21
7
teven J.Peek,E q.
Nevada BarNum ber 1758
Jen'y M .Snyder,Esq.
Nevada BarNum ber6830
HaleLane Peek D ennison arld How ard
5441 K ietzke Lane, Second Floor
R eno,N V 89511
22
23
24
25
(775)327-3000,
.(775)786-6179(fax)
A ttom eys forPlaintiff
26
27
.
28
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Page 2 of13
'
Case
3:06-cv-00056-PMP-VPC Document 644-4 Filed t05/28/08 Page 4 of 49
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M EM O R AND UM O F PO INTS AN D AU TH O R IT IES
1. INT RO D UCTIO N.
This case involves the m isappropriation, destnlction and/or conversion of trade secrets and
4 proprietary and confidential business m aterials from plaintiff e-rreppid Technologies, L.L.C .
5 (te-freppid'') by defendant Dennis M ontgomery (iM r. Montgomerf).
The information
6 misappropriated, destroyed and/or converted by M ontgomery (the tte-rreppid Source Code'')

7 colutitutes the only intactversion ofthe e'rreppid Source Code. M r.M ontgom ery hasadm itted taking
8 the e'
Freppid Sourc'
e Code and has flatly stated his intention to blackm aile'
Treppid by holding hostage I.'''9
the only intactversion ofthe e'rreppid Source Code.
=k
10
yt
..2
XO k
ti
ll threats Accordingly,theCourtshoul
d enterthe requestedtemporary restrainingorder(<<TRO')and
e'l-reppid would be irretrievably hanned ifM r.M ontgomery is allowed to make good on his
.
=kY$1c 12 issuetherequestedOrdertoShow CauserePreliminl'

ylnjunction
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II.FACTIJU IIACKGROUNO.
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A.e'freppid'sBusinessAndTheTradeSecretsAtIssue.
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e'Freppid is a privately-held limited liability company thatdevelops soware for such
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zt 16 applicationsmsdatacompressionandpatternrecognition,amongothsrthings.DeclarationofSloan
Q 4 17 Venables in Supportof e'rreppid Technologies,L.L.C.'S Ex Parte Application for a Temporat'
y
af
tfn
d
l:
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l8 Restraining Order alzd an Order to Show Cause re Preliminary Injunction Against Dennis
19 M ontgomery,attachedheretoasExhibitA (G<venablesDecl.''
),.
2.e'
freppidwasoriginally fonnedas
20
Intrepid Technologies LLC in 1998. Declaration of W arren Trepp in Support of e'Freppid
21 Teclm ologies,L.L.C .'SEx Parte Application fora Telnporary Restraining Order and an Orderto Show
22 CauserePreliminary lnjunction AgainstDennisMontgomery,attached hereto asExhibitB (t-l-repp

23 Decl.'') 2.
24
The e-freppid Source Code is the source code used to im plem ent the various functions
25 perfonned by e'rreppid Software. V enables D ecl. 3,

'Trepp D ecl. 6. A l1of e'
freppid's revenues
26
derive from e'l-reppid Soflw are. V enables Decl. 4. Given the criticalim portance ofe'
l-reppid Source
27 Code to e'
Treppid, as Chief Technical Officer Delm is M ontgom ery was solely responsible for
28
L:
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Page3of13
1 maintainingthecurrentversionofthe e'
l-reppid SourceCodeand forbacking-up (i.e.,savingacopy)
2
ofthe e'rreppid Source Code. Venables Decl. 5'

,Trepp Decl. 3.
H istorically, progranlm ers developing e'rreppid Source Code store pieces of the e'
l-reppid
Source Code they are working on attheir personalworkstations. V enables D ecl. 8'
,D eclaration of
5 BarjinderBalin Supportofe'
Freppid Technologies,L.L.C.'SEx Parte Application fora Tcmporary
6 Restraining Order and an Order to Show Cause re Preliminary Injunction Against Dennis
7 Montgomery,attached hereto as ExhibitC (6tBa1Decl.''), 2'
,Declaration ofVenkata Kalluriin
8
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w
Y Y -
Supportofe'l-reppid Teclm ologies,L.L.C.'S Ex Parte Application for a Tem porary Restraining O rder
9 and an Orderto Show CauserePreliminary lnjunction AgainstDennisM ontgomery,attached hereto

10 asExhibitD C/lfalluriDec1''), 2. e-rreppid maintained a nehvork ofcomputersthatalso allowed
.
1l theseprogranunersto accessa version ofthe e'rreppid Source Code thatwmsmaintained on a shared
1 8:
1'
-d 12 directory. VenablesDecl. 8'
,Ba1Decl. 2'
,KalluriDecl. 2.Mr.Montgomery regularly provided
$::
()
1X 13 compactdiscsto e-freppid's Chainnan,Mr.Warren Trepp (%<Mr.Trepp''),which heinfonned Mr.
'p u'.
t
dit
d 14 Treppcontainedthemostcunvntversionofthee'
rreppidSourceCode(''BackupCD's'').TreppDecl.
Q Q vk
''6 15 5.
x* '
td
ok-;:
t$ 16
e'freppid controls aecess to the e-freppid Source Code to protectits confidentiality. As
Q V l7 discussed furtherbelow,thesecontrolsincludelimitingaccessto itsfacilities,to itscomputerservers,
-
af
tc
d
)r1
l8 and to itstangibleand intalzgibleintellectualproperty.

19
B. Relationship B etween e'rreppid and M r.M ontgom ery.
20
Both M r.Trepp and M r.M ontgom ery are original founders of e'rreppid. Trepp D ecl. 2-3.
21 W hereasM r.Trepp has been Chainnan ofe'rreppid since its form ation in 1998,M r.M ontgom ery has
22 acted asChiefTechnology Officer. ld. W hen Mr.M ontgomely joined e'rreppid,he signed an
23 agreem entacknowledging his exchange ofany alzd a1lrights in the e'rreppid Source Code forshares in
24 e'Treppid. Contribution Agreement, Article 1, attached to the Trepp Decl.as Exhibit 1 (the
25 'Contribution Agreement'). M r.Montgomery wmsemployed by e'Treppid and paid by e'
Treppid to
26 inventand/or develop the e'rreppid Source Code,and to accom plish tllis task M r.M ontgom el'
y m ade
27 use ofe'l-reppid's facilities,computers,employees and othertools. Trepp Decl. 3. Since 1998,M r.

28 M ontgom ery hasbeen reesponsible forleading e'rreppid's developm entefforts,including those relating
::ODMATCIIOCSWILEI
.
NODOCSO8ZMISI
Page4Of13
;
f
Document 644-4 Filed 05/28/08
Page 6 of 49
v
Y e
l to data com pression and pattern recognition. Trepp D ecl. 3. A s partof his responsibilities,M r.
2
M ontgom ery m aintained the e'Freppid Source Code and was responsible form aintaining backup copies
thereof. Trepp D ecl. 3. He retained these responsibilities untile'Freppid term inated his em ploym ent
on January 18,2006. Trepp D ecl. 3.
5
6
C . SecuritjrM easures G overning A ccess to e-rreppid Source Code.

The efreppid Source Code is stored in on-site com puter servers,including the SRCSERVER ,
7 D EV SER VER and ISA SERV ER. Venables D ecl. 6. A ssociated with each of these servers and
8 w orkstations w as a different RAID storage box,w hich actually stored the e'
l-reppid Source Code.
9 V enables D ecl. 7. A ccess to these servers is controlled by an e'l-reppid Adm inistrator password.
M
ht
.2
IO w
10 VenablesDecl 6. O nly M r.M ontgom ery and M r.V enables,who w as acting asD irectorofResearch
.
ll and Development, knew this e-rreppid Adm inistratorpassword. V enables D ecl. 1,7. Ftlrther,these
M t-
k i:
gl'-d 12 serversarestoredin asen'erroom thatisaccessiblebyonly asmallgroup ofpersonnel.Venables
CX 13 Decl.7.AsofDecember2l,2005,themostcurrentversionofthee'
rreppidSourceCodewltsstored
'p g.'l
Y 14 in theSRCSERVER VenablesDecl.7.Backupcopiesofthee'rreppid SourceCodewerestored in
QiQi L
z
1
x
O
(j'15 multipleotherlocations,includingabackupserverreferredtomsISASERVER aswellastwodifferent
G1)',l
:
jg
jk ;t$ 16 backtlpworkstations.VenablesDecl.7.
Q V 17
Foroverallbuilding security ofe'
I-reppid,only afew employeeshaveaccessto alann codes
.
at
$G
l::
18 thatcan turn the building alarm on and off,and thataccess is electronically monitored by ADT.
19 V enables D ecl. 16. M r.M ontgom ery is one ofthose few em ployees. Venables D ecl. 16. Furthers
20 video cam erms m onitor the activities,including the access doors to the building and the server room ,
21 and the video files from these cam erms are stored on com puters that record this footage. V enables
22
D ecl. l6.
23
D . M isappropriation ofT rade Secrets.
24
Beginning in or about D ecem ber 2005, M r. M ontgom ery took a series of steps apparently
25 designed to preventany e'rreppid em ployee otherthan him self from possessing a com plete copy ofthe
26
e'Treppid Sottrce Code. He did this to facilitate histheft. M oreover,M r.M ontgom ery's actions reflect
27 a consistentdesire to m islead e'Freppid and coverhistracks,dem onstrating hisconsciousness ofguilt.

28
Lr
oosfzsu'clxlcstl4l-pz.
lorxlcshx8zk
llyl
Page 5 of13

.
x.
.w e
A round D ecem ber 19 or 20, 2005, in response to an inquiry by an e'l-reppid
2 prograrnmer/software developer,M r.Barjinder Bal,M r.M ontgomery said that he was deleting
k
Y!
,2
IO w
e'rreppid Source Code tiles on the hard drive ofM r.Bal's workstation for security reasons. Ba1D ecl.
3. ThereafteraM r.Baldiscovered thatthe e'Freppid Source Code he had been recently w orkiag on had
been deleted fTom the hard drive of his workstation. Bal Decl. 4. Another program m er/software
developer,M r.Venkata K alluri,also discovered thatanothercollection of e'

Freppid Source Code tiles
stored athis workstation had been deleted. K alluriD ecl. 3.
M r.Kalluri,am ong others,expressed m isgivingsto M r.M ontgom ery aboutcontinuing to work
w ithoutaccess to the e'

Treppid Source Code files. KalluriDecl. 3. M r.M ontgom ery responded that
10 hewasperfonning a daily backup so thathe,d havethem ostrecentfiles,and thatwould providethem

1l with tbee'rreppid SourceCode KalluriD ecl. 3.
.
=j'
(
Z1c 12
8:
Mr Venables took a vacation &om

.
Decem ber 22,2005 to January 3, 2006.
VenablesDecl.
;: x
2C 13 l0.IIehadaphoneconversationwithMrM ontgom ery on them orning ofD ecem ber22,2005,during

' o.4
Y; 14 which Mr MontgomerysuggestedthatMr.Venablesdidnotneedtocometotheoftice. Venables
fo
!lQi t
.
.-,
1,1 o- 15 Decl.9.Mr.Venableswenttotheofficeanyway,andatthattimenotedoneoftheworkstationsand
it
k't
:ij
okat 16 itsRAID storagebox thatwasusedto storeabackup copy ofthee'rreppid Sourcewasmissing.
1
Q 4 17 VenablesDecl., 8. M r.Venablesasked M r.M ontgom ery aboutthis,alld he explained thathe had jz''
-
at
'/
rh
x
l8 taken thisworkstation and itsassociated RAID box home. VenablesDecl.,9.

19 B etween Christm as arld N ew Year's Day,M r. M ontgom ery provided M T.K alluriw ith specific files of
20 the e'rreppid Source Code upon dem and. K alluri D ecl. 4. To provide the requested tiles, M r.
21 M ontgom ery copied the files to a shared drive thatM r.K alluricould access. KalluriDecl. 4. A fter
22 M r.K alluriaccessed the file and copied itto his workstation,the copy in the shared drive w asdeleted.
23
'
KalluriD ecl. 4. W hen he com pleted his w ork on the files, M r.Kalluzi copied them back into the
24 shared drive arld infonned M r.M ontgom ery - who would then be responsible for copying thatfile to
25
26
the e'rreppid Som ce Server. K alluriD ecl. 4.
Upon returning from his vacation on January 3,2006,M r. Venableschecked the stat
'
usofthe J
27 SRCSERV ER and the ISA SERV ER . Venables D ecl. 1l. From this check, he determ ined thata11of
28 the e'rreppid Source C ode stored on each of these servers had been deleted.
::oouzkTclxlcs+ll-paqooocsksngz4lyl
Page 6 of 13
V enables D ecl. 11,

'
'
'
t
Page 8 of 49
xv .
'v
1 KalluriDecl. 5. He w as infbrm ed by another em ployee,Jesse A nderson,thatm uch ofthe e'

l-reppid
2
Source Code that had previously been stored on progralnm ers w orkstation had been deleted.
VenablesD ecl., 11.
On January 3, 2006, M r. V enables asked M r. M ontgom ery what w as going on, and M r.
M ontgom ery said that he was 'scleaning stuff up,''and thatthis included deleted files that t4w eren't
needed''from the SRCSERVER . V enablesDecl. 12.
7
8
As of January 9,2006,M r.Trepp and M r.V enables were infonned that allof the Etreppid
Source Codew asm issing,as none ofthe program m ers had accessto the pieces ofthe e'
rreppid Source *-'
9 Code they worked on at their personal workstations. Trepp Decl., 4'

, V enables Decl. l3. M r.
=
S
ru
10 Venables,along w ith others,Iooked forthe e'l-reppid Source Code in thebuilding,butcould notfind it.
.2
IO >
l1 VenablesDecl 13. M r.Trepp also directed em ployees to look fora com plete copy ofthe e'rreppid
yt
=jY;
tc 12 Sourcye Code, to no avail. Trepp.Decl. 4. W hen Mr.Trepp examined the Backup CD ,s,he
8:
iCX 13 discoveredthattheydonotandnevercontainedacompletecopyofthee'l-reppidSourceCodeforany w.g o.g
i0 14 periodoftime, contrarytoMr.Montgomcry'srepresentations.Trepj.Decl.4.
Qd,4
7t)
tJ 6. 15
;t'
kdD
oj
On January 10,2006,duringa brieftimethatmomingwhen Mr.Montgomerywasin the
o'
i
J ;t$ 16 building,Mr.Venablesaske,dMr.Montgomerywherethee'rreppidSourceCodehadgone.Venables
QV
a;
17 Decl. l4.M r.Montgomerysaiditwasstoredon certain:6320GigabytehardDrives''intlzebuilding.
18 Venables Decl. 14. Searches by M r.Venables and others have failed to locate these 320 Gigabyte u..19 hard D rives. V enablesD ecl. 14.
20
Later on January l0, 2006, M r. M ontgom ery returned to the building and spoke w ith the
21 Chainnan,M r.W arren Trepp. Venables D ecl. l5. A fter they talked,M r.M ontgom ery spoke w ith
22 M r.Venables,stating thatif M r.Trepp tlneeds to give m e big money ifhe wants''to recover the v,.23 m issing eTreppid Source Code. V enables Decl. 15. 111'.Venabls subsequently discovered that
24 substantialamounts ofthe footage recorded from e'Treppid's surveillance camerms had been deleted V
25 from the com puters. Venables D ecl. 16. Further,as a resultofAD T'S electronic m onitoring ofaccess
26 to the building,eerreppid w as able to determ ine thatM r.M ontgom ely w as the only employee to ttm z
27 the alann offand on during thew eekend priorto January 10,2006. V enablesD ecl. l6.
28
'
::oDM>.
TcD()cs+ILPuh1oI:<csk508241yl
Page 7 of 13

'
'
w-
E. el-reppid isSuffering Irreparable H arm D ue to M r.M ontgom ery's M isappropriation.
W ithout the e'rreppid Source Code, e'

rreppid's program m ers cannot perform their ordinary
3 dtlties. Trepp.Decl. 7. Asaresult,e'

Freppid iscurrently spen-ding over$10s00000 per day on w ages
.
and other adm inistrative costs in order to retain key personnel, even though these personnelcalm ot t.
,'e
5 perform theirordinary duties because the e'

Freppid Source Code is m issing. Trepp.Decl. 7.
6
Further,e'rreppid currently has various contractualobligations that it willbe unable to m eet
7 w ithoutobtaining the e'rreppid Source Code. Trepp.Decl. 8-9. Forexam ple,e'

Freppid hasa contract
8
w ith LLH & A ssociates worth overone m illion dollars thatiscurrently being w orked on by em ployees
9 at eTreppid. Trepp. Decl. 8. W ithout the e'Treppid Source Code, the com pany cannot m eet this
2
y
t
O
: .2
>
= Y -
10 obligation Trepp.D ecl. 8.

.
1l
e'
l-reppid also hasspentsigniticanttime and effortto secure otherlucrative contractswith its
g v
$1.
--' 12 previouscustomers.Trepp.Decl.9.Atthepresenttime,certainoftheseadditionalcontractsarevery
C* l3 close to being agreed upon, but M r.M ontgom ery's actions have forced e'rreppid to cancel the
j=
,: 14
o c,?
Q o z-
previously-scheduled discussions. Id. Further,e'l-reppid cannotreschedule these discussions untilit
1 K1g 15 hasrecovered aspecific portionofthee'freppid SourceCodebecauseitsobligationsunderthese

* t;d
k-;t: l6 additionalcontractswillrequirethate'
rreppidhavethisspecificportionofthee'Freppid SourceCode.
Q 4 17 1d The portion ofthe e'l-reppid Source Code needed is referred to herein as the ''FOO S e'rreppid ..'.,,z-
a#
<
d
:
'
18 SourceCode portion,,forFiltering and OtherOutputStepscombination ofprogram sthatare used for
19 tw o separate D epartm entofD efense govenzm entdevelopm entefforts. ld.
20
111. ETREPPID IS ENTITLED TO A T EM PO R AR Y R ESTR M N IN G O R DER .
21 .
ThepurposeofaTRO orpreliminaryinjunction istopreservethestatusquo untilthemerits
22 can be detennined. D ixon v. Thatcher, 103 Nev.414,415 (1987)CW preliminary injtmction to
23 presel-ve the stams quo is normally available upon a showing that the party seeking it enjoys a
24 reasollable probability of suocess on the m erits and that the defendant's conduct, if allow ed to
25 continue,w ill resultin irreparable han'
n for which com pellsatory dam age is an inadeqtlate rem edy-''
)
26 (citations omittedl;M emory Gardens v.PetPonderosa Memorial Gardens,88 Nev.1,4 (1972)

27 (ttgejven iftheactcausing theinjury hasbeencompleted beforetheaction isinstituted,amandatory
28 injtmctionmaybegrantedtorestorethestatusquo'').Such injtmctivereliefdoesnotpumorttolixthe
::oosfxquycl
x lcsm l-lthlooocsksogz4ll
Page 8 of13

'
l ultirnate rights and obligations oftheparties. The granting ofa TRO m erely determ ines that,pending
2 thehearingonthepreliminaryinjunction,apartyshould berestrainedfrom doingthatwhichtheother

3 partyclaimsoughtnotto bedone. NRS 33.010'
,Nev.R.Civ.Proc.65(b);seeNevada Management
4 Co.p.Jack,75 Nev.232,236 (1959)(courtgranted temporary restraining orderwithoutnoticeto
5 preventdefendantfrom selling orencum bering plaintiff's propelty because plaintiff'thad the rightto
6
seek an order w hich would m aintain the status quo ofthe logs untilthere is a detennination ofthe
7 rightsofthe partiesYY). Little orno showing concerning the meritsis required to obtain aTRO. See
8 NRS 33.010,
.Nev.R.Civ.Proc.65(b);seee.g.,RhodesM ining Co.Iz.BellevillePlacerM ining Co.,32
2
y1
O ..S
Ix
9 Nev.230,(19l0)(wherettthesoleobjectforwhichaninjunctionissoughtis...themaintenanceofthe
10 status quo, until the question of right between the parties can be decided on final hearing,the
.
l1 injunctionproperlymaybeallowed, although theremay beseriousdoubtoftheultim atesuccessofthe
r =.
1 8:
Q.-' 12
$
::C* 13
i
'po-.
1
d
i
* 14
NQ t
7 z
* 6 15
j
;s.tli
ok'-pt 16
Q
aV
f 17
,-
Ct
,,
complainant.'')(decisionunderformerstatute).
Tograntinterim injunctiverelief'
,courtsconsidertwo factors: (1)the likelihoodofplaintiff's
successonthemerits..and(2)areasonableprobabilitythatthenon-movingparty'sconduct,irallowed
to continue,willcauseirreparableharm forwhichcompensatorydamageisan inadequateremedy.

Dangberg HoldingsNev,L.L.C.v.DouglasCounty,115 Nev.129,142 (1999).
,Dixon v.Thatcher,
l03Nev 414,415(1987).Assetforthbelow,e'Treppidislikelytoprevailonthemeritsofitsclaims,
.
18 butwillsuffergreatand irreparablehann ifan interim injunction isnotissued.Therefore,andforthe

19 purposeofpreservingthestatusquo,e'
rreppidisentitledtoinjunctivereliefl
20
A.
There Is M ore Than a Reasonable Probability That erfreppid W illPrevailon The
21
M erits.
22
1.
23
M ontgom ery HasM isappropriated e-rrelm id'sTrade Secrets.
Nevadastatutory law authorizestheuseofinjtmctionswhere,mshere,misappropriation ofa
24 trade secret has occurred. See N RS 600A .040, 600A.070 (providing that courts t
may order
25 aftirm ative actsto protecta trade secret''and courts f'shallpreselve the secrecy ofan alleged trade
26 secretby reasonable means'). UnderNRS 600A.030(5),atrade secretis detined ms: information,

27 inclutling, w ithout lim itation, a fonnula, pattern, com pilation,program , device,m ethod,technique,
28 product, system , process, design, prototype, procedure, com puter program m ing instruction or code
::oost/ku>cx csulultxooocskstlgMll
Page 9 of 13
'
4
1 that:(a)Derivesindependenteconomicvalue,acttlalorpotential,from notbeinggenerallyknown to.

2
and notbeing readily ascertainable by proper m eansby the public orany otherpersonsw ho can obtain
3 conunercialoreconomic value from itsdisclosure oruse;and (b)Isthe subjectofeffortsthatare

4
reasonable underthe circum stances to m aintain its secrecy.
'
NRS60OA.030(5)(2005)(emphasisadded).TheinformationMontgomeryhasdeletedartd/or
wrongfully taken from e'

rreppid qualifies astrade secrets. The infonnation satisfies the tirstelem ent
7 ofNevadaRevised Statutessection 600A.030(5)inthatitderivesvalue from notbeingknolm tothe

8 genelal public and com petitors w ho could obtain econom ic value &om its use. See Trepp D ecl. 3,
'
9 VenablesDecl. 3 (discussing valueand competitively-sensitivenatureofinformation deleted and/or

10 wrongfullytaken by M r Montgomery). Coul'
tsregularlyfind thatsoftwaresource codeandrelated
'7
h
:t
O 2
$1
w ll software information are trade secrets seeRivendellForestProds.v.Georgia-pac6cCorp.,28F.3d
=1M Q(;1 12 l042(10th Cir.1994)'
t
,ArlesInfo.& ,
$.v.Pacq
'
hcMgmt.Sys.Corp.,366N.W .2d 366tM im1.Ct.App. >
;:rzol; 13 1985.
.g o-.p
d i0 14
n a t'
4.
The infonnation deleted and/orwrongfully taken by Montgomery also satisfiesthesecond
1'.1
t
.
:s 15 prongofNevadaRevisedStatutessection600A.030(5)sbecauseeTreppidhastakenreasonablesteps
t-'
x zg
ok,-;t 16 to maintain itssecrecy. Seee.g.,Frantzv.Johnson,l16 Nev.455,467 (2000)(courtfound that
1
Q V 17 <secrecy wmsguarded''where trade secretsownerIocked customerand pricing listsin file cabinets,
d t/n
l:t
18 limited access to oftices,and established security codesto building). The stepse'rreppid adopted
19 included restricting access to its building facility,electronically monitoring access to its building
20
facility,m aintaining video cam ermsto m onitoractivitiesinside the building,and lim iting access to the
21 e'
rreppid Source Servers by a password know n only to two senior-levelem ployees. These precautions
22 were m ore thah adequate to m aintain the trade secretstatus of e'l-reppid's Confidentiallnform ation.
23 Accordingly,pursuantto the m andate ofN RS 600A.032,a rebuttable presum ption existsthate'rreppid
24
25
m ade reasonable effortsto m aintain thesecrecy ofits trade secrets.
The evidence likew ise dem onstrates that M ontgom el'

y m isappropriated e'rreppid's trade
26 secretsby hisdeletionsandwrongftzltaking. NevadaRevised Statutessection 600A.030(2)defines

27 misappropriationinpertinentparttoincludetlalcquisitionofthetradesecretofanotherbyapersonby
28 impropermeans.''NRS 600A.030.1furtherdefines'timpropermeans''to includetdgtheftl'
,...lwlillful
:r
ooMztcx csmLn ox csuosz4ll
Page 10 of13
. .
'

*
l breach...ofadutytomaintainsecrecy;(wlillfulbreach...ofaduty imposedbycommonlaw,statute,
2 (orlcontract;gand)gelspionagetllroughelectronicorothermeans.''
3
NevadaRevised Statutessection600A.030.2(c)(2)also definesmisappropriationtoincludethe
4 use ordisclosure oftrade secrets by a person w ho knew orhad reason to know thatthe trade secretw as
5 <tlalctluired under circumstances giviug rise to a duty to maintain its secrecy or limit its use.''
6
M ontgom ery cannotseriously deny his duty to m aintain the secrecy of e'l-reppid's trade secrets under
7 his em ploym entarrangem entand tenuination contract.

8
M ontgom ery's destnlction, m isappropriation and conversion of al1 versions of e-rreppid's
9 source code could resul!f'rom num erous possible m otivations,buttheresultis the sam e no m atter the
2
)t
IO ,.2
w
10 reason:e'Treppid hassuffered irreparable hann based on Montgomery'ssabotage ofits computer

l1 systems, and it continues to suffer irreparable harm so Iong as M ontgomery m aintains possession
%S.:.I*-Q c 12 and/or control of the sole rem aining version of the source code at issue. c'Freppid is cntitled to
'
&'j
f1
oj
xt
k(z)r, 13 immediateinjunctive relieftopreventMontgomeryorany otherperson orentity from continuing to
-
'
$
g.'
(j
'd
t)1t
Y 14 misappropriate e'Freppid'strade secrets,and from obtaining any commercialadvantage by using
Q Qz
'
4xo s 15 e'rreppid'stradesecrets.
..
X :c
o ':;t)
t 16
gl2
b;V
a'
<
e
r::
17
18
M ontaom erv Breached his Contribution A areem ent and the Term s of H is
Emplom ent.
By deleting ancl/or otherwise m isappropriating the e'rreppid Source Code, M ontgom ery
l9 breached thetermsoftheContribution Agreementthathe signed uponjoining t'rreppid in 1998,as

20
well1usthe term s ofhisem ploym ent. Am ong otherthings,by the term softhe Contribution Agreem ent
21 M r.Montgomeryeffectivelyagreegdltotransfer,contribute,assignarldconveyto''e'rreppidallofhis
22 tknow -how ,
' trade secrets... software program s and al1 program m ing and source codes used in
23 conntzction therew ith or othelavise required to operate any com ponent thereof...'' Contribution
24 Agreem ent,Article 1,Sections 1.1-1.2. A ccordingly,M r.M ontgom ery sold to e'
rreppid any interest
25 he m igllthave held in the e'rreppid Source Code asof 1998.
26
Furthennore, any w ork that M r.M ontgom ery perform ed orl the e'rreppid Source Code after
2,
7
1998 accrtled to e'

l-reppid's benefit. Underthe generalprovisions ofNevada cornmon law in effect
28 whertM r.M ontgom ery's em ploym entw ith e'rreppid began,ttifan em ployee is hired for the purpose
:rooMa
xocv sm un ooocsonsz4lyl
page 11 of 13
'
2
.
Page 13 of 49
'w A
1 ofinventing,the 1aw w illrecognize an implied contractgiving the em ployerow nership ofcontracted-
2 for inventions.'' M aty LaFrance,Nevada 's Employee Inventions Statute: Novel' Nonobvious, and
3 Patently Wrong,p.1 (2002). Mr.Montgomery wasemployed asChiefTeclmology Ofticerforthe

4
purpose of inventing and/or developing the e'

rreppid Source Code,and e'
Freppid paid him a regular
salary forthese services. Trepp D ecl. 3. Further,to inventand/ordevelop the e-rreppid Source Code,
M r.M ontgom ery used e'Freppid's facilities,com puters.em ployees and othertools. Id. A ccordingly,
7 undertheNevada common 1aw in effectwherthe ioined e'

rreppid,allofM r.M ontgomery'swork on uz'
e
8
'
-2
yt
O ,.2
71
the e-rreppid Source Code bclongsto e'

Freppid.
A lthough N evada's legislature chose to replace this rtzle in 2001, the new rule reinforces
10 e'
Ireppid's ownership interest in any work perfonned on the e'
l-reppid Source Code by M r.
1l M ontgom ery w ithin the scope ofhis em ploym ent The new statute providesrthatttan em ployer is the
.
= =-
k8
Cy: 12 soleownerorany patentable invention ortrade secretdevelopedby hisemployeeduring thecourse
2C 13 andscopeoftheemploymentthatrelatesdirectlytotheworkperfonuedduringthecourseandscope
- t;,4
.
Q:
oi'
t' 14 of-tl,eemployment''xxs600.500.
4z
1,.
k 6 15
Thus,Mr.Montgomelybreachedhiscontractualagreementwithe'
Freppid,entitlinge'rreppidto
$'
k'
i1
ajg
yk ;t 16 relief.
Q V 17
3.M ontMomeryHasImproperlvConvertede'
rreppidSourceCode.
-
!lW
N1
t
1
:
t
:
r:
18
e'
freppid is also likely to prevailon itsconversion claim
qqConversion is <a tjjstuctactof
19 dom inion w rongftllly exerted over another personalproperty in denialof,orinconsistentwith his title
20 orrightstherein orin derogation,exclusion,ordefiance ofsuch titleofrights.' Ftuther,conversion is

21 an actofgeneralintent,which does notrequire wrongfulintentand is notexcused by care,good faith.
22 orlack ofknowledge-'' Evans v.Dean WitterReynolds,Inc.,116 Nev.598,606 (2000)(citations

23 omitted). The evidence discussed abovedemonstratesthatM ontgomery deleted and/orwrongfully
24
took e'Treppid's Confdential lnfonnation, providing a ftlrther basis for entering a TRO against
25 M ontgom ery.
26
B . The Balance ofH ardshipsH eavily Favorsa Tem porary R estraining O rder.
27
Courtsroutinelyrecoguizethatthelossofatradesecretisan irreparableinjurythatcannotbe
28 rem edied solely in dam ages. See,e.g.,Apple Computer,Inc.v.Formula 1nt'/,lnc.,725 F.2d 521,525::oovu
xcoocsm un ooocsoo8z4lsl
Page 12 of 13
jCase
' 3:06-cv-00056-PMP-VPC
-
t
Page 14 of 49
'-
- 8
l 26 (9th Cir.1984)(irreparablehann found whereplaintiffpresented evidenceofitconsiderabletime

2 and money that ithad invested in the development of its products''l; see also Imi-lech Corp. v.
3 Gagliani,691 17.Supp.214,23l (S.D.Cal.1987) ('Klrreparable injury is...shown by evidence of

4 (plaizltiffs'l investment of time and money in the development of the secret process
5 misappropriated...sincehann tojplaintiffs')competitivepositionlacksanyadequateremedyatlaw.'').
6
The dam age to e'

l-reppid from denying the requested relief w ould be extensive and irreparable.
7 e-freppid is currently suffering irreparable harm with each passing m inute that M r. M ontgom ery
8 wrongfully w ithholds the e'

l-reppid Source Code. W ithoutthe TR O,e'
rreppid w illbe deprived ofthe
9 benejit of m any years of research and developm ent by allowing M ontgom ery. The requested TRO
2a$
)1
O .2
2:1;.
k
10 willpreventfttture usc ordcletion ofthe e'

Freppid Source Code,and furtherirreparable harm to
l1 e'rreppid
=k=gtc 12
By contrast, the requested relief threatens absolutely no hardship to M ontgom el'y.
i:
C * 13 Monlgomerywillsimplyberequiredtorefrainfrom using,disseminatingordeletinginfonnationthat
.n (;.t
S i 1 14 isintlisputablye'
l-reppid'sproperty,andto immediatelyrettmza11e-rreppidproperty(including,but
cl.)Z'
iJ
lxo m- 15 notlimitedto,theworkstationandItytll
lservertakenbyDecember2l,2005,andallfilescontained
''
jk p$ 16 therein). BecauseMontgomeryisnotentitled to use,disseminateordelete such infonnation,the

tt
Q V 17 requestedinjunctionshouldhavenoimpactonM ontgomery.
AC
Cc
18
IV. CONCLUSION.
19
Forthe foregoing reasons,the Courtshould enter the tem porary restraining order and order to
20
show cause soughtby e'I-reppid.
21
D ated: January l9,2006
22
23
en Peek>E '
evada Bar
er 1758
Jerry M .Snyder,Esquire
N evada BarN um ber6830
Hale Lane Peek D erm ison and How ard
5441K ietzke Lane,Second Floor
Reno,Nevada 89511
24
25
26
27
775-327-3000(te1.),775-786-6179(fax)
AttorneysforPlaint# eTreppidTechnologie-hL.L.C.
28
iiolm /kv'
cl
x lcsuql-pkotxncsssog?4ll
Page 13 of13
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l PILLSBUR Y W INTHRO P SHA W PITTM AN ,L.L.P.
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DAVID A.JAKOPIN CA BarNo.209950

2 JONATHAN D.BUTZER,CA BarNo.229638
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2475 HanoverStreet
3 Palo A lto,CA 94304-1114
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4 Facslmile:(650)233-4545
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5 HALELANEPEEK DENNISONAl.il7HOWARD
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441 Kietzke Lxane,Second Floor
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-31
070
90
'
8
A ttorneysforPlaintiff
9 EI'REPPID TECHN OLO GW S,L.L.C .
L0
IN TH E JU STICE CO URT O F RENO TO W NSH IP
11
COU NTY O F W A SH OE,STATE O F N EV AD A

12
13
c,
ktjtj ()()1
,J.4
- -
)
ETREPPID TECI-INOLOGIES L.L.C.,a )
Califom iaCorporation,
)
15
)
Plaintiff,
)
16
)
vs.
)
17
)
DENNIS M ONTGOM ERY,an individual; )
18 and DOES 1through 20,
)
14
19
Defendants.
20
22
23
24
'
No.
?p
..
DECLARATION OF W ARREN TREPP

IN SUPPORT OF ETREPPD
TECHNOLOGIES,L.L.C.'S EX PARTE
APPLICATION FOR A TEM PORARY
RESTRAINING ORDER AlfllORDER
TO SHOW CAUSE RE
PRELIM INARY W R TNCTION
) AGAINST DENNISM ONFGOMERY
)
) Date: January ,2006
)
)
)
)
)
)
)
21
'
Q-'
Time: :00 . Dept.:
ComplaintFiled:January 19,2006
TrialDate:None
C O ND ITIO N ALLY UN DER SEA L
'
25
Pursuantto N .R .S.600A .070.3 Plaintiffhereby lodgesthe enclosed record
26 conditionally undersealand w illm ake a m otion orapplication to the Courtforan order

27 pel
-m itting the record to be filed underseal.
28
us sw - 6 1()6528- l.
Doc
-1 -
TREPP DECL.lSO ETREPPID'S EX PARTE APPLICATION l7OR TRO AlflnOSC

.
.-
,qw w
1,W arren Trepp.do hereby declare that:
1.
e'l-reppid Technologics,IV.L.C.(''e-l-reppid'')isaNevadaL.L.C.that
3 develops software thatrelatesgenerally to data com pression and pattern recognition,am ong
4 otlzerthings.
2.
Iam afounderofe'l-reppid.which wasform ed asIntrepid Technologies.
6 L.L.C.in 1998. Since thattim e and to thc present,lhave held the position ofChairm an.
7
3.
D ennisM ontgom ery is anotherftlunderofthe com pany,and his title
8 thl'
oughouthisemploymentate'
TreppidwasChiefTechnicalOfficer.W henhejoined
9 e-rreppid,M r.M ontgom ery signed aContribution A greem entwhich effectively assigned a11
10 rights in histrade secrets and otherinventionsto e'l-reppid. TM s Contribution Agreem entis
11 attached to this declaration asExhibitA . M r.M ontgomery w asresponsible forleading the

12 developm entefforts ofthe com pany,including thoserelated to data com pression,pattern
13 recognition and others,from 1998 untilhe was term inated on January 18,2006. Aspartof
14 hisresponsibilities,M r.M ontgom ery w assolely responsible form aintaining the e'l-reppid
15 SourceCode,and he w as solely responsible form aintaining back'
up copies ofthe e'
lkeppid
16 Source Code. To inventand/ordevelop the errreppid Source Code,M r.M ontgomery used
17 e'l-reppid's facilities,com puters,em ployees and othertools.The e'
l-reppid Source Code is
18 vatuable because itisno(known to the generalpublic and com petitors who could obtain
19 econom ic value from itsuse.
20
4.
As ofJanuary 9,2006,essentially alle'rreppid Source Code,which was
21 stored in num erouslocations within the com pany,had been deleted. Although M r.
22 M ontgom ery told m e on January 9,2006 thatthe errreppid Source Code w asstored on 753
23 differe'nthard drives within the com pany, lhave since directed em ployees to attem ptto find
24 a com plete copy ofthe e'
Freppid Source Code. N o com plete copy ofthe e'rrep'
pid Source
25 Code hasbeen found. D espite hundredsofm an hoursofsearch effortsby these em ployees,
26 only a very sm allnum berofe'
Freppid Source Code files rem ain - none ofw hich by
27 them selveshave any uye. Forpracticalpurposes,the er

freppid Source Code isgone and
28 carm otbe located.
ooc
us.-sw - 6(x)1()6s28- 1.
-2 -
TREPP DECL.ISO ETREPPID'SEX PARTE APPLICATION FOR TRO AlllROSC

.
w g
5.
' .w e
Overthe years,apractice had been instituted by which M r.M ontgom ery
2 would provide to me CD 's,D vD 's and/orhard drives thatallegedly contained the then3 currcntversion ofthee'
Treppid Source Code,which lwould then store in a secure off-site
4 location. After the unauthorized deletion and rem ovalofthe e'rreppid Source Code by M r.
5 M ontgom ery.ldirected a review ofthose CD 's,DV D 'Sand/orhard drives fortheircontent,

6 and ithas been determ ined that- otherthan one program developed in 2002 and which is
7 currently notbeing used - these CD 's,D '
VD 's and/orhard drives do notand have never
8 contained any ofthe e'Treppid Source Code forany period oftim e,contrary to the
9 represel
ztations m ade by M r.M ontgomery.
10
6.
A Ilerfreppid productsthathave been developed and those thatare currently
l1 underdevelopm entrequire access the e'rreppid Source Code form aintenance ofdeveloped
12 products and continued developm entofnew products. W ithoutthe e'
Freppid Source Code,
13 none ofthese activitiescan take place.
14
7.
W ithoutthe e-rreppid Source Code,the progranuners thate'Freppid hashired
15 cannotperfonn theirordinary duties. As a result,e'l-reppid iscurrently losing over
16 $10,000.00 perday on wagesandotheradrninistrativecostsinorderto retain key personnel

17 - even though these personnelcannotperfonn theirordinary dutiesbecause the e'
Treppid
18 Source Code isrnissing.
19
8.
e'
Treppid currently hasvariousgovernm entand com m ercialcontractual
20 obligationsthatitwillbe unable to m eetw ithoutobtaining the e'

l-reppid Source Code. For
21 exam ple,e'Freppid has acontractwith LLH & Associates,a prim e governm entcontractor,
22 w orth overOne M illion Dollarsthathasbeen being w orked on since M ay,2005. W ork on
23 thiscontractrequiresthe e'
Treppid Source Code.
24
9.
e-freppid hasalso spentsignificanttim e and effolt to secure otherlucrative
25 gogernm entand com m ercialcontractsw ith its previouscustom ers. Atthe presenttim e,
26 cel-tain ofthese additionalcontracts are very close to being agreed upon,butM r.
27 M ontgom ery's actionshave forced e-freppid to cancelthe previously-scheduled

28 discussions. Further,e'
l-reppid cannotreschedule these discussionsuntilithasrecovered a
us-.sw - 6(x)l06s28- I.
Doc
-3 -
TREPP DECL.ISO ETREPPID 'S EX PARTE APPLICATION FOR TRO AN D OSC
l specific pol-tion ofthe e'

l-reppid Source Code because itsobligationsunderthese additional
2 contractswillrequire thate'
lxreppid have thisspecific portion ofthe errreppid Source Code.
3 The ptartion ofthe e'
l-reppid v
source Code needed is refezred to hercin asthe TIFO OS
4 e'
l-reppid Source Code portion''forFiltering and O therO utputSteps com bination of
5 program sthatare used fortw o separate Departm entofD efense governm entdevelopm ent
6 efforts.
ldeclareunderpenaltyofperjuryunderthelawsofthe StateofNevadathatthe
8 fpregoing is lrtle and conrct.
Executedthis 1C# dayofJanuary,2006 atReno Nevada.
10
11
12
Nvauen Trepp
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DcK2
us- svp-6a0106sz8- 1.
-4 -
TREPP DECL.ISO ETREPPID'S EX PARTE APPLICATION FOR TRO AND OSC

,
w 2
.w #y
E x tlls a A
CO NTRIBUTIO N A G REEM ENT
By and Between
INTREPID TEGHNOLOGIES.LLC
as ''INTREPID''
and
DENNIS MONTGOMERY and BRENDA K.MONTGOMERY.
as co-n ustees ofthe MONTGOMERY FAMILY TRUST
asthe 'fcontributor''
and
DFNNIS MONTGOM ERY
Dated and Executed as of

Septem ber28,1998
k= r'
2
r *#d-** LEG

w r
N+
CO NTRIBUTION AGREEM ENT
THIS CONTRIBUTION AGREEMENT (the RAqreemente)ismadeand entered intoffective asof

SEPTEM BER 28,1998,by and between INTREPID TECHNOLO GIES,LLC,A Nevada Lim ited Liability
Company(/INTREPID') onthe one hand,andDENNIS MONTGOMERY and BRENDA K.MONTGOMERY,

asCo--rrusteesoftheMONTGOMERY FAMILY TRUST,aCalifomiarevocabletrust(the*contributof').a'
nd
DENNIS MONTGOMERY,an i
ndi
vi
dual(''Montqomefvelontheotherhand.ThisAgreementis madewith
reference to thefollowing facts:
STATEM ENTS OF FACT:
A.
M ontgom efyhasdevelopedandContributorow nscedain softwarecom pressiontechnobgy
(asmore padiculady described herein).

B.
Contributordesiresto contributethe ContributedAssets(defined below)to INTREPID as
itsinitialCapi
talContributionto INTREPID inexchangeforaMembership lnteresttherein.and INTREPID
agrees to acceptand receive the Contributed Assets in exchange forsuch Membership lnterest aItin
accordance with the term s and condi
tions setfodh in this Agreement.
NOW ,THEREFO RE,inconsideration oftheforegoing factsandthe m utualcovenank ,term s,

conditions and provisions contained herein and w i
th the intention ofbelng Iegally bound hereby,the
padies hereto agree as follows:
ARTICLE 1
CO NTRIBUTION A ND EXCHANGE OF ASSETS
1.1. Contribution and Exchanqe. ln exchange for the consi
derati
on described in Afticle 2
hereof.Contributorhereby agreesto transfer,contribute.assign and convey to INTREPID.and INTREPID
agreesto acceptand receivefrom Contri

butoreffectiveasoftheClosing Date(asdefined herein)aI
1ofthe
Contri
butedM setsofContributorownedbyiti
n exchangefortheissuance to Contributorofa Membership
Interestin INTREPID equalto a FiW Percent(50%)Percentage Interest(as those terms are more
padicul
arlydescribed in the Limited LiabilityCompany Operating AgreementofINTREPID (the KlntreDid
Ooeratinn Aareemenrl).
1.2. Contributed Assets.Asusedin thisAgreement,theterm McontributedAssets'shal
lmean
and include,collectively,aIIthe following assets,togetherwithaI
IofContributorzs ri
ghts,ti
tle and interest
therein.tangible
' and intangibl
e,presentorfuture,i
ncluding,butnotI
imited to,alIdevelopment distribution
and expl
oitation rights,orto anyproceedsderived therefrom :
1.2.1. A1lofContributor'sknow-howitradesecreE '
,patentri
ghts,copyrights,trademarks
licenses and permits, registered or unregistered pending or approved'
lsoftware programs and aIl
programm ing and source codes used in connecti
on therewith orothefw ise required to operate any
com ponentthereof'and allprogramm ingdocum entati
on,designs,materialsand otherinformation,aI1in
whateverform and whereverI
ocated relating to orused i
n connection with orothelwise descri
bing or
consisting ofany part of the soft
w are com pression technol
ogy contained on thatcertain Software
Com pression Engine D evelopm entProgram conl inedonCD No.1,a1lofw hich isbeing contributed by
Contributorhereunder(collectively,thew-rechnoloovll.
c7K)= lT .#N tepiclr ootAgmtEc
!:.;)
,,z.
,w fs.
contrisutionAgreement-Page 1

*
1.2.2. Cedain of Contributor's tanglble personal property tlsed in connectlon the

Technol
ogy as m ore pafticularl
y descri
bed on SGHEDULE 1.2.2 attached hereto and m ade a paftofthis
Agreem ent.
1.2.3. A1
lofContribtltor's books and racords relating to tha Contributed Assets.
1.3. Excluded Assets and Liabilities. Notwithstanding any ofthe foregoing, Contributoris
specificallynotcontributingltransferring orconveyingto INTREPID underthisAgreem entorbyanyother
m eans,noris INTREPID acquiring from Contfibutor. any othertangible orintangible assets ofContributor
notspecijed herei
n and expressly is notassuming anycl
aims Ii
abilities orobligations ofContri
butorofany
kind ornaturegwhetherexisting asoftheClosing Dateorarising thereaftefonaccountofContributor's
ownefship,devel
opm ent exploi
tati
onoroperationoftheContributedAssetsatanytime priorto the Closing
Date.
ARTICLE 2
CONSIDERATION
2.1.
Consideration'
,IRC 6721(a)Exchanqe.ln ftlllconsideradonofthecontribution,transfer
assignmentandconveyaflce ofthe Contributed M setsby Contributorto INTREPID (whi

ch transferis
intended to qualify as a contribution ofproperty to an entity in exchange foran interestin such entity
pursuanttosection721(a)ofthe InternalRevenue Codeof1986,asamended),Contributofshallreceive,

and INTREPID shallissue to Montgom ery Trusta m em bershi
p certijcate representing a M em bership
Interestin INTREPID equalto a FiftyPercent(50%)Percentage lnterest(theMMembershio Cedifi

catee),
2.2. FairM arketValue:Am ountofContributor's CanitalContributlon to INTREPID.For
purposes ofvaluing Contributor's CapitalContribution to,and becomi
ng a Member of, INTREPID,
Contributorand INTREPID hereby acknowledge and agree thatthe aggregate fairmarketvalue ofthe
Contributed Assetsshallbe theirGrossM setVal

ue (asdesnedinthe lntrepidOperati
ng Agreement)equal
toOne MillionThree.
irlululredThousand Doll
afs ($1,300,000.00)whichhasbeen determined i
n accordance
with the Intrepid Operating Agreement.The partiesfuftheragree that fora11tax reporting purposes,the
al
locati
on am ongthe ContributedM seLsshallbeassetfofthontheallccationschedule attached heretoand
made gtparthereofasSCHEDULE 2.2 w hich allocation shallbe used by each pady in preparing their
fespective appl
icableincome taxretum s.Contri
butor'scontributionoftheContri
butedAssetsto INTREPID
asitsCapitalContributi
ontheretoand i
tsadmission asa Membershallbe evidenced byhisexecutionand
delivery atthe Closing ofacounterpaftsignature pagetothe Intrepid OperatingAgreem entin accordance
with the term s thereof.
ARTICLE 3
REPRESENTATIONS AND W ARPANTIES OF CONTRIBUTOR

As a materi
alinducem entto INTREPID to enterinto and perform INTREPID'
S obl
igations underthis
Agreement,Contri
butorandMontgomeryherebymake tLe following representationsand warranti
es upon
whlch INTREPID isrelying andbutforwhi
chwouldnothave othel
w ise entered intothisAgreement
3.1
PowerandAuthoriW.Contributorand Montgomeryhavethe rcxquisitepowerandauthori
ty
to execute,deliverandperform thisAgreementanda1Irelateddocuments instfumentsand agreements,
each ofwhichwilbedulyexecuted and deliveredbyContributorandMontgome!y atthe Cl
osing and shall
consti
tute aval
idandbindingobligationofContributorand Montgom ery.Theexecuti
onanddeli
veryofthis
Agreem ent,and anyagreementagreed to beexecuted and del
iveredpursuanthereto doesnotandwi4not
C1
4
:
Qcss
t
T
sr
.e
sq
am
es
f
neepkpconukpntec
contributionAgreement-page2

w
vi
olateany provisionofany agreementorderjudgmentordecreetowhich ContrlbutororMontgomew is
a part
y.orbywhi
chContributororM ontgomet
y isbound
'
3.2
Title to Contributed Assets. Contributorhas or wilthave atthe Ct
osing good and
marketable titl
e to aIIoftheContributedAssets freeand clearofal1securityinterests m tm gages,ptedges
liens, encumbrances charges or restri
cti
ons of any nature and specificall
y including any contingent
Iiabi
li
tiesorIiabilitiesarisingoutofanyIegalproceedingstowhichContributorisa pady. and there are no
otheclicenses coatradsoragreem entsoutstandingfegafdin:Contfi
butor's rlghtto ow n develop,operate
use,sell,transfeq Ii
cense, distri
bute orexpl
oi
tthe Contri
buted Assets, specifi
callyincl
gdingtheTechnology.
3.3
W orkinu Condition ofthe Technoloqv. TheTechnology isdeveloped isoperadonaland
perform s in them anne:which Contri
butorhasrepresented tothe LLC orits representatives. A working
prototype ofthe Technol
6gyhasbeen developed, and Contributorhas conducted repeated and varied
testing on theTechnology,orllascausedittobe tested toensuretheTechnol
ogy satisfactorilyoperates
underanumberofoondi
tions.Thereareno knownprogfam m i
ng,codingorothererrorsw hich need to be
overcom e orthatwouldotherwiseinhibitorpreventthesoftwarefrom properlyoperating orpefform i
ngin
the mannerwhi
ch i
tisdesignedto doorwhichContributorhasrepresented. There isno specialhardware
orothersofl
w areprogram wbichisrequiredtorunoroperatethe program atany levelthatisnotgenerally
or readily available to the public that woul
d othefwise make it cost prohibitive or unreasonable to
m anufacture distri
bute licenseorexploi
tinanym annerthe Technology.
3.4
LeqalProceedinqs. Exceptassetfofthon SCHEDULE 3.4 attached hereto and made a
pad hereof,neitherContributororMontgomeryhasno kn'owledge ofany pending orthreatenedliti
gation,
governm entalinvestigati
on orotherproceedingagainstorrel
ati
ng to oraffecting Contributor Montgom ery,
the Contributed Assetsorthe transactionscontem pl
ated by thisAgreem entwhich could have a m ateri
al
adverse affectthereon. To the knowledge ofContributcrand Montgom ely, no basisforany such action
exists,and thereisnolegalimpedimentofwhi
chContributororMontgom efyhasknowl
edgetothe conjnued
developm entand exploitationofthe Technology orcontinued use oroperationofany ofthe Contributed
Assetsin the ordi
nafy course ofINTREPID'Sbusiness.
3.5
Contracts. Contributor bas detivered to tNTREPID copies of aIlwri
tten contracts,
obligadonsandm mm i
tmentsofContributorenteredinto i
n connecti
on with and rel
ated tothe Contributed
M sets,aIlofw hi
ch are Iisted by reference onSCHEDULE 3.5attacbed heretoand m ade a parthereof.
3.
6
Llabllities. Contributorhas notincurred any matefi
al uninsured obligati
on orliabitity,
absolute,accrued,contingentorotherwise,which affectthe Contributed Assets, and exceptin connection
with the perform ance ofthi
s Agreem ent,sold transferred orencumbered any ofthe Contributcd Assets.
3.7
T:xRetum s:TaxespContributofhashledal$taxretumsrequifedto be filedby. anmade
a11payrnentsrequired to bemadebyitwithrespecttoaIIIocalstate andfederalincom etaxes salestaxes
usetaxes,employmenttaxesand similartaxesdue andpayableonorbefore the date ofthisAgreement.
To Contributor'sbestknowledge, information and belief,there areno such unpaid taxliabil
ities.
3.8
comm issions and Fees.Thereareno val
idclai
m sforbrokeragecom missionsorfinders
orsimilarfeesinconnecti
onwiththe transactioncontemplated bythisAgreementwhich may nothave to
be asserted againstINTREPID resul
tingfrom anyactiontaken byContributor.
3.9
Comoliancew ithLaws.Conbibutorisincom pl
iancewith aIIfederal, state and localIaws,
regulations and ordinancesrelatingto aIIoftheContributed Assets.
3.10 No Untrue Representations orW arranties. No representation orwarranty made by
ContributororMoptgomely inthisAgreementinany scheduleattached hereto, in any certificatefurnished
l'
,
Y=t
arsnt
T
s,
rs
n
ses
1'
kl
'repidmoc
e mtEc
contributionAgreement page 3
-
to INTREPID pursuantto this Agreem ent ofin connection w i

th the transactlons contemplated hereby,
contains orwilcontai
n any untrue statem entofa matefialfact oromits orw i
llomitto state and matefialfact
necessary to m ake the statementsor factscontained therein notmisleading.
3.11 Disclosure.ContributorhasreceivedcopiesoftheArticles ofOrganizati

on andtheIntrepid
Operati
ng Agreem entand hashadanopportunityto fevi
ew suchdocum entsand toaskquestionsandto
receive answers and/orto review such ottlerdocuments orinstrum ents as requested by itand/orits
independentlega!counselin conneclionwith tl
ne tfansadi
ons contem plated by this Fgreement.
ARTICLE 4
REPRESENTATIONS AND W ARM NTIFS OF INTRFPID
Asam aterialinducementto Contribtltor toenterl

ntoandto pefform Contributor'sobli
gationsunder
this Agreement,INTREPID hereby m akesthe foll
owing representations and warrantiesv upon which the
Contributorisrelying'
.
4.1
O rqanizationand Standinfl.INTREPID isa limitedIiabititycom panydulyorganized, validly
existing and in good standing underthe I
aws ofthe State ofNevada.
4.2
Powerand Authoritvt INTREPID has the requisite powerand authorityto execute, deliver
and pefform this Agreem entand aI1related documentsl instrum entsrelated thereto each ofwhichshallbe
duly authorized,executedanddel
iveredbyanauthorized representati
ve ofINTREPID attheClosing and
shallconsti
tute a valid and bindingobli
gationofINTREPID.
4.3
Broker.INTREPID has neitherem ployed norothe- ise engaged any brokerorfinderin
connedionwi
th thisAgreementorwithrespecttothetransactionscontem plated herebyunderterm swhich
would gi
ve rise for a claim againstContbutorforany brokerage com missi
on fi
nder's fee orsimil
ar
Paym ent.
4.4
C apitalization. INTREPID is authori
zed to issue the M embership Certiscate upon the
Closing,and the Mem bership Certifi
cate contem plated to be issued I'
ieretlrtderto Contributorwitlbe duly
and validl
y issued and willbe fully paid provi
ded Contributorhas full
y transferred and conveyed the
Contributed Assetsto INTREPID inaccordance with thi
sAgreement.
4.5
No Other Representations or W arranties. Except as othefw ise set forth in this
Agreem ent SNTREPID m akes no otherepresentations orwaranties expressorim plied.
ARTICLE 5
INTREPID'S CO NDITIONS TO CLOSING
'
AIIobligationsofINTREPID underthi
sAgfeementshallbesubjectto the fulfillmentofthe following
conditionson orpriorto the Cl
osing, anyoralIofwhich m ay bewaived in writing, inwhol
e ori
n part,by
INTREPID!
5.1
Contributor'
s and Montnomew 's Renresentations and W arranties True atClu ln .
The representations and warrantiesofContributorand Montgomeryconl ined in thisAgreem entshallbe
true and correctin aIImaterialrespectson and asoftheCl
osingwiththe sameforceandeffectasthough
m ade on the date ofthe Closing.
C1
4
:
m
27vs
90(T
6r
2e
5K
PMr;epid-ceotMmtEc
contributio.Aureement-page4
'

*
2
iqation. There shallba no suit
threaten5.
ed
befoAbsence
reanycouofrtLi
ortb
eforeorbyanygovefnmentalagaecn
ti
c
oy
nio
nrwoh
th
icehri
p
tri
o
scs
eoeudginhg
tt
p
oen
redsi
n
trg
aio
nr
r/
prohibit invali
date orsetasi
de inwhofe ori
flpartthe devel
opment manufacturing use, sale licensure
distributionorotherexploitation oftheTecbnology;the consumfnationofthisAgreementorthetransacti
ons
'
contem plated bereby;orto obtain substantialdamages ln connection therewith.
53
M aterialChances.Thereshallhave beennomaterialchangesi
n Contributof'sContributed
Assetsl including butnotlim ited to any changeintheway1heTechnologyoperatesorperforms,and no
changesorerrorshave occurred in and no as

terationshave beenmade inthedesign orprogfamm ing of
the Technofogy thatcoul
d inhi
bit delay orpreventthe furtherdevelopm ent use operation performance or
exploitati
on ofthe Technology.
5.4
ApprovalofDocum entation.The form andsubstance ofa!Icertificates instrum entsand
otherdocum entsdeliveredorto be deliveredby Contributorto INTREPID underthisAgreementshallbe
satisfactory in a1
lrespects to INTREPID and i
ts counsel
ARTICLE 6
CONTRIBIJTOR'S CO NDITIONS TO CLOSING
AIIobli
gationsofContributorunderthisAgreementshalbesubjecttothefulillmentofthefollowing
condi
ti
ons on orpriorto the Closing, any oraIlofwhich may be wai
ved in writing,in fullorin part,by '
Contributor'
.
6.1
INTREPID'SRepresentations and W arrantiesTrueatCloslnq.Therepresentations and
warranti
esofINTREPIO inthisAgreementshallbetrueandcorred ina1Im aterialrespectson and asofthe
Closing w ith the sam e force in effectas though m ade as ofthe Cl
osing.
6.2
ApprovalofDocum entation.Theform andsubstance ofaIIcertificatesl instruments and
otherdocum entsdeli
vered orto be defi
vered by INTREPID to ContributorunderthisAgreementshallbe
satisfactory in atIrespectsto Contrtbutorand l
iscounsel.
ARTICLE 7
CLOSING'
.DELIVERIES AT CLOSING
7.1
clolinq.closina Date- The cl

osing ofthe transactions and exchange ofdocum ents and
propedycontemplatedbythi
sAgreement(theMclosina*)shalloccureffecti
veasofSEPTEMBER28,1998,
orsoon thereafterata time and on a date as may be mutuall? agreed upon beG een INTRPPID and
Contributor(theMclosina DateM). AttheClosing.the partesshalldeli

verand exchangethe documentsand
property setfofthinSecti
on7.2 bel
ow orsuchotherdocumentsinsubstitutionthereforasare saisfactory .
to the recipientanditsorhiscounsel.
7.2
Deliveries bv ContributorattheClosina.
7.2.1 A fi
nalupdated SCHEDULE 1.2.2,SCHEDULE 2.
2 and SCHEDULE 3.5hereto.
7.2.2 A dulyexecuted Bi
llofSale ina form andsubsl nce satisfadory to INTRFPID and
sufscienttoconvey.transferandassignto INTREPID, a1prightsltitleand interestinand totheContributed
Assets,including the Technol
ogy.
ClKxxxlTre-sontepkqionvqpntec
llczsa(es8pu)
Contribution A greem ent-Page 5
'
7,2.3 A dulyexecuted counterpad signaturepage to thelntrepidO perating Agreem ent

ofINTREPID in connection with Contributorbecom i
ng a Mem berofINTREPID and the is
INTREPID
suance to
ofthe Mem bership Cedifi
cate.
7.2.4 Possession ofaI1ofthetanglble Contrl
buted Assetspursuantto Alticle 8 hereof
including butnotI
imiledto Contfibutor'stangibie pefsonalproperty, books records hles and otheritem s,
relati
ng to the Technology orotheritemsofpersonalpropedybeing acquiredand conveyed hereby.
:.2.5 Contri
butoratanyjmebeforeorajtertheClosing,agrees to execute,acknowledge
anddeliveranyfudherassignments conveyances andotherassurances documents and instrumentsof
transfer reasonabl
y fequeSted by INTREPID oritscounselandwilltake anyotheracti
on consi
th
stentwith
e tefm softhis Agreem entthatmay be reasonablyrequestcd by INTREPID forpurposes ofassigni
transferring granting,conveying,and confirming to INTREPID aIIofthe Contributed Assets i

ncludinq tng
he
Technology and otherpropedy to beconveyedpursuanttothisAgreem ent.
T.3
Deliveriel bv INTREPID attheClosinu.

7.3.1
The Mem bership Cedi

ficatelduly issued in the name ofContributor.
7.3.2
A finalupdated SCHEDULE 2.2.
7.3.3 ResolutionsadoptedbytheManagementCommittee ofINTREPID authorizing the

execudonanddel
iveryofthisAgreementandal1relatedagreements,documents and instrum ents and the
.
consumm ation ofthe transacti
ons contem pl
ated hereby
T.3.
4 tNTREPID atanytimebefofeofaftertheClosing.agees to executelacknowledge
and deliverany fuftherdocum ents waiversand to take any otheraction copsistentwith the terms ofthis
Agreementorthatmay be reasonabl
y requestedby Contributorforpurposesofconhrm ing to Contributor
thevalidissuanceofthe Mem bershipCedikateasdescribedhereinoras mayothefwise be necessary to
consumm ate the transacti
ons contem plated by this Agreement.
.
A Rylcl.u a
PO SSESSIO N OF THE CONTRIBUTED ASSETS
Possession ofthe Contri

buted Assei, includingtheTectlnology,statlbedelivered to INTREPID
on tlle closing Date'

.provided how ever. thatw i
thout limiting any other provision of this Agreem ent
Contributorshal
lprovide authorized repfesentativesofINTREPID reasonable access to the Contri
buted.
M
setsfortbepurposesofsa:sfyingINTREPID withresped to tllerepresentations warranties, covenants
andagreementsofContributorcontained hereinandwithresped tosati
sfacti
onofanycondifonsprecedent
tothe Closingcontained herein.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND W ARRANTIES:
INDEMNIFICATION
9.1
Survival. Al1representations warrantiesand statementscontained inthisAgreementor
in any scbeule attached berRto or any agreemenl executed purstlant hereto shall constitute
representationsandwarrantiesofContributorand Montgomery,respectively.Allsuchrepresentationsand
warfanbesshallsurvivethedateofthisAgreementandtheClosi
ng Dateforaperiodoffi
ve(5)yearsand
omxaTrn a trepid-ctmtm tec
ltzzgeter
sapMl
Contribution Agreem ent-Page 6

MW
each pafly covenantswith the otherpafti

es notto make any claim with respectto such representation and
warranties againstany party afterthe date on whi
ch such survivorshal!terminate.
9.2
Indem nification. Contributorand eactlofi

ts successortrustees benefi
ciari
es ageots
counsel,successors and assigns (coll
ectivel
ylthe ''lndemnitors*and individually, anMlndem nitor-) shall
indem nifyandholdharm l
essINTREPID and itsali
ated aadsubsidia!
y entities. andeachofthei
rrespecti
ve
ofhcers directors sharehol
ders managers m embers emptoyees agents counselsuccessofs andassigns
'
(collecdvely,the'lndemni
fi
edPersons*andindki
duall
y,anelndemnifiedPersone)offrom andagainstany
and aIIliabilitiesl Iosses,claim s damages,actiorislsuitsl costs,defi
cienciesandexpenses (including,but
notI
imited to reasonablefees anddisbursementsofcounsel)arisingfrom orbyreason otorresultingfrom
anybreach by Indemnitorsofanyrepresentati
on warranty agreementorcovenantcontained hereinand
eachdocument,certi
scateorotherinstrumentfurnishedortobefumishedbyan Indemnitorhereunder,on,
from orafterthe Closing Date,orarisingfrom orbyreasonoforresulting from lndem nitorsconductorthe
development,ownefshi
p use, operati
onorexploi
tationoftheContri
butedAsseE includingtheTechnology,
orfrom any alleged actofnegligenceofIndemnitorsori
tsemployees. agentsorindependentcontractors
inanywayrelating to the Technnlogyocthe ContributedAssets.
9.3
Indemnlfication Precedure.W i
thinsixty(60)daysafteranIndemni
fied Person recei
ves
written noticeofthecommencementofany acti

on crotherproceeding in respeclofwhich i
ndemnification
orreim bursem entmaybe soughthereunder orwithinsuch Iessertime asmaybe provided by 1aw forflle
defense ofsuch actionorproceeding, suchlndemni
fi
edPersonshallnotifytheIndemnitorts)thereof.Ifany
such action orotherproceeding shallbe broughtagai
nstanylndem ni
fied Person Indem nitorshallupon
written noti
ce gi
ven wi
thin a reasonabletim e following receiptby lndem nitorofstlch noti
ce from lndemnijed
Person, beenti
tled to assum e thedefense ofsuchactionorproceedingw i
thczmnselchosenby Indemnitor
and reasonabl
ysatisfactoryto theIndemnifi
edPerson'provided however thatanyIndemniied Personmay.
athisown expense, retain sepafatecounselto participatei
n suchdefense. Notwithstaflding theforegoing,
Indem nified Personshallhave the rightto em ployseparatecounselatlndem ni
tor'sexpense and to control
hisowndefense ofsuch action orproceedingifinthe reasonableopinion ofcounselto such Indemnified
Person: (i
)thereareormay be legaldefensesavailabletostlchIndemnifiedPeoon ortootherlndemnised
Persons thatare differentfrom orin additi
on to those available to Indem ni
torand w hi
ch could notbe
adequatesyadvancedbycounselchosen byIndemnitorr or(ii)a conflictorpotenti
alconflictexists between
lndemnitorand suchlndemni
fiedPersonthatwouldrnakesuchseparaterepresentation advisable'provi
ded
however,thatin poeventshallIndemnitorbe requiredtopayfeesand expenseshereunderform oretban
one firm ofattorneysin anyjurisdi

ction inanyone acti
onorproceeding orgroupOfrel
ated actionsor
proceedings. Indemnitorshallnot, wi
thoutthe priorwritten consentofany lndem nified Person, settle or
compromiseorconsenttotheentryofanyjudgmentinanypendingorthreatened cl
aim compromiseor
consenttotheentryofanyjudgmenti
nanypending orthreatenedclaim,actionorproceeding towhichsuch
lndemnified Personis a party unlesssuch settlement compromise orconsentincludesan unconditi

onal
release ofsuch lndemnifi
ed Personfrom any and aI
IIi
abili
tyofanynature arisi
ng orpotential
ly arisingfrom
orbyreasonofsuchclaim action orproceeding.
In the eventIndemnitorshalobjecttothe requested indemnification W written notice
received bylndemnified Personwithintwenty(20)daysaqernotice ofthecommencementofan actionor

proceedingisreceivedbylndem nitor,the entitlementoflndemnifiedPersontotherequestedindemnification
shallbedeterm ined bynonbinding arbitrati
oninthefollowingmanner.'onearbitratorshallbe named by the
IndemnijedPersonandone bytheIndemnitorwithinfi
fteen(15)daysofreceiptby Indemnified Personof
the wri
tten notice ofcontestreferred to above. lfthetwoarbitm torscannotagreeuponthe al
lowanceofthe
requestedindemni
ficationwi
thinfi
fteen(15)daysaftertheirappointment the arbi
tratorsshallappoi
ntathird
arbi
trator,andthedecisionofthemajorityshalbemadawithintwenty(20)daysthereafter. AlIexpenses
ofarbi
tration shallbe paid by the l
osi
ng pady,orifthere shallbe no cleardetermination as to the prevailing
orIosing party.as the case maybe such expenses shallbe shared equally by lndemnified Person and
jndem nitors.orpro rata among alIlndemnified PersonsandaI
lIndemnitors asthecase may be.
Q
k9r:xmm
ePre1$k
27
(67
5.
8
uvtpc
contributionAgreement page7
-

w .
>
ARTICLE 10
NOTICE.S
Exceptfolhe i
tems to be deli
vered atorbefore ttle Closingl any notice orcom m uni
catjon required
orpdeem
ermitted
edtobegivenhereundershalbeinwritingandmaybeeither(i)personalydel
ivered,which shall
be
recei
ved atthe time ofactualreceipttbereot c)r(ii)sentby regi
stered orceftifi
ed matl with
post
U ageand chargesprepaid, whichshal
lbedeemeddeliveredseventy-two(72)hotlrsafterdepositinthe
ni
ted Statesmaitor(ii)delivefed byfacsi
m isetransmission,w hich shallbe deemed receivedonthe date
andatthe timeofelectfonicconjrm ati
onofsuchtransmission provid
edan ori
ginalmechanica!signedcopy
ofsuchnoticeorothercommunicationtsalsoimmediatel
ydepositedinthe United States mailwith first-class
m stageand chargesprepaid'
t or(
i
v)deli
veredbymessenger,FedExorothertcackablecoufiersen i
ce whi
ch
shal
l
be
deemed
del
i
v
ef
ed
on
t
he
dat
e
an
d
at
t
he
t
i
me
as
t
r
acke
d
and
i
confirmedbysuch courierservice'and
n each case addressedodeliveredtothepadytowhom the sameisdifected atsuch pad
facsimil ,
ysaddressand/or
e num bersetforthbelow oratsuchotheraddressand/orfacsimilenumberasthatparty may specify
by written
notice givento theotherpadiesinaccordancew i
ththi
s paragraph:
Ifto INTREPID:
INTREPID TECUNOLOGIES, LLC

Attn:W arrenTrepp, 1ts Managem entComm itteeChairman
685Gary Couft
InclineM llage,NV 89451
M ailin?Address:
P.O.Box 4964
InclineM llage, NV 89450
Facsimile'
. (
702j831-4395
W ith a courtesv Copv to:
Frye& Hsieh, LLP

Attn:DouglasJ.Ffye, Esq.
24955 PaciscCoastHighway, SuiteA201
M al
ibu.California 90265.
.4747
Facsimile:(310)456-0808
Ifto Contributor:
MO NTGOM EIRY FAM ILY TRUST
Attn:DennisMontgomeryand Brenda K. Montgomefy,!tsCo-Trustees

818CheneyCoud
Lodi.Catifomia 95242
Facsimi
le:(209)369-7530
Ifto M ontqom ew :
DENNIS MONTGOMERY
818CheneyCourt
Lodi. California 95242
Facsimilef(209)369-7530
G:tlMcslTre m rsre forG gmtec
llz7'
.
:
efs:seeM)
Contribution A greem ent- Page 8

'
With a Courtesv coov t9:

.
TEHIN +PARTNERS
Attn: NikolaiTehin, Esq
Bank ofAmerica Center
55.
5 California Street,3:
fdFloor
SanFrancisco,California94104-1609
Facsi
mile:(415)951-8308
W here coudesy copies are pfovided for, the servi
ceofanysuch courtesy copyshallnotconstitute notice to
theparty hereundef.
ARTICLE 11
GENFRAL PRCVISIONS
11.1 EntireAqreem ent. The partesagreethatalInegotiationsare merqed into thisAgreemeat
and that,exceptforthe BillofSale, thisAgreementconsti
tutesthefinal
ofthe tefm softhe Ageementrelati
ng tothecontributionofCont , complete and exclusive statem ent
f
ributor'sContributedAssetsin exchange
bortheM embership InterestinINTREPID assetfodhherein. There arenooralorotherwrittenagreem ents
etweenthe padies concerningthesubjectmatterofthisAgreement

.
11.2 Am endm ent: Moditication. Thi

s Agreement shal
lnotbe deem ed modified by oral
representation made before orafter the execution oflhis Agreement. Any oralrepresentations or
m
cationsconcerning thisAgreem entshallbeofnoforceand effect.Anyam endmentorm odifi
todifi
cation
o thisAgreementshallbevali
d unlessitisinwriting andisexecuted byaIIpafti
es.
11.3 Ne Assiqnm ent. ThisAgreementmaynotbeassignedbyanyoftheparti
es heretowi
thout
the priorw ri
tten consentoftheotherpaftyorparjes.
11.4 Benefitand Burden- ThisAgreementshallbe binding uponandinure tothebenefitofthe

padi
eshereto andtheirreapedive heirs successorsandassi
gns. The padi
esheretoagree,forthemselves
and theirh
eirs successorsand assigns,to execute anyinstrumentinwriting w bi
ch m ay benecessary or
properin tbe carfying outofthe purposesand irltentofthisAgreement.
11.5 No Third Padv Beneficiaries. Exceptasomerwiseprovided inthisAgreement

orbenefi
ts und
ghts
. no ri
ertlxis Agreernentare conferred upon,diectl
y ofindi
rectly,orsballjn anyw ay jnure to the
b
enefitof,anythird padynota signatoryto thisAgreement.
11.6
Sevvrabili*. Ifany provision ofthis Agreementas appti

ed to any pafty orto any
ciccumstanceisadjudged byacourtto bevoidandunenforceable. thatshallin no way affed any other

provi
sion ofthisAgreement theapplication ofsuchprovision inany othercircumstances ofthevalidity or
enforceability
ofthisAgreementasawhol
e.
11.Z No W alver. No couse ofconud betweenlhe padie.

s and no delay oromissio
partiestoexercise
n ofthe
any
r
i
ght
or
power
gi
ven
under
t
hi
s
Agr
eement
s
hal
l
'
. (
ofany such rightorpower
i
)impairthesubsequentexercise
, or(
ii)be construed to be awai
verofany breach oran acquiescence in or
consentto the cureofany breachwhileany otherbreach sllal
!coatinuet
wai
verofsuch continuing breach orofanyotherrightorpowerthatshallo
thexistorbe construedto be a
eretofore have arisen. Evel
powerand re
y
medygrcmtedW law andbythisAgreementtoeitherpartyheretomaybeexercisedfrom time
to time.asoftenasm aybedeemedexpedient AlIsuchrightsand
powersshatlbecumulativeto thefull
est
extentpermi
eed by Iaw.
CEOODIT
112zx te
LTr
J''eHr onGyntEc
contribution Agreem entzpage9
11.8 Affirm ative Acts:AllditionalDocum enti. Atany time and from tim e ttltime following the
Cl
osing Date. and ateach party'
s own expense, the paftiesagree to take orperform such furtheracts and
to execute and deliver such fudher documents cedlficates or instruments and to give oath to or
ai
zknowledgebeforea notarypublicanydocumentsreasonabiyrequestedbythe otherpady to im plement
orcom pletesuch pafty'sobl
igationsheretlnderorthe terfnsorintentt)fthisAgreem ent.
11.9 BINDING ARBITM TION OF DISPUTES. EXCEPT FOR ANY PROCEEDING S ARISING
OUT OF OR PURSUANT TO ARTICLE9 HEREOF,ANY PARW TO THIS AGREEM ENT MAY REQUIRE
THEARBITRATIO N OFANY DISPUTE ARISING UNDEROR IN CONNECTION W ITH THIS AGREEMENT.
ANY PARW M AY INITIATE AND REQUIRE ARBITM TION BY GIVING NOTICE TO THE OTHER
PARTIES SPFCIFYING THE MAU ER TO BEARBITRATED. IF LEGALACTION IS ALRFADY PENDING
ON ANY M AU ER CONCERNING W HICH THE NOTICE IS GIVEN, THE NOTICE SHALL NOT BE
EFFECTIW UNLESS GIVEN BY THE DEFFNUANT THERFIN AND GIVEN BEFORE THE EXPIIRATION
OF TW ENW (20)DAYS AFTER SERVICE OF PROCESS ON THF PFRSON GIVING THE NOTICE
EXCFPT AS PROVIDED TO THE CONTRARY IN THESE PROVISIONS ON ARBITI

RATIONI THE
ARBITRATION SHALL BE IN CO NFO RMITY W ITH AND SUBJECT TO APPLICABLE RULFS AND
PROCEDURES OF THEAMERICAN ARBITRATION ASSOCI

ATION (OR ANY SUCCESSOR THERETO)
.
IF THE AMERICAN ARBITRATION ASSOCIATION IS NOT THEN IN EXISTENCE AND THERE IS NO

SUCCESSOR,OR IF FOR ANY REASON THE AMERICAN ARBITRAIION ASSOCIATtON FAILS OR
REFUSES TO ACT,THE ARBITRATION SHALL BE IN CONFORMITY W ITH AND SUBJECT TO TFIE
PROVISIONS OF APPLICABLE NEVADA STATUTES (1F ANY)RELATING TO ARBITRATION AT THE

TIM E OF THE NOTICE. THE ARBITRATORS SHALL BE BOUND BY THIS AGREEM ENT AND ALL
RELATED AGREEMENTS. PLEADINGS IN ANY ACTION PENDING ON THE SAME MAU ER SHALL,
IF ARBITRATIO N IS REQUIRED AS AFORESAID' BE DEEM ED AMENDED TO LIM IT THE ISSUES TO
THOSE CONTEM PI
-ATED BY THE RULFS PRESCRIBED ABOVE.
THE NUMBER AND SELECTION OF ARBITRATORIS)SHALL BE IN ACCORDANCE

W ITH THE RULES PRESCRIBED ABOVE,FXCEPT THAT (I)FACH ARBITRATOR SELECTED SHALL
BE NEUTM L AND FAM ILIAR W ITH THE PRINCIPAL SUBJECT MATTER O F THE ISSUES T0 BE
ARBITRATED, SUCH AS, BY WAY OF EM MPLE ONLY, TECHNOLOGY OR SOFTW ARE
DEVELOPM ENT,OR SUCH OTHER SUBJECT MATTER AS M AY BE AT ISSUE,(11)THE TESTIMONY
O FW ITNESSES SHALL BE GIVEN UNDER OATH.AND (111)DEPOSITIONS AND OTHER RFASONAHLE
DISCOVERY MAY BE ORDERED BY THEARBITI

RATORIS).THEARBITRATORSSHALLHAVE THE
POW ER TO G RANT ALL LEGAL AND EQ UITABLE REMEDIES AND AW ARD COM PENSATO RY
DAMAG ES PROVIDED BY NEVADA LAVI. BUT SPECIFICALLY SHALL NOT HAVE THE POW ER TO
AW A RD PUNITIVE DAMAG ES. THE DECISION OF THE ARBITRATO RS SHALL BE FINAL AND
UNREVIEW ABLE FO R ERROR ()F I
. AW OR LEGAL RFASONI
NG OF ANY KIND. FACH PARW SHALL
PAY THE COSTS OF ARBITM TION I INCLUDING ARBITRATORS'FEES,AS AW ARDED BY THE
-
ARBITRATORIS).
11.10 W aivefofJurv Trial. W ITH RESPECT TO ANY DISPUTE ARISING UNDER OR IN
CONNECTION W ITH THIS AGREEMENT OR ANY RELATFD AGREEMENT AS TO W HICH NO PARW
INVOKES THE RIGHT TO ARBETPATION HEREIN PROVIDED, OR AS TO W HICH LEGAL AC5lON
NEVERTHELESS OCCURS,EACH PARTYHEREBY IRREVOCABLYW AIVESALLRIGHTS IT OR HF MAY
HAVE TO DEm ND A JURY TRIAL. THIS WAI
VER IS KNOW INGLY. INTENTIONALLY, AND
VOLUNTARILY MADE 8Y THE PARTIES, AND FACH PARTY ACKNOW LEDGES THAT NONE OF THE
OTHER PARM ES NOR ANY PFRSON ACTING ON BEHALF OF TFlE OTHER PM TIES HAS MADE ANY
REPRESENTATION OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY lTS EFFECT. THE PARTIES HEIRETO EACH FURTHER ACKNOW LEDGE THAT
lT OR HE HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED)IN

3'HE SIG NiNG CT TH IS AGREEM ENT AND IN THE MAKING OF IHISW AN ER BY INDFPENDENT LEGAL
COUNSEL.SELECTED OF ITS OFlH1S OW N FREE WILL,AND THAT IT HAS HAD THE OPPORTUNIW
IXX QQCP
2 GWAMMLEC
ContributionAgreement-Page10
TO DISCUSS THIS W AN ER W ITH COUNSEL THE PARIIES EACH FURTHER ACKNOVW-EDGE THAT
IT OR HE HAS R EAD AND UNDERSTANDS THE M EANtNG AND RAMIFICATIO NS OF THIS W AI
V ER
PROVISION.
11.11 Tim e is ofthe Essence. TIME IS EXPRESSLY DECI-AREO TO BE O F THE ESSENCE
in this Agreem entwith respectto allofthe terms provisions covenants and conditions contained herein
including specifically, but not lim ited to,the payment ofany m oni
es orexecution and deli
very of any
docum ents provided forherein
11.12 Construction.TheI
anguageina1tpartsofthisAgreem entshallbe construed. in a1lcases
accordingtoits fairmeaning;andnotfororagainsteitherpartyhereto. The parties acknowledgethateach
party and its or his counselhave reviewed and revi
sed thi
s Agreem entand that the norm alrtlle of
construction to the effectthatany ambigtfitiesare to be resolved againstthe drafting party shal

lnotbe
em ployed inthe interpretati
onofthisAgfeement.
11.13 Captsons.Tt
4ecaptionsandheadingscontainedinthisAgreementareinsededforconvenience and identi
fication onl
y and are in po way intended to describe interpret define orIim itthe scope
extentofintentofthisAgreementoranypfovisi
on hereof
11.14 Variation ofPronouns:Gender.AIIpronounsandanyvari
ationsthereofshal
lbedeem ed
to referto m asculine fem ini
ne orneuter singularorplural asthe i
dentityofthe person orpersonsm ay
require.
11.15 Public Notice:Confidentialitv.
11.15.1
Public Notice.Subjed totheprovisionsofSecti

on 11.15.2.below,the parties
hereto agree thatatany ti

m e and from time to time follow i
ng the execution ofthis Agreem entthey will
m utual
tyagree inwritingonthe contentofaIlpressreleasesorotherwrittenororalcom m uni
cationsto be
dissem inatedtoanym edi
a orthi
rd parti
esconcerning thisAgreementoranyofi
tsterms ortheirrelati
onship
with one another.
11.15.2
Confidentialitv:Disclosure ofCedain lnform ation. The parties hereto
acknowfedge and agree thatthi
s Agreement and allnegotiations discussions m atters orinformajon
relating hereto are confidentialamongthem. Exceptfordisclosureto i
ts audi
tors lawyers,tax advisoo
bankers undelw riters orIenders or as necessary or desirable for conduct of business including
negoti
ationswith otheracquisi
tionceandidates nei
therpady hereto shalldissem inateorreleaseto anythird
party.oruse in com peti
tion againstthe otherorthe other's af
filiates,any information regarding any provi
si
on
ofthisAgreementaoranyfi
nancialinformadonfegardingthe other(pastxpresentorfuture)thatwasobtained
by the otherin the course ofthe negotiation ofthsAgfeementorinthe(rourGe ofthe perfomhance ofthis
Agreement,withouttheotherpady'swrittenapproval,'provi
ded,howeveqtheforegoingshallnotapp: to
infermati
onwhi
ch(i)isgenerallyavailabletothepublicotherthanasaresultofabreachofconNdentialiN
provisions'(ii)becomesavailableonanonconfi
denti
albasisfrom asourceotherthantheotherpadyori
ts
' aliatesoragents,whichsource wasnotitselfbound by aconfidentialityagreement, or(iii)whichisrequi
red
to be disclosed by law,includingsecuritieslawsprpursuantto couftorder.
11.16 Governlnq Law. n e validity, construction. interpretation and enforcement ofthis

Agreementand the Ightsand obligationsoftheparties hereunder.shallbe govemed byand construed in
accordancewith the Iawsofthe State ofNevadawithoutgi
ving effecttoany conflictoflaw provisi
on.
11.17 Counterpads. To facili
tate execution, thi
s Agreem ent may be executed in m ultiple
counterparts eachofwhichshallbe deemedanoriginalAgreement and alIofwhich shallconstjtuteone
Agreem entto be effecti
ve asofthe day andyearfirstabovewritten. ltshallnotbe necessaryin making
C1
1
*o
2?9c
3
a&
(
11
rQrg
)roks.con& lt.
Ec
contributionAgreement-page11

Y F
'w
proofofthisAgreementto produce oraccountform ore than a single counterpartcontai

ning the respecti
ve
si
gnatures or,oron behalfof each ofthe parties hereto.
IN W ITNESS W HEREOF,thepadiesberetohaveexecutedanddelivered c)rcausedto beexecuted

anddel
iveredby adulyauthorizedrepresentati
ve, thisCONTRIBUTION AGREEM ENT as ofthedayand
yearfirstabove wri
tten whichAgreementwherlfullyexecuted shallconstitutea valid bi
nding agreement
on aIIparties.
E'INTREPID'' '
'
INTREPID TECHNOLOGIES. LLC
AjjevJ,LimitedLia 'IiN Company

$
By:
'
.
TREPP
s anagem entCom m i
ttee Chairm an
T'CONTRIBUTO R''
M ONTGOM ERY FA rY TRUST
A Calitornia Revocab Trust
I
'
By:
I''n DE Nl d'T
l>.
i
B f?
MERY ItsCo-Trustee
y:f
BRENDA K
ONTG
Y, Its Co-T stee
'. KTGOMERY'' (
.
'
j
'
DENNIS
.
,#
RY. an Individual
CrDcu sTre nkepklfere ntEc
4427% (sL
5eeM)
Conlribution Agreem ent-Page 12

1
SCHED ULE 1.2.2

This schedule is attached to and m ade a partof th
S
atcertai
n Contribution Agreement dated as of
eptember28,1998by andbetweenINTRPPID TECRNOLOGIES LLC
. aNev
(-INTREPIDO)ontheone hand,and DENNIS M ONTG OM ERY and BRENDA
aKdaIimitedliabili
N company
. MO NTGO M FRY as CoTrastees ofthe MO NTG OM ERY FAM
,
ILY TRUST, a Galifornia revocabl
e trust(the icontributorN) and
DENNIS MONTGOMERY
,
anindividual(uMontclclmerW),ontheotherhand
The following is a Iist of aII tangible personal property of Contrib

or being
contributed assigned, transferred and conveyed to INTREPID pursuantut
to Section
1.2.2 ofthe Agreem ent:
(TO BE COMPLETEDI
t
lllI
(z:
i.
s
'
ilM
H)f-M- t'c

W
N.
SCHEDULE 2.2
Thi
S s schedule is adached to and made a partofthatcertain Contribution Agreem ent dated as of
eptem ber28.1998byand between INTREPID TECHNOLOG IESI
(*I
NTREPID')
LLC,aNevadaIimi
tedIiabilitycompany
on the one handland OENNIS MO NTGOM ERY and BRENDA K. MO NTGO M ERY,asC0T
rustee
the MOSTGOMERY
FAMILY TRUSE a Califoni
a revocable trust(the Dcontributof'). and
DENNI
SsMof
O NTGOM
ER
Y,anindividual(Mh/lontnomefvp),ontheotherhand
TNefollowing altocationofthe consideration fortlAeContributed Assets pursuantto

tbeAgreem entisberebym ade, agreed and delivered pursuantto Section 2.2 thereof:
Technol
ogy
Tangible PersonalProperty
TOTALCONSIDERATIONZ
$ 1.300.000.00
Ci
Flr#T7pqFe/pklzo/4mteG
1:$:03211(i;s:NfY )
00
00

)
SCHEDULE 3.4
This schedule is attached to and m ade a pad ofthatcertain Contribution Agreem entdated as of
September28, 1998 by and between INTREPID TECHNOLOGIES, LLC,aNevada lim ited Iiabili
tycom pany
(/INTREPIDR)ontheonehand,andDENNISMONTGOMERYandBRENDA K. M O NTG OM ERY,as C0Trustees of the M ONTG OM ERY FAMILY TRUSTS a Cal
ifornia revocable trusttthe 'Contributormj,and
DENNIS MO NTG OM ERY, anindi
viduaf(NMontgomerv-),ontheotherhand.
Thefollowing is alistofalllegalproceedingsofContributororMontgomery relating

to Contributor,M ontgom e!y ortheContributedAssetstobedisclosed by Contributor
and M ontgom ery pursuantto Section 3.4 ofthe Agreem ent:
1.
Montgomery has anoutstandingjudgmentagainsthim individually, in the sum of

$335,000.00 (pl
us interestacca ingthefeon)foradverseattorneys'feesand costs
ari
singoutofa failedarbi
trati
oni
nvol
ving3NET SYSTFMS, I
NC.Iwhichjudgment
and arbitration asrepresented and wafFanted byM orltgomety. do notadversely
affectinany mannerthe ContributedAssets including theTechnology.
c
,1
mo
2.
/%cmr
(s:m
s.M
kmr
)wli
dreei
tAgmtEc

>
'w
SCHEDULE 3.5
'
Tl
zis schedule is attact
ed to and made a pad oftlzatcedain Contfibution Agee
S
m ent ated as of
eptember28,1998byand betweenINTREPID TECHNOLO GIES, LLC,a NevadaIi
m ited I
iabili
tycom pany
(
K
I
NTREPI
D*
)
of
y
t
he
one
han
d
and
DENNI
S
MONTGOM
ERY
and
BRENDA
K
,
MO
NTG
OM
ERY
Trustees ofthe MO NTG OM ERY FAMILY TRUST
. as C0, a Cal
ifornia revocable trust(the acontributor'), and
OENNIS MO NTG OM CRY
.
anindi
vidualtdMontnomefyn),ontheotherhand.
TheIollowing i
s a IistofaI1writtencontracts, obligations and othercom m itm enl of
Contributor relating to the Contributed Assets to be delivered to INTREPID
di
and
sclosed by Contributorpursuantto Section3.5 ofthe Agreem eflt:
(TO BE COMPLETEDJ
7(l.
12:
('
.:Xu'
7ePk''*G''Ae=teC

= #
BILL O F SA LE
THIS BILL OF SA LE ism adel enier

edintoanddeliveredeffectiveasofSEPTEMBER 23 4998,
pursuantto the terms and conditions of
th
,
1998
atcedain Contributi
onAgreementdated as ofSeptem ber
28
NTREPID TECHNOLOGIES
1 byandbeM eenI
a Nevada l
imitedIi
abilitycompany ('INTREPIDMJ.
on theone hand, andDENNIS M ONTGO MERY and,LLC,
BRENDA K. MONTGO M ERY
M ONTG OM ERY FAM ILY TRUST
-rrustees ofthe
,as Co, aCal
i
forni
arevocabletrustCcontri
butoro),and DENNIS M ONTGO M ERY,
an i
ndi
vidual(MMontnomefvn) onthe otherhand(the Ocontri
butionAqreement>). Unlessothefwisedefined
herein, theterm susedinthis,Bi
llofSaleshallmeanand refertoth
Agreem ent.
ose term s asdafined i
n the Contribution
NOW ,THEREFORE, FO R GOOD AND VALUABLE CONSIDEM TIO N th

ofwhich i
s hefebyacknowled
ereceiptand sufficiency
ged,Contributorhefebysall
s. transfefs, assignsandconveysunto INTR EPID
aIIofi
ts ri
ghtsltitle, and interestin andto thefollow i
ng tangible and intangible
constitute aI
loftbe ucontributedAssets'beingcontfibuted byContributorto INTREPI
proper
ch
Dtyandassetswtli
the Contribution Agreem ent:
underthe term sof
1.
A1
lofContributof'sknow-how'trade secrets'patentrigbts
bice
, copyr
ightsltrademarks
nses
progr
amsand
a permitslregistered orsnregistered pending orapproved,' sofY are
aIIprogrammi
ng and sourcecodesused irtconnediontherewithor
othefwise rnd
equi
red to operate any component thereot and alIprogramming
documentation designs materialsandotherinformation alIinwhateverform and
w hereverl
ocated relatingtooused inconnedionwith
consisting ofanypad of thesoftwarecom pressiontechnol
orothewsedescribing or
c
ainSoftwareCompf'
essionEngineDevelopmentProgro
gycont
cont
ai
nedo
nt
hat A
Nert
am
ai
ned
on
CD
o.1,being contributed byContributorpursuanttothe ter

Agr
m s ofthe Contribution
eement(coll
ecti
vely,the'Fechnolonvol.'
2.
Certain of Conbsbutor's tangibh

e person
T
al propedy used in connecti
on tbe
echnology as more pafticularl
y described on SCHEDULE 1.
and made a paftoftllisinstrtlm ent'
2.2attacheq hereto
, and
3.
AlIofContributor'sbeoksartdfecocdsrelati
ng to theContributed Assets.
Contributorhereby represents and warrants to INTREPID th

oftlle above-descri
atitisthe lawfuland equitable owner
bed Contributed M sets, and ithasthe free right
to conti
bute,
a
ssigni
tsentireinterestthereinwithouttheconsentorpermissionof,and
convey,transferand
notice t
withoutthe requlrementofany
oItaony
personthe
ore
ntity.
CoioptributorrepresentsandwarrantstoINTREPIDthat, exceptasotherwise
disctosed
ltunder
Cont
ribut
nAgreem ent,al
lofthe Contributed Assets arefreeand clearofa
aIIIiens securityinterests charge.s burdens claim s restrictions orencum brances whatso
nyand
ever.
EachofContributoranclINTREPID hereby acknowledgeand congrm thatthisBilofSal

sale transf
e and tbe
er'assignmentand conveyanceofdtletothe Cont
,
to INTREPI
Dh
ri
buted Assets setfodh herein byContributof
eretlnderi
s beingexecuted anddeli
veredpursuantto tbe ContributionAgreement
ofSale andthe conveyance oflitje t
Thi
s 8ilI
.
ty
hehContributed Assets to INTREPID hereundershallbe effective
im m ediatelyuponexecutien and delivoet
ereofatthe Clostng.
lnthe eventolanyli
tigati
on arbitrati
onorotherdispute arising asa resultoforbyreasonofthi
ofSaleorthesubjed rnatterhereof,tl:eprevailingpartyinanysuch litigation
sBill
be entitledto in addition to any otherdamages assessed

bitrationorotherdisputeshall
, ar
i
t
s
r
eas
onabl
e
at
t
or
ne
ys'fees, and alIothercosts
,
and expensesincurred i
n connectionwithsettli
ngorresolving such dispute. Theattorneys'feesw hichthe
prevaling
partyisentitledto recovershalli
nclude feesforprosecuting ordefendingany appealafld shallbe
cqrlocatTlv.ltltlotrepidalcgsaMxEc
11az:8(
e49eM)
awarded forany sugplementalproceedingsuntilthehnaljudjmentissatisfied in full
foregoing award ofattorneys'fee

. l
n additi
on to the
sto the prevatling pady, the pfevailing paqy in any lawsuitorarbii
procedure on ths instrumentshallbe enti
tled to it
ration
proceedingsto
sreasonableattorneys'feesincurred inanypostjudgment
collectorenforcethe judgment
.
The validity, constructitm interpretation and enforcem entofthisBiilofS

obligationsofthepartieshereunder shallbe governed by and construed in accordanc
ale,
and
e wi
th tt
hhe rights and
StateofNevadawithoutgiving effectto anyconflictofIaw provision
e lawsofthe
.
IN W ITNESS W HEREOF the parti

es hereto haveexecuted orcaused to beexecuted bya dul
authorized representati
ve this BILL O F SALE eff
ecti
veasoftheday andyeaffirstabovew ritten and toby
delivered attheCl
osing.
.
e
''CONTRIBU-I
-OR''
MO NTGO MEPY FA lLY TRI

JST
A W ftynia Revo
.
leTrust
$;
.
j
,
By:
''
I
(
)
i 4 I
tk !z
Bk
g;y: j
z'
TGOMERY ItsCo-lkustee
.
.1
J
K. OHIG W RY, tsCo--rustee
.
ACKNOW LEDG ED AND RECEIVED BY:

Z'INTREPID''
INTIV PID TECHNOLO IES, LLC
A Ne ada
Limited L' IlityCompany
'
j
.
kQ
By:
RR TREPP
tl anagementcommi
tteechairman
l
c:lo lTreknucespkl-sillofsaw.ec
1lzz1
ll(6:x9ps!)
:?
'
SCH EDU LE 1.2.2

Tbisschedule isattached to and
from DENNIS M O NTG OM ERY amade a paftofthatcertain BlI1ofSaledatedasofSeptember28 1998
nd :RENDA K. M O NTGOM ERY asCo-l-fusteesoftheMONTGOMERY
1
FAMILY TRUST, aCal
,
i
f
o
c
ni
a
r
e
v
o
c
ablqtrust(theicontributorn)infavorof
aNevada Iim i
ted liability c
iNTREPID TECHNOLOG IFS LLC
ompany ('INTREPIDM .
The folsow ing is a 'list of alIt

angible personal property of C
contributed assigned, transferred and conveyed to INTREPID ontributor being
accom panying BillofSale:
pursuant to the
ITO BE COMPLETED)
l
$
1
)
J!
l
l
.
11Jli
rE)
l
s(f
;:z
l
!qk
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.-
DAVID A .JAKO PIN ,CA BarN o 209950

JONATHAN D.BIJTLER,CA BarNo.229638
2475Hanoverstreet
paloAlto,
cw 94304-1l14
.
Telepbone:(650)233-4500
9 Facsimile:(650)233-4545
ApplicationforAdmissionProHacViceforthcoming
10 AttorneysforPlaintiff
ll
IN T H E SEC O N D JU DICIA L D ISTRIC;a CO U RT O F TH E STA rrE O F NEVAD A
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IN AND FORTIIE cotlx'rv oywwslloE
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E'rR.Bppto 'rEcllw ol-oG lEs, lx c ., a
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VS.
l8 DENNIS M ONTGOM ERY,an individual;and

DOES lthrough 20,
l9
efendant.
20
21
C O M PLAINT
22
(Exemptfrom Arbitration - Inl

.unctiveReliefSouabt&
Amountin Controversy Exceeds$40,000.00)
Pursuard to N .R .S.600A .070.3,Plaintiffhereby lodges tlle enclosed record conditionally under
23
24 sealand willm ake a m otion or application to the Courtforan orderpennitting the record to be filed
25
underseal.
26
27
plai
ntiffe'WeppidTecbnologes,L.L.C.(E<eTreppid''ortplaintiff'')allegesasfollows:
///
28
'
T.
oouxwcoocsmtn ooocsopsznzl
Page 1 of10
N ATU RE O F T H E AC TIO N
1.
..D
Defendants Dennis M ontgomery ('tM ontgomery'') and DOES 1-20 (collcctively,

,,
efendants )m isappropriated trade secrets,have engaged and threatened to blackmaile'

freppid by
5
6
wrongfully converting and w ithholding e-freppid's sensitive proprietary infonnation, and have
breached contractualagreem entsw ith e'
rreppid
.
2.
Celain of e'rreppid's employees, including M ontgom ery, are given access to
8 e'
freppid's sourc.e cotte on speoitic tennsand oonditionsdesigned to allow them to perfonn theirduties
9
=
w hile protecting e'

l-reppid's proprietary technology, confidentialinform ationyand trade secrets related
1
h::t
10 to e'rreppid products (collectively, the d<e-rreppid Confidentiallnfonnation''). Pliorto January 18a
XO .2
ll
f.
ud
=k=;m:::
2006, D efcndant M ontgom ery w as em ployed by e'Freppid.
W hile an e'rreppid em ployee
i2
a.
Jr
$7 I
o
xrl
M ontgom eryhad theability to accesse'

rreppid ConfidentialInformation
8y)< l3
' C'D
i i$
# 14
..
'
Because M ontgom ery is in possession ofthe only intactsource code,and D

.
efndants
QQ g
''
FreppidConfidentialInfomzationtosuittheirown
*o
d 6 15 arecontinuingtomisappropriateandconvertthee'
vd
*k,-'jzs 16 interests,e'rreppid seeksthereturnofallofthee'
TreppidConiidentialInformation in Defendants,
i
Q V l7 possession orcontroland seeksto enjoin them from obtaining any commercialadvantage or
unjust
,.
Qt
Nr
tl
'
$1
18 enrichm ent from their m isappropriation e'rreppid also seeks dam ages for D efeudants: wrongful
.
l9
conduct.
20
GENERAL FACTUAL ALLEGATIONS

21
22
23
'
rlle partes
plaintiff e'
rreppid Technologies, L
L.C.is a privately-held lim ited liability com pany
thatdevelops soRw are forsuch applicationsasdata com pression and pattern recognition. lts corporate
24
headquartersare located in Reno, N evada.
25
26
5.
lndividual D efendant Dennis M ontgom ery was the Chief Teclm ology O fficer of
freppid isinfonned and believesthatM ontgomery residesin Reno, Nevada.

27 e'l-reppid. e'
28
r:
ooMAwcx csmLn ooocson8zozhl
Page 2 of 10
1Case 3:06-cv-00056-PMP-VPC
1
2
3
6.
%-
e'l-reppid is unaware of the true nam cs and capacities, w hetherindividual,corporate or
othenvise, orthedefendants sued herein asD OES 1 through 20 and therefbre sues thesedefendantsby
,
such fictitious nam es. e'
l-reppid willam end this com plaintto state tlze true nam es and capacities of
such fictitiously nam ed defendants when ascertained. e-rreppid is infonned and believes,and on that
5
6 basis alleges,that each of such fictitiously nam ed defendants w as acting as the agent, partner,joint
7 venturerorpotentialbusinesspartneroracquirerofe'
l-reppidandisjointlyandseverallyresponsible
g
2
t!
@
st
10
I1
o
'.. .
iliM.
% % -
sorthe actsand om issionsalleged herein.
7.
e'
rreppid is inform ed and believes, and on that basis alleges,thatthe D efendants and
fth
each o em w eretheagents,sew antsand em ployeesoftheirco-defendantsand each ofthem , and in
doing the things alleged herein w ere acting within the course and scope of their authority as such
i$
@171 12
r
8'rmo& l3 agents,sew antsand em ployeesand with the perm ission and consentoftheirco-defendants, andeach
.2 g.?
of'tiwm
db*
t l4
a .4;$
'
1 c; l5
TheNatureofe'l-renpid,sBusikess
.
.v tln
'j
-'kNd*' l6
8' Thee'
l-reppidSourceCodeisthesourcecodeusedtoimplementthevariousfunctions
tu
Q V 17 performedbye'rreppidSottware Allofe'rreppid'srevenuesderivefrom e'rreppidSoftw are
a'
I
G
4'
d
2c
18
19
Given the criticalimportance ot-e-rreppid sourcecodeto e'rreppid,as chiefTechnical
O ffi
cerD ennisM ontgom ery w as solely responsible form aintaining the currentversion ofthe e-rreppid
20
SourceCodeandforbacking-up(i.e.,savingacopy)ofthee'rreppidSourceCode.
2l
22
23
l0.
To protect the valuable e'

Freppid Source Code, e'
l-reppid controls access to the source
code to protectthe security and confidentiality ofits intellectualproperty. A sdiscussed furtherbelow ,
:24 these controls include lim iting access to its facilities, to its com puter servers,and to its tangible and
25
intangible intellectualproperty.
26
27
securiw M easures G overlline A ccess to e'rreppid Source C ode

.
11.
The e'
rreppid Source Code ,prior to its being deleted, w as stored in on-site com puter
28
servers, including the SRCSERVER alld ISASERVER as well as two different workstations
::oouaocx csmLo ooocswo8zozyl
Page 3 of 10

-
- '
l Associated with each of these servers and workstations was a different RAID (Redundant Array
2 IndependentDisks)storage box, which actually stored the e'l-reppid Source Code. Access to these
3
sew ers is oontrolled by an Adm inistrator passw ord. O nly M r M ontgom ery and M r.Venables knew
.
the correctAdm inistratorpassword.

5
l2.
4j
;
The e'Freppid servers are stored in a server room that is accessible by only a sm all
7 group ofpersonnel.
13.
A s of Decem ber,2005, the m ost current version of the e'Freppid Sourc'

e Code w as
9 stored in the SRCSERV ER . Backup copiesofthe e'rreppid Source Code w ere stored in m ultiple other
2
d@
h
10 l
OCations,including abackup serverreferred to asISASERVER aswellastwo (2)differentbackup
7o1,.0
ll
;t.
M = -
w orkstations.
!$
i::1 12
$
7 ;
l4. Foroverallbuilding security ofe'Freppid,only a few employeeshave accessto the
iJ!tu l3
' o-=
building, and tunling on and offofthe alarm iselectronically m onitored
Ei 0 14
.
Q j.
-lC
15
Further,video cam eras m onitor ttte activities, i
-1 1oo- 15
ncludingtheacvessdoorstothebuitding
'
-
t'tlf!
'*
i'k20X'b'
m
Q#
<
16 and the selverroom , andthevideo tilesfrom thesecamerasisstored oncomputersthatrecordthis

17 footage On orsoon afterJanuary 10, 2006,M r.V enablesdiscovered thatthe footagerecorded from
71
18 thesecamerashad been deleted from thecomputers
QV
..
19
l6
.
'
M r. M ontgom ery regularly provided com pact discs, D vfl's antl/or hard disks
20
('Tackttp CD's'')to e'rreppid'sChainnan,M r.W arrertTrepp (<tM r.Trepp''),whichlztinformod M1..

2l
22
Trepp contained the m ostcurrentversion ofthe e'

rreppid Source Code
.
23
24
M isappropriatiou ofTradeSecrets.
l7.
H istorically, prop am m ers developing e'rreppid Source Code store pieces of the
25 e'rreppid Source Code they are w orking on attheirpersonalworkstations.

26
27
1g
e'
rreppid m aintai
ned a network of oom puters thatalso allow ed these progranlm ers to
accessa version ofthe e'freppid Source Codethatw as m aintained on a shared directory.
28
.roouavcx csm Ln ooocslogzozl
Page 4 of10
1
2
3
19.
Around Decem ber 19 or20 , 2005, M r.M ontgom ery began deleting certain e'Freppid
SourceCode filesthatw ere located on the hard drive forcertain w orkstation thathad notbgen reccntly
used. M r. M ontgom ery told M r. Bal,an e'
l-reppid em ployee, that he w as deleting the tiles on his
workstation forsecurity reasons, and thatthere rem ained copies ofthese tileson the SRCSERV ER that
5
I would stillbe able to access. Also, atthattim e,there stillrem ained on the hard drive ofM r. Bal's
7 workstation othere'l-reppid Source Code files thathe had been using m ore recently in theperform ance
8 ofhisduties ate'rreppid.
9
2
)
dk
20.
W hen M r. Bal arrived atwork on M onday, January 2,2006 allofthe e'Freppid Source
10 c
ode thathe had been using more recently and which had stillbeen on the hard drive forhis
1l
0 ..
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;l;r.
k
M = -
@ Q7
@ 1 12
c
iC &a! l3
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i bl 14
w orkstation the previousw eek had been deleted
21.
A nother program m er/sofhvare developer,
Mr.Kalluri,also discovered thatanother
collection ofe'
rreppid SourceCodetilesstored athisw orkstation had been deleted
o .)A
,9
11 6 15
0.
t3 j?
'*d : 'k'
,,.
22
'
M r. K alluri asked M r. M ontgom ery about tbe m issing e'Treppid Source Code
,
expressing m isgivings about the difficulty of continuing to w ork
w ithout access to the files Mr.

t
k)k ;i$ 16
Q 4 17 Montgomeryrespondedthathewasperformingadaily backup so thathe'd havethem ostrecenttiles
.
'
!tmt
ZEI
18 and thatwould providethelp withth
e e'rreppid Source Code they required on an as-needed basis.
19
23.
On Decem ber 21, 2005
M r. Venables had a phone conversation with M r.
20
M ontgomery,whereM r.M ontgomery suggested thatM r V enables did notneed to com e to the office
.
21
.
M
r
.
V
enabl
es
w
ent
t
o
t
he
of
t
i
ce
a
nyw
ay
22
hat tim e M r.V enables noticed that one of the
, and at t
23
workstations thatw as used to store a backup copy ofthe e-freppid Source wasm issing. M r.V enables
24
asked M r.M ontgom ery aboutthis, and M r.M ontgom ery explained thathe had taken this workstation
25 and the associated R AID storage hom e.

26
27
:,
4
M r.v enables took a vacation &om D ecem ber22, 2005 to January 3,2006.
25.
D uring the tim e period between Christm as and N ew Y ear's D ay, M r. M ontgom ery
28
provided M r.K alluriw ith specific files of the e'rreppid Source Code upon dem and. To provide the
l:
ooMAcoocsmLn ox csun8zozl
Page 5 of l0
,
Page 45 of 49
l requested tiles,M r.M ontgom ery copied the liles to a shared drive thatM r.Kalluricould access. A fter
2
M r. K alluriaccessed the file and copied itto hisworkstation,the copy in the shared drive w as deleted.
Wh
en he com pleted his w ork on the tiles,M r. Kalluri copied them back into the shared drive and
infonned M r. M ontgom ery - who would then be responsible for copying that tile to the e'
rreppid
5
Source Server.
6
7
26.
Upon returning from hisvacation on January 3,2006,M r.Venables checked the status
8 oftheSRCSERVEk and theISASERVER. From thischeck,hedetermined thata11ofthee'

Freppid
9 Source Code stored on each ofthese servers had been deleted. H e w as infonned by anotherem ployee,
'?
ht
o i?
s-. ,..
klif'
td
10 J
esseAnderson,that portionsofthee'
Freppid Source Codethathad previously been stored on the
11
= t-
program m ers w orkstations had been deleted asw ell.
iZ
i71 l2
27
c &
OnJarmary3,2006,Mr.VenablesaskedM r.M ontgomerywhatwasgoingon,and Mr.
9()1zj 13
''
'
Ci
t)
-'
f
d
d
t 14 M ontgomery said thatile was tucleaning stuffup, and thatthisincluded deleted filesthatK6weren't
.
QQ;
z;
,,
needed.
t,.
1o- l5
'
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'p
'hk
!';
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28' As ofJanuary 9,2006>M r Trepp andMr.Venabl
t' 16
esdiscoveredthatsubstantiallya1lof
Q V 17 thee'rreppid SourceCodewasmissing, as none ofthe program m ers had access to the pieces of the
'
a#
73
I
18 e'rreppid source code they worked on attheirpersonalworkstations. M r.Venables Iooked for the
l9
e-freppid Source Code in the building,butcould notfind it. M r.Trepp also directed em ployeesto look
20
fora completecopy ofthee'rreppid SourceCode,to no avail. W hen M r.Trepp had the Backup CD's
21
exam ined,itw asdiscovered thatthey did notand neverhad contained a com plete copy ofthe e'Freppid
22
23
24
Source Code forarly periodqoftim escontrary to M r.M ontgom ery's representations.

29.
On Janualy 10,2006,during a brief tim e during the m om ing w hen M r.M ontgom ery
25 w as in thebuilding.M r.Venables asked M r. M ontgom ery w here the e'rreppid Source Code had gone.
26 M r M ontgom ery said itw as stored on certain :.320 G igabyte hard D rives''in the building. Searches
27 b
y M r.V enablesand othershave failed to locate these 320 G igabyte hard D rives.
28
zzoDMATcoocsHLn ooocsbo8zozl
Page 6 of10

w
1
2
30.
'>
Later on January 10,2006,M r.M ontgom cry returned to the building and spokc with
the Chairm an, M r.w arren Trepp After they talkcd, M r. M ontgom el'
y spoke with M r Venables,
.
Sr stating thatifM r.Trepp .needs to give m e big m oney if he w ants.,to recover the m issing e'l-reppid
4
Source Code.
5
e'Ireppid isSufferine lrreparable H arm D lle to M r.M onteom erv's M isappropriation
6
.
7
31.
W ithout the e'rreppid Source Code, e'

rreppid's program m ers cannot perfonn their
g ordinary duties. Asaresult,e'

rreppid iscurrently losing over$10,000.00 per day on w ages and other
9
2
Y
d
,0
.,. .
;Li;z.
adm inistrative costsin orderto retaln key personnel, even though these personnelcarmotperform their
10 ordinarydutiesbecausethe e'Freppid SourceCodeism issing..

11
32.
r = -
0$
i:71 12
$
1:1&< l3
'-'
Further,efreppid currently has various contractualobligations thatitw illbe unable to
m eetw ithoutobtaining the efreppid Source Code.
Forexample,e'
l-reppidhasacontractwithLLH &
pt
j;=* I4 AssociatesworthoverOneMillionDollarsthathasbeen workedonbyemployeesate'
l-reppidsince
QoQ L
ir
M ay 2005 W ork on thiscontractrequiresthe e'rreppid Source Code
1,
.
1 g'15
Xo tlj:
jkQiw
t' 16
33' e'l-reppid also hsspentsignificanttimeand effortto securemonetarily significant
Q
17 additionalcontractswithcustomersthatithashadinthepast Atthe presentm om ent,certain ones of
aV
#
.
V7
18 these additional governm entalcontracts are very close to being agreed upon,butM r.M ontgom ery's
19
actions have forced e'rreppid to cancelthe previously-scheduled discussions.
20
21
bqR S'f CAU SE O F AC TIO N

(AIIDefendants)
22
(M isappropriationOfTradeSecrets-NevadaRevised Statutesj600A.010etseq-j
23
24
25
34.
e'Treppid re-alleges each and every allegation set forth in Paragraphs 1 through 33,
inclusive,and incom orates them herein by reference.

35.
The e'
Freppid Confidential Inform ation is com prised of trade secret m aterials,
26 including, butttotlim ited to,source oode regarding e'l-reppid'stt com pression

27
and
pattem
recognitionteclmolog/'.Thesetradesccretsarenotgenerallykflowntothepublicortootherpersons
28
w ho can obtain econom ic value from their disclosure or use.
:r
oospA.
uclxx stl
.luRtkorlocskstlsztlzhl
Page 7 of10
Thesetrade secretsarethesubjectof
tCase 3:06-cv-00056-PMP-VPC
.
.4-
*w
1 reasonable effortsby e'

Treppid to m aintain theirsecrecy,and they derive independenteconom ic value
2
from notbeing generally know n The inform ation destfoyed,deleted and/or taken by M ontgom ery
S4
constitutese'
l-reppid,s <:trade secrets,,underN evada Reviscd Statutes section 600A 030.5.
36.
On inform ation and belief, D efendants w illfully and m aliciously m isappropliated
e'l-reppid's trade secrets.

6
7
8
37.
B y reason of the above-alleged acts and conductof D efendants, e'

Treppid has been
dam aged severely,and w illsuffer great and irreparable harm and dam age in the future. The precise
9 am ouut of this it-reparable harm w illbe difticult to ascertain, and e'

rreppid is w ithout an adequate
'u
11u. 10 remedyatIaw toredressitsinjuries

Y ij
2
,.. ,.
11
=kit
;
f.
rAi
Q71 12
38. e'rreppid isentitled toan injunction restrainingDefendants,theiremployers,attorneys,
agents, em ployees- and alI persons acting in concert with them , f

&a
rom using,copgng,publishing,
l
3
C
1tl1
disclosing, transferring, selling or otherw ise distributing e'l-reppid,s trade secrets,
d i0 14
oranyproductor
a *.
-1:O/o,- 15 servicesbmsed on orincorporating allorpartofe'l-reppid's trade secrets,
*
andrestrainingthem from
X zd
btaininganycommercial
jk-';i$ l6 0
advantagcorunjustenrichmentfrom themisappropriation ofe'rreppid's
a 7 17 tradesecrets
a<
t1
)t
18
19
39
e-rreppid isfurtherentitled to anorderrequiring Defendants, theirem ployers,attorneys,
agents,em ployees,and allpersons acting in concel-tw ith them , to retul'n to e'

l-reppid any and allofits
20
trade secrets and confidential, proprietary m aterials, including but not lirnited to the e-rreppid
2l
ConfidentialInform ation.
22
23
40.
e'
rreppid is furtherentitled to recoverfrom D efendants the actualdam ages sustained by
24 e'
l-reppid as a resultof D efendants' wrongfulacts described in this com plaint. The muount of such
25 dam agescannotbe determ ined precisely atthistim e.
26
27
41
Defendants'acts ofm isappropriation w ere both w illfuland m alicious,and e'rreppid is
entitled to an award of punitive dam ages and attom ey's fees against D efendants. N .R.S.600A .050-
28
060. e'Treppid is further entitled to rccoverfrom D efendants the gains, profits,advantages,andunjust

rr
oouzkpclxncsudl-l
u4olxl
csksoszozyl
Page 8 of 10
I1Case 3:06-cv-00056-PMP-VPC
'+
l enrichm ent that they have obtained as a result of their wrongful acts as described herein N .R.S.
.
600A 050. el-reppid is atpresentunable to ascertain the fullextentofthese gains,proiits,advantages

.
andunjustenrichmentbut,oninformationandbelief,theyaresubstantialandinexcessof$10,0 . .
4
SECO N D CA USE O F A CTIO N
5
6
(DefeudaatM eutgomery)
(Breach ofContract)
7
8
42.
inclusive,and incorporates them herein by reference.
9
(q s.
Y
ij
0
... ,.0
;Li;td
e'l-reppid re-alleges each and every allegation contained in paragraphs 1 through 33,
43.
M ontgom ery breached the tennsofhis em ploym entagreem entand ofthe contribution
10 agreem entby which he assigned to e'Freppid any and aIlrights in the e'rreppid Source Code
.
ll
44. A s a direct and proxim ate result of M ontgom ery's breaches of these agreem ents
=k=;lz 12
,
o
$:It
e'Freppdhasbeendamagedinarlamountandentitledtorecoverasum ofmoneyaccordingtoproofat
9rll* 13
- c'l
tlaetimeortrial
pk.
u 14
;0kQ t
ir
THIltD CAUSE OF ACTION
.t 6 l5
;o
u lj
(AlIDefendants)
Ia d
c
ok ;t: l6
1
( ouversion)
Q 7 17
45 e'rreppid re-alleges each and every allegation contained in paragraphs 1 through 33,
ac
d
.
'
18 inclusive, and incorporatesthem herein by reference
19
46
.
e'rreppid is inform ed and believes that D efendants have im properly taken and
20
converted e'Freppid ConfidentialInformation to their use. The value ofthe e'Freppid Contidential
2l
22 Infonnation is,on infonnation and belief,substantialand in excessofthejulisdictionalminimmn of

23 this Court.
24
25
'
47.
e-freppid is inform ed and believes that in com m itting the acts alleged herein,
Defendants are guilty of oppression, fraud or m alice in that D efendants w rongfully and unlaw ftllly
26 Obtained e'
rreppid Confidential lnformation in order to benefit themselves ateTreppid's expense.
27
e'l-reppid istherefore entitled to an award ofpunitivedam ages and attorney's fees againstD efendants
28
///
::oDMAcx csm L> oDocsM08202!
Page9 of10
llCase 3:06-cv-00056-PMP-VPC
l
WHEREFORE,e'
Treppid reqtlestsjudgmentagainstDefcadants,and each ofthem,and a1l
2 those acting in concertw ith them as follows:

3
A permanent injunction restrainillg and enjoining Defendants froln continuing the
w rongfulactsand conductsetforth above;

5
6
7
8
9
2
10
t
)
!
s6
u.
9 .2
A permanent injunction requiring Defendants to return the e'

rreppid Contidential
Inform ation;
3.
Duringthependency ofthisaction,apreliminary injunction enjining and restraining
Defendantsfrom the wrongfulactsand conductsetforth above;
4
.
D
uring the pendency ofthisaction,a preliminary injunction requiring Defendantsto
1l
;
N f.
tq
retum the e'rreppid ConfidentialInform ation'

,
M Y -
1'
2
:1y; l2
;: 12
2r)lx 13
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t1 o6 15
io
kd$
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at
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d
X
2.
Restitution;
6'
com pensatol'y dam ages in an am ountto be proven attrial, i

ncludingbutnotlimitedto
dam ages recoverablepursuantto N .R.S.600A .050.l'

,
7
'
8
PunitivedamagespursuanttoN
18
A11costsofsuitherein incurred;and
l9
10
20
R.s.600A.050.2.
,
Reasonable attorneys'fees;
Such otherand ftzrtherreliefasthe Courtm ay deem proper.
D ated: January l9,2006
21
22
25
ephen Pe , uire
evada B
um ber 1758
N evada BarNum ber6830
H ale Lane Peek D em zison and H ow ard
5441K ietzkeLane,Second Floor
Reno,N evada 8951l
26
AttorneysforPlaintt eTreppid Technologies.L.L.C.
23
24
.
775-327-3000(tel.),775-786-6179(fax)
27
28
::
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Page 10 of 10
M ONTGOM ERY v.ETREPPID,DEPT OF DEFENSE

CaseN o.CV-N.06-056
CERTIFIED COPV S OF D OCK ET ENTIUES
A1%713FILINGS (VOLIJM E 11OF 11)

IN 2ND J'
UlllclyklwDISTRICT COURT
OF NEVADA,COIJNTY OF W ASHOE,
REGARDING CA SE N O.CV06-00ll4,
DEPT,97
S E A L E D
l(
0 R IG IN L
1 coop):3060
M !lzi.,l1 2
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IN 3HE SECOND JUDICIAL DlSFRICT COLJRT OFTIIE STATE OFNEVADA
lx ANo FoR4'fIp)couwvr'f'oizwzvsuoiT
ETREPPID TECHN O LOG IES,LLC,
a N evada lim* ited liability com pany,
10
Plaintiftl
CmseNo.
CV06-00l14
D ept.N o.
11
vs.
12
D EN NIS M O NTG OM ERY etal.,

13
D efendant.
14
15
Ahr RELA TED CO U NTER CLA D:S
16
17
i8
I9
.
20
ORD ER
The Courthmsreviewed and considered Counterclaim -D efendant,the D EPARTM EN T O F
,
:<.
.
.
DEFENSE OF THE UNITED STATES OFAMERICA s(hereinafter DOD,:

,
),MotionforOrder
Di .
a
rectlng Release ofcopiesofAllRecordsand Proceedingsto United States GovernmentCounsel,
21 filed on June 4, 2007 and sabm itted to the Courtwithoutopposition on August9,2007.

22
'
nm attersthathavebeen removed from Statecourtto theU.S.Di
strictCottl'
t,28-U.S.
C-j
23 1447(b)authorizestheU S.D istrictCourtto<<requiretherem oving partyto tilewith itsclerkcopies

.
24
25
ofallrecords and proceedings in such State courtorm ay cause the sam e to be broughtbefore itby
,,
w ritofcertiorariissued to such Statecourt.

26
Afterreview ing the record,the CourtfindsthatD OD hasdem onstrated good causeto relemse
27
certified copiesofallpleadings,docum ents,and recordsto counselofrecord forthe D OD .
28
l-

*--'
>w.<
Accordingly,and good cause appcaring,IT IS H EREBY O RD ERED thatthe DOD 's M otion
l forOrderDirectingRc/ea'cofcopiesofAllRecordsanlProceedingsto UnitedStates'Governmen
3 Collnselis GRA NTED.
4
IT IS H ER-EBY FUR THER O RDERED thata1lstlch lnaterialrcm ain sealed in accordance
5 w ith the priororders ofthisCourt.

6
DA TED :
-l-his ..
n ,3 day ofAugust,2007.
8
9
D ISTRICT JU D G E
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
.
25
26
27
28
2-
--

1
CERTIFICATE O F M A ILIN G
lursuanttoNRCP5(b)plcertifythatIam anemployeeoftheSecondJudicialDistrictCourt
3 of1he State OfN evada,County ofW ashoe;thaton this
day ofA ugust,2007,ldeposited in
4 the County m ailing system forpostage and m ailing w ith the United States PostalService in Reno,
5 N evada,a true copy ofthe attached docum entaddressed to:
6
G reg Addington,Esq.
A ssistantU nited StatesA ttorney
l00 W estI-iberty Street
Suite 600
Rene,N V 89501
10
7
g
ll
12
13
14
'
15
16
17
onald Logar,Esq.
Eric Palver,Esq.
225 S.A rlington A ve.,Suite A
Reno, IvV 89501
M ichaelFlynn,Esq.
P.O .Box 690
6125 EITordo
Rancho Santa Fe, CA 92067
Carla D iM are,Esq.
P.O .Box 1668
Rancho Santa Fe,CA 92067
18
19
20
21
22
23
24
J.Stephen Peek,Esq.
Jerry Snyder,Esq.
5441 K ietzke Lane,2''d Floor
.-
Reno,N V 8951l
Jeffrey S.Ross,Esq.
'
-.
Jonathan Butler,Esq.
50 Frem ontStreet
P.O .Box 7880
San Francisco, CA 94120-7880
25
26
27
Jeffrey Ross,Esq.
2475 H anoverStreet
P
alo Alto,CA 94304-1114
.
gM
28
Sheila K .M ans leld
3-
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1 S-I-IVCIJ I,
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ActingWoit
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DENNISM ONTGOMERY,etal.,
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Defendants.
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CaseNo.CV06-00114
Dept.9
REQUEST FOR SLJBMISSION OF

M OTION
14
15 AND RELATED COUNTERCLAPWS
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Counterclaim-defendantDepartmentofDefenseoftheUnitedStatesofAmerica(DoD),by
17
and tltrough itstmdersigned counsel,requestssubmission ofits (unopposed)motion fororder

18
directing release ofrecords,etc.,which m otion w ms filed June 4.2007.

19
m ovestM sCourtfora!zorderdirecting the Clerk ofthisCourtto relese to D oD counselcertified

20
DA TED :June 4, 2007
2I
Respectfully subm itted,

22
23
STEV EN W .M Y HRE
A cting U nite S es A ttorney
24
25
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GREG
HqGTON
A ssistantUnited StatesA ttorney

Ae-e
1
2
3
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PRO OF OF SER VICE

1hereby certify thatlam an em ployee in the office oftheU nited StatesAttorney,R eno,
N evada and Iam ofsuch age and discretion asto be com petentto sela,e papers. O n A ugust9,
5 2007,lservedacopyties)ofREQUEST FOR SUBM ISSION OFM OTION byplacingsaid

copyties)inapostpaidenvelopeaddressedtothepersonts)namedbelow attheplacets)and
6 addresstes)statedbelow andbydepositingsaidenvelopeandcontentsintheUnitedStatesmail
atthe U nited StatesA ttorney's O ffice,100 W estLiberty,Suite 600,Reno,N evada 89501:
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RonaldLogar,S q.
9 Eric Pulver,Esq.
225 S.Arlington Avenue,Suite A
10 Reno,N V 89501
11 M icbaelFlynn,Esq.
P.O .Box 690
12 6125 ElTordo
Rancho SantaFeyCA 92067
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C arla D iM are,Esq.
14 P.O .Box 1668
15
J.Stephen Peek Esq.

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16 Jerry Snyder,Esq.
5441 Kietzke Lane,Second Floor
17 R eno,(NV 89511
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SECO ND JU D IC IA L DISTRICT C O URT
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Pursuantto NRs 2398.030
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DENNIS M ONTGO M ER Y,trustee etat
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AFFIDAVIT ()F SERVICE
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NameofDefendant:DENN IS M O NTG O M ERY,trustee etal
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SignatureofPersonW hoMailedtheDocument
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Page 2 of2

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A F FIDA V IT
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State of Nevada
County of Washoe
SS .
CARL V INCI, b eing first duly sworn deposes and says :
That affiant is a citizen of the United States , over 18
years of age , lieensed to serve civil process in the State
of Nevada under license #322, and not a party to , nor
interested in the w ithin action affiant received the documents
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2 2006
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UMMONS; PLAINTIFF'S ETREPPIDTECHNOLOGIES, L.L.C.'S FIRST AMENDEDCOMPLAINT
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on DENNIS MONTGOMERY, A PERSON OF SUITABLE AGE AND DISCRETION RESIDING AT THE

RESIDENCE SERVED ON BEHALF OF BRENDA MONTGOMERY , TRUSTEE FOR THE MONTGOHERY
16
FAMILY TRUST, AT THE RESIDENCE.
17
1272 0 BU CKHO RN LAN E

RENO, NV 89511
18
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Affiant does hereby affirm under penalty of perjury that

the assert ions of this affidavit are t rue .
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CAR L V IN CI
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Signed and
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9 ETREPPID TECIINOLOGIES,LLC,a
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Plaintiffl
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DENNIS MONTGOM ERY,
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13 THEM ONTGOMERY FAM ILY TRUST, )
DENNIS M ONTGOM ERY and BRENDA )
14 MONTGOM ERY asTrusteesofThe
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M ontgomeryFamilyTrust.and
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15 DOFS 1-20,
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16
Defendants.
)
17
18
19
AND RELATED COUNTERCLAPWS
)
)
CaseNo.CV06-00114
Dept.9
M OTION FOR ORDER DIRECTING

RELEASB OF COPIESOFALL
RECORDSA.
l'
tlPROCEEDINGSTO
IJNITED STATES'GOVERNM ENT
COUNSEL
.
- '
'
Counterclaim-defendantDepartmentofDefenseoftheUnitedStatesofAmerica(DoD),by
20 and through itsundersignedcounsel,movesthisCourtforanorderdirectingtheClerkofthisf ouzt

21 to release to D oD counselcertified copiesofal1recordsand proceedingsherein,including certified
22 copiesofallpapers,pleadings,and recordstiled in this Courtconcerning the w ithin action. This
23 motionisbroughtpursuantto28U.S.C.,section 14471).In supportofthismotion,DoD aversas

24 follow s:
25
1. 'Thisaction w asrem oved to theU .S.D istrictCourtfortheD istrictofN evadaon M arch
26 20,2006,through D oD 'sfiling ofaN oticeofRem oval.A N oticeofFiling N otice ofRem ovalwas
'-
1 filed llerein on M arch 21,2006.

2
2. The rem oved action ispending in thc U .S.D istrictCourtforthe D istrictofN evada as
3 docketnumber3:06-cv-0l45-PM P-VPC (consolidated with related action underbasclile3:06-cv4 0056-PM P-VPC).

5
3. Priorto rem oval,proceedingsw ere conducted by thisCourtin this action and therenow
6 exists papers,pleadings,and recordsfiled in this Courtconcerning the w ithin action.

7
4.BypreviousorderofthisCourt,the filesm aintained by theC lerk ofthisCourtconcerning
8 thewithinactiop havebeen sealed.
5.Sectionl447(b),title28,UnitedStatesCode,providesthattheU.S.DistrictCom'
t,inan
10 action rem oved from Statecourt,%tm ay require the rem oving party to filew ith itsclerk copiesofa1l
11 records and proceedings in such State courtorm ay cause the sam e to be broughtbefore itby w rit
12
13
ofcertiorariissued to such State court.''

6. O n M arch l5,2007,the U.S.DistrictCourtto which this action w asrem oved directed
14 DoD counselto obtain the (sealed)Statecourtrecordsand proceedingsforsubmission ofsuch

15 recordsand proceedingsto theU.S.DistrictCourt. SeeExhibitA attached hereto (Minutesof
16 Proceedings-//123).
17
'
7. Accordingly,on M arch l6,2007,D oD counselrequested the Clerk of this Courtto
18j provide certified copies ofa1lpapers,pleadings,and records liled in this Courtconcem ing this
19 action. SeeExhibitB attached hereto (IetterdatedM arch 16,2007).Thereatter,DoD counselwas

20 infonned by arepresentative oftheC lerk ofthisCourtthatsuch papers,pleadings,and recordsw ere
21 sealed by orderofthisCourtand w ould notbereleased w ithoutful-therorderby this Courtorby the

22 U .S.D istrid Court.
23
8. D oD counseladvised the U .S.D istrictCourtofthe statusofthe requestforState court
24 matelials.SeeExhibitC attachedhereto(DOD statusreportfiledApril17,2007).

25
26
9. O n M ay 22,2007,the U .S.D istrictCourtdirected DoD to seek relieffrom this Court
2 coacerning therelease ofthisCourt'sscaled recordsconeerning thisaction.See ExhibitD attached
3 hereto(Order-//173).
4
10.ltisrequested thatthisCourtdirecttheClerk oftheCou:tto releaseto undersigrted D oD
5 counselcertifiedcopiesofallrecordsand proceedingsherein,includingcertifiedcopiesofallpapers,
6 pleadings,and records filed in thisCourtconcerning the within aetion. Itis furtherrequested that
7 such records and proceedings herein rem ain sealed in accordance w ith the previousorders ofthis
8 Cour!.
9
DA TFD :June 4, 2007
10
ll
STEVEN W .M
Acting U ni d States torney
12
13
14
G
IN O
A ssistantU nite tatesA ttorney
15
16
17
18
19
20
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22
23
24
25
26
l
2
PROOF OF SER VICE
Ihereby certify thatIaIn an employee in the oftice ofthe U nited StatesA ttom ey,Reno,
4 Nevada and Iam ofsuch age and discretion as to be com petentto sen,c papers. On June 4 2007,
1selaredacopyties)ofM OTION FOR ORDER DIRECTING RELEASE OFCOPIES OF

5 M ,L REC OR D S A ND PR O CEED IN G S TO UNITED STATES'G O VER NM ENT
COUNSEL byplacingsaidcopylies)inapostpaidenvelopeaddressedtothepersonts)named
6 below attheplacets)andaddresstes)statedbelow andbydepositingsaidenvelopeandcontents
in the United Statesm ailatthe United States Attom ey'sO ffice,l00 W estLiberty,Suite 600,
7 Reno,N evada 89501:
'
8
Ronald Logar,Psq.
9 Eric Pulver,Esq.
225 S.Arlington A venue,Suite A
10 Reno,N V 89501
ll M ichaelFlp m ,Esq.
P.O .Box 69O
12 6l25 ElTordo
13
14
Carla D iM are,Esq.
P.O .Box 1668
l5
J.Stephen Peek,Esq.
16 Jerry Snyder,Esq.
17 Reno,N V 8951l
18 Jeffrey S.Ross,Esq.
'
'
Jonathan B utler,Esq.
19 50 Frem ontStreet
P.O.Box.7880
20 San Francisco,CA 94120-7880
21 JeffreyRoss,Esq.
22 2475 H anoverStreet
23
Palo Alto,CA 94304-1114
'
24
'
GREG
25
26
DW GTON
- -
E xhibit A
E xhibit A
'
Case
644-5Filed
Filed
Page117
Case3:06-cv-00056-PMP-VPC
3'
.06-cv-00O5b 'P-VPC Document
Docum ent123
Oa,05/28/08
2007 Page
ofof
4 143
UNITED STATES DISTRICT COURT

DISTRICT OF N QVADA
RENO , HEVADA
DENNIS MONTGOMERY, et al.,
Plantiff tsly
vs .
)
)
)
)
)
)
3:06-CV-0056-PMP-VPC
'
ETREPPID kECHNOLOGIES, LLC., )

et al.,
De fendant (s).
and
ETREPPID TECHNOLOGIES, LLC .,
et alw
Plaintiff ts),
vs .
DEHNIS MONTGOMERY, et a1.,
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
.
3:06-CV-0l45-PMP-VPC
MINUTES OF PROCEEDINGS
.
Dted: March 15, 2007
PRESENT : THE HONORKBLE PHILIP M . PRO , U .S . DISTR ICT JUDGE and

TH E HONORABLE VA LERIE P . COOKE , U .S . MAGISTRATE JUDGE
Deputy Clerk: Rosemarv Damron
Reporter: Marqaret Griener
Counsel for Dennis Montgomery, et a1: Michael James Flvnn and

Ronald J. Loqar
Counse l for E treppid Technolog ies, et a1: Je ffrev S . Ross y JerrY M .
Snvdery Jonathan D. Butler and via phone: J.S. Peek
Counsel for U.S. Dept. Of Defense: Carlotta P. Wells, and Greq

Addinqton
Counsel for Reno Ga zette -lournal : David S . McElrov
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Case 3:06-cv-00O5:
P-VPC Docum ent123 Filed Oa/ 7.007 Page 2 of4
>-
PROCEEDINGS :
STATUS CONFERENCE ; HEAR fNG ON SEALED MOT ION TO
SEUER THIRD-PARTY CLAIM, OR REMAND (DOC. )15 in 3:06-cv-145);

MOTION TO CONSOLIDATE CASES (Doc . #50 in 3:06-cv-b6; Doc . #23 in
3:06-cv-l45); MOTIONS FOR PROTECTIVE ORDER (Doc. #74 & #83 in 3:06cv-f'6; Doc . #5l kn 3:06-cv-145)
1 :0b p .m .
Court convenes .
The Court addresses counsel regarding outstandkng matters.

The Court will issue a rulinq reqarding the search warrant case
(3:06-ev-Q63-PMP-VPC) in the near future.

IT IS ORDERED that the Motion for Remand (Doc . #15 in 3;06-cv-145)
is denied .
IT IS ORDERED that the Motion to Consolidate Cases (Doc . #50 in

3 :06-cv-56 and Doe. #23 in 3J06-cv-145) is qranted.
IT IS ORDERED that the base file shall be designated :
3 :06-CV-0056-PMP-VPC.
Al1 future filings shall be filed in said case.
The Court discusses the wholesale sealinq of pleadings due to the
a ssertion s of trade secrets z assertions o f the specte r of state
seerets, classified information and the pendency of a separate
proceedng (the search case, 3:06-0263-PMP-VPC). The Court urges

the parties to be parsimonious with regard to what needs to be
sealed .
The Court hears the positions of counsel with reqard to continuing
the stay of dscovery until after rulings on the motions for
'
protective order and/or dispositive motions. After the motions for

protechive order have been decidedz the protocol for discovery c4n
then be determined .
The Court requests that counsel ln the U.S. Attorney's Office in
Reno shall at some point review the filea to determine if there is
any possible overlap regarding state's secret privilege in the
inatant two cases and in the search case.
The government removed the state case to federal court in
3206-cv-0145 on March 20: 2006. Mr. Addington will attempt to
certain that the state court proceedings are transferred to
Court as it appears that not all of the pleadtngs have
case
make
ths
been
' '

Case 3:06-cv-0005f (P-VPC Oocum ent123 Filed 03 2007 Page 3 of4
* /I
w ,
transfe rred . What was sealed in the sta te court file w i1l remain
sea Led in th is Court until furthe r orde r from this Cou rt .
The Cou rt hears discussions from counsek regarding the setzed
property that is in Lhe custody of the U.S. with ongoing debate
ove r ow ne rship o f said p rope rty .
IT IS SO OR DERR D.
2:00 p.m.
Court adjourns.
LANCE S . W ILSON, CLERK
By:
/s/
Deputy C lerk

*
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E xhibit B
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United States Attorney
f)lb'/rc/ofNevada
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M arch l6,2007
OFFICE OF TH E CLERK
Second JudicialD istrictCourt,W ashoe County
OI1eSoath Sierr'
a Street
P.O .Box 30083 .
Reno,lVV 89520
Re:eTREPPID Teclm olonyies.LLC v.D elm isM ontgpm el'v.etaI.
CaseN o.CV06-00l14 -D ept.9
-
DearSirorM adam :
The above-captioned m atterwasrem oved to the U .S.D istrictCourtforthe D istrictofNevada on
M arch 2t),2006,througah the filing ofa Notice ofRem oval. Subsequently,a Notice ofFiling N otice of
R em ovalw as liled in the State ofN evatla D istrictCourtforW ashoe County,a copy ofw hich is
enclosed.
Section l447(b),title28,UnitedStatesCode,providesforthepost-removalsubmissiontothe
U .S.D istrictCourtofallrecords and proceedingsw hich occurred in State court. A ccordinglysplease
provide thisoffice w ith itcertitied''copiest)fa!1papers,pleatlings,and records tiled in theState court
proceedingsconcem ing the above-referenced m atter.
Once thc above-described m aterials have been copied and certified,you m ay contactm eand l
willm ake arrangem entsto collectthe m aterialsfw m yottrofiice.A ltenm tively,them aterialscan be
mailedtothisoflice.Ifyouhaveallyquestiorus,do'nothesitatetocontactmeat(775)784-5438.
v ery tlally yours,
STIEVFN W .
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Actngu nit state Attom ey
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P-VPC Docum ent158 P'iled 04,- 200/ Page 1 of3
case 3:06-cv-00056w
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l PETER D .KEISLER
AssistantAttorneyGeneral
2 STEVEN W .M YHRE
Acting United StatesAttorney
3 DistrictofNevada
G REG ADDINGTO N
4 AssistantUnited StatesA ttorney
Nevada 13ar6875
5 l00 W estLiberty,Suite 600
Reno,Nevada8950l
6 V INCENT M .GARVEY
Deputy Branch Director
7 CARLOTTA W ELLS
SeniorTrialCounsel
8 FederalProgr- sBranch
CivilDivision -Room 7150
9 U.S.Departm entofJustice
20 M assachtlsettsAvenue,N.W ./P.O.Box 883
10 W mshington,D.C. 20044
Telephone:(202)514-4522
l1 Facsimile:(202)616-8470
12
UNITED STATEIDISTRICT COURT
13
DISTRICT O F NEVADA
14 DENNIS M ONTGOM ERY,etal.,
)
)
15
Plaintiffs,
) 3:06-CV-0056-PM P-VPC
)
BASE FILE
16
vs.
)
) 3:06-CV-0145-PM P-VPC
17 ETREPPID TECI-INOLOGIES,LLC,etal.,) (Consolidatedaction)
)
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Defendants.
19
)
)
AND RELATED MAW ERS.
DEPARTM ENT OF DEFEN SE'S

STM 'U S REPO RT REGARDING
) STATE COURT M ATERIALS
20
21
Comesnow defendantDepartmentofDefense(DoD),throughitsundersignedcounsel,and
22 submitsthefollowingstattzsreportconcerning theprocurementofm aterialstiled in theStateCourt
23 (W ashoeCounty,Nevada).
24
l.Oneoftheseconsolidatedactions(3:06-cv-0145)beganasaStatecourtproceedingwhich
25 wasremovedtothisCourtbyDepartmentofDefense(DoD)pursuantto28U.S.C.,j 1442.
26
2. At a hearing conducted on M arch 15 2007, this Court enquired of DoD counsel
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Case 3:06-cv-O0056
P-VPC Docum ent158 Filed 04
2007 Page 2 ef3
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l concerning the stamsofthe recordsand filingsofthe State courtproceedingswhich had preceded

2 the rernovalo('the action.
3. Section l447(b) title 18 U.S.C. providesthatthe districtcourt'<may require the
4 rem oving partyto file with itscierk copiesofaI1recordsand proceedingsil

zsuch Statecourtormay
5 causc thesam e to be brougiltbefore itby writofcertiorariissued to such Stale court.'*
4. Following this court'senquil'

y atthe M areh 15,2007,hearing,Dol
; counselcontacted
7 thecterk oftheStatecourtand requested certitied copiesofalkfilingsand recordsregardingthe pre8 removalStateourtproceedings.DoD counselwasinformed thata!lsuch materialsweresealed by
9 orderofthe State oourtand would notbe released to DoD counselwithoutan appropriate ofthis
10 Courtoran appropriateorderof(he Statecourt.

ll
5. ltis respectfully suggested thatthisCourtissue its orderauthorizkng and directing the
12 relf
lase oftherecordsand proceedingsoftheState courtto DoD counseland thatallsuch materials
13 thereafterbereview edbyeach part'
yinaccordancew ith theprotocolwhich wasfollowedforreview
14 ofmaterialsassociatedwith therelatedcase(3:06-cv-0263).SeeMlinutesofproceedings(//243).
15 Upon issuance ofsuch an order,DoD counselwillprom ptly initiate such aprotocol.
16
Respectfully submitted
17
18
PETER KEISLER
Assisf
antA ttom eyGenel'
al
'
19
A cting U nited States A ttorney
20
/s/flrea Addington
GREG ADDINGTON
AssistantUnited SkatesAttorney
STEVEN W .MkHRk
21
22
VW CEN '
F M .GARVEY
Deputy Branch Director
CARLOW A P.W ELLS
SeniorTrialCounsel
FederalPrograms Branch
U .S.DepartmentofJustice-civilDivision
23
24
25
26

c ase 3:06-cv-00O56> IP-VPC Docum ent158 Filed 04,w '?007 Page 3 of3
PROOF OF SERVICI!
lhereby certify thatselaziceofthe foregoing DEPARTM ENT OF DEFEN SE'S STXTUS

REI>ORT REG ARDING STATE COURT M ATERIAL.S wasmade through theCourt's
4 electronic notiticatiortsystem or,msappropriate,by sending sam etk ough firstclassm ailfrom
lteno,Nevada,to the addresseesbelow on Aprill7,2007.
5
Ronald Logar,Esq.
6 Eric Pulver,Esq.
225 S.Arlington Aveaue,SuiteA
7 lteno,NV 8950l
il M ichaelFlyfm- Esq.
Philip Stillm an,Esq.
9 224 Birmingham D rive,Suite IA4
Cardiff,CA 92007
10
J.Stephen Peek,Esq.
ll len'
y Sllyder,Esq.
5441Kietzk.
e Lane,Second Floor
12 Reno,N V 895ll
13 Jefh'
ey Ross,Esq,
David Jakopin,Esq.
14 Jonathan Butler,Esq.
50 FremontStreet,PostOftk e Box 7880
15 San l7rancisco,CA 94120-7880
16
17
18
19
21
22
23
24
25
26
/s/Greg Addinatort
GREG ADDINGTON
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E xhibit D
ase 3:06-cv-00O5bw .P-V PC

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Docum ent173
Filed 0t)/ 200-/ Page 1 of2

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U NITED STATES D ISTRICT CO URT
DISTRICT O F N EV AD A
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ETREPPID TECHNOLOGIES,LLC;
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W ARREN TREPP;and theUNITED
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STATES DEPARTM ENT OF DEFENSE, )
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Defendants.
)
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)
AN D ALL RELATED M ATTERS.
)
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7 DENNISM ONTGOM ERY and the

M ONTGOM ERY FAM ILY TRUST,
8
Plaintiffs,
9
10
11
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1.3
14
3:06-CV-00056-PM P-VPC
BASE FILE
3:06-CV-00145-PM P-VPC
O R.D E R
15
16
A tthe M arch l5,2007 status conference,the Ctkurtdiscussed w ith the
17 D epartm entofDefense,the rem oving party,the status ofthe state courtrecord in thiscase
18 priorto removalsasnotallstatecourtfilingswere in thisCourt'srecord.(M ins.of
19 ProceedingstDoc.//1231.) OnApril17,2007,theDepartmentofDefensefiledastattls
20 reportindicating ithad contacted the state courtclerk ofcourtand requested certifie'
d copies
21 ofthepre-removalstatecourtrecord.(Dep'tofDefense'sStatusReportConcerningState
22 CourtM aterials(Doc.#158j.) TheDepartmentofDefenserequeststhsCourtenteran
23 order<authorizing and directing the release ofthe recordsand proceedingsofthe State
2 4 court....'' H ow ever,the Departm entofD efense hasnotindicated itm oved forreliefin
25 the state courtbefore seeking this Court's intervention. The Courtwillnotenteran order
26 forthe release ofthe state courtrecord and instead refersthe Departm entofD efense to the
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State of Nevada
County o f Washoe
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CARL VTNCI , b eing first duly sworn deposes and says :
That a ffiant is a e itizen of the Unibed States , over 18
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NameofDefendant:M O NTG O M ERY FAM ILY TRUST , etal
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Address:
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A FF IDAV IT
State of Nevada
County of Washoe
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CARL VINCI , being f irst duly sworn deposes and says :
That affiant s a citizen of the United States , over 18
years of age , licensed to serve civil process in :he State
of Nevada under zicense #322, and not a party to, nor
interesred in the wlthin action affiant received the documents
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on Feb
2 2006
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personally
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UMMONS; PLAINTIFF'S
ETREPPIDTECHNOLOGIES,
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on DENNIS MONTGOMERY , TRUSTEE FOR THE MONTGOMERY PAMILY TRUST
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127 20 BUCKHORN LAN E

RENO: NV 89511

the assertions of this affidavib are Lrue .
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CA RL V IN CI
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Signed and sworn Lo before me on Feb 12 20*

06
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by CAR
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orjX I3 0 THE DEFENDANT:Y0UHAVE BEENSUED. TIIE COURTMAYDECIDE zdGAINST

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Ifyou intendtodefend thislawsuit youmustdothe followingwithin20 daysafterserviceofthis
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File with the Clerk of Court whose address is shown below a form al written answer to the
complaintorpetition'alongwiththeappropriatefilingfees'ihaccordnzewiththerulesoftheCoult'
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serveacopyofyouranswerupontheattomeyorplaintifrwhosenartp andaddrss'
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AFFIDAVIT O F SERVICE
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Name
ofDefendant:BR EN DA M O NTG O M ERY , trustee etal
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Ad
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Si
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A FF IDAV IT
State of Nevada
County of Washoe
SS.
CA RL V INC I . b ein g first du ly swo rn depo se s an d say s :
'
rhat a ffiant is a cit)izen of the United E;tates , over 18
years of age , licensed to serve civ il process in the Stat:e
of Nevada under license #322 , and not a party to , nor
interested in the within action aff iant received the documents
10
on Feb
11
affia nt personally served a copy of the
1 2006
5:53PM and on Feb
2 2006
8 :20AM
LAINTIFF 'S ETREPPID TECHNOLOGIES. L.L.C .'S FIRST AMENDED COHPLAINT

12
13
14
15
16
17
o n D ENN IS MON TGOMERY A PERSON OF SUITABLE AGE AND DISCRETION RESIDING AT THE
R ESIDENCE SERVED ON BEHA LF OF BRENDA MONTGOM ERY , A T T HE RE SIDEN CE .
n
1272 0
BUCKHORN LAN E
R EN O , NV 89511
18

19
the assertions of this affidavit are true .

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Signed and sworn to before me on Feb
24
by CARL V NCI
3 2006
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itedstatesAttorney
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IN TlfE SECOND JUDICIAL DISTRICT COUR
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W A SH O E C O UNT Y
9 ETREPPID TECHNOLOGIES,LLCSa
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Plaintiff,
.)
CaseNo.CV06-00114
ll
)
vs.
)
Dept.9
l2
)
DENNISMONTGOM ERY,
)
13 THE MON FGOM ERY FAM ILY TRUST, )
DENM SMONTGOM ERY andBRENDA )
14 MONTGOM ERY asTrusteesofThe
)
M ontgomeryFamily Tnzst,and
)
15 DOES 1-20,
) NOTICE OF FILING NOTICE OFREMOVAL
)
16
Defendants.
)
17
DENNIS M ONTGOM ERY,and
18 MONTGOMERY FAMILY TRUST,a
Califom iaTrust,
l9
20
)
)
)
vs.
21
eTREPPID TECHNOLOGIES,INC.,a
22 Californiacorporation,
W ARREN TREPP,
23 DEPARTMENT 0FDEFENSE ofthe
UNITED STATESOF AM ERICA,
24 Does1-l0s
26
Counterclaimants,
25
)
)
)
Counterdefendants.
)
)
)
)
)
)
)
)
)
'
- -

.
To:
2
3
Ronald Logar,Eesq.
Eric Pulver,Esq.
.
225 S.Arlington A ve,Suite A
Reno,N evada 89501
CounselforCounterclaim ants
4 and otllerinterested parties:

5
Please take notice thaton M arch 20,2006,CounterdefendantD epartm entofD efense ofthe
6 United States ofA m erica,by and through its undersigned cdunsel, filed in the officeofthe Clerk
7 oftheUnited StatesD istrictCourtforthe D istrictofN evada,itsnotice oftherem ovalofthe above8 entitled action to the said United States DistrictCourt. A copy ofsuch notice isattached hereto.
*
lnaccordancewithz8USC,sectionl446(d),thetilingofthisnoticetshalleffecttheremoval
10 and the State courtshallproceed no furtherunless and untilthe case is rem anded.''
ll D ATED :M arch 20, 2006
12
13
D ANIEL G .BO GD E
United StytesM torn

,
14
15
?/g
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'
16
-G I D
T
A ssist U nit States Attorney
17
18
'
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19
20
21
22
23
24
25
26
-. --
Case
3:06-cv-00056-PMP-VPC
Page 40 of 143
'
case 3:06 cv. $5 Docum
ent1 Filed 03/20/200; v
.page 1 of3
'
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: DA NIEL G.BOGDEN
United StatesAttorney
2 DistrictofNevada
3 GR-EG AD DIN GTON

AssistantUnited StatesA ttorney
4 Nevada Bar6875
l00 w estLiberty,Suite 600
5 Reno Nevada 89501
Tel:(175)784-5438
'
6 Fax:(775)784-5181
7
UNITED STATES DISTRICT CO UIW
DISTR ICT O F NEVAD A
9 ETILEPPID TECHNOLOGIES,LLC,a
NevadaLimited LiabilityCompany,
10
Plaintiff,
ll
vs
.
12
DEpk'
hlls M ONTGOM ERY
)
)
)
)
)
)
)
)
i3 Tl.
li!MONTGOMERY FAVILYTRUST )
DE> lsMONTGOMERY andBILENDX )
14 M ONTGOM ERY asTmsteesofThe
M ontgomeryFamilyTnzst,and
15 DOES 1-20,
)
)
)
)
16
'
Defendants.
17
DENNIS MONTGOM ERY,and

18 MONTGOM ERY FAMILY TRUST,a
)
)
)
cv.N.0 L -'w'-0 J V S(fonnerlyCaseNo.cV-06-001l4,inthe

second Judicialoistrictcourtoftl'estate
ofNevada,W%hoeCounty,Nevada)
'
NOTICE OFREMOVAL
19
(iounterclairnants,
20
vs.
21
eTREPPID TECHNOLOGIES,lNC.,a
22 Californiaoorporationa
W ARREN TREPP,
23 DEPARTM ENT OF DEFENSE ofthe
IJNITED STATESOF AM ERICA,
24 Does1-10,
25
26
Counterdefendants.
)
)
)
)
)
)
)
)
)
)
)
)
)
- --
Case
'
Case 3:06-cv
'
45
'> .J
Docum ent1
Filed 03/20/206
'Page 2 of3
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'
Notice ishereby given thatCounterdefendant,I7epartm entofDefenseofthe United States
2 ofAmerica,by and through its undersigned counsel,have rem oved thisaction from the Second
3 JudicialDistrictCoul'
toftheStateofNevada,W ashoeCounty,Nevada,to theUnited StatesDistrict
4 Court,DistrictofNevada,on the following grounds:
5
1.
DepartmentofDefense oftheUaited StatesofAm erica isnam ed asa
6 Counterdefendantin the above-captioned civilaction now pending in the DistrictCourt,W ashoe

7 County,Nevada,civilaction no.CV-06-0lI4. CopiesofalIprocess,pleadings,and orders
.
8 serveduponthtsCounterdefendantin such actionareattached hereto.

9
2.
The above-captioned action isone which m ay be rem oved withoutbond to this
10 courtpursuantto subsection 28 U .S.C.section 1442 forthe reasons thata so-called

ll counterclaim hasbeen alleged againstan agency oftheUnited States in aState courtproceeding.
12 DATED:M arch 20 2006.
13
Respectfully subfaitted
14
DAN IEL G.BOGDFN

United StatesA tlom ey
15
16
17
/s/Greg Addinqrton
GREG AD DINGTON
AssistantUnited StatesAttorney
18
- .
19
20
21
22
23
24
25
26

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LAWS OFFICE OF LOGAR & PULVER'PC
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Philip H .Stillm anw.
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6 FLY NN & STI-LIVM AN
224 Birfrtingham Drive,Suite lA 4
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7 CardifflCA 92007
Tel: (888)235-427,
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8 Fax.: (888)235.
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L-REC'EiVEO
9 A ttom eysforD efe daatDEN NIS M ONTG OM ERY and Counterclaim antsD ENN IS M ONTGO M ERY
and the M O NTG OM ERY FAM ILY IR UST,a California Trust.
10
IN TH E SECO ND JIJD ICIAL DISTR ICT C O UR T O F TH E STATE O F NEVAD A
11
IN AN D FO R T H E CO UN TY O F W ASH O E
'
12 ETREPPIDTECIINOLOGIES,INC..a )CASENO.: CV06t2

st
11j
13 Califoruiacorporation, '
)
)
14
Plainti/
) ANSW ER toFIRST AM ENDED COM PLM NT and
) FIRST AM ENDED COUNTERCLAIM FOR;
15
vS.
)
.
) 1. DECLARATORY JUDGMENT;
16 DENNIS M ON TGOM ERY ,amd Lqdiddual; ) 2. ACCOUNPTIN G;
TI4E M ONTGOM ERY FAMILY TRUST' )
'
17 DENNISMONTGONIERY andBpuENlv
M ON FGOM ERY msTrusteesofTHE

18 M OPCFGOM ERY FAM ILY TRUST;and
DOES 1ATIROUGH 20,
19
.
Defendan/.
)
)
)
)
)
20
-
21 DENNISM OAITGOM ERY anindivdual; )
dMONTGOMERY FAW Y TRUST,i )
22 CalifomiaTrustv
23
24
'
25
26
- - - '
.
)
Comlterclaimants, )
)
VS.
)
eTREPPID TECHNOLOGIES,llIC.,a
)
califomiagorporatioa akaeTreppid
)
Technologles,LLC,aNevadaLLC;
)
W ARREN IREPP,atlindividual;
)
DEPAR-IM EINFI-OF DEFENSE ofthe
)
IJNI'I'ED STA'IYS OFAMERICA andDOES)
'
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27 1 tizrough 10,
Colm terdefendm ts.

28
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3
ANSW ER
CIFFENDA '
N T,D ennisM ontgom ery,and tlleM ontgorneryFnm l
'ly-rrtlst,byandthroughhiscourusel,
4 'rhe Law O ffice of Logar and Pulver, PC,and Flyun & Stillm an,for their Answ er to Plaintiff's First
5 A m ended Com plaintorlflte hereirl, adm its,dezties and allegesas follows:
NATVR.
E OF THE ACTION
l.
-/tnswering paragraphs 1-5, D efendautsdeny thoseallegatiotzs
Q EIVERA.
L FACTUAL ALLEG ATIONS
-
T heParties
10
2.
A nsweng paragyraph 6,D efendantsadm itthose allegations
11
3.
Aasw ezing paragraph 7, Defendantsdeny those allegations.
12
4.
Arlsw eting paragraphs 8-l6,D efendant-sdeuy those allegations.
13
5.
A nswering paragraplxs 16 ar)d 17z D efendants adm itthose allegations.
14
6.
A nsweting paragraphs
l8 and 19, D efendatlt-sare w ithoutsufficientlcnowledgeor
,
15 infornp tion neceassazy to form .a beliefasto te tnzth or falsity ofthe allegations oontained therein, and
16 therefore deaie.s tbe sam e. ln so farassaid allegations suggestornply responsibility orliability on the
l7 partoftlkisaaswering Defendanq then thesmncaqeexpressly dertied.

.
18
19
The N ature ofe'l-reppid's Business
7.
Auswering paragraplss20-22, Defendarztsdeny thoseallegatiorss.

.Securitv M easures.c overnine A ccess to e'rreppid Source Code
20
21
8.
Aasw ering paragraplzs 23-28,D efendants deily tllose allegations.
22
M isyppropration ofT rade Secrets
23
9.
A nsw ering pagagraplks 29 thr

. ough 43, inclttsive,Defendantsdeny those allegations.
24
E treppid isSttfferina Irreparable H arm dueto M r.M onto

wom ery'sM isappropriation.
25
l0.
26
Annw eciug patxgraphs44 through 46,Defendants dmty those allogations
FIQ ST C A USE O F A CTIO N
27
28
M lbefeadants
'
1-
.
-
J
..
'
11
.
l-rzsweriug ppa-agraph 47 Defbrtdaut.

s re-aliege thgirarzswersta those priorparagraplls 1
.
thru 46,inclusive alld incorporates them herein by reference

3
12
Answ ering paragraphs 48 tbrough 54, inclusive,D efeudantsdeny those allegations.
4
.
SECOND CAV-SX I)F ACJIAO..

N
.
(DefendantM ontgomery)
'
T reach ofCoatract)
7'
l3
Answ eling paragraph 55,Defendantsre-allege theiransw ers to those priorparagraphs l

g
'
'
thru 54,iaclusive,and incorporates them herein by reference.
9
l4
Attcwerittgparam aplus56 artd 5-/, Defendantsdeny thos allegatioro.
10
c
fm ltll CAU SE O F A CAIO
. N
11
M IDefendants
.
12
(Couversion)
l3
15
.
A nsw ering parap aph 58,D efendantz re-allege theiratksw ors to thosepriorparagraphs 1
14 th
roug,h 57,itlclusive,and incorporat% th= 1herein by reference.
15
16
A nsw ering yaragraphs59 and 60,D efendantsdeny those ailegations.
16
FO
URTH C AU SE O F A CTfON
j,/
'
.
'
'
18
m reach ofFiduciaryDuty)
17
M sw ering paragraph 61,D efendantsre-allegetheiransw ersto those priorparagraphs l

19 th
'
.
rough 60,incltlsive,andincorpol-atesthem hereinby refkrence.
.
20
18
.
a(
''
.
OF AC H ON
- -
@ ad F
aitlt-Tortiousaud Contractual)
(M
outgom ery) .
23
a4
A nsw eting paragraphs 62 through 66a D efendantsdeny those allegations.
FIFTH CAUSE
,2
'
19
'
' Anqw eling pr ap aph 67,D efeadanLsre-allege theiransw ersto those priorparagraphs 1
25
'
through 66,iacltuive,and ito rporatesthem hereinby reference.
26
20. Amsw ering pasagraphs 68 throug,h ?2,D efendauts deny tllose allegations.
27
, SIXTH CAUSE OF ACTION
.
28
3-
'
.
- .
Case 3:06-cv-00056-PMP-VPC Document 644-5 Filed 05/28/08 Page.45 of 143
t'
D eclaratoz'y Reliefl
(M ontgom ery and theM ontgolnery FanzilyTrust)
21
.
M swering paragraph 73,D efendantsre-allege theiranswersto thosepriorparagraphs 1
through 72,itlclusive,and irlcorllorates them herein by referencc.
22
.
A nsw eling paragraphs 74 through 75,D efendantsdeny those allegatiotls.
SEVENTH CAUSE O F ACTION

'
'
(lntentionalInterferenceW itltColttractualRelatioRs)
(M ontgom ery)
8
9
23
.
10
11
A nsw ering param aph 76,D efendantsre-allegetheiransw'ers to those priorparap'aplus 1
throtzgh 75,inclusive,and incorporateas tllem herein by reference.

24
.
A ruswering paragraphs 77 througy

h 81,D efendatlts deny thoseallegations.
l2
lg
AFFHUWATn V DEFENSES
A
.
s distinctand separ
ate am rm ative defensesto the causes ofaction alleged illtlze Com ple t,
14
.
''
thewse answ efing Defendant.sallege as follows:
15
16
FIR ST A FFIIRM ATIW

A
DEFENSE
.
sa separate arl'
d afftrm ative defenseto tlie A m euded Com plaintand each pt
lrported cause of
17
action therein,D efendantalleges tlmtthe Am ended Com plaiutfails to state factssuflicientto constitute
18
.'
a catzse ofaction agnl
nKtthisansw ering D efendant.
19
20
21
SECO N D
A
T IVE D EFENSE
sa sepm te arld affirm ative defezise '

to tlae A m ended Com plaintand each purported catkse of
''
'
aotionthereia DefendaatsallegethatPlaitltil hasnotsustainedanydamageas,fnjuriesorlosses,ifO y,
22 b y reason ofaay actorenzissionafaultorne'gligeuce'

,on tlzepartofthese D efendants,theiragents,
23 servaats orem ployees,oreifheror ally ofthem ,and is thtzs barred from msserting any cattseofaction
24 agal
.nntthe-se DefendanLs.
25
26
THTRD A FFIR M AT IV E DEFENSE
sa separate and affirmafve defense to the A m ended Com plaiatand each ptuported caatlse of
27 action thereinaD efendants allege thatPlaintiffisbatred frozn m aintxiniag atly claim againstthm e
28
4-
1
Document 644-5 Filed.05/28/08 Page 46 of 143
F /
'* '
1 D .
efendat!tsby tlze doctziqe ofequitable estoppel.
FO URTH AFFIRM A-II

,W
. .
PEFENSE
s a separate a'nd afftrm ative defenseto the Am ended Com plaiutand each purporte.d causeof
..
actitm therein,D efezldantsallege tlaatPlaintiffis barred I

i'
olzlm aintalnlng any claim againstD efetldazlts
5 b
y the doctrine ofw aiver.
.
AI
-T'FH AFFIRN AJJJW E DEFENSE
7
8
sa separate aud aftlrm ativedefense to theAm ended Com plaintand each pup ot'ted cause of
..
ad ion thereinaD efendautallege thatPlaintiffisbarred frorn m aintal
nlng atly claim againstD esendt
m ts
.
bytheplaintiff'sulcleanhands.
10
SEVTH
,
AFFH UW AR B V D EFEN SE
11
&s a separateand afflrm ative defenseto the Am ended Com plaintarld ewach purported czatlse of
12
..
action tllerein,Defendants allege thatPlailltiffis barred from m ainta3nlng any claim againstDefendants
13 '
asany dam ages w ere notcatlsed by any actiou ofDefendant.
14
SEVENTH A FFHNW ATIVE D EFENSE
.
15
s a separate and afftrm ative defenseto the Am ended Com plaintand e'
ach puroorted cattse of
16
ad ion thereinaDefendants allege thatPlaintifrisbarrcd Som m aintaiuing any claim againstD efendants
17 b y Plaiiltiff?sunfaircozip etition.
18
EIG H TH A FFIR M ATIV E D EFENSE
19
2/
-1
.
Asasopayateazld afflrmativedefenseto theAmended Complaintanj eacjjpurpoytetjoatuseof

.
action thoreinvD efendants atlege thaq to the oxtentatly Defendautis found liable,D efendautsare
entitled to set-offand/orrecoupm entfrom Plaintiff

22
- ..-
N IN TH AFFIR M AT W E DE FEN SE
23
sa separate and affirm ative defease to the Am ended Complaintand each ptuported catuseof
24
p,s
'
aotion thereia D efendalltsallege thatPlaintiffhassu/ered no hnrm ,orin the alternative, th2 auy hazm
'
allegedly suffered byPlaintif wmssolely theresultoftheitsownnegligenceorthatofitsagatsarkd/or
26 em ployeewsatld Ilottllease defendants.

27
28
'
5- .
:
=?
l
'* J
1-ENTH .M aFIRM A TIA/E DEFEN SE
.
2
3
A
s aseparateand aftirm ative defertse to the Am ended Com plaintaud each purported cause of
action thereitl,DefeadantsallegethatPlaintiffisnottlaeownerofarly teclmology mzbjecttoits

C
om plaiat.
ELEV ENT H AF>HUW

AInyx.
s p ssuxsE
s a separateand affirm ative defenseto the Artkended Com plaintand each purported catzseof
actioa tlterein,Defendaats allegethattttisCourtIackssubjectmatterjurisdictionovertheComplaint,as

8 i
.
tispreempted by 17U.S.C.j30l.
10
.
'
TW ELFTIT AFFIR NIATIV E D EFEN SE
.
s a separate aud affirm ative deferuse to dle Am ended Com plaintattd each purported cauje of
l1 action therein,D efendantsallege thatany actsofDefeudantsw ere privileged.

12
W HEREFO RE
,
13
Defeadaat,DeanisM ontgomery,praysforjudpneatasfollows:
'
1. Thattlle Plaintifftake rkotbing by way ofhisA mended Com plaintazld thatthe sam e be
'
14
di
sfaissedwithprejudioe;
15
2
.
Thatjudm entbeenteredagainstPlaintiffandinfavorofDefelldantsbaseduponthis
16
.
D efendaatas Colm terclaim ,
17
3 ThatDefendantbe aw arded a reasonable mlrn asand forattorney fees and costsofsaz,
it
18 incuzred berein'
4. Forsucllotlzerarld furtherreliefasthe Courtm ay deem properia the pre'm ises.
20
'
'
C O UNT ER CLAMW
21
'
C otm terclnim ants,D ezmis M ontgom eiy and the M ontgom ery Fam .
lly Trust.hereby'kllege agaiast
22 Pl
=
'
aintc .Cxouaterdefeudanta Et
reppid Technologies, LLC.
, Cotmterdefeudanta W arren Trepp,
23
'
Counterdefendantbonald D lmqfeld iahisoK cialcapacity msSecretaryofDefense fortheUnited States
24
ofAm ericaathe followillg Claim s fotRelief:

25
N RO DU G IO N
26
Tlzis is an action arisiug outof the pnauthorized tuse of extrem ely vallmble copyrighted
27 com putersoftw are teohnology by C ouaterdefendnnt e'rreppid Teclm ologies,Inc.,and Counterdefendanta

-.
28
'
6.
- '
Case 3:06-cv-00056-PMP-VPC Document 644-5 Filedl 05/28/08 Page 48 of 143
'w
<ma-.
'
w a-ren rrepp.N otcoutentto reap m illionsot-dollarson t etechnology wirhoutalicecuse,ttlemajority
sllareholderofe'FreppidTechnolopes,CounterderendautWarren -1rcpp,used hismajority pesition to
squeezeout,diluteartdmisappropriatevastsum sofm oneyfrorn theinventorand tkllow shaveholder,Dennis

4 M ontgom ery and theM ontgom ery Fam ily Trust. M oreover,asfully stated below,even tyjosebreachesof
,
fiduciary dut'
y did notsatisfy M r.Trepp.Hew entfurtherby t'
ryirtg to obtain Cotmterclaim antxfontgosyery
6 Fam ilyfrtlst,sextrem ely valuabletechnology through aknowingly falseclaim tbattjjeu ontgom ezyFarftfly
7 Trust,steclm olom 'wascontributed to tllecom palzybyM r.M ontgorflery,then attem ptillgtt?reverseengiueer
8
the-softw are in directviolation of federalcopyright law s. Because Cotmterclaim a'

atM ontgom ery has
9 signed asecrecyoat
*h w ithU nited Statesbyandthrotzgh tlle Departm eritofD efezlse,atld becatlsehisdefqnse
10 of the com plaintrequire,s him t()breach thatsecrecy oth w ith the United State-s,the United States of
11 A m er'
ica,by and tluough Secretary Rtunsfeld is allindispertsable party to this litigation arld is tllerefore
12 m adea oolm terdefettdarltin this cotm terclaim .
13
PA RT IES
14
Counterclaim r t Demzis M ontgom ery is all individual who residcxs in W ashoe Comzty,
15 N
16
17
evadaandisttteinventorofallteclmology tbatissubjecttothisaction.M ontgomeryisalso aminority
shareholderin e'
Freppid Teclm ologies,Inc.
3.
CounterclaimantM ontgomely Farnlly Trustttize t'l-rtust3'lisaCalifomiairrevodabletrust
18 f
'
orm ed and opevated uuder
thelawsofthe StateofCaliforniaand isthe owaerofthe copyrights atissue in
19 tlds adion.
20
' -
'
Com lterdefendante'Freppid Technologies,Inc.,isalleged in the Com plaintia this action to
'
21 b
'
e a Califomia coryorafion,w1t11aa tusualplaoe ofbusinessi:lW ashoe (70* +,Nevada- llowover,
22 C
ouhterclnlmant.swerejtlstnotifiedbyplaiutifthatit-sdesignationintheCaptiontotheComplaintwmsi.
ll
2j >rror.
'N evadaD.m .
,azld tIIM Plaintif is actually e'rreppid Technologies,LLC,a
lted Liabilitz Com pany.
:4
5
.
25
16
residc ittW ashoeColmty,Nevadaandisthemajorityshareholderine'freppidTeclmolobes.

6
.
27
'
(QltltltelxlefendHtw - enTrepp(Vrepp'')is,uponirlformationm dbelietlanilzdividtlalwllo

CounterdefendarttDeparfrneatofD eferkseisadepnrtm ent/agency oftheoftlzeu nited Stxtes .
ofAlaehot
-
28
7-
'
-.
-.
7
.
Couzlterclaim ants are iguorantoftlle truenpzm es aud capacitiesofCounterdefeadants Eiued
2 herein as DO ES 1 tiuough l0,inclusive,aud therefore sale said Counterdefendants unders'ucla fictitious

3
x
nam es.C'olm terclaim arttsare inform ed and believethatsuch fictitious Counterdefendalltsare responsible
4 i
llsom e m anner forthe eveutsand happezliugsberein referred to,and proxim ately caused the daraage to
5
true Ram esand capacitieswhen the sam e have been ascertained.

FA CTU AL ALLEG ATIO NS
7
8
ounterclaim ants as herei:zalleged. Plaintif'

fs willseek leave to am end this Counterclaim to allege their
8
.
DennisMontgomcryx ontgomery)isaninventorandsoftwaredeveloper.lnorabout1982,
9 M
ontgom erydeveloped certainsottwareforwhichtheU.S.Copyrighto ffoegrante,

d aserieasofcopyrights.
11) Th
.c4
,,
eMoutgomeryFarnllyTrusttl-nustlistlzeownerofthecopyrights(the Copyrights).
11
9
.
A ftertheregis% tionofthesecopyrigahtsaM orttgom erydevelopedderivativeworksbased on
12 th
eteclmology originally copycighted in 1982 and in 1986 (ther erivativeW orlcs''l. Thoseuniquely
13
:
14
im portaatderivativeworlcswere ftzlly developed priorto 1998 and are the excltusive property ofthe Trust.
10
.
ln oraboutSeptem ber 1998,M ontgom ery and CounterdefendautTrepp,form ed Intrepid
Technologies, LLC , a Lim ited Liability Com palzy. Pursuant to a i<contribution Agreem edt''(L'
,e,tI
16 S
eptember28,1998,betweenTrepp,M oatgomeryand theTlazsk inexchaageforaNfJrpercentinterestitl
17 Izitrepid Technologiexs,LLC to M ontgom e ,theTrustcontributed specifio teclmology to Intropid thatis

jg identisedinparavaph 1.
2.1o?theContributionAgreement.
19
11.
20
That aragraph specically identifies the contzibuted technolegy as .cthe software

'
' compressiontechzloiogycontainedonthatcerfal
'nSoftwareCompressionEngineDevelopmentProgram
gj
j2
'
C'Ollfni.ned ollCD 'N O. 1.'' '
12
.
'
23
24
,
'
'
..
'.
Sigaiiicantiy,becatusethefnlstowned otherteclm ology,Paragraph 1.3 oftheContribution

u
Agreementstate,sthattizeTrtustisexpresslynot contributing,transfetaingorconveyingtolntre/idunder
'
'
thisajreementorby aay othermeqnq,norisfntrepidacquiring from ltbeTrastlanyothertangl

-bleand
zj
'
'
intarzgl
-ble assets of''theTnustorM ontgom ery.
'
26
13
.
Thus,puu tu'
m tto the expressterm s ofthe Contribution Am eem entoIntrepid oaly acquired
27 the software com'pression teclmology contna
.ned on CD N o.1 and Ilofhl
.ng else.
28
8-
--- .
Case
.
tx
(
.,. .
.e
w
,
'
l4
xw
ltlparticular,the D erivative Vr
forks vzerenotpartofthe sotkw arccom pression teclm oiogy
z')
containsdonCD No.1tf
aatissubjecttotheContributionAp-eement.
l5
Subsequently,TreppbegantodiluteM ontgomerysshareinelntTepidand,usedhismajority
ateresti.
aelntrepid to obtain favorabletreatmetltforltlnaselfasamajority shareholderattile expenseof
5 M
ontgom ery.
l6
1.norabout2003,e'
FreppidTechnologesbegansublicemsingtheDerivativeW orksto various
7
entities,iacluding the Uaited Statesgovermnetltand collecting licensiag feesforthesublicenses.e'Freppid
8
'
.
w asnevergrarlted a license to tlzeD erivative W ork.
sby, and failed to pay royalties to,theTrust.
9
*
17. A tno tim e did .
any oftlle Counterdefendant.
s have a written license to exploitthe Tnlst's
.
10
l1
'
DezivativeW orksasrequired by 17 U.S.C.j 204(a). Asaresult,atbct,e'

Treppid onlycarlclaim (if
mzythinglaaoral,non-excltusivelicenseto exploittheDerivativeW orlcspursuantto federalcopyriglltlaw.
12
18
A lthough the-fnzstdeniesthatitgranted any oralnonexcltlsiveliceaseto e'Freppid,any such

13
orallicease wms term .
lnated by the Truston Jattuar.y 19,2006,orally and by letterdate,d January 25,2006.
14
l9
e'Freppid hasfailed to and refuses to cease exploitation oftlleD erivative W orksand has so
.
15
far refusetlto accotlntforan.

y profits obyained as a resalltofitsunlioensed exploitation ofthe D erivative
16 w orks.
17
20
.
.
M orover,becatlseofthehighly confidentialaad sensitivenattzreoftheDerivative
W orks,
18 the DerivativeW ork,

-otected from revezseengineering and/ortam pelingby sophis-ticatedsafegtmrlis.
sarepr
19 A
'
'
s a result of e'Freppid's im proper attem pts to obtain and reverse engipeer the D erivative W orlcs,
20
4.
21' W
olks,furtherbnrm ing Cotm terclaim ants.
>7
'
'
'
'
-23
,, jpts
Couaterdefendantshave,uponinformatiollazidbelietldestroyedpartofthe sotzrcecode o osouvatw o
2l.
lnoraboutthesametim e,M r.M ontgomeryexecuteda'Yecrecy oath''4v1t11tlleDeparlrnent

'
ofDefense,whichpreventshlm &om disctlsging,disclosingorevenidentifyingthesubjectmatterofhi.

s
24 w ork fortlteU nited Stxate.

.nl
.nalprosecution fortreason.
.s ou penalty ofcnr
25
FIR ST CLA IM l?OR R ELIEF
26
27
22
(Dedaratory RehefAgahzstUnitedStates)
22.
'
Colm terclaim ants izlcorpot-atebyreferencedleforegoingallegations(

MAIILaiJAOIiEtPat-<
Igr& M
.
- 9--
Document 644-5 Filed' 05/28/08 Page 51 of 143
1
r .
.
&
w I
1 l th
rough 2l asthoug,
h l'
estated herein infull.
2
23.
An actualcontroversy hasarisen andexistsam ong Counterclaim antsalldCoullterttesurjants
3 underthe Declaratory Judgm entA ct

'Fhe R.rustconteuds thatitis the excltusive ow uerogthe peuvative
.
4 W
. CouuterdefendantsTrepp alld Etreppid dispute thiscontention.

.:1thisaction.
orks atissue 1
24
How ever,irlorderto defend counterdefendantsTrepp ,sand e'l-reppiapscjakrjsoftzaclesecret
.
6 m isappropriationpM ontgom ery willbeobligated to disclosethe natttre ofthe technology,the typeofwork

7 thathe hasperform ed on the govem m etltcontractsusing histechnology versus thatofe'
Treppjtj,aud the
.
r)
'
'
apabilities ofhistechnology verstustbatofe'

rreppid in perforrning work foroertain governm eatagencies.
*
9 E
ach oftllese disclosuresviolate-shissecrecy contzactw ith tl)e govecnrneat,including the D epartmentoj-
10 D efenseand otherageuciespandisdirectly and intim ately related to theIlationaldefense.D isclosureofthis

1l i
ntbrmation islikely aviolatiolloftheNationalEspiouageAct,18 U.S.C.9 793(d),which precludes
12 .di
sclosureofclassified iaform atiottto tilose notauthorized to rcceive it.
13 '
25
M oreover,thesedisclosuru go totlzevery ooreofthedefenseofthiscase,m aking jtvirtuany
.
14 .ifnotlitezally im possible to defend w itlloutviolating tizesecrecy oath and comprom isillg nationalsecurity.
15 A controversy hasthereforearisen overtlle namreaad scopeofM ontgom ery,s ability to defend illligtd of
l6 hi
ssecrecy contractw itlzthe U nited Stxtes. M ontgom ery,on theone hand,m ttstm akesuch disclosuresin
j7 orderto establish hisow nership interestsi.
a tlle technology.U poniriform ation and belief,theU nited States'
'
18 oonteads that suoh disclosazres are absolutely prohibited by the term s of it.
s secrecy agreem erd w ith
jj) '
M
ontgom ely.
'
20
21
26.
. w
'
Counterclalm an? du ireaiudicialdeclaratiouiatadisolosurebycourzterclaimantsoftbese

'
'
- -.
'
m atiels illorder to defend agninKt the claimq irltlle complaintwillnotviolate the contractbefween
22 M ontgom ery atld the Uaited States'to m aintain tlm se secrets, aad
'/or a declaration of 1
*42414311111t: for
.
23 'M
:.
4
ontgom ery om the United States.

27
A declaration of Iights ls necessary and 'appropriate at this tim e irt order that
25 Uotmtorclalm autsm aymscertain theirrightsanddutieswithrespecttoCotmterdefendant-syaud w ithrespect
.
26 to any third parties who m ay claim azliuterewstin eitherthe Copyrights orthe D erivative W orkseitherby
27 lioease oralleged sublicense,writhoutviolating M ontgom ery,s secrecy oontractw jfjjtjw uaited sutes
28
10-
Case
'
'
' '.t a
m
l
'
.-
SECONP CLAIM FOR RELIEF

(Accotm ting)
-
2
3
28
.
Colm terclaim ants realiege and iucarporattz by referm'c,

e each and eve;y Zlegatlon i.u
parar aphs 1 through 27 setforth herein.

5
29.
Counterclaim alztTzustis the exclusive ownerofthe Copyright
.sand tlleD erivalive W orks.
6
30
.
.thout
CounterdefendarlLshavew rortgfully exploited theCopyrightsandD erivativeW orkswi
paym entto the Trusttherefor.

8
31
.
As a re-sulta the Trust is
eatitlo to an accounting of a11 profits derived from
9 C ounterdefendw ts,exploitatibn ofthe Copyrightsatzd the D erivative W orks.
10
PRA YER FO R RELIEF
11
W H EREFORE
'
erclaim aafx
sptay to flw COIIII for:
, Couat
12
'
O rderCountecdefendallfstopay Couaterclaim artts such dam agesasCounterclaim ants havc
lj s'
- erdefendantz'ire m gem eatoftheTf'
astained in oonsetp ence ofCount
ast,scopyvightsand to accolm tfor
14
andpayoverto theTrustalltheprofitsthatColm terdefendarttshavederived from theirwillfulisfringem ent
15 ofCounterclaim ants,copyright.
s;
.
16
2.
OrderCounterdefendant to pay such dam ages to Cotmterclaimaafs as this (X)IZtI shall
17
considerjustandpropec and
18
.3
AwardColmterclaimantstheirattomeyfeesaccording toprootl
19
.
Aw ard Countercla
m m ts theircosts'
.and
.
20
Cxraats'
uch otherand fuztherrehefmstlle COI.IZ'tdeemsjtustarld proper.
.
'
21
DA TED .
'
: February 17,2006
22
LA W OFFICB OF LOGA R & PULVEROPC
'
- 23
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David A .JakopinaEsq.
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PROO F OF SERVICE
lherebycertify thatIam an employee in theoffice oftheUnited StatesAttorney,Reno,
4 N evada and lam ofsuch age and discretion asto becom petentto serve papers. On M arch 20,
5 2006,Iserved acopyties)ofNOTICE OF REM OVAL byplacingsaidcopylies)in apostpaid
6 envelopeaddressedto thepersonts)namedbelow attheplacets)andaddresstes)stated below

7 and by depositing said envelopeand contentsin theU nited Statesmailatthe United Smtes
8 Attom ey'sO fx e,l00 W estLiberty,Suite600,Reno,Nevada 89501:
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10 Ronald Logar,Esq.
Eric Pulver.Esq.
ll 225 S.Arlington Averme,SuiteA
Reno,NV 89501
12
M ichaelFlynn,Esq.
13 Philip Stillmal Esq.
224 Birm inglzam Drive,Suite lA4
14 Cardiff,CA 92007
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15 J.Stephen Peek Esq.

Jeny Snyder,Esq.
16 5441KietzkeIweme,Second Floor
Reno,N V 89511
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David Jakopin,Esq.
18 Jonathan Butler,Esq.
2475 H anoverStreet
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PRO OF OF SERV ICE

Ihereby certify thatIa!'n an em ployee in the office ofthe U nited States Attom ey,Reno,
4 N evada and Iam ofsuch agearld discretion asto be com petentto serve papers. On M arch 20,
2006,lservedacopyties)ofNOTICE OF FILING NOTICE OFREM OVAL byplacingsaid

5 copyties)inapostpaidenvelopeaddressedtothepersonts)namedbelow attheplacets)and
addresstes)statedbelow andbydepositingsaidenvelopeandcontentsintheUnitedStatesmail
6 atthe United StatesA ttom ey's Office,100 W estLiberty,Suite600,Reno,N evada 89501:
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8 RonaldLogar,Qsq.
Eric Pulver,Esq.
9 225 S.A rlington A venue,SuiteA
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M ichaelFlylm ,Esq.
1l Philip Stillm an,Esq:
224 Birm ingham Dnve,Suite 1A4
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13 J.Stephen Peek,Esq.
Jerfy Snyder,Esq.
14 544l K ietzke Lane,Second Floor
Reno,N V 89511
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16 Jonatha:lButler,Esq.
2475 HanoverStreet
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Ronald A.Longtin Jr.,DistrictCourtClerk
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03/17/06
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DATE: Marcb 17,2006
Janette M .Bloom ,Clerk ofCourt
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(AdnlittedProHacViceonFebruary 6.Jpptsl
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Attorneysfore'
l-reppidTeclmologies, lnc.and M r.W arren Trepp
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IN THE SECOND JUDICIAL DISTRICT COURT OFTHESTATE OFNEVADA
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CV 06-00114
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vs
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l7 DENNISMONTGOMERY
,
anindividual;THE
18 M ONTGOM ERY FAM ILY TRUST;DENNIS
M ONTGOM ERY and BREND A M ON TGOM ERY,

l9 astrustees forTHE M ONTGOM ERY FA M ILY
20
TRU ST;and DOES 1through 20,

D
efendants.
21
22
AN D RELATED ACTIONS.
/
23
24
M O TION O F PLA INTIFF A ND CR O SS- D EFEND ANT ET ILEPPID TECH NO LO G IES.L.L.C.

AN D C RO SS-D EFEN DA NT W AR RE N TREPP TO DISM ISS AM EN DED C O UNTERC LA IM ;
M EM O M ND U M O F POINTS AN D A U TH O R ITIES
25
26
Pursuant to N.R.S. j 600A.070.3, e'

Freppid Teclmologies, L.L.C. ('de-l-reppid'' or the
27 dcompan/')hereby lodgestheenclosed record conditionally undersealand willmake amotion or

28
apptication to the Courtforan orderperm itting the record to be filed underseal.

::
ODMATCDOCShHL> ODOCSb25044l
Pagc 1 Of7

w
Pursuantto Rules 8, l2 and 4 l ofthe Ncvada Rules of CivilProcedure as w ellas the legal
2 authorities cited hcrein,e'

Treppid and W arren Trepp ('''!'repp>')hereby tile thcir M otion to Dismiss
3 AmendedCounterclaifn ofDennisMontgomery(''Nlontgomery'*),theMontgomeryFamilyTrtlst(the
4 il-rust''orttM ontgom ery Tn1st*'l,and M ontgomery'and BrendaM ontgomery astrustces forthe Trust
5 (collectively,the'tl-lefendaflts'').
6
7
8
M E M O RAN D UM O F PO INT S AN D A UTH O R ITIES

1.
INT RO DU CTIO N
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This m atterarises outofM ontgom ery'sdestruction and theftofe'

l-reppid'sproprietary Source
l0 Code The technology at issue includes compression,anom aly detection, and pattenl recognition
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1l softw are, w hich e'

Treppid uses to fulfill obligations to its custom ers - including the Federal
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Freppid SotlrceCode,,). e'l-reppid initiated
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'eppid filed itsFirstAm ended Com plaint,alleging causes ofaction form isappropriation of
l,2006,e'lr
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trade secrets,
a a 71)
breach of contract,conversion,breach offiduciary duty,bad faith - tortious and
xo '
2qai$ 16 contractual,declaratory relief,and intentionalintertrence with contract. FirstAmended Crnlplaint,.
17
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17 #assim.
18
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On February l7,2006,Defendantsfiled theiramended counterclaims,alleging (1)a cross-
'19 claim for declaratory reliefagainstthe U.S.Departmentof Defense,and (2) a counterclaim for
20
accounting againste'
Treppid and Trepp individually. These counterclaim s are w holly prem ised on the
.
21 unfounded contention thatthe M ontgom ery TrustLfis the exclusive ow ner''ofcertain copyrights and
22
derivative w orks that e'Ireppid and Trepp have purportedly 'wrongfully exploitedq'' Answer to First
23 AmendedComplaintandFirstAmendedCounterclalln (the'tAmendedCounterclaim''),atIJ29-30.
24
The Courtshould dism iss the A m ended Counterclaim ,w hich is nothing m ore than a federal
25 copyright infringenzent claim m asquerading as a state accounting claim . As such,it fallsw ithin the
26 originaland exclusivejurisdiction ofthe FederalCourts. Dismissalofthiscounterclaim willleave

27 D efendants free to pursue their copyright allegations in Federal Court, an arrangem ent to which
28 DefendantscannotobjectinlightoftheidenticalallegationsassertedintheirFederalComplaint.
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ODMAPCDOCSIHLM OX CSSZSM4hI
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STAT EM EN T O F FAC TS
A.
On January l9,2006,e'
l-reppid filed its Com plaint in this action. D efendants stlbsequently
sotlght to renlove this action to FederalCourt. W hile c-l-reppid's m otion for rem and w as pending
before the FederalCourt,Defendants filed a countcrclaim alleging copyright infringem ent and other
associated claim s. On Jafluary 3 l, 2006, after the Federal Court granted e'
rreppid's m otion for
rem and,Defendants filed a FederalComplaint in the U .S.D istrict Court for the D istrictof Nevada
R elevantProceduraIBackground.
8 alleging,interalia,infringementofcertain copyrightsthatMontgomery allejedlyobtained between

9
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1982 and 1986. A true and correctcopy ofthe FederalCom plaintisattached hereto asExhibit1.
On February 8, 2006, followiag an extensive evidentiary hearing, this Coul-t entered a
preliminary injunction whereby 'M ontgomery and all persons or entities in active concert or
participation therewith, are enjoined and restrained from destroying,hypothecating,transferring.
m odifying, and/orassigningtheE'
TreppidSourceCode(sic),gandqfrom discussinganyE'
Treppid(sic)
technologya including anomaly detection and pattern recognition software,with any third-parly,
Q o zXtxo - 15 except''in connection w ith this litigation OrderofFebruary 8,2006,at3:6-l0.TheCourtpremised

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thisOrderonitstindingthate'
Treppidu:isIikelytoprevailonthemeritsofgits)claims,,due,interalia,
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17 to itthe subsequent undisputed conduct of the parties throughout the course of V ontgomery's
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18 employment with E'l-reppid (sic), and M ontgom ery,s acquiescence to and active participation in
a<
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19 contractualagreementsentered into by E'Freppid (sic)with third-parties involving the Source Code

20
and technology atssuew'' OrderofFebnsary 8,2006,at2:7-11-
21
O n February 9,2006, Defendants m oved to dism iss e'l-reppid's'Com plaint,asserting that its
22 claim s w ere preem pted by federalcopyright law . A fter e'

Treppid opposed this m otion and filed its
23 own m otion to dism iss Defendants' copyright counterclaims, Defendants tiled their Am ended
24 Counterclaim on Feblazal'
y l7,2006. Defendantsnow assertjustonecounterclaim againstel-reppid
25
and Trepp, for an accounting arising from the alleged infringem ent of certain copyrights and
26
derivative w orks thatD efendantsclaim to ow n.
27
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:CODMAVCDOCSHLRNOX CSUZSO44I
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Page 3 Of7

. ../
B.
T he A m ended Counterclaim A llegations.
D efendants'Am ended Counterclaim is notlling m ore than a redux assertion oftheir copyright
infringem entallegations. Defendants allege thatttin or about l982,M ontgom ery developed certain
soltware for w hich the U.S. Copyright O ffice granted a series of Copyrights.'' Alnended
5 Counterclaim, at ! 8. Defendants further allege that, after the registration of those copyrights,
6
StM ontgom ery developed dcrivative works based on the teclm ology originally copyrighted in 1982 and
7 l986.** fJ.,atj 9. Defendantsalso allege thatM ontgomery did notIicensetheseso-called ttllerivative
8 W orks''to e'
Treppid. fJ.,at11l7-l8. Notwithstanding this allegatton,Defendantsalso clalnl
e
2
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9 (somewhatinconsistently)thate'
Treppid ''began sublicensing the DerivativeW orksto variousentities,
l0 includingtheUnitedStatesgovernmentandcollectinglicensing feesforthesublicenses''fJ.at11l6.
'
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Defendantsthen conclusorily assertthatthe M ontgomery Trustistithe exclusiveownerofthe
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=-1 12 Copyrightsand theDerivativeW orks,,,and that e'l-reppid and Trepp <thave w rongfully exploited the
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1(?)-, 13 Copyrightsand DerivativeW orkswithoutpaymentto the Trusttherefor.'' fJ.at!(29-30. On that
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'
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J o- 15 Cotmtekdefendants'exploitationoftheCopyrightsandtheDerivativeWorks.''Id.atjl31.
* 11g
hk pt 16 111. ARGUMENT
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D efendants'A m ended C ounterclaim Should Be D ism issed.
18
Rule 121)(5)ofthe Nevada RulesofCivilProcedure permits a responding party to seek
19
dism issalofa claim fordfailure to state a claim upon which reliefcan be granted.'' Nev. R.Civ.Proc.
20 l2(b)(5). A m otion to dism issunderRule l2requiresthe Courtto decidewhetherthefactsoutlined or
21 reasonablyforeshadowedin thecomplaintcouldentitlethe(claimant)to'relief.J4. Furher,

-pursuant
-
22
to Rule 8 of the N evada Rules of Civil Procedure, a com plaint m ust contain 4ta short and plain
23
statem entofthe claim show ing thatthe pleaderisentitled to relief.'' N ev.R .Civ.Proc. 8(a);seeal
so
24 Hay v.Hay,100 Nev.196 (1984). Asexplained below,the Amended Counterclaim ispreempted.

25 A ccordingly,the Am ended Counterclaim should be dism issed for failing to state a claim upon w hich
26 reliefcan be granted in state court. Further,the Coul'
tshould spccify thatitsdism issalt'operates as an
27 adjtldicationuponthemerits.''Nev.R.Civ.Proc.41(b)-(c).
28
///
::ODM.
A!PCDOCSHLRNODOCSL525044I
Pagc 4 Of7
B.
The A m ended Counterclailn is Preem pted as a C opyriglltInfringem entC laim .
The Am ended Countcrclaim is substantively eqtlivalent to the copyright infringem ent
allegations that Dcfendants w ithdrew from theiroriginalAnswer and Cottllterclaim and have asserted
in their Federal Com plalnt. Accordingly, the Cottrt should dism iss the Am ended Counterclaim as
5 expressly preempted by Federalcopyrightlaw. -'gA)11legalorequitable rightsthatareequivalentto

6 any oftheexclusive rightswithin thegeneralscopeofcopyright...and gthatlcomewithin the subject
7 matterofcopyright...are governed exclusively by''the CopyrightActof l976. l7 U.S.C.j 30l
8 (2005)'
,seealso Firoozyev.EarthlinkNetwork,l53 F.Supp.2d 1l15,ll23-ll24 (N.D.Cal.200l)
.
2
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9 tgjljlzg,lnteralia,Kodatlekv'.M TV Networka.Inc'.,l52 F.3d l209,l2l3 (9th Cir.l998)). Further,

10 Congressintended thatcopyrightclaimsbecompletelypreempted Firoozye,supra, 153 F.Supp.2d
.
1l at ll23
(copyrightintringementclaims are completely preempted) (citing Rosciszewski v Arete
.
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d; 12 Associates, Inc.,lF.3d 225,232 (4thCir.l993)).
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The preem ption inquiry requires this Court to determine that (i) the materials for which
..g sg
* 14 Defendants seek protection are within the Csubjectmatter'ofcopyright, and (ii) the rigllts that
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-1hefirststepinthisinquiry issatisfied becausethccopyrightsthatDefendantsasse!'tare,by
tt
,
V 17 definition, within thesubjectmatterofcopyright. TheCottrtshould presumethatthematerialsA.1C
that
N
18 DefendantsseektoprotectarewithinthesubjectmatterofcopyrightbecauseDefendants(i)purportto
-
19 holdcopyrightsforthosematerials,and(ii)assertrightsarisingfrom copyrightprotection.Evenifthe
20
underlying m aterials them selves w ere not eligible for copyright protection, nonetheless they fall
21 w ithin the am bit of the Copyright Act's preem ption because they are'w ithin the subkct-m atter of
-
22
coplqight.Firoozye,supra,l53 F.Supp.2d at1124-1l25.
23
The second step in thisinquiry isalso satisfied,asDefendants'allegationsare 'equivatntto'
24
the exclusive rights reserved to a copyrightow ner. D efendants claim to own certain copyrights and
25 derivative w orks, and tiley allege that e'Freppid and/or Trepp have exploited certain stl-called
26
GoD erivative W orks''ofthose copyrights withoutauthorization. The A m ended Counterclaim does not
27 allege orrely on any facts beyond those necessary to supportthe copyrightallegations thatD efendants
28
have asserted,atone tim e or another,in both this Courtand in FederalCourt. As-s'uch,the Cotlrt
::
ODMATCX CSHL> ODOCS525044h1
Pajje 5 Of7

w
w g
1 should dism iss the A m ended Cotlnterclaim as preernpted by Federalcopyrightlaw. Firoozye,s'tfpra,
2 l53 F.Supp.2f1atll26 (state-law claim sart

zequivalentto copyrightclaims,and thereforepreempted,
3 iftheydo notrequiretheproofofanadditiollalelement).Thisconclusion isreinforcedbythefactthat
4
the Am ended Counterclaim duplicates the copyrightallegations thatDefendantsassertin their Federal
5 Com plaint.
6
N otably,the posture of this M otion to D ism iss is notinconsistentw ith the positions adopted
7 by e'
Treppid in eitheritsM otion for Summ ary Rem and (filed in FederalCourt)orits Opposition to
8
D efendants' M otion to Dism iss. e'

rreppid has no'tasserted any Federalclailns or any claim s thatare
*
-7
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9 equivalenttoFederalclaims,andfederalquestionjurisdictioncannotariseforthisentiredisputebased
10 on Defendarlts'counterclaim allegations Fuftherm ore, e'Treppid m aintains that its trade secret
.
11 m isappropriation, breach of fiduciary duty and other related claim s are not preempted. See TD S
= = -
j $1y; 12 Healthcare Sys.Corp.v.Humana Hosp.111.,880 F.Supp. l572, l58l-I582 (N.D.Ga.l995)'

,
13 Enhanced Computer Solutlons v.Rose,9l1 F.Supp.738, 740 (S.D.N.Y. 1996),Firoozye,supra,
5
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1 6 15 602(E.D.Pa.2002). Thesepositionsareconsistentbecause,whereastheAmended Counterelaim
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42
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Q V 17 requireproofofadditionalelements. 1d. Accordingly,onlyDefendants'Amended Counterclaim is
ac
-
18 preempted.fJ.
19
IV .
CO N CLU SIO N
20
Forthese foregoing reasons,the Courtyhould dism ss Defendants'Am ended Counterclaim .
21
D ated: M arch l5.2006.
22
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.
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23
stephen
Esquire
Nevada BarNum ber I758
N evada B arN um ber6830
H ale Lane Peek D ennison and Howard
Reno,N evada 8951l
24
25
26
27
775-327-3000(tel.),775-786-6l79(fax)
AttorneysforPlainti
ffeTreppid Technologies,L.L.C.
28
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T:ODMATCDOCSSHLM ODOCSUZSO4I
Page 6 OF7

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6
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PR OO F O F SERV IC E
x-
1,G aylene Silva,declare:
l am em ployed in the City ofReno,County ofW ashoe.State ofNevada by the Iaw offices of
H ale Lane Peek Dennison and Howard. M y btksiness address is 544l K ietzke Lane, Second Floor,
Reno,N evada 895lI. lam overthe age of l8 yearsand nota party to this action.
M A llwO NLY Iam readily fam iliar with Hale I-ane Pcek D ennison and Howard's practice for
collection and processing ofits outgoing m ailw ith the United States PostalService. Such practice in
the ordinary course of business provides for the depositofalloutgoing m ailwith the UnitetlStates
PostalSelw ice on the sam e day itiscollected and processed form ailing,
.
O n M arch l5, 2006, 1 served the foregoing M O T IO N O F PLA INTIFF A ND C RO SS8 D EFEN DA NT ETR EPPID TECH N O LO G IES,L.L.C.A ND C RO SS-DE FEND AN T W A RR EN
TR EPP TO A ISM ISS A M END ED C O UNTERC LA IM ; M EM O R AN D UM O F PO INTS AN D
9 A IJ-I-H O RITIES by placing a true copy thereofin Hale Lane Pcek D ennison and Howard's outgoing
2
d
p
CZ1
la
mailinasealedenvelope,addressedasfollows:
EricA Pulver,Esq.
PhilipH.Stillman,Esq.
.
71f
1l
.k
l
,
.
.
,u s
The Law O fticesofLogar& Pulver

Flpm & Stillm an

224 Benningham D r.,Ste.1A4
l8;( 12
c t&q 13
Reno,Nevada89501
Cardiff,CA 92007
IJ.s. A ttom ey G eneral
CivilProcessC lerk
:
z:
'2
71
J=d
t 14
QX
7
-
De
9 pt oflustice
u.s.AttomeyfortheDistrictofNevada
5O Petm sylvania Avenue

w ashirtgton, D c 20530
1
.t o- l5
t'
Di
civilProcessclerk
t'k ;
j
:t 16 IJ's.AttorneyfortheDistrictofNevada
Q V 17 10()w .Libertystreet
ac
Reno,NV 89501
'
100 W .Liberty Strect

Rerlo, NV 89501
DonaldH Rum sfeld

Dept.ofDefenseoftheUnitedStatesofAmerica
1000DefensePentagon
.
washington,DC 20301-1000
.
l8
19
ldeclare tmderpenalty ofperjury underthe Iawso-fth Uhited States ofAmerica thatthe
fbregoing is true and correct,and thatthisdeclaration w asexecuted on M arch 15, 2006.
20
21
22
'
aylen Silva
23
24
25
26
27
'
28
:EODMATCDOCSHL> OX CSU25044l
Pagc 7 OF-1

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......'*.
E X H IB W 1
ea
.

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pa Page
s q of65
1;?of 143
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c ase 3:C)6-cv..
?56 Docurrtent1-1 Filed01/31/2%') 64
...
'
R onald JtL/gar.
-stateB ar N o.303
EricPulvpr-stateMarNo./874
.
LAW OFFICE OFLOGAR & PLILW !K PC
225 s. ztrliugton A vev,ste A

Rcazo ,N v 89501
''
rel: (77s)786-504:
Fm
x: (775)786-7544
M tchaepz.Flynzt,M ass-stateBarNo.
'
Ibflip 11 sli'
lma'u calirornia statelzarNo.1s2s61
224 Birrningllam Dlw e,suite 1A4
liq CA 92007
.(7arc
'
'
Telr (8S8)235-5279
Fax: (88d)235-4279
.
'
LvlpplicationforAdmissionProHac Fbcc-/rt/ltomfrlx
*
Attoznlew forPhiatjf bEhihils V ONTGOM BRY,anindividual
andM ONIGOM EP.
Y FAM ILY TRUST
'
'
.
'
Fcvwuk snqncft,.u
8
n
k
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1
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10
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a California Trast
11
IJNrfFaD STATESPISTRICT COURT
12
FoR THE DtSTIIICT OF NEVADA

13
14
DElqhris M ohrrGoM ERY,au'individua

andM olzrqior lty FytM IL'F Txus'
r,a
Califonl:
iaTrnst,
.
Plaintiq
IS
16
'
17
vs.
eTREPPD TBCHNOLOGIEE t1r.,a

N ovad:Li
>ayi
ctedLiabgityCoppa
W AFA EN TREPP,aajndiwdual;
doop,s 1ttuough 1o,
.
18
19
'
20
Defendanf
x
'
21
'
) Y E NO.:
)
)
) CEIATPLAINT EOR 7
)
) 1. . CQPYRIGIU INFRY GEMENT;
) 2. COPY RIGI'FFINFPJNGEMBNT BY
)
DLSTRIBUTION)
) 3. DECLARU OIW JIJDGM EINIT;
) 4. 'Accoupk-rm c;; .
) 5. BREACH OF FD UCIM W DITFY;
)
6. F
'RA.
UD; . .
) 7.
MREACH OF CONTM CQ
8.
M ISM PKOPQTATION Oi7TRADE
sscpr sk.
COuksytsyox .
22
23
''
24
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27
'
'
'
:5
26
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..
...............
..
=.
7Qa
l
i
02/01/2006WED10:39 ITI/RXN061981 //?,,1
x.e
Platuti.
fss D ezuus M ontgonxrv axd tlte M outgom ery iz- 'ly Ttaust.harcby aElege agaicst
Defeadant,e'Freppid Teclzf
aoiogies.LLC,&ud D efsndant W arreu Trepp,thefoliow ing Claiuzs for
Reheh
INTRODUCTION
1.
Thisisazzaction m-isiugoutofthetzckatxtikoz'kzcd- eofextvemelyvrltlablecopyrightgd
cocuputersoftware techaology'byoefendaat e'

rreppid Teclm ologies,LLC aud D efrndanq W arrc
za
'
rreyp.Notcontestto reap rniillonsofdolhrson tbeteclmolopywitbouta license,themajovity
shareholderofe'
Freppid Techzzobgjes.DefsntiantW arren Tmpp,used his majorit'
y positiou to
* out,di
squeeze
lute attdm innppropviatevastslrmnofm oueylom tlto i
zw em orandfellow shareholder,
10
11
DeaaisMbrttgomery.andtlzeM onsgomcz'yFamilyTrust. Voreover,'asfullystatedbelow;evou

thosebreache.soffdudarydutydidm tsatifyMr.Trepp. I'
Iowentfurtberbytrying toobtaiu
J2
plaintifrM ontgofaerytamiiyTrust'sextrernslyvaluabletecbnologytlumughaknowinglyfalseclaim
13 .
tllat tbe M ontgom ery FsrnR

'y Trusf s tochnology w ms contruted to tlle compasy by * .
14
M ontgom ery,thenattrzuptfng torcvorsccngfnscrtltesofwaa'

eindiractviolatbnoffederalcopybght
15
laws Accordlgly,iu addition to allothar reme-dies, Plaiatr seeks notonly a declaration of
J6
ou ershipundertlze1976CopyrightActofthusoftwarlatkssueinthislitigationxbu1injtmctiverelief
17
ag
18
19
.
ainstanyfurtheruseoftheieclmobgywjtlloutalicenscandazzaccclmtgofallproffsobtainod
'
'
'
'
asareslzttofthetm autlzorizcd exyloitation oftllo copyright.

sod thosc derivativew orksthcrefrom
l
'
'
2.
'
'
l>Ak'lqlls
'
puutx oer
nokssu ntgoaloryisaniadixxd'
o w
'hofesidosu w ao oocounts xe.t,a
21
and istheittveator.
ofantelmologgthatissubjocttothisaction- M enigomm'
y jsatso anaizlority
22
23
shareoldarine'
rreppjdTrclmolobes,LLQ Defendanta.
ixlvtnmlw l.
.
3. Plalntis M ontgoiuery FnmllyTrtlsttihc *vm ste'lis a G lifom '
la irrevocabie trtzst
-
'
24
S
fonzed ind operated uuer'tholaws oftllb Statc ofCalifotxiaand isthe owacroftlzecopyright;at .

V Y W YXVK
'
'
5VC
26
4.
27
Defendant,erfreppidTechuologiesaL.
L.C,(eTreppidlpisuponRdbrnxationandbelief
aN evada IiXIISIeJ:Ikability com pany,with itsprinciplopkacc ofbusinmssin W ashoe County,N evada.

.
)-
.. -
Xs
02/1/2008 WEp 10:39- (TI/R: N0 61981
Document
Filed
Page 67 of 143
Cas'a 3:05-cv-- ..c56 Docur
nent1-1 644-5
F'iiet
l 01/
31/205/28/08
. aQe
Y
'
1.
Dcfoadautw arron '

rrepp (--crepp-').
is,upon mrorrzuattoo and bel
act an individualwiao resktesm
w aslzoecokmty,Nevaclamad isthemajority sbarebolderzu e-rreppidTechaoloaiss,LLC.
5. ' .l'Iatutifrsareprsscntly ututw are ofthe tm enaznes and capaciesofDelfenclmltssued
hcrein msD oBg 1 through 10,iuc'lusive,azld therfore suc said Dcftradauts undersucb fctltaous
Imm'es.Plainticsare iafom wd aad beguvc thatsucb fictiuousDcreadantsare responsiple izzsom e .
m armer forthe evehts an:lhappsniagshere;iu referred to,and prodmatcly caused the dam age to
Plaintilfsashurein allegud. Plaintifrs wi

'tlset;k leave to am ezd tlds Coznplatutto atlegc tlleir &ae
nazzrsand cxpaciheswlze;n tlaesam mlmvebeen ascertained.
9
10
6.
JTJR ISDICTIO N Ae V ENITK

Phiatitrs raise a clnizn zmtlerthofaderalCopyrightActof1976. Accordiagly,this
l1.
12'
CourthasjtuisdictionpursuaatttA2*U.S.C 9133S(a)and1338(b).TheCom'
talsohasjuristlistion
purstwantto28U.SC.j13J1(federalqtzesdonjuzisdiction) audovertl
x statelaw'cla
'imspursuant
13
to28U.S.C.(1367(slipplcmentaljf.
zrlsdiction).Vezluaisproperpur-auntto.
28U.S.C.j139i(b)and
14
28U.S.C.91400.
15
FACTUAL AL LEGATIONS
'
16
DenuiuM ontgomea (M outgmery)isan weutorand soRware develtapcr. ln oz
17
about $9:2, M oatgom ery deveoped ccrtaia pattcm rceoguidoft software for whjch the U.S.
IB
CopyziglztilGcegraatedasc'riesofcopyng
'hts.'fxeMozttgomeryFacnfljTl-ustt'
Ttv<listheowuct
19
ofcopyzjglltkegistzatioaN os.TX u-98-018,c u-98-699,-1-X11-98-727,-1-.

411-98-728,M 11-98-731,
20
TXu-l17-863,*
?Xu-119-549,)
'-.
X-1-983-14.
7,7W -1-992-867,1-X-2-000-234,-1-X-2-083-750alfd
21
T2-2-095-0* ttlm r,oPyng

'ht.
93,
)'
--'
22
8.
M ertlm registatoztoftlzaset
copyzights,M ontgomo devoloppdDerivativeW orks
23 ' bue owiepa> m reo> uonnA obr oce KycepN gbtedbenveca1982andJ>ntuazy1987

24
' ttbeir crivafveW or$;s'.).TilosetmiquelyimponantDtrivativeW orp.
s were111.
7developedplior
'
25
1.6
77
to 1998 aad are tllo exclusiveproperty oftbe Tnzst'

ptemller'lgg8,M otgom ery and D efondantTrepp.fol'
m e.d latrspid
' 9.
I'
a or about se
.
Tecbzmlogiaw LLC.a'Lkuited Ljability Compauy,wbich name was later changqd to e'rreppid

-
2-
02/01/2006 WED 10)3F ITK/RX N0 61981
'
Document
Filed
J56 Docu
fnent1-1 644-5
F-IIt
7U O
1/3l/05/28/08
z
r ) FoaPage
?f4Of68
12of 143
Y z
Case 3'
.06-cv..
.
YCCLIROZDCS,LSC (YGQJIXCFfCtYxcd O aS CYCCIRPX ) Xll1-StlztRtto :

1CV OSLIQYIW OIIXCQCIIIC;ZEZ'
l
:'
datet! septeao or 28- 199:,betk

veeu Trcpp,M outgom ery aad the 'rrust,iu exchauge for a ftb.
y
pcrceut interem in r'Freppid 'I'

ecnologiemszLLC to M ontgozneryz the Tr12:! ctnnrl
-l
-buted specific
technologytoe'
Twpyd txatsdentjfiodinparasraph 1.7..1ortlaecootroatioa Agreement.
:;
l0.
That Pacagz-aph specifca

.lly identifics tile coutfabutod tealmology asl*thk
tsoftware
6.
couvryssiou.teclmotogy coratajued c,u thatcsrtain sonwars comprcssion sugiue Developmont
Program contained on CD N o.).''
ll.
'
Sigtlt
'
ficantlyg becauae the Trus-t owsed otl
aer tcclm elogy,Parasraph l.3 of tbe
'
9
ConGxutionAv eom entsMtesO ti eTrtzstisexpresslynotQ'contn-buti

og,t'
rausferringorcollvoyitlg
10
to e-frcppidImdirrthtsagrscmentorbyattyothcrmeans,nor' e'
TkeppidacquiringfrornltheTfustj
)l
asy othcrtaap-ble aad intanp-bleassctnot''tlle TrustowM ontgom ery.
'
12
13
l2.
'iqms,pursazautto the express term s oftlze Couttalm tion Agrcem eat,fntrcpid ouly
acquired the soltw m'e conprossion tec'hzzobgy contaicrd czz(7D N0.1 aad notbing ebe
14
13.
lrtparticutara the D ezivative W ork.

s w bre notpa.
rt of the soitware comw ession
'
J.5
teclmologycoatakled onCD No 1timtissubjectto th.

cContta-bution Agrccfrent.
16
Subsrqusmtly,Trepp bogan to cl
iluteM ontgomery's sharein r'
l-rcppid atk
d,usod ikis
17
majorityinteres't e-rreppidtoqbta.
infzyomblotreatmeutforhinxselfasamajorityshareholderatthe
18.
expezkso ofM ontgopzery.
'
19
15. tu orabout200,
3,e'rreppitlbegaz sablicensicg tlle Dcrivadve W orkslo various
20
entitios,hlcludiag tlle Uoited States goymnm eatattd collectiug licmksiug feps for the s'ubliccascs
21
e'Froppid wasnsvc'rgxautod alicense totheD erivabveW orksby, artd failedto pay royaltlestoathe
22
Trust.
23
.
14
16.
A tno tlrrhcdid any ofthe Defqqzdacts havr a wzitt= Jisezuseto exploit1he Trust's
'
24
DorivgtiveW orksasroquh'
edbyIJU.S.C.92()4(a).Asaresult,atbest,e'
rreppidoulycanclaim
25
(ifauythiag)aztoralanou-excltu/eliccnsetoexpbktheDolivativeW orks. .
26
27
17
AlthouglztheTzustdcniestllatitm '
anted aay oralaonexolusiveEceuseto e'Fre pida
az)y such orallicouse wastezm inated by tlke Tntston January 19,2006.orally and by letter dated
-
3-
.. -
Q7Qn
02/01/2006 :E9 19:3F ITI/R: N0 61981
Fstr?d 01/
31/20i
a>ePage
b of 1269 of 143
Case 3:06-cv-00056-PMP-VPC Document 644-5
Filed
05/28/08
'
case
3qtl6-cv-otv..,G ooeuroeot1-1
* ,.?
)
2
Januar.
y1
2s,
8 2c06.
c'
Ikeppid basfailed to azzt
jrefusesto ceaseexploitation oftl)eDcrivalvt
zW orks aud
hasso tu rsrused to accounto rauyprostsobtauwdasaresulsoricsvuuiceust

zd exploitauos oftl,e
4
s
o eriva
'tt1
ve
9 worps
M oreuver,beca.
useoru,obigsycoofidsxualaald secusitkveaatzzfc oruaooeaivatlvc
W orks
'. the Dcrivativc W orks arc protected fzom revtn'
se engiueerizzj and/or tampering by
sophiaticaed safcguards.Asarestlltofe'Freppid'simproperatternpts10 obta.

in anclTevgrst ectginccr
tlm DCZVO VCW orksaX efcnfkant:havc;,11pOL Vtformatiullalldbclit

X tlcdtford PZX Oft111Uhstlume
'
code''oftheD erivaliveW orlcs.furtlter
'u PIaZO .
FIR ST CLM M FOR RELIEF

10
ll
(Copyrightlufxillgem ehtazaiastanbefentlants)
12
13
'
20
Plaintiffs iacozporuteby refereucetttoforegoig allegationscontataed in Parav aphs
ltlzrougll19 asthougllrestatr;d hertixtia full.
14
21.
'
The M ontgomory ratady

' Trus't is tbe ow-as'r of Copyngh
' t P-egisuatiou Nos.
15
TXu-98-018, 1-Xu-98-699, TXu-98-727, TXu-98-72*a %70 -98-731. Yxu-i1'/-568, mld
16
17
Txu-l19-540 aud tho Derivati

veW orks created tberefron
22. Defendantslmve fortllc pasttbrecylarsand cottiuuiag to theprescptaexploited tbe
18
Trust'sderivativeworl:sxvltheutatzylkecsetherefors.
o.
dwkhoutpayhagrom lties.
19
23
D cfe
'ckdant Trepp,as M azzager of e'
Fzeppidxkmowiugly aad iuteatiomally div tcd
20
21
iuN gemuatoa tlm Trast's pyrigh'

tsahd Do vativeworks
'
e
Freppid'
swillf
ul
-'
24.
Sk
sadircctaaclpcoximatermsulloftbobefondants>wtllfixl' ' m eutoathoTrust's
7.2
Dorivative works, the Trtsst has sufered ard continues to s'uuor dam ages iztattamolm tto be
'
.
24
25
25
Pm w ant to t'
he CopyriglztActfyf 1976 tbe Trttst is e
'Iktitled to actttaldAm agcs,
statutor.gdarm gesasprovtdod tlzereia anditreasonableattoznoy's fees.
26
SEcoe CLAIM -FOR XELIEF
11
ICOPyTiZLffllfringement-UnlawfulDi:tribution efCopyrigtdedW ork -Tttjunctitm

V
.. .-
c=
oz/gj/ggpg $Eg gigg jsga yg gtggj

.
Document
70 of 143
Case 3'0t
7i-(7V-0lr ..
ti6 .OoGur
nent1-1 644-5
File 01Filed
/31/2005/28/08
a;ePage
6 O1?
J
.
11 U.SC.j106(3)) '
2
l
26.
Phitlt'
ifrsZcorporate iuto tikis claim forrelicfthe allegaticzascontained m each aud
evel
'y pretleding paragraph ofth.
is Cornplaintasiftbe satneweri
tsetoutatleaglh bcrcm.
27.
Piaintift--f-z-ustis tbc ow-acrard authorofthe,D erikativt W orks
2B.
In dom g tlle acts a'

llegcd, Defcndant viohted tl)e Tnust's l'ight aud itztcrest to '
'
6.
distributccopiesoftl)eDerivativeW orkstotllepttblictlrder17U.S.C.910643),andsaldactswcrc
S
7
d are irtfriugernsuts oftheTm sts'copycights.

29. Plainli.
ffs havr lx ca and are bom substautially Jnmage.d by said infringemcat,
a!l
'
partieottlarly,upotziaformatioa and botiet the tmw ttorized tuse of '

dle Derivative W orks by
10
.
Defepdants Ftl
rttterharm aud jzz
juryto Plaiato Lsimminent.ard Pl
m'ntix are m thoutadequatc
11
remedyatLaw unlessDefendaflts'.' ' uezzycutisenjoincdby tilecouzt.

'
lw nkp ctx m so h lkxstlv
12
(Declaratql'yReliep
1
4
13
30.
Plairtix reanegeaudincom om tebyrefezeazsee'ashazzdsvefyallegatioaiuparagraphs

'
'
'
15
16
1tlzroug
h.
29 set
fortt
llua
he
u-rov
t er
31
Anc
lrei
cont
sybasariseaaadexistsaaaolzgplaitltiY alldDefendx rstmderthe
17
Copyrvz
'lztA ctof1976. '
Fhe TZ'I
J.
W coptendsthatttkstlle exclussveownerofth/Derivative W orks
18
atissue'
itlthisactiotu 'Fho Defeadazztsdisw to111:$col
ltentiim .
19
'
52. PlaintiY dzs;

eajudiclldcclarationtbatPlaiat'
iffsarothe.ownersotrtheDezivative
'
... .
..
1t)
W ork and ftzdher,thatany actualoriumliedoralztozmkclzisivlicetbsristormnated.
21
33. FuttlmrmoreaasPlaintie havencvv validlyassignecla'

nyiatemstintitccollpoltts
2.2
ovtheD erivativeW orl;sto D efendants,Plal

'ntitfsarootttkled to adeclcationthattheTrlzstisentitled
23
to 100% oftholiceasofeesobtaizmd by theeo foitation alld sublicen='ng of'

tkeDcrivative
'W orksas
'-
'
:=
:
.
4
zs
matw orr
eaeral
opy
uw.
s4.
Ac
de
c-rigu
uono
rwghtso ue= - v dappropuatoatx - e'woo x x tpla tx
26
mayascertaintlloirtightsaud dutieswith respecttoDefendants,and withrespem toaoythird parbes
11
who zaay clau a,zkatere-stin eithortho copyrightsort'

i,eoerw ativsw orkseituerby licemsoor
5-
'
.. mr.u
02/01/2096 :E: 10:3: (TI/RX N0 61981

tl6-cv.v lo.
sf5 Docum ent1-1 F'ile
.
'
case3
atlegedsulllci
erl
st.
(Accountilm)
7
8
9 '
10
35.
PlaintiX reallcge azld iacorporate by refwsnce rach and cvery atlegatiou in
paragraphs T tiarough 34 setfor'th hereiu.

k sli
. ofthe Copyriphts
.and theD envat
.orl
36. Plaintif Tnt
stllecxclusivc ownor
ivcW '
cs.
.
37.
Defendautbhavem ongtktlly exploitedtheCopyrightsandDerivativeW ork-sw ithout
paym cntto tllcTm sttherefor.

.
38. Asa resttltatlle Trttstkqentitled to aavaocouqting ofallitt
com e aod profits derivcd
sfpm D cfendants'exploitation oftlm Copyz
'ights4nd theDczivativcW orks.
1l
4F'IW CAUSE OF ACM ON
12
m reach ofFiauciaryDuty)
13
14
39.
P1'
.4m
'tim r
'eallege atzd incarporate by referencc elich and every allegation in
paTagraphs 1through 38 tetforth herein.
15
40. Aat.
l= znajoritysluarebolde;
riae'frcppidTechnologies,Trepp owedahduciarydtlt'y
16
of tttuzostjolralty nna good fnd

'h to Plaintig D ennisM ontgomqry,including within thatduty,au
17
obligation notto tlso hisznajority interestto tlm detzimen.

tofthe minorit'y slmreholder.and au
' 18
obligarioa not tc fartdr his owzl iuterasts at the exps'nse of tlfe m inozity sllareholderz Dems
19
M ontgom ctv.
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20
41. Jn violation ofidsEduciat'y dut-iostb Plaintc TT*pp improperlyuse.

d hisnaajority
21
iuterestia orderto amongothortilings,gtlezzlptto l'

eductM ontgom ery'sshare
'srehtiveto hisowvox
2j
ldingsofM ontgomezywhileattilesametime'increasiug thgvalueofl

zissluues,pay
devatu'
et.
1,1)hov
23
hinuelf exorbitant dividtm t

ks from the compan.
y witlzotlt paying equal dividends to phintifl'
24
M outgom oa .u d tomisapproprlaternziozssofdollazsatM ontgom ery'sexpensefrom tlzeeompany
25
accolm ts.
26
27
42.
'
'
Jts a direct aud proxinzate result.of Trepp's brraach of fiduc'iary duty,Philtitf
M oplgom cryhassufferedaadconthm esto stzfrerdamagesin azkam olmttobedetem amed attrialbut

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iu auy eveutrm lsssthan $6 mitlion

43. Bccause Trepp's actiorzs ws'
re
M ontgom cry roqueststhatptm itlve dam age.

sbe avzartiatlasainstTrepp.
malaciousp :rt bad faith and oppres'

iive,
SIXT-IAX-AJJA
SE OF.
ACO ON
4
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44.
(rr>ud agailzstTre/p)
Plaizltiffsreallege aad incorporatsby rererence each and.evezy agegatou m'

'
7
8
param aptus 1through 43 setforth hercia

45. Atttte tim e ofthe fortnation ofe-frcppid Techuolragics,LLC,and theexecutkm by
Plaiut
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.
e of the Contrlm tion Am eamezlt, Trepp oratty apd in w riting promised Plamtilfs tbat
10
M ozztgomerywouid be a50% sbarekoldezkte'

freppid Teclmolo#eswithTrepp. Hc Ett'ther
li
repre
zsented tlhatM ontgomerywouldslmreeqtlallgw'it.
b Trepp iul11e;proftsoftltecouapavy.
12
46.
Attb.
etitv timtTrepp roade tlm forcgoizlg represerztations $0 V ontgomcly and the
13
M ontgomery Fpmiy Tnistz

'Trepp kaew tbmn to be false. M oreover hernadesaid rcprssem ariozss
14
izzorclc'
rto iuducoPlaiatitfsto coutnlm t.
evaluabk softwarecom ptessiotzteclmologytothecoiupatly.
i5
47.
Txreliaucozzthtlsrrcpm sentations,M outgomca and theM ontgomerylzamlyTzust
16
coutn-btzted tlle'Yoftwarecom pression techtzcbgy''to tbecompaay iu rrtiance o!lTrepp'spromisu
17
18
to share theIirofl
tstherefrorcu '
48. H ow evor,Trepp llasfm-led to sharethcproftsequalty and .
basiustead.failed to pr
ay '
'
lp
qualtbvfauzasoyroyalties.
20
49.
21.
'
23
Go
Becauso Trejl
p's actlous werewillfttt malicious,iu bad fai
t.
lkaztd oppressivr,
M ontgom ety requeatstbalpunhivedam agesbo aw arded againstTrcpp.
24
25 .
27
.
6sadectaudproxiuateremsultot-freppfsfrudoPlaintiAsbavesattrorodaadcontiau
to sufferdaauage-stqazlamouu.
ito boclofrminsdattria!btttinaay uventno lrssthan.
%6 million.
22
26
SEVEVI'
H CAUS
.E OF-AC-TION
m reach ofcontxact)
'
51.
Plaintirsrealloge atd jnKozporate byrcfereuceeach aud Tvoryallegation in
pm-agraphs 1through 50 setforth hercir7-
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Vlaiotiff.sat'
td DetendaotTrepp euti-recliuto awritte;a corztrad titlcd ''Contributlou
A gz-cem e,
nt.z'
tcclm ology to tlke compaay,Plaiatiffhlocltgom e.

ry wasto receive50&i oftbe comprm y.
03.
In pertlutultpm .io excbartgejlxrPlai

'rttifrz'
,coattibutiug thf;G'softwarecocnpressitau''
54.
'
Plautitt'
sporformed aflobljgatnonskmderrhe conrract'
.
55
H ow ever,Trepp broaclzed tho contcactby failizzg to naaim aiuM ontgomery's 50%
'
S6.
*
Asaflirectandprcx'
m
'a?teresaltc'f-l-rcpp'sbreachofcostract,t'lailltiffsllavesufrcred
-
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zssthan
10
11
IIK rrl
ilhOn.
EIG HTH CAV SE OF ACTIO N
12
(M isappropriatis or-fradeSecret)
13
57.
14
15
'
PlaintO reallegeD dicoo ol*tebyrefercnceeacho devea v egatiou pu agrapy
l tbrough 56 setforthhorein.
58. ThcDezivative W orks constitttte tradesecretsofPtainti& .
16
'59.
17
18
iaterest, ard iustead attempted to rcducehisow-aerrzip intsrestin tbe compauy.
8
9
By the actioms atlsge;d above,Defecdants Trepp and e'

lkeppid Teclmologies bave
w rongfully attemptcd to maAapproprfate aud c'

on'vt
zrtPlaiutie 'Dctivative W orks.
'
60.
l
As
adrectand proxivnateresttltof.Deferldatgs'misapproprjatiou ofPliutiG 'trde
19
secrets,l4aitlti'
Rshavemlffm
'zdandcoatfnuetostifferdaraagesilzanamounttobedetermiaedattrial.
20
61. BccaustDefendaats'actionswere willfutIpalicious,in bad faith nnd opptessivea
21
'
. M ozztgom ct'y requegts tbatplm itive damngesbc awarded agans:Tqcpp.
2/
cwvsE olcAcaqox
23
(Ctlnveuiqn)
24
62.
25
param apbs l G rougb 61 setfortb hereia.
28
27
PlaintiY reallagcand incorporateby refemnov eac% au.

d every allegatiollin
63. Plaintie owutlloperivativeW or/ currentlyinthepossessionofDefeadants.

'
64.
D efcndants couverted laialix 'property fortbeirownm eaud havefailed aud

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aud coutjnusto sufl'

erdaxmage-staau aruopatto bedetermiaedattzialbutin attycvczltIzo lesslbx
azt
$500 rofllion-
Nforttgom zy raquestsLba!ptmitive datnagesbeawarded agairlstDefeaclants.
66.
Becatksebefeat
laue'actiorxs wtzte wftlftlk rnahcious,iu bad faittt.a.
ud oppt
ressive,
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Pttrs'tzanttoPcderalPuttleofCivjlProcechvr380*,Plaiatifrsherebyderaalldajurytrialonall
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PM YER FOX REf,IEr
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1.
13
14
Temporarilyamlprclfu'
liu'uulyeujoinDefeadantsdurixzg thepe casyoftb.
tsadiou
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ad peramneatly thereafterasfollows:
.
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Prolu-bitD efonclmztsrrom izl
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17
W orks owned by Pla4ntiffs Trust.aud aay Derivative W ork.

s tbcreots and illtlsregafda that
18
Defendantsberequired to deliverupon oath,to bcknpotmdod dl'v'rng tim pencteztcyoftllisactfona'

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' such cepje.siuthoirposse-ssionuazareallsgcd toiufrjngeupoa#laixl

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recm dinas,tapes,cds,dvds m astersxprintordigitaldocurnrntsaud m edia,oraay otherm eausfo'

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LAw OFIVCB OF LOGAR & PULVBK PC

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Phoae:775-786-5040
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OFFICB OFLOGAX & PULVBK PC,withthebusices:addressat225S.Arlingtoa/kveum e,Stlite
A.Retlo,N V 89501. 1aalovertho'ago of17yoal'sold and aotaparty to tlzisactiono
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W ale Lnzze Peek'
l7enniaon and H oward
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KiFl
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IN TH E SECO ND JUDIC IA L DISTR ICT C O U RT O F THE STATE O F NEVA DA
IN AND FO R THE C O UNTY O F W ASH O E
'
*
9 DEN NIS M O NTG O M ERY and
C ase N o. C V06-00114
10 BR ENDA M O NTG O M ERY,as
Dept.N o. 3
11 individuals,and as TR USTEES
12 M O N TG O M ERY FA M ILY TRUST,
13
14
Appellants,
V S.
15
16 ETREPPID TEC H NO LO G IES,LLC .,

lz
Respondent
18
19
21
-. . .
..
C ERTIFICATE O F TR AN SM IU A L
22 lhereby certify thatthe enclosed the Notice ofA ppealand otherrequired docum ents
23 (cedified copies)weredelivered to the Second JudicialDistrictCoud mailroom system for

24 transm ittalto the Nevada Suprem e Coud.
qd41%.!'149f''
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Dated:March 14,2006
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IN THE sEcoNo JuolclAl D ls'm lc'rco uR 'ro F TH E STATE o F NEVADA
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10 BRENDA MO NTGOM ERY,as
Dept No. 3
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11 individuals,and as TRUSTEES
12 MO NTGOM ERY FAMILY TRUST,
13
14
A ppellants,
VS.
15
16 ETREPPID TECHNO LO GIES,LLC.,

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Respondent,
18
19
20
C ERTIFICA TE O F C LER K
21 Ihereby cedifythatthe enclosed documents are certified copies ofthe originalpleadings
22 on file with the Second JudicialDistrictCourt, in accordance with the Revised Rules of
23 AppellantProcedure Rule D(1).

24
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Dated:March 14,2006
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Filed 05/28/08 Page 80 of 143
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IN TH E SECO N D JU DIC IM .D ISTR ICT CO URT O F T H E STATE O F N EV AD A
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IN AxI)lpoR 'I'HE COUNTY OF W ASHOE

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rEcl-lw oLo cilils , LLC .,a N evada
Lim ited Liability Com pany,
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cvO6-00114
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41y l7 DENNISM ONTGOMERY,anindividual'
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M ON TG OM ERY M d BREN DA
l M ONTGOM ERV astrusteesforTHE

M O NTGOM ER Y FA M ILY TRU ST;and D OES
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A hltRELA TED A CTION

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A FFID AV IT O F M AILIN G
24 STATE OFNEVADA )
25
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COIJNTY OF W ASHOE )
26
The undersigned, being firstduly sworn,deposes and says:
27
That afliantis and w as w hen the herein described m ailing took place,a citizen ofthe Uni'ted
,
28 States, over 18 years ofage,and nota party to,nor interested in,tjje w ktjyjn aotion;that, pursuant to
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Pagc 1 Of2
ICase 3:06-cv-00056-PMP-VPC
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1 NRCP 5(b),on M arch 9,2006,affiantmailed atrueand correctcopiesofORDER ADM ITTING TO

2 PRACTICE DAVID ALAN JAKOPIN, ESQ. and O RDER ADM ITTING TO PRACTICE
3 JONATIIAN DALE BUTLER,ESQ.cnclosed in a sealed envelope upon which tirstclasspostage
4
wasfully prepaid,addressed as follows:
Ronald J.Logar,Esq.
Eric A.Pulver,Esq.
7 225.5.A rlington A venuc,Suite A
Reno,N V 89501
Philip H .Stillm an,Esq.

Flynn & Stillm an
224 Berm ingham D r.,Ste.1A4
Cardiff,CA 92007
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Therelsregularcommunicationbymailbetweentheplaceofmailing andtheplaceas
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I,Gaylene Silva, do herebyswearunderpenal

tyofperjury thatthe assertionsofthisaffidavit
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Signed and sworn to before m e on M arch 9,2006,by Gaylene Silv
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HaleLanePeekDennisonandHoward
544lK ietzke Lane Second i'loor
Renc,, Nevada 8951
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Attorneys forPlaintiff-
IN THE sEcoNlJUDICIAL DISTRICT COURT OF THE STATE OF NEVADA
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IN AND FOR THE COUNTY 01fW ASHOE
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ETREPPID TECHNOLOGIES,LLC.,aNevada
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plaintiff,
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M ON TG OM ERY ,astrusteesforTH E
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.and D o ns
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Defendant.
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REQUEST FOR SUBM ISSION
23
24
Itis requested thatplaintfr II-I-REPPID TEcu x ot-o clly,s,L.t-.c.'s M otion to M odify Order
25
GrantingPreliminaryInjunction, filed on the 13thday ofFebruary, 2006,intheabove-entitled matter
26
be subm itted to the courtfordecision.
27
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::ODMATCX CSSHLM ODOCSb22875l
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'I'he undersigned attorney certifies thata colly ofthis requesthas been m ailtrd to allcouuselof
record.
D ATED : This 7th day ofM arch,2006.
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tephen
,Esq.
N evada BarN umber 1758
Jerry M .Snyder,Esq.
NevadaBarN um ber6830
H ale Lane Peek Dennison and H ow ard
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1,G aylerte Silva,declare:

1am em ployed in tlle City ofR eno,Cotlnty ofW ashoe,State ofN evada by the law offices of
Hale Lane Pcek D ennison and H ow ard. M y business address is 5441 Kietzke LaneySecond Floor.
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t(),N cvada 8951l. Iam overthe age of i8 yearsand nota party to this action.
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IAIL O NLY lam readily fam iliarw ith Hale Lane Peek Dennison and H oward's practice for
collection and processing ofits outgoing m ailw ith the U nited States PostalService. Such praetice in
the ordinary course ofbusiness provides for the depositof a1loutgoing m ailwith the U nited States
PostatService on the sam e day itis collected and processed form ailing.
On M arch 7,2006,1served the foregoing REQ UEST FO R SUBSIISSION by placing a true
copy thereofin H ale Lane Peek D ennison and llow ard's outgoing m ailin a sealed envelope,addressed
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FricA.Pulver,Bsq.
Philip I1.Stillman,Esq.
F1ynn & Stillman
225 S.Arlington A vcnue,Suite A
CardiffyCA 92007
TheLaw OfticesofLogar& Pulver
224 Bermingham Dr.,Ste.l2%4
Reno,NV 8950l
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chaelJirlylm,Esq.
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M ass.StateBarNo.: 172780
7 PhilipH.Stillman,Esq.
CalifomiaStateBarNo.152861
8 p't,vxx & s'rll-uxfytx
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IN ANIIFoR THE couN'rY OF W ASHOE

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N evada Lim ited Liability Com pany,
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PlaintiO espondent
CaseN o.:C V06-00l14

Dept. No.:9
17 i
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vs.
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DENNISM ONTGOM ERY , an individual,

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19 THE M ON TGOM ER Y FA M ILY TRU ST;

D ENN IS M ON TG OM ERY and BREND A
20 M ON TG OM ERY ,mstrustees forTH E
M opk-rcloxffx y FAM II-'
F TRU ST,
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and D o Es 1 through 20
21
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Defendants/xppellaatu
DEN NIS M ONTGOM ERY ,an individual;

23 and M ONTGOM ERY FA M ILY TRU ST, a California Tnzst,
Counterclaim m ts,
24
VS.
25 eTREPPID TECHNO LO GIES, lN C.,aCalifor'niacorporation,

aka e'Freppid Techtlologies,LLC , a N evada LLC ;
26 W A RREN TREPP,an individual;
DEPA RTM ENT OF D EFEN SE ofthe
27 UN ITED STATES OF AM ERICA and D OES
l through 10,
28
Counterdefendants.
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1. N am e ofappellantfiling thiscaseappealstatem ent:
DENN IS M O NTG O M ERY ,an individual;TH E M O NTG O M ERY FA M ILY TRU ST;
3 D ENN IS M O N TG O M E RY and BR EN DA M O NT G O M ER Y, as trustees for TH E

4 M ON TG O M ER Y FA M IL Y TR IJST ;
2.ldentifythejudgeissuingthedecision,judgment,ororderappealed from:
The H onorable R obertPerry ofthe Second JudicialD ist-rictCourt-
3.ldentifyal1partiestotheproceedingsinthedistrictcourt(theuseofetaI.todenoteparties
8 isprohibited):
ETREPPID T ECH N O IIPO G IES,L.L.C.,aN evada Lim ited Liability Com pany,are the
9
.
l0 Plaintiff;
D ENN ISM O NTG OM ERY,anG dM dUaI;TH E M O N TG O M ER Y FAM ILY TR UST;
11
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D E N M S M ON TG O M ER Y and BRENDA M O N TG O M ER Y, as trustees for TH E
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11californiaTrusto aretbecounterclaimants,
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Technologies, LLC,aN evada LL C;W A RR EN TR EPP,an individual;D EPA RTM EN T O F
19
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4 ldentifya11partiesilwolvedinthisappealttbeuseofeta1.todenotepartiesisprohibited):
DENM S M O N TG O M ER Y,an individual;TH E M ON T G O M ERY FAM R Y TR UST;
'
ENN IS M O N TG O M ERY and BR EN DA M O NT G O M ER Y, as trustees for TH E
'
ONTGOM ERY FM IR Y TRUST;ad DQES 1treugh 20ywillbetheAppellant;

22
' ' ion, aka

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eTreppi
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23
eclm ologies,LLC,aNevadaLLC;W ARREN TREPP,an individual;DEPARTM ENT O17
24
EFENSE oftlze UN ITED STA TES O F AM ER IC A willbe the R espondent:
25
S setforth thenam e, law firm ,address,arld telephonenum berofa11counselon appealand
;6 dentify theparty orpartiesw hom they represent:

27
D efendangAppellantA ttorneys:
28
RONALD OGARESQ.
.
Case
Nevada8X 0303
'
ERIC A.PULVER,ESQ.
(775)786-5040
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M ichaelJ.Flynn Esq.
Myss.StateBario.:172780
Plulip H .stillm an,Esq.
califom ia State BarN o.152861
FLYNN & STILLM A N
224 Bl
.rm l
.ngham Drive,Suite 1A 4
C ardiff,CA 92007
Tel: (888)235-4279
Fax: (888)235-4279
Pro H ac F/cc
H aintiff/ltespondentA ttom eys:
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sfr. Jen.y M .snvder,ilsu.

H alet-anepeeko ennisoa and H oward
5441 Kl
'etzke Lane Second Floor
Reno N v 89511 Y
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Tel: (775)327-3000
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LA W O FFICE OF LO GAR & PULV ER,PC
225 S.Arlington A ve.,SteA
Reno,N evada 89501
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stephen J.Peek,Esq.
Ha
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5441 Kl
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Pillsbul'y W inthrop Shaw Pittm an,

L.L.P.
D avid A .Jakopin,Esq.
2475 H anoverStreet
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19
20
21
Reno,Nv 89511 , SecondFloor
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94304-1114
Te1: (6$0)233-4790
Fax: (650)233-4545
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sbuz'y w inthrop shaw Pittm an,L.L.P.
Jonatllan D .Butler,Esq.
2475 H anoverStreet
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23
'rel: (610)233-4790
Fax: (650)233-4545
24
A dditionalPal-ties:
25
CivilProcess clerk,U nited StatesA ttorney forthe D istrictofN evada;

10()w .Liberty street
Reno,N V 89501
26
27
28
'
U nited States Attorney G eneral

D epartm entofJustice
950 Pennsylvartia Avenue
w mshm
' gton, D C 20530
'
' Casel3:06-cv-00056-PMP-VPC
DonaldH .w ,14sfie1d

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Departmedt-afDefenseoftheUnited StatesofAm env '
l000 D efense Pentagon

W ashington,D C 20301-1000
6.lndicatewhetherappellantwasrepresented by appointedorretained counselin the(listrict
3 court:
4
A ppellantw asrepresented by retained counselin the D istrictCourt:
7. lndicate whetherappellantisrepresented by appointed orretained counselon appeal:
6
7
Appellantis represented by retained counselon appeal:

8. lndicate whetherappellantwasgranted leaveto proceed in fonnapauperis,and the date
8 ofentry ofthe districtcourtordergranting such leave:

.
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Appellantwas notgranted Ieave to proceed in form a pauperis

.
9. lndicatethedatetheproceedingscommencelin thedistrictcourt(e.g.,datecomplaint,
1l indictment,information,orpetitionwasfile.dl:
Complaintfl
'ledonJanuary19, 2006.
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DATEDthis/? dayofMarcha2006.
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CounselforD efendarlt/Appellant
N evada Bar# 007874
Law O fficesofLogar & Pulver,PC
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225 S.A rlington A venue,Suite A '
Reno,N V . 89501
Te1: 775-786-5040
Fax: 775-786-.
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CERTIFICATE OF SERVN Z
PtzrsuauttoNRCP 508,Icertify tbatIam an employeeoftheLAW OFFICE OF LOGAE
2 & PULVER,PC,andthaton the
*X
dayofMarch, 2006, 1sentthe above docum entthe
3 follow ing w ays:
Via: Reno/carson M essenger:
M r.Jerry M .Snyder,Esq.
H ale Lane Peek Dennison and H ow ard
5441K ietzke LanenSecond Floor
R eno,N V 89511
s
6 Vi
a: Reao/carson M essertger:
7
8
Stephen J.PeekpEsq.
Hake Lane Peek Dennison arld H ow ard
5441 K ietzke Lane,Second Floor
Reno,N V 89511
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N TH E SEC ON D JUD ICIA L D ISTR ICT CO UR T O F THE STA TE O F N EV A DA
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CaseNo.:CV06-00114
Plaintiffe espondent
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EN NIS M ON TG OM ERY ,an individual'

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FH E M ON TG OM ERY FA M ILY TRU ST;
20 EN NIS M ON TG OM ERY and BREN D A
ONTGO M ERY .astnzsteesforTH E
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23 AEN N IS M ONTG OM ERY

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24 d M ON TGOM ERY FAM ILY TRU ST,a Califontia Trust,
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26 TR-EPPID TECHN OLO GIES,IN c.,a califom ia corporation,

a e'rreppid Technologies,LLc,aN evada LLC;
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Casel3:06-cv-00056-PMP-VPC Document 644-5 Filed 05/28/08
Page 91 of 143
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N O TICE O F A PPEAL
a TO: Plaintiflle'freppidTechnologies,W arren Trepp and theizattorneysofRecord.

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N OTICE IS H EREBY G I'VEN thatD efendant,D EN NIS M ONTG OM ERY , et.al.,hereby
4 appealsto the Suprem e CourtofN evada, from the OrderRe:PRELIM INA RY IN JU NCTION Oi7
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DA TBD this
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CERT IFIC ATE O F SER S
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4 V ia: Reno/carsou M essenger:
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PLM NT IFF ETR EPPID TEC H NO LO G IES,L.L.C.'S R EPLY M EM O M ND UM O F

PO INTS O F AU TH O R ITIES IN SU PPO RT O F M O TIO N TO M o b ln 'O R DER G RA NTIN G
PR ELIM INA RY INJUN CT IO N
-
26
Pursuantto N.R.S.j 600A.070.3,Plaintiffhereby lodges the enclosed record conditionally

27
undersealandwillmakeamotionorapplicationtotheCourtforanorderpermittfnytherecordtobe
28
tiled underseal.
:'oDMATCO CSHL> ODX Sb22850l
Pagc 1 Of l0

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Pursuantto Rule 7(b)ofthe Nevada Rules ofCivilProcedure,LocalRule l2 forthe above-
2 entitled Court,and the Iegalauthoriticscitcd herein,e-l'reppidTechnologies,L.L.C.(te-l-reppid''orthe

3 ttcompany'')hereby subm itsitsReply in SttpportofitsM otion to M odify OrderGranting Preliminary
4 lnjunction (theEiMotion''),torebuttheOpposition filedbyDennisMontgomery(ttMontgomery''),the

5 M ontgomery Family Trust(the it-l-rust''or ttM ontgomery R'n,st''),and Montgomery and Brenda
6 M ontgomery asTrusteesfortheTrust(collectively,theitDefendants*').
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1.
INTRODUCTION.
Defendants use their Opposition as a soapbox from which to express fm stration at the
9 Preliminary rnjunction Orller(the t:Order''),which preveatsthem from using the Source Code and
10 relatedteclmologiesthatM ontgomerystolefrom e'
Freppid(thedtsourceCodea')
.
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Rather than addressing the Court's findings in the Order and e'
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access to the Source Code,e'rreppid m ay be forced to forego entering into valuable contracts for the
use and the sale of the technology
...
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Thatis notto say thatDefendantmay ormay nothave a
i)k ;t$ 16 substantialcounterclaim.'Ofder,at2:19-23.Accordingly,theCourthasalreadyfound thate-l-reppid

4
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18 and thatthe issueofany potential substantialcounterclaim isnotrelevantto the O rder. 1d.

19
II.
D EFENDANTS'O PPOSITION A DVANCES IM PROPER AND M ISPLACED A RGIJMENTS.
20
1.
Defendants m ake m isplaced or procedurally im proper araum ents.
21
M any of D efendants'argum ents are im proper. For exam ple,Defendants recite-the-predicate
22 stepsforissuingapreliminaryinjunction,inanapparentattempttoopposeanOrderwhichhasalready
23 been entered. See Opposition, at 4:2-8. This recitation ignores that e'
rreppid has already
24
dem onstrated both a likelihood of success on the m erits and a reasonable probability of irreparable
25 harm . Order,at2:l1,2:14-15. W hetherthis argum entis intended as an opposition to oran appealof
26 theOrderstheargumentisimproperinthecontextoftlaesubjectM otionandshouldbeignored. .
27
D efendantsalso ciaim thatthe O rderexceedsthe scope ofevidence presented atthe underlying
28 evidentiary hearing on February 7,2006. O pposition,at 3:24-26. H ow ever,D efeffdants fai!to cite
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2
as itappears to im properly appealthe Order. Likew iseaD efendantsclaim thate'Freppid failed to plead
its lrade secrets claim w ith sufficicnt speciticity. O pposition, at 2:27-3:2, 4:l9-26. As ueith the
im propcr opposition to or appealof the Ordcr, this argum ent is m isplaced in the context of this
M otion'
,D efendants had the opportunity to fnake this argum entin responsive pleadings to e'
l-reppid's
6 Complaint. Finally,Defelldants'allusion to a tcoercerdj''settlement is misplaced. Opposition,at
7 3:26-27. Asevidenced by theCourt'sfindingsand itspreliminary injunction order(which appear,

8 respectively,in theOrderat1:21-3:5and at3:6-l5),e-l'reppid islikelyjucceed on themerits.
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10
Defendants recycle oId aruum ents withoutanv evidentiary support.
ln addition to asserting improperarguments, D efendants also repeat several argurnents -
11 withoutany evidentiary support thatwerealready deemed unpersuasive. Forexample,Defendants

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Freppid's proposed modifications because the currcnf Order prevents Defendants from
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l-reppid Source Code''- including
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18 exception ofuses forthis case). Thus,in lightof the Order's currentrestrictions,Defendants are
19
20
already barred from earning a living using e'rreppid's Source Code and technology.
Further, the generalized right to work derives from the Fourteenth Am endm ent. Truax v.
21 Raich,239U.S.33,41(1915).
,seealsoSagana v.Tenorio,384F.3d731,742-743(9thC-ir.2.004). If,
22 by reference to the Thirteenth Am endm ent, Defendants are attem pting to portray M ontgom ery's
23
situation as com parable to slavery or involuntary servitude, that characterization is outrageous.
24
A ssum ing,however,thatD efendants are m erely unfam iliarw ith Constitutional law , the argulnent is
25 stillm isplaced. e'

rreppid is nottrying to preventM ontgom ery from earning a living;rather,e-rreppid
26
is seeking to preventDefendants from using or destroying Com pany property thatM ontgom ery took
27 w ithoutpenuission orright,and to regain possession ofthatproperty.

28
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Page 3 of10

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Defendants also try to frustrate any adjudication of the parties' dispute by invoking
M ontgom ery's purported ttsecrecy oalh.'' Opposition,at7:3-15. Citing tlpc NationalEspionage A ct,
3 l8U.S.C.j793(d),Defendantsclaim thatthisCourtcannotadjudicatetheparties'disputebutthat,
4
due to a so-called 'tsecrecy oath,''M ontgonlery cannotprovide any evidence to support this clainl.
5 Defendantsraisedthis4secrecyoath'issueatthepreliminaryinjunctionhearing,buttodatetheyhave
6
presented no evidence - otherthan M ontgom ery'soraltestim ony - as to the existence orterm s ofany
7 such oath. 'rranscriptofProceedings,Hearing - Prelim inary lnjunction (ItPlTranscript''),Vol.ll,at

8 l66:7-l67:3 (D.M ontgomery testimony). Therefore,theCourtshoul'
d ignorethisbaselessargument.
9
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3.
10
D efendants,intellectualproperty aruum entsare extraneous to this M otion.
Defendantsattemptto divertthe Court'sattention by re-asserting theircopyrightallegations
ll and by claiming thatthe courtlackssubject-matterjurisdiction to modify theOrder. Opposition,at
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' 12 5:l1 l5. The Order currently applies to tcom ptlter source code...allegedly belonging to Plaintiff
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u ?: 14 dispated SourceCode- including thoseportionsthatDefendants claim to own. The Orderalso takes
Q a zatx'l - 15 D erendants'ownership claim s into consideration. Orderaat2:
22-23. Defendantshaveassertedtheir
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at
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18 in this action on February l7,2006 (the Defendants Answer). Accordingly,those claims are
19 immaterialtothesubjectM otion.
20
A lthough Defendants also referto theipurported dtrade secrets and intellectualpropertyy'itks
21 unclear to w hich trade secrets they refer. Opposition, at 8:12. Defendants haverecycled this
22 argum ent from those m ade at the evidentiary hearing which led to entry of the O rder, w ithout
23
explaining how itchangesthe Court's findings.
24
111. THE PROPOSED M ODIFICATIONS C LARIFY THE SCOPE OF THE O RDER.
25
Contrary to D efendants'assertions,the m oditications proposed by e'l-reppid w ould clarify the
26 O rderin a m arm erconsistentw ith the Court'sfindings. Forexam ple,the M otion requests the Courlto
27 am end the Order to explicitly state that it applies to the M ontgom ery Tnzst. This request does not
28 change the substance of the Order, which currently applies to the M ontgom ery Titljt; it applies to
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Page4 Of10

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c concert or participation therewith...'' O rder, at
2
3:6-7. D efendants'own allegations supportthc conclusiollthatthe Trustis an entity ''in active concert
3 orparticipation''with Montgomery;Defendantsattempttojustify Montgomery'sactionsby arguing

'
4 thatthe Trustowns the Source Code sqlu.

t,
.gu.
aDefendants'Answer,at7:I7-l9. Accordingly,the
5 Orderas m oditied w ould explicitly state itsapplicability vis--vis theTrust.
6
7
D efendants broadly claim that the Order is fatally vague and that e'
Freppid's proposed
m odifieations would com pound this vagueness. Opposition,at 3:l2-13. According to Defendants,
8 this vagueness contrasts w ith the specificity found in the parties'Contribution A greem ent,w hereby
9
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M ontgom ery-and the Trustcontributed certain compression technology to e'

Treppid. Opposition, at
10 3:15-21 However,thisisjustanotherrecycled argumentthatthe Courtrejected by finding that

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14 Opposition- at4:9-12.However,thisargumentlacksmerit.Thefirstallegedlyvagueterm (txincluding

n o zX xo - 15 withoutlimitation'')isself-explanatory. The secondterm (tused moditied orcreated ate'l-reppiti')
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m erely clarifies thatallofe'

Treppid's Source Code is included w ithin the O rder.s intended scope -
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17 basedontestimonythatcertain SourceCodewas'iusedv''thatotherSourceCodewas'lrriodified,''und
18 thatstillotherSource Codewascreated atand forc'

Treppid. See.e.c.,P1Transcript,Vol.1,at27:5-
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l9 18,28:7-19,102:24-103:5 (S.Venablestestimony). Likewise,the third term ('used in connection

20 with ordeployed by e'l-reppid in perform ance ofgovernm entcontracts'')is notvague,since even the
2l Court found that M ontgom ery consented to e'Freppid's contracts w ith the U .S. Govem m ent. PI
22 Transcript, Vol. Il, at 199:16-21. Further, this Court prem ised its O rder on M ontgom ery's
23 acquiescencetoandactiveparticipationincontractualagreementsentered intobyE'Freppid(sic)with
24 third-pal-tiesinvolving the Source Code and technology atissue.'' O rder,at2:9-ll.
25
D efendants also now feign ignorance as to the m eaning of the term s tpattern recognitiony'
26 Kanomaly detection,'and iobjecttracking.' Opposition,at7:25-26. StrangethatDefendantsshould

27 not understand those term s after M ontgom ery and his counsel discussed them at length at the
28
evidentiary hearing,apparently w ithoutany confusion as to their m eanin

'g. P1 Traltiiipt,Vol.1I,at
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l 125El5-l7 ('tztnornaly detection is Iooking foranything outofthe normal,and pattem recognition is
2 specitically looking for pattenls in things''), l58:l0-l59:l (re:objecttracking) (D.Montgomery

3 testimony). Theseterms arenotvague orconftlsing,and Defendants'new-found ignorance ismerely
4
anotherattem ptto forestallthe inevitable recovcry by e'

l-reppid ofitsproprietary Source Code.
Defendants obfuscate by claim ing thatt'no one ate'

Treppid w as involved in using or creating
any ofthe softw are e'l-reppid referred to.'' Opposition,at3:l3-14. The record from the evidentiary
hearing flatly contradicts this statem ent -- including testim ony by D r. Sun and by M ontgom ery
8 himself.See,e.q.,PlTranscript,Vol.1,atl85:20-l86:20(Z.Suntestimonyl'
,PITranscript,Vol.Il,at
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9 138:10-20 (D.M ontgomery testimony). Accordingly,Defendants cannot seriously dispute that

10 e'
rreppid employeesotherthan M ontgomery used, created,and developed the SourceCode.
ll
D efendants also m ischaracterize testim ony from the evidentiary hearing, asserting that
1 8:
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Treppidtpresentedevidence...thatitallegedlyhasover80% ofwhal'
/(sic)definesasthee'Freppid
irl* 13 SoarceCode...>' Opposition,at7:22-23. Mr.Venablestestified,however,that1:80percentarenot
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1.) (; 15 Likewise,Defendantsassertthate'rreppidhas'tnocurrentcontractswiththegovemment,''whichMr.
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k ;r$ 16 Trepp s testimony flatly cohtradicts. Opposition, at 7:23 (emphasis in origirtall; compare Pl
d
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lV. THE PRELIMINARY INJUNCTION ISNOT A NON-COMPETITION COVENANT.
19
ContrarytoDefendants'characterizationoftheOrderasanon-competitioncovenant,e'rreppkd
20 has only requested injunctive reliefthat (i) compels the return ofCompany property thatwas
21 wrongfully taken by M ontgom ery and (ii)precludes Defendants from'im properly disseminating or
22 destroying thatproperty and e'rreppid'stradesecrets.First,Defendantsclaim thattheOrderprecludes
23 M ontgom ery ttfrom creating any type ofsoftware thathas no com m onality w ith any technology used
24 by e'
l-reppid otherthan being in the sam e generalfield.'' O pposition,at4:20-21. Second,Defendants
25 claim that the Order acts as an im plied covenantnotttkcompete. Oppositicm ,at6:2-26. Defendants
26
am plify this claim by pointing out that the non-com pete clause in e-rreppid's 2001 Operating
27 A greem entonly applied to M ontgom ery during his em ploym entate'Freppid. Opposition,at6:22-23.
28
H owever,these assertions ignore a fundam entalpurpose ofthe Order,w hich isto pr-e-v'
entDefendants
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froru tlsing ordestroying Com pany property;Defendants arc frec to em bark on any ncw undertakings,
in Reno orclsewhere so long asthey don'tuse e'I'reppid's proprietary Source Codc,trade secrets and
3 related technologies(incltrding thatwhichDerendantsclaim toown).

4
V.
T HE BALANCF-OFH ARDSHIPS FAVORS ET REPPID'S REQUESTED INJUNCTIVE R ELIEI?.
1.
e-rreppid's requested m odifications Inaintain thestahts t'

.
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Contrary to D efendants' characterization of the proposed m oditications as attem pting to
7 ttaffirmatively transferllrights''(Opposition,at2:l3),e'
Freppid'sproposed modificationsrequestthe
8 Courtto explicitlydefinethescopeofitsOrderforprohlbitory(notmandatory)injunctiverelief.Tile
*
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9 partiesagreethatapreliminaryinjunction isdesignedtomaintain thestatusquobetweentheparties

10 pending resolution oftheirdispute A s properly used in this context, status quo m eans 'the Iast
.
.
11 uncontested status which preceded the pending controversy '' Golo.com ,Inc.v.WaltD isney Co.,202
.
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; 12 F.3(ll199,1210(9thCir.2000)(statusquoexistedbeforedefendantbegan using allegedlyinfringing
crm
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= l3 logo)(citationsomittedl;jee also D om inion Video Satellite,Inc.v.Echostar Satellite Corp.,269 F.3d
Y
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? 14 l149 l155 (10th cir.2001). p'urtlaer,theparty againstwhom preliminary injunction would enter
>aA1
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,
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,Sigtlo treatsuch a new status quo as the relationship which an
.-1
7 17 injuactionshouldnotdisturbwould unilaterallyempowerthepartyopposingtheinjunctionto imjose
av
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18 aheightened burden on thepartyseekingtheinjunction. Domlnion Vldeo Satelllte,supra,269F.3d

19
at l155. A s betw een e'

Freppid and M ontgom ery,the lastuncontested status quo w s when e'rreppid
20
had possession of its Source Code,before M pntgom ery took a RAID storage device containing the
21 sole rem aining com plete copy of the Source Code and deleted a11 other copies. Accordingly, by
22 ordering M ontgom ery to retum the Source Code to e'Freppid,the Courtw ould m aintain thestatus quo
23
thatexisted priorto thisdispute.
24
2.
Defendantsm ischaracterizethe M otion asrequestin: m andatory iniunctiverelief.
25
A s explained above,e'l-reppid's proposed m odificationsw ould m erely clarify the scope of the
26 O rder's prohibitory relief. Defendants attem pt,how ever,to m ischaracterize the M otion as a request
27 formandatory injunctive relief,which would entaila stricterscrutiny by the Court. Opposition,at
28 2:22-27. Tosupportthisconclusion,Defendantscitecasesthatdiscussmandatory inju-nctivereliefin

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l anemploymentcontext.5.
..Stanley vz.Univ.ofso.Ca/.,13F.3c1l3l3,1320(9thCir.1994)(relating
2 to forcing employer to hire one particularpersonl'
,Anderson v.UniteclStales,6l2 F.2d l1l2, l1:4
3 (9th Cir.l979)(same). Howcver,e'

Treppid hasnotsoughtthetypeofreliefrequested inthosecases
4 (i.e.,forcing acompany orperson to enteracontract). Rather,e-fqreppid seeksto maintain thestatus
5
quo that existed before the currentdispute. Nonetheless,even if D efendants' characterization w ere
accurate,the relevantstandardsdictate thate-l-reppid isentitled to possession ofitsSource Code.
This Courthas the authority to ordermandatory injunctive reliefwhen lfthe factsand law
8 clearly favorthemoving party.'' Stanley,supra,l3F.3d at1320. Fufther,amandatory injunction

*
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9 may issue if''extreme orvery seriousdamage willresult''and tlthe injury complained ofis (not)
10 capable of compensation in damages'' Anderson,supra,6l2 F.2d at lll5 (citations omitted).
.
ll Finally, Nevadal
aw providesthatttlajpreliminaryinjunction maybemodified atanytimewhenever
'U n,
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d 12 theendsofjusticerequiresuchaction,,Hansen r.Edwards,83 Nev.189,193(1967).
.
9
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e-freppid faces serious harm so Iong as M ontgom ery is allowed to hold its Source Code
oe.c
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C)1 1 14 hostage AsrecognizedbythisCourt,t6gtjherecordreflectstheSourceCodeisessentialtotheday-to1

.
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day business operations ofBTreppid, as evidenced by the testim ony ofDr.Sun.'' O rder,at 2:15-17.
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17 tlwlithoutaccessto the SourceCode E'

Freppid (sic)maybe forced to forego entering into valua
-ble
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18 contractsforthe use and saleofsaid technology.,, Order,at2:19-21. W orse still,e'rreppid,sinability
19 to deliver on its contractual obligations could erode its custom er base and,ultim ately,lead to the
20 Company'sfailure. Seee.z.,PITranscript,Vol.Il,at17:l3-l8:5(W .Trepp testim ony). M ontgomery

21
hms brougahte'l-reppid's operationsto a crashing haltand,ifthe Courtdobs notcom pelM ontgom ery to
22
retur;ltheSourceCode,e'Treppidm aynotsurvivetheduration ofthislitigation.
23
lt is w ell-recognized that such potentialharm constitutes sufficient grounds for m andatory
24 injunctive relief, were the Court to consider the proposed modification as such. Stuhlbarg
25 InlernationalSales Co.,Inc.v.John D.Brush and Co.,Inco240 F.3d 832 (9th Cir.2000),see also
26 Memoty Gardensofl-as Vegas,Inc.v.PetPonderosaMemorialGardens,Inc.,88Nev.1,4 (1972)

27 (courtordered lessorto restoreirrigation to lessee'sland becauseK<gujnlessthewaterwasrestorcd to
28 theland itwould 1iebarren andtheinjuryto therespondent...wouldcontinue').iccordingly,in an
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1 actitln for declaratpry relief thatplaintiffs tradem arks did not infringe defendant's tradem alks, the
2 Stuhlbatg Courtupheld apreliminaryinjunction wherebydefendantwasenjoiied from hinderingthe

3
im portation of plaintiff's safes and ordered to provide Custom s w ith w ritten consent to such
4 importation. The Courtreasoned that(l)plaintiffshowed a likelihood thatdefendant'smark was
5 subjectto cancellation as generic (.c.,Iikclihood ofsuccess on the merits),and (2)''withoutthe

6 injanction,gplaintiffjstoodto loseitsnewfound customersarld accompanyinggoodwilland revenue.
7
Evidence ofthreatened Ioss ofprospective custom ers orgoodwillcertainly supports a finding of the
8 possibilityofirreparableharm.''.JJ.at4l.
*
Finally,D efendants claim thatthe Courtcannotorderthem to retunzthe Source Code because
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.
and hiscounsclunderstood al1ot-therelevantterms althcevidentiary hearing. &e

..
qSection111,l.nfra.
.
Likewise,itdefies reason thatM ontgomery - an e-freppid founder,its former ChiefTechnology

Ofticer,and a self-professed expertin his field - does notunderstand to w hatSource Code the O rder
1 g
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.
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Finally, even if M ontgom ery has generated his own Ttclean'' source code since his
term ination,he isbestqualified to separate outsuch new m aterials from e'

l-reppid's Source Code.
6 t!g1
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VI. CONCLUSION.
Fortheforegoingreasons,theCourtshouldamendtheOrderasrequested.
tG
Dated:M arch 7,2006.
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NevadaBarNumber 1758
Jen'y M .Snyder,Esqure
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H ale Lane Peek D ennison and H ow ard
23
5441 K ietzke LanepSecond Floor

Reno,N evada 89511
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AttorneysforPlaintffeTreppid Technologies,L.L.C.
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775-327-3000(te1.),775-786-6179(fax)
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lam em ployed in the City ofReno,CotLnty ofW ashoe,State ofN evada by the law offices of
H ale Lane Peek D ennison and How ard. M y btlsiness address is 544l K ietzke Lane,Second Floor,
Reno,Nevada 895l1. Iam overthe age orl8 yearsand notaparty to this action.
M A IL O NLY Iam readily fam iliarw ith ilale Lane Peek D ennison and H ow ard's practice for
collection and processing ofits outgoing m ailw th the United States Posta)Servce. Such practice in
the ordinary course ofbusiness provides for the depositofaIloutgoing m ailw ith the U nited States
PostalService on the sam e day itiscollected and processed form aiiing.
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On M arch 7. 2006. 1 served the foregoing PLAINTIFF ETR EPPID TE CH N OLO G IES,
L.L.C.'S REPLY M EM O R AND UM O l7 PO INTS AN D A UTH O RITIES IN SUPPO RT O F
M O TIO N T* M O DIFY O R DER G R A NT IN G PRELIM INA RY INJUN CTIO N by placing a true
copy thereofin Hale Lane Peek D erm ison and H oward'soutgoing m aiiin a sealed envelope,addressed
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A PPLICATIO N FO R SETTING
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MATTER TO BE HEARD:Trial
Date ofApplication :3/2/06
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COUNSEL FOR PLAINTIFF:J. stenhen Peek.Esn.& Jerw M .Snvder,Esn.ofHale Lane Peek
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DENNISM ONTGOM ERY,anindividual;

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T0 Tffr COUN TERDEH NDA NT: DTJ'

.ZIAFATFN F 0F DEH NSE OF FN f UN ITED
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Y0U M d1zT BEEN SUED . THE (JO L/AT M 4FOF L'
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NFORM ATION BELO W FAA F t7.4WfF CV ZE
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A Civilcomplaintorpetition hmsbeen ftled by the Cotmterclaimantagaiustyou for the reliefas
26 setforth in that document(see counterclaim on file). When service is by publication, add a brief
27 statementoftheobjectoftheactiom SeeRulesofCivilProcedtu'
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ltereliefdemandedinthecomplaint.
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Dated this21S'day ofFebrtzary.2006

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JIJD ISTA YODER, being first duly sworn deposes and says :
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UMMONS; ANSWER AND FIRST AMENDED COMPLAINT AND FIRST AMENDED COUNTERCLAIM FOR:
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and on Feb 23 2006 11 :20AM
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on JOAN SILVERSHIELD OF THE OFFICE OF DANIEL BOGDEN, UNITED STATES ATTORNEY,

DISTRICT OF NEVADA, AUTHORIZED TO ACCEPT ACCEPTED ON HIS BEHALF FOR THE
DEPARTMENT OF DEFENSE OF THE UNITED STATES OF AMERICA
i00 W . LIBERTY ST - STE. 600

RENO , NV
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Affiant does hereby affirm upder penalty of perjury that
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A ttorneys forDefendantD EN NIS M ONTG OM ERY

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IN TH E SEC O ND JUD ICIAL D IST R ICT C O URT O F TH E STAT E O F N EVA D A

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IN AN D FO R TH E CO U NTY O F W A SH O E
13
ETREPPID TECHN O LOG IES,L.L.C.,a

14 N evadaLim ited Liability Com pany,
15
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CaseN o.:CV06-00114
Dept.N o.:9
Plaintiff,
vs.
17 D EN NIS M O NTG OM ERY an individual'

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AFFID AVIT O F M AILIN G
THEMONTGOMERY FAQILY TRUST'

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18 DEN NIS M O NTGO M ERY and B REND A
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19 M ON TGO M ERY FA M ILY TRU ST;
and D OES 1through 20,
20
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21
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AFFIDAVIT O F LEZLIE M .LUCAS
L EG A L A SSISTAN T T O T H E
LA W O FFIC E O F LO G AR & PULV EROPC
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1,LezlieM .Lucms,being firstdulysworn atlaw and underpenalty ofperjuly do hereby
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3 and correspondence prepared by this office and filed w ith thc court,are properly served upon the
4 adverse pal'
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1,Lezlie M .Lucasdeclare.Iam an em ployee in the City ofReno,County ofW ashoe,State
6 ofN evada,ofthe LA W O FFICE O i2LOG A R & PU LVER,PC,w ith thebusinessaddressat225 S.

7 A rlington Avenue,Suite A ,Reno,N V 89501. Iam overthe ageof 18 years old and nota party to
g thisaction,and thaton the22nd day ofFebruary,2006,lsent,viaU S Certified M ail,Rettzrn Receipt
9 Requestkdthefollowingdocuments:
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Surnm onsin a CivilAction;
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Answ erand FirstAm ended Com plaintand FirstA m ended Counterclaim for
2.
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To the Following G overnm entA gencies:
14
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D eclaratory Judgm ent

Accounting
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15
CivilProcessClerk,U nited StatesA ttom ey forthe D istrictofN evada.

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l00 W .Liberty Street
Reno,N V 89501
16
b.
17
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Uaited StatesAttom ey General

D epartm entofJustice
950 Perm sylvania A venue
W ashington,DC 20530
D onald H .Rum sfield

D epartm entofD efense ofthe U nited StatesofAm erica
1000 D efense Pentagon
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Le A ssistantto the
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Law OfficeofLogar& Pulver,PC

24 SIGN ED AN D SW O RN TO O R A FFIRM ED
before m ethis3rdday ofM arch,2006,
25 by LezlieM .Lucas.
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PursuanttoNRCP 5(b),Icertify that1am an employeeoftheLAW OFFICE OF LOGAR
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4 the foregoing docum ent,addressed to:
5
6 V ia:Reno/carson M essenger:
7
M ryJerry M .Snyder,Esq.
Hale Lane Peek Dennison and How ard
5441 Kietzke Larte,Second Floor
Reno,N V 89511
V ia:Reno/carson M essenger:
9
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Stephen J.Peek,Esq.
HaleLyne Peek Dennison and Howard
5441K letzke Lane, Second Floor

Reno,N V 89511
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2475 H anoverStreet
Palo A lto,CA 94304-1114
14 U S RegularM ail:

Jonathan D .Butler,Esq.
2475 H anoverStreet
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Cmse N o.:CV 06-00114

Dept.N o.:9
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D EN NIS M ON TG OM ERY an individual;
21 THEM ONTGOM ERY FAVJLY TRUST'

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DENNISMONTGOMERY andBRENW
M ON TGOM ERY ,astnzstees for'

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Defendants.
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'fheLaw Oo ceoff.ogar& Pulver, APC,filed D ermisM' ontgom ery,sM otion to D isrniss

FirstAmendedComplaintforLackofSubjectMatterJurisdictionfilodonFebruary9,2006.The
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4
Thetm dersigned attorney eertifies thata copy ofthisrequesthasbeen served to allparties
5 ofrecord.
DAI-EDthisX dayofsfarch,2006.
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Ronald J. ogar,Esq.
A ttorney forDerm isM ontgom ery
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PaloAlto,CA 94304-1114
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12
IN T H E SECO ND JU DIC TAT,D ISTR ICT C O UR T O F TH E STATE O F NEVAD A

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IN A N D FO R TH E C O IJN TY O F W ASH O E
14
15 ETREPPID TECHNO LOG IES,L.L.C .,a

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Plaintiff,
CmseN o.:CV06-00l14
D ept.N o.:9
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VS.
18
D EN NIS M O NTGOM ERY ,an individual;

19 THE M ON TG OM ERY FAM ILY TRU ST;
DEN NIS M ON TGOM ERY and BREN DA
20 M O NTGOM ERY ,as tnzstees forTH E
M O NTGOM ERY FA M ILY TRU ST;
21 and DO ES 1 through 20,
22
D efendr ts.
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23
24
25
26
DEFEN DA NT 'S R EPLY IN SUPPO R T O F M O TIO N T O D ISM ISS FIR ST AM END ED

CO M PLA INT FO R LA C K O F SU BJECT M A TTER JUR ISDICTIO N ;
'
CO M ES N OW ,D efendant,D ennis M ontgom ery by and through the Law Office ofLogar
& Pulver,PC,and hereby replies in supportofhism otion to dism isstheFirstA m ended Com plaint
27
ptlrsuanttoNev.R.Civ.P.12*)forlackofsubjectmatterjurisdiction,which isbaseduponthe
28
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l follow ing M em orandum fPointsand A uthorities,thepleadings,and the tile in this action.
Datedthisz$ dayofMarch,2006.
3
4
Ronald J.Log ESQ.
Attorney forDefendant,D ennis M ontgom ery
7
8
9
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J,ACK O F SUBJECT M ATTER JUIUSDICTION

2
IN TR O DUCT IO N
Theentirethnlstoftheplaintiffs'oppositiontotheM otiontoDismissforLackofSubject
5 M at
ler Jurisdiction appears to be that e'
l-reppid is alleging that M r. M ontgom ery som ehow
6 %tm isappropriated''an am orphous t'e-l-reppid Source Code''which no one could detine during a
7 tw elvelzourevidentiary hearing.i Althouglae'Treppid personneltestified thata1lofthesourcecode
8 pertaining to anything otherthan M r.M ontgom ery'stop secretm ilitary work rem ainsate'
rreppid,
9 e'
l-reppid now appearsforthefirsttim eto contend thatM r.M ontgom ely actually took m orethan his
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10 ow n softw are. ltisprecisely forthisreason thatcourtsrequirespecificity in pleading tradesecrets.

ll The factrem ains thatduring a twelve hour hearing,notonce did e'rreppid contend thattlze case
12 involved any sourcecodeotherthanthespecificpattem recognition and anom aly detection soware
13 designed by M r.M ontgom ery. Ifitistrue thate'rreppid now contendsthatthetradesecrets case is
14 notaboutthe anom alydetection and pattern recognition software created by M r.M ontgom el'y,then
15 those issues should be clearly abandoned in thiscase. Butto the extentthate'rreppid continuesto
16 contend thatNfr.M entgom ely h.
as no ownership interestin the 'anom aly detection and pattem
17 recognition''soRw are,thatclaim ispreem pted by the CopyrightA ct.M oreover,ife'rreppid isonly
18 contending thatM r.M ontgom ely actuallytookttdatacom pression''technologythathasspecifically
19 beencontributedtoeTreppid,thene'
Freppidmustamendthepreliminaryinjunctiontoreflectthat
20 new contention.
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. .
H owever,notonly is this Courtnotconstrained by e-rreppid's artfulpleading around the
22 CopyrightA ctasw asthefederalcourtin deciding a m ption to rem and,butas isnow clearfrom the
23 twelvehourevidentiaryhearing on e'rreppid'sapplication forapreliminary irt

junctionthatthe
24 entirety ofthq case ispredicated,notupon som e ttother''e'
rreppid Source Code,butthe specitic
25 program thatthe U .S.Governm entseeks to tlse i!zconnection w it,
h nationalsecurity issues- the
:6 softw yreowned by M r.M ontgom ery,note'rreppid.Since theresolution ofth2 precise issueturns
27
28
' 'rheplaintiffs'portion oftbeOpposition dealing with M r. M ontgom ely'scotm terclaim shasbeen

w ithdrawn bye'rreppid alldoonftrm ed inw ri'
tingby M r. M ontgom ezy'scounsel.
-
3-
w)
-.p.
l upon thisCourt'sinterpretationoftheCopyrightA ctofl976,andm orespecifically,therequirem ent

2 thatany transfer ofownership of copyrightbe in w riting and the determ ination ofw hether M r.
3 M ontgom ery had created theworksatissuein thislitigation asattwork forhire''undertheCopyright
4 A ct,the claim sare preem pted.
lftheCourtdetcrminesthat(1)thereisnowritingtransferringtheteclmologyatissue,which
6 isundisputed,and(2)theworkseitherwere(a)derivativeworksor(b)notttworksforhire,''then
7 e-rreppid hasno case. Itcannotuse the lp ise ofa iibreach offiducia:'
y duty''elaim ,a declaratory
8 judgmentclaim,oratortiousinterference claim to bootstrap ownership ofM r.Montgomery's
9 teclmolkgyinexpressderogationoftheCopyrightActofl976. Sincethegravamen ofthiscase

10 m ustbe decided undertheCopyrightActofl976,e'
rreppid's claim sare speciically preem pted by
1l 17U.S.C.j301andthisCouztlackssubjectmatterjurisdiction.
12
A RG UM ENT
13
1.
14
TH E C O URT LAC K S SUBJECT M A TT ER JU R ISD ICTIO N O V ER ALL C LAIM S
15
O TH ER TH AN BR EA CH O F C O N TR A CT
16
A lthougyh e'rreppid isvaliatztly attem pting to plead around the federalquestion ofw bo olkns
17 the technology atissue in this lawsuit,tlle attem ptism erely artfulpleading thatm ustbe pierced.
lg Underlyingeachcatuseofactionisthefundamentaiquestion:(1)whatexactlyisthee'
rreppidSource
19 Codeand(2)whetherthesubjectsourcecodeisaderivativeworkownedbyMr.M ontgomely (or

20 theM ontgomel'yFamilyTrustl.lfMr.M ontgomer.
y(osthe.
-l-nust)ownsthesourcecodeatissur,
z1 no am ountofartfulstate 1aw claim scan give e'rreppid a rightto exploitthatteclm ology w ithout
'
22 com plying w ith the CopyrightA ctof1976.

23
For exam ple, although e'rreppid now claim s that t<all'' of its softw are has been
24 m isappropriated,a1lofe'Freppid'sw itnesses testilied thatatleast8O% ofthe source code w as on

25 e'Treppid's com puters and that>other tlzan the governm entcontractthatused M r.M ontgom ery's
26 teclm ology,e'
Treppid had 21source codes. Etreppid hasnotidentified w hatsource codehmsbeen
27 m isappropriated.lfh& .M ontgom eryownsthesourcecodetowhatwillbereferredtoforsimplicity

28 hereastpatterrlrecgaitionand anom aly detection,''then he cannotttm isappropriate''it. AvtecSys.
4-
k
.
m4
,- .
l v.Pezer,2lF.3d 568(4'hCir.1994),holdingthatthecompanycouldnothaveastateIaw trade

2 secretclaim when the com pany did notown the copyrights. Since each cause ofaction hasasits
3 gravam en thate'Freppid,notM ontgom ery,ownsthe softw are,theCopyrightA ctisdirectly atissue.
4 Copyright preem ption is both explicitand broad.'' G.S. Rasm tlssen t: Assoc. v.K alitta Flying
5 Service,958F.2d896,904(9thCir.1992),ccr/.denied,l24L.Ed.2(1678,l13S.Ct.2927(1993).
6 A.
The Trade Secrets Claim IsPreem nted.
Etreppid is now apparently expanding its trade secretclaim to al1sorts ofother softw are
8 having nothing to do with the specitic teclm ology used by M r.M ontgom ery to perfonn a lim ited
f? Govemzentcontract. M r.Montgomerydoesnotdisputetllatthedatacompressiontechnologyon
10 CD N o. l w as contributed to e'
Treppid,and if e'
l-reppid is now lim iting its claim to an alleged
1l m isappropriation ofdata com pression teclm ology,this claim w ould notbe preem pted.
12
However,to theexteutthate-rreppid contendsthatitow nsthePatterflRecognitiorl/A nom aly
13 D etection Soware thathasotherwise been atissue in this case,this Courtm ustfirstdeterm inethe
14 fundam entalissuespursuantto the CopyrightAct,f.c.,isM r.M ontgom ery'ssoftw are owned byhim
15 ora derivativew ork prepared by llim ,and doeshe therefore havetherightto exploititin any w ay
l6' hechooses.Assetfol'th in M r.M ontgomery'sM emorandum ,onecannotttm isappropriate''what
17 oneowns.Thus,in AvtecI1,38U.S.P.Q.ZD (BNA)1922(4*Cir.1995),thecourtreaffinnedthat

1g principleconcisely,stating EtAsw eheld inWv/ccf,onecannotbeguilty ofm isappropriating hisown
19 property;so long asPeifferisthe ow nerofthecopyrightin theoriginalversion ofthe Program and
2: in itsderivatives,including the2.05 versien,hecannotbeg.

uilty-ofmisappropriating them .Basezd
21 on ourholding thatPeifferisindeed the om zerofthe copyrightin the Program ,we therefore aflirm
:
22 (thedismissalofthetradesecretclaimj.'''
23
As acknowledged by e'rreppid in its Opposition,a state cornm on Iaw orstattztory claim is
24 preemptedbySection301if::4(1)theworkiswithinthescopeofthe'subjectmatterofcopyright' 25 asspecitiedinl7U.S.C.j102and103'
,and(2)therightsgrantedunderstate1aw areequivalentto
g6 any exclusiverightsw ithin thesoope offederalcopyrightassetoutin 17 U .S.C .106.3:D eIM adera
2-/ Propertiesv.RhodesandGardner,Inc.,82OF.2d973,977(9tbCir.l987).Theiirstelementis
a,
yI
'seem ingly notcapableofreasonabledispute- clearly the softw areatissue iswithin thescope ofthe
I
'
5-

'
t.
- .)
-.yb
1 ttsubjectmatterofcopyright.''Evenuncopyrightableideasthatarepartofcopyrightedworkscome
2 withinthesubjectmatterofcopyright.Firoozyev.EarthlinkNetwork,l53F.Supp.2d 1l15,1129
3 (N.D.CaI.2001).
4
The second elem entis also m et. U ndere'

I-reppid's theory ofm isappropriation,the rights
s granted to e'
l-reppid by m eansofthe trade secretclaim are identicalto the exclusive rightsto
rranted
6 to a copyrightholder. Section 106 ofthe CopyrightActgrantsto thecopyrightownertheexclusive
7 rightsto:(i)reproducethecopyrightedwork'
,(ii)preparederivativeworks'
,(iii)distributecopiesof
8 tlle work;(iv)perfonn thework publicly;and (v)display thework publicly.l7 U.S.C. 106.

v Etreppi4 contends thatonly itcan distribute copiesofthework,useitpublicly ro prepare other
10 works from it. Itis a classic example ofenforcem entofrightsm anted by j l06 and therefore
ll preem pted.
12 B .
TheConversion Claim lsPreem pted.
13
Etreppid'sthirdcauseofaction isforconversion,allegingthatM r.M ontgom ery ttconverted''
14 the m ysteriotks terfreppid Source Code.'' teG eneraliy, the copying arld distribution of literary
15 intangible property does notstate a claim forconversion.
'' D ielsiv.Falk,9l6 F.Supp.985,992
16 (C.D.CaI.1996).SeealsoNirnmer& Nimmer,NimmeronCopyrigkt,j1.01gB1(l)(i)(''Thetorts
17 ofconversion and trespassrelatetointerferencewith tangibleratherthanintangibleproperty.'').
18 Etreppid's conversion claim rests on intangible rights protected by the Copyright Act arkd are
Ijl therefore preem pted.
20
Tostateaclaim forconversion,aplaintiffmustestablish:(l)theplaintiff'sownershipor
zl righttopossession ofacertairlpieceofproperty;(2)thedefendant'sconversion ofthepropertyby
2: a wrongftzlactordisposition ofproperty rights;and (3)damages. SeeFiroozyev.Earthlink

23 Network,153 F.Supp.2(111l5,1129 (N.D.CaI.2001). Putting asidethefundamentalissueof
j.
4 whetherornote'rreppidcanevenshow ownership ofsomethingthatitcannotevendefine,tllisclaim
25 ispreempted. Becatlse claim sinvolving theconversion ormisappropriation ofworlcswithin the
26 subjectmatterofcopyrighttypicallyseekdmnagesfortheurmuthorizedreproductionoftheworks
z.
i andnotjtlsttheunauthorizedpossessionortlseofaspeiiiicpieceofproperty,'legionsofcues..
as .have held pre-em pted claim sform isappropriation ...''1d.at1130. In fact,knFiroozye,the court
i
t
-6-
w .?
wp
l found thataconversion claim waspreempted because,justmsin this case,the company was

2 challenging unauthorized useofthesoftw are- theessenceofeopyrightinfringem ent.fJ.Sim ilarly,
3 in D ielsi,the Courtalso held thatconversion claim sw erepreem pted by theC opyrightActbecause
4 the essence of the elaim w as the infringem ent on the t'ight to reproduce and distribllte the
5 copryighted m aterial.Dielsi,9l6 F.Supp.at992.Seealso,Worth p'
.Universalpictures,5 F.Supp.
6 2(1816(C.D.CaI.lgg7ltconversionclaim preemptedwheresoughttorestrainuscofcopyrighted
7 m aterial). Sincee'
rreppid (1)seekstorestrainM r.M ontgom ery'sdistribution and useofmaterial
8 thatisclearlywithinthesubjectmatteroftheCopyrightAct,theconversionclaim ispreempted.z
f? C.
T'
he Breach ofFiducia Dut Claim lsPreem ted To TheExtentn atltls Based On M r.
10
M ontMom ery'sU se and D istribution OfThe So-called tie-freopid Soklrce Code''
1l
e-rreppid'stlbreach ofFiduciazy Duty''claim could notbe any lessspecitic in alleging what
12 is the breach offiducial'

y duty. 3 H owever, it appears to be alleging dam ages from M r.
13 M ontgom ery's alleged use and lieensing ofthe so-called tte-rreppid Source Codey''which is the
14 equivalentofrigahtsgranted to the copyrightownerand istherefore preem pted.t<Federalcopyright
15 1aw encom passesreproduction and distribution ofcopyrighted w orks.'' W orth,5 F.supp.at823.
Etreppid's Fifth C ause O fAction ForBreach O fThe Im plied CovenantO fGood FaitlzIs
16 D.
17
Preem Dted.
lg
TheFitth CauseofAction attemptsto statea claim forbreach oftheimplied covenantof
19 goodfaithandfairdealingimpliedintocontracts.Althoughe'l-reppiddoesnotidentifywhichalleged
:
4: contractisatissue,e'Freppidisagain arguing thatby dislributing,licensing orpreparing derivafive
a1 w orks from the alieged i/e-rreppid SourceCodey''M ontgom ery haa violated thenplied covenant.
:
,2 A breach ofan implied contractisa speiesofquasi-oontractalld isto bedeemed art''equivalent
:/3 right''fordeterm ining preem ption. Worth,5F.supp.A t823,citing N irnm erand Nim m er,N imm er
24
25
yhaspossessionofsome
2 Significaatly,G reppiddoesnotallegein theconversionclaim thatM ontgome!'
physicalpropertybelongingtoe'
rreppid,merelytllatV allegedlydeletedsatlrceccdekom tlzeefrcppidcomputers,
26
furtherem phasizingthepreem ptionofthisclaim .
3 M oreover,astheM ontgom ery FnmilyTnzst,thereisno allegation thatwouldgiveriseto fiduciary

relationshipwitlze'
rreppid.M erelybeingam emberofanLLC doesnotimposeafiduciary duty from them em ber
28 to theLLC.
27
y.
sv)
..
m)
l onCopyrightj1.01(B1(1lggj1-34(1997).AYistypeofimpliedcovenantofgoodfaith inacontraet
2 isthereforepreem pted insofaras itrelates to copyrighted m aterial. Id.
3 E.
The D eclaratory Relief Claim Directly U sum s The Federa! Court's Copyrinht Aet
4
5
Jurisdiction.
ln the Sixth cause of action,e'
l-reppid seeks a declaraton ofow nership ofthe so-called
6 ite-l-reppid SourceCode.''H ow ever,thefundam entalquestion ofwhetherthee-rreppid SourceCode

7 is a deiivative w ork ofM r.M ontgom eor's,w hetheritwas produced ms a work forhire,orwhether
g M r. M ontgom ely has improperly reproduced the wofk is four-square within the excltusive
9 jmisdickonofthefederalcourts.Thiscourthmsnosubjectmatterjurisdictiontodeterminecopyright
10 m attersthatarecurrently pending in thefederalcourtand ttariseunder''the CopyrightActof1976.
l1 F.
The lntentionallnterference Claim IsAlso Preem oted.
12
To recoverforintentionalinterferencew ith a contractualrelationship,e'Freppid m ustshow
13 ''41)thatithadavalidandexistingcontraet,(2)thatMr.Montgomel'yhadknowledgeofthecontrad
14 andintendedtoinduceitsbreach,(3)thatthecontractwasinfactbreached,(4)thatthebreachwms
15 causedbyMr.M ontgomely'sunjustifiedandwrongfulconduct,and(5)thate'rreppidhassuffered
16 damage.''SummitMach.ToolMfg.v.VictorCNC Systems ,7F.3d 1434,1442(9 t
bCir.1993).
17 Intentionalirderferencew ith contractclaim sare subsum ed w ithin CopyrightAct.M otown Record
18 Corp.v.GeorgeW.HormeldcC0.,657F.Supp.I236,1240(C.D.Cal.1987).
19
In thiscase,eTreppid claim s thatM ontgom ery had no rightto reproduce ordistribute the
2c Ete-freppid Source Codey''arguing thatthispum orted conduet-wasthewrongful''conductsatisfyin,g
21 the 'Qunjustified and wrongfulconduct''element. This claim is directly related to oopyright

-
22 infrillgement,thesubjec'tarea oftheCpp'yrightAct. Congress<<clem'ly indioated thatstate-law

:.3 claimswhichcomewithinthesubjectmatterofcopyrightlaw andwhichprotectrightsequivalent
24 to any ofthe excltzsive rightsw ithin the scopooffederaloopyright1aw ...should belitigated only
.:5 asfederalcopyrightclaim s.''D ielsi,916F.Supp.at993.Therefore,e'rreppid'sclaim forintentional

:
)6 interferencew ith contrachlalrelatiomships ispreem pted.
27 ///
28
-
8-

'
:..)
,-J
CO NC LUSIO N
G iven thata11theclaim srequirethisCourtto enforceordeterm ine rightsequivalentto those
3 grantedbytheCopyrightAct,thisCourtlackssubjectmatterjurisdiction.Fortheforegoingreasons,
4 defendantsrespectfully requestthata11claim sotherthan the Second Cause ofA ction forBreach of
5 Contractbedismissedforlackofsubjectmatterjurisdiction.
RespectfullySubmittedthistMdayofMarch,2006.
'
FLY NN & STILLM A N

9
10
11
l3Jr:
Philip H .Stillm an,Esq.

12
13
By:
14
Ronald J.Logar,Esq.
A ttom eysforDefendantsDEN NIS M ONTGO M EIW
and M ON TG OM ERY FAM ILY TR u sT
15
'
16
17
18
19
20
''
21
22
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23
24
25
26
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C ERTIFIC ATE O F SER VIC E
PursuanttoNRCP 5(b),loertify thatIam anemployeeoftheLAW OFFICE OF LOGAR
&PULVER,Pf7,andtha!onthev/dayofMarcla,2006,1senttheabovedocumentthefollowing
5 %V'ayS:
7
8
9 Via:Re;o/carsonM essenger:
Stephen J.Peek,Esq.
Hale Lane Peek Dennison and H ow ard
5441Kietzke Lane,Second Floor
Reno,Nv 89511
10
11
.
Hale Lane Peek Dennison and H oward
Reno,N V 89511
'
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13 U S RegularM ail:

David A .Jakopin,Esq.
2475 HanoverStreet
14
15
16 Us RegularM ail:
Pillsbuly W inthrop Shaw Pittm an,L.L.P.

Jonathan D .Bu
-tlerm Esq.
2475 H anover Street
Palo Alto,CA 94304-1l14
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LegalA ssistanfto the
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tN TH E SECO ND JUIH CIAL DISTR ICT C O UR T O F TH E STATE O F NEVA DA

11
IN AND FOR THE COIJNTY OF W ASHOE
12
eTREPPID TECHNOLOGIES,lNC.,a
13 Californiacomoration,
14
Plaintiff,
15
vs.
) CASE NO.: CV 06-0114

)
)
) OPPOSITION TO PLAINTIFF'SM OTION TO
) M ODIFY PRELIM INARY INJIJNCTION
)
) u
16 DENNIS M ON FGOM ERY,and individual; )
THE M ON TGOM ERY FAM ILY TRUST; )
17 DENNIS MONTGOMERY andBRENDA

MONTGOM ERY asTrusteesofTHE
18 M ONTGOM ERY FAM ILY TRUST;and
DOES 1THROUGH 20,
19
Defendanl.
)
)
)
)
)
)
20
)
)
21 DENNISM ONTGOMERY,anindividual;andl '
M ONTGOMERY FAM ILY TRUST,a
)
22 CaliforniaTrusk,
'
)
Counterclaimants,
)
23
VS
)
)
24 eTREPPID TECHNOLOGIES,m C.,a
)
NevadaLLC;W ARREN TREPP,an
)
25 individual;DEPARTMENT OFDEFENSE of)
theUNITED STATESOF AMERICA and )
26 DOES 1through 10,
)
Counterdefendants.
)
.
27
.
-
- .
, . .
w )
=r)
j n
2
IN eI-R O DU CTIO N
4 2006
,
'
sthis Courtis aw are,an evidentiary hearing lmsting m ore than 10 hours was held on February 7,
aerwhichthisCourtgrantedapreliminaryinjunctionusingthelanguagealreadyrequestedbythe
plaintift-and oonsistentwith thetem porary restrainingorderpreviously entered theweekbefore.Notcontent

t;
::
,,
withitsownhandiwork,e'rreppidTechnologies,LLC ( e'rreppid )now wantsevenharsherrestrictionson

thealreadyextrem elybroad injunction.First,e'Freppidasksthecoul'ttobroaden thedefinitionoftte-l-reppid
El Sotlrce Code,,to include any sotlrce code lzsed at e'rreppid, including source code used to fullill any
9 G
ovemment coctracts. Second,e'

l-reppid wants to bind non-party M ontgomery Fam ily Trust and
10
affirmativelyrequireMontgomeryFamilyTnzst(ofwhichMr.M ontgomeryisaco-trustee)torettlrn any
11
alleged te-l-reppid Source Code''in possession msw ellmsftarly proprietat'

y e'rreppid technology in tangible
1;!
,,
q
., jj t
fonn. Thepumoseofthepreliminal'
y injunction wmsmerely topreservethe status quo unt yjttj.
13 H
14
l5
owever,thepropose,dm odiGcation notonly goesbeyond the:<statusquo,,butam rm atively transfersrights
to e'Treppidthatitdoesnotyetpossess'
,thosem odilicationspreventM ontgom ely from com peting in any w ay
with e'
Treppid withouta written non-competition agreement;and further,injectsvague tennssuch as
1t; <:
,,
proprietaly e'Freppid technology into the order which creates vagueness and am biguity, M ontgom ery
17
respectfullysuggeststhattheexistingorderalreadygivesfarmoretoe'rreppidthantheevidencejustitiesto
18
maintainthestatusquo.'
l'herequesttomodifytheinjunctionshouldbedenied.
1q
AR G UM ENT
20
21
23
24
Wh
'
1.
'
THE REOUESTED M ODIFICATION IS IJNW
;?:(
;l
' '
TED AND OVERLY BROAD
,,
entheplaintiffseelcs mandatol'y injunctiverelief,thecourtreviewsthemotion forhjtmctive
reliefmorerigorously.Stanleyv.Univ.ofso.Cal.,13F.3d1313,1320(9tbCir.1994)moldingthattheC-OM
shouldnotgrantmandatoryinjunctions''tmlessthelaw andfactsclearlyfavorthemovingparty'll. Thisis
25 b
..
ecattseamandatoryinjunction goeswellbeyondsimplymaintainingthestatusquopendentelitegand,Jis
26
27
N.
ts
particularlydisfavored.Andersonv.UnitedStates,612F.2dl112,1114(9 Cir.1979)(quotingM artinez

.
v.Mathews,544 F.2d 1233,1243 (5th Cir.1976)). Moreover,pleading atradesecretsclaim requires

-
2-

xv
.,z:,
l specificity in identifyingprecisely whatisthe trade sectnt.

computerEconomics,Inc.v.GartnerGroup,Inc.,
2 50F.Supp.zd980(S.D.CaI.1999).n eadditionallanguageonlyinjectsfurtherambigtzityintotheexisting
3 order.
4
First,e'l-reppid seeks to add language expanding the ttsource Code'' from teverything used at
5 e'
l-reppid''mstestified toattlialto includettobjecttracking.''Therewasnoevidenceathearing onwhat
6 Gobjecttracking,''fpatter'
n recogaition,''oritanomaly detection''meantoreven whatitreferred to,even
7 though e'
l-reppid had am pleopportunity to presentevidenceofwhatthose term sm eant. Thus,the language
8 isitselfoverlybroadandvagtze.Forexample,objecttrackingcouldrefertovideogametechnologyusedto
9 track pinballsinj.pinballmachine;whereanartillel'yshellisprojectedtolandinamilital'
y exchange;or
10 w here aplane isin routeto itsdestination. W ithoutany evidence in the record thateven explains whatany
11 Of these tenns refers to,M ontgom ely'scom pliance cannotreasonablely bedetennined. This
lack of
12 speciticity is calculated to overcom e e'Treppid'sinability to even describe the type ofsoftwareto w lzich it
13 isreferring,sinceno oneate'
Freppid w asinvolved in using orcreating any ofthesoltw are e'rreppid referred
14 tO.
15
This vagueness is in stark contrast to the vcr.)z specific definitions contained in the written
16 Contribution Am eem entbetwreen M ontgom ery,theM ontgom ery Fam ily Trustand e'rreppid f/k/a Intrepid
17 Technologies,Inc. A stheCourtw illrem ember,the Contribution Ap eem entnotonly specifically defined '
18 tlleteclm ology thatwastransferred and attached to theagreem entasCD N o.1. The vet'y nextparagraph of
19 theContributionAgreementKfspecicallyexcluded''theremainingtehnologyownedbyM ontgomel'y.Ip
20 fact,W arren Trepp specilically testifie,d undercross-exam ination,thathereceived ev
21 for.
22
'ng lze contracted
'
TitisCourtisbeing asked to expand the defsnition ofthe e'rreppid Source Code,w here,athearing,
23 neithere'l-reppidinorany ofitswitnessescould identify the specicsofthe very teclm ology they claim ed
24 to ow n and seek to preventDefendantfrom exploiting.ln spiteofthis,PlaintiffrequeststhisCourtbroaden
25 thecoverageoftheinjunction,whichbyitsprovisions,alreadyexceedsthescopeofPlaintiff'sevidenceat
26 hearing. W hatPlaintiffts m otion intendsto accom plish,is to prevent M ontgom ery from even enrning a
27 lid ng within tl)efield oflzisexpedise,to coerceasettlem ent.A settlem entoverteclm ology which e-Treppid
CaIIlleitherdescribewithremsonablecertaintynorjtlstifiesanyownershipclaim.InfactyPlaintiffcompleteiy
'

x. .
we
..)
1 failed to presentany evidence thatthe vtsourcecode''fallsw ithin the twork forhire''doctrine.
A preliminary injunctionunderNRCP 65(a)(2)canonlybeissucdbyacourtiftheapplicantcan
3 show a likelihood ofsuccess on the m erits and a reasonableprobability the non-m oving party'sconduct, if
4 allow ed to continue,w illcauseirreparableharm tbrw hich com pensatofy dam agesarean inadequaterem edy.
5 Dangberg Holding,LLC.v.DouglsCounty,115 Nev.129,142-143,978 P.2d 331(1999). The District

6 Courtm ay also weigh thepublic interestand relative hardshipsofthe parties in deciding whetherto g'
rant
7 apreliminaryinjunction. ClarkCountySchoolDistrictv.Buchanan,l12Nev.1146,1l50,924P.2d 716

8 (1996).
9
Second,'Freppid seeksto ttslip in''evenm orevagtzelanguage,such asttincluding w ithoutlim itationy''
10 titlsed,m odified orcreated ate'Freppidy''&haseed in connection w ith ordeployed by erreppid in perform alw e
11 of governm entcontraots''and tt
proprietary Etreppid technology''for which there has been no definition
12 whatsoever,and which could includevirttlally anything. Sincethetouchstone ofalzy injunction,either
13 mandatoz'
yorprohibitory,isthatcompliancecanbereadilydetenninedbythespecifictermsoftheinjunction
14 itself,such expansive and vague tennsmustbe rejected,becausespecitic evidencewasnotpresented
15 cottcernirtg whatexactly isthesoftwareatissue,with sufficieatspecificit.yfora courtto detenniaew hether,
16 for exam ple,com pletely new telm ology created by M ontgom ely after leaving e'rreppid violates the
17 injunction. Again,e'Treppitssolemotivationtoexpand thecoverageofthepreliminaryinjunction isto

18 preventM ontgomery from earing aliving,which isoontrarytothe 13tham endm ent.
19
Third,withoutartyspecificityconcerningtheexactnatureofthesoftwareatissueintbeinjunction,
20 M ontgom ely isliterally prezuded from creating any typeofsoftwarethathasno oormnonality with any
.
21 technology IXSGIby e'rreppid otherthanbeing in thesam egeneraltield,butsharesno sourcecodewith any '

22 alleged technology ate'
rreppid.'Fhus,forexam ple,ifM r.M ontgom ely worked on wordprocessing software
23 ate'
Treppid,undertlw tennsoftlzeinjunction,becouldnotwork onanythingrelatedtowordprocessing,
24 regardless ofwhetlaerthenew work used orwasbased upon anything ate'rreppid. To take itoutofthe
25 softwarecontextandintoamoreoommonone,itwouldbeanalogoustotheCourtenjoininganeyestlrge'
on
26 w orking w ith a m edicalm oup from w orking asarleye sttrgeon anyr
w here else. Itsim ply emnnotbe done.
27
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II.
TH E PR O PO SED R EV ISIO N ACT UA LLY TRAN SFER S C O PY R IG HT R IG H TS
EX CLU SIV ELY W ITH IN TH E PO SSESSIO N O F A C O PYR IG IIT O W N ER W ITH O UT AN Y
FIND IN G S O F FACT R ELA TIN G TO HW O R K FO R H IR E''
AssetforthinMontgomery'sMotiontoDismissforLackofSubjectM atterJurisdiction,e'freppid
6 is seeking to avoid the clear dictates of the CopyrigahtActof l976 titrough this state court action. The
g CopyrightAct,j204(a)expressly requiresthatacopyrightownertransferany copyrightinwriting,unless
8 itisatworkforhire''asdesnedintheCopyrightAct,andthisCourthasmadenosuchtindingswhatsoever.
9 Thus,otherthare n som e im plication thatbecause M ontgom ery pennitted the use ofhis technology,its
10 ownership wasim plied to havebeen transferre,
d to e'Freppid,thereisno com pliance with theCopyrigbtAct's
11 ttwriting''requirem entand no show ing ofow nership by e'Freppid otherthan msanon-excltusivelicense'. The
12 requestedmodificationsacttzallyhighlighttheIack ofsubjectmatterjurisdictionby msking theCourtto

13 expressly lim it the rights granted to the copyright holder,such as the right to license its rights,create
14 derivativeworksorduplicateitsworks.Byinjectingthisfurtherlanguageintotheexistingorder,e'Freppid
ls clearlydeprivesthiscourtofjurisdiction.
16
Section106oftheCopyrightActgrantstothecopyrightownertheexclusiverightsto:(i)reproduce
17 thecopyrightedwork;(ii)preparpdedvativeworks;(iii)distributecopiesofthework;(iv)perfppntlzewprk
18 publicly'
,and(v)display theworkpublicly.17U.S.C. 106.Federal1aw willpreemptKastate-createdright
19 ifthatrightm ay be abridged by an actwhich,in and ofitself,w ould-infringe one ofthe exclusive rights'
20 established by federallaw.''G.S.Atzarnzfowcn&:Assoc.v.KalittaFlying Service,Inc.,958F.2d 896,'904 (9th
21 Cir.1992),ccrtdenied,124L.Ed.2d678,113S.'CL2927(1993).
22
W e requested m odificatiolls seek to add lim itations on M T. M ontgom ely tlice

' nsing, tusing,
23 duplicating and/orassigning the Etreppid SourceC ode.''Bytrying to includelarlguagethatexpressly lim its
24 M r.M ontgomely'srightto exploithisown derivativeworkswithoutany fmdingsthatsupportaconcludon

25 thatsom ehow e'rreppid hasended up w ith ow nership to copyrights,e'rreppid hmsnow clearly overstepped
26 (orasksthattheCourtagainoverstep)thejurisdictionoftheCourtandh'
astrazusgressedintothedomnin
27 exclusivelyreservedtothefederalcourtsby 17U.S.C.j301.
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III.
2 TH E REO U ESTED IN JIJN CT IO N IM POSES A N O N-C O M PET ITION AG R EEM EN T W H ERE

3
TH ERE IS NO N E
ltisundisputed thatthere isno non-com petition agreem entbetween M r.M ontgom ery and e'Freppid.
5 Byexpanding theinjunction,e'rreppidisseekingliterallytoimposeanon-competition agreementonMr.

6 M ontgom ery by im plication,m erely because he cooperated with e'
Freppid's effortsto secure goverm nent
7 contracts with his teclm ology. A ny im plied covenantnotto com pete isunreascmable.H ansen v.Edwards,
8 83Nev.189,191,426P.2d792,793(1967).AstheHansencourtexplained:
9
An agreem enton thepartofan em ployeenotto com pete with hisem ployeraRertennination
10
unless the sam e are reasonable.W here thepublic interestis notdirectly ilw olved,the test
oftheemploymentisinrestraintoftradeandwiilnotbeenforcedinaccordancewithitsterm s
11
12
13
tusuallystatedfordetenniningthevalidityofthe(non-competitionqcovenant aswrittenis .
w hetheritim poses upon the em ployee any greaterrestraintthan is reasonably necessary to
protectthebtlsinessand good w illoftheem ployer.A restraintoftradeisunremsonable,in the
absenceofstatutoryauthorizationordominantsocialoreconomicjtlstificationaifitisgreater
tlzan is required forthe protection ofthe person forw hosebenefitthe restraintis im posed or
im poses undue hardship upon the person restricted.
14 f#.at191-92,426 P.2d at793(citationsom itted)(emphasisadded).
15
lnthiscmse,e'rreppidisnotcontenttorestonmerelylimitingM r.Montgomely'stlseofteclmologf
16 thathecreated and ow nspursuantto settled copyrightlaw ,butfurtherseekstorestrain M r.M ontgom ely from
17 com peting w ith e'
Treppid in any field in which e'Freppid operated. Sincethere isno w ritten oavenarltno1to
18 compete,sucharestraintisperseunreasonable.Nlr.Montgomeryis(orshouldbe)9e,
etodevelophisown
19 com petingproductswithoutinterferencefrom eitllere-l-reppid ortlzisC-ourt.ByprecludingM T.M ontgom ery
20 om doing any w ork on his ow n thatrnighttouch upon the vague and undefined Krpattem recognition,
71.anomalydetectionandobjecttracking''areaq,thecourtisimposingbylaw whatdoesnotexist.In fact,the

22 only evidence isto the contraly - thatthe e'Freppid operating agreem entm erely lim itsM r.M ontogom ery's
23 compe:tion with e'

Treppidin eTreppid'sbusiness(which isdefinedin theOperatingAgreementasdata
.
24 compression)whileheisemployed.Si'
noeitsundisputedthatMr.M ontgomely isnolongeremployedat
25 e'Treppidaand there isa written integration clattse in the Operating A v eem ent,there should be no dispute
26 thatany non-com petition agreem entexpired with lktstennination no laterth% on Janua!y 19,2006.
27
W .
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.
?--#)
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N O EVIDENTIA R Y H EAR IN G CAN BF IIELD W ITH O UT W O LA TIN G TH E SECR EC Y
O ATH S ENT ER ED INTO BY BO T H TR EPP AN D M O NTG O M ER Y
Astcwstified attheevidentiaryhearing on February 7,2006,bothTrepp and M r.M ontgom ery entered
4 into 'secrecy oaths''with theUnited Statesthatprecludesthem from disclosing thenature ofthe technology
5 atissuein thecase.(M r.M ontgom ery'ssecrecyclearanceissubstantiallyhigherthatM r.Trepp).Because
6 oftheseoaths,thisCourtcannotdetenninethescopeofthepreliminaryinjunction with any enforceable

7 specificity,particularly in theabsenceofaclearand definite record asto whatthe alleged tte-rreppid Source
8 Code''actually is. By way ofillustration,if M r.M ontgom ery were to independently create som e sortof
9 tecim ology thatrerfonued a type oftpatterflrecognition''in a totally differentway than had been done
10 before,this Courtcould notdeterm ine that the new teclm ology w as m aterially differentfrom any prior
11 teclm ology withoutrequiring both Trepp and M ontgom ery to violate tlzeir secrecy oathsw ith the U nited
12 SGtes.SeeNationalEspionageAct,l8U.S.C.j'793(t1)(precludingdisclosureofclassifiedinfonnationto
13 thosenotauthorizedtoreoeiveit).Forthisreason,mssetforth inM r.M ontgomely'sM otion to Dism issfor
14 LackofSubjectMatterJurisdiction,anyfurtherexpansionoftheprelimina!y injunctionsimplycreate,
smore
15 conflictbetweentltisCourt'sand thefederalcourt'sjurisdictionoverthesubjectmatteroftlziscase.
16
V.
17
ETR EPPID CA N NO T USE TH E G U ISE O F A T M DE SECR ET CLA IM T O FD RC E
18
M ON TG O M ERY T O EITH ER DISCLO SE H IS O W N PR O PR IETAR Y TEC H N O LO G Y O R
19 FO R CIBLY A SSIST ETR EPPID IN ILE-CR EAT IN G SO U R CE CO D E D ESTR O YED BY TH EM
20
e'Freppidadditionallyseekstorm ttiretbatM r.M ontgom eryactuallytw noverwiatisbroadlydefined
21 as the %te-rreppid Sottrce Code''and tany other Etreppid property''to e'rreppid. Etreppid has already
22 presente,d evidenceatlaeazing thatitallegedly llas over80% ofwhalzdelinesastheerfreppid Source Code,
23 a1l of which is IZSe,IIfor its current contracts w ith the govem m ent. ln fact,e'
Treppid's evidence clearly
24 (lisclosed thatithadno cwrrentcontractswith thegovenunentthatarenotcapableofbeingfulfilled with its

25 existing teclm ology,which involvu data com pression,notAtpattel'
n recognitiow ''ttanom aly detection''and
26 ttobjed trackingv''(whateverthosetermsactuallymeanl.BeforethisCourtcanenternotonlyaprollibitl'y
2-/ injlmetionbutalsoamandatoryhljunctionrequiringafftrmativeactionbyMr.M ontgom ely,e'l-reppidmust

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5# '
.
1 fla'
ve atleastspecificallyand clearlydefinedtheprecisecodethatitisseeking.This,ithasnotdone.
2
O ne reason thatplaintiffs,in trade secretscases,are required to plead w ith specificity,isto prevent
3 exactly whate'
Freppid isattem pting to do in thiscase - forceM r.M ontgom ery to ttzrlzovercreationsofhis
4 own invention to e'l-reppid that ithas never possessed or ow ne,
d in order to perm it them to copy his
5 intellectualproperty.SeeComputerEconomics.Inc.v.GartnerGroup,Inc,50F.Supp.zd980(S.D.CaI.
6 1999). ln thatcase,thedistrictcourtinsightfully observed:
7
'
8
9
10
11
l2
Forexam ple,where a plaintiff'sem ployee quits and opens a com peting business,a plaintiff
ohen filesalawsuitfortradesecretm isappropriation which statesthatthedefendanttook and
istusing plaintiffstradesecrets,butdoesnotidentify the trade secrets.Theplaintiffcan then
em bark upon extensive discovery which the new business is ill equipped to afford.
Ftuthernl re,by notinform ing the defendantwith any degree of speciticity ms to w hatthe
alleged tradesecret.
sare,defendantm ay beforced to discloseitsown btlsinessortradesecrets,
even though those m attersm aybeirrelevant,and thedefendantm ay notlearn tbe exactnature
ofthe supposedly m isappropriated trade secretsuntilthe eve oftrial.
.
IdLat985,n.6.Byexpalldingthescopeoftheinjunctiorqincludingwithoutlimitationthenew proposed
tf
ttulzover''order,e'
Freppid isattem pting to gain M r.M ontgomery '.
trade secretsand intellectualproperty
l3
withoutany show ing ofow nership,w ithoutspecifically identifying exceptin the m ostgeneraland broad
14
term s tlle alleged trade secrets,and withoutdem onstrating any entitlem ent. ttpreserving the statusquoy''as
15
thisCourtstated in its originalorder,m akes sure thatthe partiesrem ain in the sam e position asthisCourt
16 fotm d them . ltis notintended,norshould itbe the Court's intention,to place e'rreppid in a substantially
l7
betterposition th:.
11itwasatthe beginning oftheaction.
18
19
20
21
22
CO NC LU SIO N
'
Forthe foregoing reasons,M r.M ontgom ery and the M ontgom ery Fam ily Tnzstrespectfully
requestthattheMotiontoM odifythePreliminary.lnjunctionbedenied.
DA TED : Februazy 27,2006
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LA W O FFICE O F LOG AR & PULVER,PC
23
:4
25
26
27
'
By:
Ronald J.Logar,Esq.
A ttorney forCounterclaim antD ennisM ontgom ery
and Counterclaim antM ontgom ery Fam ily Trust
N evada B arN o.303
225 S.Arlington A ve. Ste.A
Reno,Nevada 89501
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C ERTIFIC ATE O F SERV IC E
PursuantttjNRCP 5*),lcertifythatIam alzemployeeoftheLAW OFFICEOFLOGAR &
3 PU LV FA ,PC,and thaton the 27+ day ofFebruary, 2006, I

4
deposited form ailing in the U .S.M ail,with sufticientpostage affixed thereto via Certified
s M ail,Ret'urn Receiptrequested.
6
sentviaFederalExpressor otherovem ightdelivery service
deliveredviafacsimilemachinetofaxnumber P-'sk-&/7 a.JJBtf

R8.
7 clsedtobedeliveredviaReno-carsonMessengerServicetax41x..
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10 the foregoing doctunent,addressed to:

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Hale Lane Peek D ennison and H oward
5441K ietzke Lane
Second Floor
Reno,N V 89511
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Pillsbuly W inthrgp Shaw Pittm an,L.L.P.

D avid A .JakopinoEsq.
Facsim ile:650-233-4545
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Law O ftice ofLogar& Pulver,PC

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AttomeysforDefendantDENNISM ONTGOM ERY andCounterclaimantsDENNIS M ONTGOMERY
andtheMONTDOMERY FAMILY TRUST,aCaliforrtiaTrust.
IN THE SECOND JUDICIAL IHSTRICT COURT OFTHE STATE OF NEVADA
. .
11
IN AN D FO R T H E C O UNT Y OF W A SH O E
12 ETREPPID TECHNOLOGIES
13
14
15
16
17
18
19
20
.
&&//zJ
) CASE NO.: CV 06-0114

Californiacom oration,
)
)
Plaintiff,
) ANSW ER toFIRST AM ENDED COM PLAINT and
) FIRST AM ENDED COUNTERCLAIM FOR:
vs.
)
) 1. DECLARATORY JUDGM EN T;
DENNIS M ONTGOM ERY,and individtlal; ) 2. ACCOUNTING;
THE MONTGOMERY FAMILY TRUST; )
DENNIS M ONTGOM ERY and BRENDA )
M ONTGOM ERY asTnzsteesofTHE
)
'
M ONFGOM ERY FAM ILY TRUST;and )
DOES lTHROUGH 20,
)
)
Defendants.
)
,
I'
NC.,a
)
21 DENNISM ONTGOM ERY,anindividual; )
arldMONTGOM ERY FAMILY TRUST,i )
22 CalifomiaTrust,
)
(rounterclahnants, ).
23
vs
)
.
)
24 eTREPPID TECHNOLOGIES,m C.,a
)
Califomiacomoration,akae'rreppid
)
25 Technologies,LLC,aNevadaLLQ
)
W ARREN TREPP,anindividthal;
)
26 DEPARTM ENT OFDEFENSE ofthe
)
UNITED STATESOF AM ERICA andDOES)
27
1 through 10,
Counterdefendaats.
28
. .
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x-...
'
AN SW ER
2
3
DEFENDANT,DennisMontgomery,andtheM ontgome Fe lyTM t,byu dthroul hsounsel,

The Law O ffice of I-ogar and Pulver,PC,and Flynn & Stillm an, for their Answer to Plaintiff's First
Am ended Com plainton file herein,adm its,denies and allegesas follows:

5
N ATUR E O F TH E ACT IO N
6
l.
Answering paragraphs 1-5,Defendantsdeny those allegations.
G ENERA L FACTU A L A LLEG ATION S

8
The Parties
2.
Amswezing paragraph 6,Defendants adm ittbose allegations.
3.
Answ ering paragraph 7,Defendants deny those allegations.
4.
M sw ering paragraphs 8-16,D efendantsdeny those allegations.
5.
Answ ering paragraphs 16 and 17,D efendants adm itthose allegations.
6.
A rtsw erin'
g param aphs l8 and 19,D efendants are w ithoutsufGcientknowledge or
10
11
12
13
14
inform ation necessary to fonn a beliefasto the tt

azth orfalsity ofthe allegationscontained therein,and
15
therefere deniesthe sam e. ln so far&ssaid allegations suggestor im ply responsibility or liabilit.y on the
16
partofthisanswering Defendant,then the sam e are expressly denied.

l7
The N ature ofe'

Trepoid's Business
18
7.
19
atl
21
Answ ering paragraphs20-22,D efendantsdeny those allegations.

Securit'
v M easures.
G overnhm A ccess to e'rrepoid Source C ode
8.
.
Answ ering paragraplus23-28,D efendantsdeny tltose allegations.
M isappropriation ofi'radeSecrel '
22
9.
- -
Answezingparam aphs 29through 43,inclm ive,Defendantsdenythose allegations.
23
Etreppid is Sufferinz Irreparable H arm due to M r.M-onteom el-v'sM isaporopriation.

-
24
10.
M sw ering paragraplts44 through 46,D efendalm deny those allegations.
25
26
27
l?IR ST CA U SE O F A CT IO N
.
M lD efendants
-
28
1-

>-
1 .
11
.
w e
Answering paragraph 47,Defendantsre-allege theiranswers to those priorparagraphs 1
2 thru 46,inclusive and inoorporates them herein by reference.

3
l2
.
Answ ering paragraphs48 through 54,inclusive,D efendants deny those allegations.
SEC O ND CA USIa
'
S O F AC TIO N
m reach ofContract)
l3
.
Answ ering paragraph 55,D efendantsre-allege theiranswers to those priorparagraphs l
8 tlm z54,inclusive,and incorporatesthem herein by reference.

9
14.
A nsw ering param aphs 56 and 57,D efendantsdeny those allegations.
10
TH IR D CA U SE O F A CTIO N
l1
A llD
12
l3
(Conversion)
15
.
14
15
efendants)
Answering paragraph 58,Defendantsre-allegetheiranswersto thoseprtorparagraphs1
through 57,inclusive,and irzcorporatesthem herein by reference.

16
M sw ering paragraphs 59 and 60,D efendantsdeny those allegations.
.
l6
FO UR TH CA U SE O F A CTIO N
17
(Breach ofFiduciaryDutyl
18
17
.
19
20
Answ ering paragraph 61,D efendantsre-allege theiranswersto those priorparagraphs 1
through 60,inclusive,and incorporatesthem herein by referenee. 18

.
A nsw ering paragraphs 62 through 66,D efendantsdeny those allegatiorls.
21
H FI'H CAUSE
. O F ACTI
' ON
22
(Bad Faith Tortiousand Contractual)

(M ontgomery)
-
23
24
19.
'
A nsw ering parar aph 67,D efendants re-allege their answersto those priorparagraphs 1
25
through 66,inclusive,and incom orates them herein by referenee.

26
2O
A nsw ering paragraphs 68 through 72,D efendarttsdeny those allegations.
.
27
28
SIX TH CA U SE O F A CTIO N
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!
1.
(DeclaratoorRelieg
2
3
(M ontgom ery and theM ontgom er'y Fam l

.ly Trust)
2l
.
4
5
6
A nswering paragraph 73,Dcfendantsre-allege theiransw ers to those prior param apbs 1
through 72,inclusive,and incorporatesthem herein by reference.

22
.
Answering paragraphs74 through 75,Defcndantsdeny those allegations.
SEV EN T H C A USE O F A CT IO N
(IntentionalInterferenceW ith ContractualRelations)
(M ontgomeor
)
23.
Altsw eting paragraph 76,Defendantsre-allege theiransw ersto those priorparagraphs l
l0
through 75,inclusive,arld incom oratesthem herein by reference.

11
24
.
.
A nswering parap aplls 77 through 81,D efendantsdeny those allegations.
12
A FFIRM ATIV E D EFEN SES
13
14
15
16
17
18
19
20
2I
sdistinctand separate aftirm ative defenses to the causes ofaction alleged in the Com plaint,
'
these answ ering Defendantsallege asfollow s:

FIRST A FFIR M A TIV E D EFE NSE
A
.
s a separate alld aflirm ative defense to the Am ended Com plaintand each purported cause of
action therein,Defendantallegesthatthe Am ended Com plaintfailsto state factssufticienttflconstittlte

a catlse ofaction againstthis answering D efendant.
SEC ON D A FFIRM A TIV E D EFEN SE
A
s a separate and affinnativedefense to the Am endod Com plaintand each purported cause of
.
.
actiontherein,DefendantsallegethatPlaintiffhasnotsustahledanydamages,injuriesorlosses,ifany,
22 b
y reason ofany actorom ission,faultor negligence,on the partofthease Defendants,theiragents,
23
servaatsoremployees,oreitherorany ofthem ,and is thusbarred from asserting any cause ofaction
24
agaizlsttheseD efendants.
25
TH IRD AFFIRM A TIV E DEFENSE
26
27
28
s a separate and aflinntive defense to the A m ended Com plaintand each purported catlse of
action therein,D efendantsallege thatPlaintiffisbarred from m aintaining any claim againstthese

- 4-

1 .D
2
3
efendantsby the doctrine ofequitable estoppel.

FO URT H AFFIR M AT FVE D EFEN SE
A
s aseparate and aftirm ative defense to the A m ended Com plaintand each purported cause of
action therein,Defendants allege thatPlaintiffisbarred &om m aintaining any claizn againstDefendants

5 by thedoctrine ofw aiver.
6
7
FIFTH A FFIR M A TIVE DEFEN SE

A
s a separate arld affinnative defense to the A m ended Com plaintand each purported cause of
action thereinoD efendantallege thatPlaintiffisbarred &om m aintaining any claim againstDefendants

9 b
y the Plaintiffk unclean hands.
10
SIX TH A FFIRM A TIVE DEFEN SE
11
12
13
14
15
s a separate and am rm ative defense to the Am ended Com plaintand each purported calzse of
action therein,Defendr ts allege thatPlaintiffisbarred from m aintaining arly claim againstDefendants

as any dam ages were notcaused by any action ofDefendant.
SEV ENTH A FFIR M AT IV E D EFEN SE
A
sa separate and affsnnative defense to the A m ended Com plaintand each purported catlse of
16
action therein,D efendantsallege thatPlaintiffisbarred from m aintaining any claim againstD efendants
17 by Plaitiff'sunfaircom petition.
18
19
EIG H TH A FFIR M A TIV E DE FENSE

A
s a separate and affirmative defense to the Am ended Com plairltand each purported catlse of .
20
action thereinvD efendants allege thatato the extentarty D efendantisfound liable,D efendantqare
21
,
entitledtoset-offarld/orrecoupment9om Plaintiif.
22
23
24
25
26
N ECT H A FFH eH AT n V DEFEN SE

A
sa separate and am rm ative defense to the Am ended Com plaintand each purported cause of
action therein,Defendantsallege thatPlaintiffhms suffered no harm ,orin tlze alternative,thatany hann

allegedly sufrered by Plaintiffw as solely the resultofthe its ow n negligenoe orthatofit
-sagentsand/or
em ployeesand notthese defendants.
27
28
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,
Page 140 of 143
x.
1 .
w e
T ENTH A FFIR M A TIV E D EFEN SE

-
s a separate and aftirm ative defense to the Am ended Com plaintand each purported causeof
action therein,Detkndantsallege thatPlaintiffisnotthe ownerofany technolog.ysubjecttoits

4 C
om plaint.
.
5
EL
EV ENT H A FFIR M A TIV E D EFEN SE
6
A s a separate arld affinnative defense to the A m ended Com plaintand each purported cause of
7
actiontherein,DefendantsallegethatthisCourtlackssubjectmatterjurisdictionovertheComplaint,as
8 i
tispreem ptedby 17 U.S.C.j301.
a
TW ELFTH A>FIRM ATIVE D EFENSE
10
1l
s a separate and affm native defense to the Am ended Com plaintand each purported causeof
action therein,Defendantsallegethatany actsofDefendantswereptivileged.
12
W H EREFORE
,
13
'l
.
14 di
DefendR t,DennisMontgomery,praysforjudgmentasfollows:
Thatthe Plaintifftake nothing by way ofhis Am ended Com plaintand thatthe sam e be
'
smissedwithprejudice;
15
2
.
16
ThatjudpnentbeenteredagainstPlaintiffandinfavorofDefendantsbaseduponthis
,
D efendants Cotm terclaim .,
17
3
.
ThatDefendantbeawardeda reasonablesum msand forattorney feesarid costsofsuit
18 i
ncurred herein;
19
4
. Forsuch ot
herand furtherrelief astheCourtm ay deem properirlthe prmnises.
:20
C O U N T ER C L A IM
21
..
'
C
otmterclaim ants,D ennisM ontgom ery and the M ontgom ery Fam ily Tnzsta hereby allege agaimst
22 Pl
aintiftl Counterdefendant, Etreppid Technologies, LLC., Counterdefendant, W arren Trepp,
23 C
24
'
ounterdefendantDonald Rum sfeld in his officialcapacity as Secretary ofD efcnse forthe United States
ofAm erica,thefollowing ClaimsforRelieft
25
INTR O D UCT IO N
26
.
This is all action arising outofthe unauthorized tlse ofextrem ely valuable copyrighted
27
'
com patersoftw areteolm ology by Counterdefendant e'freppidTechnologies, Inc.,and Counterdefendant,
- 628
.

1 'W
2
3
4
5
arrenTrepp.Notcontentto reapmillionsofdollarsonthetechnologywithoutalicense,themajolity
shareholderofe'rreppidTeclmologies,CounterdefendantW arren Trepp,used llismajority position to

squeezeout,diluteand m isappropriatevastsum sofm oney from theinventorand fellow shareholder,Dennis
M
ontgom el'
y,and the M ontgom el'
y Fam ily Trtzst. M oreover,asfully stated below,even thosebreaohesof
fid
uciary duty did notsatisfy M r.Trepp.Hew entfurtherby trying toobtain Counterclaim antM ontgom ery
6 F
,
am ily-rrustsextrem ely valuableteclmology through aknow ingly falseclaim thattheM ontgom ery Fam ily
y
.
Trust'stechnology wmscontributed to thecom pany by M r.M ontgom ery,then attem ptingtp reverseengineer
8 th
e softw are in direct violation offederalcopyrightIaws. Because Counterclaim ant M ontgom ery has
9 signed asecrecw ath w ith United Statesby and through theDepartm entofD efense,arid becausehisdefense
1()
'
ofthe com plaintrequires him to breach thatsecrecy oath with the United States,the United States of '
11 A
m erica,by and throug,h Secreta!'y Rum sfeld is an indispensable party to this litigation and is therefore
12
m ade a counterdefendantin this counterclaim .
13
PAR TIES
14
.
Counterclaim ant D ennls M ontgom ely is an individualw ho resides in W ashoe C ounty,
15
evadaandistheinventorofa1lteclmologythatissubjecttothisaction.Montgomeryisalsoaminoritk
l6
shareholderin e'rreppid Technologies,Inc.

1'/
3
q:
,,
CounterclaimantMontgomeryI'amilyTrust(the Tl-ust)isaCaliforniairrevocabletnzst
18 f
orm ed and operated underthe law softhe State ofCalifom ia and isthe ownerofthe copyrightsatissuein
19
thisaction.
..
20
4
.
Counterdefendante'
Freppid Technologies,Inc.,isalleged in the Com plaintin thisaction to
21 b
'
e a California comoration,with an usualplace ofblzsiness in Washoe Colmty,Nevada. However,

22 C
otlhterclaimantswerejtlstnotitiedbyPlaintifrthatitsdesignationintheCaptiontotheComplaintwasin
2j
.
..
error,and thatPlaintiffis actually e'rreppid Teclm ologies,LLC,a N evada D m lted Liability Com pany.
24
5
.
25
26
CounterdefendantW azrenrrreppttTrepp''lis,uponinfonnationandbelietlanhzdividualwho
residesinW ashoeCounty,Nevadaandistllemajolityshareholderine'rreppidTechnologies.
6
Cotm terdefendantD epartm entofD efenseisa departm ent/agency oftheoftheUnited Sttes

27
'
ofA m erica.
.
28
7.
.
'

)
<-
7
.
Counterclaim ants are ignorantofthetrue nam es and capacitiesofCounterdefendants sued
2 h
erein as DO ES 1 through 10,inclusive,and therefore sue said Counterdefendants undersuch fictitious
3
nam es.Counterclaim antsare inform ed and believe thatsuch fictitiousCounterdefendants are respoasible
4 i
n som e m annerforthe eventsand happeningsherein referred to,and proxim ately caused the dam age to
5 C
ounterclaim ants asherein alleged. Plaintiffs w illseek leave to am end this Counterclaim to allege their
6
true nam es and capacitieswhen thesam ehave been ascertained.
7
FA C TUA L ALLEGATIO N S
8
DennisM ontgom er,y(Montgomery)isaninventorandsof

twaredeveloper.Inorabout1982,
9 M
ontgom ery d- eloped certainsoftw areforwhich + eU .S.CopyrightO ffice granted aseriesofcopyrights.

l0 'Th
eM ontgomeryFamilyTrustt'rrtustlistheownerofthecopyrights(theE<copyrights').
l1
A Aertheregistration ofthesecopyrights,M ontgom ery developed derivativew orksbased on

::
,, a
12
the teclm ology originally copyrighted in 1982 and in 1986 (the Derivative W orks ).
ose uniquely
l3 im portantderivativeworkswere ftzlly developed priorto 1998 and are the exclusivepropedy ofthe Trust.
14
'
10. ln or aboutSeptmnber 1998,M ontgom ely and CounterdefendantTrepp,fonned lntrepid
l5 T
eclmologies,LLC,a Limited Liability Company. Pursuantto a Ktcontribution Agreemefd''dateb
16
eptember28,1998,betweenTrepp,Montgomely andtheTrust,inexchangeforaf1% rpercentitzterestin
l7 I .
ntrepid Technologies,LLC to M ontgom ery,tlle Trustcontributed specific teclm ology to Intrepid t112 is
18 identified in paragraph 1.2.1ofthe Contribution Agreem ent.

19
l1
.
That Paragraph specifically identities the contributed technology as ttlle software
20
com pression teclm ology contained on thatcertain SoftwareCom pression Engine D evolopm entProgrmn
21
.
'
O ntaiped On CD 'N O.1.':
22
12
Sip zicantly,becalzsetheTm stowned otherteclm ology,Paragraph 1.3 ofthe Contribution

23 A
K:
greem entstatesthattheTrustisexpressly not contributing,transferring or conveying to lntrepid tm der
24
.
thisagreementorby any otllermennA,norisIntrepidacquiring from ltheTrustjanyothertangibleand
25
'
intangible mssetsof'the TrustorM ontgom ely.
26
13
.
Thtzs,pursuarltto the express term softhe Contribution A greem entaIntrepid only acquired
27 th
e softw are com pression teclm ology contained on CD N o.1 and nothing else.
28
8-

Ne
'
14.
In particular,the D erivative W orksw ere notpartofthe soware com pression technology
containedonCD No.1thatissubjecttotheContributionAgreement.
l5
Subsequently,TreppbegantodiluteM ontgomery sshareinelntrepidand,usedhismajority
nterestinelntrepidtoobtain favorabletreatmentforhimselfasamajorityshareholderattheexpenseof
ontgom ery.
l6
In orabout2003,e'FreppidTechnologiesbegan sublicensingthe DerivativeW orkstovarious

7
entities,including the United Statesgovernm entand collecting licensing feesforthesublicenses.e-l-reppid
8
w asnevergranted a license to the D erivative W orksby, and failed to pay royaltiesto,theTrust.
9
17
,
.
Atno tim e did any of the Counterdefendantshave a written license to exploitthe Trust s
10 D
.
erivativeWorksasrequired by 17U.S.C. 204(a). Asaresult,atbest,e'rreppid only oanclaim (if
11
anything)anoral,non-excltlsivelicensetoexploittheDerivativeW orkspursuanttofederalcopyrightlaw.
12
18
.
A lthoug,h the Trustdeniesthatitgrantedany oralnonexclusivelicenseto e'Treppid,any such
13
orallicense wasterm inated by the Tnzston Janualy 19,2006,orally and by letterdated January 25,2006.
14
19
.
e'Freppid hasfailed to and reftzses to cease exploitation ofthe D erivative W orksand hasso
l5 f
arrefused to accotm tfor any prolits obtained as a resultofits unlicensed exploitation oftheD erivative
16
works.
17
20.
M oreover,becattseofthehighlyconGdentialandsensitivenatureoftheDerivativeW orks,
18
tlzeD erivativeW orlcsareprotected from reverse engineering ancl/ort

ampelingby sophisticated safegaards.
l9
20
21 W
22
s a result of e'Freppid s im proper attem pts to obtain and revelse engineer the D erivative W orks,
ounterdefendantshave,upon inform ation and belief,destroyed partoftheiEsouroecode''oftheD erivative
21
.
23
orks,furtherhanning Counterclaim ants.

In oraboutthe sam e tim e,M r.M ontgom ery executed atEsecrecy oath''w ith theDepartm ent
ofDefense,whichpreventshim from discttssing,disclosingorevenidentifyingthesubjectmatterofhis
24
. .
w ork forthe United SG teson penalty ofcrlrnlnalprosecution fortreason.

25
FIR ST CLA IM FO R R ELIEF
26
(D
27
22
.
28
eclaratory ReliefAgainstUnited States)
Counterclaim ant.sincop oratebyreferencetheforegoingallegatiorlscontained inparagraphs

-
9-

1 1
through 21 asthough restatcd herein in 1 11.
2
23
.
An acttlalcontroversy hasarisen and existsam ong Counterclaim antsand Counterdefendants
3
underthe D eclaratory Judgm entAct. n e Trustcontends thatitis the exclusive ow neroftheD erivative
4 W
orks atissue in thisaction. Counterdefendants Trepp and Etreppid dispute thiscontention.
5
24
,
,
.
H ow ever,in orderto defend counterdefendantsTrepp sand e'
l-reppid sclaim softradesecret
6
m isappropriation,M ontgom ely w illbe obligated to disclose thenat-ureofthetccim ology,the type ofwork
7
thathe hasperform ed on the governm entcontracts msing his teclm ology versus thatofe'rreppid,and the
8
capabilitiesofhistechnology versusthatofe'
Treppid in perform ing work forcertain govenunentagencies. .
9 E
ach ofthese dhclosuresviolateshis secrecy contractw it.
h the governm ent,including the Departm entof
10 D
efense and otheragencies,and isdirectly and intim atelyrelated to thenationaldefense.Disclosureofthis
11 i
nformation islikely a violation ofthe NationalEspionageAct,l8 U.S.C.j 793(d),whichprecludes
l2 di
sclosure ofclassified infonnation to those notauthorized to receive it.
l3
25
.
M oreover,thesedisclosuresgo to the vel'y coreofthedefenseofthiscmse,m aking itvirtually
14 if
notliterally im possibleto defend w ithoutviolating thesecrecy oath and com prom ising nationalsectuity.
15 A
controversy hastherefore arisen overthe nature and scope ofM ontgom efy's ability to defend in lightof
16 hi
ssecrecy contractw ith the United States. M ontgom ely,on theone hand,m ustm ake such disclosuresin
17
orderto establish hisownership interestsillthetechnology. Upon inform ation and belief,theUnited States
18
contends that such disclosures are absolutely prohibited by the tenns of its secrecy agreem ent w ith
l9 M
ontgom ery.
' '' '.20
26
.
21
Counterclaim antsdesireajudicialdeclarationthatadisolosm ebyCounterclaim antsofthese

'
'
'
mattrs in orderto defend againstthe claimsin the complaintwillnotyiolatethe conyactbetweeti
22 M
ontgom ery and the United States to m aintain those secrets, and/or a declaration of inzm unity for
23 M
ontgom ery from theU nited States.

'
.
27. A declaration of rights is necessaly and appropriate at this tim e in order that
25 C
.
24
otmterclaimantsm ayascertain theirrigahtsanddutieswitlzrespecttoCounterdefendants,andwithrespect
26 t
o alzy third partieswho m ay claim an interestin eitherthe Copyrights orthe D erivative W orlcs eitherby
27 li
,
censeoralleged sublicense,w ithoutviolatirlg M ontgom ery s secrecy oontractw ith theUnited States.
28
10-

1
SECO ND CLAIM FO R RELIEF
2
3
(A
28
.
ccounting)
Counterclaim ants reallege and incorporate by reference eacll and every allegation in
parap aphs 1through 27 setforth herein.

5
29
.
Counterclaim antTrustisthe exclusiveow nerofthe Copyrightsand the Detivative W orks.
6
30
.
7
8
9
10
Counterdefendantshavewrongfullyexploited theCopyrightsand DerivativeW orksw ithout
paym entto theTnzsttherefor.

31
.
A s a result, the Trust is entitled to an accounting of a1l profits derived from
C
,
ounterdefendA ts exploitation ofthe Copyrightsand the D erivativeW orks.
PR W ER FO R R ELIEF
11
WI '
IEREFORE,Counterclaim antspray to tlle courtfor:
12
l
.
OrderCounterdefendantstopay Counterclaim ants such dam agesasCotm terclaim ants have
13
,
,
sustained in consequence ofCounterdefendants infringem entoftheTrtzst scopyrightsand to accountfor
14
and payoverto the-l'rustallthe protit-sthatCotmterdefendantshave derived from theirw illfulinfringem ent
15
,
.
ofCounterclaim ants copyrights,
16
2
-
17
18
considerjustandproper;and
3
.
19
20
5
.
21
Order Counterdefendanti to pay such damages to Colmterclaim ants as this courtshall
Aw ard Counterclaim antstheirattom ey feesaccording to proof;

A'
w ard Counterclaim ants theircosts'and
' - -
'
Grantsuch otherand furtherreliefmsthe COI.

IIIdeem sjtlstarld proper.
DATED
: Febnzazy l7,2006
22
'
.-
LAW OFFICE OF LOGAR & PULVEK PC
' 23
'
24
B
y:
Ronald J.Logar,Esq.
Attorney forCounterclaim antDennisM ontgom ery
and Cotmterclaim antM ontgom ery Fam ily Trust
N evada BarN o.303
225 S.Arlington A ve. Ste.A
Reno,N evada 89501
..
11-
25
26
27
28
C ERT IFICA TE O F SERV IC E
ursuantto NRCP 50)),Icertify thatlam anemployee oftheLAW OFFICE OF LOGAR &
3 PU LVER
,
4
5 M
ail,Ret'urn Receiptrequested..
sentvia FederalExpressorotherovernightdelivel'
y senice
d
elivered via facsim ile m achine to fax num ber
7
8
'
.
eaused to be delivered viaReno-carson M essengerService
9
10
the foregoing docum ent,addressed to:
11
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-
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5441 Kietzke Lane

Second Floor
Reno,N V 89511
13
l4
17
l8
and
ls
16
ts
PC,and thaton the 28 day ofFebnzary,2006, l
deposited form ailing in the U .S.M ail,w ith suffcientpostage affixed thereto via Certified
PillsburyWinthropShawPittmam LL.P. &(.t2.-'

jtls ostaz u,&lr.au
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.
'
Facsim ile:650-233-4545
19
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7,1
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LegalA
.LU CA
stantto the
Law Ofliceof.Logar& Pulver,PC
22
23
24
25
26
27
28
..
12-
!Case 3:06-cv-00056-PMP-VPC Document 644-6 Filed 05/28/08

'
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Page 4 of 137
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H ale Lane Peek D ennison and Howard
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(AdmittedProHac ViceonFebruary6,zppo
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Attorneysforplaintifre-rreppid Technologies,Inc.
1l
7 'gc 12
IN THE SECOND JUDICIAL DISTRICT COURT OFTHE STATE OFNEVADA
UjJt
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HJ'
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g f ja ETREPPIDTECHNOLOGJES,L.L.C.,aNevada
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ok ;$ 16
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CASENO. CV06-00114
pj
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aistis,
DypT.N o . 9
vs
DENNIS MONTGOM ERY,anindividual'THE
r<
c'= 18 MONTGOMERY FAMILYTRUST;DEW IS
M ONTGO M ERY and BREND A M ONTGOM ERY ,

l9
astrusteesforTH E M ON TGOM ERY FAM ILY

TRUST;and DOES 1 through 20,
20
2l
'
'
efendants.
22 AN D RELATED A CTION S
/
23
D ECLM LA
TIO N O F JE RRY M .SNY DE R IN SU PPO RT O F PLM NTIFF ETR EPPID

24 TECH NO LO GIES.L.L.C.'S M OTIO N TO DISM ISS C O U NTER CLM M :A ND ,OPPO SITIO N
TO PREEM PTIO N BR IE F AN D TO M O TIO N TO D ISM ISS FO R LA CK O F SUBJECT
25
M ATTER JURISDICTIO N;M EM O RA ND UM O F PO INT S A ND A UTH O R ITIES
. .
26
Pursuant to N .R.
S.j 600A.070.3,Plaintiffhereby lodges the enclosed record conditionally
27 tmdersealand willmakea motion orapplication to the Courtforan orderpermitting llw record to be

-
28 filed underseal.
::oDMAwcDocsLHL> ox cso17492$I
Page 1Of4
--

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k
:
Y-
1,Jen'yM.Snyder,declareunderpenaltyofperjuryunderthelawsoftheStateofNevada:
l.
l am an attorney dtlly licensed to practice in the State ofN evada and am an associate
w ith the law firm of H ale Lane Peek Dennlson alld How ard. l represent e'
Treppid Teclm ologies,
4 L.L.C.(QteTreppid'')intheabove-captionedlnattcr.lhavepersonalknowledgeof,and it-called,could
5
com petently testify as to,the m atters contained herein.
2.
A ttached as ExhibitA to this Declaration is a true and correctcopy ofexcerpts from
7 Volume 11ofthe tlltough)TranscriptofProceedings,Hearing - Preliminary lnjunctiony''which '

8 hearing took T lace before Judge Perry ofthe Second JudfcialDistrictCourtof the State of Nevada,
9
=
11
vt
which took place on February 7,2006.
10
3.
Attached as ExhibitB to this Declaration is a tl'ue and correctcopy ofexcerpts from
2OIt.2. 11 the t-l-ranscziptofPlaintiff's M otion for Sulnmazy Remand of Proceedings to State Couzt''which
;tf
=l'
!
ZJc 12 hearingtookplacebeforeJudgeMcKibbenoftheU S.D istrictCourtfortheDistrictofN evada.w hich
q 8:
rl* l
3 tookplaceonJanuary31,2006.
j
g
.
.
1
'-'
oi Y
?t 14
4
AttachedmsExhibitC tothisDeclarationisatrueandcorrectcopyoftheKQNoticeof
.
Q Q Z-
t.1 os 15 RemovalofActionunder28U.S.C.jl441(B),''withoutitsattachments,whichwastiledwith the

;1
l)
:1
:2j
o (w ;t$ 16 U .S.D istrictCourtforthe D istrictofN evada on Januarv 25,2006.
k;fi
'
Q V 17
5. Attached as Exhibit D to thisDeclaration is a tnze and correctcopy ofttplaintiff
t
?(
7r
f1
,
,,
'
,.
:::
18 e'rreppid Teclmologies,L.L.C.s Ex Parte M otion forSumm ary Rem and, withoutits attaclunents,
19
w hich w as filed with the U.S.D istrictCourtforthe D istrictofN evadaon January 25y2006.
20
6.
Attached asExhibitE to thisDe'claration isatrueand correctcopy ofthettArlswerand
21 Counterclaim ,''which w as filed w ith the U.S.D istrictCourtfor the DistrictofN evada on January 27,
22
23
2006.
7.
Attached msExhibitF to thisDeclaration isa trtle and correctcopy ofthe dopposition
24 to Ex Parte M otion to Rem andy''w hich w as fiIed with the U .S.D istrict Court for the Distlict of
25 N evada on January 30,2006.
26
8.
Attached as E xhibitG to this Declaration is a true and correctcopy of the <keply in
27 Supportofe'Freppid Teclm ologies,L.L.C.'SEx Parte M otion forSum m azy R em and,''which was f1ed
28 w ith theU .S.DistrictCourtforthe D istrictofNevada on Januar'y 30,2006.
::oDMATcx cshHL> ox csol7492I
Page 2 of4
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js
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9.
A ttached as ExhibitH to this Declaration is atl'

ue and correctcopy ofthe 6'Com lllaint,''
2 which w as filed w ith the U.S.D istrictCourtforthe DistrictofN evada on January 31,2006.
10.
A ttached as ExhibitI to this Declaration is a true and correctcopy of the Order that
4 was entered by Judge Perry ofthe Second JudicialDistrictCourtofthe State ofNevadaon February 8,
5
2006.
1l..
Attached asExhibitJ to this D eclaration is a true and correctcopy ofthe ttpreem ption
7 Brief,''which was filed with the Second JudicialDistrictCourtoftheStateofNevada on February 7,

' 8 2006.
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A ttached as ExhibitK to this Declaration is a true and correctcopy ofthe ddM otion to
10 Dismiss First Amended Complaint for Lack of Subject Matter Jurisdiction;Motion for Order
1l Shortening Tim e forPlaintiffs'Responsey'' which was filed with theSecond JudicialDistrictCourtof
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QQ:
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14. Attached as ExhibitM to thisDeclaration isa true and correctcopy ofsevral
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17 registrationfonnsf1edwiththeU.S.CopyrightOffice.
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DATED :This16th day ofFebruary,2006.
19
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Page 3 of4
PR O O F O F SERVICE
2
3
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i,G aylene Silva,declare:

Iam em ployed in the City ofReno,County ofW ashoe,State ofNevada by the Iaw offices of
H ale Lane Peek D ennison and H oward. M y business address is 5441 Kietzke Lane,Second Floor,
Relao,Nevada 89511. 1am overthe age of 18 yearsand nota party to this action.
H AN D D ELIV ER Y O NLY I am readily fam iliar w ith H ale Lane Peek Dennison and
How ard's practice for collection and delivery of its hand-deliveries. Such practice in the ordinary
course ofbusinessprovides forthe delivery ofal1hand-deliverieson the sam e day requested.
OnFebrtlary 16,2006,lcausedtheforegoingDeclarationofJerryM .SllyderillSuyportof
PlaintiffEtreppid Technologies,L.L.C.'S M otion to D ism iss Counterclaim ,and O ppositlon to
M em orandum ofPoints and A uthoritiesto be hand-delivered by providing a trtze and correctcopy

to H ale Lane Peek Dennison and H oward'srtlnners with instnlctionsto hand-deliverthe sam e to:
PreemptionAriefand toM otion toDismissforLackofSubjectM atterJurisdiction;

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Facsimile:(775)786-7544
RonaldJ Logar,Esq.
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Eric A .Pulver,Esq.
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; , 13 Reno pzv 895:1
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1declare underpenalty ofperjury underthe lawsofthe United StatesofAmerica thatthe
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j 6 15 foregoingistrtzeandcorrect,andthatthisdeclarationwasexecutedon Februaryl672006.
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:IODMAPCDOCVHLRNODOCSU1749281
Page 4 Of4
Page 8 of 137
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E X H IB IT A

Page 9 of 137
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SECOND JU DICIAL DISTRICT CO URT O F THE STATE OF N EV AD A

IN AN D FOR Tl'lE COIJNTY OF W ASHO E
BEFORE THE H ON ORABLE R OBERT H.PERRY,DISTRICT JUD GE

*
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ETO PPID TECHNOLOGIES,L.L.C.,a

N evada Lim ited Liability Companyy
Plaintiff,
CaseN o.CV06-00114
V S.
Dept.No.9
DENN IS M ON TG OM ERY,an individual;
THE M ONTGO M ERY FA M ILY TRUST;
DEN NIS M ONTGOM ERY and BREN DA
M ON TGOM ERY,astrusteesfor'ITIE
M ON TGOM ERY FA M ILY TRU ST,and
D OES lthrough 20,
Defendants.
/
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SE A L ED
VO LUM E 11of11
TM N SCRIPT OF PROCEEDING S
HEARIN G -PRELIM IN ARY INR JNCTION
Tuesday,February 7,2006
RENO,NEVADA
Reported By: CECILIA V OHL,F;V CCR #246,RPR,CRR,CCP
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Page 10 of 137
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A PPEA R A N C ES
Forthe Plaintiff: HALE,LAN E,PEEK,DEN NISON

3
Ahl'
ll H OW ARD
BY:STEPHEN J.PEEK,ESQUIRE
AndJERRY M .SNYDER,ESQUIRE

Reno,N evada 89511
PILLSBURY W IN THROP SH AW PIU M AN
And
BY:DAVID A.JAKOPIN,ESQUIRE
7
.
2475 HanoverStreet
Palo Alto,Califom ia 94304-1114
Forthe Defendants: LA W OFFICES O F LOGAR & PULV EROAPC
BY:RONALD J.LOGAR,ESQUIRE
AndERIC A.PULVER,ESQUIRE
10
225 S.A rlington Avenue,Suite A

Reno,Nevada 89501
And
FLYNN & STILLM .
AN
11
12
BY:M ICHAEL J.FLYNN.ESQUIRE

AndPHILIP H.STILLM AN,ESQUIRE
13
224 Binningham Drive

Suite 1A 4
CardiffzCalifornia 92007
14
15
-000-
16
17
18
19
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20
21
22
23
24
2
--
No*vr)
->..''
-
1 M r.Trepp'stestim ony aboutGunga Din and -2
A. Right.
Q. --discussingboth pattem recognitionanddata
4 com pression before the dealwas signed on September28th,1998.

5
A. Yesalheard.
Q. Andyouheardit--
A . Yes.
Q. --isthatcorrect?
A . Y es.
10
Q. W asit% t.
11.
ft11:/
11
A . 1don'trecallmzything to do with Gunga Din.
12
Q. Doyou recallanything aboutpattern recopzition?
13
A . No.
14
Q. lsitpossiblethatyou hadthatconversatiol
z?
15
A . N o.
16
Q. W hatwasin yourmind--whatwasyourintentmsa
'
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17 contracting party when you signed the contribution agreement

18 and form ed e'
rreppid,then Intrepid Technologies,w ith M r.Trepp
19 ms to w hatyou were putting into the company?
20
M R PEEK : YotlrHonor--I'm son'

y. 1apologize.
21
TI-IE CO URT: Go ahead.
22
M R.PEEK:Myobjectionistointent.Ithinkthe
23 Courtallow ed 'tmderstoody''butintentyIthink,detinitely
24 would go to val'y the term s and conditionsofthe contract,as

131
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--h.
'
1 opposed to hisunderstanding.
'I'HE CO URT: W ell,Ithilzk thatthere aresorne claim s
3 here asto w hatthe contractsays and whatitm earls and what

4 the partiesintended.A nd Iknow M r.Trepp talked aboutw hat
5 ltisintentwas,and Ithink itwillaid m ein tmderstanding

6 exaetly whatwe'
re dealing w ith. I'm going to overrule the
7 objection.Ithink it'snotnecessarilyto contradictthe

*
8 terms oftlte contract,butto explain them .

9
So,go ahead.
10
T'
H E W ITNESS: Data com pression.
l1 BY M R.FLY NN :
12
Q. Andatthispoirltintime,September1998,how many
l3 differenttechnologiesdid you have sophistfcated knowledge of
.'
14 w ith regard to computerprograrnm ing,otherthan data

15 compression?
16
A . W ell,Ihad spent,you knom the last10 or15 years
l7 working in m edicine,so Ihad a lotofexperience in building

18 m edical-type devicesand m edicalprograrnm ing through alotof
19 variety ofareaa both in tlleclinicallabolatory and the
'
- '--
20 medicalrecordsand X-ray. And 3Netwas building a large-scale

21 clinicalinfonnation system to do that.
22
Q. So youhada1lthatsophistication?
23
A. Yes.
24
Q. W hatothersophisticatedknowledgedidyouhave?
132
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hA
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A . W ell,obviously,Ihad a lotofexperiencein pattern
2 and anom aly recognition because itwas used in those

3 technologies.
Q. Sowhen you madethisdealwith M r.Trepp,again,what
5 was yourunderstanding,tmderstanding the differentiation
6 be- een these technologies,as to whatyou w ere putting in?

7
A. Datacompression.
Q. Atanytime,inanydiscussionswit.
h M r.Trepp prior
9 to Septem ber28th,do you recallany disctzssion aboutputting

10 in any othertechnology otherthan datacom pression?
1l
A . No.
12
Q. ln fact,yousigned the 1998contribution agreem ent,
13 sir?
'
14
A . Yes. .
15
Q. And yout
reawareofitsprovisions?
16
A . Yes.
17
Q. You'reawareofthatprovisiona1.2.1,whichsaysthat
l8 the only thing being given isthe teclmology - the softw are
l9 com pression enginedevelopm entprogram contained on CD
20 Ntunber 1?
21
A . Yes.
22
Q. Did you,infactyprepareCD Number1?
23
A . Yes.
24
Q. W hendidyouprepareit?
l33
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2
1
.
...
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A. Idon'tlcnow the exactdate,butin thattim e fram e.
Q. Did you deliverit?
A. Yes.
Q. Youwanted to form thiscompany;isn'tthatcorrect,
5 sir?
6
A. Yes.
Q. You wanted toputthedatacompression teclmology you
8 knew into thatcom pany,

'isn'tthatright,sir?
9
A . Yes.
10
Q. W hatwasthethen-bestform thatyoucould utilizeto
11 putthatdata compression technology into the company?

12
A . 1putiton a CD . Isthatyourquestion?
13
Q. Yes.
14
A . Yealz,lputiton a CD.
15
Q. And who didyou givetheCD to?
16
A. Doug Frye.
17
Q. W heredid yousig.nthedoctunents,the September28th,
18 1998 contribution agreem entawhich hasbeen m arked as
19 Exhibit3:
7
20
A . Ibelieve in m y hom e in Lodi.
21
Q. AnddidFryegiveittoyou?
22
A. Yes.
23
Q. Did you haveanydiscussion with M r.Fryeaboutthe
24 provisiorus,the language,in the contribution ap eem ent?

l34
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1
A. Yes. Im ean,they wanted theCD N tzm berl,which
2 contained tlze software fordata com pression.
Q. lfyouhadn'tdeliveredCD Number1,wouldthecompany
4 have started?
5
A . No.
Q. How couldthecompany havestartedifitdidn'thave
7 CD Num ber 1:2

*
A . No,itdid. Tlzatwasthe point.
Q. So,you gavetheCD NttmberltoM r.Frye?
10
A . Yes.
1l
Q. Do you know whathedid withit?
12
A . N o.
l3
Q. Andthereatter,afterthedealwasmade>you gave
14 M r.Frye CD Ntzmber l. Shortly thereafter,did 111..Trepp leave?

l5
A. Yes. He left,1believe,in Novem berorDecem ber
'
16 of'98.
17
Q. Andwhowasnmning thecompanyafterheleft?
18
A . Doug Frye.
19
Q. W hatdid M r.Fl'yedo?
20
A . W ell,he told m e thatW arren wasn'

tgoing to beback
21 untilM ay orJuneand thathe wasthe one thatwasin charge of

22 the com pany.
23
Q. Nom 1etmereferyoutothecontribution agreement,
24 which hasbeen m arked asExhibit3,to paragraph l.3,''Excluded

l35
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l Assetsand Liabilities.'' Do you recallthatprovision,sir?

2
A . Yes.
Q. Anddoesthatprovisionaccuratelysetforth the
4 agreem entthatyou m adew ith M r.--with M r.Trepp?

5
A . Yes.
Q. And itwasyourunderstandingthatyou weren'tgiving
7 any teclmology otherthandata com pression and the data
'
8 compression on CD Num ber l;is thatcorrect?

9
A. Yes.
10
Q. Didyou andM.
r.Fryehaveanydisctzssionaboutthat?
11
A . W ellaIhad to deliverthe CD to him .
12
Q. Soitwasagiven?
13
A . Yes.
14
Q. Now,whattypeofwork didM r.Treppdoin rumling
15 then Intrepid TechnologiesafterM r.Trepp lei?

16
A . To be honestwith you,1don'tknow becausel
17 continued to do m y work,and 1wasw aiting forW arren,
18 obviota y,to getback.
19
Q w hattypeorworkwereyoudoing?
'
20
A . Data com pressiow working on the data com pression
- -'-
21 m odel.
22
Q. Describe,ifyou can,insomedetail--seeifyou can
'
23 flesh thatouta little bit. W ere you worlcing on a com puter?
24
A . Yes.
136
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.- .
w?)
Q. W hatwere you doing? W ereyou creating Iinesofcode?
A . Imean,Iwas gcnerating codeand creating different
3 varietiesofthatparticulartechnology.
Q. Fordifferentapplications?
A. Yes.
Q. W hattypesofdifferentapplications?
A. W ell,data com pression insideofW indows,and video
8 and audio requiresa specific interface so you can hook to the

9 hardware devicesin W indows. So,Iwasbuilding those
10 interfacesforthose differenthardware devices.
l1
Q. Andwhatwasyottrtypicalwork routineduringthat
12 tim e frame,i.e..early O ctober l998through the end of
13 Decem ber'98:3
'
14
A. Iworked eight,ten hours aday on the software.
15
Q. During thattimeame?
16
A . Yes.
17
Q. l-low m any daysaweek?
18
A . Probably five orsix.
19
Q. Duringthattimeframe?
20
A. Yes.
21
Q. M d forhow longdid you continuedevelopingdifferent
'
'
22 applicationsw ith thatdata com pression technology?

23
A . Continuotlsly.
24
Q. Uptmtilwhattime?
137
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w, 2
A. UntilIwas fired.
Q. Untilyou werefired? Okay.
N ow,between the tim e you were working exclusively in
4 building those m odels thatyou described,forgetting,forthe

5 mom ent,any anomaly detection in connection with governm ent
6 classified issues,did you do any othertype ofdata

7 compression work ate'rreppid Teclm ologies?
*
A. W ell,we were developing an audio and a video arld a
9 data Kodak in m ultiple forms.
10
Q. Alzdhow manylinesofcodeweretypically being
1l written perday in cormection with theseapplicationsyou were

'
12 preparing?
13
A . By m e personally orcollectively?
14
Q. W ell,let'sfirsttalk youpelsonally.
15
A. That'
svery hard to determ ine. Thousands.
16
Q. Andcollectively,how mally linesofcodewcrebeing
''
l7 written?
18
A. Five to ten thousand. .
19
Q. Perday?
20
A . Yes.
21
Q. A1lintia/acompression?
22
A . Yes.
23
Q. Atthis--andfor- andthatcontinuedalltheway
24 up untilthetime you were flred?

138
--

''
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wp
...
A . That'scorrect.
Q. Now)whereis,today,aIlofthose --beforewe getto
3 thesouzcecodes--allofthelines ofcode thatwere created

4 overallofthose yearsforthe data compression?
5
A. In e'
Treppid.
Q. Alzd you'veheard thistestimonysayingthishasbeen
7 deleted and thathasbeen deleted. lfyou walked overto

*
8 e'rreppid tomorrow m orning,could you fm d the source codes:

9 first foral1ofthoselinesofcode?
10
A. A sstlm ing ithasn'tbeen destroyed,yes.
1l
Q. Okay.Now,Iet'
stalka littlebitaboutthe--what
12 you call whaq ''copy and destroyy''when you'redoing a --when

13 m u'
re creating som ething on a server.
14
A . Ithink whatyoudre asking is,w hen people arew riting
15 computerprogram s,the computersare continuously building and

16 destroying Gles,Im ean,hundzedsoffiles,filesthatare
17 used in theprocessofm aking the sourcecode.
18
Q. So,atevery workstationkeveryprograznmeris
19 continuously creating and destroying evel'y time,virtlm lly,he

20 w ritescode?
21
A . That'scorrect.
22
Q. Alldthathasalwaysbeenthewayate'
l-reppid
23 Teclm ologies;isthatcorrect?
24
A . The natureofbuilding com plex program s,thatisarl

139
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...ee '
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.a
l inherent--you know,atask in it.
Q. Okay.
A . Thingsare builtand taken apart.
Q. Now,haveyoueverdestroyed in any wayortaken any
5 data compression technology from e'

Freppid?
6
A. No.
Q. Onhow manydifrerentcomputersate-freppid doesdata
8 com pression teclm ology appear?

9
A . Overa hundred.
10
Q. Onhow Inanydifferenthard drives?
l1
A. H undreds. Tlu'eeorfotlrhundred,probably.
l2
Q. Andweheardafigureofaboutl50millionbytesof
13 inform ation,wasit?
14
A . Files.
15
Q. Files?
16
A . Yes.
17
Q. And51.Venabletestified thatthere'sstill
'
18 80 percentofthatthathe'sfound there. Have you heard that

19 testim ony?
20
A . Yes.
21
Q. And with regardtotheother20percent,haveyou done
22 ortaken ordeleted anyofthat20 percent?
'
23
A . No.
24
Q. AndifMz.Venablecalmotfmdthisallegedpurported
140
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w.- .
w?
1 the agreem ent--
2
'
TI'IE COU RT: Did he sign it? n at's tine. Ithillk he
3 can answerthat.
M R.PEEK: Iapologize,YourHonor. Ithoughthe was
5 tal
king abouta separate contractforwork.
6 BY M R.FLYNN :
Q. Didyou sign adoctunent,youpersonally,with the
8 govenm lentwith regard to yoursecurity clearance in connection
9 with whatyou could discloseand notdiscloseeverto anybody?

10
A . Yes.
ll
Q. And didanindividualfrom tllisdepartmentgive you
12 thatcontract?
' 13
A . Yes.
14
Q. Did youexecuteit?
15
A . Yes.
16
Q. Did you giveitback tohim?
17
A . Yes.
18
Q. Didyou read it?
19
A . Y es.
20
Q. Anddidhegiveyouacopy ofit?
21
A . N o.
22
Q. Underthetermsofthatconact,whatisyolzr
23 tmderstanding today asto whetheryou can disclose anything
24 abouttheidentity ofanybody orthew ork you dd in connection

166
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'
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qx-
'
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l w ith the M arch 2003 contractforthisdepartm ent?

2
A . W ell we - we signed --the agreementstatesthatI
3 cannotdivulgethe nature ofthew ork orwho the clientsare.
Q. Andcanyouimagineartyhighergovernmentalsecurity
5 orclassifiedprojectatthattimeframethanwhatyouwere
6 doing?
7*
MR.PEEK: YourHonor,Iwould objectto that
8 because--
THE COURT: Yeah,ifwe're notgoing to getto know
10 whatitis,tlle testim ony aboutsom ething higherthan that

1l can'tbecross-exam ined about. So since thatcross-exam ination
12 is foreclosed,1'm notgoingto allow thatquestion.

13
M R.FLYNN : Fine. Thank you,YolzrHonor.
14 BY M R-FLYN N:
15
Q. Didyouusesotlrcecodestodothisproject?
16
A . Yes.
17
Q. W heredid you getthem?
18
A. Thereweremultiplefacetstetbeproject.Thevidee
'
19 and the face recognition w ase'rreppid's,and the anom aly and

20 pattern detection w asm ine.
21
Q. Andinconnectionw1t11thisparticlzlarprojectdid
22 youhavedisclzssiorzs-justyesorno--w1t11governmental
23 agentswitllregard to theanom aly detection aspectofthe
24 software?
167
.-p .)
A - A tthattim e,no.
Q. Atsomepoint,did youhavethesediscussions?
A. Yes.
Q. Aazd when?
A . Septem berof'03.
Q. And didyou completetheprojectto thesatisfaction
7 ofthe governm ent?

*
A . Yes.
Q. Arld theseurcecodesthatyouused in tennsof
10 govem m entalclassification.whatare they called,

l1 11.
:..M ontgom el'
yythe anomaly detection sottrcecodes?
12
A. W ell,itwascalled the anom aly detection orpattern
13 recognition sotlrce codes.
''
14
Q. W hatthedoesthetenn ''SAP''mean?
15
A . Specialaccessprogram .
16
Q. Doesanyoneelsehaveane'rreppid--haveanydealing
17 V t.IZany govem m entalagency aboutspecialaccessprogram s?
18
A . Ever?
'
19
Q. Dllring thistimeframe.
20
A . N otthatIklzow of.
21
Q. W erethesolzrcecodesclmssifed?
22
A . Ibelieve,yes.
23
Q. Atld werethey called SAP?
24
A. No.W ell,itwasjllstcalledsourcecodeslmderthat
168
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l that's note'
Freppid'sm atelial?
THE W ITNESS: ldon'trecall,YotlrHonor,ifIdid or
3 not.
TH E COURT: W ell,go ahead,M r.Peek. lwms going to
5 open m y big m outh aboutsom etlzing.
M R .PEEK: I'm happy to hearfrom theCourt. lfit
7 w illshorten the proceeding,I'm happy to hearlkom the Court.

e
TH E COURT: W ell,letm e tellyou,counselforboth
9 sides,kind ofhow Ithink I'm seeing this,butI'm prepared to

10 be persuaded otherwise. Butm aybethatwillbehelpful. l
l1 know ,when Iw msa practicing lawyeq lkind ofliked to know
12 sometimeswhatthatjudgewasthinkingabout.Notalwayshappy
13 ttlknow,butIkind ofw anted to.
14
And itseem sto m ethatthe agreem entthatw as
15 originally entered m ay orm ay notcoverthe teclmology that
'
l6 we'retalking about. Butcertainly,atsom epointin tim e,by
17 conductoragreementmoralorby conductand by perfbrmance,it

18 wasagreed thateTreppid could.m arketthistechnology and
19 didrftm arkettltisteclm ology to thisagency ofgovem m entand

20 thata1lthepartiesacknowledged thatitwase'Freppid'sto
21 m arket.
22
'f'heproblem arises*1t11regard to a flzrtheragreem ent
23 orfurthercompensationorotherissuesthatmaybethesubject
24 ofavery meritoliouscounterclaim.W hetherit'smeritoriolls
199
.
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l ornot,Ihave no idea. ButIdon't--atthis pointin tim e,

2 I'm not--itwould appearto m e thatthe teclm ology wasindeed
3 conveyed to e'I-reppid to marketand sellto the governm entand

4 thatthe governm entpaid e-rreppid forthat.
5
Now,iftlzere wasan agreernenttlaatthere would be
6 compensation foritlaterand thatagreem entwasn'thonored

7 that'
s partofthe cotmterclaim . Ifthere's an agreementthat
e
8 copyrights wereinfringed,that'spartofthe counterclaim .

9
Butasto the ownership ofit itwould seem to m e
10 Iike lsaid,by conduct,by oralundcrstanding,thatitwas
11 agreed,yeahathisbelongsto e-freppid and I'm going to get

12 comllertsated foritlater.That'swhere the counterclaim scom e
l3 in. So tellm e where I'm w rong aboutthat.
14
'
M R.FLYN N : YourHonor:with al1due respect,black
15 Ietterlaw --alzd we have a briefon it--saysthatno

16 coplrright-17
TI4E COURT: Title 17aright?
18
M R.FLYN N: - no copyrightcan be given underthese
19 circum stanceswithouta written assignm ent.
20
The closestthey can getisthe W ork ForH ire
2l D oclzine. W elaave --astate courtisabsolutely preem pted,

22 tmdercmse law stattzte,from using trade secretafzom lzsing
23 conduct,from lzsing im plied agreem ent,to breach the provisions
24 ofthecopyrightact.n emostthattheycould getisa

200
--
...e)-()
wy )
l nonexclusive,orallicense underthe conduct.

2
And asIsay,YourHenor,we have the briefl W e're
3 ready to subm itthebriefto the Court.
THE COURT: 0h,ithasn'

tbeen subm itted to me yet?
5 I'm fam iliarw ith Title l7.
M R-FLYNN : Ithasn'tbeen subm itted.
THE COURT: A nd Ithink lknow thesectiou thatyoupre
8 tx
alking about. ButIm ean,ifthat'sthe case,whattheheck
9 arew edoing itzstate court? W hy aren'
tyou guysin federal
10 court?
11
M R.FLYN N: The only reason we'

re here is the Cottrt
12 sim ply said,you can'tremove itbased on thecounterclaim .

13 Butw e've already liled over in the federalcourt.
14
So,no m atterwhatthisCourtdoes--
15
THE COU RT: I'm wasting m ythne?
l6
M R.PEEK : You're notwasting yottrtim e,YourHonor.
17
THECOURT:W ell,whydon'tyoujustletmedoit,and
''
l8 then you can go to federalcourtand do whateverfederalcourt
19 does.
20
SfR.FLYNN:YotzrHonor,becauseitfsjtlstse
21 flagrantly inoorrect underthe copyrightlaw,fora ste

22 courtto --in effect,to give away a copyright,which isthe
23 clearbasisoftherecord atthis pointin tim e,with no
24 reputation,with nomeetingofanyburden ofprooftotbe

201

w
'''
'
rx
w;))
1 contrary. Based on allthecase law and the briefw e've got

2 forthe Court,itsimply cannotbe done.
3
THE COURT: A1lright. See,1'11haveto consider
4 that. Imean.I'm awareofTitle 17. I'm aware,ithink,of

5 thesection youfre tallting about.
I'm justlooldng atthisfrom thestandpointof
7 regularcontract. Ifitcan'tbedone,then we go back to the

*
8 issue,and fdeterm ine whetherornot,fn fact,itwmsin
9 writing and whetlzertlle wziting is sufcientto convey that

l0 artd whetherconductcan supplem entitorexpand upon that
11 agreem ent. Those are thethingsthat1'11have to take into

12 considemtion. And I'm notnecessarily going to decide itnow ;
13 I'm justtelling youthecontentsinmyhead.

14
'
M R..FLY NN : Yes,Y ourH onor. See,on tbatpoint,
15 w e're - the contractclearly saysonly CD Num ber 1hasbeen
'
16 given. 1do notsee how you can possibly getoutside ofthat

17 whereyou'renotdealing w ith an employee,you're dealing w ith
18 a f/underand a principaland an independentcontractor.

l9
Tl'lE COU RT: W ell,that'ssom ething 1'11haveto decide
20 w hen ltake thatinto consideration.
21
M R..PEEK : And a fiduciary dutr asa m em berofthe
22 LLC,Y ourH onor,with partnership fiduciary resporsibilities.

'
23
M ay 1go ahead and cross-exam ine?
24
Tlv COIJRT: Yeah,go ahead.

202
- -'
w )j
1
C'-)')
M R.PEEK : Iunderstand where the Courtis. Imay be
2 able to shed som e Iighton this,aswell.

3
TH E COURT REPORTER: M ay1say,fortherecord l'm
4 getting really tired.
M R.PEEK : 1'11be slow,M s.Vohl. Idon'tagree w ith
6 that,btlt--Idon'tbelieve that.
7
*
CROSS-EX AM m ATION
10 B Y M R.PEEK:
l1
Q. Let'
stalkalittle bit,M r.M ontgomery,about,asyou
12 say,the anom aly detection,w hich you say you copyrighted as

13 paztofyourwork atCom puterm ate;isthatcorrect?
''
14
A . Yes.
15
Q. And tlmtwasrelatedtobloodgasanalysis?
16
A. W ell,itrelated to blood gmsanalysis.
I7
Q. And theblood gas--thebloodisbeingdrawnfrom
'
'
1s tim eto tim eby techs and tested msto whatitsgasesare?

19
A . Yes.
20
Q. Alzd tlmsegaseshaveto bewithin acertain range,do
21 they notohave a certain m edicalrange w herethey m ightshow

22 thatthere'ssom ething w rong w ith thepatient?
23
A. Isthataquestion?
24
Q. Yes.Isthatcorrect?
203
- --
-r'
)
.v ?
A . Yes.
Q. And youranomalydetectionportionoftheblood gas
3 was,you said thatthe range forcertain levelsofblood gases

4 would be a percentageforhydrogen,oxygen,nitrogen,carbon
5 dioxide,thingsofthatnature?
6
A . ldon'
tunderstand yourquestion.
Q. W ell,you'redetermining,areyou not,whetherornot
8 aperson'sblood gasesconin m orehydrogen,carbon dioxide,

9 oroxygen than they are supposed to?
10
A . N o.
11
Q. W hatareyoutestingfor,then? W hatistheanomaly?
l2
A. I'venevertestedforhydrogen.Youjustused
13 hydrogen asan cxam ple.
14
'
Q. Okay.Butyou weretesting forotherbloodgases,are
15 you not?
'
16
A . Yes.
17
Q. Andtherearemedicalrangesforblood gues,are
18 there not?
'
19
A . Yes.
20
Q. And ifthoseblood gasesfalloutsideofthosemnges,
21 thatwould be an anom aly;isthatcorrect?

22
A . N o. Thatwould be abnorm al.
23
Q. W ell,wllat'stheanomaly,then,tllatisbeingtested,
24 the anom aly detection thatyou'

redeterm ining w it.
h yotzrblood
204
-'-
h-e) )
(--.?
1 serversate'Freppid?
2
A. N o.
Q. So,therewereno --noneoftheengineersin Zehang's
4 group,ashe isdirectorofengineering,did any additions

.
5 whatsoeverin writing sourcecode orwriting code,eitherin

6 M ET lab orC++,to the anom aly detection'
,isthatright?
A. To m y anom aly detection?
Q. That'sright.
A . N o.
l0
Q. W asyottranomalydetectionon thesourceselver?
lI
A . No.
12
Q. W asitontheESA senrer?
13
A N o.
14
Q. W asitinaraidbox?
15
A . Had iteverbeen on a raid bex?
16
Q. Uh-huh.
17
A . Possibly.
18
Q. Possibly.So --and didyou--from timeto time,as
'
19 the governm entwasasking you to m ake additionsordeletionsor

20 improvem entsto the - asyou callyoursource code,did you
21 have to wliteadditionalcode?
22
A . To theanom aly detection software?
23
Q. Yes.
24
A . N o.
213
--
w:r
')
1
t.r-r )
Q. Okay.Andwhendidyouputiton --whendid youput
2 theanom aly detection software onto thecomputersateTreppid?
A. W hich com puters?
Q. Thecomputersate'
D eppid.
A . July orA ugustof2003,Ibelieve.
Q. Andwhich computer--on which computerdidyouput
7 it?
*
A. The one in m y office.
Q. Okay.Onthisdiagram herewllereweshowed
l0 DennisM ontgom ery in sortofthe lowerright,is thatwhere -l1 that'syou.

rdesk sution?
12
A. W here?
13
Q. Istlmtm urdesk? Show lzs--actzmlly,whydon'tyou
14 do itin green: Do itin p een,plemse,sir.
l5
A. (W ibzesscomplies.)
16
Q. So it'snotinthewarehouse?
l7
A . That'scorrect.
18
Q. Okay.Anddoyouhaveanyotheridentifying
'
19 characteristicsofthat,otlzerthan thatcom puterthatwasin

20 youroflice?
21
A . Idon'ttmderstand whatyou m ean.
22
Q. Isthereauyttdng,ifIwereto- Iwanttomakesure
23 thatIcouldgototherightcomputer.Istherejustone
24 com puterirtyotlrol ce?
2l4
--
*- )> $
trJ ,b
.
..
A. A nd whattim e frame wasthat?
Q. Let'ssayin Decemberof2005.
A . Ithoughtyou said originally --
Q. No,Iwantedtoknow --
A. You said originally 2003.
Q. Youputitthere.Youputitthere,in2003,onyour
7 com puterin yourom ce?

*
A . That'scorrect.
Q. Did itgoanyplaceafterthat?
10
A. Yes.
1l
Q. W herediditgoafterthat?
12
A. Downstairs.
13
Q. Tlzat'
sinto llzewarellousearea?
14
A . Yes.
15
Q. Didyoujtlsttaketheentireboxandputit--takeit
''
'
16 downtothewarehouse,ordidyoujusttakeportionsofit?
17
A. Im adejtlstacopy ofit.
18
Q. Anddid youleavetheoliginalonyotlrdesktop oryotlr
l9 com puteritlyottroftice?
20
A. No.
21
Q. Soyoudeletedthat?
22
A . Yes.
23
Q. Okay.Andthenwheredidyouputitafter2003,which
24 com puter?
215
-'- '
>
'=,
- <.
l entity today,doesitnot?
A . Idon'tknow ifitdoes ornot.
Q. You leftitafteracertaintime?
A. Yes.
Q. Now,Ithink youalso say thatyottr--youclaim to
6 havetherightto the source codeforpattern recognition,as

7 well;isthatcorrect?
8
A . Yes.
Q. Somethingthatyoudevelopedwhileyouwerein
10 Hollywood,acting asa consultant?

ll
A . No.
12
Q. Okay.From '93to '98,you workedasanconsultant,
13 and you said during thatperiod oftim e,you did som e work in
14 Hollyw ood. .
15
A . Yes.
'
16
Q. And it'swhile- it'swhiledoingthatworkin
17 Hollykvood thatyou then wrotepattern recogrtition source code?

l8
A . No.
19
Q. W hendidyouwritethat?
20
A . Thatwasderivativew ork from the originalw ork thatI
21 had done on the copylights.
22
Q. Olcay.Samething* t11thebloodgasanalysis?
23
NIR.FLYNN:Objection.Idon'tunderstand.
:!zl ////
////
224
-- '
.))
x.
r,)
l BY M R.PEEK :
Q. W hatcopyrightwasitthateovered pattern
3 recognition? W as ittheblood gasanalysisone?
A. Ibelieve itwasthe one in BarrettLaboratories.
Q. And what'sthenameofit?
A . I--ithiak itwastheone formicrobiology.
Q. Theoneformicrobiology? Okay.
'
(PlaintiffsExlzibit24wasmarkedfor
9 identification.)
10 BY M R .PEEK:
l1
Q. LetmehaveyoutakeaIookat,again,adocum entfrom
12 the United SutesCopyrightO ftice.1'11representto the

13 Courtarld colm selthat'swhere tlliscam e from .
14
It'sExhibit24?
15
THE CLERK : That'scorrect.
l6 BY M R.PEEK :
l7
Q. Letmeswitch withm uandgivem uthe--these
18 are --Iwillrepresentto youathesearethe copyzightntunbem
19 forthecopyrightswhosentunberscorrespond totheallegakons
- -
20 in yourcounterclaim arld in yourfederalcourtcom plaint.

21
A ..Okay.
22
Q. Canyou tellmewhgch oftheserelatetopattern
23 recognition,ifalzy?
24
A . 1did pattern recognition originally in theorigirtal

;!:!;
-----

-
t.
9
'.
v)
1 HP computers. Itwasexpanded greatly when lgotinto the

2 Ban'
ettLaboratories.
Q. Okay.Thenlet'sgoback--youstillhavethe
4 Com puterm ate. W hich one ofthose isrelated to pat-tem

5 recognition?
A . The one dated --the one - l17-868,titled
7 'Evapotranspiration Soltware.''
*
Q. And thisisentitled --andyousay ''Computermate
9 SourceCode forHewlett-packard M odel86 Evapotranspiration

10 Irrigation Softw arel';istltatcorrect?
11
A. Yes.
12
Q. AndtheHewlett-packardModel86,wasthatacomputer,
13 orw asthatone ofthose hand-held -14
A . N o. .
15
Q. Whatwasit?
16
A. lbelieve they w ere allcomputers,the 85,86,and 87.
17
Q. Theywerebeforethe1BM XTs?
1:
A . PCs.
l9
Q. '
l'heXTSthatrantm tlze##- or8800chip?
20
21
Q. AndyoubelievethatthisisarlHPcomputer,the86?
22
A . Ibelieve it's a oom puter,yes.
23
Q. Arldcertainlyuotwhatweknow todayoreven
'
'
Yes.
24 com parable to thelBM thatstarted a11this,w1t.

11the 8800 chip
226
----

w s
..
l back in the mid-'8os?

2
A . A re you asking me --
Q. n at'snotthesamething,isit?
A . W hatdo you m ean,'the same thingf'?
Q. W ell,it'snotwiththemotherboard,thehard drives,
6 thechip?
7
A . lthad a m otherboard and ahard drive and achip.
Q. M din whatlanguagedid you writetlliscode?
A . lthink itwas RPN . I'm notcertain.
10
Q. You'renotcertain.Okay.
1l
So then we have the blood gmsarm lysis foranom aly
12 detection and the Evapotranspiration Irrigation forpatlern

l3 recognition;istltatcorrect?
'
14
A . Yes.
15
Q. Sotheso-called copyrightsatBarretthad nothingto
'
16 do w ith eitheranom aly detection orpattem recognition;is

l7 thatcorrect?
18
A . N o.
19
Q. Okay.Sowhichofthoserelates--oftheBarrett
20 relate to pattern detection and anom aly detection - pattern

21 recognition alld anom aly detection?
22
23
I'
m tryinp Y ourHonor.
A . n eone thatendsin 750 thatspeak.
sofm icrobiology
24 andtheonethatendsin009 thatrelatesto anatomic

:!;!/
-----
'
- z)
'rp )
l ofrem and. It'snotin m y tile,anyavay. And w ms thisissue

2 presented to JudgeM clfibben,and did Judge M cK ibben --why did
3 Judge M clfjbben send itback to state courtif,in fact,itw as

4 preem pted?
M R.PEEK: Thatwasthe argum cntlhatwasm ade by
6 M r.Logar,YourHonor.
'
M R.FLYNN : Iwasn'tthere. M r.Logarw illhave to
8 addressit.
9
'THE COURT: 1directed the question to them ,so let
10 him answerit,and you can reply to itifyou wantto.

11
Butdo you havethe orderofrem and? Idon't.
12
T1'
11!CLERK.: Idon'thave it.
13
THE COIJRT: A1Iright. M r.Logar?
14
A4R.LOGA R: The case wasoriginally tiled by 1he
15 plaintiffsin statecourt. W edid a rem ovalbased on two
16 issues: One wasthe diversity ofcitizenship parties,and
l7 subjectmatterjurisdiction.Thefederalcourtfoundthat
l8 neitherapplied and rem anded itback to the state court.
19
THECOURT:W ell,areyoutellingmethatM cKibfen
- --
20 fotmdthatthesubjectmatter,i.e.,theissueofcopyright,
21 wmsnotpreempted?
22
M R.LOGA R: N o.
23
M R.PEEK : Tlzat'sexactly whathe folm d.
24
M R.LOGA R: No,thatsnotwhathe fotmd.

239
--..
*< )
fM )
M R.PEEK: YourI-lont)r--
M R.L()GAR: Ile follow ed the well-crafted conp laint
3 rule,okay?
4
M R .FLYNN : YotzrHontm the issue tha!arose overin
5 federalcourtw asrealsim ple. W hen they putin theiroriginal

6 com plaintthate'
rreppid Teclm ologieswasthe Californiacorp.,
7 we rem oved it()n thatbasis thatthey pled i!w.
asa California
'
8 corp. n ey didn'trealizethey m adea m istake. They told

9 Judge M cK ibben we m ade a m istake,it'snota California corp.,
l0 it'sa Nevada corp. Judge M cKibben said Ihave no choice,
11 there'sno diversity.
12
'
In the interim ,we filed acopyrightclaim --
13 counlerclaim . So tlze issue ofpreemption ornonpreem ption l)a

14 neverbeen broughtup ordiscussed ordecided upon overin the
15 federalcourt.
'
16
M R.PEEK : YourHtmor,Iw.
a.
'
sthere --
17
TH E COU RT: Hold on. W hatIwantto know is - I
l8 mean,youknow,Ienjoythisjob.Igetpaidtodothisjob.
19 Buton the otherhand,ittroublesm e thattlzis issue tbat
20 wllereyoufre coming here and telling m e,on February the 7th,
2l thatallofthisstuffispreempted,thatthefirsttimeIhear
22 abouttlzatis when I'
m handed tlzisbziefthisevening. 1don'
t
23 t.
h1111:that'sa vel'
y diplom atic way to handle this issuew ith
24 this Court.
240
- '
)
t
.
-.,,--
.-.---?(
1)
.--
M R.FLYNN : YourIlonor,lagree with the Court.
THE COURT: Im ean.we have --ifyou are correct,if
3 you are correet--and 1thiak the issue thatreally is whether
4 ornotthe materialw e'retalking aboutwascopyrighted back in
5 the'80ssometime.Butifyou'recorrect,thenwefvejust
6 w msted a whole lotoftim e,and frankly,Iwould think thatif
7 thatwasyottrposition from w ay back whensIw ould have heard
*
8 aboutthis before now .

9
M R.FLYNN : YourHonor,M r.Logarand M r.Pulverare
'
10 notcopyrightlawyers.W ewerejustbroughtin.W eonly tiled

l1 ourappearances,YourHonor. You know,we had to do al1of
12 thatby FederalExpress. W e literally havebeen doing this
13 research in the lastseveraldays. W e'
ve been broughtin at
14 the 11th hotlr, An enormousam ountofm aterialisbeing dtlm ped
15 in the Court'slap,and itis 16
M R.PEEK : YourH onor,could 1addressthis?
17
THE COURT: You can ifyou w ant. Im ean,I'

ve already
18 pretty much decided thatwhatI'm going to do is,1'm going to
19 goahead and finish thismatter.And I'm goingto hearthig
- -
20 m atteralzd I'm going to m ake a decision in thism atter,and

21 then ifthe federalcourtsaysl'm preem pted,that'
s fm e.
22
M R.PEEK: Icould address why they did whatthey did,
23 butIwonft.
24
THE CO LJRT: Itdoesn'tm atter.

241
--
v-.)
.
- .)
M R.PEEK: O kay. Thank you.
THE COURT REPORTER:YourHonor,Ijustwantto say,
3 forthe record,Icannotgo to 10 o'clock. Sorry.

4
Tl'lE COURT: You can'toryou won't?
THE COURT REPORTER :1cannot.
THE COURT: How m uch longerdo you think you can go?
7 Im ean,ifwe'rcnotgoing to go to the end,we m ightas well

*
8 stop rightnow.
THE COURT REPORTER: I'm very sorry,butthe record
10 willsuffer,and w e'
ve gota clim inalcalendar,msyou know,at
11 8:30.
12
Tl'fE COURT: IsortoftI;I'

IICIhave to behere for
l3 that,don't1?
14
TTTE COLJRT REPORTER: Yes,YourHonor.
15
M R.PEEK : YotlrHonor,could Iask M s.Vohlto itzdulge
16 usjtlstforafew morequestions,becatuseIwanttomakesure
17 that,one,the orderthat'
s currently there rem ains. An.
dI
l8 think the Courtw illdo that. But1also walztto ask forsom e
19 expansion ofthat.Butm ay Ihavethe Court's indulgence?

20
-' -
M R.FLYNN : 1'm going to need to be heard on that,
2 1 YourHonor.
22
TH E COURT: W ell,Im ean,w e gota situation w here
23 w ed
ve gota courtreporterthat'stelling usshe can'treally
24 go much farther. Y ou know,there'snotm uch --Ican'tgetout

242
--.

y
y
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''v J
'M )7
.
- .
1 STATE OF NEVADA )
) ss.
2 COUNTY OF W ASHOE )
3
1,CECILIA VOHL,OfficialReporteroftheSecond
5 JudicialDistzictCouztofthe Stale ofN evadw in and for
6 1he County ofW ashoe,do hereby certify:

7
T'
hatmssuch reporter,Iwaspresentin Departm ent
8 No.9 oftheabovecourton said date,time and hotm and l

9 then arld there took verbatim stenotype notesofthe
10 proceedingshad and testim ony given therein.
11
Thatthe foregoing transcriptis afull,true and
12 correcttranscription ofm y said stenotypenotes,so taken

13 asaforesaid. Thattheforegoing transcriptwmstaken down
14 undermy direction arkd control,and to the bestofm y
15 knowledge.skilland ability.
16
DA TED: AtReno,N evada,this
day of
18
19
CECILIA VOHL,N V CCR $246
'
20
21
22
23
24
256
'
'
%*z )
rer.)
E M IIB IT B

w
-.
))
. .
1.
IN THE UN ITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEVADA
E'
Preppid T echnologies , LLC:
6
7
8
PLAINTIFF Z
'
-vs-
NO . 3:06-cv-04I-HDMIIG M)
United States District Court
4.
00 S . W rginia Street
Reno , Nevada 89501
January 31. 2006
Dexnls Montgomery ,
DEFENDANT .
g g jgjyg.(.
10
11
3
'
TRXNSCR IPT OF PLAINTIFF 'S MOTION FOR
12
SUMMARY REMXND OF PROCEEDINGS TO STATE COURT (#1)
13
BEFORE THE HONORXBLE HOWARD D . MCKIBBEN
14
SEN IOR UN ITED STATES DISTRICT JUDGE
15
l6
17
A P P E A R A N C2 E S :
FOR THE PLAINT IFF :
18
19
Jerry M . Snyder
Stephen PeeF
A ttorneys' at L aw
FOR THE DEFENDANT :
20
Ronald J . Logar
Eric Pulver
Attorneys at law
21
22
'
'
Proceedings recorded by mechanical stenography produced by

computer -aided transcript
23
24
OFFICIAL COURT REFORTER :
25
KATHRYN M . FRENCH , RFR

NEVA DA LTCENSE NO . 392
OALIFORN IA LICENSE NO . 8536
KATHRYN M . FRENCH I C .C .R .
(702) 786-5584
-. .

w
))
>?g
11
.
agreement that was attached to the affidav it that was filed
along with the eomplaint in Nevada State Court , you dll see
that ehey claim rights to the pattern recognition, but the
agreement never transferred pattern recognition . By its very
wording , it only transferred the compression data to the
corporation in 1998 .
So any rights, derivative rights to this new
technology that they say was converted by the defendant,
is an issue of derivatve rights. And thae derivative
10
rights to the original work , the original copyrighted work ,
11 is within the exclusive purview of the jurisdiction of this

12
'
court .
13
THE COURT : A l1 right . Thank you .
14
15
Your response.
MR. SNYDEZ : I guess in response I primarily cite Lo
16
a number of cases in which federal courts have held that state
17
law claims for trade secret and contract, breach of contract
18
are not preempted by federal copyright law. TDs Healthcare
19
Svstem v . Hum ana Hospital, 88O F .supp I5V2; Enhanced Comnuter
20 Solutions v . Joel Rose, 927, F.SupP 738; Firoozve v .

21
Earth- link, l53 F-supp 2d 1115; and Countv of Delaware v .
22
ment Svstems, Inc. Thatla 230 F.supp 2.d 592 .

Co
v ern
-- -
23
24
In all of these eases the court has held that

where the plaintiff brings a claim in state court alleging
25 theft of trade secretsw breach of contract, things of that
KATHRYN M . FRENCH , C .C .R .
(702) 786-5584
- -
-r))
'
..=,..
)
12
'
l nature, and the a counterclalm is for copyright infringement,

2
that the counterclaim -- the state law claims are not
3 preempted by the couneerclaim such as eo juseify removal to

4
federal court.
I also think ehat the Supreme Court case in
G Holmes Groub v. Vornado, is completely dispositive. In that
7 caie, the Supreme Court held that where the plaintiff made a
8 claim for declaratory relief, and the defendant, the defendant
9
counter-claimed based on patent infringement , which is also an
10 area of exclusive jurisdiction under 28 USC 1338, that subject

11 matter jurisdiction was inappropriate because the federal
12
question was only raised in the counterclaim .
13
'
This complaint doesn't plead around , doesn 't
14
artfully plead around the question of copyright infringement.
15
It asserts claims based on state law for theft of trade
16
secrets: breach of contract and conversion. So, there is no
17
copyright issue raised in the four corners of the complaint.
18 There are no claims for copyright infringement that we have

19
20
made .
Would we have had some if we wanted to make them?
21 That could be. But the fact is we have pled a complaint

22
for trade secrets, breach of contract # and conversion .
23 Thank you .
24
THE COURT : Thank you .

'
25
MR . LOGAR :
Your Honor , may I be heard as to a
(702) 786-5584
'r .)
'.v ,
13
1
2
THE COURT ; Normally --
MR . LOGAR :
4
5
'
.
couple of --
-- their legal authoritie s?
I know
it ts unusual .
THE COURT Z Normally I wouldn 't g ive y our side the
last word . But if there ls something briefly you want to bring
toemy attention , 1 .11 consider it .
MR . LOGAR ;
Thank you.
We're not arguing preemption . We lre arguing
10
that the gravamen of the action necessarily defined by the
11
complaint that was filed in state court, brings it within the
12
purview of the copyrighted act . And probably one of the best
13
cases is Scholastic Rntertainment versus Fox, 336 F.3d 982,
14
a 2003 case where the issue o f copyr ighted matters and the
15
ability of the 'state to handle certain issues su ch as
16
ownership is d iscussed w th --
17
THE COURT; Well, it just seems to me if you look at
18 this, that the gravamen of this complaint really is whether or

IR
noL the defendant destroyed , deleted
or took th6 eTrepp id
20 Source Code and whether tha'

t was wrongful. That's really what
21 this case is about.
22
Now, I think there 's some tangential iBsues,
23 perhaps, from what I 've heard bere and from what I reviewed
24
in the pleadings that may tie into some issues involving
25
obv iously licensing and perhaps , to some degreey som e
KATHRYN M . FRENCH , C.C.R .
(Jo2) 786-5584

-
).
)
.
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)
14
l copyrighted issues. But, it just seems to me that this
basically is a state claim. And it doesn st appear to me
that there 's been a lot of artful pleading here to keep
this case out of federal courL .
5
'
7
8
9
10
But , go ahead . Explain to me why you think I 'm

wrong on that .
MR. LOGAR :
The remedy that Lhe plaintiff seeks in
the complaint -THE COURT : Right.
MR. LOGAR:
-- based upon a breach of contract, in
1t our mind, necessarily brings into effeet the contract that
'
12
existed, the Contribution Agreement between the defendant and
13
Lhe plaintiff, and the extent to which the rights were or were
14
not transferred to the technology involved Yn the source code ,
15 of which they say has been converted and is in fact a trade

26
17
secret of in the state court action.

We are saying that necessarily in that
18 determination,.the state court would have.to. look to the

19
Copyright Act to determine whether or not, as an example ,
20
the pattern recognition that Lhe complaint alleges that the
21 corporation owns, is essentially -- was not, de'finitely noE
'
22 ncluded within the contract transferring tke compression data

23
to the corporation and , therefore , it wouldn 't be an issue of
24
derivative rights . And that is, wh ether or not the owner of
25 t2e intellectual property, the owner of the copyright would
(702) 785-5584
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purportedly based on tha: preempeed state law is considered,
from its inception , a federal claim , and therefore arises
under federal law .fl And that 's quoting from the Ho lcomb
versus Binqham Tovota case at 87l F.2d 909, Ninth Cireuit,
1989 .
'
I believe that the Supreme Court's case in Holmes is
7 di/positive in this case, Holmes Group, Inc . versus Vornado

8
A ir Circulation Svstems, Inc w
In that case the Supreme Court specifically held that under
10
the well-pleaded complaint rule, a defendant may not rely upon
11
legal theories contained in the countercla im as a basis for
12
removal under 28 USC Section 1331, and 28 USC Section 1338.
13
'
.
535 U .S . 826, a 2002 decision .
The only way that this case shou ld remain in federal
14
eourt is if the artful plead ing doctrine applies .
Federal
15
copyright law is an area which preempted state 1aw in many
16
aspects, however the courtz in my opinion , need no t reach the
17
question o f preemption in this case .
18
Plaintiff has an action for misappropriation of
19
trade secrets an8 conversion under Nevada atate law . The
20 elemenus of misappropriation of trade secrets are the

21
following:
22
One, a valuable trade aecret;
23
Two, misappropriation of the trade secret through
24
use , disclosure , or non-d isclosure of use of the trade secret;
25
and
(702) 786-5584
..
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21
Three, the requiremeat that the misappropriaeion
be wrongful becauae it was made in breach ot an expressed or
implied contract or by a party with the duty not to disclose .
'
The tort of converson occurs whenever tbere is a
serious interference to a party 's right in the property .
The gravamen of this dispute, it appears to me
7 fr3m the pleadings that have been filed here and the evidence
8
that 's been presented by way of affdavits and otherwise, is
not as the defendant asserts, that the de fendant owns certain
10
11
'
'
of eTreppid 's intellectual property .
Now, it may well be, and counsel has pointed out
12
the section in the complaint where there is discussion about
13
the -- lee's see the paragraph that that was -- where tbere
14
was some discussion about the --
15
MR . LOGAR :
16
THE COURT :
17
Page 9 .
-- rights in the eTreppid Source Code ,
and Montgomery breached -- it is alleged that MonLgomery
18 breached the terms of :he Rmployment Agreement and of the

19
Contribution Agreement by which he assiqned eTreppid any
20 and a1l rights in the eTreppid Source Code . That could be

21
construed either as possibly opening the door in 'connection
22 wieh licenses, or arguients involving copyright or copyright

23
infringements. But it, in the opinion of this court, equally
24
goes directly to the question of breach of contract or
25 misappropriation of trade secrets and a misappropriation of
KATHRYN M . FRENCH . C .C .R .
(702) 786-5584
m,i)
.. )
22
'
l
2
'
the eTrepp id source Code .

Now , there are questions of state 1aw here .
There 's no question about Lhat , and they are the predom inant
questions . The defendan t may assere as a defense that
the eTreppld Source Code was not part of the Contribution
6 Agreement; theretore, if there was destruction or deletion or
7 an eimproper taking of the code, or a takxng of the code, ft

8
was not wrongful or improper .
The Court is of Lhe opinion neither this defense,
10
nor the federal counter -claims under the Supreme Court 's
11
decision in Holmes creates a federal question appropriate for
12
removal at least at Lhis point in time .
13
Accordingly , this case is remanded to the state
14 court for laek of jurisdiction .

15
Miss Clerk, rhis action will be transferred to
16
the Second Judicial District Court in and for the County
17 of Washoe forthwlth, so that the matter can proceed this

18
19
afternoon .
. . The holding of this court, obv iously . does not
20 preclude the defendant from proceedlng in connection wth any
21 legal claim that it may determine appropriate/ if in fact - '

22 there is a federal question ouL there, an independent federal
23 question whieh may or may not be the basis of an independent
Q 4 action aa it has been suggested here.
25
rt is so ordered . This will constitute findings and
KATHRYN M . FRENCH, C .C .R .
(702) 786-5584
--
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conclusions .
2
3
Thank you aqain for your expedieed briefing on tnhis.

I appreciate that.
MR . SNYDER: Thank you, Your Honor .
MR . MR . PEEK : Thank you , Your Honor .
MR . LOGM J
Thank you .
(Court adjourned .)
l0
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13
'
.
14
I cereify ehae :he foregoing is a correct transcript from

the record of proceedings in the above -entytlea matter .
'
15
16
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17
FA THRYN M . FREN CH , RPR , CCR
DATE
16
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22
23
24
25
KATHRYN M . FRENCH
C .C .R .
(702) 786-5584
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RONALD J.LOGAR,ESQ.
N evada Bar//00303
JENNIFER CHRISTIE,ESQ.
Nevada Bar# 8025

LA W OFFICES OF LOGA R & PULVER , PC
225 S.Arlington Ave.,SteA

Reno,N evada 89501
u.s. ojsynjc'rcoun'r
pjsTgjcvrogNw AoA
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(775)786-5040
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A ttorneysforDefendantD EN NIS M ON TGOM EPNF

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UN ITED STATE
FOR TH E D ISI
3)06-cv-()c041
13
ETREPPID TECHNOLOGIES,INC.,a
Californiacorporationa
14
15
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Plaintilt
16
vs.
17
DENNTS M ONTGOM ERY,
18
Defendaut.
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) NOTICE OFREM OVAL OFACTION UNDER 28
) U.S.C.j14411 )(DIVERSITYI
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TO TH E CLERK O F TH E ABOVE-EN TITLED COU RT:
PLEA SE TAKE N OTICE thatdefendantDennisM ontgom ery herebyrem ovesto thisCoult thestate
courtaction described below .
l.
OnJanuary 19,2006,anaction wascommencedintheSuperiorCourtoftheStateofN evada
in and for the city of Reno, W ashoe County, Nevada, entitled eTreppid Technologies, Inc. v. D ennis
M ontgom ely CaseN o. C V06-0114. A copy ofthepleadings filed in the state courtareattached hereto ms
ExhibitA .
2.
The firstdateupon w hich defendantD ermisM ontgom ery received a copy ofsaid com plaint
wasJalmaly 16 2006,whendefendantwasservedwithacopy ofthecomplaintfrom saidshtecourt.No
10
sum m onsw asprovided.

-
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3.
Thisaction isacivilaction ofwhich thisCourthmsoriginaljurisdiction under28U .S.C.j
12
1332,and isone which m ay berem ove-d to thisCourtby defendantptzrsuantto the provisionsof28 U .S.C.
l3
j 1zI41(b)in thatitisacivilaction alleged to bebetween citizensofdifferentstesand thematterin
14
controversy exceecls$75,000,exclusiveofinterestand cost.

sbecalzsethetechnology atissueitlthis action
15
hmsbeenalleged byplaintiffto havea valuein excessof$100 million dollars.
'
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16
4.
Defendantisinform ed alld believesthatplaintiffe'rreppid Technologies,lnc.was and still
17
is a citizen oftlze state ofCalifornia,based on e'

rreppid Tehcnologies,Inc.'sparty allegation contained in
18
tlm complaint.Defendantwms,atthetimeoftheflling ofthisaotion,allflstillisracitizen ofNevadaaud is
19
the only defendantotherth% tr oe''defendants nam ed in the'coliplaitand served w1t11acopy ofthe

.
20
tmplaint.
21
Dated:Jaaualy 25,2006
LAW OFFICE OF LOGAR & IIIJLVEK PC
22
.
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2.4
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A ttom eys forD efendard DennisM ontgom ezy
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ttrsuanttoNRCP 5@),Icertifythat1am anemployeeoftheLAW OFFICE OF
LOGAR &PULVER PC,yad thaton thecpchL

3 day ofJanuary,2006, I
,
deposited form ailiug in the U .S. M ail,wif

lzsufficientpostageafftxed thereto via
6 Certifed M ail Rettzm Receiptrequested.

7
sentvia FederalExpressorotherovem ightdelivmy service
delivered via fac-sim ile m achine to fax num ber
9.
f personallydelivered
10
11
caused to be delivered via Reno-carson M essenger servi.e
12 tlle foregoing docum ent,addressed to:
13
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JerryM zsnyder,Esq. l
/tx & ZJ.'zx.f't *-X'S'
'''YW 'W g;zvw'&?
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H ale Lane Peek D ennison and How ard

5441 Kietzke Laae
Second Floor
Reno,N V 8951l
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Pillsbmry W qthrop Sb-avv
'Pittnana L.
D avid A.Jakopin,Esq.
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2475 HanoverSleet
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Facsim ile:650-233-4545
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Case
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Page571 of
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JerryM .Snyder,Esq.('
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'
HaleLane Peek Denuison and Howard
5441KietzkeLane,SecondFloor
3 Reno,NV 8951l
Tel:(775)327-3000
4 Fax:(775)786-6179
5 A ttorneys forPlaintiff
6
IN THE UNITED STATES DISTR ICT CO URT

7
8
FOR THE DISTRICT O F NEV AD A

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jp ETREPPID TECHNO LOG IES,LLC,aCalifornia
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corporation,
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PLAINTIFF ETREPPID
plaintirf,
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CASE NO . 3:06-CV-0004l
Mon ox FoltstN NtxrtvltEwtxxo

-vs.
DENNISMONTGOMEIW ,
j4
Defendant.
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Plaintiffse'
Freppid Technologies,LLC (''e-freppid'')hereby filethereEmergencyExParte
X 7' 17 M otion toRemand Proceedingsto StateCourt ThisM otion isbmsedupon 28U.S.C.j 1446-1447,on
.
!t:,
71
l8 the following Pointsand Authoritiesand exhibitsatlched hereto.'

19
20
POINTS AND AUTH OR ITIES '

1.
'
INTRO DUCTIO N
21
Through the present motion, e'

rreppid seeks to have this matter remanded to sbate Court.
22
DefendantallegesthatFederaldiversityjurisdiction existsoverthismatterbased theassertion tllat
23
M ontgomery is a N evada resident and e-rreppid is a California Corporation. How ever,Defendant
24
knowsvery welltlzatthis argum entisbogus. Asa fonneremployee,oflicer,and m em berofe'rreppid,
25
26
27
D efendantknows thate'
rreppid is a Nevada LLC. Plaintiff's State Courtpapers correctly identitied
'Plaintiff'sStateCurtpleadingswerefiledconditionallyundersealpursuanttoNRS 600A070(3). InaninChamber's
28 conferenceDefendantagreedthiswasappropriategiventllehighlyconfidentialinfonuationatissueintheseproceedings.
However.Defendanttiled thesubjectNoticeorRemoval,atGchingallofplaintifr'sStateC-ourtfilingc
vwithoutrequesting
theybeplacedunderseal. Plaintiffwillsubsequentlyfileamotionrequestingthedocumentsbeplacedunderseal.
ziol:
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582of
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Trcppid as a Nevada LLC 3other than foran obvious scrivcner's errory. Furtherm ore,the Exhibits
2
attached to Defendant's notice of Remand clearly demonstrate that e'

l-reppid is a Nevada LLC
ccordingly,thism atlershould be sum marily remanded to State Court.
Defendanttiled his notice ofremovaljustminutesbefore a scheduled state courthearing on

5
PlaintifrsM otion fora Temporal'

y Restraining Order. ThisNotice ofRem and is clearly nothing more
6
7 than proceduralgam esm anship devised to delay the pending TRO hearing. Even though e'rreppid has
jk pointed out to defendants thattheir Notice ofRemovalis meritless,Ijefendants have notagreed to

9
M
stipulateto rem and. Accordingly,thislnotion should be considered on an ex parte basis.
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ThismatterarisesoutofDefendantDennisMontgomely'smisappropriationofcertain trade
secrets rrom e'rreppid. e'
rreppid,which is a Nevada Lim ited Liability Company,with headquarters in
t'Q:G o j4 Reno, creates com pression and pattern recognition soware technology,as wellas other sof> are.
'
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M ontgom ery, tll

roughatrustownsasubstantialinterestine'
rreppid and,untilvery recently,servedas
ck
o
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rreppid.ManagementcommitteeandasitschiefTechnology Officer. In early
Qs t4
17 Januaryof2006,e'
rreppidlearnedthatMontgomeryhaddeletedessentiallya1lofthee'
rreppidsource
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18 code from a1lstorage devices on e'rreppid's prem ises and thathe had rem oved the sole rem aining
19 storagedevice containing thissource code.
-'
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20
zroceduralH istorv
2j
O n January l9,2006, e'rreppid filed'its Complaintin this m atter,along with a M otion for
22 Tem porary Restraining Order and a number of supporting declarations, including one executed by
23 w arren Trepp, the Chainnan ofe'

Treppidain the Second JudicialDistrictCourtin and forthe State of
24 N evada. Through a scrivener's error,the caption ofthe com plaintincorrectly identified e'rreppid as a
25 california com oration. However, paragraph 4 or the com plaint correctly states tllat e'rreppid's
26 headquarters are located in Reno, Nevada. In addition,
' the Declaration ofW arren Trepp correctly
27 identifiese'
rreppid asaN evada limited liability company.
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Alstl on January 20,2006, eTreppid appeared bcfore Judgc Polaha in ehambers to seek a
2 temporary restraining order. Defense counselalso attcnded thism eeting,along with M ontgomery. At
3 this tim e,Judge Polaha dertied e'
Treppid's motion for a TRO ,but ordered thate'rreppid was to be
allowed an evidentiary hearing on its m otion for a TRO . This hearing was to be held on or before
5 W ednesday,Janua:y 25,2006. Judge Polaha furtherordered thatthe case w as to be transferred to

6 Judge Elliotunderthelocalbusiness courtrules.
7
On Friday,January 26,2006,Judge Elliotschcduled a hearing on the m otion ftlra TRO to be
8 sclleduled on Ttlesday,January 24.2006. Also on FridayyJanualy 20>2006,defendants exercised a

9 perem ptor*y challengeto preventJudge Elliotfrom hearing thism atter.
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On M onday,January 23,2006,Judge Polaha advised thataa the other two business court
ll judges were unable to hear the pending motion for a TRO, he would hear the matter. After
=j=$1c 12 consultation with counselforboth parties,JudgePolahasetthehearing forW ednesday,Janualy 25,

Q @:
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Atappreximately l:3on Wetinesday,January25,2006,counselforMonlgomezy lelephoned
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rreppid and advised thathehad fileda Notice ofRemovalbased on'
-
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ok:b
;$ 16 kliversity ofcitizenship. M.ontgomery's notice ofremovalstates that''Defendantisinfonned and
Q14 17 believestllatplaintiffe'
l-rermidTechnoloeies,Inc.wasandstillisacitizen ofthestateofCalifornia,
a#
7d173
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18 based on e'
rreppid,s parly allegations contained in the com plaint.,, Shortly thereafter,couusej s r
19 f
'eTreppid conl cted counsel.
for M ontgom ery to advise him tllat, gs et forth in the Declaration of
20
W arren Trepp,and as e'rreppid'

s Novem ber 1 200l Amended and kestated Operating Agreem cnt,
21 which had been attaohed to apreviouspleading,e'rreppidwsaNevada LLC. Counselfore'

rreppid.
22 asked counsel for M ontgom e;y to stipulate to rem and the case back to state court. Counsel for
23 M ontgom ely has notresponded. A ttached hereto asExhibit 1 is a true and correctcopy of a letter
.
24 m em orializing thtseconversations.
25 H 1.
26
AR GU M ENT
A . The CaseShould Be R em anded to State CourtBecause this CourtD oesN ot H ave
Diversitv Jurisdiction
-
27
28
Pursuantto28U.S.C.j1332(a)(1),FederalCourt.
shavediversityjurisdictionovercases
IC
ODMATCDX STILfLNODCK:SUIA ZtI
Pagc3 Of7
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'O6-cv-000
DM -IkAMDocument
Docum ent
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2006 Page
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3:06-cv-00056-PMP-VPC
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D Ju'
1 between ''citizensof differentStates.'' Under28 U.S.C.j l332(c)(2)a corporation is decmed the

2 citizen ofa the state in which itis incorporated and the state in which itsprincipalplace ofbusiness is
3 located.
4
Pursuantto 28 U.S.C.j I447(c).a motion to remand a case to state court,based on lack of
subjectmatterjurisdietion,may bemade atany timo before finaljudgmentisentered. Furthermore,
pursuantto28 U.S.C.j 1446(c)(4),thiscourtistoexaminaDefendant'snotieeofremovaipromptly:
7
g
and ''ifi!clearly appears on the faceofthe notice and any exhibitsarmexed thereto thatremovalshould
*
9 notbepermitted,tllen,thecourtshallmake an orderforsum maly remandv'
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The exhibitsto Defendant'sNotice ofRemovalclearly demonstrate thatPlaintiffsare simply

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wrong in theirasseruon that therc is a diversity of citizonsllip between e'rreppid and M ontgom el'
y.
n51=C:
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t
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paragrap6thate'rreppid'scorporatebeadquanersarelocatedinReno,Nevada.
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I7
18
Trepp,sbatesatParagraph 3 thate'
rreppid isa Nevada LLC. ln addition,attached to
19
ExbibitG is aseptember28,1998 Contiibdtioli'

A greement,executed by defendant
20
peanisM ontgomezy,which statesclearly thate-rroppid (which wascalled lntrepid at
21
thetime)wasaNevadaLimitedLiabilitycempany.
22
Exhibit J to tlle N otice of Rem oval,which is a Supplem eu lDeclaration of lerry

*
23
24
snyder, attaehed a copy of e'rreppid's N ovember 1,2001 Am ended and Restated

o erating Agreem erlt. This document -- which was also executed by defendant
Mpontgomery -- also clearly identiiies e-rreppid as a N evada Limited Liability
'
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26
company.
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Thus,based upon theexhibits to Plaintiff'

s Notice ofRemoval c'
rreppid is a Nevada LLC and
2 as sudl,lhere isno diversity ofcitizenship. Accordingly,sum lnary remand isappropriatepursuantto
3 28U.S.C.j l446(c)(4).
4
B.
ThisM otion Should Be Considered on An Ex Parte Basis
Pursuantto LocalRule 7-5 this Courtmay considerex parte applications provided thatsuch
6 applications ''contain a statement showing good catlse why the matter was subm itted to the couft
7
without notice to allparties.,, In addition, the application shallstate the efforts made to obtain a
stipulatiorkand why a stipulation wasnotobtained.''
9
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Here,good cause exists to considerthis m atter on an ex parte basis. Defendants filed their
10
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noticeofremovaljustminutesbeforeahearing wxsscheduled onPlaintiffsrequestforatemporary
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restraining order. As set forth in eTreppid's State Courtrequest for a TRO,errreppid is being
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2@)aj 13 irreparably harmed Defendantsactions in seeking removalarenothing more than a naked atlemptto
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Moreover,e'rreppiciattemptedtoobtain astipulationto remand. Assetforthintheattached
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M ontgom ery's assertion thate'rreppid is anything otherthan a Nevada entity. Nonetheless,as oftlle
19
- -. .
.20 tim e of this pleading, counsel for M ontgom ea has not responded to e'freppid's request for a
21 stipulation.
22 ///
23 ///
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26
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::ODMATCDOCSTILIINODIM SUIIG ZI
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CO NCLUSION
Forthe forgoing reasons,e'rreppid respectfully requeststhatthe presentm otionshould be
ranted.
Dated:January 25, 2006
/s/
Steven J.Peek Esq.
NevadaBarNum
' ber l758
Jerry M .Snyder,Esq. .
Ncvada BarNum ber6830
Hale LanePeek Dennison and Howard '
7
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Reno,lqv 89511
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(775)327-3000,
,(775)786-6179(fmx)
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PRO O F O F SERVICE
l am employed in the City t)fReno,County ofW ashoe,State ofN evada,by the Iaw offices
of Hale Lane Peek Dennison and Howard. M y business address is: 5441 Kietzke Lane, Second
4 Floor.Reno,Nevada 89511. Iam overthe age ofl8 yearsand nota party to thisaction
5
Eric Pulver,Bsq.
Law O fticesof Logar& Pulver
225 S.Arlington Avenue
Reno,NV 89501
6
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mailedatruecopythereoftothefollowingpersonts)attheaddresstes)listedbelow by
placing t e documeut in Hale Lane Peek Dennison and How ard's practice for collection and
processing ofitsoutgoing m ailwith the United StatesPostalSefvice to the following:
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1l foregoing istrue and correct and thatthisdeclaration wasexecuted on Janual'y 25,2006.

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Ideclare lmderpenalty ofperjury underthelawsofthe United StatesofAmerica thatthe
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Ronald J.Logar--stateBarNo.303
Erie l'ulver-otate Bar N o.7874

LA W O FFICE 0 F LO GAR & PLJLVFR,PC z''
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eys forDefendantD EN NIS M ONTGO M ERY and Counterclaim antM OFITGO M ERY
FAM LLY TRU ST,a Califofnia Trtust.
10
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UNITED STA TES DISTR ICT C O UR T
12
FO R TH E DISTRICT O F N EV A DA
13
14
15
16
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18
19
20
21
22
'
ETREPPID TECHNOLOGIES,INC.,a
Califom iacorporation,
) CASENO.: 3:06-cv-O0041-HDM -RWM

)
)
Plaintiftl
) ANSW ER and
.
)
vs.
) COUNTERCLAIM FOR:
)
DENNISM ONTGOM ERY ,anindividual, ) 1. COPYRIGHT INFIUNGEMENT;
andDOES 1THROUGH 20,
) 2. COPY RICJFIT INFRINGEMZEN'T BY
)
DISTRIRIJTION'
m
Defendants.
) 3. .DECLARATORY JUDGM ENT; .
) 4. ACCOUNIING
)
DENNIS M ONTGOM ERY,an individqal; )
artdM ONTGOM ERY FAM ILY TRUST,a )
CaliforaiaTrust,
)
.
- Counterclaimants, )
)
'
v s.
)
eTREPPID TECITNOLOGIES,(NC.,a
)
.
Californiacozpocationrakae'rreppid
)
Technologies,LLC,aNevadaLLC'
,
)
WARREN 'IREPP,auindividual;andDOES )
1throug,
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.
23
24
25
26
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Cotmterdefeadants.
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1
2
ANSW ER
D EFEN DA NT,D ertzzis M ontgom ery,individually,by and through itis cotm sel:The Law
O fficeoflalgarartd PulveryPC ,forhisAnswerto Plairttiff'sCbm plainton Gleherein,adm its,denies
5
6
and alleges asfollows:

NA TUR F O F THE A CTIO N
.
1.
7
g
Answering paragraphs l,2,and 3,Defendantdeniesthoseallegations.

G EN ERAL FAC'I'U .
A.L AL LEG A TION S
Tlle Parties
10
2.
3.
11
M swering paragraph 4,D efendantdniesthose allegatioms.

'
Arlsw ering paragraph 5,D'

efendantadm itsthose allegations.
12
13
A nsw ering paragraphs 6 and 7, Defendant is w ithout sufficient know ledge or

4.
iaferm ation aeoessary to form a beliefasto the tnzth orfalsity ofthe allegations contained thereiw
14
andtbereforedeniesthesame.InsofarassaidallegatioassuggestorH plyrupo- ibilil orliabilil
15
onthepartofthisansweriagDefendant,thenthesameajeexpresslfdenied.
16
Tbe N atvre ofe'

Treppid,s Business
Answering paragraphs8,9,and l0,D efeadaritdeaies those allegations.
17
1:
5.
19
6.
Secaritv M easuresG overnizke Access to er

freppid S/urceC ode
p,tl
M. isappropriation ofTrade Secrets
7.
21
22
il,bef'
endaritdoniestikoseallegatoas.
Aosweringparax aphs 11,12,13,14,15 an(
Answelingpm graphs17 tbru 30,inclusive,Defendantdeniestlloseqll#gations.
Etreppid isSufferine lrreparableH arm daetoM .

r.M onteom ew ,sM isappropriation.
Answeriagparagrapl)s 31,32,and 33,Defendatd deniesthoseallegations.

23
24
8.
FIR ST CAU SE O F A CTIO N
25
26
A IIDefendants
I
Answ ering paragraph 34,D efendantre-allegeshisansw ersto thosepriorparagraphs
.9.
'
27
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1thru 33,Lqclusiveand incorporatesthem herein by reference.

-
Answering parapzraphs35 tlm 141,inclusive,D efendr tdenies those allegations.
10
SECO NIA- CAUSE OF ACTION
m reach ofContract)
ll
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Answ ering paragraph 42,Defendantre-allegeshisansw ersto thosepriorparagraphs
1 tlm z41 inclusive,and incom oratesthem herein by reference.

,
'
12.
A nsweling paragraphs 43 and 44,D efendantdeniesthose allegations.

TH IR D CA USE O F A C TIO N
'
10
M lDefeudants)
11
(Conversion)
12
13
14
l3.
1 thru 44, l clusive,and incorporatesthem herein by reference.

l4. A nswering paragcaphs 46 and 47,Defendarltdenies tlm se allegatitm s.
15
16
17
A FFIR M ATIV '

E D EFEN SES
Asdistinctalzd separateaffirmativedefensesto thecausesofaction (sic)alleged in the

C om plaint, thisansw ering D efendantallegesas follow s:
18
19
Answering paragraph 45,D efendantre-allegeshisansw ersto thosepriorparagraphs,
FIIIST AFFIRM AT IV E DEFEN SE

A ssepar
.i
ateaadaflirmativedefensetotheCo.m/a
nt-andeachpurportodcalzseofaotion
tlv eino Defendantallegeas thatte Com plaintfails to state facfs suo cientto constitute a cause of
21
action agaim tthisarlsw ering D efendant.
22
SECO N D A FF
- .-
TW E D EFEN SE
23
M a separate and affirm ative defense to the Com plaintand each purported eause ofadion
24
thcrein DefendaatallegesthatPlaintiffhasnotS'
US/Ie.tIaz)ydamages,injtuiesorlosse's,ifauy,by
o
25
reasonofanyad oromissionofaultornegligence,onthepartofthisDefendanqhisagents.servants
26
oremployees,oreitherorany ofthe1a1,and isthmsbarred fxom asserting any catuseofaction against
27
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.
2
3
THIRD AFFIRM ATIVE DEFENSE

As a separate and afftrm ative defense to the Com plaintand each pup orted cause ofaction
D efendantallegesthatPlaintiffsbafred from m aintaining anyclairn againsttl'
tis Defendaut
therein,
by the doctrine ofequitable estoppel

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10
FOU RTH A FFIRM A TIV E D EFEN SE
A sa separate and affitw ative defense to the Complaintand each purported cause ofaction
therein,
DefendantallegesthatPlaintiffisbarred from m aintaining any claim againstD efendantby
thedocttine ofw aiver.

FIFTH A FFIR M A TIVE D EFEN SE
1l
A s a separate and am rm ative defenseto the Com plaintand each purported cause ofaction
12
D efendalltallegesthatPlaintiffisbarred om m aintaining any claim againstDefendantsby

therein,
'
13
14
the Plaintiff'slm clean harids.

SIX TH AF
TIV E D EFENSE
15
A sa separate and affrm ative defenseto theComplaintand each purported calzse ofadion
16
thereiw DefendantallegesthatPlaintiffisbarredfrom maintaining any claim againstDefendantas
17
any dam ages w erenotcaused by any action ofDefendant.
18
SEVEN TH AFFIRM ATIVE DEFEN SE
19
eandaffmaativedefensetotheCo.mjlaint.andeachpurportedcauseofaotion
A saseparat
20
tbereinv DefendantallegesthatPlaintiffisbarred from m aintaining any claim agafnstDefeadantby

'
21
Plaintiff'sIUI'
G com petition.
22
23
EIGHTH AFFIRM ATIVE DEFENSE

As a separate and aO rmative defense to tlze Com plaintand eeach purpol'ted cause of action
24
txereinoDefendantallegesthat,to theextentDefendantisfotmd liable,Defendantisentitledtoset-
25
offand/orrecoupment9om Plaiatiff.
'
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26
WHEREFORE,DefendantaDennisM ontgomezy,praysforjudo entmsfollows:
27
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.
with prejudice'
,
2
.
'Fhatjudpnentbeentered againstPlaintiffand in favorofDefendarltbasedupon this
,
efendants Counterclaim '
3 ThatD efendantbe awarded a reasonable sum as artd forattorney fees and costsofsuit
i
.
ncurred lzerein'
4 Forsuch other and furtherreliefasthe Cottrtm ay deem properin theprem ises.
.
6
7
8
C O UN TER CLAIM
Counterclaim ants,Dennl
.s M ontgom ery and the M ontgom ery Fam ily Trust,hereby allege
10
l1
againstPlaintiff,Cotm terdefendantaEtreppid Technologies,LLC.,and Couaterdefendant,W arren

Trepp,the follow ing Claim s forRelief:
-
12
IN TRO D UCTIO N
l3
1
.
Tltis is an action arising out of the unauthorized lzse of extrem ely valuable
14
eopyrighted com putersow are teclm ology by Colm terdefendant e'rreppid Techrtologies,Inc.,and
15
Counterdefendant,W arrenTrepp.Notcdntenttoreapmillionsofdollarsontheteclmologywithout
16
alicense,themajot'ityshareholderofe'rreppidTeclmologies,ColmterdefendantW arren-rrepp,IZSOII
I7 '
l8
and fellow shareholder,D elm is M ontgom ery,aad the M ontgom ery Fam ily Trust. M oreover,as
fully statedbelow ,even thosebreachesoffiduciary dttty did notsatisfy M (.Trepp.H ew entfurther
aismajoritypositiontosqueezeout,diluteandmisappropriatevastsumsofmoneyfrom theinventor
19
20
b
.
y trying to obtain Cotmterclnl
m antM ontgom ezy Fmnily Tnzst.s extrem ely valuable teclm ology
21
through aH ow ingly false claim thatthe M ontgom ery Farnily Tnxst,steclm ology wascontributed
22
23
violationoffederalcopyrightlaw s.A ccordingly,l additionto a1lotherrem edies,Colm terclaim ants
24
seek notonly a declaration of ow nersltip tm derthe 1976 CopyrigahtA ctofthe softw are atissue in
25
thi
26
anaccotmtingofallprofitsobtained asaresultofthetm authorized exploitationofthecopylighf

-sand
o the company by * .M ontgom ery,then attempting to reverse engineerthe software in direct
.
slitigation,butinjtmctivereliefagnl
nqtanyfurthertlseoftlAeteclmologywithoutalicensealld
27
.
5-
. .
2
C
Counterclahnant Dennis M ontgom ery is an individual who resides in W ashoe
ounty,Nevadaandistheinventorofal1technologythatissubjecttothisaction.M ontgomeryis
also a m inority shareholderille'Freppid Teclm ologies,lnc.
8
9
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12
-
13
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Cou tcclaM u tM ontgomeu Fa ilyTmst(the Tlazst) sacaliforniairrevocable
t
rustform ed and operated underthelawsoftheStateofCaliforniaand istheownerofthecopyrights
atissue in thisaction.
-4
Counterdefendante'
Freppid Technologies,lnc.,is alleged in the Com plaintin this
10
I'ARTIES
.
--.
those derivative works therefwom .
Tj
,
action to be a Califom ia com or
ation,w ith an usualplace ofbusiness irlW ashoe County,N evada.
H
.
owever,CotmterolnlmantswerejttstnotifiedbyPlaintiffthatitsdesignationintheCaptiontothe
C
' . .
om plaintwasirlerror,and thatPlaintifrisactuallye'rreppid Technologies,LLC,aN evadaD
m lted
1zl
Liability Com pauy.

5
.
15
16
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CounterdefendantW arren Trepp (Trepp ) is,upon iafonnation and belief,arl
ndividualwho residesin W ashoeColmty,Nevadaandisthemajority shareholderin e'

Treppid
17
eclm ologies.
6
.
Courlterclaim r tsareig zorantoftlietruenam esand capacitie.sofColm terdefendalzts
18
19I s
uedherehzasDOES1through10,inclusive,andtherefo.res
.uesaidCotmterdefendaltstmdersuc
.h
fictitiotlsnamas.Counterclaim antsareinformed andbelievethatsuch tictitiolzsColmterdefendaais
20
21
22
23
are re-sponsible in som e m alm erforthe eventsand happeningsherein referrod to,and proxim ately
c'
attsed the dam age to Counterclaim antsas herein alleged. Plaintiffs willseek leave-to am end tllis
C
om plaintto allege theirtrue nam es qnd capacities when the sam e havebeen ascertained.
JU RISD IG IO N AND V ENIJE
24
7
.
25
26
Counterclnlm r ts raise,sclaim stm derfederalCoppightA ctof1976.A ccordingly,
thi
sCourthasjurisdiction ptusuantto 28 U.S.C.j1338(a)and 1338(18. 'Fhe Courtalso has

j
'
urisdictionpursuantto28U.S.C.j1331(federalquestionjurisdiction)andoverthestatelaw claims
27
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pursuantto28U.S.C.j1367(supplementaljurisdiction).Venueisproperpursuantto28U.S.C.
l3911)and28U S.C.j1400.
.
FA CTU AL AL LEG ATIO NS
4.
8.
DennisMoutgomely (Montgomery)isaninventorand softwaredeveloper.In er
about 1982, M ontgom '

ery developed certain pattern recognitiort softw are for which the U .S.
C opyrightOfficegrantedaseriesofcopyrights.TheM ontgomeryFamilyfrusttTrustlistheowner
ofCopN ghtRe#skationNos.Txu-g8-ol8,7-:0 -98-699,1Xu-98-727,1Xu-98-728,1Xu-98-731,
TX u-l17-868,andTXu-119-540(thetuCopyrights,,).
*
9
10
9.
A ertlle registration ofthesecopyrights,M ontgom ery developed derivative w orks

'
based on the pattem recognition teclmology originally copyrighted in 1982 (the r erivative
11
12
l3
exclusive property ofthe Trust.

'
In or about Septem ber 1998,M ontgom ery and Cotm terdefendant Trepp, form ed
10.
l4
lntrepidTeehnologiesyLLC,al-im itedLiabilitycom pany.Ptlrsuanttoac(ContributionAgreem ent,.
l5
dated Septem ber 28, 1998,beA een Trepp,M ontgom ely and the Trust,in exchaage for a fifty
16
percentinterest irl Intrepid Technologies, LLC to M ontgom ery,the Trust contributed specifc
17
technology to lntrepid thatisidentifed in paragraph 1.2.l ofthe Contribution Agreement.
18
orks.,,).Thoseuniquelyimportantderivativeworkswerefullydevelopedpriorto1998andarethe
xx
11.
.lllatn
,lV eC1mI1C'
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=rl,
,ogy aS :V C SOIIWA C
raragrapl
aI
IY 1
(1eI1t1
IDC Conl
Dtltee,
ltec.
lm ol
19
Com pressioll technology contailled oll that certain Sofhvare Com pression Engine Developm eflt
20
.
PrograrrlGlnfnlned on CD No.1.*'
21
12.
--
Significantly,because the Trustowned other technology,Paragraph 4.3 ofthe
22
Contribution Agreement states tlaat the Tzust is expressly not v:contzibuting, transfening or .
23
conveyingtoIntrepidandertbisaveementorbyanyothermeans,norisIntrepidaoq-uiringfrom lthe
24
Trustlanyothertangibleandint
angibleassei of,theTnzstorM ontgommy.
25
26
13.
Thtls,ptusuantto tl)e express telm s ofthe Contribution Ap eem entzlntrepid only
aoquired the software com pression teclm ology contained on CD N o.1 and nothing else.
' 27
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14
.ive W orks w ere no$part of the softw pIn particular, the D erivar
re com pression '
teclmologycontainedon'CD No.1thatissubjecttotheCoatributionAgreemcnt.
Subsequently,Trepp began to diluteM ontgom ery.ssharein eIntrepid and,used his
15
.
majorityinterestinelntrepidtoobtainfavorabletreatmentforhimselfasamajorityshareholderat
the expense ofM ontgom ery.
l6.
In orabout2003,e'
Treppid -l-eclm oIogiesbegan subliceasing the DerivativeW orks
to variotks entities,inoluding the United States governm entand collecting Iicensillg fees for the
sublicenses. e'Freppid w as never granted a license to the D erivative W orksby. arld failed to pay
9
10
royalties to,the Tlzlst.

A tno tim e did any ofthe Counterdefendants have a written licease to exploit.
the
17.
11
Tnkst.sDerivati
veW orksasrequiredby l7U.S.C.j204(a).
12
A lthough thcTrastdeniesthatitgranted any oralnonexcllzsivelicenseto e'l-reppid,
18.
13
any such orallicense w asterml

.nated by the Truston January l9,2006,orally and by letter dated
14
1s
Jatm ary 25,2006.

'
19. ' e'rreppid hasfailed to and reftlsesto ceaseexploitation oftheD erivativeW orks and
j6 .
hmsso farrefused to acc.ountfprany profits obtained msaresultofitsunlicensed exploitation ofthe
17
18
Derivative works.
.
20. M preover,becalzse oftlaehighly confidentialand sensitive nature ofthe D erivative
19
W rks, the Derivative W orlcs are protected from r'

eve'
rse '
engineering antl/or tam peling 'by
20
sophisticatedsafeguards.Asaresultofe'
Treppid,sim properattem ptsto obtain and reverse engineer
21
theD erivativeW orks, Cqtmterdefendal

ltshave,uponinfonuation andbeliet destroyedmartofthe
:!:!
tgsotlre,ecode,,oftheDerivativeW orks,furtherharml
.ngCounterclaimallts.
'
23
FIR ST C LAIM FO R RELIE F
24
(CopyrightInfringementagahlstallCounterdefedants)
25
g6
Cotm terclaim ants incom orate by referenoe the foregoing allegations contairted irl
21.
Paragraphs 1through 20 as though restated hcrein i

.rl9 11.
27
,
.
8-
<-G

x
22.
.- ,)':
The M ontgom eoz Fam ily Trust is the olvner of Coplrright R egistration N os.
(2,
*699,TX u-98-727,TXu-98-728,R'X u-98-731,TXu-117-868,arld-l

'rXu-98-0l8,Txu-98-xu-l19-540
arld the derivative workscreated therefrom .
23.
Counzcrdefendants have for the past tlu'

ee years arld continuing to the present,
exploited theTrust,s derivative works withoutany license thereforaud withoutpaying royalties.
24.
Counterdefendant Trepp,as M ariager of e'

Freppid, knowingly and intentioaally
directed e'rreppid,swillfuiinfringementon
. theTrust,scopyrightsand Derivativeworks.
25.
AsadirectandproximateresultofteCounterdefendants,willfulinfringemertton
tbe Trust,sD erivative w orks,the Trusthassuffered arzd continuesto sufferdaznagesin an am otm t
l0
to be determ ined attrial.
l1
26.
12
Pursuant to the C oppight A ct of 1976,the Trtkst is entitled to actual dam ages,
statutoly dam ages'as provided therein,and it.sreasonableattom ey's fees.
13
SEC ON D C LA IM FO R R ELIEF
14
(CopyrightIrtfringement UnlawfulDistributitm ofCopyrighted W ork -Ixzjunction
15
17 U .SC.b106(3))
16
17
27.
C ounterclaim arlts incorporateirtto this callse ofaction the allegations oontained in
each and evel'y precedirlg paragraph ofthisCounterclaim asifthesam ew eresetoutatlength hefein.
18
28.
Colm terclaim antTrttstis the ow ner alld authoroftlle D erivative W orks
19
29.
' ts
-viol
-ated the Trust'srightaod interest
In doing the acts alleged,Counterdefendaa
20
to distributeoopiesoftl
ae DerivativeW orksto thepublictmder17U.S.C. 106(3),and said acts
21
were and areinfringem entsoftheTrusts'copyrights.
22
2.
3
30.
'
- -
Counterclaimants have been and are being substantially damaged by said

'
infringem ent,particularly,upon inform ation and belieiltheunauthorized use of the Derivative
24
25
.Colm terdefendants'infringem entis

Counterclaim ants are w ithoutadequate rem edy at1aw unless
26
.mml
.nent
orksby Colmterdefendants. Furtherharm and injury to Colmterclaimantsis T
aand
enjoinedbythecourt.
27
-
9.. -
QV

.. .
),
.v '
t)
TITFP..D CLA!M FO R P-ELIEF

-
(Declaratory Reliell
31
.
Counterclaim antsreallegeand incorporateby referenceeach and every allegation in
paragraphs l through 30 setforth herein.
32
.
Art actual controversy has arisen arld exists am ong Counterclaim atzf.s and
C ounterdefendants underthe CopyzightActof 1976. The Tnzstcontencls thatitisthe exclusive
owner of the D erivative W orks at issue in this action. The Counterdefendant.s dispute this
contention.
*
33.
CounterclaimantsdesireajudicialdeclarationthatCotmterclaimantsaretheowners
10
'al nonexclusive license is

of the Derivative W ork and ftzrther, tllat arly actual or im plied or
11
t
erm iaated.
34
Furtherm ore,as Counterclaim ants have nevervalidly assigned ariy interestin tlle
.
'
copyrights or the D erivative W orks to Cotm terdefendants,Counterclaim ants are entitled to a
12
13
14
declaration thatthe Tlazst is entitled to 100% ofthe license fees obtnl

.ned by the exploitation and
15
sublicertsing oftlze Derivative W orks asm atteroffederalcopyrightlaw .

35.
A declaration of rights is necessat'y and appropriate at this tim e ilz order that
16
17
. '
Counterclaim antsm ay ascertain theirrightsalld dutieswith respectto Counterdefendants,arld w ith
18
respectto arly tllird palties who m ay claim an interestin either tlle Copyliglzf.qer the D erivative
19
W orkseitherby license oralleged sublicense.

'
'
FO URT H CLA IM FOR RELIEF
20
ij
22
(Accotm ting)
36
.
23
'
-.
Cotm terclaim ants reallege and inoorporateby reference cach and every allegation
'
24
irkparagraphs 1 tluough 35 setforth herein.

37.
Counterclaim antTrustistheexclttsive owuerofthe Copyrightsand the D erivative
25
W orks.
a6
38.
'
Colm terdefendantshavewrongfully exploitedtheC'opyrightsarld DerivativeW orlcs
27
-
10-
(
.
-,.,
'
2
g
9
10
-s
As a result, the Trust is entitled to an accounting of al1 protits derived from
39.
'1 oitation ofthe Copyrightsand the D erivative W orks.

Counterdefendallts'expl
JIJR Y D EM AN D
PursuanttoFederalRuleofCivilProcedure380)),Counterclaimantsherebydemand ajuor
trialoltallissuesin theCom piaintand Counterclaim so triable.
7
8
)-
.v.. ..z)
Mzitheutpal
zrm entto theTrasttherefor.
4.
5
'*
nx
PRA YER FO R R ELIEF

W H EREFOR E, Counterclaim ants pray to the courtfor:
1.
.ml
.narilyenjoinCounterdefendatztsduringthependencyoftlli
Temporarilyandprell
s
action and permanetltly thereaeras follows:
11
a.
Prohibit Counterdefendants from infringing, conspidng to infringe, or
12
contributing to orparticipating in the infringem entby othersofCounterclafm ant,

s,copyrighted and
l3
14
derivative w orks'
,
' b.
15
D erivativeW orl
c.sownedbyCotmterclaimantsTrust,andanyDerivativeW orksthereotlandin this
16
regard,tilat Cotmterdefendants be required to deliver upon oath,to be impotmded duting the
17
pendency of this action, all sueh copies irltheir possession, ms are alleged to infringe .
upon
' s from posse-ssing any of the copyrighted or

Prohibit Counterdefendant
1
8! C
ounterolaimants,copyrigahtstogetherwi
tha11recordings,tapes,cds,dvds,mastel
'
s,prirltordigital
19
docum ents and m ediaaor atly otherm eans forrecording arld storing the Trust,s copyrighted and
20
D erivative W orkstlmtallow Couaterdefendantsto m ake infinging copies,and W ritsofSeizure be
21
' gbtA otnd by the nzlestifthe Suprem e

issued by tlzisC-OIJJIin the m annerprovided by the Coppi
22
CourtoftheUnitedStatesforPradioeandprocedtlreirtCopyrightCases,andthatattheconcltusion
23
ofthis action,the oourtorder al1such m atters be held to be surrendered to Cotm erclaim am s or
24
dea
stroyed underW ritsofDestnldion,whichevershallseem
25
26
to thecourttobethemostjustand
W OPCT;
.
c.
Order Counterdefendants to pay Cotm terclaim ants such dam agu as
27
-
11..
- .

.
w j
. r,, y
..
y;. .-.)
.
..
C ounterclaim arltshavesustainedin conszquenceofCounterdefendants,inivingem erltofthe-rrust,s
copyrightsaod to accountferand pay overto theTnlsta1ItheprofitsthatCounterdcfendantshave
derived from theirwillfulirtfringem entofCounterclaim ants,copyrights;
4
5
O rderCounterdefendantsto pay such dam ages to Counterclaim antsastltis
courtshallconsiderjustandproperwithintheprovisionsoftheCopyrigp
htAct;artd
e.
OrderCounterdefendants to pay Counterclaim nts forCounterdefendarlts,
intentional,willful,and m aliciotus infringem entofplaintiff's copyrighted arid Derivative W orks,
suchdlmagesasthiscourtshalldeemjustandproperV t.
IItheprovisionsoftheCopyrightAct,but
notlessthan $150,000 foreach separateinfringemmltofCounterclaimarlt,scopytight.
10
A ward Counterclaim antstheirattorneys,feesaccording to proofand/orasrequired
11
orperznitted by tbe CoppightA ct;
12
3.
Aw ard Counterclaim antstheir costs;and
13
4.
Grantsuclzotherandfurtlzerreliefasthecourtdeerosjustandproper.
14
DA TED : Jarluary 27,2006
15
LA W OFFICE O F I-o /A.

R & PULVER,PC
l6
By:
Ronald J.Logar,Esq.
18
Attom ey forCounterclaim m tD ennis M ontgom ery
andCounterclaimarqM ontgom eryFnrnilyTtust
19
N evada BarN o 303

225 S.A rlington A ve. Ste.A
Reno, Nevada 89501
.
20
21
- --
22
23
24
25
26
27
-
12-
..
UC4s
1
I
,
-.
,
..
..x;x
v)
C ERTIFICA TE O F SER xG CE
ursuanttoNRCP 5(b),Icertifythat1am anemployeeoftheLAW OFFICE OF LOGAR
& PULVER
,
4
5
k
PC,and thaton the 27t
day ofJanuary,2006, l
d
.
eposited form ailing in the U.S.M ail,w ith sufficientpostage aftixed thereto via
ertified M ail,Retum Receiptrequested.
sentvia FederalExpressorotherovernightdelivery service
l
8
'
/JJJX deli
veredviafacsimilemachinetofaxnmnber VCG -(t
(I//1
ct.-
y personallydelivered 4o l'1Ar.ssjjyon ' s. .

.
9
10
11
12
13
14
caused to be delivered via Reno-carson M essengerService

the foregoing docm nentaaddressed h):
J
erry M .Snyder,Esq.
Hale Lane Peek D ennison and Howard
5441 Kietzke Lane
Second Floor
Reno,N V 89511
and
15
Pill
sbury W inthrop Shaw Pittm an,L.L.P.
l6
17
2475 H anoverStreet
Palo M to,CA 94304-1114
18I
Facsimi
le:650-233-4545
19
20
LU C
'
Legal sistalltto the

Law O fficeofIaogar& Pulver,-pc
21
22
23
24
25
26
27
r13-
- .

..
. !
.
'
a'
f)
.x
.g
E X H IB IT F
u tz zo z zt,tl(; z :-$3 I-'A.X
LOGAR L.&B' OFi''lt;bCase 3:06-cv-00056-PMP-VPC Document

644-6 Filed 05/28/08 Page 79 of 137Y'Jt'k,t
N.
+
C) e 3:06-cv-0O041-e
M-FkAM
Docunlent10
wm
Filed 01/
. h7006
.
Page 1 of8
't
1 Ronald J.Loaar-stateBarN o.303

Eric Pulver-stateB arNo.7874
2 LAW OFFICE OF LOGAR & PULVER Pc
?
225 S Arlingtoa A ve. gte A
3 Rcno ,N V 89501
.
Tel; (775)786-5040
4 Fax: (775)786-7544
M ichaelJ.F'lpm ,h'
Il
mss.state BarNo.172780
5 Pbilip H .Stllm an,Califoraia StateBarN o.152861
FLYN N & STILLM AN
6 224 Birmiugham Ddve,suite 1A4
Cardti CA 92007
7 Tel: (888)231-4279
Fax: (888)235-4279
'
'
8 (ApplicationforAdmiasionProHac Prfcc-pr/corrffn/
Attorne)zs forDefenttantDBhrlils M ONTGOM ERY

9 aud Couttterclaim nntM ONTGONIERY FAM IL.Y TRUST,
a Califoraia Trust.
10
'
UN ITED STATES DISTR ICT CO URT
11
fs
IZ
R$ Zz
12 B'rltlzptt'
rscmqofocqss,m c.,a
<
Fo k ws E ovsaau cw o sqx svwoa
13 californiacopozatioqp
)cmsexo: 3;06-cv-on041-Im &f.RAsf
hiatia
tgxz*
:! 14
vs.
Zt;r4t
rmwxlsM ovrcs
rox ity an
=aA o. ls indiviaaa a4ooss1THkoutm 20,
t:
.,sy 16
orremaauzs.
. Ks
tlG =:
' rt
)
)
)
)
opposnaox To Ex PAR'I'
E
Moe
rlox To REMAND
17 oBlorls M oN rrcyo so p.
;'%
y atziodividuatand
opkw o- R.
v Fasm s lxus'
r.a
18 califonzia Trast, .
19
Cox terco x ts,

vs.
20
'
'
'
ETREPPD TECRN OLOGIES,IN C.,a
21 California yorporatiom aka oTreppid
Teclmolorles,LLC,aNewadaLLC;
22 wApaz!; Tasp: aniraivia,,a and

DOES1tlzroug:1.
'
23
24
Catmterdefendants.
)
. ) '
)
)
. -
'
I no x o pucn o x
25
'
This actioa arose oat of the unauthoriz.ed uso of extrezx ly valuable copyrighted computer
26
27
software teclmology by Plaine colmtcrdefendant,E'

rrcppid Teclmologiesa1nc.,(E-frcppid) aqd
'
CouuterdefandantaW arren Tropp. 'rhetruo gravaum of thisaction centcrs arotmd e'

frcppid ard its
28
rnanxgiag shareholder,M r.Trepp's attcznptto knproperly gaktcomrolaad ow acl'ship ofsoftware 0 1
.
.
w
v .
.
0iz30/200s x0N 12:25 lvsyax ya 6y84j
tl1zJtJzztlt)t; tz:E
J3 FAA
I.OGAR t.A>' O FF lCE
tf7lt)02
'
w.
C e 3r0G-cv-Cl0041
-. 1M-IRA M
w , g
Docum ent1(?
Filed 01/0..' ;
.006
Page 2 of8
l M r.DemzisM ootgom ery previously authorcd, copyrighted and aeverassigned to E'Freppid orW aza'en
2 Trepp.
3
From approxim ately 1982 through 1957 M r. M ontgornery developed certaiu softw are
4 tecbuologies.Orteaveuueofhisresearch aud devolopmentproduccd sottw arecompressioa tcclmology
5 M r.M outgom ery akso iaveated aud copyrighted soparate teclm ologieskaown msfltcriag processand
6 pattem recognitioa software, alzd aro maly detection software.
The ownel'ship of aIl of M r.
7 Mbntgomery's teclm ologies w as trm sfss

rred to the M ontgoa)ely Family Tm sf. The sit'us of the
8 Montg.omtryFazuilyTrustLsCaljforaia9
'
'
On or arotm d Septem ber of 1998, M r.Trepp and M .

r.M ontgom ery decided tllattlm Trust's
10 soN aro compression tm huology had m any applications, and decided to form a company,e'
Freppidato
1l exploitthe sottware cow ression tcclmology. M r.Trepp conm -buted cerfain oapital.contn-butions to
12 secure his 50% iatbrest itktlke com oration- Tbr Mbutgom et'y Famjly Trastconm-bktted its stlthvare
13 coznpressionteclmolog.vcontained on CD No.1.,to the company,ilzexchange for 50% ofthestock in
14 ' eTreppid.
15 '
'
TheM ontgomezy Trustexpressly reservod allotherassetsaud teclm ologieswhen itconfruted
16' the soRwa ecompressioatv u olor x ut-
ozlCD No l ,to e'

rreppid.n cTrustsfzlterktgprocess,
.
17 patterzzrecogniEolzsojtware, and anom aly detection softw arereznaiaed proporty oftheTrust.

18
B egimliugarotmd2003, e'
rreppid beganto uqcthefllteaingprooessapatlorrtrecognitionsohwarez
19 aad auom aly detection soltwm'

ew ithottta Eceascmzdw ithoutpayingtheM ontgomeryFamly-frustaay
20 royalties forllse ofthe copyrighted work. Notconlentt'
o Vap nlilliom ofdollafs on tlzetchnelo'
,g
y
' 21 w itbouta licmkse, CotmterdefendantW arren Trepp,USe.
:Ihismajorkypositiontosqueezeout,t
iiluteaad
22 misappropG tevaststtmsofmoneyfrom tlm inventorandfellow sbareholder, DenaisM ontgomory,ao;

'
23 tho M ontgom ery Fnmily Trust. Evea thosc breachesofEduoiaty duly did notsatisfy M n Trepp. He
24 w ontfurtherby tryingto obtaia theM oatgom > FnmiyTrustsextreznelyvaluabletechnology through
25 ahzowiugl#falseclahnthatthabfontgomelyl7armi
TM t'stechaoloaywascone utedtothecornpauy
26 by M r.M ontgomezy,ttken atternpthlg to reverse eno e,e.
rtl!e software in dirsctviolation offederal
27 copyrighthws.
22
IT. PR O CEDUR AL HTATG IW
2-
..
'
01/30/2006 M0N 12:25 -ITXZRX N0 61841
''
--
'

C e 3:O6- cv-00O- ' xhVI-RAM Document10 f'iled Ur u'. /.A.006 P<ge 3 of8
.
On Tautzary l9, 2006.e'l-reppidv f'

tled, lntheSecondJudicialD tstrictCtlm-toftheStateofNevada
2 in and forttle CotmtyofW aslloe, aCom plalntagainstM r.M oatgomery asazlindlviclual
Thc com plaint

3 alleged M isappropriatiou ofTrade Secrcts, Breach ofContract aad Conversion ofe'l-reppid's source
-
4 O de.
5
'
Ou Januat'y l9, 2006,e'rreppd also fled an Ex Ftzz'fc Appl
icatioq forTemporary Rom aimng
6 Orderand M otion for a Prclimm

'nr'ylujuncti
on AgaiustDeunisM outgomely 'l'h.
eApplicatioa falscty
7 stx
ated that M r. M ontgom ery had coutlalm ted allof tl)e above named tecbuology to e'rreppid
, and
.
8 dem audedthatM r.M ontgomerybeordercd to returlztlig 'E

sourcecode''thatM r.M oatgomery attthored,
9 and tba,M r.M outaom ezy bepreveafed frozu ,cttsiug, dissetuinattng ordeletingiuforvnayjon rejatiugto jjts
10 tecbaology.'
ll
OtlJatmary 19a 2006,Honorable Jezay Polnha ofthe Socond JudicialDistrictCourtofthe State
12 ofNevadaia and BbrW mshoeCountydenied wilhotttprejuttice, Plaintifr'sApplication forTem pormy

13 Re'
s ' ' v Order, etcv,hadiug tllatPhintis had failed to m eeetitsburdea ofproofaccessary before a
14 tcmporary rostrnlng ordercoald lawfully beissued.
15
0n Jan!zaty 20, 2006.Plam

'til filed a Sttpplem etztalD eclaration ofJerry SnyderiztSupporlof
16 M otios (sic)forTemporaly Restminiag Ordor

17
D efendantp M r.M ontgom ezy rom ovedthecascto f

llcUnited StatesDistrictCouztfofthe State
,
18 ofNovaY oaIanuazy25, 2005.

19
Piaiati'
x t7ottnterdofc e tfIIH am otiottetjtitlodPlaiati st'rroppidTeobuologies,L.L.C.'SEx
20 Parte M otion for S

21
Memand ollJaquary 25, 2006.
'
'
A htzazing wassrttizzPlaiutj.trs/couatcrdefoudant>sFx JkrreM otion forSttrnm ary Rfm landfor
22 9:00 am on Jaauary 31, 2006.
23
OnJazmary27,i006 Dpfendauts/cotmterc1a'
lmantsz Dcnni
' sM ontgomery, artiadividtmt ancltlze
24 M ontgommy Family Tzuslfged jn thisFederalCouztactiow an Aagwerand Countem laim anegiag:

25 copyrigtt infringement;tznlaw faldjstla-bution ofcopyrighted w ork aad f
oriajtmctioniadeclaration of
26 rkhts witlzregard to tEe copyrigllted teclmologyiand aa aceolmta
'ng ofallIyroftts derived frouk
27 lhintitrs/tzouztterdefentlazltas'exploitation oftecopyrighted teclm olo
gy.
28
HI. AR GUM ENY

u3-
'
01/30/2006 :0N 12:25 -ITXZRX N0 61841
..x..u)w zz.k,w u s z;.ott rztzt
Lut,x'
&tl t..'
<!'f I.J1.1'1t.n
I4il111/1
'
C e 3r06-cv-0004) . JM -RA M
Docum ent10
Filed 01,:. ,2006
Page 4 of8
D efcndazt/couaterclaimant relied ou the face of Plaintifrs/cotmterdefendast's conaplaiutto
2 determ ine the citjzenshi

p of Plaintitr/cotmterdefendaut
.
for diversity jtlrisdictiou purposes
3 D efeadant/couatea laim antpr'

operly rem ovcd the caso to federaloourtbased upoa appaxent diversity
4 jurisdiction.Even ifcomplstediversitydoesnotcxistntlzeuazegravameuofthiscaseisacopyrtght
5 actionnandthecolzrthasexclusivsfederalq'uastionjarisdictionovertlleentircmatler
.
'
a.
D efendant/counterclawn
' ant relied on the face orPlaintifrg/coanterdefendant's complaiut
'
hich appe-ared to dem onstrato oornplete qiversitv l
'km 'sdicdo.
.
.
w-
- -
Defcndallt/tzzltuzterchl
'
n'axntproperly rcmoved thl
k case to '
federalcourtunder28U S.C.j1446
8
fi
r
x/l7otmterclal
'mxnt'ssomphintoefrsppidTe
.chnologies: Jnc.,Lsidentiiiedas
j (19.f!e thefacqofPlailt:iz
.
a'Califonliacorporatiom Defendantx otmteclaimant. M r.M ontgomrry isacitizen ofN evada. Further,
the am olm t in contovers'

y is well in rxoess of $75,000.00. Thtlsa from the face of tlm
tf's/cro> tero feae t's Cornplaint, thore appeared to be fedcraldiversi
12 Phdsi.
tyjurisdictiou overthe
paztiosptzrsuautto 28 U.S c.1332.
11
'
13
14
Now,afterrem oval, l'laiatix tM ttutcdef= e tE'Freppklclans tlatiterred v/heu itidentifkcd
itself as a Cxaliforah corporationx aud

. asserts that a num ber or docum ents Eled witlz
15
.
16 Defeutlaat/col:lnterclf> nt>sN otice ofRemovaldomonslrate thate'
rreppid isa N eu daLLC witb i1s
priaciple phceofbtlsiaess ia Nevada.
v
'
17'
.
18
19
Howeversllefendant/cotmterclan
''nxnftookplam
'tiTclountmdefendant'sstatemoatthate'
freppid
.
is a Calhbraia cargavatiaa in its f:4)IzlI)1

..
-.G
...:atVaevalue.Defcndau&'
ctlkuxtra% Rtwasawaret
ltat
W arrenr
frepphadousorm oreoop oratiozlsw '
itlltbec'
Freppidnnrnq whicbwereCaliforniaoozporatioas
.
20
D
ef
enc
l
a
nt
/
t
l
ot
ul
t
er
cl
ni
r
nn
nt
rol
i
ed
upon
Pl
ai
nt
e
s
ag
c
2
xert
ious,thatitsaotion w asbroughtia ttko nam eof
ed to hlvessigate fldlae.r orrely ort

22 its Califonzia corporatioa Dofendant/couateclnim anfLs notrequk'
.
23
subjective lcnowledge to determ'

me tbe oitizenship oftbe PhirltiK 'In 1be'
llmlh Ciicii notce of
'
24 rmnoveabilit'y uzzder28U .S C.jl446.(blisdetermm

'ed by azlvarnination ofthefoutcornersofthc
.
25 applicable ploadings, notthroughsubjectivekaowlodgeoradutytomakefildherinquiry.Iirrisv.

rsfa!
N and tlzzxzzal/.v& .,425,/.3d689''694 (9*Cir 2005) Furtller. 1446(b)ptx'mitstNe
26 Banke.
.
'
end'alktlorelyexcladvelyontbel
'nl
'tialpleadhgsforiaforvnationbeadagonremovability. Rico-chinn
. f
27 de
v.Prudentiallmz Co. 0.fxm.,2* 5U.S.Dist LEM S'
23l32,No.05-01975,2005W L 16322:9(N.D
28
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4-
01/30/2006 KON 12:25 -ITIZRX N0 61841
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0t/30/2006 t?:3 r
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LOG.
&R L&!Y OFF tUE
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.1-RAM Docum ent10 Filed 01/t5Y 2006 Page 5 of8
l Cal.Tuly 12,2005). The courtistmtreqlzire,d to ascenaitlwbatthcdefendautknew orshould have

2 kaown attim taleitreceivedthecompbifzt,oriaotherwords,thecourtswilldcclineto havea 'minl-tzial
3 rcgarding wlaok-aow wkataadwhma-'' Id (citatiotw ornitted).

4
Fktrlier,svea ifplaiutitf/tzottnterdefelte tezred in idtatt

'fying itselfasaCaliforaiaCorporationo
5 Defeutr
laltt
./cou terchmsntw msentiue.d to relypla.
irktr cotzaterdesndmat'sideutificatioa oritsell-asa
6 Caljforniacorpozation-D-ieamLpv.So//erpgrlyfAzreo'
,fnc.,366F.3d972,974fn-2.,(9*Cir.2004)
J
7 (Removalwasproperimder28U.S.C.j1332.,wherePl>intiffzscomplaiatretlectedcornpletediversity,
8 even thoughPlaine argued thatithadnamed tlm wrongparty aad divcrsity wouldhavebeea dcstroyed
9 lkad PlaintiW namez thecorrcctparty.l

10'
Plnm
' fiW/colmterdefendant, e'rrcppid, identitied itself as a California corpcrationa and
11 betimclx tr ounterclnimantM r.M ontgomerytooktllatidcntjlication atfacevalue.Hewasnotrequk'e.d
12 toinvestgat:furtherorrely oasubjectiveknowledge.NormaytheCoatl,intheremandproceediugs,
13 hold a tsm iai-trial''to determ inew hatDefealt:

latt
l/fiotmterchl
'o nntcould orshould laavekmown orw hen
14 he lcnew it.
15
'
The som ldness of the polioy of avoiding t'm ini-t'

lialf'on wilat Defrntlaaf.
/col.
ultcrclnl
vmant
16 subjectivelyknew andwheaheknew itLsappareat+ 1119 cmse.M r.M ontgolueryknew thatthecompany

17 wasrozm edwhenbothpartieslhredincalifornu w bile,Y .M ontgomo celial
'nlyuae rstoodeTreppid
18 to be a LLC in N evadavhe tlid notknow ifM P Trepp lhad change,d the citi
zenshl
'p ofthc company,or
19 cbose to bzing t.
hisactioa iathenam e ofthe Californin corporatioa PlairltiY c-ouzzterdofendm/'sown
L
..
..
20 cqmplaintidczltifies itselfaa a Californja Corpoe op but refers to the compaay as an LLC,witttits
21 corpoz'
ateheadquartezsinNevada Heknew tlaathfr.Trepp,asazaajorityskareholderofE'Freppicthad
12 frozenbp
'n outofalloftheoperationsofe'
freppid.M r.M ontgomerydjdnot% ow whcrM k-frepphad
23 formedtheLLC,ifMr.TrepphadincbrporatedasanLLC orcorporationaorifV r.Trepphad chaaged
.
24 the fonn orcitizeaskip ofthecomp

' any atsom e lattertjm e.
--
25
n us,Dftrndant/lEzotzutrarclax
'mnntwKnothavetodemonstcatewhathesubjodivelylmdorstooda
.
26 lxztonlytlaatitclearlyappeare,dFom thefaceofPlaiatlYcouaterdcfendant,acolnplamt
tllaty.vcrsys
.
27 Attisdicdon appearodto ex'

L 1(appoared from tllefaceofPlaitttj/l/countcdeRne t'scomplaiatthat
28 therewasdiversityjurisdictioa aadtlm cmsewasproporlyrnmnved.
.
5-
..
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Q.
u.tzuuzzutlo 1z:.
J4 f.'
.
&x
LOGAR I-.
&F OFFICE
e 3:Oi$-cv-O0O41'1JJM -M M
Dosum ent10
w e - )h
Filed 01/aw,J2006
Ltllt
ltlti
Page 6 of8
b.Eve:zifcom Iete diversi islacldn thecaseLs ro erl beforetheFcdfa-alCourtastbe court

hasrxclasivefederal uestion '
urisdictioa ovepthe actiou.
Evenifdiversityjurisdictioad1dnotexiqtatthetimeofremoval,thetsscueislzow mo
'otastllecasc
3
'
itwolvescopyrightisjueswhichcreatefedera!qaestioujurtsdictonunder28U.S.C.j'l331and j1338.
A case wlcllwas impropesly removed because complete diversity was lackiuga ulay stillbe
6
y
'
'
preperlyadjudicatediugderalcoul'
tsolongastlm impedimem sto thec-ourtassertktgfederatjurisdictioll
.
arenletbyLhetimetlzejudgmentisoatereed.Caterpilla.
.Inc.v.Lewis.5l9U.5.61,64(19963 (Where
.
defeudantimproperlyremovedto fedcralcourtasscrt'
mgcompletediversty,aadfederalcottrterroueotlsl
y
.
dcztiex motion toremnnd eveathoughtcomplete divenitywaslacking, butwhere,complete diversfty

.
eyem tually existed because tlm clefendmzt destroyiug diversity settled acd wms dimminsed before
'
10
judgement.l,
'Tn nqBeefbmeedersv.Oprah H'in/rca'
,201F.3d 680,686 (5'hCk.2000)(holdiug even
tbougizremovallm ybavobe= improporduetolackofdivorsityhxisdictionatthctimcofremoval.iftho
12
.
'
defeu injurisdictioaislatercuredlxforeitisIzoticetlztheM eralcourthassubjectmatterjtuidictionto
13
'
entorjudgment.).
'
11
24
ln the prc enl case, evan ifitia found tllat thl

'q case w as improporly rcm oved due to lack of
15
'
cliversityjulisdictionathejurksdiction defectiscuredbyDeferlt
iant/cl
zlu terclnf
'mnnt'scouuterchirnon
16
1
copfrightkssaes.Pursuam toZ8U.S.C.j1331and 91338copyriglltoasesP,/lwitbklFederalQuestion
l7
Jmistliciioq andtllefeedemlcoarthaxorigiaala
'ndoxcltlsivejurislctionovercopyrightcase>. '
'
js
.
'
Pla-te'Cotu erdefeuaantL ay arguo tlkatitistbe''m astcrofitscau-aplaiat,''aud t.
batitwa.
snot
'
19
requked to issert thl copyright actioa hl i+

zte complaint.- n erefor, the argumeat goes,4lmt
..s St
20
D efmlclaxx cotttLtez'
clax
' n=t could notizlsart a fedoralqut
zstioa in a *tplam
' 1y'*state hw clainx Hcre
21
how evcr,Plam
'to couuterdofendantm y aotr-scapt
ctllat$he true gravarr-a oftlze action isthe fedm'al
22
..
za copyrightissue,simplybylzavingiartfl
'?llyplead''itsstateclama
'nptv oztingtoignoreitsv lationsof
.
/courtterclal
emant7scopyrights See,Azl
24 D efendaut
rtzrzzsclc.
v.HugheaWircrti
/..992F.2d971,(9'bCir.
'
'
1993)'
,Canyellv-Greatkepubtic.J>.Co.,873F.2d1249(9'bCir.1989). .
.
25
'
'
'
Plne
'ntifrs/cotmterdefcndaat's complam
' t clsarly implicates the M ontgomcry Fam ily Trust's
26
27
copyrights.orinotllerwortlsatlm pacties,rightsaadrespozsibilitiesregardiagthecmpyrightedteclmology.
'
'Phiq case was'prom rly rem oved as tbe tzue gravamen ofthe action is 1) ' ' s/couuterdzfendant's
28
.
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y.
..
01/30/2006 :0N 12:25 - (TI/PA N0 61841
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0l/30f2006 12 734 FAX
LOGAR 1-.
18. ili'1
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,
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1t3M-PuAM
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Document10 Filed Ol/t#2006 Page 7 ofE$
1 infriageznentonDefeudant/cotmterclaiumat'scopyrigiltedtechnology,andjurisdictionoverthefederal
2 question copyrightLssueshasbeeacomplcttzlyprecmpted by28 U.S.C.j 1338.

3
W herefor,Plaintr s/counteadefendant'sExparteM otionforSum m arylternandmusbcdeaizd.
Respect-fully subatted this30'

bofJaauazy 2006.
6
7
'
LAW OFFICE O F LOGAM z

t PULVER PC
Br
3 JL)
$0
Roaald J. Logar,Esq.
.
Attorney forCounterclawn
' antDenniqM outgomely
and Couaterclne
'm AntM ontgomo
' Iy Fam ily Trtut
N evacla BarNo.303
11
Reno,N evada 89501
9
.
225 S.ArlingtonAve. Ste.A.

12
13
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15
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18
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01/30/2006 :0N 12:25 - (TX/RI N0 61841
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C--e 3:06-cv-0O041S?i)JM-IRAM
Docum ent10 Filed 01/3=/2006
CERTIFICATE OF SERW CE
Page 8 of8
'
Purstuqntto NRCP 5(b)s1certl

'fv thatJam an employeeoftheLAW OFFICE OF LOGAR &
3 put-v syt-pc,aad timton tlae aci'

x day oryauuary,20t)t;
,I
deposite.
d rorrruallngintheu.s.M at
'l,witllsazs cientpostagenfsxeathereto viacertifioa
5 M ail,ltetu,.
n Receiptrequested.
6
seutva s'edcm lExpre-ssorotherovem igiu dclivea.

y service
..
..
deivcrodviafacsirsgemaclzinsto faxn',mser:7/5-786-679on ()1/3:/06
personallyd/vered
causcd to bedelivered viaReno-cm-solzM esseugerServicc -
10 the foregoing docum om ,addressed to!
l1
Jerzy M .Snytler,Esq.
12
H aleLane Peek Denniqoa aud Howard

5441 K ietzkeLaae
13
Second Floor
RenoaN'
V 89511
14 and
'
'
15
PillqburyW iatlyop Shaw PittmuaL.L.P.Via:RegularUS M a1

7
16
David .
& .Jakopa Esq.
Joxzafhan D Butler,Er,q.
2475 H auoverStred
Palo M to,CA 94304-1114
17
Facsim ile:650-233-4545
IB
.
r
20
LegalA sststaatto thc

Law Oe ceofLogar& Puivor,PC
'
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01/30/2006 Z0N 12:25- (TX/RX Ni 61841

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Case
3:06-cv-00056-PMP-VPC
644-6
Filed
05/28/08
Case
3:06-cv-0004'e. ' (A M Document
Docum ent
11 Fi
led 01
''
. ,6 Page
Page88
1 tof
)f4137
'
** )
W
.
l J.StephenPeek,Esq.(NV Bar#1758)
Jerry M .snyder,Fsq.t
'Nv Bar//6830)
2 Hale Lane lzeek D ennison and H ow ard
5441K-ietzke Lane,Second Floor
3 lteno,N V 895l1
'
TeI:(775)327-3000
4 Fax:(775)786-6179
5 A ttorneysforPlaintiff
6
.
IN TH E UNITED STATES DISTRICT CO U RT
'
8
Fo R TH E olsTlzlc'r o v NEVADA
.
9
!o ETREPPID TECHNOLOGIES,LLC,a Califom ia
=
u
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t
A
1k
1' Corporation,
7o:.w,
REPLY IN SIJIY ORT OF ETREPPID
plaintift
.rscsq
xolaotu ss.taL.c.'sEX PARTE
XIZ 12
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'
1,:4
CASE NO . 3:06-CV-0004l
MoTlox I?oR SrMMARVREMANII
vs.
DENNISMONTGOMEIW ,
).i
9 :4
Dt
4o
D efendant.
'
Ct8
11.15
jkq'
-$
:
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o
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a(G .,
I
C
Plaintiffe'
rreppidTechnologies,LLC (''e-rreppid'')herebyfilesitsRepiyinSupportofitsEx
17 parteMotionforsummaly Remand.'
lnhepresentreplyisbasedupon28U.S.C.j144621447,onthe
l8 following pointsand authoritiesand exhibitsattached hereto.
19
Polx'rs ANI)AUTH O RIT IES
20 1.
21
'
l'N'
rltopt/cn ox
.
As set forth in e'
rreppid's M otion for Sum m ary Rem and, tiled Jarmary 25, 2006..and the
22 suppiementthereto,tiled on Janual'
y 28,2006,M ontgotnery and the M ontgomel'
y Family Trust(the
23 'Tmst'')simplyhavenolegalorfactualbasistoremovethismattertoFederalCourt.
24
Iu Defendant/counterclaimants'Oppositiontotlle subjectpending motion,Montgomery and
25 theTrustassertthat(l)thecmsewasproperlyremovedonthebasisofdiversitybecauseMontgomery
.
26 and the Trustbelieved,based upon the caption ofiie'Complaint,thateTreppid was a Califomia

27 Corporation,and (2)thisComtnow hassubjectmatterjurisdictionon thebasisoffedel'
alquestions
28 assertod in a counterelaim .
ICODMAVCDOCSV-ILRNODOCSB121681
.
Page lOf4
. -%
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.

Case 3JO6-cv-0004 >. . -. tAM Docum ent11 Filed 0'. ' :6 Page 2 of4
.
*
)
Both ofthese arguments are meritless. The overwhelm ing evidence shows thatM ontgomery
and thc Trtlst were fully aware, based on the allegations of the Complaintand on M ontgomery's
perscmalknowlcdge,thate'l-reppid is a Nevada LLC. M oreover,asa residentofthe State ofN evada
4 M ontgomeryeannot,under28 U.S.C.j l441(b)rclnovethecase based ondiversity. In addition,asa

5 m atterofsettled law,where a plaintiffdoesnotraise a fcderalquestion in the complaint,a defendant
6 maynotinvokefederalquestionjurisdictionbased ontheallegationsofacotmterclaim.
j
y
l
O2
7 I1.
8
ARG UM ENT
A .- Rem ovalIsNotAvailable to M ontzom efv Because Defendantisa ResideutofN evada
28 U.S.C.j 1441(b)specitically provides thatactionsin which subjectmatterjurisdiction is
10 basedt)ndiversilyareonlyremovable''ifnoneofthepartiesininterestproperlyjoinedandservedas
1l defendantsisacitizen oftllestateiu whicllsuch action isbroughti' Firemanj-Fund Ins.Co.,lnc.v.
Nw
=j=$
-;
1:
1
12 Paine Webber RealEstate,690 Fvsupp.879 (N.D.CaI.,I988)(''The prfvilege ofremovalis not
@;
l
$t
1:o
n l3 extended toadefendantwhoissued inastateofwhich itisacitizen.'')
.'j
qt.n!j 4
- 1l 1
As set forth in Plaintiffs Notice ofRemoval,tiled on January 25a2006,Defendant
o
-
n a th
.
X t'A6 l5 M ontgom ery is a citizen ofthe State ofN evada. A s such,he m ay notrem ove this case to Federal
xdtx E
o'
2 ;t
$ 16 Coullbasedon diversity.
1,
Q
s.
t
.q #
:d
17
18
19
B.
n is CourlCannotHave FederalOuestion Jurisdiction A risinc Outof the Allezations
ofDefendanfs'Counterclaim
As setforth eTreppid'
s Supplem entto Ex Parte M oton for Sum m al'y Rem andjM ontgom ery
20 cannotuse thisCourt'sfederalquestion jurisdiction asa basisofremovalwhere the federalquestion

21 azises only out ofthe allegations of a counterclaim . ln H olm es Group v. Vornado Xir Circulation
22 Systems.Inc.535U.S.826,l22S.Ct.1889,l53L.EII.2(113(2002),theUnitedStatesSupremeCourt
23 specitically held that tm der the well-pleaded-complaint rule, a defendant m ay not rely upon legal
24 theories contained in a counterclaim as a basis to rem ove an action to Federal Courtbased on 28
25 U.S.C.9 1331and28U.S.C.j1338.
26
Nonetheless,M ontgomel'
y and the trust asseri'
thatms the ''gravamen'
'of this action is a
27 question of federal copyrightlaw ,the action is properly rem ovable. This is nonsense. First,as set
28
.
Z:ODMATCDOCSTILRNODOCSU1216841
Page 2 Of4
=.
.
+.
Case
Case
3:06-cv-00056-PMP-VPC
3.
'06-cv-0O04- ' .tAM Document
Docum ent
644-6
11 Fi
Filed
led 01
05/28/08
ml. :t5 Page
Page90
3 of
of4137
j
Y
M
'
'
l forth abovc,tlae H olmes Group case flatly precludes M ontgomery's argum ent. Second the case !aw
2 tatM ontgom ery arid the Trustrely uptln simply does notsupporttheirposition.
ln Karambelasv.HughesAircra.
ftCo.,992F.2d 971(9tl1Cir.l993),thecotlrtheldthatthe
4 defendant improperly rem oved a case to federatcoufl where tlle defendantbased its rcmoval on an
5
argurnent that -- in spite ofthe fact that the plaintiffhad notplead a claim arising outofa federal
6 qucstion -- the true gravam en ofthe complaintwasan ERISA claim . The courtacknowledgcd that''in
7 the area ofcomplete preem ption if thc true gravamen ofthe action is a federalclaim ...the plaintiff
8 cannotavGdpreemption by pleading apurportedstatcclaim.''Id at973.However,theCourtwenton

9 to tind thatasthe piaintiffhad not-- and could not--plead any federalclaims againstthe defcndant,
10 thecasewasnotproperly removed.
.'e
'
C
2 ll
In tlziscase,justasin.Karambelvvje-rreppid hasnotplead any federalclaimsagainsteither
y't
:k>t1:
;4 12 MontgomeorortheMontgomeryFamilyTrust. E'
Freppid'sclaimsarebased onstate1aw claimsfor
= = -
$1. 13 m isappropriation of trade secret, conversion, and breach of contract. The trust's assertion in a
i(4
?)
1xt,j
'j1
g'e>
l
4 counterclaimthatitownscellainofe'rreppid'sintellecmalpropertybasedonfederalcopyrightlaw
aj 1
X
e 15 doesnotsomebow chaogethe''gravamen''ofe'rreppid'scomplainttoacasearisingoutofa feddrai
.t
4'7
f
t/
xto
u i
'
J;t 16 question.SeeHolmesGroup,supra.
Q7
17
Accordingly,undertheUnited StatesSupremeCourt'sruling inHolmesGroup,Montgomery
71A
a
tc
18 and the Trustsim ply ,

cannotuse the allegations oftheircounterciaim to rem ove this action to federal
d
-
19
''
COt1.
rt.
20 H .
21
'
CON CLU SIO N
Fortheforgoingreasonssc'
FreppidTechnologiesrespectfullyrenuestsitsL'
xParteM oticm f0r
22 sum mary Remand be grarded.

23
D ated:This 30t
:day ofJanualy,2006.
24
/s/
J.StevenPeek Esq.
Nevada ParN umber 1758

Reno,N V 8951l
25
26
27
(775)327-3000,
'(775)786-6179(fax)
AttorneysforPlaintff
--
ag
r:opuAtpclltxsvlnlthpcllkcpcskNlzl6:l
Page 3 of4
.'=.
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Case
3:06-cv-00056-PMP-VPC
644-6
Filed
05/28/08
of 4
137
C ase
3:06-cv-0004 w.e *N..tAM Document
Docum ent
11 Fi
led 01
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Page914 of
PROO F O F SERVICE
2
3

lam ernployed in the City ofReno,County ofW ashoe,State ofN evada,by the law officcs
of H ale Lane Peek Dennison and H owafd. V y busincss address is: 5441 K ietzke Lane,Second
4 Floor,Reno,Nevada 89511. Iam overthe age of18 yearsand nota party to thisaction
mailed a true copy of Reply in Support of Etreppid Technologies,LLC'S Ex Parte
Motion forSummary Remand,thereofto the following personts)atthe addresstes)
listed below by placing the document in Hale Lane Peek Dennison and H oward's
practice forcollection and processing ofitsoutgoing mailwith the United States Postal
Serviceto the follow ing:
7
8
'x1
11
.
Eric Pulver,Esq.
9 Law Ofticesof Logar& Pulver
225 S.Arlington Avenue
l0 Reno,NV 89501
pt
7O12
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faxed atrue copy thereofto the fax numberindicated below by placing the docum entin
Hale Lane Peek D ennison and Howard's practice for collection and processing of its
taxqsto:
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225 s. Arlington Averlue

Reno,plv 8950l
Ideclareunderpenalty ot-oerjufy underthelawsofthe United statesofAmeriea thatthe

foregoiug istrue and correct,and thatthis dcelaration wasexecuted on January 30,2006.
'
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19
./s/
20
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21
22
23
24
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27
28
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19
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eTREPPID 'ITCHNOLOO S.LLC.a
NcxadaLictedtabo Coplpmyi
W APAEN TREPP,ankkdiwdtuat
aooss 1through 1.
.
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CQPYRIGFTT ENI7lo gsw gsr
) 2. COPY RIOK FTNFRINGEM BN T BY
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DISTIUBITTION)'
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16
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20
21
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8
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pltrA cilOF CON FRACQ
w gxppppyaujxeno!qo:TILADE
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23
24
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26
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02/01/2006 WED 10:39
ITI/RK N0 61981
-.
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Plaintiffs D ennis M ontqonw '

y and the M ontgonwty P'amfly Trllst,he-rfby allege aXAinst
Defeadallt,e'Freppid Trchuologiex
s,LLC,aud DefelldantoW arm n Trepp.the fchllovring Claiznsf&r
ReRef
4
5
-t
m.
n..
1! tzzz*w='
Case
3:06-cv-00056-PMP-VPC
- =
v
. .-
1.
IN TRO DUCTION
TIZSisan aetionarisin:Outoftlm tzmaatlkorizedlueOfextrrmelyvnhzablecopyrightad
coluplltersotkware techaoiogybyDefeudattt e'

Froppid Tecbnologieas.LLC azld D efendant W arren
Trepp Notcontentto reap millionsofdoltarson tlm technolbgywjtilouta Ecsruse,thcmajority
sharchkolderxofe'
Treppid TecH ologiesaD cfendautW arroa Trepp,lzsed ids nxajorit'y positiou to
91111ee7.
0Out,diluteattd m iu ppropliatevasetsuuzsofm oncygom tM iqvenlorandf'
QQIIW shariholder,
10
.llenntq M oatgom m-y,aad tllo M oofgozucry Fam ily Tm st. M oroovcr:asfully stated below even
11
tltosebrmache.s offidudary dut'

y didnotsatlsfy Mr.Trepp. fle wentfttrtberby trying to obtuain
J2
plaitvtis'
hfontgomm-yt7atm-lyvrnlst'soxtre> lyvaluabletechnologytbrpughakaowiuglyfalseclaizr
13 .
tlzat tbe M ontgom ezy Fnrnily Ttust's tr-clmology was contu-buted tp the com paay l;y * .
14
M ontgoo ezy,theaatlezzzpting to rsvszseenghzeerthesoitwam indirectviolationoffotiezaicopyright
15
Taws. Accordiugly,iztadditioztto allotller rome-dios,Plainti.

l seeks no: oniy a declaratioa of
$6
owaazshipundertlle 1976'Copyngl
' ktAGtofthesoftwareatisstteiuthislitigatioa butkl
junctivereiicf
17
agaiastallyfurtherlzse oftxeteclmologyve outalioense aud au accotm tfag ofallprfltsobtaizred
18
asaresuttoftbe unautlm rized explohation ofthe copyrightsaodthoscderivadve wollcsrhcrefrom-
19
'
'
'
'
PAILTIRS
'
'
'
''
20
2.
Plaintiq DabniaM o'ntsomorkjsinkldividualwhoresidewsinW asbooCounty.Nevada
'
21
and istheiaventor.ofalltoghnology thatissczbjectto thisactiozu M onigomeryisalso arninoz'ity
22
slmreholderktefrqlpidTochnologies,LLQ Defoadantaixlvcnamod-
23
3.
24
PhintiF M ontgoinezyFamilyTM ltXcN mst''lisadalifoaia H evocabletrtzst
fomzedndoperatetlunde/tl:olawsofthStateofCaliforaiam d isdm om le:roftim copyrigbtsat

'
25
issuciatlzisactioa.
27
aN evat
la1=
* 'fekllability com pany,wfth itsprfnciplo place ofbusiumsshzW ashoe Cotmty,N evada-
26
4.
Defemdazzt,e'
rroppidTenhnnlogies,.
IJ-C,(e-freppidlpisuponjnformntionard belicf
'
1-
..
02/01/2006 5ED k;19- (TI/Rx N0 61981
-.
02/01./2006 tf?:5t F'

,
&X
Lplpln-!zf!-'!vs-'-&-Case 3:06-cv-00056-PMP-VPC
Document
644-6
Filed 05/28/08 Page 95 of 137
v
CYSC11'06-CV-00056 DOCUFFIOOt1-1 Uiled01/21/2006 -Page3Of12
.
'
DeftcadarztW azrozzTrepp ('eTrepp7'

)iszupottiufortllafion and ilelittt an iudivictualWilt
7rlsitlrsin
W ashoeColmty Xevadaaud L5tho'

Euajorit'
y shareholderiue'
Freppid TocbnoloxemszLLC.
5' ' Platutic arepr'

escutly tlnaware ofthe h'
IZGnames aud capacitaesofDefsudautssued
llcreitzasDOBS 1 through 10,inc'lusive,aad therfoze sue said Dorcadants tm dersuch tk tztious
nam es.Plairzties are infot

'znsd and believe tlzatsucb fictitiotlsD cfeadaxtsare rosponsible iu som e .
m mnncr forthe eveztts aad bappszzings bera:

in refenvd to,and proxitzlately caused tim dam age to
Pbaintitrs a,
silereis allozcd. Plaintic wjllseek laave to am end tlds Complaiut to allegetheir truo
narnos aad capacitieswilsn ttm sarnn havebeen ascerrnm

' ed.
1t
9)
6.
JV RISDIG IO N AND
PlxntiEs raise a claa
'm zm t
iortlze fradem lC-opycightActof 1976. Accortlizzgly;this
11.
Courtl
f
a;tsjtuisdictionpo uattto'28U.S.C.9'1338(a)and1338U$.n eCourtalso.
liasjtzristliction
12'
13
pusmlnntto28U.SC.j133i(federalquesrtioujurisdicson) azzdovertlztistatejaw'olan
-rnqptlrmlnnt
to28U.S.C.j1367J(spplt
u.neztaljilriqiicdos).Veuutispropcrpurqu>pntto28U.S.C.j139l(b)and
'
14
28U .S.C.jl400.
15
16
--'
7.
FA CTTJAI,AIM GATD NS
Dennl
'sM outgomezy t'
M outgotztezy)isaa itwezztoraqd soltw artdeveloper. Irtor
17
abou )982,M ontgom ezy developcd ce.

rtaia pattsm rccoglzition sottware for which ti)e U.S.
18
19
20
Copyrightilxcegcantodaseriesofcopwim s.'
IleldoatgomezyFamyl'rtlstt'
frast)ktheaenlr
ofCop> ght> > a tionNos.= u-p8-0l8,U u-98-6j9,Tx-98-727$4-:* -98-728,TXu-9-731,
I'
Xu-l17-86% YX-119-540,7.
W -1-983-14.
7,7W -1-992-867.TX-2-t)00-234,-1*.
X-2-083-756alfd
1
2
22
-2-095-009ttlm ropyzag'
ht.
j>)..
.
. .
TV 8. AM <tlm re' a'oz
'zoftbesecoppzghts.M ontgome!v developrdlkrivat'VzveW orks
'
23
.
'
bascd ou tbepattom recogilition tecbnologyozigirlallycopyng

'lk
tad botavesn 1982 aud Tyauary 1987
24
ttlx C'DeH/CdM W orks'').TizoseuukuelyitaportantDerivativ'

eW orlcswrefullydevelopedprior
25
to 1998 aad ave tlle exclusive property oft:oTrust
77
Technologies,LLC,a'Lr
'rrn'
ted Ljabffity Company:wbjaltnnm e was later chano
xred to E'Freppid
'
26
9.
In oraboutSeptembe,r'1998,M oiltqomezy and DefmdnntTrepp.fok'med lntrepid
2-
0Z/01/2c06 FED 10:3F ITZ/RI N0 6198)
i)Zz't)1/2IJIJtlCase
zu:o1
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3:06-cv-00056-PMP-VPC
Clase 0:06-> -00056
Doctlfnent 1-1
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Uilcd 01/31/200:' 'Page
4 Of 12
'
r hraologies LLc mereafterrererred toass'rreppid) pursuauttoa''coaua-butiouAgreemeat''

'
2
1
Elat
n Trepp,lkfolltgofrtdry and tbe:Yrust,ilCXG QIIV;C fOF a fft'
y
ececl Septe ,ber28,1998,betlvee.
perGen.
t Ztereaqt in e'
fmzppid TechzzologiospLLC tt
l M outgom ery,tlle '
fl-ust (
zolltrl
-blltrad Spe/i
zo
teclm ologyto sTreppid thattsideatv ed iapazagraph 1.2.1oft17cContribation A greemGlt. '
10.
6.
That Paragrapiispecifcally identifies tha contrl

-bttted teclmology as f'tht softw are
comprassioa teclmotogy cozztaiasd on tbatcartain softwarc coupression luginc Development

'
p
8
Pzogram contaiued on ctlN 0.1.,'

Signt
'ficantly, bccatlse tlle Trust owzmd otbor techaotogy,Parapaph l.3 of the
* ll
.
'
'
9
G uGXutionAr x = ntsGta tu ti eTm st+ expresslynotTtontributing,t'

rausferrittgor conveyirzg
10
toe-freppidtm.
dsrtb.
isagreementovbyatlyotllemeaus,nor'iae'
Freppidacqllirm
'gfrom gttz R-nksll
Jl
auyotllortaagl
'bleanditltaztplnleasset:or'theTzustorMozjgomepy.
12
12.
13
'
Tlm s,pttrsazanttp the express terms oftl)e CoatnYutioa AgrcenzentuTnkcpid only
acquire,d tim softwata comm ossiotttecM ology txm tajnetlozz(7D N o.1 aad nothiag else.
14
13.
J5
Ia particulara te D erivative W orks w :re notpartof the software com pression
teclmologyoontx
aiaedonCD No.1thatiss'abjectto ths Contrl
%etionAgrecmont.
16
14.
Subsequently,Trepp bogaa ttldiluteM ontaom ery'sshare hle'

Freppid ard,used Ns
czajclrltyinlerestiueTreppidtopbtainfayozabletreatmeatforhnuolfasamajoritysharholderattl)e
17
18.
.
cxpenso ofM ontgolnery.
19
15.
1.
n orabout200J,e'
rreppid bega.
listlblioenshzg-t:e Dlrivati
ve W orksto variotu
20
matitios,including theUztitedStatesgoyezzl
meatandcollectinglicm qirtgfewsfozthesalblicenses.
21
e'frorpidw msnevergrantod a licsnseto tlm DgrivativeW orb by, arzd faed to payroyaltic to,the
23'
'
16
AtnotlmsdidanyoftheDofwdaitshaviaw1-1t10 liceasetoexploittteTrust's
24
DerivytiveW orksasreqairedby 17U.S.C.j2(/4(a).Asaresult,atbest,e'

rreppidoclycanclawn
'
25
(/f
26
27
':)azzoralano
''n-exchzsiveliccmetoexpbhtheDerivativeWorz .
l7.
A tthotlgh theTm stde esthatitgrauted any oralnonexcltksivo Zcenseto o-freppido
tzy such oral'

licmxse w aatezm iuated b'y the Traston Janaazy 19,2006 orally and by letler dated
'
3-
.. -
Qx
02/01/:006 FED 1c:3& (TI/RI sg 6lpdj
Uz/otzzuuo iv lau sax
C ase 3:()6-(N'00OG6
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F'iir)d 0 1/31/2026 ...7at
Doctlrnent1-1
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8.2006.
c'l-reppid basfafled tc and refusrsto ceasbexploitation oftheDclivaliveW orksand
Jatm aryl25
'3
hasso farrcfused to accotmtrormly profitsobtained as aresultofiusltaliseased exploitatb rlofthe

'
4
5
Derfva
'tf1
vo
. utialand sensitivenatl
9 w orks
M .oreover,becatzseofthchjghlycptfde
i'
c oftheDezivatva
6 '
Worka,the pezivative w orks arc proteoted frolzzrrvm'

se engineerinj aucl/or tamperiag by
sophisticated safepaartla.A saresulfofe'

Freppid'simproperattrtzptstp obtain mldTevm'ste'
agineer
theDerjvativeW orks,Defmidantsilavcsuponizzforinae aaadblieftdemstroyedpartofthetcsoum e
code''oftlaeD etivatw e W orks,ftl

rther
10
'
11
20.
FO R REL IEF
. .
Plaintiffs kkcorporatebyrefereucathoforegohfgallegattoruscontaiaodizzparagraphs
' 1 through 19 asthoughrestxtjd herekizlfult
14
2l.
Tlm M ontgommy Famt

'ly Trast is the os'
acr of Copymr
'yht Registration Ns
15
TXu-98-0l8, TXu-98-699a TX u-98-72?, -1-20 -98-728. ,171 -98-731, TX u-l17-868, azzd
16
Txv
u-119-540andtlleDerivativeWorksOX'
Q e tberevouz
17
22.
D efeudantshavofortitezpa.
stthrecyears azd coatinq.
klg to thoprescot,expoited :be
18
19
Tnzst'sderivativeworksNvithoutanylimxseGereforaudwithoutpayiugroyaxios.
23 DsfYdantTrepp,msManagerofe'l-reppi; k'uowiugly andiatenhoctallyclircctcd
20
e'rreppid'swillful' ' emeatoa tlke Trtust'sovpycightsand Dtzrivativa workq.
21
24. Asadirectaztdproxlrnntere-sutofthelzle?=e t'wu11671

'
FIRST
(Cepyrightbzfringemeutagaiustallbefehdauts)
12
13
' vPlaiutie .
'-
'
'
zns'zttonthei-pzst.s
..
22
Derivayive works,ttte Trusthas suO ed az)d contilme.

s to suFor dam ages iztaa M ountto be
23
tletsrmhled tt'
rinl
24
25.a
25
'
'
'
Purmlant to '
tli.e C-opwv htA ctof 1976,the '
frttstis e
'zl
titled to actual
cxes,
slatutory dao agesmsprovtdod dtereipaaad t:roasonable attozney?sfeea.
SECO NIIC LAIM FOR RELIRF
27
26
(Copyrialttlnfringem eat-Unlawfulbkstribution nfCoppightedW orlc-Injunctloa

+
.,
=.% .
02/0172006 10:52 12.

tX
-- .:.
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!9AB.-.?,z7'rv''.--.Case 3:06-cv-00056-PMP-VPC
Document
644-6 Filed 05/28/08 Page 98 of 137
w
0:-.z--(),
a:,.
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case :s.
17U-SC.j106(3)) '
1
3
e'
N'efy Preceding parraph Ofthis Complaintasifthe sam cFcre:rtoutatlength j)erek)
-
Plaintttt-j-rustjstheowaeraud autht?roftheD edv'

ative W orks
2S.
1.
u doiag tile acts allegcd.Defoudaat violated the Tnusths righ: aud iateiest to -
6.
'
27
istwsutccopiesorsooewu qvewocu toutepablicunasrh'?u.s.c.j106(3),asdsaiaactswsre
r 7
8
axdar:29.
mffiugePl
rne
at
sifort
)evo
Tras
tsa'caopy
ai
ut
fs l
ha
Ixs
nd zi
agh
cots
b.
ehg substautially dnmxged by said 1
'
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iugement,
pe c ly,upoa Touzulou and bsnet K:o mqutNoe M use of ie Dehvadve V/orks by
1()
Defezjdam s. lhyrtberhnvm aud jzjtu'

y to Plaiatl
'fflLsimminentaand Phiati arewithoutadequate
11
remedy athw unlessDefendaats'.

irtfnz
'l
gomsutisoujoiuedbythscourt
ca,zkm Foyixtsslxv
lz
'
(pedaratory Reliefl
14
13
30.
Plaiukigsreanegeandiucom oratcbyrefaremccTaollaudevmyallegatioaiuparagraplx
'
'
'
$5
16
lthrough
tfort
lze
n3129
. seAn
cl
ttua
frcsi
oz
ktro
rsyl)asazism andexistaaznongplairtitfsazd Defendazttstmderthe
tve
17
Copyngh
' tActof1976. 'rhe Trlast'
copreadsthatitisthe oxclusivoowaeroft11:Delivative W orks
18
19
ats'aein thisactioa Tho Defendautsdisw te thiscolztcutin.

'
32. Plaiutifrsdcsife aw dtcialJoclarationthtPlaitttiffuare the.ownbrsortbe Derivative
10
W ork audfurther,*1-1anyactuatorimplied.
oralztozmxobasivoLioeau kstermm
'ated.
21
33
Fe ermore asPlaintiffsllavenew validlyasgigaedauyilztemstintlm copyta

kikts
22
ortbebezivativoW orkstoDefendants,Plal
'
nf''
rffqaroontitledtoadecvzationthatttkeJfruifkqentitled
23
to 100% oftlloliconsefeesobtaiaed bytherzploifzdionandsabliceniugofthrDorivathroW orkswG

'
24
25
m att. o34.
ffederaAlc
opp
ig
bt
lao
w.
de
chr
at
bn
friglztsisno= saryard appropdateatfldstim-'h ordcrtlmtPlaintim
26
may msceftah thcirkightsand dutiesw itkrespecttoD efendauz,atd witlzrespectto asyo dpauies
2/
WIIIIrnay claim an kzterestilloithorGe CoppightsortlleDe vative W orkseithcrby licezlsc oz

c
= VY7G
02/01/2006 FEp l:z: ITI/RX N0 61981
U</'tlA z< u tpo iu .)v. z.a x
d01/31/P00ti'Pao'
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File
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atleged sublicensez.
FOU RTH CLAIM FOR ILELIU

2
(Aqcountiag)
3
4
35.
5
6
'
17la.
1.
f4t1* reallcpasmd izlcorpopate by refere
m t:e raach and cvery allegatioq iz
paragrapius ytilroug.
h 34 sctforth tmrein.
.
.
.
36. Plx
'tintF Thtstis theexclusivo ownoroftlm Copyrightsa!ylthcD erivaliveW orks.
3p.
b efendae saveur
ro'
ngstgyuxptoted the copyrigixsaad Deriva4ve w ork'swithout
.
'
8
9 '
paym cntto tim Trtusttlerefor.

.
38. A5 a resulq the Trmstis elztitled to aa accoudting ofallincom e and prolits derivird
10
frtlm Dcfeatlauts'rxploitation oftle Copy

'rightsxttd theD crivativoW orks.
11
'
Fll?TffCA U SE Ol?ACH O N
12
'
m reach ofEidudarybuty)
13
39.
14
'
Plaiatj.
e realkge and incorporatoby roference,m'fch azd every allegadoa ia
paragraphs 1throtlgh 38 set1r:.11bzrei!z.
'
15
40. Aatlzum/odtyKhnmebolderiae'
rropidTeccologics,TrappowedaIiduciarydt'
y
16
of lrtm ostJoyalty and good fakh to Plaintig D enniqM om goznqv iacludg within thatduty,ar
17
obligation notto use hismajority iutereotto the derivlme;

atofthe mnnoftt:/sw xjwjder,aad an
' 18
obligatiou aot to ftu'tit

dr his ow rt ltarests at the expc'zsse of tlie m 'noziry sbarekolder,D eml.
k
19
M om gozuozy.
' 20
'
.
41.
Jr violation ofhissduciazy dutiosto Plnm

'fc Trpp krproperlyUSGJbismajority
21
iutorestiaordertoamongotherthngs,attempttoreducMbntgomery'sshm'e.
sI'
elativetobjsowa
21
dgvalu'
etbch.oldmg
' sofM oatgomezywhileattbesametfme'iacremsing tlkevalueofhssharcs,pay
1:1114so1f e'xorbitaat dividends from tlm com paxy without paying equal dividends to plnintx
23
24
25
26
27
M outgomea ,u dtomisappropriatemllioasofdollarsatM oatgomezy'sexrprzuse9om tbe'company

acooanfs-
42.
'
'
ais a dk'
ectaud proxzaate res'uk.ofTrepp's breach of fidtzciary thty,Plaialiff
M oslgom eryllassuFere.d aadconn'nllesto stO rdam agssZ a.

I
Znmnauttobedetermined attziatbut
-
&
02/01/2006 #Ep 10:: (TI/RA N: 6j98)
02/01/2()()6 ).():5z jzaa
--2JMV'
M M *'*' .
c ase argls-cv-oncifsei oocum eut 1-1
giled 01/31/2:()6 ' eage 8 ef12
1
2
iu auy event
les
s
thaaTr
$6em
ills
l
'oa.
43 noBe
ik
muse
pp'
actions wo'
r: Wl
'llfula malicious, ill bad f.
11C.
11 arld fapl7rtzssive,
M outgom ca rcquM sthatpunkive dam agesbe awarddd agaiustTrepp

SEXTH CAUSE OF ACXXO N. .
'
5
6
44.
(zk-r>ud agaiaat'rrehp) .
'Phiatie rea
. llege and km orpol-atebyrerorence eacb ao.
d every allegation ia
'
7
8
paraq aphs
outg
b4
3me
set
foz
lhf
he
eixion oreTrcppid TeshnologieszLLC,and the exctnztion by
45.lthr
At
he
ti
of
the
orr
zuat
PlaiatiFs oftlle Contrlutiou Agrcemrm aTrepp orazy apd.in writing promisdd Plaiatif'
s that
10
M ozttgomety would be a 50% sbarckolder kte'

froppid Technologies wjth Trepp. Ho ftttther
1
1i
2
repm seated ttuatM ontgom e.ry would slmre eqtlallg wit.

b Tropp ilzt1lc proG softlzecom pany.
46. Atthe timetimtTropp lm de tlm foregohlg m presentationsto M ontgom ety azl
d tlle
13
M ontaemezvFamilyTrdst;Trepp H ew t1)s-111tobefalse.M orsover.hemadesaid tepresealatious
14
iaordsrto iuducePlaiat:
i.
e to cozzhu
-but,
evaluabiesoftw are cottl
pressvion.tecbzlolon to tbecoiupany.
15
16
47.
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ztion wasreceivcd fronlLogar,Xozzald J ontered on 1F31/2006 at5:31 PM PST aad fled oa
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Name:
Montgomeryetalv.e'Treppidrrechuolo#esetal
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CONIPLAJNTX rCopprightJn-frfawlczzt'Cop.
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alldefendallLs(12111.1)&fee$250receiptzttmlber98651),flledbyDopniqM ontgomety.CertidcateofInterestedPartiag
dueby2/10/2006.tAttachmeats:#(1)Civil(loverSlzertltt-ogar,Roimld)
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FEB -22(31
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AONALO s LONGTIN Ji
3.,CLERK
(5y:.M
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DEPU Y
IN Ar FOR THE COUNTY OF W ASHOE
9 ETREPPIR TECH N OLO G IES,L.L.C .,a Ncvada

10
11
12
Plaintiff,
vs.
C ase N o.
CV 06-00l14
Dept.N o'
.
13
DEN NIS M ONTGOM ERY,anindividual;THE

14 M O N TGO M ERY FA M ILY TRUST;D EN N IS
M ON TGO M ERY and BREND A
15 M ON TGO M ERY , mstrustee forTHE
16 M O NTGOM ERY FAM ILY TRU ST;and D OES
1 through 20,
l7
D efendants.
'
l8
19
20
ORDER
'
Thismatterproceeded to apreliminary injunctionhearing beforethisCourton Febnmly 7.

21
22 2006ontheissueofDefendantMontgomeY'sallegeddestructionand/orpossessionofcomputer
ftwaresourecode(hereinaertsourceCode''),allegedlybelongingtoPlaintiffE'Frepptd
23 so
Teclmologies.The Courthasreviewed theentirefile,thepleadings,pointsand authorities,and
24
exhibitsfiled thcrein.In addition,theCourthascoasideredtheoralargum en? ofcotmsel,and

25
althoughthepreliminary injtmctionhearingultimatelyconcludedbeforecotmselhadtheopportunity
26
to finish the examination ofonewitness,theCourtbelievesithasm oreth% adequateinformation

27
uponwhichto decidethe issuesbeforeit.The hearingwasscheduled foroneday.Itbeganat9:00

28
a,m .and concluded at9:30 p.m .Furtherexmnination ofthe finalwitnesscalled to testify is
!-
w.
m

*
1 unnecessary.See,e.g.yZupanic'v. Sierra P'

fx/tzRec,Inc.,625P.2d 1l77.1l#0l'Nev.1981).
2 Accordingly,the Courtm akesits Decision as setoutbelow.'
A preliminaryinjunctionisavailableifanapplicantcanshow alikelihoodofsuccessonthe
4 m erits and a reasonable probability thatthe non-m oving party'sconduct,ifallow ed to continue,w ill
5 causeirreparablehann forwhichcompensatory damagesisan inadequateremedy.Dangberg-
6 HoldingsNevada.L.L.C.v.DouglasCounty,J15 Nev.129 (l999).

7
First,the Courtfinds,pursu-m tto the em ploym entagreem entbetween the parties,the
8 subsequentundisputed conductofthe partiesthroughoutthe course ofM ontgom ery'sem ploym ent

9 w ith E'
l-repgid,and M ontgom ery's acquiescence to and active participation in contractual
10 agreem entsentered into by ETreppid w ith third-parties involving the Source Code and technology at
ll issue,Plaintiffislikely to prevailon themeritsofhisclaims.See.Brooksv.Bates,781F.supp.202,
12 205-206(S.DNY 1991)(rightsmaybeacquiredetbyoperationoflaw,g'suchasinanemployer13 employeerelatitmship).

14
Second,the CotlrttindsPlaintiffhmsdem ons% ted a reasonabie probability thathe w illsuffer
15 irreparableharm ifapreliminaryinjtmctiondoesnotissue.TherecordreflectstheSourceCodeis
16 essentialto theday-to-day businessoperationsofE'rreppid,asevidenced by thetestimonyofDr.
17 Sun. Furthennore,thetechhology atissue,includingdatacompressionsoftware,imagedetection
18 software,andpattern recognition software,which necessalily reliesuponthe SourceCodeforit's'
19 opcration.isalleged tobe valued in txcessof$100,000,000.W ithoutaccesstotheSouroeCode,
20 E'
Freppid m ay be forced to forego entering into valuable con-tra'c
--ts'
fo-rthe use orsalc ofsaid
'-
21 technology. Lastly,thetestim ony indicatesthatPlaintiff m ay sufferdmnages in excessof$10,000
22 perday(ten-thpusand)ifheremainswithoutpossessionoftl)eSourceCode.Thisisnottosaythat
23 D efendantm ay orm ay nothavc a substantialcounterclaim .
24
Fortheforegoingreasons,theCourtconcludesthatapreliminaryinjunctioniswarrantedin
25 thepresentco'nlext.Accordingly,pttrsuantto therequirem en? ofNRCP 65,Plaintiffisordered to

2
-.
27 ''IheCourtnotesthatDtfendantgavenotic.
eapproximatelyten(10)hotlrsintothehee
aringtltatitwouldbeseeking
28
federalpreemptionoftht issuesatbarundertheCopyrightActof1976.W llile Defendant'sposition may indeed havt

m eritatheCeurtdeclinesto addresstheissutofpreem ption.deferringsuchadetermination fordeisionbasedupon
applicationtotlleproperCourt.Assuch,thi
sCourl'sOrdrrsolelyaddrmuesthemcritsoftheprelimiqaryinjurtction
issueathand.
'
2.
.. -%
'
l postabondintheamotmtof$50,000(tiy-thousand)tosecurepaymentofsuchcostsanddamages
2 asmaybeincurred byDefendantiffoundtohavebeenwrongfullyenjoinedorrestrained.See,
3 Amer.BondingC0.v.RoggenEnterprises,584P.
2d868,870(Nev.1993).Goodcauseappearng,
4 PlaintifpsMotionforPreliminaryInjunctionagainstDennisMontgomel'yandtheMontgomery
5 Fam ily Trtlstis G ILAN TED.
6
Untiltheconclusionofatriaion themeritsorotherOrder,M ontgomery andallpersonscr
7 tntitiesinactiveconcertorpardcipationtherewith,areenjoinedandrestrainedfrom destroying,
: hypothecating,transferring,modifying,and/orMsigningtheE'rreppid SotlrceCodt,from discussing
9 anyE'rrep/dtechnology,includinganomalydetectionandpatternrecognitionsoftwmr,withany
10 tllird-party,exceptexpertsand otherpersonsand w im essesnecessary to Defendant'scmse and
lI counsel,provided,howeverthatsuchwitnessesand counselshallnotdisclose any information to '

12 othersaboutE'rreppid Source Code.
13
TheCotztissuesthisinjunctiontomaintainthcstatusquoand toavertanyirreparableharm
14 thatE'rreppid m ay sufferandbased ontheriskthatM r.M ontgomery could deleteand/ortransferthe

15 lastversion ofthe B'rreppid SourceCode thatremains intact.
$6
DA-I-SD this %l dayotp'

ebruary,atmt;.
'
17
1*
DISTRICT JUDG
19
20
- '
21
21
23
24
25
26
27
' ''
28
3.
.uwo

W
1
2
CERTIFICATE O F M AILIN G
Pursuantto NRCP 5(19,IcertifythatImn anemployeeoftheSecond JudicialDistrictCourt
5 ofthestateofNevada,countyofWmshoe;thatonthis C
dayofFebrum'
y,2006,Ideposited
6 in the county m ailing system forpostage and m ailing w ith the United States PostalService in Reno,
7 Nevada-and faxed,atruecopy oftheattached document.addressedto:
9
Ia
J.stephen Peek,Esq.
5441 Kietzke uane, second Floor
Reno,N v 8951l
FaxNo.:(77s)7:6..6179
jl
'
12
13
Jonathan D ,Butler,Esq.
2475 HanoverSt.
Palo A lto,CA 94303
14
FaxNo.:(650)j33..4545
15
,6
17
R onald J.Logar,Esq
Eric A .Pulver,Esq.
225 S.A rlington Aye.,Ste.A
Reno, N V 89501
18
FaxNo.:(775)786-7544
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21
Sheila M anstie
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25
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EX H Ib IT J !
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4 225 S.A rlington Ave.,Ste A
R eno,N evada 89501
FEX -22()1
s (775)786-5040
RoNxt
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Rv:
(; M ichaelJ.Flytm ,M ass.State B ar N o. ,
rltilip H .Stillm an,C alifornia State Bar No.152861
7 FLYNN & STILLM A N
224 Birm irtgham Drive,Suite lA4
8 Cardiff,CA 92007
-'
Tel: (888)235-4279
9 Fmx: -(888)235-4279
10 (ApplicationforAdmissionProHacViceforthcomingl
11 Attom eys forDefendantD EN NIS M ONTGO M ERY
12
IN T H E SECON D JUD IC IAL D ISTR ICT C O IJR T O F TH E STATE O F N EV AD A
13
IN AN D FO R TH E C OUN TY O F W A SH O E
14
ETREPPID TECHN OLO G IES,L.L.C.,a

1.
s N evada Lirnited Liability Com pany,
16
Plaintiff.
17
Casc N o.:CV 06-00114

Dept.N o.:9
vs.
18 D ENN IS M ONTGOM ERY ,an individm l;

Tll'E M ON TGOM ERY FA M ILY TRU ST'
,
19 DENNIS M ONTGOM ERY andBRENDA
M ONTGO M ERY,astrusteesforTH E
20 M ONTG OM ERY FAM ILY 'IR UST;
' '
and Doss 1tlzrough a0,

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21
Defendants.
22
23
24
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PR EEM PTIO N BRIEF

COM ES NOW ,Defendant,DennisM ontgommy by alldthrough theLaw O oeofLogar
25 & Pulver,PC,andherebysubmitshisPreemptionBrictwhichisbasedupontheMemorandmnof
26 Autlmzitiesfollowing,jjeexhibitsattachedhereto,axldtheftleinthisaetion.
27
Dated tllis
</-M
1
day
--ofFebnzazyy2006.
28
RONALD J.LOG ,ESQ.

AttomeyforDefen ant,W rmisMontgomery
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:4v.

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M E M O RAN DU M O F PO INT S AN D A UT H O R ITIES R E :

LA C K O F SU BJECT M ATTER JU RISDICTIO N
Because thiscaserequiresthisCourttf
adeterrainem at-tersoffederalcopyrightlaw pursuant
totheCopyrightActof1976regarding(l)whetherthesoftwaretechnologyatissueinthisaction
arederivativeworksofcopyrightsowriedbyM.
r.M ontgomel'
y,17U.S.C.j101;(2)whetherthere
5
6
7
8
9
isany written transferofthe M ontgom ery Fam ily Trtzst'sownersllip irtterestsin the copyrights by
mearlsofawritingthatcomplieswith l7U.S.C.j204(a)and(3)whetheranysoflwareatissueis
consideredtobeatfworkforhire''pursuantto l7U.S.C.2011),thiscaseispreempted bythe
CopyrightActandthereforethisCourtlackssubjectmatterjurisdictionovertheaction.Particularly
.
'
since M r.M ontgom ery and the M ontgom ery Fam ily Trustcurrently have a copyrightaction now
10
11
12
13
14
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.
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16
17
18
pending in theU .S.districtcourtin Reno,this issue m tzstbe reserved to the federalcout't.

ARG U M A NT
tr opyrightpreem ption is both explicitand broad:'gfzs'

.Rasm ussen tfrAn oc. v.K alitta
FlyingService,lnc.,958F.2d896,904(9tZCir.1992),ccrtdenied,124L.Ed.2d678,113 S.Ct.
2927 (1993). The key iswhetherthe operation ofstate law '''standsasan obstacle to the
accomplisluuentandexecutionofthefullpurposesandobjectivesofCongress.'''KovaneeOilCo.
vBicron Corp.,416U.S.470,479,40L.Ed.2c1315,94 S.Ct.1879,181U.S.P.Q.(XNA)673

(1974) Section301(a)oftheCopyrightActof1976states:
x
'
19
ealllegalorequitablerightsthatareequivalenttoany oftheexcltlsiyeright,
swifhin
thegneralscopeofcopyright...aregovqrned cxclusvelvby tlustltleyNo person
isentltledtoany suchnghtorequivalpntnghtin atty such workundertheconm lon
2c
law orshtutesofanyState''(emphaslsadded) ' ' -
21
'
fhatstatute precludes enforcem ent of any state cause of action which is equivalent in
..
2/ substanceto afedmalcopyrightingingem entclahn. Data Gen.Corp.v.Grumman Sys.Support
23 Corp.,36F.3d1147,1164-65(1&tCir.1994)*
,1Nimmerj1.01gB)gh),at1-35to1-36.1.Putaaother
24 way,ft-rhus,astatec6rnm onlaw orstatutoryclal
'm ispreemptedbySection301if:'(1)theworkis
25 wifhinthescopeofthe'subjectmatterofcopyright'asspecifie,din 17U.S.C.102and 103,
.and(2) .
z6 theright.sgranted lmderstatelaw are equivalentto any exclusiverightsw itldn the scope offederal
z,
i copyrightu setoutin17U.S.C.106.''GatesRubberCo.v.BandoChem.fn#* .,9F.3d823(2DdCir
J
28 1992)cl
tingf/ltzfv.Tanner,780F.2d876,878(101 Cir.1985),cert.denied,479U.S.820,93L.
Ed.2dj9,l07S.Ct-86(1986)(citingHarpert:fsAtpw Publishers,Inc.v.Nationkfczrz-fscs'
,723
F.2d 195,199-200(2dCir.1983),rev'donothergroumis,47lU.S.539,85L.EiL2d588,105S.
.
'
1 Ct.2218(1985)).
2
Section 106c?ftheCclpyrightActgrantsttlthecopyrightownertheexclusiverightsto:(l)
3 reproducethecopyriglltedwork'
,(ii)preparederivativeworks'
,(iii)disttibutecopiesofthework'
,(iv)
4 perfonn thework publicly'
,and(v)display thework publicly.17U.S.C.j 106. dsFederallaw will
5 preempt''astale-created zightifthatrightm aybeabridged by an actwhich,in andofitselfkwould
6 infringeoneoftheexclusiverights'
'established by federalIaw.''G .S.At
zxv zfu en tfrAssoc.v.Kalitta
7 Flying s'
crvfcc,Incn,958F.2d896,904(9'
bCir.1992),cert.denied,124L.P-Z.2(1678)113S.Ct.
8 2927 (1993.
).Artfulpleading ofstate1aw causesofaction cazmotavoidtherequirementsofthe
9 CopyrightAct.SeeM illerv.CP Chemicals,Inc.,808F.Supp.1238,1246(D.S.C.1992)(employee

10 could notavoid w ork forhiredoctrineunderthe CopyrightActby alleging breach ofem ploym ent
1l Agreementl;SaengerOrg.v.Nationwidefzt.Licensing vjssocs.,119 F.3d 55 (1&tCir.l997)(oral

12 agreementrepartnership did notrebutwork forhire).
13
ln this cse,the injunctive relief and trade secrets claim directly impactsthe copyrigllt
14 owner'sexclusiverights. First,thisCourtm ustdetennine whetherthe teclm ology isa KKderivative
.
vework thenhisrighttoexploit
15 w ork''prepared by M r.M ontgom ery.1ftheteclmologyisaderivati
16 itc'
nnnotbelim ited by thisstatelaw com plnint.Second,therequested relief- purportedly underthe
.
17 guise oftKtrade secret''claim - interferesw ith the M ontgom ery Fam ily Trust's rightto distribute
18 copiesofthework,reproduceitlmldtuseit,onceagainrequiringpreemption.Thirdy'sincethertis
19 no w riting transfening ownerslkip ofthe copyrights to e'
Freppid Technologies,this Courtcannot
'
20 im posea statelaw causeofaction tp exctuse thelack ofa written transferam cem entwithoutn'nning
21 afoulofSection 301.Fourth,thisCourtm tustdecidewhethere'rreppid istlzeow neroftllederivative
z2 worksassom esortoftiwork forhire.''Atleaastasitappliesto thesecopyrights,tlzeNevadasttte

23 relied upon,sectioa 600.500,m ustbepreem pted to theextentthatitpurportsto tratusferow nenhip
24 ofthecopyrightsto e'
Treppid w ithoutawlitlen agreem entorw ithoutanalydng theownership ofthe
zs tecbnology ulzder tlle work forhireprovisionsofthe CopyrightAct.
26
In additiow from apracticalstandpoint,therecan be no tradesecretm isappropriation in this
zy caseevenifnotpreempted.T'
heFourthCircuitillAvtecs'
ys'.v.Pezer,21F.3d568(4*Cir.1994),
zg held thatthe oom paay oould nothavea state law tradesecretclaim when the com pany did notown
the copyrights. tt-fhereisno di culty irlfmding theexistence ofa tradesecretirttlzesource or
objectcodestocomputerprogramswherequestionofcopyrightownershipisnofkiissueor,even
..
3-
CEQO
l m oreclearly,wherethe ow nerofthealleged tradesecretalso ow nscopyrightirkthe m aterialsougyht

2 to be protected.''f#.at575.H olding thatatbest,the com pany had arkoralnonexclusive license to
3 the softw are because there w as no writing transferring ow nership,i% e do not believe that a
4 rtonexelusive uselicense in copyrighted m aterialcan supportthe reasonable expectation orrightof
'
5 secrecy necessary to predicate a claim thattheidenticalm aterialisa trade secretprotectible under
'
6 Virginialaw.';Ii InAvtecI1,38U.S.P.Q.ZD (BNA)1922(4thCir.1995),theCOUIIreaflinnedthat

7 principleconcisely,stating tlA.
sweheld indvlccf,onecannotbeguiltyofm isappropriating hisown
8 property;so long asPeiftkristhe ownerofthecopyrightin the originalversion oftheProgram and
'
p Jn ifsd vatives,including the2.05version,hecannotbepailt'

.
yofmisappropriatingthem .Based
10 on ourholding thatPeifferis indeed tbeownerofthecopyrightin tlleProgram ,we therefore aftirm
l! (tlzedismissalofthetradesecretclaiml.''
12
R espectfully subm itted tlzis 7* day ofFebzuary,2006.
13
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15
Attorney forDelm isM ontgom ely
16
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we
PursuanttoNRCP50)),1certifytbatIam anemployeeoftheLAW OFFICE OF LOGAR
3 & PULVER,PC,and thaton the 7* day ofFebnlary,2006,l

4
deposited form ailing in theU .S.M ail,with sufficientpostage aflixed thereto
'sentv'ia FederalExpressorotheroveraightdelivery service
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delivered via facsim ile m achine to fax num ber
personallydelivered
catlsed to bedelivered via Reno-carson M essengerService
9 the forc oing docurrieataaddressed to:

10 Personally Delivered to:
M r.Jen'y M .Snyder,Esq.
11
5441 Kletzke Lane,Second Floor

Reno,N V 8951l
HaleLrnePeek Dennison and Howm'd
12
13 Personally Delivered to:
Pillsbtuy W inthrop Shaw Pittm an,L.L .P.

D avid A.Jakopia Esq.
14
2475 H anoverStreet
15
16
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18
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<
By:
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E X H IB IT K

u.
. j.
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06 FE8-5 FII 5:55

1 CODE:1955
2 RONALD
NevadaBaJ
r.//LOGAR,
00303 ESQ.
X.
PULVER
3 ERI
NevCad,a
Ba
r#078,
7kESQ.
..
,Lilbxf
RG1.
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$?
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''A
l.J1XeJfI.
DY--'a-C-P.-'IvV'
.----- .
.
LA W OFFICES OF LOGA R & PULV ER.PC

4 225 S.Arlington Ave.,Ste A
Reno,N evada 89501
5 (775)786-5040
6 M ichaelJ.Flynn,M ass.State Bar N o.: 172780 .
Philip H .Stillm an C alirornia StateBar N o.152861
z Fcvxx & s'rlctoytx

224 Birm ingham Drive,Suite 1A4
8 Cardif'f,CA 92007
Te1: (888)235-4279
9 Fax: *(888)235.
.4279
10 (ApplcationforAdmissionProHacViceforthcominf
l1 A ttorndys f/rDefendantDEN NIS M ON TG OM ERY
12
IN THE SECOND JUDICW L DISTRICT COURT OF TRE STXTE OFNEVADA
13
IN AND FO R T H E CO IJNTY O F W ASH O E
14 ETREPPID TECHNOLOG IES,L.L.C .,a

N evada Lim ited Liability Com patly,
15
Plaintift
l
Case N o.:CV 06-00114
Dept.No.:9
16
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VS.
D EN NIS M oNTGOM ERY ,an individual;

18 TH E M ON TGOM ERY FA M ILY TRUST'
,
D EN NIS M ONTGOM NRY and BREND A
19 M ONTG OM ERY ,mstrusteesforTH E
M ON TGO M ERY FAM ILY TRU ST;
20 and D OBS 1 tbroug,h 207
21
D efendants.
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22
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23 . - M OTION TO DISM ISS FIRST AAIENDED COM PLAI

'NT FOR LACK OF SUBJECT
24
M A W ER JU RISDICTION :M O TIO N FO R O RD ER SH O R TENIN G TIM E FO R

PLA IN TIFFS'RESPO N SE
25
COM ES NOW ,Defendanq DennisM ontgom my by and through theLaw O ceofLogar
26
& Pulver,PC,and hereby m ove,s this Courtto dism iss the First Am ended Com plaintpursuatltto
27
.t
Nev.R.Civ.P.121)forlackofsubjectmatterjurisd.ic
ionzwhichisbasedupontheM mnorandtlm
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28
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1-
- = a.
1 ofAuthoritiesfollowing,theexhibitsattached hereto,atld thefilein this action.

2
Dated this 9'h day ofFebruary,2006.
ERIC A PLJLW R ESQ.
Atlorneyforoefenant,oermisMontgomery
lo
11
12
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14
15
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18
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26
gy
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1J
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z(y
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51EM O
lJM O F PO VN TS AN D AUTH OR ITIES R E:
LA CK O F SU BJE CT M ATTER JUR ISDICTIO N
Thefactualbackground oftttiscaseisby now well-know to thiscourt.Despitebeing fram ed
asa ''trade secrets''claim ,thiscase actually t
'urns on the ownership ofcertain technology,notthe
disclosure ofthatteclm ology to third parties. Because this case requires this Courtto detem line
mattersoffederalcopyrightlaw pursuanttotheCopyrightAetof1976regarding(l)whetherthe
software teclm ology at issue in this action are derivative works of copyrights ow ned by M r.
Monlgomery,17U.S.C.j101,
.(2)whctherthereisanyurlittentrarlsferoftheMontgomeryFanzily
Trust'sownershipinterestsin'thecopyrightsbymeansofawritingthatcomplieswith l7 U.S.C.j
204(a)Ind(3)whetheralzysoftwareatissueisconsideredtobeatwork forhire''puzsuantto 17
U.S.C.j2011),tltiscmseispreemptedbytheCopyrightActandthereforethisCoul'tlaclcssubject
'
matterjurisdictionovertheaction.ParticularlysinceNh'
.Montgomeryandtl)eMontgomeryFnmily
Trustcurrently have a copyrightaction now pending in the U .S.districtcourtirlReno,this issue
m ustbereserve.d to the federalcouzt.

A R G UM ENT
Rcopyrightpreemption is both explicit and broad:''Gx5'

.Raamussen (:
t An oc.v.Kalitta
Flyingservice,Inc.,958F.2d896,904(9thCir.1992),ccrf.denied,124L.Ed.2(1678,113S.Ct.
2927 (1i93). The key iswhetlzerthe operation ofstate 1aw '''standsasan obstacle to the
.
.
accomplishmentandexecutionoftllefullpurposesandobjectivesofConpus.''KewaneeOi1Co.
vBicron Ct?cp.,416U.S.470,479,40L.Ed.2:1315,94S.Ct.1879,l81U.S.P.Q.(BNA)673
. .
(197d) Section301(a)oftheCopyrightActof1976states: '
..
21
''alllegaloreqtl
itablerigphLsthatam
22
thegeneralscopeofoopyright...aregovg'
neda clusvelvbythistitle.Noperon
za
law orstatutesofany State''(emphasisaddedl
:4
Thatstatute precludes enforcementofany state catlse ofaction which is equivalentin
equivalentto ally o'

fthe excllzsive rightswithin
isentitled to any such zightorequivalentrle/lz'fa qnvsu'

ch w r/cuttderthe com m Gn
25 sttbstance to a federaloopyriglltinfringem entclaim . D ata Gen.Corp',v. Grumman Sys.Support
:26 Coqx,36F.3d1147,1164-65(1StCir.1994),
*1Nimmer9I.OICBJIXJ,at1-35tol-36.1.Putanother
:7 way,'-l-htls,astatecommon1aw orstattztol'yclaim ispreemptedbySection301ift''(l)theworkis
zs wifhfnthescopeofthe'subjectmatterofcopylight'msspecifiedin l7U.S.C.102and 103,
*and(2)
therightsgranted tmdersGte1aw arem uivalenttoanyexclusiverightswithl
'n thescopeoffederl
copyrightassetoutirl17U.S.C.106.,'Gate,sRubberCo.v.BandoChem.Indus.,942.3d823(2ndCir
.. '
'a
'
= .a
'
I 1992)citingEhatv.Tanner,780F.2d876,878(10+ Cir.l985),cert.denied,479U.S.820,93L.
2 Ed.2(139,lO7S.Ct.86(1986)(citingHarpcrd:RowPublishers,Inc.v.NationEnterprses,723
3 F.2d 195,199-200(2t1Cir.1983),rcv'
lonothcrgrounds,471U.S.539,85L.Ed.2(1588,105S.
'
4 Ct.2218(1985:.
5
Jn Patay Aiken flcafrr/,fnc.v.Baby Togs,Inc.s70l l7.Supp.108,110 (E.D.N.C.
(; 1988)(citingMayerv.Josiah li
fzrgrfgkvoof/tjrSorts,Ltd.,60lF.Supp.1523,1535(S.D.N.Y.1985)),
7 thecotu'
tstated thegeneralI'
ulethatiEin orderto escapepreemption tmder 17 U.S.C.j301,astate
8 law claim ofunfaircompetition m ustinclude som e qualitatively different extra elem ertt'besides
9 copyinp''lnPatsy,thecourtheldthatttfederalcotatshaverepeatedlyheldthatstate1aw claimsfor
1() misappropriation'orKunfairtradepractices,'arepreempted by theCopyrigk Actof1976.'3I6L at

'
'
1l 111.
lz
Section l06oftheCopyrightActgrarltsto thecopylighfewnertlaeexclusivelightsto2(1)
13 reproducethecopyrighte.dwork;(ii)preparcdelivativeworks;(iii)distributeoopiesofthework;(iv)
14 perfonn theworkpublicly;atld(v)displaythework publicly.l7U.S.C.106.fTederallaw will
ls preernpttastate-crealedrightifthatriglatm aybeabridgedby an actwbichzin and ofitself,would
16 ilzfrirlgeoneoftheexclusiverights'establishedbyfederailaw .''G.S.Raamussen (::Assoc.v.Kalitta
a'
17 F'
lyingService,.
Jntz.,958F.2d896,904(9u
Cir.1992),cert.denied,124L.Ed.2d678,1l3S.Ct..
1: 2927 (1993).AT:f'
UIpleading ofstatelaw causesofaction oannotavoidtherequirementsofthe
'
lp CoppightAct.SeeMillerv.CP Chemicals,Inc.,808F.Supp.1238,1246(D.S.C.1992)(employee
2a could notavoidwork forhiredoctrinepndertheCopyrightA ctby aileging breach ofemplopnjtt
al ameemelltltsaengerorg.v.Nationwie//.
ls.LicenaingAssoca.,I19F.3d55(lStcir.l997)(oral
.
z.
agreem'
eatreparmershijdidnotrcbutwo
'rkforltirel.
.'
2:
In thiscmse,theinjunctivereliefnd trade sedretsciaim directly impactsthe crpyright
24 owner'sexdtksiverights.First,e'
FreppidisattemptingtoasserjowaershiplightsintheMbntgorpery
FamilyTrust'sderivativeworks.T'
htls,e'Freppid'sstatelaw titradesecreta''claiznisgiv.
inger
freppid
25
z6 equivalentrightstothosegrazltedbytheCopyrightAct.SecondathisCotzrtmzzstdeterminewhether
z7 tlle technology is a ktderivative work''prepared by.M r.M ontgom ely If tbe technology is a
z8 derivativeworkothenhisrlghttoexplcititcannotbelimite.
dbythisstateJaw complaint.Third,the
requested relief - purportedly under the guise of tf ade seoret''claim - interferes with the
-
M ontgomery Fnrnily Tnzst'srightto distribute copie-softhe work,reproducei.

k.and tuse it,once
''
.
A.

h-
l again requiring preempton. Fourth, sfnce there is no writing transferrirtg ownership of the
2 copyriglltsto e'Freppid Technologies,thisCourtcannotim pose astate1aw causeofactiorlto excuse
3 the lack ofawritten transferam eem entwitlloutl-unrtingafoulofSection 301.Fifth,tl'

lisCourtm ust
4 decidew hethere'
Freppid is the ow neroftlle dclivativeworksas sem e sortof'wchrk forhirt
z.'' A t
s least as itapplies to these copyrights,the Nevada stam te relied upon,sestion 600.500, m ustbe
6 preem plcd to the extenttllatitpul-portsto transferowncrship oftheeopp ightsto e'l-reppid w ithout

7 a svritten ag-eem entorw ithoutanalyzing tlle ownerslzip oftlze teclm ology underthework forhire
8 provisitm s ofthe CopyrightA ct.
k addition,from apradicalstandpointytherecanbenotradesecretrnisappropriation inthis
10 caaseevenifnotpreempted.TheFourthCircuitinzlvfccSys.v.PeZer,2lF.3d568(4tbCir.1994),
21 laeld thatthe com pany could nothavea state law tradesecretclaim when thecom pany did notown
12 the copyrights..f'There is no difliculty irlfm dillg the existence ofa trade secretin-the source or
,3 objectcodestocomputerprogramswherequestionofcopyrightownershipisnotittissueor even
14 m ore clearly,w herethe ownerofthe alleged tradesecretalso ow nscopyrightin the m atedalsought
15 to be protected-''1d.at575. H olding thatatbest,the com pany had an oralnonexclusive licenseto
16 the software because there wms no w riting tratlsferring ow nership,K:W e do not believe that a
17 nonexclusivelzselicensein coppighted m aterialcan supportthereasonable expectation orrigyhtof
lg secrecy necessary to predicate a claim thatthe identicalm aterialis a t'

rade secretprotectible uader
19 Virginialaw.''1d.InAvfccff,38U.S.P.Q.ZD (BNA)1922(4tbCir.1995),thecout'treaftlrmedthat
za principleoonciselyystatingttAsweheldinAvtechonecannotbeguiltyofmisappropriatingtlisown
z1 property;so long msPeifferistheow nerofthe copyriga
btilltbeorigitlalversion oftheProm am and
initsdelivatiyes irtcludillg the2.05versionvhe e-qnnotbeguiltyofmisapprop

'riatng them .Based
22
23 onourholding thatPeifferisindeedtlzeowneroftheeopm ghtintheProgram ,wethereforeaffirm
24 ltlledismissalofthetradesecretclaiml.''
2.5
Fortheforegoingreasons,DefendantsrespectfullyrequestthatthisCourtdismissthisaction
:6 forlack ofsubjectmatterjurisdiction.
;1
M O TION FOR ORDER SHORTENING TIM E
:.
8
Timeigoftheessenceinthismatter.OnFebl'uary8,2006,ThisCourtjtzstissuedasweeping
preliminazy injtmction,forwhich,Mr.M ontgomel'y respectfully submitsthisCourtlackedthe
subjectmatterjurisdiction to entertain. The sweeping preliminary injunction prevent.s MT.

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5-
X.
lon

M
'-
l M ontgom ery &om m akng a living on his copyrighted technology,and im pelm issibly treads on
2 federalcopyrightlau,. M r.M ontgom ery isirreparablyharmedeveryday theprelim inazy injunction

3 rem ainsin place.
Further,thereiscurrentlyavirtuallyidenticalcasependinginfederalctlurt wheresubject
5 matlerjudsdiction clearly exsts. In thisappropriate venue,the parties'rightsregarding the

6 copylighted technology w ill be determ ined under copyrightIaw and any appropriate state 1aw
7 remedieswithouttlledangerofwrongfulinjunctionorinconsistentresultsbehveenthejurisdictions.
8
oW herefor,M r.M ontgom ery requestsan OrderShorteningtim eforplaintiffs'responsetothis
10 M otion.
11
12
C ON CLUSION
Forthe foregoing reasoms,D efendants respectfully requestthatCourtissue allO rder
'
13 Shortening Tim e forPlaintiffsresponse to thism otion,and thattllisCourtdism issthis action for
14 lackofsubjectmatterjurisdiction.
15
16
Respectfully subm itted this 9* day ofFebnm ly,2006.
17
18
19
20
ERIC A .
PULVEK ESQ.
Atlorney frD erm isM ontgom el'y
21
zg
23
24
25
26
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27
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28
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PursuanttoNRCP 50)),1certifythatIam anemployeeoftheLAW OFFICE OF
3 LOGA R & PULV ER,PC,and thaton the l0'

h day ofFebruary, 2006,1
4
deposited form ailing in the U .S.M ail,with sum cientpostage affixed thereto
--
delivered via facsim ile m achne to fax num ber
9 the fore oing docum ent,addressed to:
10 Via:Reno/carsonMessenger
Mr
Hal.eJe
nyM.
SknyDdenm
er,Fs
q.and H oward
Lane
Pee
son
11

Reno,NV 8951l
12
13 V ia:U S RegularM ail:
Pillsbury W intllrop Shaw Pittm art,L.L.P.

D avid A.Jakopin,Esq.
2475 HanoverStreet
14
15
16
Pillsbtuy W inthrop Shaw Pittm aw L.L.P.

Jonathan D.Butler,Esq.
2475 Hanover Street
'
17
19
20
21
.
22
L zlie
Legal
cas
'tantto t e
Law OfliceofLogar& Pttlveryyc

-
23
24
25
26
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FIONALLIA LONGTIN JFILCLEFIK
By'
: S.VRNSIOIU
DEPt)
'
5
6
IN TIiE SECOND JUDICIAL OISTRIG COURT OF TH: STATE OF NEVADA
IN AND FOR THE COUNR 0F W ASHOE
9 ETREPPID TECHNOLOGIES,LL C.,a

Callfornla Corporatlon,
10
11
Ptalntfff,
12
C-ASE NO.: W 06-001:4
vs
DEPT.NO.: 9
13
DENNIS MONTGOMERK an Indlvldual;

14 And DOES 1 through 20,
15
16 .
17
18
19
Defendant,
/
ORDER
.
The Courthasconsldered the Ex-parte Moeon to Shorten Tlm e forPlalntlffto 5le its
Opm sltlon to Defendant's Motlon to blsm lsson tbe grounds ofpreem ptlon.The basisfor
2() the Motlon ls thatDefendantwlllbe harm ed by any delav ln the resclutlen ofthlslssue.
21
n e CGUI
I note.
sthztPlalptlff'sCoinplalntwasflledonJanuary 19,2006;Defendant
22
flled a Com plalntralslng the lssue ofcopyrlghtupon whlr.

h he cla'Ims preemptltfn is-based,
23
on oraboutlanuaw 31,2006 and dId not ralr.

e thls Issuo to thls Cotlrtuntllapprtlm atelY
24
ten(10)hoursIntothehearlngonthePrellmlnaryInjunctioncendudedonTuesdaY,
25 February 7,2006.Moreover,thls case was refnoved to FederalCourtand tben remanded.

26 Arcordln: to the materlalsthlsCourtrecelved from the PederatCourt,the sole Issue ralsed
27
was Dlverslty. Preem ptlon was nev'

erm entloned.
28
1-
02110/2006 FR1 14:22'-ITZ4RI N0 62541
FER -IU-PWBG 1G:UU Hromlauooc m acma l
.- -- .-.
!
1
,-
The Courtfeels thatPlalntlffIs entitled to the usualtlm e to respond tc a Mntlon
2 whlch could term lnate 1t.

s c-ase. See,Che-ek v.FNF Constructlnn.Inc-,924 P.ld 1347,
3 1349-1350 (Nev.1996).Therefore,the Defendant'sMdinn IsDENIED.:
DATEDthls
/ $ dayofFebruary,2006.
Dlstrlctludge
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
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23
24
25
26
27 'Them rtlesareasked to speclflcapyaddresswbetbersmotlontodlsmls:versusremoValistheapproprlate
28 vebkle. n e CmurtIsm ncafned thatthe FedernlCourtm lghtbe tho Courtwlth the mostlnterestz uecanq
preemptlon and jklrisddton,
'-
02/10/2006 FR1 14:22- (TZ/RX N0 62541
htuln;-llr7-ctutr)to 1.4.zaco r fwtfl.oouxwu- .. .u.,w..,
hr
,.. ,
CEA T-IFICATE-OF SERVICE BY M AILI

-NG
Pursuantto NRCP 5(b).Ihesebycertifythat4am anemploye/ ofthpSocond
JudicialDlstrid CourtlinandfoftheCountyofWaBboe;andthatonthis 20 dayof

5
6 February,2000$Idepoalted in the Counk malllngsystem forpostage and mailing withthe

7 Unlted States PostalServlce in Reno,Nevada.and faxed!a true and corred copyofthe
8 attached docum lntaddressed a:follows:
*
9 A.stephen Peek,Esq.
Jerw M ,Snyder.Esq,
10 Hale Lana Pek Dennison and Howard
jj 5441 Kietzke Lane.Second Floor
Reno.Nevada 89511
1.2 Fax No.: (775)786-:479

13 David A . Jakopin,Esq.
jx zonathan D.Butler,Esq,
2475 HanoverStreet
1$ Palo Alto.CA 94303
Fax No.: (65:)233-4*M
16
17 Ronald J.Logar,Egq.
Cric A.Ptllvar,Esq.
18 taw Offices ofLogar& Pulvar,P.C.
226 S.Arlington Akenue,Suite A
19
Reno. Nevada 89501
7 Fax No.: (776)786-7544
' -
21. M ichaelJ.Flynn,Esq,
22 Flynn & Stillm an
224 Birm ingham orive,suite 1A4
23 Cardiff,GA 92007
''-
FaxNo.) (888)236-4279
24
26
Sheija Mansfiel
26
27
28
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02/10/2006 FR1 14:22- (TI/RX N0 62541
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3:06-cv-00056-PMP-VPC
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PILLSBURY WINTHROPSHAW PITTMAN,L.L.P.

DavidA.Jakopin(CA BarNo.209950)
JonathanD Butler(CA BarNo.229638)
.
2475HanoverStreet
PaloAlto,(-A 94304-1l14
Telephonc:(650)233-4500
9 Facsimile:(6X )233-4545
(Admittea'ProHacl'fcconFcsmtzr.
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AttomeystorPlaintirfe'
rreppidTeclmologies, Inc.
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IN THE SECOND JUDICIALDISTRICT COURT OFTHE STATE OFNEVADA

IN AND FORTHE COUNTY OFWASHOE
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C il 14 ETREPPID TECHNOLOGIES'L'L'C''aNevada
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cv06-00114
l7 DENNIS MONTGOMERY,
anindividual;THE
18 MONTGOMERY
F
AMI
LY
TRUS
T;DENNIS
M ONTG OM ERY and BRENDA M ONTGOM ERY,
l9 astnzsteesforTHE M ON TGOM ERY FAM ILY
TRUST;and DO ES 1 through 20,
20
cfendants.
21
' -
' y
'
'
22 AN D RELATED ACTION S.
/
'
23
24
25
26
PLM N TIFF ET REPPID TECH N O LO G IES L.L.C.,S M O TIO N TO D ISM ISS

,
C O UN TFR CLAIM ;AN D O PPO SITION TO PR EEM PTIO N BR IEF A ND TO M O TIO N T O
DISM ISS FO R LA CK O F SU BJECT M A TTER JUR ISD ICTIO N ;M EM O R AN DUM O F
POINTS AN D AU TH O RITIES
.
--
Pursuantto N.R.S.j 600A.070.3,Plaintiffhereby lodgesthe enclosed record conditionally
27 undersealand w illm ake a m otion orapplication to the Courtfor an order pennitting the record to b
28
filed underseal
:ODMATCDOCSTILRNODOCSU 174891
-''
PV C 1 Of l5
Case '3:06-cv-00056-PMP-VPC Document 644-7 Filed 05/28/08 Page 18 of 65
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Pursuantto Rules 8, 12 and 41 of the N evada Rules ofCivilProcedure as wellas the legal
2 authorities cited hereilz.e'

Treppid Technologies, L.L.C.('ie-l-reppid''or the tcompany'') hereby
3 submits its M otion to Dismiss Counterclaim By Dennis Montgomery (ttMontgomer/'), the
4 M ontgomery Family Trust (the t'Tnlst'' or tsM ontgomery Tn1st'fl, and M ontgom ery and Brenda
5 M ontgontery as tnlstees forthe Trust(collectively,the d%Defendants''),its Opposition to Preemption
6 Brief,anditsOppositiontoMotiontoDismissforLackofSubjectMatterJurisdiction.
7
1.
Introduction.
Thism atterarisesoutofM ontgom ery's destruction and theftofe'

Treppid'sproprietary Source
9 Code. The Cechnology at issue includes compression,anomaly detection,and pattern recognition
2
yt
1O -12
10 software, w hich e'rreppid uses to fulfill obligations to its custom ers - including the Federal
11 Govefnment-forsecurityanddefenseapplications(the'te-freppidSourceCode'').
% = -
(Q1@
gly: 12
e'FreppidhasallegedcausesofactionagainstDefendantsformisappropriationoftradesecrets,
gl o tlt
9u?'u
* 13 breach oi'contract,breach oftiduciary duty,conversion,bad faith,declaratoryrelief,and intentional
p o-=k
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lt
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olg
aj
;
> 14
interference w ith contract. Defendants arsm e that the claim s asserted in e'l-reppid's p-irst Am ended
2
dao - 15
Com plaintare som ehow preem pted by Federalcopyrightlaw Thisissimpl

ynotthecase;underwell-
a s)Zt;
.
-'
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$'; t)
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' ;$$ 16 settled law, this court maintains jurisdiction over e'
Treppid,s state Iaw claims notwithstanding
x:
.
p'
-17
17 Defendants'counterclaim for copyright infringement. This Court's dismissal of this copyrlght
18 counterclaim willnotleave Defendants withouta rem edy,

'they may pursue those claim sin Federal
at
fn
19 Court- a factofwhich Defendants are already aware,g)ven-th'e-y have already ti1ed a Federa
'-1
20
21
Com plaintasserting identicalcopyrightinfringem entclaim s.

Assum ing that D efendants' allegations concerning their alleged copyright ownership and
22 asagethereofate'l-reppid are true,the Source Code consists ofthe follow ing differentpieces:
23
(1) certain compression teclmology and/orsource code thatwas created by Montgomery
24 prior to his em ploym ent ate'rreppid thatthe parties agree w as expressly conveyed to e'
Treppid and
25
which has been further im proved upon ate'

Freppid by M ontgom el'
y and other em ployees ofe'Freppid
26 (Transcriptfrom Preliminal'ylnjunction Hearing('(PlTransclipt''),at133:4-14 (attached msExhibitA

27
to Declaration ofJen'y Snyder in Supportofe'Freppid's M otion to D ism iss or,in the A lternative,.to
28 StayDefendants'Counterclaim ('tsnyderDec1.'')));
I:ODMATCEOCSLHLM OO CSUI74B9hI
Pagc 2 Of 15
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( 05/28/08 Page 19 of 65
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-!) certain pattem recognition and anomaly detection technology and/or source
2 codeallegedlycreated and copyrightedbyM ontgomerypriorto hisemploymentate'

l-reppid (Snyder
3 Decl.,Ex.A at203:11-16 (P1Transcriptll,
'
(3) certainpatternrecognitionandanomalydetectionteclmologyand/orsourcecodethatwas
developed by e-rreppid em ployees other than M ontgom ery and that are patently not related to
6 Defendauts'copyrights(SnyderDecl.,Ex.A atl38:I0-22(P1Transcriptll'
,and
7
(4) certain pattem recognition technology and/or source code thatM ontgomery adm its is
8 ownedbye-rreppid(SnyderDecl.,Ex.A at167:15-20(PITranscriptl).
9
'E
yt
.2
IO .w
Manyeportionsofthee'
rreppid SourceCode- including those described in (l)x(3)and(4),
10 supra - arecompletely unrelatedto and unaffected bythecopyrightsthatDefendantsclaim to own.

11 According
ly, even ?
/'Defendants'copyrightownership claimshavemerit,such claimswould apply
.
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1c 12 only to asmallportionofthe e'rreppid SourceCode By contrast,e'rreppid,s broader assertions of
$1@:
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. 13 tradesecl'
etmisappropriation,breach ofcontract,breach ofiiduciary duty alad conversion extend to
.
'p (;'il
CiiI 14 theentiree'l-reppidSourceCodegp.l.
le'rreppidtechnology.
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AsdiscussedinSection11ofthisbrietinfra,theU.S.DistlictCourtfortheDistrictofNevada
;d: d
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t 16 hasalreadyreoognizedthat thegravamenofthisgstatecourtlcomplaintisreallywhetherornotthe
1
i
.-lV 17 defendantdestroyed,deleted,ortook the e'rreppid SourceCodeand whetherthatwasWrongful..
'.it
ac
68
.
,,
x
18 justseemstomethatthisbasicallyisastateclaim. SnyderDecl.,Ex.B at13:18-14:2(Transcriptfor

19 SummaryRemandHearing(lkemandTranscript''l).
20 I1-
ProceduralB ackground.
21
This proceduralbackground supplem ents that found in the other.pleadings and paper-s on tile
22 in the above-entitled action. e'

Freppid tiled its Com plaintin this m atter on January 19,2006,and it
23 filed its FirstA m ended Com plainton February 1,2006. e'Freppid's FirstAm ended Complaintasserts
24 causesofaction form isappropriation oftrade secrets,breach ofcontract,conversion,breach of
25 fiduciary duty,bad faith - tortious and contractual,declaratory relief,and intentionalinterference w ith
26 contract. Plaintiffe'
l-reppid Teclm ologies,L.L.C.'S FirstA m ended Com plaint.
27
D efendants have already soughtrem ovalof this case to FederalCouzt,by filing a N otice bf
28 RemovalofAction Under28U.S.C.j 14411 )onJanualy 25,2006.SnyderDecl.,'Ex'.C (Noticeof

TT
ODMAVCDOCSTILRNODOCSVS174891
Page 3 Ofl5

x..-
'
l Rem oval). This Notice ofRem ovalwas initially prem iscd on grounds ofdiversityadue to an incorrect
2
identification of erreppid s a Califom ia corporation in the captions ofe'Treppid's initialpleadings.
3 SnyderI(lecl.,Ex.C at! 4 (NoticeofRemoval). Although themisidentitication ofe'Freppid as a

4
California corporation was clearly a scrivener>s error,Defendants stubbornly refused to stipulate to
rem anding the case. Accordingly, e-rreppid filed its Ex Parte M otion for Sum m ary Rem and on
6 JanuaryJ5,2006. SnyderDecl.,Ex.D (M otion forSummary Rem and).
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On January 27, 2006, M ontgom ery and the Tnzst filed in Federal Court an Answ er and
Counterclaim to the e-freppid Com plaint, alleging that e'Freppid had infringed certain copyrights
9 allegedlyowcedbyDefendants(thetscounterclaim'').SnyderDecl.,Ex.E at!(8(Counterclaim).On
10 January 30, 2006,D efendants tiled an Opposition to e'freppid's Ex Parte M otiou m aintaining the
ll diversity claim , and further asserting that even ifthe initialgarounds for rem oval were baseless,the
= t-
i8
$2y: 12 jurisdictillnalderectwas cured by Defendants'Counterclaim forcopyrightinfringement. Snyder
glC& 13 Decl.,Ex.F at6:15-18.(OppositiontoMotionforSumlnaryRemand).OnJanuary30,2006,e'rreppid
2
... .
pt'gc$
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t 14 filedaReplyinsupportofitsExParteMotionforsummaryRemand,topointoutthedeticienciesin
Q'd.4
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D efendants' rem oval and Opposition to rem and SnyderDecl

t-11o
.,Ex.G (Reply lSO Motion for
x:d
jk-';t 16 SununaryRemand).
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Tbe hearing on e'

rreppid's Motion forSummary Remand took place on January 31,2006,
18 before Judge M cKibben of the U .S.District Court for the District ofNevada. Judge M cr bben
19 characterized efreppid'saction astibasically glastate claim .'' SnyderDecl.,Ex.B at13:18-14:2

20 (Remand Transcript). In his findings and copclusions atthe hearing,Judge M cu bben found that
21 t'Plaintiffhasan action form isappropriation oftrade secrets and conversion underN evada state law ...
22 The gravam en of this dispute... is notas the defendant asserts,that the defendantow ns certain of
23 e'rreppid'sintellectualproperty.'' SnyderDecl.,Ex.B at20:18-21:10 ('RemandTranscript).Further,

24 in connection w ith e'
rreppid's claim s foribreach ofcontractorm isappropriation oftrade secretsand a
25 m isappropriation of the e'rreppid Source Code,''Judge M cKibben found that 'xthere are questions of
26 state 1aw here. There's no question about that, and thev are the predom inant questions.'' Snyder
27 Decl.,Ex.B at21:24-22:4(RemandTranscript)(emphasisadded).
28 ///
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Paj;c 4 Of15
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( 05/28/08 Page 21 of 65
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O n January 31,2006,D efendants liled a FedcralCom plaintin !he U .S.D istrictCourtfor the
D istrict ()f N evada alleging, inter alia, infringem ent of the sam e copyrights as asserted in the
3 Counterclaim . SnyderDecl.Ex.H ! 7 (Defendants'FcderalComplaint). In the four-day intervening

4
period belween filing the Counterclaim and lheirFederalComplaini,Defendants apparently decided
5 thate'Treppid'sSourceCodealsoinfringestiveadditionalcopyrights.CompareSnyderDecl.,Ex.H !
6 7 (Defendants'FederalComplaint)andSnyderDecl.,Ex.E ! 8 (Counterclaim).
7
On Febm ary 1,2006,Judge Perry granted e-freppid's requested TRO and on February 8,2006,
follow ing an extensive evidentiary hearing, Judge Pen'y further granted e'freppid's requested
9 preliminaryiljunction- finding inpertinentpartthate'rreppidwouldlikelyprevailon itsclaimsdue

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10 to ttthe subsequent undisputed conduct of the parties throughout the course of M ontgom ery's
11 employmentwith E-freppid (sic),and Montgomery's acquiescence to and active participation in
= = -
k l'-' l2 contractualagreementsentered into by E'

l-reppid (sic)with third-partiesinvolving the Source Code
$7@V
zox 13 andtechnologyatissue.''SnyderDecl.,Ex.Iat2:7-11(OrderofFebruary8).
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OnFebnzary7,2006,Defendants66gavenoticeapproximatelyten(10)hoursintothehearing
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3.:
1o-15 thatgtheylwouldbeseekingfederalpreemptionoftheissuesatbarundertheCopyrightActofl97.''
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tk-';t$ 16 Ordergrantingpreliminaryinjunction,datedFebruary7,2006,atp.2 1.1. Defendants'Preemption
Q 7 17 Brief,filed onFebnzary 7,assertsthatthisCourtlackssubjectmatterjurisdiction over1heclaimsin
a*
<
x($J
18 e'
rreppid,sFirstAmended complaint. snyderDecl.,sx.zat2:8-10(preemption Brief). oiscussing
19 thispreemption Brierattheprelimina:y injunction hearing o

'n fieliru
'ary 8 Defendants'counseltofd
20
the Courtthattthe issue ofpreem ption or nonpreem ption hms never been broughtup ordiscussed or
2l decided uponoverinthefederalcourt.''SnyderDecl.,Ex.A at240:13-1.5(P1Transcripl).TisCourt

22 appeared to share e'Treppid's incredulity atD efendants'new position:itif you're correct,then we've
23 justwastedawholelotoftime,andfrankly,Iwouldthinkthatifthatwasyourpositionfrom wayback
24 when,1would have hcardaboutthisbefore now.'' SnyderDecl.,Ex.A at24l:5-8 (151Transeript).

25 W hatD efendants never told the Courtw as thatthe parties did discuss the issue ofpreem ption before
26 JudgeMcu bbenoftheU.S.DistrictCourt.SeeSnyderDecl.,Ex.B at1l:9-12(Defendants'counsel

27 averred that ttderivative rights to the original w ork, the original copyrighted w ork, is w ithin the
28 exclusiveparview ofthejurisdictionofthis(U.S.DistrictCour1l'')(Remand Transrrript). Although

IIODMATCDOCSHLRNODOCSU 17489h1
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t
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l Defendants would have been corrcctto say thatJudge M clf-ibben did notdccide the preem plion issue,
2 preem ptilln and related issueswere discussed,and therem ova!and rem and was notlim itcd to diversity
3 jurisdictitln.asDefendants1edthiscoulttobelieve.
4
On February 9:2006,Defendants replaced their Preem ption Brief with a M otion to D ism iss
5 andM otiontoShortenTimefore'
Treppid'sOpposition.SnyderDecl.,Ex.K (M otiontoDismissFirst
6 AmendeclComplaintforLack ofSubjectM atter,M otion for Order Shortening Time for Plaintiffs'
7 Response). Judge Perry rejected the Motion to Shorten Time. SnyderDecl.,Ex.L (Orderdated
8 February10,2006).
9
2
ht
2
O
'
To facilitate the Court'sreview ()fthe variousm olionsttldism iss and/orto preem ptthe various
10 claims in this action, this brief serves ms e'Freppid's (i) M otion to Dismiss Counterclaim,
l1 (ii)Opposition to Preemption Brief,and (iii)Opposition to Motion to DismissforLack ofSubject
Xw
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1
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-
M atterJllrisdiction.
111.
Defendants'Counterclaim Should Be D ism lssed.
A. TheCounterclaim Allegations.
MontgomeryandtheTnzstassertintheCounterclaim thatthepattem recognitionandanomaly
detection technologies are zerivative works of certain copyrighted software source ctlde that is
allegedlyowned bytheTrust.SnyderDecl.sEx.E atj9(Counterclaim).TheTrustallegesthat-itis

the owner ofseven particularcopyrights,which were registercd in l982 arld l983. Snyder Decl.,
19 F,x.F,at! 8(Counterclaim). Thenamesaloneofthesecopyrightsare suflicientto demonstratetfiat

20
they cover teolm ology bearing no apparent rlationship to the com pressiou,pattem recogaition,and
21 anom aly'detection software atissue in this cse. Specitically,the Counterclaim refers-to sopyrights
22
thatrelate to blood gas analysis,accounting,and irrigation applications. See SnyderDecl.,Ex.i!at
23 !22 (Counterclaiml;SnyderDecl.,Ex.A at203:11-19,225:22-226:11 (P1Traruscript). Further,

24 M ontgom ery's cotm selhas reftlsed e'rreppid's requests to review the alleged lm derlying copyrighted
25 m aterials, presum ably because a casualreview would reveal thatthe copylights are not relevant to
26
27
theseprooeedings.
Defendants did notassertownership ofthe e'Freppid Source Code,based on theirpulported
28 copyrights,as a defense in theirAnsw erand Counterclaim . H ow ever,even ifD eferfdants are eligible
r:
ODMAT(7D0CSHL> OX CS17489$I
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l forand electto assertstlch a defense,they face a significantburden. Specifically,Defendants have to
2 prove ownership ofthe copyrights - w hich,according to the originalapplication filings.on their face
3 are assigned to Computermate,lnc.and Barrett Laboratories. See Snyder Decl,,Ex.M (U.S.

4 CopyrightOftice Applications). To prevailon any ownership defense,Defendants would need to
5 demonstratethatthecopyrightedmateriaisMontgomeryallegedlydevelopedpriortojoininge'
rreppid
6 werein fctused ate'
rreppid and included in theSourceCode(whiche'Freppiddoesnotbelievethat
7 hecan). M ontgomery also facesasignificanthurdlegiven his admission that.
b..
copied thesourc.e
8
code thatderives from these copyrights onto e'l-reppid's com puters. SnyderD ecl.,Ex.A at214:1-8
*
9 (PlTranscript
). Ata minimum,this shows thate'
l-reppid has a license to use any copyrighted
-?
vt
O .0
.
I>
10 materialsthatmightbeincorporated intothee'
TreppidSourceCode.Stillfurther,asexplainedinthis
11 brief,evclq ifpartofthee'Freppid Source Code derivesfrom thecopyrighted materials,therearem any
-
=j';
y.
'.
-,
' 12 otherpa14softheSourceCodewhichdonot- so thedefenseofownershipcould notcompletely
2
g?mtlx 13 absolve Defendants ofliability.
.-.
1 1o.gd 14
Thus,thedefenseofownership,ifapplicableand ifasserted,would onlyhavemeritafter
Q Qz
j.
t g.15 Defendalltsestablishtheprecedingelements. Givcnthesworfltestimonytodate,establislzingthese
O
fo:
hjt;z4: l6 elements appears speculative atbest,and thus further illustrates the m inim alim pactthe copyright
1k
'-l7
17 allegationswillhaveonthestate1aw claims.
'
A
x C 18
B. TheCounterclaim Failsto Statea Claim Upon W hich ReliefCaR BeGranted.
'
19
Rule 12*)(5)oftheNevada Rules ofCivilProcedure penuits a responding party to seik
20 dism issalofa claim fortfailure to state a claim upon which reliefcan be m anted.'' N ev.R .Civ.Proc.
21 12(b)(5).A motiontodismissunderRule12requirestheCourttodecidewhetherthefactsoutlinedor
22 reasonably foreshadowedinthecomplaintcouldentitlethegclaimant)torelief. L(1.Further,pllrsuant
23 to Rule 8 of the N evada R ules of Civil Procedure, a com plaint m ust contairl <fa short and plain
24 statementoftheclaim showingthatthepleaderisentitledtorelief''Nev.R.Civ.Proc.8(a);secalso
:
2.5 Hay p.IIay,100Nev.l96(1984).Asexplainedbelow,theCounterclaim ispreemptcd.Accordingly,
26 Defendants'Cotmterclaim should be dismissed forfailing to state a claim upon which reliefcan be
27 grarded Ln statecottrt.Further,theCourt'sOrderdismissing Defendants'Counterclaim should speify
:
28 thatitttoperatesasanadjudicationuponthemerits.''Nev.R.Civ.Proc.41(b)-(c). -:ZODMATCDOCSSHLRNODOCSU 17489h1
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C.
D efendants'A llegationsofCopyrightInfringem entA re Preem pted.
Defendants' allegations of copyright infringem ent should be dism issed becatlse they are
3 expresslypreempted by federallaw. ttgA1IIlegalorequitablerightsthatareequivalentto anyofthe

4 exclusiverightswithin thegeneralscopeofcoppight...and fthatjcomewithin thesubjectmatterof
5 copyright...are governed exclusively by''the CopyTightActof 1976. l7 U.S.C.j 30l (2005)*
,see
6 alsoFiroozyev.EarthlinkNetwork,l53F.Supp.2d lll5,ll23-ll24 (N.D.Cal.200l)(citinc,inter

7 alia,Kodadek v.MTV Arclwor/o'
,In
'c.,l52 F.3d I209,12I3 (9th Cir. 1998)). Further,Congress
8
intended that copyright claim s be com pletely preem pted.
Firoozye v. Earthlink'Network,
9 153F.Supp.3d at 1l23 (copyright infringement claims are completely preempted) (citing

=
k
)t
IO ,w2
10 Rosciszewsk'
ip.AreteAssociates,Inc.,lF.3d225,232(4thClr.l993)).
11
Accordingly, thepreemption inquiryrequiresthiscourttodeterminethat(i)thematerialsfor
% = -
j $:1'
-' 12 whichDefendantsseekprotectionarewithinthetsubjectmatter'ofcopyright,and(ii)therightsthat
;:
r)@
' 13 oerendantsseektoprotectaretequivalentto-theexclusiverightsofacopyrightowner.
- -,
@
0
o ru 14
a a Zt)
First,the copyrightsasserted byoefendantsarewithin thesubjectmatterofcopyright. The

.
t.1 o- l5 Courtshouldpresumetllat(hematerialthatDefendantsseektoprotectarewithinthesubjectmatter
*' s
-$k9;'
t' 16 ofcopyrighton the groundsthatDerendantsallegedly hold copyrightsforthose materialsand that
.
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af
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ld:
t
17 Defendants themselves asserts rights arising from copyrightprotection. Even if the underlying
18 materialsthem selveswerenoteligible forcopyrightprotection,nonethelessthey fallwithin theam bit
19 oftheCqpyrightActspreemptionbecausetheyarewithintlesubjectmatterofcopyright.Firoozye,
20
21
l53 F.Supp.2(1atl124-1125.
Second,D efendants'allegations are m ore than Kequivalentto'the exclusive rights rerserved to
22 a copyrightowner- they are identical. D efendants allege thatthey own certain copyrights and that
23 e'Freppid andloEM r.Trepp have exploited derivative works ofthose copp ights w ithoutauthorization.
24 SnyderDecl.,Ex.E at!jl8-19(Cotmterclaim).
25
The posture ofthisM otion to Dism iss is notinconsistentw ith e-freppid's previousM otion for
26 Surnm ary Rem and tiled in Federal Court, ms the tw o m otions are different. See aenerally Snyder
27 Decl.,Ex.D (M otion forSummaryRemand). ln itsMotion forSummaryRemand,e-freppidpointed

28 outthatitsstate Complaintdid notassertany federalclaimsand thatfederalquextit)njurisdiction
::
oDMATcc.
ocsm Ln o= soIp489l
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1 could notarise outof the allegations of Defendants'Counterclaim . Snyder D ecl,,Ex.D at 2:19-25,
2 3:l1-l6 (Motion forSummary Remand)(citinc HolmesGroup v.Vornado AirClrculation Systenls,

3 Inc.,535 U.S.826 (202)). Atthehearingontllatnlotion,e'Freppid alsopointed outthatstatetrade
4
secret nzlsappropriation and other related claim s w ere clearly not preem pted by copytight claim s.
5 SnyderDecl.,lx.B atl1:15-12:4(RemandTranscrlpt)(citin:TDSHealthcares'
y.Corp.v.Humana
6 Hosp.111.,880 F.Supp.l572 (N.D.Ga.1995).
,Enhanced ComputerSolutions v.Rose,927F.Supp.
7 738(S.D.N.Y.1996)'
,Firoozyev.EarthlinkNetwork,l53F.Supp.2d 11l5(N.D.Cal.2001)'
,County
8 ofDelaware v.GovernmentSystems,Inc.a230F.Supp.2d 592 (E.D.Pa.2002))'

. ln thisM otion to
1
:
9 Dismiss,byYontrast, e'
Freppid acknowledges thatcopyrightinfringement claims presentfederal
10 questions and maintains thatthe state trade secretmisappropriation and otherrelated claim sare not
ht
2
IO>
ll Preempted See SectionsV and V1'infra. ThatDefendants'Counterclaim shoul

d bedismissed is
== -
1 ;1'
-' 12 fultherillustrated by the factthatDefendants'FederalComplaint,which hasalready been filed,
c
C @' 13 incorporatesidenticalclaims.comparesnyderDecl.,Ex.H at!7(oefendants'p'ederalcomplaint)
' g..
p
i
i
* 14 andsnyderoecl., sx.Iat:g(counterclaim).
QQ t
v
,
l o- 15
BecauseDefendants'Counterclaim satisfiesthetwo-steppreemptionanalysis,itispreempted
lc
As discussed above,the districtcourtspecifically held,on e'

Treppids motion forrem and,that
''
O 1bj
jk ;f 16 byFederal1aw andshouldbedismissed.
Q V 17 V. e-rreppid'sClaimsforMisappropriationofTradeSecretsAreNotPreempted.
ac
18
19 under H olmes Group n Vornado Air Circulation uv-pw/crzz

m lnc,535 U.S.826 (2002),M ontgomery
20
could not rem ove this case to federal courtby filing a counterclaim for copyright infringem ent.
21 Nonetheless,D efendants now seek to effecta rem ovalofthis case tltrough the indirectrneans.offiling
22
a separate com plaint forcopyrightinfringem entin federalcourt,then seeking dism issalofe'Treppid's
23 pending state 1aw action. This courtshould recognize that D efendants'present m otion to dism iss is
24
nothlng rnore than an im ptoper attem ptto end run around the United States Suprem e Court'sexplicit
25 ruling in Holm es.

26
Contrary to D efendants'assertions,Plaintiff's claim s for m isappropriation oftrade secrets.are
27 not preempted. tt'l'o survive preemption, the state cause of action must protect rights that are
28 qualitatively different from the rights protected by copyright:the com plaint m ust-ttllege arl textra
::ODMATCiM CSSHLM ODOCSUI748QhI
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1 elem ent' that changes the nature of the action.'' Grosso 1z.M iramax Film Corp., 2004 U .S. App.
2 LEXIS 28043,*4-5 (9th Cir.Sept.8,2004)(citalions omitted). To determine whether e'Freppd's

3
trade secrets claim s are preem pted,tthe Court m ustevaluate w hether the plaintiffs state-law claim s
4 areequivalent(J
'.c.,donotrequiretheproofofanadditionalelement)toprotectionsundertheActand
5
are therelore preem pted.'' Firoozye,153 F.Supp.2d at1126.
D efendants' position,thatclaim s for m isappropriation of trade secrets are preem pted, is flat
7 wrong. A ttmisappropriation oftrade secretsclaim contains an extra element- thatgtechnology)

8 qualifies as a trade secret (1 - that makes the claim qualitatively different ti'om a copyright
9
=
11
p
t
O .2
Iw
infringem ellt-action.''Firoozye,supra,153 F.Supp.2t1atll31(tradesecretsclaim notpreempted,
.
10 even though copyrightinfringementclaim was)(citinq Trandes Corp.v.Guy F.Atlans
on Co.,996
11 F 2d 655'660 (4thCir.1993)(:
W eagreewith theSecond Circuitthatthebreach ofadutyoftl-ustor
.
= = -
j 8:
Z,
-d 12 confidentialitycomprisesthecoreofactionsfortradeseeretmisappropriation,andsuppliesthettextra
$:1 o x
.
l
t11-.
13 element''thatqualitatively distinguishessuch trade secre!causes ofaction from claims forcopyright
'
-.g..
$
M
o1*
t 14 infringementthatarebasedsolelyuponcopying''')(quoting ComputerAssocs.Int'l,Inc.v.Altai,Inc.,
*d
C1Q :
1,
.
0 o- 15 982 F.2d693,7l7 (2dCir.1992)),
j
'5'.0.:.,Inc.n Payday,Inc,886F.2d 1081,1090n13(9thCir.
Ox
gg
ok'-;z: 16 1989)),
':eealso TDS HealthcareSys.Corp.v.Humana Hosp.111.,880 F.Supp.1572,l581-1582
i
Q V 17 (N.D.Ga.1995)(tradesecretsclaim notpreempted becauseitencompassedallegationsofbreach of
a2
.'
18 trustorcollfidentialityl;Enhanced ComputerSolutions v.Rose,927 F.Supp.738,740 (S.D.N.Y.

19 1996)(samel;Brignoliv.BalchHardyandScheinman,Inc.,645'#.Su'pp.1201,1205(S.D.N.Y.1988)
20 (tradesecretsclaimsnotpreemptedl;WarringtonAssocs..Inc.v.Real-limeEngineering Systems,Inc.,
21 522 F'
. Sup
p.367,368-369(N.D.111.1981)(samel;BalboaIns.Co.v.TransGlobalfkulWeJ,
-2l8Cal.
22 App.3(11327,1346-1350 (1990) (claims formisappropriation oftrade secrets and forbreach of

23 fiduciary duty notpreemptedl;M fry'ccd:Associates.Inc.v.Gladstone,107 W is.2d 241,258-259
24 (W is.Ct.App.l982)(findingclaimsformisappropriationoftradesecretsrtotpreempted).
25
Courts have repeatedly recognized the difference betw een trade secret protection and
26 copyrightprotection.Onecourtnoted that'tltlradesecretlaw protectscontentirrespectiveofform of

27 expression;copyright1aw protects form of expression by notthe underlying ideas.'' M Srycc.tf:
28 Assocs.,.
lhc.,107 W is.at258. Anothercourthassimilarly noted thatttgtlhe pra-dizaldistinction
::oDMA+cra :sHL> oDocsol7489l
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l betw een the tw o interests is m anifest. W hile disclosure of the expression does not vitiate rights
2
secured by' copyright law , that sam e dlsclosure m ay well strip the underlying idea of its
confidentiality,and thus itsstatus as a trade secret.'' Wctrrington Assocs.,Inc.,supra,522 F.Supp.at
368.
Even assum ing D efendants'copyrightassertions to be true,D efendants convcniently ignore
M ontgornery's testim ony thathe physically broughtcopyrighted source code thatallegedly belongs to
7 him into e'

l-reppid>s facilities, where he used it on e'
Treppid's com puters. Snyder D ecl.,Ex. A at
8 136:14-1.
37.
*23 (Pl Transcript). Defendanls also ignore that'e'
Treppid employees other than
'C
'
vt
IO w2
.
9 M ontgomery-developed e-rreppid Source Code (SnyderDecl.,Ex.A at138:10-22,139:11-17 (171

10 Transcriptl) and that signilicant portions of the Source Code (e.g.,those relating to software
11 compression) indisputably belong to e-rreppid. Snyder Decl.,Ex.A at 133:4-14 (141 Transcriptl;
= = -
i ex:
71 12 ExhibitA to Declaration ofW arren Trepp lSO eTreppid'sEx Parte Application for Temporary
$
8:1C %'a 13 RestrainillgOrderandPreliminarylnjunction,filedJanuary l9,2006(ContributionAgreement).
.p (;-B
d 1 0 14
DefendantscitetheFoul'
th Circuitdecision atAvtec.V.
8.l'
:Pei
ffer,21F.3d 568(4th Cir.
a a At)
1.jo-15 1994),forthepropositionthatacopyrightowrlercarmotbeliableformisappropriatingthecopyrighted
*
n'
$k
o('t
-.pj$ 16
i
Q V 17
a;
Cz:
18
19
m aterials. However,thisproposition conveniently sidestepsDefendants'admission thathecopied the
copylighted sohwareonto thecomputersate-freppid and thenused itgcitelasthee'rreppid Sollrce

Code. Snyder Decl.,Ex.E at! 11 (Counterclaiml,
'Snyder Decl.,Ex.A at 132:24-133:7 (P1
Transcript). Both parties agree that at leastsome portions '
of tlle Source Code (e.g.,softwai-e
20 compressionmaterials)belong toeTreppid,soDefendantsshould beheld liableformisappropriating

21 thoseportions.
22
.- -.
Defendantsalso citethe Avtec decision forthe proposition thata non-exclusive use license in
23 copyrighted m aterialcannotgive rise to trade secretprotection. The significance ofthisAvtec citation,
24 however,is thateven if D efendants' copyrightclaim s have m erit,at the very lemste'Freppid holds a
25 non-excltlsive license to use the copyrighted m aterialin itsSource Code.
26
Finally,itis notewofthy thateven the cases cited in D efendants'Preem ption Briefrecognize
27 tlmtclainls form isappropriation oftrade secrets,when tied to aduty to maintain confidentiality,are
28 notpreempted. ''(A)tradesecretsclaim thatrequiresproofofabreach ofadutyt)T contidentiality

::ooua+crocsyuua ooocsol74ggl
Page l1 of 15
'
.
1 stands on a different footing.Such claim s are notpreem pted because pafticipation in the breach ofa
2
duty ofconfidentiality - an elem entthatfonns no partofa copyrightinfringem entclaim - represents
unfaircompetitiveconductqualitativelydifferentfrom mereunauthorized copying.''Data Gen.Corp.
4 l?.GrummanSys.SupportCorp.36F.3d 1l47,l165(lstCir.1994)*
,seealsoKewaneev.Bicron,416
5 U.S.470,474 (416 U.S.470,(1974)(tradesecretsclaimsnotpreemptedlkGatesRubberCo.v.Bando
6 Chem.Lndus.,9 F.3d 823,847-48(2d Cir.1992)(same).TheSaengercaseexpressly did notreach

7
preem ption, instead ruling thatthe state law claim s were barred under the statute of lim itations and
8 statute of'frauds. Saenger Org.v. Natl'

onwide Ins.Lf'
cen'Jfng Assocs., Il9 F.3d 55,63-64 (1stCir.
9 l997).
2
h
t
O .2
'
x
10
Likewise, D efendantscitetheRasm ussen decision,butthey selectivelyquoted from thatN inth
ll Circuitdecision;theentireRasmussen rulingreads:itsection301(a)goftheCopyrightAct)preemptsa
r = -
1;
-1:
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ol; 13
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QiV 17
-
state-createdrightifthatrightmaybeabridgedbyanactwhich,in andofitself,would infringeoneof

the exclusive rightslisted in j'106. Butifviolation ofthe state liqhtispredicated upon an ac(
'
a#
I
incomoratinc elements bevond mere reproduction or the like-there is no preemption.'' G..

S.
..
Rasmuvsen tftAssocs.r
ztKalittaFlying Service.Inc.,958F.2d 896,904 (9thCir.l992)(citations
omitted)(emphasisadded).Furthermore,theRasmussenCourtspeciticallyheldthatplaintiff'sstate
claimsforconversionandunjustenliclunentwerenotpreempted byFederallaw.Rasmussen,sup-ra,
18 958F.2d at906,908.
19
20
1l1 fact,only two of the decisions cited in D efendants' briefs found state claim s preem pted.
H owever,even these cases failto supportD efendants'position. The Patsy Aiken Designs Courtheld
21 state claim s preempted because the'claim in question alleged only colying alld did n'
ot allege arty
22 textra'elements.Patsy AikenDesigns,Inc.v.Baby Tags,Inc.,701F.Supp.108,l1l-112(E.D.N.C.

23 1988). And in theMillercase,the Courtfound thatessentially theemployee'ssuitwasacopyright
24 claim ,as the em ployee w as asserting ownerships of copyrights. M iller v. C# Chemicals,Inc.,808 F.
25 Supp.1238,1246(D.S.C.1992).Bycontrut,e'
Freppid'sclaimsarebased inlargepartontradesecret
26
m isappropriation,and this accords with theM iller Court'srecognition ofthe generalrule thatttin order
27 to escapepreemption under 17 U.S.C.j 301,a state law claim ofunfaircompetition mustinclude
::ooMATcx cshHL> ox csol7489hl
Page 12 of 15

.
(v
(.
, ,
*- . .I
'
1 som e qualitatively different 'extra elem ent' besides copying.'' M iller,supra,808 F.Supp. at l245
2 (citationsolnitted).
3
A sexplained in thisbrief:e'
rreppid's state Iaw claim s are qualitatively differentfrom copying
because tlley assertone orm ore textra elem ents.' erreppid alleges thatM ontgom ery m isappropriated
the Com palzy's trade secrets by,interalia,violating his fiduciary duty of loyalty to the Com pany as
well as his contractual duty of confidentiality under the Com pany's Operating Agreem ents.
7 Accordingly,the very cases thatD efendantscite in theirPreem ption Briefm ilitate againstpreem ptiori
'
2
d
v!
O e2
I f.
tq
ofe'
Frepgid's state 1aw claim s.
V.
10
'
e'
Treppid's O ther C laim .
sA re NotPreem pted.
Asexplainedin thepleadingsrelatingtoitsMotion forSummaryRemand,e'

Freppidreiterates
11 thatithltspled only statecausesofaction. SnyderDecl.,Ex.G at3:l1-16 (Reply lSO ExParte
Y1YZz 12 Motion forSummary Remand). The only federalclaim involved in thisaction is Defendants,
;::
o ,..
.
(?)--. 13 Counterclaim forcopyrightinfringement- which,as a counterclaim,carmotsen,e as thebasisfor
'
a 1-n!
Y
l t ?: 14
federalquestion jurisdiction.
SnyderDecl.,Ex.G at2:19-25 (Reply ISO Ex Parte M otion for
Q .4$
t.j s 15 SummaryRemand).
;t
>'$
j
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e'freppid,s claim s for breach of contract, conversion, breach of fiduciary duty,bad faith jk
Q V 17 tortiousJtnd contractual,declaratoryrelief,orintentionalinterferencewithcontractarentpreempted.
'
at
ffh
x
18 As discussed above in the contextoftrade secrets,state claim sare notpreempted when they require
19 proof of an extra elem ent'beyond those required by the CopyrightA ct. Grosso v.M iramax Film
20
Corp., supra, 2004 U .S. App. LEXIS at *4-5. Each of e'Freppid's causes of action hinges on
21 M ontgom ery's breach of the conlidential relationship between him self and e'
Treppid, which w as
22 established by contract in the Operating Agreements and by virtue of his position as Officer and
23 Director of the Company. See, e.c., 2001 Operating Agreement (at-tached as Exhibit 1 to
24 Supplenlental Declaration of Jerry M . Snyder ISO M otion for Tmnporary Restraining Order, Filed
25 Febrtlary20,2006).Becauseeachcauseofactionispremisedonbreachofaconfidentialrelationship,
26 e'Freppid's claim s are notpreem pted. See,e.x.,Balboa lns.Co.n Trans GlobalEquities,supra,.
218
27 Cal.App.3t1at1350(1:W eseelittlebasisfordistinguishingthebreachedfiducial'yduty claimsfrom

28 thebreached conlidentialrelationship and tradesecretclaim s.They a1linvolvetheektra
'elementofan
::oDMA+c'DocsmL> oDocsoI7489yl
Page 13 of 15
.
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..05/28/08 Page 30 of 65
1 im portantrelationship. The dam ages flow from the disruption ofthatrelationship,in w hatever form it
2 occurs'').
3
V I.
fN
-onclusion.
Asdiscussed above,Defendantshave attempted (unsuccessfully)to remove thisentire action
to Federal Court. They have filed a copyright action in Federal Court that deals w ith the alleged
copyrightclaim s,and the FederalCourtshould decide those issues. A s forthe copyrightallegations in
this actien,they are m inim alas com pared to e'

Treppid's state claim s.-.which include e-rreppid Source
8 Code thatis not the'subjectmatter of the alleged copyrights as well as e'rreppid technology.
-7
yt
o .2
Iw
9 AccordinglyyYecauseDefendants'copyrightclaimscould only have a minorimpacton e'

Treppid's
10 broaderstate claims, the state action should proceed while the copyrightclaim s are addressed atthe
ll federallevel
.
= = -
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F'or the foregoing reasons,the Courtshould (1) grant e-rreppid's Motion to Dismiss
9
cC& 13 Counterclaim,(2)deny Defendants'Preemption Brief,and (3)deny Defendants'Motion to Dismiss
l o-.j
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Y 14 forLackofSubjectMatterJurisdiction.
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Dated:Feboary16,2006.
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18
evadaBarNumb
758
Jen'
yM .Snyder,Bsquire
19
H ale LanePeek D ennison alld H ow ard
20
5441K ietzke Larle,Second Floor
R eno,Nevada 89511
21
775-327-3000(te1.),775-786-6179(fax).-
AttorneysforPlaintffeTreppid Technologies,L.L.C.
22
23
24
25
26
27
28
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Page 14 of15

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PR O O F O F SERV ICE
2
3
4
1,G aylene Silva declare:

1 anlem ployed in the C ity ofReno,County of W ashee,State ofNevada by the Iaw offices of
H ale Larle Peek D ennison and Howard. M y business address is 5441 K ietzke Lane,Second Floor,
Reno,Nevada 89511. lam overthe age of 18 years and nota party to thisaction.
H AND D ELIV ERY O NLY 1 am readily fam iliar w ith H ale Lane Peek Dennison and
H ow ard's practice for collection and delivery of its hand-deliveries. Such practice in the ordinary
course ofbusinessprovides forthe delivery ofallhand-deliverieson the sam e day requested.
OnFebruary 16,2006,lcausedtheforejoingPlaintiffEtreppidTechnologies,L.L.C.'S
M otion to D ism iss Counterclaim ,and O pposltion to Preem ption B rief and to M otion to D ism iss
forLack ofV bjectM atterJurisdiction;M emorandum ofPointsand A uthoritiestobehand9 delivered by providing a true and correctcopy to H ale LanePeek D ennison and How ard's rurm ers
withinstluctionstohand-deliverthesameto:
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csimile:(775)786-7544
Ronald f
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Logar,Esq.
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Eric A .Pulver,Esq.
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225s Arlfngton Avenue,suite A
Reno, NV 89501
D o .:k
(:):-1)
IdeclareunderpenaltyofperjuryunderthelawsoftheUnitedStatesofAmericathatthe
j.j o- 15 foregoingistrueandcorrect,andthatthisdeclarationwasexecutedon ebrtlaryl6,2006.
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RONALD J.LOGAR,ESQ.
2 NevadaBar//00303
JEFTNIFER CHRISTIE,ESQ.
a Nevada Bar# 8025
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FICESOFLOGAR& PULVER, PC
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CardiftlCA 92007
B Te1: (888)235-4279
Fax: Q88)235-4279
9 Attorneysfor DefendantD EN N IS M ON TGOM ERY
10
11
IN THE SECON D JUD ICIAL DISTRICT CO URT O F THE STA TE O F N EVA DA

IN AN D FOR THE Co UN TY O F W A SHO E
++#**
12
13
ETREPPIP '
FECHNOLOGIES,L.L.C.,a
14 N evada Ltm lted Liability Com pany,
Plaintifll
15
CaseN o.:CV06-00114
vs.
Dept.N o.:9
&6 DENN IS M ON TGO M ER Y .an individual;
THI'
:M ONTGOM ERY FAA ILY TRUST;
17 DEN N IS M ON TGO M ER Y and BREN DA
M ONTGOM ERY astm stees forTHE
M ONTGOM ERY FAM ILY TRU ST;
18 and DO ES 1 through 20>
19
'
'
D efendants.
20
21
M OT IO N TO ASSO CIA TE CO IJN SEL
22
Defendant,D ennisM ontgom ery,et.al.,hereby m oves the Courtfor an orderpennitting

23
Phillip H , Stilhnan,Esq., to practice in N evalla pursuant to N evada Suprem e Court Rule 42

24
(SCR 42).Thismotion issupported by theattached ttverified Application forAssociation of

25
Counsel''
1 (ExhibitA),iicertificatesofGood Standing''from theStateBarofCalifomiaandMassachusetts

.
2 t'
ExhibitB)andtheStateBarofNevadaStatement.(ExhibitC)
3
Dated this
day ofFebruary,2006.
subm itted by:
7
8
Ronald J.Logar,Esq.
N evada BarN o.:0303
*
9
10
11
12
13
11
15
16
17
18
19
20
21
22
23
24
25
'
CERTIFICATE O F SERV ICE
PUTSUanttoNRCP 5(b), lcertifythatlam an employeeoftheLAW OFFICE OF
LO GA R & PU LVER,PC , and thaton th
day ofFebruary.2006,I
deposited form ailing in the U.S.M ail,w ith sufticientpostage affixed thereto
sentvia FederalExpressorotherovem ightdeliverr sew ice
6
7
8
9
delivered via facsim ile m achineto fax num ber

the foregeoing docum ent, addressed to:

Personally D elivered to:
10
l1
12'
13 S
entU S RegularM ailto:
l4
15
Hale Lane Peek Dennison and H ow ard
Reno,IVV 8951l
2475 H anoverStreet
Palo A lto, CA 94304-1114
l6
17
l8
IwezIie . cas
''
LegalAssistantto the
19
jwaw O ftice ofLogar & Pulver, PC
20
'
'
21
'
22
23
24
25
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Case
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E X H IB IT A

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IN TI'1E SE CO ND JUDICIAI,DISTRIC T CO URT OF TIIE ST AT E O F NEV AD A
IN AN llFO R TH E C OIJNTY O F W A SH O E
*+ *
ETREPPID TEC HN OLOGLES,L.

L .C.,a
Plaintiff,
CaseN o.:
CV 06-00114
Dept.N o:
V S.
D EN NIS M ON TG O M ERY ,m)individual;

TI'
IE M ON TGO M ERY FANIILY TRU ST;
D EN N IS M ON TGO M ERY and BREN DA
M ON TGONIERY ,astrustees forTHE
M OFITG OM ERY FAM ILY TRU ST;
and D OES lthrough 20,
Defendants.
VER IFIE D APPLIC ATIO N FO R ASSO CIATIO N
O F CO U NSEL ITN DER NEVA DA SUPREM E CO IJRT R IJLE 42
Phillip
Harris
Filst
M iddleN ame
1. Petitionerresidesat
Stilhnan.
Petitioner,respectfully represents:
Last
224 Birm irtzharn Drive,N o.2A

strectAddress
Cardiff
city
(888) 235-4279
San Dieco
cousty
' 0A
state
zip code
'
. .
Telephone
2. Petitioneris an attom ey at1aw and a m em berofthe law firm of:
w1f.1:oG cesat
92007
224S.Birmine mn Drive.Suite lA4
171vnn & Stillm an
'
streetAddress
Cardiff
City
(8S8J 235-4279
Telephone
San Dieao
County
CA
State
92007
ZipCode

<
w ,,
3. Petitioner has been rem ined personally oras a m em berofthe above named law ftrm by Law
O fliceofl-ogar& Pulver,PC.,to provide legalrepresenm tion in connection w iththeabove-entitled
m atternow pending before the above referenced court.
4. Since Jtme
.##J-....
= pctitionerhasbeen,and presently is,amemberofgood
of ,J
...
standing ofthe barofthe highestcourtofthe Suteof California
where petitiotler
regularly practiceslaw .
5. Petitiener w as adznitted to practice before the followixg United States DistrictCourts,United

*
StatesCircuitCourtsofA ppeal,the Suprem eCourtoftheUnited States,arld/orcourtsofotllerstates

on thedatesindicated foreach,and ispresently am em berin good standing oftlzebarsofsaid Courts:
DATE A D M ITTED
M assaehusetts Suprem eJudicialCourt
D ecem ber 1989
U S D istlictCourtsD .M mssx1%1CircuitCourtofAppeals
D ecem ber 1989
US DistrictCourtfora11DistrictsofCaliforniaand 9* CircuitCourtofAppeals
Jttlv 1991
6. Petitioner isnotclm ently suspended ordisbarred in any courtexeeptashereinnfferprovided
(Giveparticulars;e.g.,Court,jutisdiction,datel: N/A
. -
7.Petitionerisnotcurrently subjectto any disciplinazy proceedingsby.any orgnnizntion w.

.11
authorityat1aw exceptashereinaRerprovided(giveparticulars,e.g.cotlrqdisciplineautllority,date,
stattzsl:- --N/A-
8. Petitioner has never received public discipline including,but not lim ited to,smspension or
disbarment,byany organizxettion %4t.

1:authorityto disciplineattorneys at1aw exoeptashereinnher

w
w ./?
provided (giveparticulars,e.g.court,disciplineauthority,date,status): N/A
9. Petitionerhas neverhad any certificateorprivilege to appearand practice before any regulatol'y
administrativebody suspendedorrevokedexceptashereinafterprovided(giveparticulars,e.g.date,
adm inistrativebody,dateofstlspensionorreinstatement): N/A
10.Petitioner,eitherby resignation,w ithdraw al,orotherwise,hasnevertenninated orattem pted to

term inatePetitioner'sofficeasan attom ey in orderto avoid adm inistrative,disciplinary,disbarm ent,
orsuspension proceedingsexceptashereinafterprovided; N /A
11. Petitionerorany m em berofPetitioner'sfirm w ith which Petitionerisassociated luas/lmve fiied
applicationts)toappearascounselunderSupremeCourtRule42duringthepastthree(3)yearsin
thefollowingmatters:
Date of
Application
Jlm e 3.2003
Cause
Title ofCourt
Adm inistrative Body
orArbitrator
CV N03-0046-l1D M -V PC
W asApplication
G rm ted or
D enied
U .S.D istrictComtkD .N ev.
M ichaelJ.Flvnn.Applicant
(Ifnecessary,pleaseattachastatementofadditionalapplications)
Czranted
mr .x)
12. N evada CounselofRecord forPetition in thism atter is:
Ronald
J.
FirstN ame
M iddleName
225 S A r1in:ton A venue.Suite A ,

.
seeetAddress
89501
Lovar
:who hasofficesat
I-astNam e
'Reno
W ashoe
City
, (775 )786-5040
zip code
County
Phone Number
l3.The followingaccurately representsthenam esand addressesofeach party in thism atter,

W H ETIV R OR N OT R EPRESENTED BY COLJN SEL,and the nam es and addresses of each
counselofrecord w ho appeared forsaid parties:
'
N AM E
Plaintty'
e'
rreppid Technologies,L.L.C,
M A ILING AD DRESSES
775 Tradem ark Drive

Reno,N V 89521
Plaintz Attorney'
s.
'
Pillsbury W inthrop Shaw
Pittm an,I-.L.P.'
,D avid A .Jakopin & Jonathan Butler
2475 H anoverStreet
Palo,A ltosCA 94304-1114
650-233-4500
.
H ale Lane Peek D ennison & Howard

'
Defendant:
DennisM ontgomery
5441 K ietzke I-az)e

oor
asecond Fl
R eno,N V 89511
775-327-3000
12720 BuckhorriLane .
Reno,N V 89511
Defendant'
sAttorney:
Law Oftice ofLogar& Pulver,PC
R onald J.Logar,Eric A .Pulver,
& JenaiferA.Christie
'
'
225 S.Arlington Avenue,SuiteA

R eno,N V 89501
775-786-5040
l4.PetitioneragreestocomplywiththeprovisionsofNevadaSupremeCourtRule42(3)
artd(13)andPetitionerconsentstothejurisdictionofthecouztsanddisciplinalyboardsoftheState
efNevadainaccordancewithprovisitmsassetforthinSCR 42(3)and(13).Petititinerrespectfully
requeststhatPetitionerbe adm itted to practice in the above-entitled coul'
tFO R TH E PURPO SES

< e
0F TI!iS M A TTER ON LY .
l5. Petitionerhas disclosed in writing to the clientthatthe applicant is notadm itted to
practiceinthisjurisdictionandthattheclienthasconsentedtosuchrepresentation.
'
1,PhilipH.Stillman ,doherebyswear/affinnunderpenalt'yofperjurythattheassertions
ofthis application are true:
Thatlam thePetitionerin theabove entitled m atter'
,thatIhaveread the foregoing andknow
'
the contentsthereof;thatthe sam e istrue ofm y ow n knowledge exceptasto those m atterstherein

*
stated on infonnation aud belief,and asto the m atterIbelieve them to be true.
ThatIfurthercertif'
ythatlam subjecttothejurisdictionoftheCourtsanddisciplinaryboards
ofthisstatew ith respectto thelaw ofthisstategoverningtheconductofattorneysto thesam e extent
as a m em berofthe State BarofN evada'
,thatIunderstand and shallcom ply w ith the standardsof
professionalconductrequiredbymembersoftheStateBarofNevada;andthatIam subjecttothe
disciplinaryjurisdictiontotheStateBarofNevadawithrespecttoauyofmyactionsoccurringin
OICCotlrseOfSuch appearv ce.
41
D ATED this day ofJanu
, 06.
P ltioner/A ffiant
STATE OFNEVADA
COUNTY OFW ASHOE
)
)ss
)
Subscri
$bedandsworntobeforeme
w
thisR dayofJanual'y,2006,
by Philip H . Stillm an
No
Public
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taulsu
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ucxs
xowyeubx.sja
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aI
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I Ronald J.Iaogar-Esq.-hereby consentasN evada CounselofRecord to thedesignation of

Petitionerto associate in this cause pursuantto SCR 42.
D : 'vday ofFebnlary,20 .
Counselo Record
STATE QF NEVADA
COUNTY OF WASHOE
)
)ss
)
Subscri ed and sw orn to before m e

thismv day ofFebnzary,2006,
by Ronald J.Logar,Esq.
otary P
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GW!.
R e LEZUEM.LUGAS
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Notaf
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C ER T IF ICA T E O F GOO D ST
D IN G
UN ITED STATES O F AM ERICA
SO UTH ERN D ISTR ICT O F CA LIFO
ss.
1,W .Sam uelHantrick,Jr.,Clerk ofthe United Stales DistrictCourtforthe

Southern D istrictofCalifornia,
DO HEREBY CERTIFY thatPhilip Stillm an w asduly adm itted to practicein said Court
on June 10,1991,and '
is in good standing asa m em berofthe barofsaid Court ps g'
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JO HN A OAM S C OIJRTHOUSE
ONE PEMBERTON SQUARE SUITE 1301

B osvopk M AssAcn usc'r'rs ()2.1O8 .170V
WWW SJCCC)U NTYCLERK COM
CASE INFORMATION f61V)b5J.1100
MA U RA S .D OYLE
cusp'K
FACSIMILE (617)557.ll17
Februaf'
y 9,2006
ATFDRNCY SECRVICES (6I7.)557.(0543

FACSIMIL.C (6iV)SSJ.1O55
M ary Jorgenson
Su te BarofN evada
600 EastCharleston Boulevard
Las Vegas.N V 89104
IN R E:PH ILIP H .STILLM AN
D earM s.Jorgenson'
.
Enclosed please tind a Certiticate ofA dm ission and Good Standing attesting to the
date ofAdm ission and Good Standing atthe Barofthe Cornm onwea1th ofM assachusettsfor
Attorney Philip H.Stillman.

lfthisofficecanbeofany furtherassistanceto you,please donothesitateto contact
PaulJ.Sheaat(617)557-1174.
Ve truly yours
XJ2
M AU
Clerk
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SupremeJudicialCourt
M sD/pjs
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C O M M O N W EA LT H O F M A SSA CH U SET T S
SLJIY OLK.,ss.
BE ITRFM EM BERED,thatatthe Suprem eludicialC ourtholden atB oston
dCountyofSufolk,onthe
w ithin andx forsai
dayof
Decemller
twentietla
A.D. 1989 ,saidCourtbeingthehighest
CourtofRecord in said Com m onw ealth:
Plailip H .Stillm an
being found duly qualified in thatbehalf,and having taken and subscribed
the oaths required by law ,wasadm itted to practice as an A ttorney,and,by
virtue thereotlas a CounselloratLaw,in any ofthe Courts ofthe said

Com m onw ealth:thatsaid A ttorney is atpresenta m em berofthe B ar,and
is in good standing according to the records ofthis C ourt*.
ln testim ony whereotl1have hereunto setm y hand and ax xed the
sealofsaid Coult this ninth day of February

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'y 10,2006
M ary Jorgensen
State BarofNevada
600 E Charleston Blvd
LV NV 89104
'
TO W H OM IT M A Y CON CERN :
In accordance with yourrequest,plemse find enclosed the fonn ofcertificate you
require.
'
Ifthiscertificate includes disciplinaly m atters,and ifyou w atztadditional

infonnation concem ing thatdiscipline,you m ay requestcopiesofthose records
from the State BarCourtin ourLosA ngelesgffice. Call213-765-1418 forfurther
inform ation.
Pleasenotethateffective immediately,fora feeof$25,you may requesta
maximum oftlu'
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M EM BERSH IP RECORD S DEPA RTM ENT
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Enclosure
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TO W HO M IT M A Y CON CERN :
'Fhis is to certify thataccording to the records ofthe State Bar,PHILIP H ARRIS
STILLM AN ,#15286l was adm itted to the practice of 1aw in this state by the
Suprem e CourtofCalifornia on June 13,1991;and hasbeen since thatdate,and is
atdate hereof,an A CTIV E m em berofthe State BarofCalifornia;thatthe public
record states that infonnation has been provided pursuant to Business and
ProfessionsCodesection6086.1(c);andthatnorecommendationfordisciplinefor
professionalorotherm isconducthaseverbeen m ade by the Board ofGovem orsor
a Disciplinary Board to the Suprem e Courtofthe Sute ofCalifornia.
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IN THE SECOND JUD ICIAL D ISTR ICT COURT OF
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IN AN D FOR THE COUNTY OF WA SHOE
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Case No . CV06 -00114

Dept . No . 9
Etreppid Technologies ,
L .L .C .
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VS .
Dennis Montgomery .
an individual
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THE STATE BAR OF NEVADA , in response to ehe application Of

Petitioner, subm its the following statement pursuant to SCR42 (3):
16
scR4z t6lDscreton . The granting or denial of a motion to associahe

counsel pursuant to this rule by the court is discretionary . The
court may revoke the authority of Lhe person permitted to appear as
IZ
18
counsel pursuant to this rule ('Aout-of-state counsel'') to make

continued appearanees pursuant to this rule .' Absent special
19
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circum s tances , rep eated app earan ces by any p erson o r firm o f
21
motion to associate such person .

(a)
Limitations . It shall be presumed, absent special circumstanees , that more than five appearances by any
three-year period is exeesive use of this rule .
'2
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(b )
lurden on app licant . The burden to establish special

circumstances in excess of the lmita tions set forth in
subsection 6 (b) of this rule shall be upon the

app licant , shall be fully set forth by affidavit , and
shall accompany the original verified application .
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1.DATE OF APPLICATTON: 2/2/2006

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2 . APPLYTNG ATTORNEY : Phillip Harris Stillman , Esq .
28
3 . FIRM NAME AND ADDRESS : Flynn & Stillman z 224 S . Birm ingham Dr.,
Ste . lA4, Cardiff, CA 92007
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4 . NEVADA COUNSEL OF RECORD : Ronald John Logar, Esq w
225 S .
Arllpgton Avew Ste. A, Reno, NV 89501

addirion to tbe present application, petitioner and/or other
s . Iu
tirm members made the tollowing previous applications w ithin
:he las: three years :
02/02/2006
Fzcss slMucTAxsouscv
? DATED this February 13 , 20 06

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IN TH E SECON D JUDICIAL D ISTRICT CO U RT O F THE STATE O F N EV AD A

IN M D FO R THE COtJN TY OF W ASHO E
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ETREPPID TECIIN O LOG IES,L.L.C .,a

12 N evada Lim ited Liability Com pany,
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Plaintiff,
CaseN o.:CV 06-00114

Dept.N o.:9
.
VS.
14
15
16
DENN IS M ON TGOM ERY ,an individual;

TLIE M ON TGOM ERY FA M ILY TRU ST;
DENN IS M ON TGOM ERY and BREN DA
M ON TGO M ERY ,astrusteesforTITE
M ON TGO M ERY FA M ILY TRU ST;
and D OES 1 through 20,
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18
19
NO T IC E OF M O TIO N
TO :
A1lInterested Parties;and
T0 : A l1CounselofRecord
20
PLEASE TAKE NOTICE thatDefendant,DennisM ontgomery willbring tjjejo.regosg
21 MOTION TO ASSOCIATE COUNSELonfordecisiononthe /Y1ja

.yofFebruam 2006 in
,
22
D epartm ent9 ofthe above-entitled Court.

23
Dated this
7th
day ofFebruary, 20
24
25
Ronald J. ogar,Esq.
Attorney forDefendantD ennisM ontgom ery
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.
Page 52 of 65
CERTIFICATE O F SERV ICE
PursuanttoNRCP 5(b)NIcertifythatlam mzemployeeoftheLAW OFFICE OF

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3 LO GAR & PULV ER, PC,and thaton the
day ofFebrtlary,2006,I
deposited form ailing in the U .S.M ail,w ith sum cientpostage affixed thereto
delivered via facsim ile m achine to fmx num ber
catlsed to be delivered via Reno-carson M essengerService
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Personally D elivered to:
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Nfr.Jerry M .Snyder,Esq.
Hale Larle Peek D ermison and H oward
544 1K ietzke Lane,Second Floor
Reno,'
N V 8951l
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Pillsbury W intlyop Shaw Pittman,L.L.P.

D avid A .Jakopln,Esq.
palo A lto, CA 94304-1114
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IN THE SECON D JUDICIAL D ISTRICT CO URT OF THE STA TE 0 F N EVA DA

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JECHNOLOGIES,L.L.C.,a
evada Lim ited Liability Com pany,
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Plaintiff,
Case N o.:CV 06-00114
vs.
15
D ept. N o.:9
16 THE
DENNI
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GOMERY FAMI
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DEN NIS M ON TG OM ERY
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O R OER AO M ITTIN G To Plu cTlcE

PH IL LIP H .
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STILLM AN ESQ.having filed hisM otion to Associate Counseltmder
22 N evada Suprem e Court R ule 42, together with a Verified Application for Association of
23 Cotm sel a Certificate of Good Standing for the state of M mssaohtusetts and California
,
a and the
24 State BarofN evada State
ment;said applicationhaving beennoticed,noobjectionshavingbeen
2s,
m ade,and the Courtbeing fully apprised in the prem ises, and good cause appeazing,itishereby
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O RDER ED , thatsaid application ishereby granted,and M IC H AEL H .STILLM AN ,
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CASE NO.: CV06-00114
vs
13
DEPT.NO.: 9
14
DENNIS MONTGOMERY,an individual;

15
D
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16
17
18
O RDER
19
The Courthas considered Plaintiff's Motion to Shorten Time. The Courtfeels that
20 the injundion which itissued adequately protectsPlaintlff-from furtherharm,atleastuntil.

21 such tim e as the Motion to Am end can be subm itted and resolved. Therefore,Plaintil's
22
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Motion to Shotten Tim e is DENIED.W DCR 11
DATEDthis UZ/ dayofFebruary,2006.
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CERTIFICATE O F SERV ICE BY M A ILING
Pursuantto NRCP 5(b),lhereby certifythatIam an employeeofthe Second
5 JudicialDistrictC oud,in and forthe C ounty ofW ashoe;and thaton this
day of
6 February,2006,Ideposited in the County m ailing system forpostage and m ailing with the
7 United States Posta!Service in Reno, Nevada,and faxed,a true and correctcopy ofthe
8 pttached documentaddressed asfolfows:

9 J.Stephen Peek,Esq.
JerryM.Scyder,Esq.
10 Hale Lane Peek Dennison and Howard

11 5441 Kietzke Lane,Second Floor
Reno,Nevada 89511
12 Fax No.: (775)786-6179

13 David A Jakopin,Esq.
14 Jonathan D.Butler,Esq.
2475 HanoverStreet
15 Palo Alto,CA 94303
.
16 FaxNo.: (650)233-4545
17 Ronald J.Logar,Esq.
Eric A .Pulvar,Esq.
18 Law O ffices ofLogar& Pulvar, P.C .
19 225 S .A rlington Avenue,Suite A
Reno,Nevada 89501
20' Fax No.: (775)786-7544

21 M ichaelJ. Flynn,Esq.
22 Flynn & Stillm an

224 Birm ingham Drive,Suite 1A4
23 Cardiff,CA 92007
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TO : D EFEND AN TS,and theirattom eys ofrecord:
N O TICE IS H ER EBY G IVEN thatPlaintiffe'rreppid Technologies, LLC hasdeposited w ith
25
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the Tem porary Restraining Order,e'

Freppid has deposited a totalof$50,000.00.
DATED : This 13th day ofFebruary,2006.
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Telephone:(775)327-3000
Facsimile: (775)786-6179
AttorneysforPlaintffeTreppid Technologies,
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H aleLanePeek D ennison and H ow ard
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PRO O F O F SERV ICE
1,Gaylene Silva,declare:
Iam em ployed in the C ity ofReno,County ofW ashoe,State ()fN evada by the 1aw oftices of
H ale Lane Peek D ennison and How ard. M y business address is 5441 Kietzke l-ane,Second Floor,
Reno,Nevada 8951l. Iam overthe age of 18 years and nota pal'ty to thisaction.
M AI1wO NLY lam readily fam iliarw itllHale Lane Peek D ennison and H oward'spractice for
collection and processing ofits outgoing m ailw ith the U nled States PostalService. Such practice in
the ordinary course of business provides for thc deposit of alloutgoing m ailw ith the United States
PostalService on the sam e day itiscollected and processed form ailing.
On February 13,2006,1 served the foregoing N OTICE O F D EPO SIT O F SECUR ITY by
placing a true copy thereof in Hale Lane Peek Dennison and How ard's outgoing m ail in a sealed
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Facsimile: (775)786-7544
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RonaldJ.Logar,Esu.
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eno,Nevada 8951l
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JonathanD Butler,Esq.(CA BarNo.229638)
2475Hanoverstreet
paloAlto, califom ia 94304-1tl4
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NO TICE O F EA RLY C ASE CO N FER EN CE

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l;TO ERIC A.PULVER,ESQ.,THE LAW
OFFICES O F LO G AR & PU LVER ,A PC, 225 S.Arlington A venue,Suite A ,R eno,Nevada
25
89501,HIS COUNSEL OF RECORD:
26
PLE ASE TA K E N O TICE ,
that pursuant to NRCP 16.1(b)(a), Plaintiff, e'rreppid
17 Tecbnologies, LLC,by and through its counselofrecord,J.Stephen Peek, Esq.and Jerry M .Snyder,
28 of H ale Lane Peek D ennison and H ow ard, hereby givesnotice thata case conference
-'hms been setfor
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l Thursday,the 2Rdday ofM arch, 2006,atthe hourof10:30 a.m .,atthe Iaw oftices ofHale Lane Peek
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D elm ison and H ow ard,5441K ietzke Lane,Second Floor,Reno,N evada 8951l.

D ATED this 13thday ofFebnlary, 2006.
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Jonathan D
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Facsimile:(650)233-4545
a s4711
Palo Alto,California94304-1l14
A ttom eys forPlaintiffe'

Treppid Technologies
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Iam em ployed in the City ofReno,County of W ashoe,State ofN evada by the law offices of
H ale Lane Peek Dennison and Howard. M y business address is 5441 Kietzke Lane,Second Floor,
Reno,N evada 895l1. Iam overthe age of 18 years and nota party to this action.
.w .z
PR O O F O F SER VICE
M A IL O NLY Iam readily fam iliarw ith I-lale Lane Peek Dennison and H ow ard'spractice for
collection and processing ofits outgoing m ailw ith the U nited States PostalService. Such practice in
the ordinrlry course ofbusiness provides for the deposit of a11outgoing m ailw ith the United States
PostalSelvice on the sam eday itiscollected and processed form ailing.
O n February 13,2006,lsen'ed the foregoing NO TICE O F EAR LY C A SE CO NFER ENC E

by placing a true copy thereof in Hale'lvane Peek D eanison and H ow ard's outgoing m ailin a sealed
envelope,adoessedasfollows:
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Eric A .Pulver,Esq.
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Ideclareunderpenalty ofperjury underthe IawsoftheUnited StatesofAmericathatthe
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ZEODMATCDOCSHLRNODOCSU 16067yt
Pagc 3 Of3
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Case 3:06-cv-00056-PMP-VPC .
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2 JerryM .Snyder,Esq.(NV BarNo.6830)
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DavidA.JakopinpEsq.(CA BarNo.209950)
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Telephone:(650)233-4500
Facsimile:(630)233-4545
A ttorneys forPlaintiff
IN THE SECOND JUD ICIA L D ISTRICT C OLJRT OF TH E STATE OF NEVA DA
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IN Ah;D FORTHECOUNTY OFW ASHOE
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DENNISMONTGOMERY
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'an individual'
,THE
M ONTGO M ERY FA M ILY TRUST;DEN NIS

19 M ONTGO M ERY and BR ENDA
M ONTGO M ERY,as trusteesforTH E
20 M ONTGOM ERY FAM ILY TRU ST;and DOES
1 through 20,
21
D
efendant.
22
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NO T IC E TO SET FO R TRIAL
24 TO: DEFENDANT,DENNIS MONTGOMERY,AND TO ERIC A.PULVER,ESQ.,THE LAW

25
OIS
.FIC ES OF LO GA R & PU LV ER,A PC,225 S.A rlington Avenue,Suite A ,Reno,N evada
89501,H 1S COU N SEL O F RECORD :
26
PLEASE TA K E N O TICE , that Plaintiff,Etreppid Teclm ologies, LLC, by and through its
27
counselofrecord, J.Stephen Peek,Esq.and Jerry M .Snyder,Esq.,ofH ale Lane Peek D ennison nd
28
H OWard)w illappear in person, orbytel

ephoneifmutuallyagreeable,beforetheJutifcillAssistantof
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ODMATCDOCSHLRNODOCS'
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Page 1 Of3

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l D epartm ent 89 of the above-nam ed courton the 2nd day of M arch 2006, at l0:45 a.m . to setthe
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above-entitled m atterfortrial.
DATED this l3thday ofFebruary, 2006.
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JonathanD.Butler,Esq.(CA BarNo.229638)
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vada B arN um ber l758
Hale Lane Peek D ennison and Howard
Reno,Nevada 895l1
Attorneys forPlaintiffe'rreppid Teclm ologies
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:LODMATCDOCShHLRNODOCSU160651
Pagc 2 Of3

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PRO O F O F SERVIC E
1,Gaylene Silva,declare:
I am em ployed in the City ofReno,County ofW mshoe,State ofN evada by the law oftices of
Hale Lane Peek D ennison and H oward. M y business address is 5441 Kietzke Lane,Second Floor,
Reno,N evada 89511. Iam overthe age ofl8 years and nota party to this action.
M AIL O N LY lam readily fam iliarw ith Hale Lane Peek Dennison and Howard's practice for
collectioftand processing of its outgoing m ailw ith the United States PostalService. Such practice in
the ordinary course of business provides for the depositofalloutgoing m ailw ith the United States
PostalService on the sam e day itis collected and processed form ailing.
O n February l3,2006,l served the foregoing N O TIC E TO SET FO R TRIAL by placing a

true copy thereof in Hale Lane Pcek Dennison and H oward's outgoing m ail in a sealed envelope,
addressed as llows:
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Facsimile:(775)786 7544
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EricA Pulver,Fsq.
The Law O fficesofLogar& Pulver
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225 S.A rlington A venue,Suite A
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Reno,NV 8950l
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ldeclare underpenalty ofperjury underthe lawsofthe United States ofAmelica thatthe
foregoing is true and correct, andt

hatthisdeclarationwasexecutedon Febmaryl3,2006.
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Pagc 3 Of3
M ONTGOM ERY v.ETILEPPD ,DEPT O1RDEFEN SE

Case No.CV -N -06-056
.
DECLARATION OF JERRY M .SN YDER IN

OPPOSITION TO M ON TGOM ERY 'S APPLICATION
FOR '
FR0 AyiD P1FH-ED W ITH 2* JUDICIAL
DISTRICT COU RT OF N EVADA,
COIJNTY OF W A SH OE,
CASENO.CV06-00114,DEPT,9
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RONALCJA LONUJIN,Ja.
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BY
PILLSBURY WINTHROPSHAW PITTMAN
D AV ID .X.JA KO PIN ,CA BarNo.209950

JONATHA N D .BUTLER,CA BarNo.229638
2475HanoverStreet
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Filed 05/28/08 Page 2 of 95
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Facsimile:(65% 233-4545
i(Applicationforzktfzzlj-xft?nProHacVicePending)
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IN THESECOND JUDICIALDISTRICT COURT OFTHE STATEOFNEVADA

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TECHN O LOGIES, L.L C.
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Jim ited I-Diabi
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plaintiff,
cv06-(o114
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DEPT.NO 9
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vs.
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l8 DENNIS M ONTGOM ERY an individuavl'THE

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19 M ONTG OM ERY FA M ILY TRUST;D EN NIS
M ONTGOM ERY and BREND A
20 M O NTG OM ERY,ms trustees forTHE
M ONTGOM ERY FAM ILY TRUST;and DOES

21
1 tluough 20,
22
Defendants.
23
DE CLA M TION O F JER RY M
25
SN YD ER IN SU PPO RT O F ET REPPID TEC H NO LO G IES,

L .L .C .'S REPLY T O OPPO SIT IO N IN RE EX PAR TE APPLICATIO N FO R
A TE M PO R ARY R ESTR M NING O R D ER AN D O R DER TO SH O W
CAU SE R E PRELIM IN ARY INJU NC TIO N '
26
pursuantto Nlks j 600A 070.3,Plaintiff e'rreppid Teclm ologies, L.L.C .hereby Iodges the
:4
27 enclosed record conditionally under seal and w illm ake a m otion or application to the Court for an
28
orderperm itting the record to befiled llnder-seal. . .-
:oDMApcD< s>L> oDocsol377l2
Page l of3
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(,Jerry Snyder,do hereby declare as follows:
l.
litigation.
2.
lam anattorney fbrc'

FreppidTechnologics,L.L.C.(t%e-l-reppid*'),intheabove-entitled
A ttached as Exhibit ;EA'' to the present Declaration are true and correct copies of
5 e'Treppid'sO perating Agreem ents,asexecuted in 1998,l999 and 200l.

6
3.
A ttached as Exhibit 1iB'' to the presellt Declaration are true and correct copies of
7 United States Patent Application Publications and of Patent A ssignm ent D etails reports from the
8 Intem et site eof the U .S. Patent and Tradem ark O ffice, w hich evidence several assignm ents of
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technology by M r.M ontgom ery to e'Freppid.

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ldeclare underpenalty ofperjury undertheIawsofthe StateofNevadathattheforegoing is
11 trueand correct
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Executedthis1-.dayofI'ebfuary,2006,atReno,Nevada.
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ODMATCDOCShHLM OX CSWI377IQ
Page 2 Of3
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PRO O F O l?SERV IC E
2
3
I Gaylene Silva declare:

l am entployed in thc City ofReno,County ofW ashoe,State ofN evada by the law oftices of
Hale Lane Peek Dennison and H oward. M y business address is 5441 Kietzke Lane,Second Floor,
Reno,N evada 895l1. lam overthe age of l8 yearsand nota party to this action.
5
6
H AN D D ELIV ER Y O N LY I am readily fam iliar w ith Hale Lane Peek Dennison and
H ow ard's practice for collection and delivery ot-its hand-deliveries. Such practice in the ordinary
course ofbusinessprovides forthe delivery ofallhand-deliverieson the sam e day requested.
On February 6,2006,Icaased the foregoing DEC IUAIG TIO N O F JER RY M .SNY D ER IN

SU PPO RT O F ETREPPID TE CH NO LO G IES,L.L.C.'S R EPLY TO O PPO SITIO N IN RE EX
SH O W CA USE ItE PR ELIM INA RY INJU NCTIO N to be hand-delivered by providing a true and
PARTE API
Y ICATION FOR A TEM PORARY RESTRAINING ORDER AND ORDER TO
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correctcopytoHaleLanePeek Dennisonand Howard'srufmerswithinstructionstohand-deliverthe
10 sam e to:
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l1 Ronald J.t-ogar,Esquire
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EricA.Pulver,Esquire
71 12 TheLaw OfficesofLogar& Pulver
jkl:
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eclare underpenalty ofperjury underthe lawsofthe United States ofAmerica thatthe
foregoing istl'tle and correct,and thatthisdeclaration was executed on February 6,2006.
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(:
ODMATCDOCSHLRNODOCSU l377l2
Page 3 Of3
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OF
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A NevadaLimited-laialglily Compmzy
Dated and Adopted
EffectiveasefNovem bee1,2901
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AMENDED ANl)RESTATEB OPEIG TING AG

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THISAM ENDED AND RESTATEIIOPERA

'I'
ING AGREEM ENT ismat!eandentered
into aud effcctiveasofNOVEM BER 1
ld among tllose M em b
, 2001,by al
exccutingthisAgrecmcnt. u-rreppidTeachnologies
ers(defiatdbelow)
,I
.1f,aNevadaIimited
''Cpmpany''or''
1.1.
fr),andanyotbt!rPersond(detiaedbelow)wh
liabilitycompany(the
bytikotermshercof
oshallilltI'Gfuturebecoln:boulld
ThisW grczementism adc with

refcrcncc to (Ilo followin: facts:
STATEM EN'I'SO FFAI7r:

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A.
oerreppidTechnologies
'lingotthAzticlasofOrgi
with dle Novada Secretary of St ,LI-C wasforme,dbytheft
m izstion
ltte tm Stptem lAof 22, 1998,for thl fonnation purs
appllcableprovisionsoftheNRS (asdcfinedh
uantto thtt
erein).
l).
Effective Scptcmbe
adopte;dtbe Oprrgting Apxm r 28,1998, the Company and its M cmbers cntre'd into altd
entofc'
Jrcppid Technologitx,
Teciulologies, I-ICD (thexetxsvinalAarezrncnf')
Ltr (formcrly knownas'Tlntrepid
C.
lffectivoJanual'
y1
RcstatedOporalfng Am omcnt , 1999,thc Com panyalld itsM cmbersktdoptedthcAme.
ndr,dand
()feTzoppidTecbnologies, LL.
C toamend andrestatetlleo
Agmementinitsentiretytthe%'
RestatedA
jtreement'').
riginal
D.
ThtRestatodAgzeem
entwasamendezdbyFil'stAmeatlmentdatcd
2000,andbySecond Ameutlm
cffectivcJuly7,
entdatcdiffectiveM ay25, 2001(th:'W
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mendodArsmemant''
).
TheM anagementCo
earltlitsM om bcrswhfzaroentitled toVetehavedN mrd

thatitisfrtthe bestinterests of tb m mitte,
e Company antlal1pfhs M embors t .
Amendr,
dAgroemntinitsontird'
o amendandrostatctIZ
yassetforth h:roin.
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PHEREFORE, iu coluldtration ef tht rorb
going prem ise,s and the mutual
ctapzlnntx and canditlons cotltalntxlllerei
n,
and
wi
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intthtlon ofbeing legally baund
hereby,tbtpartleshretoagre,
e atlfbllows:
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Exceptasothcrwiseseparately degined elsewkcrein thisAgrccmcnt, fotlowin;a'

c thelelm s
tm d m canings asusod tluoughoutthisAgrccmtmt:
l.1. liAddititm alU nits''shallhavc themeaning setff

arth in Section 3.2-
1.2. ''
Adiusttd CapitalAccountDefidt''means,withtesfecttu any M ember,tltedcticit
balance,ifany,in such M cm bcr'gCapitalAccountasofthecnd ofthe m lcvantFiscalYcar, after
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'
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r is
obligated to contzibute to the IJ.C (ptlrgtlagttothetermsoftilisAgrecmcntortlthet-wise)oris

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loem edtotv obligatedtoconttibutetothc1J.-C gursuanttoRcgulationsSe-ctionsl.704-2(g)(l)and
.
704-2(i)($);and
1.2.2. Reducc such CapitalAccountby tiie amount of the item s desczibed in
RegulationsScctions1.704-109(2)(ii)((l)(4),(5)and(6).
1.3. GAffillate''m eans,whenuse,
d withreferenceto asl cified Person, (i)ttllhincipalof
theperson.(ii)anyPersopdirectlyoriudimctlycontrollinp controlledbyorundercommoncontt'
ol
with such Person,(iii)Imy Pezsonowningorcontrolliug TEN PERCENT (10%)ormorcofthe,
outstandingvotinginterestsofsuchPcrson,artkl(iv)auymlativeorspousoofsuchPerslm
1
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4.
GAereem ent''m eansthsAmended andRcstatcd Operating Agreenwntoftho I.1r .
asoziginallycxccutedand asamondedfrom tWIGtotimchereafter, asthecontextl'equims.W ords

such asdtherei'
n ''4theroinafterz''f'hereto,'''fhcrcby''and 'lerounde.
rj'' when usod w ith rcfcrenceto
this Agreem ont.m ferto thisAgrcementasawholo, unlcssthe contsxtothcm iso requiref. .
1.5. tArticlesofOrzAnlzation''m eaas,colloctively,the ArticlesofO rganization filml
.
with th.
e Secrdary of Etate (hereina
'f1er delincdl on SBFIEM4ER 28, 1998,Filing No
.
11 C-5563-98forthopurposoofformiug(lw LIr ,Itsameqdexlby'Cortitk itoofAmendmentfild

w ith the Secretary ofStatc on April19.2(G ), to changethenam eoftheLLC.and zny subsequrnt
ortificatesand restatem ontsto the AtticlesofOfgaztization duly adopted in accordance with this
AgtrzmcntandpmpotlyEleduhdendorsodbytheSem ttaryofStatm.
1.6. GAvallableCashFlow''means,withrespecttoanyFiscalYcarorothcrm riod, the
sum of411cashreceptsoftheLII from anyand:11sourccs,icssa11cashdisbtlzsemrmts(including

loanmpaynznts,capitalimpmvemcntsgnllmplacemeats)andureasonablellowanceforReasefv ,
contingencicsandanticipate,dobllgationsasdeternlinedbytlleM anagemontCummittee.
1.7. t%B@ok lltnredatinn''moimsforrachHscalYcarorothezlxfie ,anamouutequalto
til:Dcpreciation.oxcoptdlatiftheGrossAssetValueQfaayasset(liffcrsfrom itsadjustedbasisfor
fedemlincom:uxpuqyosesattheboginningofsuchyearorothcrperiod, T'bookdqlredltuon''with
respectto such assetshall,excGpta$otljerwiserquiredbyRcgulationsSection 1.704-3(d).btan
t
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sou wgaJgdcnd Restated Operwf/z, lgram nnt- 2
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d
f
0
r
s
uc
h
y
e
a
r
i
s
e
'
z
G
r
o
,
book dopreiationshallbodcterm incdwithreferencctos
uchbegirmingCylossAssd Valueusingauy
rcasonablemethodst
gecte,dbytheLLC.
1.8. :'
B usilless''orT'BusllessqrthtLLc''meansthebusinessorth:LLC asdefmcdin
ection 2,6 hereof
-9. '4capitglA ccountnofaM em bcratanygivrndatoshallhavothemcaniugsetfotthin

Seciion13.
4.3 hereofand shallbedctermined in accordance w1t11Seotitm 3.5 hcrx tl
1.10. ''CapltalC ontributioa''shallhavethemcaqingsetforthin Section3
- --
-.
- .
6.!hereof
1.llr <$C1a::A M embertsl''mtaasthos:Membersr- ivi

ngaPriorityRetum (dtfmed
elow)andhavingpriorityoverthcClassB M cmbersindistributionshom theLI.E andinvoting

lights
.
1.17. 'tCla,s B M embertxr means those M embcrs teoeiving a P

recviviugsubotdinateddisibutionsfrom thcl
liolity Retum arld
al
h
.f untilth:ClassA M cmbersmidClassC M embers
a
ve
r
e
c
c
i
ve
d
t
l
e
i
r
N
or
i
t
yRdu
m
a
a
d
ar
t
t
u
r
nof
tbeiraggregateCapitalContributionstothelalf .
Tlw ClassB M
.
embersshallhaveno votillg lights.
1.13. UCIM:C M emberfslHmeansthoseM emb= receivingapriorityRetum andhaving
priorityovertheClaasBMcmbersindistributionsfrom theLbC TheCtassC M embersshallhavc

.
no votmgrights.
1 1.f x
!co 9* sN ltttemal
m
v
i
s
i
o
n orprovisionsofanyucceedingIam
P
decf-l
ea o mg
1.15. X om mi
tteeMemberfsl''mcansanyoral1ofthethroc(3)Pelsonsappohltedhyth:
&5s A M embers to 6:1v: (m tbe ManagementCoznmittx
Agroement
ptusuantto Scction 6.1.4 ofthis
. '
I'he Colnms
'tle: M embors sllallata11fmes actcolloctively as th4 M lnngealent
Commfttee, wldoh v11allbecltargodwith tlwsopowers
ies and respozusbim ies mssetfozth in
, dat
M iclc6and olscwheteinthisAgreem ent.
C1
-.
1.16, 'm epreclationbmeans, foroachFiscalYearorotherpl od

depx dation. amodizafon t)rotlmrcos
trocovefy roductica allowablowith, a
rn
esamounteqm ltathe
shcllFiscalYearorotllerporioi
pecttoarlassd for
1.17, 'Diss qtion'mea (i)whenusedwithreferencetoAeL'
LC,tb:eArlicof(a)tbe
date upon which tluolLL
C ist
q
r
mi
r
lt
u
p
ur
s
ua
l
l
t
t
o
$
1
!
i
$
Apw
mc
t
p
lw NRS,orany similar
,t
ovisionenactd inliouthvreof,or(b)thedateuponwhiclztlteLLC oea
s> tebeaDingconcmrrt
and
)twh
11aforenc:teanyMember,theearliernf(a)t11edatruptm whichtllem isay
Di
sv(
pii
lu
i enuse,d4v11,
onoftlm LLC or(b)thedategponwhich suchMnber'sentircInterostintheLLC i
.
tennhzatdby zneansofadistributionorseriesofdistzibutionsby theLI

.,C t
o suchM = brz'.
(.
....- ..
t> w.-.
-.e lrx-
'
l
-
K- - -
- m
Atl
u.ol.
ve.
./4-es/W g?l:Restqtedopetqtlngztjrr:ezzlefffw3
'
Jd1.I3. tdk /.J0rM

U01
1rIiS d. tfgl tsi.
10'/ib1 ?' 1/bb
.
./
w ..
1.18. tTconomlclntercst''meansaPcrson'srighttoshareintheNd Proiits,NetI-m ses

orsimilaritem sgursuantto Sections4.i.l.4 andzl.1.2.5 hercof,andto rcceivcdigtributio:u fmm the
IA,C pursuantto Sections 5.2.5and 10.4.5hercof.whiciltheassignotofsuch economicinterest
would odlenvisebo eutitled,butdoc.snptincludeanyutlwrIightsofaM embe.riacluding,without
lim itation,thorightto Voto.to participatoin1.
hem anagcmcntoftheBusinossand the affairsofthe
LLC,urany rightto ipformation concerfling the Businessogthe LLC.
..
1.l9. ''FLqcal Year'' means the fiscal year of tLe LLC,l'unning for the poriod of
IANUARY lto alld including DECEM BER 31ofeactlcaltmdarycar.
1.20. 'E ros,AssetValuc''means,with rospcctto atly assetof the 1.If'
1 theassd's
adjustedbasisfoffedoralincometaxpurposes,exceptasfollows:
1.20,1.'l'hr jnltialGrossssctValuzofany assetcontributed by aM emtkrto the
I,LC shallhe the gross fair m llrkctvalue ofsuch asset, as agreed betw ezm the LLC and tlzc
contributing M ember.
'
1.20.2.Ttle GrossAssetValuc ofal1LLC assotsshallbe adjustcd to eqtlaltheir

m spcctivegrossfidrznarketvaluees,asm uttraliyagreedbetwee
cnthcl,l.r andtleaffoctedMembcrts)
upop tlle occurm nce ofthe following cvents:
.
1.
20.2.1.n eacquisitionofanadditionallnterestin tbolalf by anyncw or
cxistingMomlxrinexchangeformllrethanak minimisCapitalCrmttibution;
i
.
1.20.2.2. 'IYedistributionbytheLLC toaMemberofmorotll

anak
'
rrlflrfrnf.
amouatofcaf;h orproperty asconsidertion fovtlm am uisition ofa1lor apottion ofsucll
Mcmber'sIntercstintheIJ.C ifthcI.
1f7rtasopitblydeterrninesthatsuchadjlmtmo tisnecesse or
approprjato to reflecttherclatiye ecoqom ic interestsofthc M gmbtsilltho LLC;alld
1.20.2.3.'l'h;liquidatioa oftheLLC within the meurdngt)fRogulatioaa
SKtin 1.704-1(b)(2)(ii)(g);
1.20.3.ThcGrossAssotValucofanyLLCasscttlistribudtoanyMcmberslvllbe
thegrossfairm arketvaloeofsuch ussetasmutuallyagreolbythet.l.
r andtheaffecfzdM emberfs)
ozttlm dateofdistribution.
1.20.4.el'heOrossAssctVltlucofthLI.,
C assetsshallbeincreascd(ordccmaasd)to
.
rcflectanyadjustmontstotheadjustodbasisofsuchassetspursuanttoCodesction73446)orCode
section743*),butOnlytotheextentthatsuchadjustmcntsarotakcninto accountindetennining
CpitalAccounts purstk'mtRegulationsScction 1.704-1(b)(2)(iv)(m)and Sr/
ction 4.9 heremf;
pzovidedghowever,thatGrossAssctValueshallnotbeadjustedpunuanttothisSection1.26.4to
thoxtontthef.1r1determinestllatanadjustmentpumuanttoSectionl.20.2aboveisneceuaryor
appmpriateinconncdionwiththctransactioathatwouldotlmrwisoresultinanadjustmentpnder
thi:Seotiolz1.20.4.
t
on-,- - x- - -
x=e T-
>- pw,= - - uA(1@pj).

v&V +?ade# andRestate.
d Olerlfgdn elrlrrlt- 4
Jd11.lJ. SUUD /.t'UFh1

* :
#.
'
U1513S 1. pro' bsi.
j./!81
IQ t/'i
%
Case
toSections1.18.1,l.18Ifthe.GrossAssclValtz ofanassethasbcendtttrmined oadjuatvdpursulmt

2 orl.18.4 above,sucl
lGros
sAs
sctas
Va
lufeor
sllpui
allt
borc
afof
tcry adjustczbythc
Book D eprcciatif)n taken into accountwith
respect
to
snch
set
pos
es
'
computingplofits
and Iossos.
1.20.5.lflheI.l.
C acd any atlbcted Mzmlxrpursuaqtto Scctions 1. 18.1,1.13,2 t'
1. 18.3 above are unable to agteo on tht:Gross AssetValue of any assctfor pt
r
uA
posees of this
grrzmeut,amutuallyaccptableappraisershallbesclectedbythem forthisputm Gc. aad thtvalue
eastablishcd by such appraisalsllallt)cbinding upon thcI.1,
C anJthcaffccted M ember.
.
l.21. ''Gllaranteetl Paymetlt''ilas tl

'tt meaning set forth in Sr-ction 6.7.2 of this
glo m ent.
(.22. 'CLLC''or'ttzbmnanv''meanse'
TtoppidTechnologiess.LLC,the scvada lim itedabilitycorm any formodpursuantlotllrArticlr:ofOrganization,
li
1.23. TTLLC I-aauns''shallm feto any lotms, lines ofcmxlitoradvanlxsInatlo by any

M
embe
r
to theLLf .Excepta'sotherwisespccified in tlli8Agrccmcal suchLLC lxallsshallbear
i
,
ntcrcstatthc rateagrccd to bctween thc Mom berand theM anagemontCom m ittrze.
1.24. 4CLIPC M inim um Galn''mcanstheamountdcterminrdbyoom putingwithrcslectto

oach nonrccoursoliabilityoftheLtr , thcamountofgai
n(ofwhatevereharactcr),ifany. tllatwould
b
oroalizedbytho f.
1f7ifitdisposed(inataxablotransaction)ofthtPropertysubjtxttosuch
Iiabilityin fullsatisfaction thereof, and forno otherconsidcration
.a
forthinRegulationsSection 1.704-2
ndsubjecttotheothorzulcsset
hon aggrogating thc amotmtsso com puted itssctftprth
, andbyt
ke ulation
ill g
'
sSectionl.74-2(d).
1.25. i*Rlal
'orlty IllIntereest''or''M al
*orit'
y In lnterestofthe M em bers''mcanu unless
,
otherwiseprovidedintheAgrecmont,tltel>om.
xlnlag:h tcmstsofthcclassAM mhtlrsx wlch,takrn
t
ogethor,exceedFIPTY PERCBNT (50*)oftheaigtq ateofallPerceqtageIntercstqheld bya11
ClassA M :mbor.
scntitlod to Vote orp'antconscntwithrcspecttoth;mnttcrilzquostion.
.
.-
'
1.26. to aaaeemehtCommittee''mcaasxcolltctively.thetl
ve,
e(3)CommitteeMmmbert
apgointedbytheClassA MemberstomanagetheLLC pursuanttoSxtion61ofthisAgreemetlt

.
acung togetherto m anage theLLC ingccordance wtb thetorm saqd gonditionsofthisAgrccment

Th
eM anagemeatCummitteeshl
tllbrcharge witltthosGpowm's,dutiG Imdtpsponsibilitie
,si
forthin Articlo6and elscwhereinthisAgme,dm
tsr.eat nt
.
1.27. 'M altaeer'fmeanttktPersfm appointedundorSTction6.1.1oftbisAgroemenlto

mlmagothoLlf .TheManagershilbchargc,dwiththosopowesrs,duticsandlrsponsibilitiesasset
.
fofthin Atticle6 andelscwhem inthisAg- ment.

1.28. ''M ember''moansaPersonwho:
(
- -
evxw.r...fu ,-:,- '=1-=-wAT- y- no
p- e A(Io1:yv:> mgzI#:#cJ#XeJW 2 OperallngAgreetneltt-
Jir
l.l?. t'UU
.,
. .
l.JIr:
10./131
U' f/2Z
'
'
UUC:Id5 J' PI!t' :S1.
,
'
Case
3:06-cv-00056-PMP-VPC
1.28.1.HM beeq admittod to theLLC asaClassA M ember,a ClassB M em berora

ClassC M em berin accortlance with thisAgrecmcnt, and who has become a M em llerpnrsuanttll
Seection 8.3 hcreof.
1.28.2.Hasnotrcsigoed,witdrawnorbccn cxpellcd a!aM em bcroq ifothtvthan an
individual,hasbecn dissolved.
1.28.3.14aspaid llisCapitalContribution to the LLC in cxchange torUnitsin the

LLC ,or,inthccase ofa transfcre.eM ombcr.hassucceeded tothe CapitalAgcountofthe tfansferor
M em ber,and who hac be-com e a party (0 this A grccmcpt by cxeecuting I
m d subm itting to the
M anugeracountcrpad signaturepageto thisAgreementaccepting thetcrm sand conditionsof,and
agrecing to be bound by,tl'
lisAgrcement.
Refcrenccto a''M ember''shallbo toallyoneofthe CiassA M cmbers. tizcCllssB
M em l
x rs o-the Class C M om bers of the LLC identified in Scction 3.1 below or as otherwist
supplem onted andidentified on EXIIIBIT A attachedtoandmadeapartofthcsAgroementawhich
exhibitmaybeamendedormodifiedfrom timet(,timewithouttheconsontofthcM embers.
.
1,29. TM embtrNonrecour:eDebt''hllsthe moaning setforth in RogulationsSr tion
1,704-2(b)(4)foretpartnernontw ourscdcbt.''
1..30. '4
hsem bcr lonrecourseDebtM inimum Gain''meansIttlamounta Wifh respoctto
cach Meme rNonrocourseDobt,equaltothe!.
1f7Minimum GainthatweuldmesultifsucllM emkr
N onrocoursoDebtwcre treeated asitnoarccourseliabilityoftilotlr ,determ inedin accordanccwith
-- - .-
l
.
RegullonsSee
ctions1.704-2(i)(2)and(3).
1.31. f'M em ller Nonrecolll'
st Deductioltsg'has themeaning setftm h in Rcgulations
Seotionk.7(M-2(i)(2)for'Tpartpetlonrecourscdoduclions.'''
i-izeamtmntofMembr,rNollrecourse
D eductioqswith respcctto aM em k rNonrecours: DGbtfora Fist:alYearofthe LLC equalstho
exce'
ss(ifanylofthonetincrease(ifany)inthcamountofMcmberNonmcourscDcbtMinimum
Clain attrlbutable to such M emlxrNonrecocrse Dcbtdurillg thatFiscalYearovertlw age gato
amountofanydistributionsdulingthatHscalYcartotheMmberthatbeap (orisdeemodtoboitrl
tileecocorniclossforsuchM emberNollrocoursDebttotheextcn'tsnchdistributiinsarofrom the
proceeds of such M elnbcr Nortrecotusc Debt imd mr allocablo to an increase in M ember
N onreacoursoD ebtM inim um Gain attributableto such M cmberN onrecourse Debt, dotermine ilt
accordancew1t.
11Rigulation!Section1.704-2(i)(2),
1.32. tM em bershlp Interut''or'flnttrcst''mtanaan ownrship intmm tilltheI.1r1,
-
whichiccludesaM embor'sEconomicIctrrest, thefighttoVotgorparticipateinthemanagm tof

tlie.LLC,(tndthorighttoinformationooncerningth:affairsandBusinessofthcI1f?asprovidedifl
thisAgreemcntandundertlztNRS.ers M embershipIpterctofaM embertincludingthoFzonomic
.
Intorost)consotutesthopersoaalprolltyoftheMemter.NoMembetliyvidueofhiGownersltipof
aM bm/ rshipInterest,hasorowns,orisdrzemeedtohaveorown, gnintercstina1loranypad oftlw
I.1r 'sProm rty,
(
o-
-- x'
- -
- r- x- - qo -
Atle.tlyvtO mee zdaad Res# ed fllerKldrlgd:re //le/l/- 6
J2q.18. FJdL /!l#7.

.
pLslis J. Frks, ET9.
1.33. t' etCapitalC ontributlon''mcansaMcmbcr'sCapitalContlibuticm

RPD UCED BY -li'
,asofa
nydatc,
a.l1priordistributionsofaM mbcr'sCapitalpursuantto Article 5'autl/orArticle 10
h
ercog.
.
8'71S1 F' 8/50
'
- -
1,34. '$NetProfittsl''and''NetLossestel''meaa, foreach FiscalYearorotllerperitd an

,
amobntequalt:thc 1.
fr 'staxablc incomGorlossl0rsuch yeart)rpcriod,determinedinaccordan
ce
wilhCotlesection703(a)(forthispurposc, a11itemsoftncom e,gain,los!ordoductitm rcquife.dtobe
statedscpafatelypursuanttoCodesection703(a)(l)shallbeincludcdiatatableincomtrloss)
withtllefollowingadjustments:
,
I-34.1,A ny incomc ofthe LLC thatEs exemptfrom Fcdera!tncome tax (md
fkot
w
i
s
e
t
a
ko
n
into accountin com putingNctProlitsorNetLossesshalltycadde,
i
d to such taxable
ncom ct)rloss;
olller
* l.34.
2.AnyexpendituresofthcLIf describetlinCodesection 705(bX2)(B)or
treated tts Codc section 7()509(2)(B) expenditucs pursuant to Regulations Scction

1.704-1(b)(2)(iv)(i)andnotothcnvisctakonintoaccpuntincomputiagNetPrttfitsorNetIx
shalll)cstlbtractrd fkom such taxable incomcorIoss;
sses
34.3.Gaitlorlossresultingfrom anydisposititm ofProm rty wif

.hr
gain orlosgisre1c.og
re
spccttowhich
nizr,
d forfedem lincomctax purgososshallbecom putedbyref
crencetothcfair
ml
trketvalue of the K operty dim used of,
Prom
notwithstandingthattbeadjustod taxbaisofstzch
rty diffcrsfrotnitsfairmarkctvaluc;
t'
'
1-34.4.lnlicu ofdeprcciatitm .amoltizaton,and otbercostrccovcr'

ydeductitmstitken
i
nt
o
a
c
o
anf
i
n
c
o
mp
ut
i
n
g
s
u
c
h
t
a
xa
bl
t
i
n
c
o
l
ns
or
l
o
s
s
D
, the'
rc shall be takrn into account
h eprecialion forsuch R scalYearorotherperiottcomputodin accordauco with th: subscction
ercofontitted 4tlhpmciatiolf';and
1.34.5.N otw ithstanding anyotherprovisiotlofthissubsection,any iternsofincomo,
ga
i
n.
I
o
t
s
or
de
e
dw
vtion tiyatae,specificall? allocatcd shallnotbctakon into accountin com puung
N
e,
(ProfitsorNetLosses,
.
.
..
'-
l.35. ''NRS/ m eans Chapte.

r :6, Soctions :6.011 to 86 590,of tlte N tvada Rlwise.
St
d
atate-q.a.
gam ended,orany convspontling provision orprovisitm sofany succoeding law .
.
1.36. f'Percentaeelnteresttsl''meansAfratfon,th
xpzessedasapementage,thenumsrator
ofwhich:isthenumberofUaitsownodoftecord byaM emberand thtd
cnom inatorofwhich isthe
-
agp rgalenumberofallissued andoutstandingUnitsoftheM emben atthtimeofthtcalculatilm
.
n ePccentageIntra stsofthoM emiyersshallber.etforthOnEXHfBI'
TA attachedhemtoacdvnnde
apktrtofthisAgrecmemt, which exhibitmaybeamcnde.datldm odificdh'
om time totimbythe
M anag:withouttheconsontoftheM cmbers.
1.37. 'Terwfm''m eansan individual, partatrship,limited partnirship. corporauon,tm st,

estate,associatioa,limitcd-liabilitycompany, orotherentity,whetherdomestic orfomign.
t
- - -
c:moe.>.
.w.ax agmlo slw ,w.
x,- lm'
f- - -- -
-u- AL'lve vtu mended?;dkezttda Olcrltlll,Agreemerrf'- 1

-
'
Jhh.18. 2206 :71@h$

,
Jtbt's 1. F('' ECC.
89.7181 p. S/b8
Case
4
$
1.30. itprincipal''meansthc Ptxson thatisin ultim ate clmtzolofaM cmber

.
1.39. 'eprioritv Returrphmeans tho ptioity return to each ofth

Cli
eClassA M embers,the
ussflM cmtmrs and the ClassC Mcmbcrsofan accrued cumulative return olloach oftlwir
respcctivaNetCapitalContributionsinanamountequaltoFIIRTEF,
PERCENI-IIS%Ipcratmum
accruing cumulatively from thedattofcontributionofthe LIaC,buN
tuotcompounded,proratod for,
any pcriod whichisapartialyear.
I.40. ''Proptr
.ty''mealts21orany personalprupcrty and otherassctsofthel-1.f ,both
tangible and intangibl
e,ilwluditlg,butnotlim itedto.
thetcof.
ttlerrectmology(dcfinedbelowljoranyportion
-
1.41. ''Reeulatioris''orf'rreasuryRecul4fions''meansthc fezderalincomctaxregttlations

pr
omul
gat
edbythe-rroasufyDepartmtmtundertheCodm ssul;hregulationsmnybo'
ti
amcgdedfmm
metotime!Al1refercnccsi3creintoaspecificscclitm o,fat
boRcgulationsshallbede
emedaldoto
mferto anycorrespondin:provisionsofstlcceodingRep l
.
afons.
1.42. ''Revaluatlon Evcnt''moansgtly ofthefollowingocc
ofcashorother
unxmces:(l)tllectmtributitm
property(otherthanaderzlfrlfrriamount)byanew orexiatingMembcrtothe
capilalofthCompaoy asaconsidf
mation fortheissuanooofAddid
ofcashorPropetty(othorthanatlcminintisamount)toaM cmborion
alunitl;0r(2)thedistributifm
nexchangeforaqlnte
Compaay;provided tha
restinthc
tsgch eyorttshallnotcelutitute a Prviluatioc Evontifthe M ana
Com m ittecreasonably detcrm ine
grmont
M
sthafitisnotnrecessm-ytoadjustthebookbasisfafProportyovtlm
em bers'CapitalAccountsinconnectionwith thetvcurre
q
provision isto cpmply with thprovisiongofRcgulationsSnceofanystlchevent.Theiqtrntofthi.
interpretedconsslentlytherewith
cction1.704-1(b)(2)(iv)(9 andshallbe
.
1.43. f'Reserves''meansfundssetitsidefrllm crapitalflollz buoM orrovonue

a
Such Reselve,sshallbemaintajne,dinamountsrcasonablydefmed sufficieutb
sasnworves.
Comm ittx for working capilal and the paym ect of taxrs
ytheM aaagcmftt
, insurance, dobt ser
vice, ropairs,
Jcplaccm ntsrellowals, orothorcosa orexpense'
s
i
n
c
i
de
nt
t
o
t
he
Bus
i
ne
s
s
of
t
l
z
LI
X , orin the
alternative, the Dissolution oftheU
f.
. .
--
1.zl4. 'WecretarvofState''ttteanttlm SevrotaryofStatooftlw StatoofNovada.
1.45. 'Alniffsl''mraansatlnitofM embtxghip InterestasaClassA M ombcq a Pl

M omberoraCl
ass-f assC M cmbrrintlm IAC.
-
1.46. ullnltOption Pjan''shallkavcth<meaningsetfozthi:lSection 3.8.

1.47. GuIIItValue''shallIlilvetltomeattiugsetforthinSeotion3.
11.
1,48. d'Vote''means,exceptwhcresupersedodbyanothrsectiotlofthisAgrezmenqoras
ma
y
h:
m quifed undortlleapplicableprgvisionsoftheNRS. tl
tl
w CodcorapplicableRegulations
wroundet tbevotesottheClassA M embes, whetherby ballot written consentora yoicc vots
,
whorcineachClassA M ombcrshal)haveandcastanumbcrofvotescqualt
,
Pemem
othatC1a:$A M tmlxxr's
gehltefeGt
'
y
.
---
oqew-- ..-w.lsl- eohw m'-xxgu- vezvvxr

/lnu
.
r.ao ol
.xlkxomqerwfli.ntyveu mzr#el qnd& zf$f/@# Optxtting ttgrerm- r.u8''
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ARTICLE 2
INTRODUG ORY M AW b'.RS
.
.. -
..
2.1. Form atin oftheLl,c;Xdoptienofarcem qn

.t.ThcLLC wa.
sIgally organiz-ed
pursuantto Sections86.
1
51
a
n
d
8
6.
201
,
1
(
)
f
t
l
l
e
NRS
b
y
e
xe
c
u
t
i
ng
A
edgingandfilillgthlt
y acknowl
z
t
l
c
l
c
s
o
f
Or
j
a
u
i
z
a
t
i
o
n
a
n
d
t
h
e
c
c
r
t
i
f
i
c
a
t
e
o
f
u
c
c
e
p
r
a
n
c
o
e
f
t
h
e
ms
i
d
e
q
t
a
g
e
n
t
withtheSecrctatyof
Statc, and paylngtllcroquiredfiling feestllerefor
. Th
P
eM embcrsexccuting tM sAgreem cntand any
ersonswho ia thofuturebccomcbound by l
hisAgrccmentllereby ad
Opot
optthisAgrc-ementa.
$the
ating AgreementofthoLLC.
-
..
2.2. Name.Tl
lenameoftheL1,C isd'erfreppid '
l'etllnologles LLC.'' ThoM embers
shallo
perate th0BusincssoftheLLC undersuchnameoru&esuchQtl ,
M embersnraydeem necessaryordesirable
lororaddltionalnamtskkstbe,
ovidcd a1lsuch nameornamcsshalllv incompliartce
, pr
with the NRS andotherapplicablc laws.
-
2.3. PrincinalBlulnessOrrice. n cLE,

C shallmaintain itsprincipalbusinossoffico at
LAEESEIOIG BODLEVD , INCLINE VILLAGITIN IW ADA 89451,witham allingadckrr
's
ofP.O .BOX 4964,INCLIAIE VILLAGB NEVADA 89450
,
from tim o to timeby the M aaagementCom
, or
ny
ot
h
e
r
l
oc
a
t
i
on
a
s
d
c
t
o
r
mi
n
c
d
mittee
SO
2.4. ResldentArent;ReWstered Om ce. n e narneand addressofthe I.

agcntupon wh
1r 'sm aidont
om proccssm ay i
yesetved,oranoticeordem and authld zcd by Iaw tob
thel-tf m aybcserved isGR'I.RF.SMIEITINAGENT/FE
e servedupon
-I
NGS,m C.,aNvjtdacorporation,whoge
strre,t addrcss in Neva,da
is 1100 EAS'
V W ILLJAM STltsET SUITE 207, CAXSON CITY
,
,
NEVADA 89701,Aud whoso maiiing addressisP.
O.
BOX
36
7
%
CARSON
CI
TY
89702. '
NEVADA
,
Ihom gistercd officeofth:l!f7inNevadltshallbetheaddl'essoftllollr 'srrsidentagnt.
q'
lm looation oftheLtf 'sregistemd efficeortlleaameand
a
d
dt
t
s
s
o
f
i
t
s
r
e
s
i
dontagert. orboth.
rnayonlybc changcd byfilin
g accrtilkatcofchangewith theSccretaryofStuteirktheform mld
rngnnorrequirod by such office.
2.5. '
PerpetualExistence.Assctforth inthArticlesofOrganizationoftheI
alr .t
T-1.C sbailhaveperpet
ho
ualoxistrnoe,untilthol.
l.
ftistonninatedordissolve,d in accofdancewith this
A
groem ent. rl'heexistenceofthet.
L C shalicoznmcneee asoftheoffective datct)flhi:Agmemetlt
,
.
SE
.
-.
BBR 23)1998.
'
2.6, PgrposeandBtlsittedsefllleLLC.'l'
hepurposeandbusinefsoft% I.J.E shallbr,to
develop,
pa
t
cns
As
t
r
i
bt
l
t
e
,
l
i
c
v
t
l
s
e
a
n
d
o
xp
l
o
i
t
i
n
a
n
y
ma
nnerandonaworldwidzbaxi:tlutcaedltill
softw
l
llet'Teehnolaav'')andtofinanl;eattyanda11
ofthei
fm
orc
eompms
going as
ci
to
intechnologyownedbydm LLClt
vities(collectivcly,tht:13us-ineas''l.'lxeLLC mayconductorengagoi
othorlawfulactiyitythatthcLLC deemsisnTcezsa
nany
ry,incidcntaltoordosirablefnceonnrectionw1t.11
theBusinessoftheT,1.& ,
-
2.7. NoIndividualAuthoritvofaM emberorCommltteeM t

mber.NoM emk ror
ember,Rtin: Aloneorwitb th:M anager, any othorCorcmittr,
eM embeq ofcirr
CommittR M
c,
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Case
3:06-cv-00056-PMP-VPC
X
Document 644-8 Filed1 05/28/08 Page 16 of 95
',
$
.
othernon-m anagerM em ber,shallhavc thc authority to aatfor, or to undortakr or assumc,any

obligatioa,debt,dutyorrcspoqsibility ocbehafoftlm LLC
.
2.8. Titlet:PrepertyIlltheNameoftheLLC.AIlPropejlyowne.dbytheI- I.
E shallbc
held und ownod and coqyeyance m ade in thc name ofthe LLf . A1lagroements,documeats,
certificatesandotherinstnlmeptsprovidingfortheacquisitionorothcrdispositionofPropertyofthe
LLC shallbe valid and binding upo:lit, cxceptasothenviso ptovidczd hcrein,ifappreycd by the
M anagemcntComm ittce and executcd by thePresident()fthe D LC asprvided forhcrein.
2.9. M alntenanceofConlpanyM lntlteBook.
.Record KeeplnEDutiei.TheM anager
-
lortheSecreuty,ifoneisappointed bytheM anagerrtcntCofnmitter)shallkeep and maintain or

causeto be keptand maintaincd acthm pany m inutebookto includethe AfticlosofOttaniwation or
tllc LIC and thisArareement,acd atty amendm etm therdo,ar
ldminutesofwllmecting:(orcoruqints
inlieuofmr tings)0(thcManagemerttCotnmittez,writtcnconsentsoftheMembers.andothcr
im poftantdocumentsofthc LLC .
'
ARTICLE 3
M EM BEIIS,CXPITX,L CO NTX IBUTIO NS
AND CAPITAL ACCOUNTS
-
--
3.1. Nam esvXddre-ssesand ClmqsesoftheM em btrs. Thocomplote namcs,addm sscs

and classesoftheM om bcrsoftlicI.I.
C V setfortkon EXH IBIT A altachedhcrctoandm adeaplt
oftNisAgmementvwhichexhibitmaybeamclzdexlormtxlifiedfrom tirrr totimcwitlloutthccortserkt
ofthe M cmbers.
3.2. M emberCapitalContribatlons.A11CapitalContributionsoftheM embersshallbe
setforthonEXHTTIIT X attachr,dhrcto andmadeapartofthisAgreement, whichexhibitmayb
amendedormotfifiedfrom timetodmewithoutoconsentotthoM emlo . The M tmbers'Capital
Contributionsshallboin excbangeforUnitsinthel.lf assotforlh onEXH IBIT A attached:creto.
3.3. AdditifmalCapitalContriblltion:atld LLC Imans. 1thceveattheM anq ement

Com mittez dotertnincs that additional fantls are rcquired for tht: om ration of the Com pgay
(including capitalcxm uditums and dobtscrvicol,the M anagemorkt Comtnittee may callfor
additionalCapitalContlibutionsfrom theMombers(thet'AdditionalCapitalContributions'').Ally
callforAdditionalCapitalContrihutionsshallbebywrittennoticototheM emherssettingforththe '-
-.
am ount(,fAdditiond Contributionsncededand thcdatoby which thM em bea sllallcontribvte,

whicbduteEhallBotbtsmmertitallton (10)day:ofl'
= iptofsuch notice. AddifonalCapital
Centrihutiona shalll): pro ratabasred on tl)e M embers'rezpoctivo Pettontag: Inte= ts. Each
M cma rshallhavothoright,butnotthobligation,tomakcanAdditionalCapitalContributionat
t14otimespecihodintlp M nnagementCornmittee'snotice. lfacyM emberdoosnotnuakth:ftlll
amountfarcqu> tedAdditionalC-apitalContribuion, theM anagementComrnitteamayelr'ctmly
ono.oranycmbinMioaof,thefollowingnptions:
3.3.1.
ThcotiierM imben shallhavotherightto makethccontributionreqosstr,d
from thenort-contrlbutirtgMcmberoaapromtabasis(basedoftthecontributinsMembtrs'rdatlko
(
c-
--
eml- se ev- -l-- x - w uAflwd/v&
enzedandA- tzfe.tfOpnntdngAgrtement-10
'
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PcrccntageIntetests)orasthoyotherwiseagtce.IfAdditionalCapitalContlibutionsare911/.
10by
som e.but qot a11 M embers. no distribution of Distribotable Cash or any retum of Capital
Contlibutionsshallbe made to anynon-conttibutingM emberuntilanamouqtoqualtoonellundrcd
FiftyPcrcent(150%)ofsuchAdditionalCapitalContributionsalr
ereturnedtothoseMembtrswho
m ade such AdditiortftlCapitalContriblztiops.
3.3.2. The Class A M embers shallhavetherightto m ake tllo AdditionalCapital
Contribution requcsted grpm tlzenon-contributiug Memberon apro ratabasis(basred on thc

ctmtributingClasA M embcrs'relativePorcentagelntcrcstx)or;k$thoyotherwiscagree;or
3.3.3. lrto other Class A M ember m akos tho Additional Capital Contribution
requestod from thenon-contlibuting M ember,then theClass1)M eulb/rsshallhave thcrightt:make
theAdditionalCapitalContributionrequestedfrom thenom contributingM cmberonaproratabM is
(basedonthJ contzibutingClassB MemLers'relativcPerccntageInterestq)orasthcyotbetwise

agrec,
In the case ofeitherSection 3.3.2 or3.3.3 abllve,the Com pany shallissueto each
.
conttibutingMembcrthenumberofUnitsdctrminedbydividing(i)theamountofcasllortllc
GrossAssetValueofatherPropel'tycontribtuedbysuchcontdbutingMomberby (ii)thcUnit
Yalue, as dctcnnined by the M anagernnt Comm itteee in connection with such rcque-sts fllr
AdditionalCapitalCoatributions.
lftheM anagcm cntComm itttedeterm inresthattheCom pany needsadditionalfunds,

butdeterlninesnottorcquestAdditiozlalCapitalContlibutionsthem for,tilcM R agemetcommttee
m ay causetheCom paly to selladditionalUnia pursuimttoSection3.8below orborrow suchft
lnds
from any Person,including any M mb:torM cmbers,upon such torm s and conditionaasmay be
agreed to attlze time.N o suchlolm totlleCom panyfrom aM embershallbe deem ed toconstim tta
CapitalContribution and shallnotincrcasotheCapitalAccountts)oftheM emberts)makin: thc

Ioan.
'
Noneofthoterm s,covenants,oblsgatitmsorrightscontained in tlkisSection 3.3isor

shallbedeeeme,
d to befordle k ncfitofatlyPerson,othorthantheM embe,
zs and the Company,and
no stlch third Person sh&lltmderany circumstanczshax imy rightto comm l any actions or
paym ents by theM anagem entCom mittea and/orthcM em bers.
3.4. RizlltsW 1thRespectto Capital.
3.4.1. LLC fapital.NoMtmlxrshallhavetherighttowithdt'

aw ()rfwziv:any
lrtum ofitsCapitalCtmeibution,and no CapitalContribuuon may l)e riturned in the form of
lhopcrty otherthan cash.oxcrptasspecificallyprovided lmrcin.
3.4.2. NolnterestonCanltalCantributlons.Exceptasoxpresslyprovidedforin
(hisAgrecmcnt,no CapitalCntributionofanyM embershallbcaranyinterestorothtrgisecntitle
thecontributingM emlxrto anycompnsation forusooftiz contributodcapital.
'
--- - -
a.--,
..--.-,- q- t- >u- -w- - u-
Ao z(lxlkvau >:H edcu Restaud fw mfia,Agreentnnt-,lt
J3r.l9. 2000 ?:22?!'

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09E!I8S J. Fryg, Esg.
i'7l01 ?. 12 b'
'
'
3.4.3. blsh blishm entofCanitalAccounts. A scparate CapitalAccountshallbo

establishodandmaintainedforeachMcmber.l7orrecordkeepingpurposes,oal:hMem& r'sC-apital
.
Accountwjltbo separated into acontribution accountand aa incomc(1oSs)accountand willbc

m aiatained according to generally acccptcd accoucting principlcs, Sections 3.5 and 3,6 below
describthe appropriate accounting trcatmcntfortax purposesoftlle CapitalAccounts.
3.4.4. NaPaymentofSalariesorDraws.NoMrfnbershallmctiveorbecntitlcd
ta roceivcany paymentofsalariesordrawswithrespectto itsCapitalContzibutionorthebalancein
itsCapitalAccountorforsorvicesrenderetltm behalfofthe LIaC orotherwist $n itscapacitA asa
M emberoftheLI>C,exceptascxpressly provde,d rorin this Agrccment.
3.5, Genem lRulesforDeternlirtin: CapitalAcrounts.TlleCapitalAccountofeach

Memllcrstlallbedeterminedasfollows:
3.5.1. Increascs.The CapitalAccountofa M cml'
lershallbeincrcared by:
3.5.1.1. n eamountoflnoneycontributod bysuchM om bertothe Com pany;
3.5.1.2. TheGrossAssetvalueofpropcltycorttlibutedbyddchM elnlxr(net

ofliabilitics sccurod by sach contributcd proprrty thattilo LLC isconsidem d to assum e ortake
subjecttounderCodesectilm 752),
.
3.5.1.3. A11liabilitie.sorthel.l.
f asgumcdbysuchM em bcr,excludingthosc
providetlforia Scction 3.5.2.2 below'
,
.
'
3.5.1.4. AllNctProfitsoftllo LLC allocated to such M omborpursuantto

Articlc 4 orothoritem sin thuature ofincomo orgain spccially allfxated hcrcundwr, andin each
cktse,appropriatrlyadjustedtotakcintoaccountbookandtaxdifferences;and
3.5.1,5. Any incmasc rcsulting from a Revalualion Evcnt
3.5.2. Dtxreases.'I'hCapitalAccountofaM embershallli

e dcreasr,dby:
3.5.2.1. e
rheamountofcash distributod to such M em bec
3.5.2.2. ThcGrtls:AssetValue ofa11actualand deemvd distriimtions-of -
prperty madetosuch McmberpuzsuanttothisAgreement(netofliabilitiessccutrd bysuch

distributodprom rtythattheMemlxrisconsidoredtoassumeortakesubjocttotmdrCodeseaction
V52);
3.5.2.3. AllliabilitiesofthcMemberllssumedbyth;LLC,excludingtllx
provideztforin Sc tion 3.5.1.2 abovo; '
3.5.2.4. A1INcttm sesoftlw I.
I.
C allocate,dtosuch M emborpursuqntto
Articlo4 orotheritenu intlzenatureoflossordrductionspeciallyallocatodhomundcr, andineach
cale,appropriatclyadjustedtotake,intoaccountbookandtax(lifferenoes:and
(
tm-...--re,wt- '
u -g-eq- - - u- -xuuAltxlkvi* lee e4lo RestatedtW mflgzlgrezlllezzf.

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3.5.2.5. Any dtcreasc rcsulting from a Revaluation Evcnt.

t
3.6. Spe ialRuIesW ith llesllecttoCapitalXccptlnfs.

- ..-
- -
3.6.1. TimeofAdltlstmttltfnrCapitalCzm tributlons.Forpurpose-sofcomputing

thc balanf
x in aM cmhx'sCapitalAccount,no crcditshallbc givon forany CapitalContributiol!
that such M ember is to m ako untilsucb contribution is actually m ade. l7or purposes of this
Arcement,theterm 'tc.
apltalCfm trlbution''manstllctotalamountofcash and/ortltc GrossAsset
- - . .. -
Valuc(netofllabilities)ofpropcl-tyinitiallycontributcdorobligatedtobecontdbutcdtothcIJE by
thatM cmber and any subsequtmtcontributions orcash and/or the Gross AssetValuc (nctof
liabilities)ofanyotherpropm'tysubscquentlycontributedorobligatedtobecout-ributcdto theJULC
by thatM em ber,including AdditionalCapitalContribtltious.
* 3.6.2. IntenttoCom plyW ithTream ry R ulatlons.RYeforegoingprovisionsof
Scctitms 3.4 and 3.5 and tlle othef provjsions ofthis Arrr-cmntrelating to tlle maintcnancee of
Capiul Accouna aro intendod to comply with Regulations Soction 1.704-14$,and shallbt
'
interpretcd and applied in a m annerctmsistentwithsuch RegulationsSection.T()th cxtratsuch

plovisionsaroinconsistentwith suchRegulationsSez
ctionorareincomplcte witllrespectthereto,
CapitalAtx ouna silallbe maintained in accordant:owith such Regulations Section.
3.7. Transferee'sPapitalAccount. ln theevontaMembertransfershisUnitsin

accordance witlltlu tcrm soflhis Agreemont,the traasfcrec M em brshallsuccoed to thcCapital
Accotlntof(l1ctransferorM em berto theextentitrclatesto tiletransferred Unitsin accortlancowith
Rogulations Scction 1.704-1(b)(a)(iv). In theovcntofa trfmsforofan Paconomic Igtercst,the

trartsfere,eshallnotsuccecdtoM ypollionofthcCapitalAccountofthetransfea r.
3.8.
Additiona.
lUnits. By apptovalofthe M anagementCom rnittee, the Compx y is
-
autborized to raiscadditionalcapitalfotanypulpos:byofferingand selling Unitsto imyPerson
underthetormsRcdconditionsandatuuchUnitValucapprovodbythcManagcmentCommittcc(thc
*'A dditi
onalUnits''l. IfapprovdbytlleMnnagemfmtComluhtec,(heCompanymayalsooffe,
r
-
AdditiorlalUnitsto emplyeres,to anyclassofM embcrs,EconllmicInterostholdco, M imagers,'
oftkcrs,congultam ,andadvisorspursuanttoanyUnttoptlonplan(oranyUnitoptionagrcmcnt
outsideofaplan)orrestticdveultitpurch&seagrezmentoranyothereeqtdtyincentivplanatlopted
..
bytlleM anagemem Committce(aelunitOptionPlan'').

3.9. preemptiveRlehts.
-
..
3.9.1. RiehtofFirstRefusal,'flr Compu yhereby grmltsto oachM erfttk.

rttte
rightoffirstrefllsaltopumhasohi:pr0ratashare(asdetnninrzdbymhtivepcmcntageIntcmstslof
allorR ypaftofanyAdditionalUnitswhicitheCzlmpanymayfrom timetotimeproN setn$t1lor
issuo,otherthaa tlw illitialissuacceofClassC (JnitsandanyAdditionalUnitswhichalrsetaside,
eoldorissurdun&ranyUnitOptionPlan&dopdbytheM anagementcomm'
ltteeandwhichdonot
excecdtenpetvem (10*)oftheissucdandoutstandinpUnits.
('
3.
9.2. NQKR .IntlleventtheCompanyproposeastotmdettakrmlissusnr.eofunii.
itshallgivceachM mberwrittcn noticeofie intentionsdescribingtlletypeofUnia aadthepriree
lmd termsuponwhichtlleCompanyptopoxstnissuethesmm .FaachM embershallhav:iftrm
0- ..-. - .-.---
- --
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.
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F'7l6i ?. lb/bg
Case
3:06-cv-00056-PMP-VPC
',
.
'
(v
.+ tA
(15)daysfm m thc datoottcceiptofany such noticc to agreeto purchaso up to theMcmbcr's
(
'
respectiveproratashafe(asdeterrninedbymlativcPrcentagclntelrsts)ofsucbUnitsfartl
:cprice
and upo:tthe tem ks specitied in thc notice by givng writtn notice to the Com pany anllstating
thereinlbequkmtityofUnitsto beptlrchased.
3.9.3, Asslkmm eatofltlchtsofFirstR efusal;I,lnIitatlen.Tllc rightoft
irstrefusal
:etfllrth inthisSection3.9isnotassignablc. NoM em bershallhavo any rights underthisScction
3.9 foranyissuancaofUnitsora oaomiclntcrcstsbytheCompany uudertheOzigirlalAgreement,
theRcstated Agtrcm cntorthc Amrnded Agrcementptiorto tlledatc heroof.
.
. -
3.10. LimitatiensonlziabllityandOblicatiensolkthcM embersandM anjters.Excopt

forilM cm ber's liability to thcIA,
C pqrsutmtto NRS Sectien 86.391, t
mdtherightsofjudgment
-
cmditorstocllargeAMember'sIktmomiclntereestforccrtainunsatisfimljudgment.
sofaMrmber
'
pursuantto'NltS Section86.401,I
tIGunlossothorwiseprvided forin an agremnentsigned bya
M embcq th8M anagerorConlmitte.
eMemborto lyehargeed,no M em ber,M anagerorCeommittez
M cmbirsballbeindividuall?Iiableunderajudgment,dccrez ororderofcourt,orinanyotllcr
m anner,forany debt.obligation orLability o:the1.LC whetherornottbatliability orobliration
arises in contractortort. N: M em bershallbc rcquited to loan any funds to tlze LIf , ezccptas
providcd forin thisAp ccmcnt.No M em bershalll>rrequircd to m akranycontribution to theLLC
by '
reason of any rtegative balance in his CapialA ccount, nor shnll any negativc balancc in a
M em k r'sCapitalAcconutcreate any liability on thepartoftheM etnborto any third party.
-
3.11. UnjtValwm upt,n ileoccun-tmco ofany Revaluation Evenk, tlw valucoftheUnits
(th0'V n
-itValue'')shallbetNevaltleofa11issuedandoutstandingUnits(withoutgivingeffcctto(i)
any option&to acquim Unitsthatm ay be outstantling frem timetotimoor(ii)anydst

ribtltionsor
.
contribtttionugivitAgriuttottm RcvaluationEvent)diville.dbytbennrnberofUnitstimnissucdand
outtanding (withoutgivingcffecttoanyUnia i&suedorto beissued inconsiderationofany

contributionsgivingrisetothe'RtyaluationEvent) M tortheU nitValuGhasbernsodetermined,
e,Kh Member'sCapitalAccouutshalllx,Adjuste.dinaccordancewithSezdion3.5,bn-.
rlonsuGlh
.
UnitValne.n eM anagmentComm itteeshallusecornmemiallyreasonablecffofl toestablish thc

fairvaluc ofthe Ugitsinaczortlance withtbisSection 3.11.
'
'
ARTICLE 4
ALLOCATION OF NET PROFITS ANIINET LOSSF.S

4.1. Allom tion ofNetProfitsvnd NetLosaes. Faxcoptagotherwisc provided in this
M icle4,NotProfit:andNotLossosofttleLLC inmachBiscalYoarshallbt allocatred amfmg ttke
M emborsassetforthinSections4.1.1and4.1.2bclow.
-
4.1.1. Nttprofits. N otProfit:shallbe allocate,

d among the M embersasfcllops:
-
4.1.1.1. Mrst,Nd Pm fits $hallbc allx ated zrnong the M embersin the
pm portioninwhichtheMembtrssbaredintheNotlosstsuntilAnnnountofcumulativeNetprosts
hasbeenallocatedequaltothototalofcomulativeNetl-m sospmviouslyallx atedtotheM embem.
(
-
e $- >- - -
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'
4.l.1.2. Second,an anlountofNctProfitse-qualto the aggm gate Ptiority
Retulm,which hasnotboenpraviouslyallocattdtothc ClassA M embersand ClassC Mcmbcl's

entitled to aPriolityRctum pursuantto thisSection4.1 1.2shallbeallocttted,pro rata.to thcClass
A M cmbersandtlleClassC M zmbtrsinacscordancesviththcirlespcctivoNctCapitalContributitms.
.
4.1.1,3. Third,an amountt)fNetProfits equalto thc aggm gate Priurity

Retum ,wllich has notbcen prrviously alltxlated to thc ClmssB M crnbers, entitlcd to a Priolity
Return pursualltto this Section 4.1. 1.3 shallbe Jtllecated,pro rati
t,to thc Class B M cmbersin
accordancc with theirresgectivePcrccntage Intertzts.
4,l.l.4. Thercarteq NetProfits shallbc allocated among tho M em bersin
gccordancc with thcirtespectivc Percontage llltcrests.
a
4.1.2. NetIaossees.Faxccptasothem isc previdcd inthisArticlc4.NotLossesshall

be all ated am ong the M embersasfollows:
4-1.2,1. First,NetLosses shatlbe allocalod am ong tho M embers in the

proportion inwhichtheM em bel'
sshated intheNetProfits unti!anam ountofcumttladveNctlulssos
hasboon allocated oqualto thctotltlcumulativo NetProfitsprevieusly allocated to tho M em bers.
4.1.2.2. Sccond,pl
'o rata,t()FRV NDLY CAPITAL PARTNERS L.P,
(
'YCP'')andW ARREN YREPP,ASTRIJSTIR'
IROFTIV FREMONTTRUST CTXEM ONT''),as
Cl
.
assA Members,iflpropqttio:ltotheirpositivebalances,iI.
'any,intheirmspoctiveCapjtal
Accounts.untilthoirrespectlveCapitaiAcecountbalanccs art:reductd to zmro.

.
j
'
;
4.1.2.3. Thirdj to DENNIS M ONTGOM ERY and BRBNDA K .

MONTGOMERY,asTmsteesof(heMONTGOMLTRYFAMILYTRUST(the'CMONTGOM ERY
-
TRUSTD,asaClassAMember,i:lproportif)ntoit.
spositivebalance,ifany,initsCapit'
alAccount,
uqtilitsCapltalAccoun:balanccisrellucred to zcro.
4.1.2.4. Pourth,NctI-ossesshallboallocatedtothoClass11M mbcrsand

ClassC M cmbersinpropotlitm tothcpositivebalanccs,ifalm intheMembers'respx tiveCapital
''
Accounts,untilsuch balanccsarcretlucedto zcro.
4.1.2.5. ThereaftafjNet'
Losses shall be llocatred to the M cmbers i:l
propoditm tothcpositivebalancas,ifany,inthM embers'rcspectiveCapitalA ccounts, untilsuch balanceesatp reduced tozzro.
'
IlzeM elnbersintendthat01eallocationspmvidedforinthisSection4.1+21
rosultinthepartie,
sobtainingdistributionsovertholifoofthtIJr!(includingupt)tlliquidation)
whichwillt)eidenticaltotlmseprovide,dforinSectitm 5-2hcrcof,aadwilialsoresultinthiparties'
adjustcdCapitalAccountbalance.suponliquidatioabeinginpropolliontotbosenecessarytoachiove
such distributions were th I'-lr!to make fm
'alliquidating distributions to the M emberg in
xxordancew1,.11theiralativeadjustodmsitivccapltalAccounthalance!.A
'gly.totlteexteat
necessarytoonwrotIIM tlleallogationsprovide,
dforinthisAlticle4msnltindistributionsoverthe
IifoftheLLC which areidenticaltllthos:provided forin Section 5.2htmof.theM anagerqhltll
(
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makesuchadjustmeutstotheallocatiousprovided(briaArticle4asarercasonablyuectssaryto
'
achievo the faregoing re-sult.
4.2. R esidualAllocationg.Bxccptasothel-wiscprovidcdin this Agreement, a1litem goi'

LI.
E incomc,gain,loss,deductieny and any otllerallocatiklllsnotothcrwise provided fotshallbe
dividcdbetweentheM ombersinthcsameproportions;
zstheyshareNetProfitsorNotl-ossces,aslhe
casornay be,forthe ViscalYear.
4.3. gualified Incom eOffses.ifanyMcmberuncxpcctedlyreceivesanyM justments,

allocations or distributions described in clauscs (4). (5) or (6) of Rogulations Section
1.704-1(b)(2)(ii)(d).itemst1fI-I.
C incomoshlzllbospceiallyallocatcdtosuchMemboriultnamount
and manner sufticiutto climinate tlle Adjusted CapitalAccountDcficitcreated by stlch
adjtutmonts,allocationsordistribtltionsasquicklyagpossiblc. 'PhisSection4.3isintendedto
coustitut a ''qualified incom o offstt'' within tho mcaning of kopllations Sc-ctioa
-
1.7()4-1(b);)(ii)(d)(3).
'
4.4. M lnlm um Galn Chareelm ck. lfthere is a nc$dccrouso in 1 1C M inimum Gftin

during aFiscalYear,cach M cmberwillbeallocalzd,bcfol'
clmyotherallocationunderthisArticle4,
.
'
itcmsofincomutmdgainforsuchFiscalYewarl= difnccessttry,subsmluentyoarslirkproportielto
andtotltecxtentofanarnountequaltosuf
;hM embcr'ssharrofthenetdecreascinLI,C M inilnnm
Gaindetcrm inedin aacordancewith RegulationsSection 17()4-2(g)(2).'thisSectito 4.4isintended
.
to com ply with, and shall be intcqw ote consiszutky with, tho ttm inilnum qain cham ebackf'
provisionsofRogulationsScction1,704-2(9.
4.5. M em berNourccourseDebtM inimum GainChareeback.Notwithstandingany
other provison of this Article 4,butexcept Section 4.4,if there is a net decreast in M ember
NonrocoutseDebtM inimam lain attributableto itMemberNcnrecourse Dobtduring anyFiscal
YeaaroftheLLC,eachMcme rwholzasashareofthcM emberNonrecom'
scDcbtMiaimum Gain
attributablcto suchM emberNonrecoursem bta dctermincd inaccordancew itherm asuryltegulatibizs
--
'
Section1.704-2(i)(5),shallbespeciallyallocateadittmsofl.Iflincomeandgainforsuchyeartand,
ifncceasktry,subsequentycara)in an amountequalsuch M e,
mber's share ofthene,ttkcreazc in
M embor Nonrocourse Debt M inl

'mum Oain attl
ibutablo to such M km ber Nonrecoursc Debt
ddermine,d in accordanc with RcgulatiomsScctilm 1,7> -2(i

)(4). Allocationpursuanttothe,
pm viougsentenceshalllyem ade in pm portioo to th:respectivramouna toquhrd tobeallocatodto

oachM em berpursuantthoroto.'l-heitemstebesoallocuted shallbedotenninodiu accordancowith
RegtdationsScctiu 1.704-2(i)(4).n isSectiun4.5isintendedtocomplywitllaminimum gain chargoback reequircmentofthatSoction ofthc Regulationsand shallbeintetpmted consistently
thewith.
4.6. M emberNonrttourseDeduce ns.AnyM mbtrNonrocourstbcduclioltsforany
FiscalYcarorotherm rld shallbesm cially allocated(;

otheM emborwho lxars(f)risdezme,dto
befu'
ltheeconomicrisk oflosgwith respcctto tlm Melnlxv NonrecourseDobttowhlchsuch
M imbrr Nonreegourse Dezdulons ,re attzibutablc in accerdance with Rogulations Sectiotl
1.704-2(i)(2).
.-
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J2q.18. 2006 7:328k

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Document 644-8 Filed 05/28/08 Page
23 of?.95
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4.
7. SptxiwlAllocations. Any specialzllocationsofitomsosNetProfhspusuantto
Sections4.4,4.5 and 4.6 shallbe takcn into acctluntin com puting subsequentallocation!ofNct
Profitspnrsuantto Scction 4 I $o thatthnetam ountofanyitclnsso allocated andthe gain
loss
and anyotherit/m allfxatedto eachM eme rpursuantto Sectiop 4.lshall,totheextcntpossib,le be
,
equalto the netamountthatwould hav: been allocated to each such M cdnbcrpussuantt()the
provisionsofthisArticle4 ifsuch sprecialallocationshad aotoccurrtd.
.
4.8. Feesto M em bersorAm liates- Ni

xwithstandingtheprovisionsofSr-ction4. 1,inthe
cvcntthatany ftes,igtoresq orotheram ountspaidtoany M cmbarorany A ffiliate(herel)fpursuant
to thisAgreem entorany othcragrccmentbetw'eeu thcLIX 4n(1any M em berorAffiliatethcrcof
providing fortlw payment(,fsuch am ount, alzd deductcd by tllc LLC in m liance tJn Codo setilm
?07(a)and/orctxlesocion707(c),aredisallowcdasdcductionstoOtel- l-c onitsftdcr'
alincomctax
return and lu'
e treated asLLO distributionssthen:
.
4.8.1. Tlw NctProfits orNctLosscs, as thc (xse m ay be,for 1lw Fiscz Yearin
which such fees,interest,orothcramountsweto paidshallbeincrcased ordocrcased, astllccase
m ay be,by theamountofstlch feees, intemst,orothcramountsthataretreated as LJ.,C distdbutious;
and
4.8.2. ThereshallboallocatedtcltheMrmbertowhich(ortowhtlsoAffiliatc)such
fees,intcrcst,orotheramotmtswere paid,priorto tllc allocationspursuantto Scutioll4. l,an amount

ofgrckqgittcome fkw tlleFiscalYearequalto tl!c amouotofsuch feaes,iptorest,orolllt!xm ount.sthat
are trcated asLIf dist
libutions.
4.9. Sectien 74tclAllbcatlpn. Any itcm ofincom c,gain,Ioss, and doductltm with
respccttoanyproperty(othertllancash)thathasbecnccmtributedbyaMombertotl
'
lccapitalofthe
'
LLC and which isrequired orpcrmittedtobeallocatcdto suchM emberforincomatax

urlderCodcsoction704(c)soas lo tilko into accountthe variation bctween the tiix bas'ispu
rpsogsce.
of
hs
pm pertyatlditsCrrossAssr,tValueatthetimeofitscontributionshallbealltwatedtosuchM tmbzr
solely forincomotu ptlrpesosin tllem annorso rcquite,dorporrnittod.In tl
w eventtlm U rossAsset
ValoofanyoftheI.
1'.C'sPropertyisadjusted inaccerdancewith Se-ction 1.20.2,subsm uemt
allocationsofincomc,gain.lossanddeduditm withmspem tosuchProm rtyshallIakeintttaccount
any valiationbetweentheadjuszdbasisofsuchPropcrtyforfederalipcomtaxpuzpe.sandits
G
'
rosgAssltValueintllesaznomannora.qundorseotitm 704(c)and the Regulationspmmulgated
thezrundor. Any electifms orother decisions rlaung to such allocations shulllx madein any
malmerthatmasoltablymflecttl/ ptltw seatlditltcdollofthisAsr ment. 'rotheexttntm rmic d byRer lationsSectton1.704-1(h)(4)(i),allitcmsofincome,gain,lossmld& ductionforfrzemland

statetax purposrasshallbealtocatedinaqcordimc,ewiththeconrspondingbook ttems.
ARTICLE 5
DISTRIIIW IONS OF AVAILABLE CASH H ,OW
5.1. Distributians ofAvailableCashFl
nm SubjxttoSoctiolz5.3below,distributionq
from theLLC tgtbeM embersshgllbzm adefrom timetotimetothcextentofAvailableCashRew
ag determined by the M anagementCommittee. Prior to the doterrnination of the amountof
-
- -
('
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u=1..T-
x..4=.
- =w - u A(lM;kv:..amen#e#azll Restau d Ofzzm ffagzigreem eat- 17
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distributions,provisionsshallbe madc fora1lknown rcasonablo obligations and liabilitiesofthc

1.f.C,whetherornotsuchobligationsandliabilitiesarcdueorcontingent,excepttllatprovisionneefl
notbemadcforany portiou ofanyLLC fillancing,theamountofwhichcan bereasonablyexpected
to besatisficd from tlleprocezedsofthcsaleofthe then remaining Property ofthcLLC ,
5.2. Prlority and M annerofDistributionstoM embers.SubjecttoSectifm 5.

3lxlow,
alIdistributionsofAvaitablecash Flow shallbe m adetotheM enlbcrsin the followingpriorityand
.
m ;tl1ncr:
5.2.1. Flrst,pro rata,to tho Class A M embers and thc ClMs C M embcrs in
accordancewiththerespectiveamotm tsoftheiraccm ed butundistributexlPrioritylleturn entilthey
have roceived aflameuntequaltt)thciruncistributed Priority Reiurn accrucd through lhe datc of
such distribution.
'
5.2.2. Socond,pto rata,tothcClassB M em bcrsin accordancew ith thoirrespectivc
PercentageIatem stsuntilthey havcreceive,
d an am ountcqlzaltothcirundistributcd Pliority Retum
accrtled ihrough thettate ofsuch distribution.
5.2.3. Third,pro rata,to thc Class A M embers and the Class C M em bers in
accordancowith theirrespectiveCapibalCentribution:uatilthcyhavereceived aaaggregateamount
equaltheirrospective CapitalContributtonstothc LLC.
5.2.4. Forth,prorataytothe ClasgB M mubersin af

x ordance with tlleirlrespeztive
PcremotageIntcrestsuatiltheyhavereceivcd anaggmgatc amountcqualto theirrcspectiveCapital
Contributionato the LLC.
5.2.5. Thereafter,pro rata,to tbe M em bers in accordanoc with theirre-spective
Porcontage Interosts.
5.3. Tax Diqributiolu. Exctjtasotilrwisemaybeprohibitodby anyagmcmortts
botweentheLLC anditslendcrs,withinnlncty(90)daysafterthoconclusionofmachFiscalYelu',
dlc ManagcmcntCommittec shalldc.
etormine alld provid written notice to tlle Mmbetsofdze
nmounttthe'q'axLiabllieshortfallAmtluntr'),ifany,bywhich(a)theaggregatefe ralandstate
tax liability (ifany)incurred bytheM embcrswithrcspr'cttotlm uetincomeofthoT.
1f7forsuch
precoding FiscalYear(which taxliabilityshallbedetrrminedbyapplyingthehighostoffoctivc
indvidualtax I'atestlzn in efftctfortlz FiwalYearin qtzstion).Gxcee,ds (b)thc aggregate distributionsofDistribatableCashmadobythcLLCwitllmspecttsuchFiscalYeartincludingany

di&tzibutionsmatlototheMemarswithreaspeu tothefinzlfl
'scalquartcrofsuchFiscalYeearl.'l'bo
.
M anagemeatCommittx shalluse a1lreasonabl: effoztqto caux theI.

1r.to distributothcTax
Liability ShortfallAmountto th:M em bcrgin tlw tim cand m '
-lnnorrequired hoa undor, including,
b4tnotlimite to.borm wingon te alfoftheI.,
IT sufgcicntfundstoO able t
lm IJP todistribute
suohTaxU abilityShortfallArnount.EacllsuchdistributionshalltiomadetotheM embersasgocm
' aspmticableaftcrsuchfundsaroavailable,ItisthoobjediveoftheMembetsthatwhilethe'
l'ax
LiabilityShortfallAmountwillbedeterrninodatthc:cdofeachFiKalYoar,totheextontpossible
andsubjecttotheforegoing,distributionswillb:mndcinrespecttherxfonaquartorlybasisto
faciiiutttheM embers'ability tomakequartcrlyostimatedtaxpaymeatswith reslmd tothek not
(
)
.
oux- '.wl#wqw q- xm-axkinlvehxuwyx. Fk

akxrrwvve/tuceaft
ul
yviwd plza#edllldRealatedW ee-z
YgAgaonent-18
J2h.18. 2006 /:'

3?1
0i
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8'/1iI ?' 21/t
incom efrom thcl.f.

C .Distribulionsmadegul'suantto thisSe-ctit)n5.3 shallbetakcn icto accountin
connrection with anysubsequentdistlillulionstlndersectitm s5.1and 5.2 abovc so that,to thecxtent
possible,thc M em bers shallobtain distrilm tions in tllcsame ordcrand priority they would have
obtained if this Section 5.3 were notin tltis Agrrzemcnt- At the elld of each Fiscal Yclr ms
'
contemplatedabove,linaladjustmentsshalli)emaf.
btf.
lrellecttheactualmsultsofsuchHsculYcar,
ARel-lCIvE 6
M ANAGEM ENT OF TR E 1,1,(2
6.1. M anazementoftheLEC. Subjrcttothe provisionsoftlw NRS,thc Articlesuf

Organizationandto tnylimitations&etforthintllisAgrccment(a.
qmaybemnendcd fm m timcto
time)rolating to actionsrequiredtobeapgmvcdbytheM embers.thcBusinesgandaffairsoftile
LLC shallbe m anaged,and a1lCompany powers shallbe vestcd in thc M anagm entCommittee,.
'Phedayto-zay opemtionsoftheLLC shallbeimplelncntodbyol4e(1)Managerdesignated or
'
appointed pursuantto Seection 6.l.1below,who shallactastho Pm sidentof the LIf arld shall
conducttheBusinessin accordanc,
cwithttntlsubjectto thepolicies,procoduros,decisionsand
diroctivcdoftho M anagemcntCommittco.
6.1,1. Deslznation ofdM anaacrv''erllcM anagorofthe.LLC shallbeDO UGLA,

S
J.FRYE,an individual,orlzissucccssor;1supm inted by thcM anagementCon4m itte.
c pursmmtto
6.1.2. EledionorSutcesserhfanazenuponthoM anagm'srcsignationfrom officc
orremovalfrom officebythoM anagcmontCommittec,theManagemcntComuaitteeshallappointa

'
successorM anager.
6.1.3. Subordhmt.Officers.TheManagrmentCommittoem ay,initsdiscrotioa,

appointasccm tary,achicffm ancialoffioer,achieftechaologyoffitvr.and such othcroflicezsofdle
LLC asthcBusineessoftllc I,
1.C m ayrequire,cach ofwhom &halihold oftico forsuch m ziod,have
such authority and m rform guch dutiesas provided forin tlzisAgreomentor asthe M anagemcnt
Com mittoemay deetcrm in; from timeto tim e.
.
'
.
Thc Com mittee M em bers,asovidenced by their aclcnow ledm ent to this
A greement,hem by.
appointDFN NISM ONTCJOM ERY to theofticeofchiefTechnologyofticerto
iloldofticeuntilhisresignatin,removalorotllerdiq m lificationfrom serviczyortmtilhisucczlof
haslxen duly appoilltr,d by tlle M anagementComm '

ltteein accordance with this Agrcemx t.
6.1.4. M anaeemeatCmmmittea 'lleM nnagementCommitteeshallconsistftlur,e
(3lcommittx M embcrs.Each(ftIITCIa AMembQrs,solongastheyareMema rs,shallappoint

opr(1)CommitteeMemlxr.EachClaqsA Mombermayappointoneormorealtomateufortbo
CommittcM embersappointe,
d by iL An altem atcshallhvv allthe powersoftheCommiM em berin llisabsenea orinabilitytostlv .Paach Com mlttr.e M em berm ay votcbydeliv:ring his
proxytoR otllerCommitteeM omW ,EachClassA Mmbrshallhavethem wertorefnov:any
CommitteeM embl apm intedbyitbydehiverlngwrittnnticeofsuchmmovaltosuchCommittrz
M em berand to the othcrcom mitte,eM embers.VacanciesontheM atlagtm entCom mi- shAllbo
(
a- ou- .m- >- - w- - M- -
<A(lx1).v6.
> MeH e#anRnstated(W mflagAgreement-19
Jih.l8. 2g00 7:3l?k!
pt!l8s J. Fryg. Ess.
89.7101 ?. 21758
.
'
r
.
..-
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<*
fillcd by the Class A M ember w ho appointed tlzc Com mittee M embcr previously holding the
position thatisthen vacant.
TheClassA M rmbcrsexeeuting thisAglr-cmcntI
w reby appointthocm rsons
setfortlkopposite theirrespectivenamellclow asthcirdesignated Colnm ittce M emberto sorve on
tho M aqagementCommittte of the Company;each of whom shallscrve attlzo ploasur of the
respectivoappointing M cmberandshallllold theirfeslyectiveofticcsuntiltheirmsiguation,rem oval
orotllerdisqualificationfrom selvice,oruntil(heiricsm ctivcsuccessorshave bccndulyappointed
in accordanco with titisAgre-emont:
Nam eofAppointing
ClassA M ember
*
Appointod
C-ommitte,c M em twr
Fricndly Capft?zlPaztnel'
s.L P.
n e Frement
ll
aust
DennisM ontgomery
DouglasJ.Fryc
W arrcn Trcpp
Dfmnis M ontgomcry
6.1.5. M aqaEem entCom m ittee Chairm an. The M anagemcntCom mittez shall
havcachairman (the''Chairman''),whoshallbconcoftheCommittecM cmbe-rsdesignatedbya
majolityofthe.CornmittceMembtrs. llleChairman initiallyshallbcWARRF-,

N TREPP,an
individual,orhissucccssorasappointed by thc M anagemrntComm ittee illaccordancc with tbis
Section 6.1.5.TlleChairmaa slall(i)presideatManagemel

ltComlnitteemoetings;(ii)havothe
autholity toexecutoanddeliveron behalfofand in thenamcofthzLLC any aglreclnentg.contlucts,
notos, m ortgagezs. evidcnco of indebteclneoss, cclliticates, statom onks, convcyancei
s or other
imstrumtntsinwriting,alldanyassiplmentorendorgementthcreof;and (iii)exerdsesuchtightsor
porform stlch dutiesItsareothem isepm vide,din tht!Agmem entorasmaybeapprovcdfrom tim to
tim eby tlx M anagcm cntCom rnittcc.e
aeChainuanmayonlyberemovedfmm offic.
cbyamajority
.
oftlleCommittr,
eM embers.IntheeyonttheCllairmanresigns()risremovedyamajorityofthe
Cornmittea M ombersshallelezctlreplaccm entCllairm i
m.
6.1.6. Ddteation ofPowersand Duties. n e M anagem entComm ittx may by

.
wdtton resolutitm frem time to time (lolegatc any of iL< power.

s te .
the M anager,the Chninnan,
officors,employeeesofaM mber,orto any othcrPerson.Such delegation ofpowersm &yinoludo.
butnotbe I'
im itcd to,ttleautllority to execute aud delivoron behalfofand in thonam ooftheLI.,
C
any agm ements,contracts,notes,m ortgages.evidincc ofindebtedncss,certilk utes,sutcmcots,
ccneyallcesorotherinstrumentsinwritillg,alld aflyassignmeptorendo> mcctthrezf, - .

6.1.7. M anazem eutCom m lttee M eetine'.
6.1.7.1. Thc M anagem ontC'
om mitteeeshallmed atIcastonoemrhquartorin
lnclineVillage,Novadavorsuchothortimesorplax asthoChHirmnnshalldttznnin:(unles:Guch
meaetingshallbewaivedbya11CornmitteeMember:)oronthecallof(1* Chn'
lrrnnnortheManager.
Suchmedingsshallbecalle,
duponatleastten(10)day:priorwrittennotice.excptillthecaseof
an emerponcy,in whicb evontsuch a meeting mayboallodupon priornoticeo asthe ChaintlO
dteu!mapprope tt,butinnoevem lessthanfortyeight(48)hours.Anagvndaforettchmeeting

shallbeptopared in advancobythcChairman orthiM imagcr,asthecasem aybe.and cimulatedto
(
cwa.
.-xm.
.xasxj
kvwuew w.w xxu-- rxyf..
w,
..,
. wkf,nobsytu nkexd4tdJzufkestneoaO/ve pgXnMemqqi.w29
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Page 27 of 95
thcCotnmittecMembirs. ApprovalofthcM anagementCornmittccshallrequireamajnrityin

numberofthcCommitteeMcmbers.n eM anagcmentComnaittccmayi
tctwithoutame-etingif(i)
tNeactiontakenisapproved ittwritingbytl
'
c numbcrofCojnm ittez M em bergnecessa:y to takzsuch
action,Jmd(ii)writtcnnoticcofsuchactioqisgivento(heCommitter McmlxrswhodidnotIlrovide
such written ccmsent.W rittcnm inutesofaIlm cetingsshallbernaintaifled,and thcm inutesforeeach
m eeting shallbeapproved atasubscquectnweting oftheM anagemcntComm itteee.
6.1.7.2. Thc M anagement Comm ittee may adflpt whatcvcr rults lmd
prtxtedures rclatiug to it.
s activities as it rnay decm appropriate,providod tbatsuch IMIC'
S and
preceduresshallnotboiflconsistontwithorviolatcthe pruvisionsofthisAgreem ent.and provided
thatsuch rulesand regulationsshallpermitrncetingsbytelephone,video conferepcing orthcliko,
and shallpznnitConunitteeM embel'
stoparticipatein m cctingsbytelephottoorvidcoconferenccor
tllc likc orby writtcn pvoxy,tnd such partkipation nhallbe decmcd attendance forpurpose.
sof
detormininLwhetheraquomm isptesent.
6.1.8 IaiabilltyforCertalnAtts.ThoMlmagerandtbeCommidezM embel'
sshall
PJfonntheirmanagerialdutiesingtlodfaith,inamamlcrthcyteasonablybelivetobeinthebost
'
lntea stsofthclwlf ,andw ilhsuch careasan ordinarilypntdentperson in alike position woulduse

undersim ilarcircumstances. A M anagerorCom mittee M om bcrwhtlso pellbrms the dutisof
M anagcrorContmideeM emtx.
rshallnothavc any liability by rektson ofboing orhaving bR n a
M anagerorCoznmitteeM embcrofthoI-I.C.A M apagerorCommitteeM emborshallnotbeliable
to theI-LC orto anyM em borforaay lossordam age suslained by the Com pany orany M ember,
unlesstholossordamageshallhavcbmnprovedbyanon-appealablecourtordecjudgmtmt,decmo
t
or decision to be the rosultoffraud,dcceit.gross ncgligoncc,willfulm isconduct, bm ac of a

lqduciaryduty,orawrongfultakingbyth;M aaagerorthem spective Cornm ittc,
e M ember. Naither
theNlanagernorthcM anagem entCoumzittecshallbeliabloforanylossordam ugctothe.Company
caused by strikog,labortl
m ubles,riot,fires,explosions.tarpadoes,tloods,actsofapublicencmy,
inaunrections,actsofGod,fallum tocarryouttheprovisionshem ofdtleto provisionsoflaw ormle,
s
orrep lationspmmulgatr,dbyanygovemmentalagoacyoraayothtrdomandorKqtlisidkm Qfrky
govcrnm ent.or from any otller cause bcyond the control ofthe M anagot or thc M anagcmcnt
Committee.Thc M imagcmentConuuittee does not,in any way.guarmltee the retum ofthe
M em bcrs'CapitalContributionsoraprofitforthc M embers from th opem tiongofthe Company
..
6.2. Pow ers.D ufles apd Responsibilitie.s of the M auaeem ent Contm ittee. Tho
-
M apagomentCornynitteee sttallhavc al1ofthe.

H#1t$,duticsand powersasspeciSed in this
Agr meat,includingwithoutlimita.
tt
'tmythgtmcralpowersandduttsofmalagtmcnttp ically
veate.d in tholxmfd ofdiroctt)rsand thcorticeofachiefexocutiveofficerofagorpor&tion. M atters

tq uiling tht approval of tbe Management Committoc shallincludc, without lim itatiQn,the
foljowing:
6.2.1. elheauthorizatit
m ,Mgotiatioll,exccutionfmddelivtlryoabdlalfof*el.1f!of
anyanda11contractsoragra mentsvvcrbalorwzitten,lmvingacontmctvalueorobligu onamunt
ofmorethazlFiftyn ousandDollars($5,
(m . ),which ar:nectssm'yotappropriat;fQrtlle
devdopmentrexploitatioa oftheTxhrt
ology orarcin furtberR ccofthoBusinessoftl1eIJr ,
including,butnd limitr,
dto,butexpmsslygubjecttothelimitationsroquiringM emlxragpval
pursuanttoSection6.
41here,
ef,contractqoragrreementsbetweonthel.1.
f7and/oritsAfliliatesorany
t
(
otlzerPersontoprovddctlcLLC withgodsorsenicesofanykindlnwhichtheLlr oritsManaget

-
>- -w.w>
-r. ..-
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a(lu,).vq,
.G pIgrIdeaandl'el.
ftrla Operatlngh reement-21
J ih.l8. Jdtb ?:J4P01
U'VIICS J' rCy' CSC'
nU'''0'
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(
may haveanactualorpotentialconflictofinterost,andincludingauyam entlm ent:orm ditk ations

thcrto,orrenewalgtIrtorminationstheteof'
.
'
6.2.2. 'l'he approval,cxccution,dtlivery and perfofm ance on bchalfofthc.I-J-C of
theM ontgom eryTrustContributionAgreement,acd amcndmentsorm odiflcation.
sthcrcto.
6.2.3. The approvalofdetailcd (ine-item budgttsfortlleoperutionoftheLLC andits

Businesg or for the dcvolopm ent or exploitation of the Technology. and any am endlnents,
modilicatiolls,supplemcntsorrenewalsthercto.'
Each such budgct(andany amendmentsthereto
from timetotime),aftcrapprovalbytheManagtmcntCommittecyshallbe'
referre.dtohereinasan '
t'Appryt!d Bttdaet-''
6.2.4. SubjecttfltheApprokedBudgets,borrowingfundshom anylondertoolrxtte

orm aintainthc Btlsioossorforanyotherpum osowhichjsinfurthom nccofthoBusitle'ssofthoI-If ,
otherth= trx e payablcsin thcordinal'
y coursc ofbusinoss.to issuoevidenccsofindebtednrmssin
connoctiontherewith;totefinanco,increasethcam ountof,modify.mnendorchangedlctcrnu of,or
cxtend th0 tm e forthe paym entof,any illdebtednessorobligatitm ofthe LLC;and to secuzr any
indebtednesgorobligationoftheI.
I.C bymortgage,pledgc,grantingasccurityimterestinorother
lien onthe LLC'Sasscts.
'
6.2.5. Theappointmentaudtcrminalionefofticera,hiringandfiringofemployecs,
'
l
ortheengagelncntofcontractors.sulvcmtractors,conqultantqsexpettsandotherpcrsonsneccssaryor
appropriato to turry outthe Bm intss oftllc LLC including the lmlection and engagem entof an
independcnt(x.
11111e.
c1public accounting tirm andlegalcounsolforthe1.!r ,and toapprovcthotermq
ofanysach appointment,cm ploym entoongagement,including approvalofthe.tcrmsatld paylm nt
ofcompensation.
6.2.6. 'IX0 approval of tho amount atld tirning of any Additional Capital
Contributionsrequire,dbytlltI.1.
C toctmductitsBtksicess.including,withoutlimitttdon,allcapital
reqpirotlto beexpendtdwithregpogttotlleTechnology.
6.2.7. SubjecttotIIGapprovalbytheMemberspursuantt()Soction6.
4.2below.tlle
sale,license,leasc,rnul
' ,assignment,trimsferorothordisposition'ofa'Ilor-any matelialpartoftbe,
assets oftbe Ll.r ,irmluding theTechnology and any patenttiglm thercto,whether as & single
transadion ora seriesoftransactionsaspartofaplan.
''
6.
2.8. Any m atotial decuions relating to the tet m arke'ting, manufactuv , '
distribution,Ecemquro orenploitation oftheTochnology.
6.3. Powcrs.Dutiesand ResponxibilitlesoftheM anaaen 'f'
heM anagershallad asthe
Pm sidentofthe 1.
1.
f!and shalll)c cbarged witllthe rights,dutiesand to wers ass'pecifie,
d in thig
Agrxment,subjecttotk limitationssetfolthinthisArticl:6andelsewhe,
l.
einthisAgreement.'Ixe
M anagershallhaveresponsibilityforcondectingtheday-tdayoperatlonsoftlw Btlsiqessandthe
LLC andforimplemcntingtlw dedsionsanddirectiycsoftheMacage= atComn'
littm kkcxlnncctio:
theriwith,subjeecttothrsupervision,dizwtionandcontmlofthtManagmontCommitteo
(
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.
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''
Case 3:06-cv-00056-PMP-VPC Document 644-8 Filed. 05/28/08
Page 29 of 95
The M anagershallhave tllc geperalpowers and datios of m anagemtpttypically

.
vested ilztllcofficcofachiefoperatingofficerofacorporation.Subjectto thoprovisionsand

Iimitat-ions setforth in Scctions6.2 and 6,4 htmof,the M anagershallhave rosm nsibility fortlle
following matters(listed by way ofcxamglo and notin Iirnitation tllore'ofl and shallhavetizc
authority on behalfof and in the namc ofthc I.I.
C to do ot
-perfblm ,orcalxst to be done or
pcrforrfletl,such actsorthingsand to negotiate, execute,acknowlcdgeand delivcra11agrrem cnts,
documcntsand instrum entsin connection therewith:
'
6.3.l. lhopare,exccute and lile onbchalfofthe1.1fn.atlapplications(including

pateutapplications),liccnses,permits,rcgistrations,andconsents,andto othclw isocommunicate
auddealwithallyanda1IgovemmontalJtgencieshavillgjurisdictionovcr,orinanywayaffecting,
the Tezchpology,thc Btjsinessorany pal4thereof.
6.3.2. M ake ordinal'y andqecessaryexpmdituresand incurreasonablcobligal

ions
nccessaryf4 thoctmductoftheactivitiesoftllo1wLC'SBusinoss,a1linatlcordf
mccwitNandsubjeact
to Approvcd Budgets.
6.3.3. Autllorize,negotiatc,cxecutcalld dclivton behalfoftlhe JJ-C any and a1I

contractsoragrcoments,verbalorwrittcn,baving acontractvalueorobligatitm amountof1e.
3.%faa
Fiftyn ousi
m dDollars($50,000.00),whicllthoM anagerdecmsam nccegsaryorappropriatefofthe
deyelopmentorexploitgtsonofthcrrechnology,orareinfue eranceorthoBusiness,iaclutling,but
notlimitedto,butexpresslysubjccttothclilnitarionsrequiringMemberapprovlpursuantto
!
Soction 6.
4 below,coptm ca oragreement.
sbotwoenthoIJf1ancl/ciritsAfliliatcsoraqyotherpersoa
to providrthel.1flwitilgoodsorsorviccsofanykind,il
zwhich tlw IJ.C oritsM anagerm ayhave
'aq actualorpotontialconflictofintcrost,andiudtlding anyam endmcntscrm odificationstherdo,or
rencwals()rtenuinationsthcreof.
6.3.4. Subjecttothepriorapprova!bytheMomberspursuatlttoSectiolt6.4.2lxlow
im d the M aultgem entComm ittee pusuantto Soction 6 2.7 abovc,the sale.license,lease,rcntal.
mssignm entvh'
ansfer or otherdisposition ofal1 or Imy m atorial part of the assots ofthe Ll.C,
.
includingtherfeechrlologyandanypatentrkha thereto,wlmtherasasinglctrangactionorascie.sof
m late.
d transactionsaspartosaplan.
-.
..
6.3.5. Toconfe&sajudgmcntagainstthoI.
1f7,orapprovctlletilingoforscttjement
of any clnims,including lidgation matters,fororagainstthc 1.

1r , oflessthan Fifty Thousand
Dollars($50,(K0. ).
6.
3.6. BxccutepzlddcliverbondsandindemnitiesbyoronbohalfofII LIX asmlly
l)ei'
equire,
dfortlteown:rsl'
lipand/ilrsaloofanyProporty,ascxpresslydimcted tod0soonacaseby-caso basisbytlw M.
anagemetuCeornmittez.
.
6.3,7, To purchase liability and otberinsumnce t pzotectthe Tcchnology,the

Prom rtyandBqsinedsofthe1aLC.
(
'
ouww..--.- a - gww - me-
- - = - qwxhorwftalyvo mrp#edce Aer c; OperadngAgrqnm ent-23
J2,. 19. ?ggs ?,25?k
02 ll's J.Frys Es,
8'.7101 ?. 25708
.
4
- .- ,
,1. ;
6.3.8. Tlle Managcr,subjccLto the masonttblo approvalt)f thc Managemcnt

.
Com rrdttoe,shallselecttechnicalcnginccra,progyranunm'
sand othercom puterteclm iciansto(kvelop
t)rexploitlhcTechnology.
6,3.9. Frem time to time,amend EXHTBIT A to this Agrtem ontto fcflcct any
changc in tho infonnation cont'
ainod thcfein, alld pmparo,oxccutc and tilo a Ccltiticate of
Am ondmcntorCorrection tothc AtticlesofO rgaaization tom flectanychangc orcorfection i!1the
LLC,itsM anager,M elnberspprincipaloffice,registcred agent.ortlleIatcstdateupotlwhich the

LLC m ay bc dissolved.
6.3.10.Prepare,exccute arld fileonbehalfofthcLLC tl
w A nnualListofM anagars,
M em bcrsand Agentwith the SccrlaryofState and to pay al1filing fcestllereftpr.
6,3.11.Asdircctcd frortltinw to timcbytheM anagem entColm nittee, to investthtz
fandsoftlleIJ.
C inbankceltifioate.sofdeposit,shorbtenngovernm entsecuritiesorothcrshort-term
sezurities,including money Iuarketfunds,priortothc oxx nditureofsuckcapitalinconnectionwitll
Businossoporations
6.3.12.lftheM anagcrdcemsitnoccssary orappropriate,tfaadopta Companyscal.
crculltrin fom lcontaining the words e'oTreppid Technologics,LI.
f .''togethcrw ith the datc (1t'
form a*on oftlle LLC,and such otherinfonnation msshallbc appropriate for banking and other
Busincsspurposes.
6.3.13.M aintain am inutcbook toincludetho ArticlcsofOrganization oftho LLC.
thisAptcmeqtimd any amondmontsorsupplcmen? homto,and tNominutcsofffleectings(or

consontsinlieuofmcctings)oftheM anagemcntCommidec,writtenconscntsoftheMemberg,alld
otherim portantdocum entsoftheI.I.
C.
6.4. Llrrlltatlon: ori the M anacemept Conlmjttec and M anaacr. Noither tbe
M anagom tmtComm ittoenortheM anagershallhaye:theautbotityto (loanyofthofoltow ingwitbout
thcpriorVoteofaMajorityinIntrmstoftheMcmbers:
6.4.1. ExcptforthelimitedauthorityoftheM anagertonmcndExlllBl'
llA hreto
and the Articles ofOrganization pursuantto section 6.3.9 above,m aterially am end '
ora stato this
AgreemcntortlleArticlesofOrgnization,in wholeorin pazt,including Im yincroasinthenumbir
ofCommittem M mben oftlleI-I.C pllrsllanttoSection6.1abovr.
- .-
6.4.2. Se1I,liconse,lcease,tent,transfer, assign or Qtlezwise dispfks: of a1lor

substnntially illlof the assds ofth:LLC,including the'Pochnology or any patontrightsthca to,
whethcrin asingle tral
u action orasericsofrelated transacuonsaspart()(ilplmz.
6.4.3. ApprovctheefransferofaMember'slnterest(exoeptfortu
le'lwnsferofupto
10% ofaMcmber'sEconimichttmstpursuanttoSectiou8.1.3hereotl.
('
c- m - - xas'
- ...u- ar- - u- x- ew -
t:mltyvllc m-zdeJce Rnstated Operatilq Agreelzleaf- 7X
U t:11'IJ ' ?-UUU
/'&)dUE1I
U Ui1t) I(1 J ' $ 1fI

J $ L 3H .
11U '1lJ1
f'' L0l d 1
6.4.4- Apprevcanytransaction invtllvingthcpaymcntofcompensationbythcllr

to a M emberoran Affiliate ofa M cmber,unless othctw isc cxprcssly authorizcd and apgrovcd
pursuanttothi:Apeement.
-
6.4.5. Any mcrger,cflnsolidation,divestitulc ordisgolution and winding up ofthe

Busincss and affairsoftho II C.
6.4.6. Anym aterialchangein thecharacterofthe Busincsst
)fthoLLC.
6.4.7. Theadmissionofncw orSuhstituteMembcrs(dctinedherein)tethcl.1F!.

6.4.8. Anyactia contravention ofthisAgrcertlemtorkmyvalid alncndm cnthereto,
(he AtticlesofOrganizatton orany ttmordmcntthervof.
* 6.4.9, Knowl glym rform anyact(othortbananyactrequit'

cdbythisAgrccmtntor
bylaw oranacttakeningoodfaith)thatwould,atthetimeofsuchact.subjegtanyMomberof'the
I.1.
C toanypersonalliabilityinanyjurisdiction.
'
6.5. Tim e Devoted to M anaeem ent.Unlessothcrwisedctcrmioed by tl
zeM acagemertt
C-omm ittcc to bein tho bestintrrcstsoftho f.
lf anditsM embcl-s, the M anager'ssclvicesshallbe
noncxclusivcto theI,LC.TheM anagerneedstodevoteonlysueb tim oand attentionto tlw Busineess
and affairs oftllo LL.C as he shalldeom Imceessary and appropriate, in tllc cxcrcise ofhisown
lrxtsonablejudgment-ThcM i
m ftgormaybclrquiredtotravelfrom timetotimcinfurthemnccofhis
dlztios4nd responsibilitieshozeundor.
Unless analtcm ative sceduleisdcterm ined from tim eto tim ebythoM anagement
Comm ittx to be in thc bestintercst.
s of thc LLC and it.s M emborg,the R zvices of DENNIS
MONTGOM ERY,anindividualIZ'MONTGOM'
ER'
hr''I,solongagI)eisservingasaCammittee
M embtrand/orChiofTeclmologyOfficorpursuanttothisAgreement,shallt)eexclusiveD thellr ,
and he shalldevotesubstantially a1Iofhisfulltim oand attonuon and efforts to tht Businoss and
affairsoftheI.
LC duringreasonablebusinresshonrs.M ONTGOM ERY may tv rrequirr,d totmvel
fm m tim c to tirno in furtherance ofhis dutiesand msjxmsibilitiesherelm der. M ONTGOMERY
lgtrces,asackqwlodged byhixsigrtattar tothisAgreement. thatheshallprovidehi$servicezina
mannor consistsntwitb tlw policiees of the LIf as m ay be adoptexlfrom timo to timc by the
M anv cm cntCom mittee.
6.
6. Restriction onndeixndentActivitlel:AzreementNottoCompete. SoIong-as M ON I'OOM ERY is appoinzd mv a Committee M cmbc.rand/or :Ks ChiefTeechnology Oflioer
pursuam tothisAptomettM ONTGOMERY aadhisAftiltatoszgreethat. duringthterm oftllis
Age meflt,noneofthem $ha1lcom pdewith theLLC. whethcrfortheirowav ountand/orfortlte
accountofothers,iadividually.jointly with others,ormqapartofany otherlimitedllability

compacy,limitcdpadnership,ptnezalpartnerghipkjiutvonture,corporationorotbeventity,by:(i)
devlopingjliczqsingorexploitinginalymmmeranysoftwarepmgramsorotlrrtreclmologywhich
lscomm titivewi+ therrehtmlogyorthcBusinezoftllGl-lf!,orprovidiaganyrervice.sorsupplies
which arc cncompassod within the dv llition oftlm 'Business'?ofthe LIE 1$s seetfortllin thit
.
Agreemept;(ii)pumhasingorntherwistacqtziring,owning,holding,operating,managinpinve.
sting
--- ..
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fltT; Olzm flagAgrzeple/lf.-25
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Document 644-8 Filedi05/28/08
Page 32 of 95
i --h
X
in ototherwisedisposing ofalikr busincssofthcLLC 'SBusinessand intcreststhc in ofanykind
ortuture;or(iii)othenviseongaginginatlyorallaspectsofalikcbusinosseftlleLlr 'sBusinemss.
(
M ONTGOM ERY'SorhisAffiliates'participation icanyoftllcactivitiesrestfictodbythisparagraph

shallbo deemcd abreach ofhisduties and obligationsaga Cornmittee M em berhcreunder.
6.7. Commensatipn toM anatementorM em bers.
.- - -
-.
6.7.1. M anaeer'sCom pensation.n eM fmagcrshal)notrr-ccivecompensation for

Izis scrviceshem untkr,unlessothet-wisc agprfwed by tftc M anagcm entCqmm ittee.
'
6.7.2. Ollkers'Conmensation. Exccptforany compcnsatitm to bc paid te thc

ChiefTx hnologyOftk orasse.tforth below , no ofticerofthe LLC shalll'
eceivcomponsationfor
hiytvhcrscrviccsulilcssotljozwisoapprovedbythcManagementCovnmitte'c. Inconsidcm titm for
hisfull-time.exclugivoserviccstotheI-LC,M ONTGOM ERY, asCllicfTechnologyOfficer,shall
rcceivo, in 'ddititm to any reim bulscment for costs as providcd fur ilz gcctitm 6.# bclow,a
.
GuarantecdPaymeat(asthatterm isdofinedinsoction707(c)oftheCode).Tim payment,amount

and tm'm ofsuchGuarauteedPaymentorothercomm nsation tobcpaid to M ONTGOM ERY Jm
CiziefTechnologyO fsccrforhisserviccsshallbeestablisbcd, adjustotl,renewcdorterminat
edby
thc M fmagementC-onunittee f'
rom timcto tim e.
6.7.3. M em bers'Com pengation.Exccptascxprmsslypcnnitted bythisA greelncnt

oranyotherwritton agreem ent,theLLC shallgaynocom lxmsation toanyM em bcrorauy Principal
ofanyM emberfottheirselvice.sasaM anagerto tlm I.
ff?.
--
I
'
- -.
6.8. Expense Reim bursements. rn e LLC sllall teim bursc the M anager. officcrs.
.
Com xm ttee M cmbers,M em txr:ortlleirAffitiatosforany exponscpttid by them on behalfofthe

T,1.
C ,thatisto beproperlybom ebytheLLC ,aspm videdforin anApproved Budgd orasothcnvist
approvod from timeto time by tlleM apagementCom mittee.
6.9. Restrictlonson bistributlons, Nodistributitm totllcLtf 'sM emlx, isvaliduqlcss
tllt M anagoment Cornrnitte,e has approvml socll distribution either hnmodiately Y fore or
im rnediately aftersuch disttibutioll.
6.10. RlchtsofInspe tlon.'I'tkeM im agcrandtErurnm itt M em e m shallhavotheabsolutc

tightatanyreqsonabletimotoinspectandcopyallhmks,recordsand docum entsofevorykind,and
- - -
to inspecttllepllyskalprogeltiesoftheLIE tmdalrootitssuhsidiaryM litedJizbilitycompe rz

dom eesticorroreign.SuchinspoctionbytllcM anageroranyComml
'ttea M embcrmaybematlein,..-
person tv byagentorattomeyarldinclude&tllerighttocopyand obtain abstracts.
6.11. Fkrnighlne LLC lnrormatltm . '

l'
hc M anager may mleasc guch information
-
concem ing the Busine'ssand opcratimu ofdle f.I.C t such source.sasiscustom ary orrequim dby
law orbyruleorrcgulationororderofanyregulatory body.
6.12. AqthorltytoSeettlewitllIRS.Iftlleroarcmorethanonehtmdredtl lM e.
mlrsof
tlzlTf3,thec''I'
axM attersManacer''(asappointe,dinSection9.4lxlow)shallhavoth:autlorityto
tnterintoa sealomentwitlttiw Itktornd Revenu:Strvico onbehalfofthoseM embon havingleas
j
'
.
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.
.
Case
3:06-cv-00056-PMP-VPC Document 644-8 Filed 05/28/08
Page 33 of 95
-.
'. .
*. .
t*I
-1
.;
thanaONE PERCENT (1*)interestitlthe,profitsofttteLLC. exceptwbere a M emberfiles a
'
s
y rogulatious, staLing thatthc Tax
Mtatementwith the m S,in accordanc: with applicable Troastll'
attcl'
aM anagerhasnosuchauthoritytoactonthatM embcr'sbealf. Any M embcrfilhlgstlch a
statemcntwithtlleIRSshallnotifytlleManagcrthf
xeofwithinthirty(30)dayaofsuchfilng
.
ARTICLE 7
M EM BERS'M EETINGS;ACTIONS W ITHOUT M EETINGS

7.1. M eetinzs.TheMembersshallnutbctequimdtoholdanyrepular,ltnnualorsm cial
mectiugsinorderto itppm ve any actiol
zofthe LLC asrcquircd by tkisAgreem cntfx tiw NRS .
7.2. AdifmsW ithouta Meeti:a.

- 7.2.1. Any actitm rr-qutrillg approvaloltho M emborspursuantto thigA prm qcnt
may Ix approved wilhoutthc coaductofa meeting alld withoutpriornotice ifa written com ent
sctting forth tllo action op actions so takort. issigrmd by M embe,
rsholding,in t
lleaggmgate, y
Ma
j
or
i
t
y
i
n
l
nt
c
r
e
m
o
r
mor
e
of
t
heM
c
ml
xr
s
a
,unl
cssagreaterVoteisrequire'd under,oralcsservoto
i
aprovided fbrin.thisAgrecm mztorlhcNRS.
7.2.2. Unlessthcunaqimoth writteaonsoatoftheM embershasbeeellgivon,Rotico

ofany such action appm ved by lesstIC
IIIallofthoM omborsshatlbegiven to th
did
oseM emberswho
notgm icipatlinorApproveofsuchactionwithintetl(10)daysfollowing theapprovalthoreof

.
7.2.3. Any M em borrriving a wtitten cxmsentlnay m voke tlzo cunscntby giviug

writton notice to the IJ.
C prior tfltllc timc tlu twritttm conseotsofth
oM emborsholdinz,ih theaggregate,thc Vllt/rcquil'
ed to authorizo thcproposedaction have beenfled with theLLC. Such
revocatitm iatzffetiveortly upon its rcreciptby tbcLLC .
7.3. Exdusion of Vote. 1f.pursuantte thc NRS ortlz: tetm s of this Agrx mcgt
, a
M omberisnfltontitlr,d to Vote onaspeciqcm attor
tra sucllM em bcr':numbe,
rofVotessha.tlaot
,t
b
econsidored forpurp sesofdctrmining whethcrapprovalby Vptepfthc M cmbershiks NICR
obtaine,
d inrspectt)fsuch specificmattcr.
ARTICCE 8
RESTRICTIONS ON '
1AtANSFER OF M EM BIS'RSH IP INT i'RFmXS*
.
- . --
ADM ISSION AND SUIW TITUTION OF NEW M EV BERS
8.1. Transfert)rAdsiznmentofM em ber's lnterest ThoIutorestofeachMemberand

t
h
t
Fr
z
mo
rnic Itltttw tofa Porsonwhoisnl aM emberconstituteslhem zsonalpropm yoftbc
M
emberorv onomiclntereestholder.NoMemkror& onomicIntenxqtholdcrhasanyinteresti
theProllertyofthcI.IX .
n
-
2.1.1. A M ember'shtermstoranEconomic Interestmay only le trrlgftzrr,d or

assignodin strictlrecortlancrwith thisAgroement.
z.---
- w ey-
- -
T-
xtl-k/vf> mcpAdandRestatedoptlzdlngh reem<nt-27
Jr.1g. ?q(4 7:8b8hl

*
:
9CL!lh J. Frd, Esq.
h0
' 7l
S34
l of?.952S 56
Case
3:06-cv-00056-PMP-VPC
Document 644-8 Filed 05/28/08 Page
j
'
vr'j
8-1.2. Exccptas otherwiso provided in Sections 8.5,l and 8.5.2 bclow,no salc
transfer,hypothecation. encumbranceorassignmcnt(a''
Transfer'')ofuM cmber'slnterestoran,
Ecol
zom icIntcrcstirtthcLLC willbevalidtmlessaggroved byttM anagemontcommtttrz
di
nitssolc,
,i
scrction.
'
8.1-3. ExcoptforanyTransfzrofaClass A M ember'slnterestto ariothe:texisting
Cl
assA M emberoftheLLC.upontheTransfcrofanyClassA M embcr'sInttrcst(butnotatranstr

ofanFxonofnicInterest),thctransfcrccshltllautomaticallybt
xomeilClassB MefnberandthoClass
A Unilsso transfen'
ed shallauttlmaticalky bc converted to Olas: B Units Notwithstanding the
f
orogoiog,with thc approvalofthe M anagcmentComm ittccs such couverted ClassB Unitsm ay
m aintain tllc allocation and distribution pritlrity riglltsofa ClassA M em bcrpuouantt
4. 1.1.
oSections
2,5.2.1 l
m d 5.2.3.
.
8.2. Vid Transfers.Any-fransferofanlntetestthatdoesnotsatistytherequirenlcnt
ectitm 8-llabcvee1
la1lbenullandvoid, Fhallnotconferanyrightsuponthoproposedtransferseof
z
'
mld the tlxmsfetrirtg M cm bc,

rshallcontinuoto bc aM emhx ofhe IJ-C andtobeobligateduntle.
t.
each and ovez'
y provision ofthisAgreement.
.
S.3. Adm issionofN ew M em bcrs. SubjccttothcapprtlvalofaMajorityinInt

erestoftbc
omberspvrsuafltoSection6.4.7hereof,4new McmbcrmaybeadmittcdintotboLLC oalyupon
approval bytheM anagem entCommittc.cand upon satisfactionoftlle mquirem optssctforth in this
Section S.3,TheM anagcmenlCornm itteeshalldetsrminc theam ountorcapita
'lCtmtributioo lhat
mus
th t% madebyanew Member.A new M smborshallnotbedeelned adluitted into theLl.
E until
eCapitalCoattibutionroquiredofsuchPeersonsllallhavclle'enmadeandsuchPrsonhasbecome
upmlyto thisA grecm entby executhzganddclivcring Co tlleLIf acountem al
'tsignatum pagefo(his
A greementacknowledginghisacccpttmceof,and agreeiftgto bcbouqdby the termsandcooditions
,
ofthi:Agmeement.
'M
'
(
8.4. SubstltutfotlofM tm bers.UponthedeathofqM emberorulm thevalid-rransfet

aM omM r'sUnitsinaccordancowithSection 8
of
,1
.2ilbtlve,apcrsonmaybosubstitutc,dasaM ember
andadmittedtothcLLC, succ:edingtoal1oft
h:IightqofanyMembor(a'fsub
.
n oSubstituteM
stituteMcmber'l.
omborsklalihavc:11tIITrightsandpowcrsandslaallbesnbjecttoa'iltherstriction&
--
andliabilie softhctnmsfelxingM em/ r,excptthatthesubslitutionofthetzunsfereeM emv rshall

r
otm leasc thotransfening M cm borfrem liabilitytotheLA .C pursuanttoNRS Seectitm 86.351. No
Stut
stitutoM om borshAllbodeem e,datlmittedintotheI,
1.C untilsuchSebs-tituteM cmberhasbecomc
'
apartytothisAgreementbycxccutingaaddeliveringtothoIJT acountep artsignaterepatctothis .

A
gc mect,acknowledgingbisacceptanceof, audagreeingtok btmndby,tl
zotenhsandcorldititms
ofthisAgrecmetkt.
2.5. Exctptions tp tieketrktionson Tm nsfcr.
.
t.5,1. ThtxstlictionsonTmttsfertontainedinthisArtide8shallnotapplyt
giftofaIltx any pe on ofaM ember'sUnitsbya M embcrto hisspollse

o(1),
.c
('Ta
hild.orrpndchild
milv''
)orofA'rmllsferofa1loranyptlrtitm ofsuchIntercstby&Momberto(i),tmstsolelyfor
thek nof'itofthoM emberorbi$Pa='
llyor(ii)anyothereptityittle&st80% ofthovalueandYoting
poworofwhich isowned (direectlyorittdirectty)bysuchMembe.randllisFi
tmily(oxceptIw stzch
(.
- -. .
>
.- - -- I
- x*
-
I
- %q4-
(I
M !vtodm:W :dJW S,#W e# O#r/wflrIgXgreel;lee = 28
.
adp.It, /ddp /:ttp:
pkslhs J. hr?9, tsg.
h'./18l ?. 30/b0
'
Na.e
transftrs shalll)om adepursuantto anl'divorcc orscparationproccedings unleastheM anagcmeut

C
,
'
butiollfrom anyM mlxrthatisalimitc.d

Iiomrnitteehasapproved suchTransfer);(2)adistri
abilitycompanyorpaztnerslliptoitsmcmbc!sotpartners(solongassuchdistributiondoesnot
occurwithiuoncycarofsuch M cmbor'gputchaseofthe Icterstbcing transfbrmd 4nd solongasa

1l
f
)
f
s
u
ch
M
e
ml
r
s
or
p
a
r
t
n
er
s
l
t
f
e
'
u
u
c
c
t
r
-di
t
t
:
d
i
uv
o
s
t
or
s
'
'
a
s
s
u
o
l
x
t
eun
i
s
dr
R
finr,
d in Rule501 of
egulation D promulgated undertheSccuritiesActof1933,
.
asamcnded;or(3)anygiftbywillto
any entity thatqualifiesasacha
'ritableorganization undersection 50l(c)(3)ttndertheClodo'
lmwided,llowc,
ver,thztsuchInterestsllallrcmainsubjecttothisAgreementandsuchtzansfemc,
shall,asaconditiontorranxfor, agreeinwritiugtoi)e bound bythc term softhigAgreem cntbythe
cxocution ofacounterpartsignaturc gago to thisAgreement.
5.2. One ormore Tfansfers efug to an aggre
Mcmber'sEcon8.
pebtuont(l0%Jofa
omic Interestm aybe donewithoutthcconsentoftgw
hete
otof
herte
Mnem
.
ers,tllc.M lmagm'
or the M anagemcnt Colnm ittce providod thatthe transfcrring M otzzber notilics tNe M
anagerin
writingatI ttcn(10)daysiaadvtmceeofhisintznttoTransforanEconolnicInterest Suchnotice

shallclm tain the date and amotm toftlze transferretlEconomic Intem st,m1d thc nam c,addreess
f
acsimile nttmber and taxpayrr identification number of the transforoe. n e transforer ofan.
E
colomicIntercgtshallnothavoanytighttoNote, partioipateintho m anagom entofthcBusiness
and affairsofthc LLC,orto beecom eaM em bcr- No xightsa5thcholderofan R onom icIntere
est
shalll
x conferrezl
uponthctransfcteruatilthctransforecagrem tobeboundbya1lofthetermsand
provisions of this Agrroemcnt. Notwithstanding tlle foregoing any Transfcrby a M om tvrofan
E
,
Iconom icInterestinexces:ofan aggrcyate ()f10% shallbedeom ed a Trartsferofsuch M ember's
nterczstandshalllx subjed toSection8.1.2abovc

,
8.5.3. Notwithstallding any r'iglltof M ctnbefs, iflcluding rightq of firstm ftwal
c
onme
taine,dhoreia,ifaMajorityinIntcreztoftheMombcrsdttermlncstoselltheCompany,wllothor
by
.
rger,consolidatitm ,sale ofa1lorsubstantially a11ofitsassctx, saleofa11oftheoutstanding
oitsoftllcCompartyorotherwisttoaanonaffiliatd tle dpm y(M1'W pprovodS:l

Mc
o''),a11ofthe
mbe.
rsshallcmlzsenttoandraisenoobjectionagainstsuchApprovedsale(indudhigmfraini
fm m excm jsing arly rightsofappraisal

ng
,i
rany)andshalltakeAIIneecessaryanddesirablcactionsin
theircapacity itsM ornborsin conlcctitm with tllt;consummation ofsuoh Approved Salo.Tizc
M
'
embersshallagre.
etosellthcirpr0rataamountofUnitswllichareSubjrcttosuchApprovedSale
onth:tenn:andctmditionsasprovidedbyRMajobtyinIntzrestoftheM cnlbefs 'I'heohligatitms
oftheMemben with rcspectto anyApproved slearesubjecttotheconditionthaqulxm tho
.
consum m ation ofsuch Approved Sale. &11ofthe.holdcr:ofUrtitawillroceive thosam o form and
amouctofconsideratiouperUnit,orifanyM embefg&r:givenanngtitm astothfnrm andarnolnt

ofconsidcrationtobercceivod, allM cmbeo willl)ogivcn thosameoption
, onapm r
atabl
uls,in
accordanfx witlltheirrespectivcPercemtageIntoroxts.
. -
mAy T
8.6. ReclirementsonTraneret. NotwithstandinganythinginthisAclo8
noMomlxr
ransferanyhterest(otherthan pursuanttoaneffectiveregistation statcmeutunderthe

Securitie.sAct)withoutfiatcomplyingwiththefollowing:
8.6.1, DoliveringtotheCompanyuponitsrequtstanopinionofounx ladd
totheCompanyrewsonpblyacceptableinform andsubstancctothe
redsed
,companyt
ihatreghtotionunlv
o -- e a ox tw- -'wr-
l.- p-
- zlfn4llvqw lepJH ce Rel'm d Operatlngtksrreemetd - 29
J3h.!8. 7206 ?:3C?k

*
e
,,
0C:!(37 J. Ff?s' Fq9
F''?t8' F' l'/h
',
' vo)
. hv )
the SecuritiesActisnotrequim d inconncction with such transferand thatsuch transferisoxompt

frf)m a11applicable state securitieslaws;and
('
8.6.2. Every Person (including sucll Person's spousc,if anyl,othcr than the
Colnpany,tu whom suchlnterestistrausfcn'
cd incom pliant;e with thisAlticle 8 shallberoquimzlto
executeanddeltvcrto theCom panyacounterpartsignaturepagetothisAgrecm cnt,acknowledging
hisacceptance ef,and agvccing to be bound by, thc ten'
ns and conditions of thisAgreclncntaod
agreeing to bezom e a party to this Agrccm ent. Atthe tim c of cxccution and delivery to the
Com pany ofsuchcountcrpartsignaturcpage,suchPersonshallbcadmittedusaSubstituteM ember.
'
ARTIC LE 9
AtIM INISTM TION AND ACCOUNTING M ATTERS
9.1.* M aintenanceofBaeksand Records.n oI.
I.C shallcausebooksandrocordsofthe
I.1r to bem aintaincd in accordanoewith gnor'
ally acceptczd accounting principlcs, and shallgive
reports to thc M ombcrs in accordance with pnldent business practices and tlle N RS. n c
-
tlcternlination oftheManagemontCommittccastoadjustmentstothfinancialmports,bx ks,
rccords and K tunu of the LLC,in tllc absenco offraud or groGg nogligence, slutlbe th atalld
binding ujxm theI.1flandalloftlleM cmbors Thcreshallbckeptatthe principalbtkqinessofficoof
tllc IJ.
C ,as wellasattbo registcrcd office oftll: LL,
C specified in Section 2.5(irdiffrmnt),any
infom lation required ttlbo m aintained bytiu 1.1,
C purstlantto NRS Srzction 86.241,asamcnde,d
from time to tim e.
.
t
.
9.2. ArmualAccountints Witltinonehundredtwenty(120)daysaftorthoclosoofeeach

FiscalYca.rofthcLLC,theLLC shallprovideto thcM emhors'
a1linform atiorinecessaryforthcm to
com plete fcderaland state tax returns.
9.3. 1nspection aud Auditm zhts.FaachM cmber,atie owaexm nsejhastheright,upon

roasonablorequestand forpulposesreagonablyrelated totheIrttorcstofthatM omber.toins- tand
copy during normalbtlsinesshoursanyoftheLLC booksimd recordsrequirod to bemaintaine,dirk
.
uccordancewithSection9.labove.SqchrightsmaybeexerciscdpytheMemberorthatMkmber's
agcntorattorney.
'
9.4. Tax MattcrsHandledhyM anaeer.TheM anagementCommitteoshalldosignatea

-
Persontobethel.IT!'s'T axM attersM anactr''(defmr,dastq'

axMattersPartner''inColksction
6231)toaprosetltthilalr (htthI.
1E'sexpense)ine'oanoctionwhha11examtkationsoftbclJX s''-
affairsbytaxauthozie s,includtgresuldngjqdicialu dae nistmqveprxdings,andtoexlnd

l.1.
C fucasforpmf>sionalsezvicesandcostsassociatcdthoriwith. Init,
scapacityitse$
TaxM atters
M anager,'*thcdasignatr.
d Person shalloversoctheLIX tax affairsinthe oyirallbestintcreag: cftlw
IJ.
c.
9.5. EgtablkshmentofBank lccpuntslAutllorize,d SlM atories.'l''
he M anagement
Ctwnrnittee shallauthorizethe txtablishmantofooeormore dcpositot.
y accounu in Nevz ac d
elsewh> forthefundsoftheIJ.C.Alldisburrsemontafrom theltr'sb'
ank accolmtsshallbein
accordancewiththisAgrx mont.Anycheckx,dfxfLq,andothorinstrumcn? obligatingtlle1.1frto
paymon:yuptoamaximum amountof'fwtmty-FiveThousandDcillars($25,0X .00).inclnding

/
cot
- oe &ter'Nrz.
euxn''
wel- T-
l- -
' sfvtnfjma tlttndqdand Xel ed OFTm dltgxgrfel/tell-'30
Jqp.l. 2yJL /:s?k

.,
oLllzs J. Fr??, ESC.
'k'l18l ?' 38/b8
Case
,
nstrumentspayableto theM anagerorothcrPcrsonsatltholiw dtosign them,m aybesignodoa the

LLC 'Sbehalfbytlw M aaagcryactingulorte.Anysuchhocks,draftsortttlwriusttumcaa obtlgatiag
the1.1.
f7topaymoneyinexceasof$25,0 .00,whotherasasinglecheckorascriesofchccks,shall
rcquirethejoictsignatumsoftheManagerandaPersondcsignated from timeto timcby the
M anagcm entCom m ittoe.
CashbalancesonhandmayboinvestodbytheM acagcmentCommitteeonbchalfof
theLL.C asprovided forin thisAgeem ent. ELC futldsshallnotbeeomm ingled with tbofklndsot'
tiloM anagor.anyCornmitteeM embcr Mbmber,officcroranyotllerpcrson orased ascompcnsating
balapcesforanyothcrobligationsi)fthcM anager, anyCornmittccM em ber,any M em ber, ofiiceror
auy othorPerson.
9.6. FtderalIncom cTazElectlons.n eM anagementCofrtraittce on bchalfofthcLL.C

m ay lnakea11clectionsforfederalincometaxpurposes. including butnotlim ite.
d to,thefollowing;
'
9.6,1. Entity Classltlcatlon Eltction. As a dom estic cligiblo cntity, the

M anagcmntCommitteeshallcaklsetheLLC toclrecttobcclassifiedasapartnetshipforfedraltax
purposesby ft
'ling Fotm 5832.Entity ClltsskficationElcction, with th lntom alRevcnue Serviccin
thc tim o and mannorpr:scribeed by the applicable gulatioas. Theelection forsuch clitssification
shallberffrectivoasefthcdateofslingthcAtticlesofOrganization.
.
9.6.2. Use ot Accelem ted Depreciatlon M ethods. To the extentpcrmitlee

d by
applicablelaw andregulztious,thcl,l.c m ay clecttotlseanucccleratcd drpreciationmethodonany
dopreciable unitoftho ikssetsoftheLLC .
-
.-
4
)
*
'
9.6.3. AccouutinzM dhod.Forfinancialrep rtingpurposea,tlw book.

sand tecords
ofthe LLC shallbe kopton the CASH M E-I-HOD OF ACCOUNTm O appliod in a consistcnt
manneraadshallreflectitlltransactionsoftheLLC aqdbeappropriatoarldadezpateforthepurpases
oftbe LLC.
9.6.4. OblizatleltsofM cnlberstoItepprtAllocationsa'IlloM rm W saroawam of

theincom etax consm uencesoflheallocationsmade bytllisAgrezmentand heroby agre to bo
botmdby thepm visionsofthisSection9.6inrepx4ingtiteirsharesoftheLLC incomcandlclksfor
-
income tu purposos.
9.6,5. Taxvear-'llx MaaagcmntCommlttccwillcilusctllcLIE to adoptthe

.
CAIX ND AR Yi!A'ttasitstaxable year.
9.6.6. OtllerElcctions.n M anagcmcntCommittecshallhavotllerightinitssole

discretion atanytim et:m akoornotto m akesuch otberelocuonsasareauthorized orpenniur.d by
-
any1aw ormgulatitm forincomtaxpuzpoles(including,butno(Iirnitedto.&nytlectionundor

sections734,743and754oftheCA toadjustthcbasisofth:PromrtyofthtTJr intheeventofa
'Prs
msfe.fof11otpartoftheInterestnfanyMem% ll.Notwithstandintheabove, noM ember,nor
tlztIJ-Q shallmgbeaneloctiontobeexcludedfrom theapplicationofSua hapterK ofth:Codeor
anysimilarprovisionsofstatelaw.
f
..--
ouw-- e xqwzlo - amlntwp

r.v e
o lmw
xt-ztleplsvu,kW lzlMdedc/l#RestqtedfW mflarxgreplFl-31
J2p.l. 4410 ?:b8M
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. .
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s-
&RTICNI,E 10
TERM INATION AND DISSOLUH ON
1
,
10.1. Dlsx lutlon. Pursmm tto NRS Section 86.491,the LI.E shallbe dissolvcd and its
affairswound upupon thcfxculTcncc ofany otthefollowing cvents:
10.1.1. TheaffirmativcVotebyaM ajority irtIntcmstoftheM etubers;or

10.1.2. The sale,liccnse,lca e,rcntal,kwsignmentoroflmrdispositionofal1or
substantially alloftho assetsofthc LLC,incltltliug theTechnotogy or any patentrightstlleroto.
whctheroccuning in asingla tran8action oraseriesofrclated transactionsaspal'tofa plan:or
10.1.3. Uponentryofadecreeofjudicialdissolutionpursuanttotheapplicablc
provisionsos the NRS.
10.2. Continuationand ConductofBusinessAfler'
Dissalutiom Uponthc(xcr emceof
any dissolution eventspecified iu Section 10.1above,lbeLI.E shallceascto carryonitsBusiness.
excoptinsofarasm aybenecossary forthc windingup ofitsBusiness.TheLLC shAllcontinue asa
com panyforthopurposoefprosecutingand deftnding suits.actions,proceeadingsandclaimsofany
M nd ornature byoragainstitand ofenablingitgraduallytoscttleandclose itsBusincss.to collect
and dischargo itsobligations,to dism sc ofalld colweyitsIhogelty imd to distribute its assotsand
Property,butnotforcontintting thc Busincss forwhich itw;
lsostablishcd.
.
10.3. I.lmitatlenonActionsbvorAealnstDissolvedLLC.Thcdissolutionofthet.l.tl
:t'
shallnotrnpairanyrcm ody orcauseofaction availablc tooragainstitoritsM anagcr,Comm lttee
M embersorM emborsarisingboforeitsdissolutionandcornmencedwithtwo(2)yearsafterthedatc
ofthe dissolution.
'
10.4. Dlstributlen ofNetProctedsU ponLiquidation.n oM om bersshallcontinuotu

divide NetPfofitsand Nettm sosatld A vailabk Cash Flow during the windinp up m riod in tho
&amemz
'inncrandthesamopzioritiesasprovidedforinArticlcs4and5hemof.'
I'
hoproceedsfrom
theliquidationofPmpertyshallbeappliedtoliabilitiesoftlleLl2 in
'tiefollowingorder:
10.4.1.
'
First,tothopwyamntofcroditors,in tlw ordorofpriorityasptovidmlby

.
Idw,txccgttoM embersollKcountofthcircfmtributitms;
10.4.2. Second,tothepaym entofloaosoradvancestIIM m ayhavoA nlnadeby
anyofd1tMzmlvrserthcirPrincipalsf0rworkingcapitalorotherM uirementsoftileL1.E;
10.4.3. 1lird.pro m ta,to the Clikss A M embcrs and the Class C M embcrain
accordance with theirm sitiveC apitulAccountbalanccs;
10.4.4.
Accountbalances;and
Fourth,to theClassB M mber&in accordanx witllthelr- itivoCapital
o- .o-- e- t-k- gt- t--
- - vtLtAsvtA
qnddandReztaa ope# qga ament- 32
Jth.t1. Jkur
.
?.J/rM
U'16$8 p. rrt' LsQ.
11U.iJ1
f' oqzdl
Page 39 of 95
.
f'
10.4.5,
Tllereafter,pro rata,to thc M cmbers in accordance with thcirm sitivc
CapitalAccountballmes,asdeterminedahertakingintoactmuntaIlCapillAccountadjtlstmcnts
?
'
IbrtheFiscalYeardtuing which thc liquidation uccurs.
Liquidationproceedswillbupktidwitlin60daysaftcrthecndoftheFisc:dYeartor,if
later,within 12.
0daysaftcrthodateofthcIiquidation). TheCompany may offsetdamagcsfor
breach ofthisAgrcznlhntby ally M omberwhose Dnits arc Iiquidatetlupou the tiquidatiouoftho
Com pany againstthe amountothmwvisc distlibutilbleto such M ember.
W llere thodisttibution gurstlanlto thisSection 10.4 tionsistsbotllofcash (oscash

cquivalenLs)Imd non-cash asscta.thecash (ofciwh tquivaknts)sllalltirstbc distlibettq in a
tlescendingordcr,to fully satisfy ouchcatcgorystaftillgwith thcm ostpreforredcategoryabovc.ln
thecascofnt
lncashassets,(hedisttibutii)nvaluesu'
le(f.
lbe,basedontl'
m fairmarkotvaluctharcofas
determ inedin good faithby theliquidator,and theshodestm aturityportioq ofsuch non-cashassets
(e.g.,notegN otherindebtedl
lcss)shall.totheextentsucbntm-citshitssdsaroreadilydiviziblc,Ile
distributsd,in a dcsccndingordey,to fully satisfy each categol'y above,sbarting with tllomost
pm ferre.
d category.
ARTICLE 11
ISSUAN CE OF LLC CERTIFICATES
ll.l. lgsltauce fLLC Certificates. n tzUnitsofeacllM om bcr in tlle f.1.

C lnay be
reprosentod by an LLC cacrtiticate dp-sinating tbe cliksses ofmom bcrsltip and U nits. Upoa tlw
eaccuuon ofthisAgreemoptafld thopam cntofthecapitalContributionsbythoM ombersp rsuant
toAfticlo3hcreof,dleM fulagcrmaycacsrtllcl.1f toissueoneorrflprcccrtificatcsin thcnameof
ezach M emberf
x rtifying thattlzcM cm bcrnamed thtroinisthorecordholderofthc UnitsofInterests
s:tftm h thorein.Forpurposcs'ofthisAgreom ont.thoterm Q'record holder''ghallm e;m tlw M omber
whesm nam eapm arsin Section 3.1astheM cmberowning tht Unitsatigsue.
.
-
11.2. Trfm sftrofLLC Certiflcates. A Mmbeohip lntemstwhich istrmufqrrod in

accordzrtcewiththetermsofArticle8QfthisAgreementshallbrtrppstblableontbe,booksofthe
I.Ir!bythenv tdholdcrthcreofinpersonorbysuchrecordhcldcr'sdulyauthorizedattorncy,but,
'
exceptasjrovide.din:cclion1J.3below withrespectto lost,stoloaordestmyedcertificates,no

transferofUnitsofM em bezshiph torostshallbcontereduntilthpzeviouslyissuedI.f.
f7ccrtificate
repreasenting such Unitxshltllhavebeznsurfonderd tottz 1.

1f!andcancelezland ltrrplzxm qat
-
1'.1.
(-!cezliticate issue,d to the transfm'ee ofsuch M cmbersbip Inresti:tac
'cot'
danoe with such -
procedaresastheM embersmayfrom timetotimeestablish.n eMcmbel'sshallcatkqetheManager

to issue to tIIGtr,nsfcningM emberanew II'
C crxtificatercprcsentingthe.UnitsofM eml rship
lntcmstsnot& ingealufcrrodbytlleMombor.inthceventsttchM emlxronlytransfen.
odsome,l'at
notal1,oftlw Unitsrepmsente,
dbytheQrignalLI.
,Cgrtificatc.Baceptasotherwisorrequirezlby
law,theLLC sballbeentitlr,d to treattbemcordholderofan LLC cordficute on itGbook:asthe
ownerthereofforal1ptltposesregardlessofanynotice orknowledgsto the contrary.
11.3. IxskstolennrDe4trtatd Certilkates.ThtI.1r!shallissueanow LW certificate

inplaco ofanyLIX Certificatepreviouslyissued ifthcrecordbolderoftho1-1r Certificate:
('
c'
or
- wxxg '
.ls.uier.rvvaiut
eroxplk-
ak>zllxlyvEo eo e# andXelfcfed Opev h'nlziFreemfrplf- 33
J2h.18. 2006 ?:87?k

*
t '
'
.
22L!I8! J.Fryo, Esg.
80.710! ?. 3b/b8
'
.
5
.
11.3.1. M akes zroof by afridaviq in furm and substance satisfactklry to the

M attltge.
rthata pmviously issucdLLC ceflificate kasbeen lost,destroycd orstolen;
l1.3.2. Reqtleststheissulm ceofancw LLC certilicatebeforcthel.
1f'lhasnoticc
tllattheLLC ccrtificatehaqbccnacquired by a.purchascrforvaluoin good faith anclwithoutnotice
ofan advcrsc claifn;
l1.3.3. Ifrequcsted by t11:rem alning M embors,delivorsto the I-I.
C a bond.it,
form and substancoreasonablysatisfactoryto theremainingM embers,w ith such surety orsureties
and with lixod oropen pcnalty astherom aining M cm bersm ay dircct,in thcirteasllnablediscrction,
to indem nifytheLLC againstanyglaim dtatlnay bclnadeon acctluatofthe allegedloss,dcs% ction
ortheftoftho LLC certificate;and
* 113 4. Satisfiesanyotherreasflnablerequhrm entsim posed bytheM emborsor
the M anagem cntComm itteze.
lfaM em borfailsto notifythe LLC within areasonabletim eaftorithagnoticeofthe
Ioss,destruction ortheftofan l.1r certificato,anda transferofthc UnitsofM emborship Interest
reprosonted by the '.
'
I.C ccrtiticate is registored bcfom recoiving stmh notificatiun,tlle LLC shall
havo no liability wiulrcspcctto arty claim againstthe I.1.
67forsuch transferor for a ncw LLC
certificatc.
AR TICLE 12
INDEM NIFICATION
(
'
12.1. Indem nification ofthe M em bersandThelrPrincipals.n eLIT shallindem nify

and holtlhurm lesseach oftheM embers,theM anager,theComm ittee M embers,therAffiliatcsand
each oftlwirz'eesy ctive ofticzrs,tlitectors.m anagers.tm teeas,m em bors,shamholders,partners.
.
employems,agcntsandPrincipals(individually,anslndemnstets'')from andagainstanyKdal1
losscs,claims,domands,costs,damages,Iiabilities,jointand sevoral.expcnsesofanynature
(includingreasonableattornoys'feesanddisbursemcnts),judgments.tipes,sdtlemonta
qandother
nmountsarising fD m any and allclaims,dcmandq,acticns,suitsorproceodings.whethrciVil,

criminal,adm irzistzativcorinvestir tive,in wlzichtlelndmzmitooisinvolvod atkapuztyalisingoutof
tl
zeBusineasofth; LLC,excludingliabilitiosto anyM em bor,regardleessofwhcthcrthelademniter
Gmtinuest0beaMembcqanAfl
iliate,oranoflker.director,cmployee,agentorPdnci?alefllleMem bcratthetimeauysuch liabilityorcxlxmscispaidorincunyd.tottlefutlrzstcxtentpormitted
bythe NRS and a.
llotlltrapplicablelawa,provided thatthe M mbcrorsuch P> ou icted in good
Caitlz,withinwhatisrfw lmablybclitvrdtol)etheKopeofitsautholityandforapurpoK whicbit
.
maqonably belitve,d to be in tlle lxstintelw ts c(tho IJr alld thc M cmbers ortltlwrwise in
cnmpliancewidlthcprovigion:QfthisAm ement;provide'd.however(i)thattheT.
I.
C sha!lnotbc
rrquiredtoindomnifyimyIndernnitce,andaay6uchIcdornniteeshallbeliablc,foranyloss,oxponse
ordiv agewhichtheLLCmaysufferasamsultof(A)suchhdemrlilee'swillfulznisconducqgmss
nq ligence orbad faitllin failing t: perfolm iB dutieshcmundcr.(B)actitm:take,
n by such
Indernnitocin violationofthisAm ement,(C)thorceziptbysuch Indemnitr.cofanyfinanciAl
benefitgtowllichitisnetentitledpuauanttothis mont,or(D)thevotebysuchIndeannitoefor
(
ovx.eos
a.wwtz.- .m- ---' '
.,e,.-'w<.,q. a1,..u&,'
&(l.,avt+,.1>e?I#eJ and Rexfzzt- OpnratlngA.
g'
reemntd- 34
Jzfoiq. 2006 7:87pp

'
rLllis J. Frg, ESC.
8C.7lSl 2.26708
,t
adistributionoffuudsof+eLLC inviolalionofthisAgreementorthoAct;(ii)thcI-1,C shallnotbe

t
Fequircd to indemnifyanylndemnitee foranybreashoftheprovisionsofthisAgrecm ent,orforany

loss, expcnsc ordam age which itm ay sufferas a resultoftlle breach ofthis Agrccmcntby the
M embertowhichthelndcmniteeisrelated;and(iii)anyliabilityhoreundcrshallbelimitedsolelyto
the assetsaad plopertiesofthe1.
1.
C and noM cmbcr(oranyAffiliatcofany Member)shallhavo
any liability orobligation by rcasou ()fthcseindemnification provisions.
'lleforegoingprovisionsofthisArticle12sllallsurviveforaperiodoffour(4)yoara
frornthedatot1fdissolution ofthc1.1,C;providcd.ifatthe,endofsuch period,there aro ttnyactions.
preccedingsorinvcstigationsthen pt
m diug,the M anagershallso notify tlleM em bersatsuchtim e
(whichnoticcshallinclttdeabrid descriptionofcachsuckaction,prccccdingorinvcstigationandol
the liabiliticsztsseltedtherein),alld thcforcgoing provisionsofthigArtide l2 sball6arvivo witlz
l-espocttoeachsuchaction,proceedingorinvestigatifm setforthin suchnotice(oranyrelated

action.procsedingorinvestigationbaseduponthesatncorsilnilarclaitna)untlguchdate;
k$suclz
actioll procceding orinve
'stigation isuldmatolyresolvcd.
'
'
l'lle T.1.
C :ilallnotincurthe costoftl)o portitln ofafty insunnce,othertharlpublic
liability insum nce,which ja
psures theM anagcrorCommittee M cmbers againstany liability as lo
which thcM anagerorCom mittee M em btl'
sarehcm in prohibited from bcing indcm nitiead.
12.2- Expensees. lixpensesincufre'd by aa Indcmnitcc in defending any clajm ,domaud,
actiou,suitorproceedingsubjecttoNeactionl2.1abovemay,rrom timototime,beadvmlcedbythe
(
I.1.C priorto thcfinaldispositionorsuchclaim ,dem and.action.suitorproceeding uponre-coiptby

tlte l.
1f?ofan undertaking by oron behalfofthe Indemnitcc to rcpay such am ountifitshalllv
detorminod (hatsuch Person isnotcntitlcd to beindcm nifjed agaathorizmd in Sr-ction 12.1.
12.3. Indem nifieatlnn Riah? Non-Excluslve. 'fhe M demnification providcd by

Sc
c
t
i
o
n
12.1 shallbe in addition to any otherrights to wltich thosc indemnitied may be optitlod
'
to derr
m y agfeemenk Vote oftheM emlxrs,asa mattoroflaw orequity orotllorwiso,both asto
ac-tioqin theIlzdernnitee'scapacity asaM ember,asan Afsliittoorasurlofficer,directlm employee,
agentorPrincipalofaM om berand ato any action in imothcrcapacity,and shallcontinucastoan
lndemnite who has ceased to sel've in stmh capacity and shallinure to4he benefitof tll hcia,
successors,assignsand adm inistratorst
)fthe,Indemniler.
..
12.4. ErtorsmldOmimitln:'
tnsurance.TholJ.
C maypurchuseandma
.iIttain'
lnnuranoe,
-
attheLLC': expen8e,on l halfofth:M omlmrsand such othcrPesopsastle M embel shall
.-
detennine,againstany liabilitythatm ylx assertodagainst,oranyexm nsethatm nybeincunrdby.

such Pctxon in conpection with theactiyitiesoft11:1J.
t3and/orthcM cmbers'actsoromissipnsas
tho M emlersofthoTJr m gardlossofwhetherthLLC would havr the puworto kldemnify such
Petsea againstsuch liability unlkrthoprovisionsoftllisAg= m ent
(
ecvv- 'e - eexxkw- -
yu,- u-xs-
- uAflxll,
viu meadedundkestated Opem flzlgAgreem ent- 35
J8q.lg. 2828 7:3785!

..
T
'
oodllps J.Fr??, Esq.
80.7181 ?. 37/00
Case
*
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w
ARTICLE 13
AM ENIJM ENTS
13.1. A
ntorM odifjcatipnQftheXzreem ent.Exceptforthe,authoritygrante,
tlto
- -m endm e
the M anagcrhertmderto am cnd EXIIIBIT A to tllis Agrecmentfzom timc to tim t witlloutthc
ltecessityofafollnalamcndm enttothisAgreem ent,thetelm sandprovisionsofthisAgroemtntm ay
notbc adopte-d,altored,amcnded,orrcpcalcd and anew oporating am eem entadopted withoutlhc
-
- . ..- -
apprflvalbyaM ajorityinIntcrestt)fthcM embers.

13.2. Am en dm entorM odificatlonorArticlesofO rnanization.Exceptfottheauthority
granted to tl
'
te M anagcr hereunder to amcnd or corrcct thc Articles ol Organization, and
notwithstanding any other provision to thc contzary in tlle Articlea of Orgmlization or this
Agrccmen.in ne cventshallthc Articles ofOrganization bc amendcd withoutthe apprm alby a
- .-
..-
Majolityin*lntcrostoftheMembers.
'
ARTICLE 14
NOTICPS'
.W XIVER OFNOTICE
14.1. M..
C.II.
E;.
I.P-.
LEQX Anynoticoorcornmunicationmqure,dorpormittedtobegivcn
hel-eundcrsballboinwrlting andm4y booithor(i)personally telivefod,which shallbedccmed

mcetvedalthetimeofactualreceiptthereof;ol'tii)sclktbyregistemdorcortifiedmail,withpostqgo
andchargosplrpaid,whichshallbedeemcddclivcredseventy-two(72)hoursaftcrdepositinthe
UnitodStatesmail;or(iii)delivcztdbyfacsimiletransmission,wllichshall1ycdecmodreceivedon
(
the dato and attNo timc of elcctronic conrlrm ation of such transm ission, provided an original
m echanicalsipledcopyofsuchnoticoorotiwrcom municationisalsoim mediatelydcpositeditlthe
UnitodSutesmailwithhrst-classpostageandchargesprepaid;or(iv)delivcredbymessengor,
Fedl!xorothertrackablecourirsenicc.whichghallbedeom e'
ddclivezcdon (hctlateand atthetime
astracked and confim wd by such couriersorvice;and in cach case. addm ssed ordelivem.,
d to tho
partyto whom tlle sftmeisdirectcdatsach party saddrcssand/orfacsim ilenum berse,tforth below ,
oratsuch otberaddressand/orfacasimilenum l
x rasthatpadym uyspecify by wridcn noticogivtnto
the otherpartiesin accordattce with thisparagcaph:
IftotheLIVC:
c'rreppid Technologios,LLC
Altn.
'W arrecTtepp,1t.
$M anagemcntCommitto Chz
'nknngn
..
..
590 I-akeshoreBoulcvard
IncliueVillegcfNevndla 89451
M ailinzAddross:
P-O.Box 4954
InclillcVillage,Nevada89450
FKsimile:(775)*31-4395
(
om-- .- -
l- - w -v-
l-- - xlw-m ,t
xatlxllveu meadedce Restated Opzrcflagzzrrrem ezlf- 36
J:q.l. ytti /:7/?g
qells J. Frkp, E:k.
1./lCI ?' 87t

.
k
.
f Sx%v .
.- .z?
'
W itba CoortesyCopyto:
.-
Frye & Hsieh,L1-P

Attn: DouglasJ.Frye.Esq.
24955 Pacific CemstHigLway,Suite A201
-
M alibu,Califomia90265..
4-/47
Facsimilc:(31t))456-0808
Ifta theM embers:
To thc address of cach M em bor as sot
forth ouEXHIRIT A.attachedhereto and
m ade a partof this Apm ment,which
exhibitm ay bc amcnded from time to
tim c1tsappropriate.
'
'
W hem col
m esy copiesarcprovided for,the sezviccofany such courtcsy copy shallnotconstitutc
noticc to theparty hcrcunder.Iftlm UaitcdState-sPostalSorvicereturnsto theLLC orthcm gistored
agcn:any rm ticeo asundolivorable,allfuturenotce.
sto thatM clnbcrshalll>edeem ed duly givon if
kepta'
vailwbleforthatMomboratthcLlr 'sprincipalplaccofbusinossforone(1)year.
14.2. W aiverofNoticw Notwithstanding theforegoing,when,pursuanttothe provision:

of thc NRS,thc Articles ()fOrgnnizmtion or thisAgrccment, notice is roquired to bc given tu a
M em bororto thc M anagorofthc I.1r .awaiverin writing signed bythePersonorPetstm sentitled
tt)tl)enotice.whetherbd orcorafterthethne stalcd in it, isoquivalentt the giving efnoticc.
ARTICLE 15
M ISCELLANEOUSPROVISIONS
15.1. Counttfrparts.ThisAgrecmrntmaybeexecutedinsevcralcouatorparts,including
any countcrpatt signature pags oxecutr,d by a nerw M cm ber or Substituto M ember aftr the
executionhereof,anda1lcountelyartssoe&ezutedshallconstitutepnlAgmement,bindingonallof
tlw pltrtieshereto,notwithstandingtlwtktllofthcpartiesarenotsignatorytothofigpinalorthcsam
countem art.
15.2. Survivalefllizht
.s..'fhisAgrementshallIx binditlgupon.andsastopormittd or
acceptedsucceea rs,transfcmcesandassipu,inurctothbenelitoftheMcmbersandtheT.
4r and
thoirmspectiveheit'
s,lcgatees,logalmprcsentxtives,successors,transferoosandassighs,ina11t'
ases
whttherby tl
ze lawsofdescentand disdbution,mcrgcrjrevlse merger,consolitlation,sale of
Itssets,othcrGalo.om rztion ofhw orothorwise.
- -
. -
15.3. Severabilitv.Inthoeventanysection,subsectionoranysemtencewithinanysection
orsubsectionhorounderiadcclarcdbyacourtofcompctlmtjnrisdictiontoIx.voidormwrlfomeable,
suchsectilm,subsectionorsentcnccshallbedx medscvere,
dfrom thercmaiudcrofthisAgmomeqt
andtllobalanceofthisAgrocmcnt:LtQ remsininfullfomeandeffoct.
t
'
. .
c...-.-.xue wimnnraeKxsre-xNooqyte v .r
u jtxauxi
owaRtvAtjxsyoka pj:v :dandAeyfgfzdOpn tlnyAgreemq# .37
J2p.1. ?qI
Jt /:78?k
rodlls J. Frys, Es9.
h'.?1?1 p. 28 58

) .
(
(
. :)
x.-
15.4. Construction. The langtmge in a1lparts of this Agreementshallbe in allcascs

construcd sim ply according to il.
sfairmeaaing and netstrictly fororagainstany ofthc M cmbets
.
(
'
15,5. Section Hcadines. Te captiorlsofthe Articlcss Sections orsubsections in this

Agreementare forconvcnience only andin no way defiae, lilnjt extend ortlescribe thcscope or
intemtofafly oftlle pm visionshereof,shallnotbedecmcd pallofthisAgrecmcntand shallnotbe
tlsed in construing orinterpreting thisAgm errtent.
15.6. GOverninc Law. ThisAgreem cnlJlnd any am emdm entsorexllibitshereto,and the
rightsandobligationsoflhoparticshoreunder,isexecutedunderand inconforlnity with thclawsof
the State ofN EVADA rrlating to lilnitred-liability companicsand isto beconstrued, cnfurgr,,
d and
govemod in accordanoe therewith withoutgiving effet;tm any (m nfiid oflaw provision.
.. .
15.7 AdditionalDocum ents-Eacb M emlxf,upon thorequestofanotherM em ber,agroe,

s
to gerfonn al1(urtheracts aad executo,acknowr
ledge and dclivcraIIdocumcnts whieh may be
remsouably neccssary. appropriato or dcsirable to carry out the provisilm s uf this Agrccment,
including butnotIim ited to acknowledging beftv; 4 notary public any signatutr herctoforc or
helraftcrm adcby a M embor.
15.3. Proaoul'
lspndPlurals.W honevcrthccontcxtmayrequire. anyprtmouuusodinthis
Agrezm ontshallincludethecozw spondingm asculine,feminineandoeutrrCtprm s, and thesingular
rorm ofnouns,pronounsand verbs shallincludethe pluraland vice verslt.
15.9. TimtoftheEssence.Exrecptasodlcnviscprovidedherein, titnoisofthessencein
conncction with eaclland cvery provision ofthis Agreernent.
'
15.10. It
k rtherActioqs.EachoftheM em trrsagreestocxccutc,acknowledgeaad deliver
sllchadditiollaldlkuments,andtakesuchfurtheractions, asm ay reaxmably berequired from time
to time tocarry outeach oftheptovisions,and thcintent,ofthisAgroom ont. imdcveryagmeemcntor
docuvtentrelating hezrto,orcntcrcd intoin connection herewitll.
'
15.11.ARBITM TION OFDISPIJTES.ANY MBMBER IIERETO M AY REQUIILE

W
nIM TION OFG
DISPO
m GO
V OR W COO ZG IONW O M S
A GREEM ENT OR A NY REI.ATED AGREBM ENT. SUCH M EM BER M AY N H ATE A ND
REQUIRE ARBITM TION BY GIWNG NO'

H CY TO TIIE OTEIER PARTIILSSPECIFFING
THRM ATR TRTO BE ARBFfRATED.P LEGM ACHON ISALRFA DY PHNDW G ONANY
M ATIER CONCERNING W HICH TI1E NOTICEB GIVER TI'

IENOTICE SHAt,l-NOT BE
EFFECTIVE IJNLESS OIVEN BY THEDFXFENDANT TRERRIN AND GIVEN BEFORETHE
EXPIRATION 0F
TV (20)DAYSAFFERSERVICEOPPROCKSSON THE PERSON
OIVING TIm NOTICE. EXCBFT M PROVIDED TO T1m CONTEARY IN THESE

PROVISIONS ON ARBITM TION.TIIEM IBITRATIONSHALLBEIN CONFO
W 1TlI
AND SIJBJECT TO APPLICABLE RUIX S AND PROX IJRRS OF THE AM ERICAN
.
ARBITRATION ASSOCIATION (OR NY SUCCFM OR
O).IF'1MB AMERICAN
ARBITRATION ASSOCIATION IS NOT '1T10 m EM STENCE AND THBRE IS NO

SUCCPW SOR,ORP FOR ANY REM ONTHE AMERICAN ARBITRATION ASSOCIM JON
FAILS OR REBUSF.S TO ACT,THE ARBFIX ATION SHAIJ.BE IAICONBORM ITY W ITH
t
... .
- - e- oxx-- ex-- - sa- k- uApxl/v,u mepdel znd Aezfo a openftltbgAgrantnnt- 38
'
J3r.ld. yylt /:88k

#
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.
okllss J. Ffys, E9.
dc./)8l ?. l0/b0
Case
#
'
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.mp
AND SIJBTU,
G TO TIV PROVISIONS OF APPLICABLH NEVADA STATIJTES (lF AN&
t
RELATING TO M LBX RATION AT TI1E TIM E OF TIIE NOTICE. 'ITIE ARBITRATORS

SH AIJ. BE BOUND BY THIS A GREEM ENT Ae A LL RELATED AGREEM ENTS.
PLFA DINGS IN AN Y ACH ON PENDW G ON TIIE SAM E M ATTER Silc , IF
ARBITRATION IS RBQIXRED M AUORESAD ,BE DEF.MED AMENDED TO LIM IT I7IE

ISSUES TO THOSE CONTEM PLATED B Y THE RULF.S PRESCRD F.D ABO VE.EACH
M EMBER SHM J- PA Y THE COSTS OF ARBfFRM XON .INCLUDING ARBITRATOR'S
FF-ES,AS AW ARDED BY TI'

IE ARBITRATORISI. TllE NUM BER AND SELECTION 0P
M BIR'RATORISISHAI.LBEm ACCORDANCEU I'fX RUV SPM SCRY ED ABOVE,
EXCEN N I'IiIEACHARBM ATORSBV CfM SO
BEW W RALO FAW .IAR
W ITH TIIE PRINCIPAL SIJBJECT M AW 'ER OFTHE ISSU ES TO BE ARBITRATED,SUCH
M .BY W AY OFEXAM PV ONLY.TECHNOLOGY AND SOFI'WAREDEVELUPM ENX OR

SUCH OTIV R SUBJEC F M ATIBR AS M AY B8 AT ISSIJE, (ii)'
IRIE TESTJM ONY 0F
W ITNESSKS SHAIJ.BllGIVEN UNDER OA'IN ,AND (;i)DEPOSITIONS AND OTHER
.
DISCOVFAY MAY BE OPDERED BYTHE ARBITRATORIS).
TIIE PROVB IONS OFTIII: SFU ION SI4AI.1.1N NO W AY LIM ITTH ERIGIIT
OFTHELLC!OR ANY M EM BER TO OBTA IN PROVISIONAL OR AN CH-LARY RF.M 9'
.DIILS
FROM A CO URT OP COM PIJIYNT JURISDICH ON BEFORE,AFTER,OR DURING THE
PBNDENCY OF AN Y ARBIRX ATION PROCEEDING,TITEBXERCB E OF SUCH REM EDY
SIfA1.1.N OT W AIVE Tlv IU GH T OF T! ANY OF 'I'l4E t,LC O R A NY M BM BER TO
A REITRATE
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NOTICE:BY EXECUTING THIS AGRIJEM EN T,YOU AP,E AGREEING TO

I4AVE AN Y DISPOR'E ARISIN G OW OF TH E M M V ERS INCLIJDED m XQIII
A ARBFIR ATION OP D ISPITIES''PROW SION DECIDED BY N EtJT'RA L ARBITRATION
AND YOU AREGIVINO UPANY RIGHTS YOU M IGITTPOSSESSTO IIAVBTIIEDISPIJIE
LITIGATED IN A COUPT OR JURY TRTAI..EY IN FPIALIN O IN TI'
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:GIVING W YOI/R JUDICIAL RIGITFS'IYIDB COVPIW M CD M PEM ,G F-SSSUG
RIGITTS ARE SPECT ICALLY INCLU DED IN TIIE A RBITRATION OF D ISPW IB '
PROV ISION.IF YOU REFUSETO SIJBM IT 'PO m ITM TIO N AFI'
SR AOREFJNG D THIS
PROVISION YOUM AYBE COMPEII.F.D T0 ARBITRAU ITNDERTIIE AUPH9RFFY OF
TllB APPLICABLE STATE STATW E YoUR AGRRRM RNT TO THIS ARBITM TION
PR OVISION IS VOLUN TARY. N O'
IAUNG CONTAINBD IIEREm SIW .L PRBVENT ANY
MBM BER FROM SEEKING BQUJTABLE REMFDIESFROM A COLJRT OF COM PETENT

TURISDIW ION.
15.12.W AIVZR OFJIJRY TIUAL W ITH RESPECTTO ANY DISPIJTE ARISING

IJNbER OR IN CONNEW ION M TI4TIIB AGREEM ENTOR M W QEIATED AGRW M ENT,
A S TO W V CH NO M EM BER IN VOKES TIIE RIGHT TO ARBITRATION HEQ EIN
PROVIDED,OR AS TO W HICH II GAL ACIION NBVERTHEIRQS OCCURS,EAG I

M EM BER WED EBY IRRBVOCABLY W AIVESM I RIGHTS IT M A Y IG VETO DFM AND A
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M ADBBYTHEM EM BERSAND EACHM RMNER ACKNOW LEX KSTIIATNONEOFTHE
0710 M EM Bp.RS NOR ANY PERK N ACIINO ON BEHAI,F OFTllB OTI'IER PARTIF,S
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1'0 M ODIFY OR NULLP Y lTS EFFECN', Tlv
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S THAT IT
HAS READ AND LJN DERSTANDS Tlv M EANINO AND RAM IH CATIONX OP THIS
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15.13. Third PartvBenefkiaries,ThcreitreIlo third partybencficiaricsoflhisAgreelzlcnt
excopt(i)AffiliazsaadPrincipalsoftltcMemlxrsand(ii)anyothcrPerscjn,
qasmaybeeatitlcdto
the bcncfitsofArticlc 12.1hereof.
15.1e4. NoPartitfon.TheM cmbersagrecthatthPropedy thattheII C nmy own orhave
an intorostin isnotsuitableforpartition. Each oftke M embcrshereby irrevocably waivesanyand
a1lfightsthatitmay havc to m '
aintain any action forpartitiktuofarly PropeftytheI,
I.C m ay alany
tim c havc an interestin.
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15.15. Entirc Azreem ent- '

lqllis Agreemcnt, toge-ther witllt111cxhibits hem to,anrltlw
Article: of Organization constitno tho entiro agrx m cntof tbe M embcrs whh respem to. and
supersedesaIIpriorwritton and oralagrccments,understandingsand nogotiationswithrcsfm t1,d1e
subjcctmatterhercof.
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15.16.W aiver. No failurr by any partv to insistupon the strictpelformance ofany

covenant,duty.agreem entor condition of this Agrccmeqtor to cxercisc any rightor zrmedy
consequentuponabreach thereofshallconstituteawaivort'fm1ysuchbrreachoranyothcrcovcnant,
duty,agreemoutorcondjtion.
15.17. A ttorttevssFee-s.In thcevent()fanylitigation,arbitrationorotllerdisputeadsing'as
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dto,m additiontoanyotlhetdamagraasstssed,itsm asonablcattorneys'
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llvhlgstlchispute.
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I'heattorneys'fteswbichthepmvailingpartyisentitledtomcovershallincludtf. forplm eouting
or defondfng any appoaland shallbo awartletlforany supplemontalproceeHings until ttle final
judgmentissatisfiodin111.Irladditiontotlm forogoingitwardofattorncys*fem totheprcvaliqg

palty,thepm vailin?partyinanylawsuitorarbitrationproceeduroonthiaAgroomqntsllallbef
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judgmont.Thisattorneys'foresplxwisionisstparattlmdsevcralandshallsul-vivethemcrgert)fthis
Agrcementintoanyjudgment.
15.1s.A
haritv.Eachsigimtol'
ytothisAgreementrepresentsandwafrantsthath;orshc
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possesses a11necressary capitcity and authority to actfor, sign,and bind tlle msgective entity on
whosobohalfhcnrsheissigngng.
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SIGNATIJRES OF THE PARTIES

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cxccuted and delivored by a duly authorizcd reptescnutivc,thisAM END ED AND RRRTATED
OPERATIN O AGREEMIINT ofe'
Tkeppid Technologitw,IA C asofthe day and yearfirstabove
written aqd ccrtify thatthis Am endcd and RegtatedOr rating Agreementis hcrcby approved and
duly adoptedbytheundersigned ClassA M em bct'
scntitledto Votccffectivc asofNOVEM BI!R ls
.
2001.
Further,the undcrslgne ,as M em bers ofthe LLC,acknowledge they have rcad and
uuderstand thc f4regoing Amelldt.
'
d and Restated Opcrating Agreement fr e'
rreppid
TechnologicG LLG lncluding speclfically,llutuatlimited toySections 15.11 and 15.17,

T'ArbitrationofDisputesy''andfKW aiverorlur'
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spcctivdy,and,asevidencedbytlzeir
slgnaturea&clowjtheundersignmlherebyacknowlalgtandagreetotheprpvisioascontained.
herein.
tTreppid '
l'echofllpgies,LLC
A Nevada Lim itcd-laiablllty Com pany
By lfa Voting Clas:A M em lccs
CLASSA M EM BERS:
FRIENDLY CAK TAL PARTNERS,L.P.
A Califom iataimitedPartaership
By: F1i Iy Capital, c..A N cvadaCorporation
Its eralPa er
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By:
TREPP.1+ Presidcnt
TI.
IE FREMONTTRU %T,DA'FED M AY 16,1994
A N evada evoca
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By;
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W CFU ANCE O F APPOINTM ENT
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SM ANAGER.C0MM ITIX F,M EM BERS
AND CH IE F TECHNOZOGY OFFICER
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Bach of tht undersignctlhereby (i) aceepts Ms rcspectivr appointmentas a M anagor

Com mittee M em beroroffigcr ofthc LIr fortl'
lc tcrm stated in thisO porating Agreementoras.
otherwisesetbytheM anagcmentCenunittc'e:(ii)atlknowledgeshelasmad and uudcrstandxthe
forcgoing Oporating A greem entof tllc LLC , pafljcularly thc restrictions containe,
d irlArticlo 6
thcmof,and agmos toIx boundbythotenns, provisions,covenant,arld restrictionssetfortilin said
Opolmting A greem ent,&q arrl
elzded from time to tilne,-and (iii)ll
ercby agreesto underl
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performapcc ofhisdlltfes, responsibilitiesandobligationsofcach respectiveofficeillaccordance
with tetm softhtsOperating Agretmeat,the ArticlesofOrganizttlon and the,applicabto prflvisions
ofNcvadakw,asanyanda1ltnayl)eamcndedfro timetotime
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AM ENDED AND RESTATED OPERATING AGREEM ENT

PO8T-EFFECTIVE EXECW ION PAGE
By his,httrtv itssignature below,tl

w undersigned llerebyconsentsto aud agrcesto be
bound by the terms and provisionsofthatcertain Aznended and Restatcd Opcrating Agreemtnt
dated cffective asofNovem ber 1,2001 bdwcen e'
l'reppid Technologirs,LLC,a Nev'
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liability company (the 'tC

-ompany''):aud its Mcmbers (asamended from time to tirnc,the
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ljacunvlltcopyofwhguhhmsbecnrcccivedbythcundersigned ftom the
Company.
The undolsigned horeby aoknowledgez thatthe undcrsigned ha,
sreceivcd and feviewed
the Op> ting Agreement, The undcrsigne,d hercby flm herackuowledges and agreosthattllc
undersigne' shall havo a11 of tbe rights, prefcrences and obligations undtr tl
ze Opem ting
Agreementasa'iclassA M ember*''eclmssB Member,'lorE'ClassC M ember''or,gontxallyasa
fKklcm lxm ''as defmctl and used therein. n e undersigncd's execution of this Amended and
Rom tz Oporating Agr>ment Post-Effective Execution Pagt wmstitutes tlw mzdersigned's
execution and acceptance of tlze Operatirlg Agroement, arld this AmendM and Restatcd
Operating AgreementPost-Effcctive Execution Page shallconstitutc an cxecuted courterpartto
the Opcrating Agrcomenty including any futurc amendmonts, restatem cnts or modificalions
thercofwhich m ay be duly approve,d arld adopted ioaccordance thcrewitb.
IN W ITNESS W IIEREOF,thbu Am ended and Restated Oporating Agreem cnt PostEffodive Execu6on Page hasbeen executed by theundersipled asof D ecem ber1 . 2091.
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SIGNATURE BLOCK FOR

IND IVID UAL M EM BER :

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M V NDED AN D RESTATED OPERATING AGREEM EN T

By his,her or it.
s signaturc below.the undersigned bercby consents to alld agrees to bc
beund by thetenusandprovisionsofthatqertain Amended andRestztedOperating Agrxment
dated cffoctive asofN ovcm ber 1,2001between W reppid Tr-cimolagies,LLC.a N evada Emitcd
liability cmpany (the lecompanv/).mld its Membefs (as amendod &om time to time,tle
4operatinaAkrreement*),acurrentcopyorwhihhasbeenreceivcdbythcund> igned from the
Company.
The undersir ed hercby acknowle gesthatthoundcrsign/ basrocoived and reviewcd
thc Opcating Amocment. '
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he undbvsignod heaby furtberacknowledges mzd agreesthattho
undersigtle,d shall have a11ofthe righta,prefefenccs and obligations under tiyc W efating
Agromlwntmsa 4'ClassA M ombcr,''f lassB M ernber,''or'CCI= C M um bcr''or,genrally as a
eM cmbcr,''asdefmedanduse,dthercin. el'
lw undersijned'sexutionofthisAmendedand
Restated Operating Agrccmnt Post-Elreotive Executlon Page constitutes the Im dersigned's

exeacution mld acceptance or tlw Openting Apeement, and this Amndtd a13(1 Restatd
Operating Ap eem entPost-Efrective Exwm tion Page shallcorlstitute an execttted ceuntelpartto
the O perating Agrx ment, including Mly future am endments, restatemonts or modifications
thereofwhichmay beduly approvodazld adopted inaccordancethorewith-
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IN W ITNESS W ITEREOF.this Amended and Restatd Operating Agreemtnt PostBffodivoExeecutionPagehasbecnexccutedbytheundelsipzed asof BEC 1 2221 ,2001.
SIG N ATURE BLO CK FOR
IND W IDUAL M EM BER :
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SIG NATIm E BLO CK FO R ENTIW

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NameofBntityorTrust
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SIGNATURE :LOCM FOR JOINT
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AM ENDED AND RESTATED OPEM TING AGR EEM ENT

POST.EFFEG IVE EXECtJTIO N PAGF
Byhis.heroritssigrtaturcbelow,theundersipe,dherel)yconsentstoandagreestobe
bound by thetermsald provlsionsofthatcertain Amcnded and Rcstatcd Opemtizlg Agreemcnt
datedeffe tivcmsofNovemberl,7001betwe'
en e'
rrrppidTeclmologies,LLC,a Nevadalimited
liability company (the tlcompany''),alld its Mcmbcra (a.

s a ende.d from time to timc,thc
if eratinzAzrmnzent'l,acurrcntcopyorwhichhastletnrv ivedbytheundersignedfrom the
Compapy.
The Radorsiplcd hertby acknowledges thatthe urld= iglled hasrr-ceivcd ard aviewed
the Oporatiag Agroemcnt. '1'h: tmdersignod horeby furtheracltnow ledges and agroes thatthc
undoqsigne shall have alI of the rights, prcftrences and Qbligations tmdcr tlle Operating
Agrecm entasa.'CIa A M embery''X laqsB M embsx''r''ClassC M ember''or#genefAlly a:a
'tM ember,''as deEned and used thervirt. The undersigned's cxecution of this Am endod and
Restated Opcrating Agrtemeat Post-Ellbctive Execution Page cohstittlte.
s tho undersigm d's
oxecution and acce tance of thc Opcrating Agreemegt, and tllis Amended and Restatpd
Operating AgreementPost-EffectiveExecution Pageshallcorsstituteanexecute,d countorpartto
tlze Operatittg Agroomcnt, including any future amendments,restatements or modilications
thereofwhich m ay beduly approve aIIJ adoptod ia accordancctherew itb.
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IN W ITNESS W HEREOF, this Am endcd and Restated O perwting Agreem ent PostEfrectivc Executioa Pageitasbeen cxecuted bythe uadersipltd aa of I)Fc 1 7nm .2001.
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CLASSB MEM BER SIGNATURE PAGE

INTREPID TECHNOLOGIES,LLC
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TllEIJNDERKGNED horebycertiliesands'tatostkat:(i)heorsheisaaorigina!subsoribing
ortransferec ClassB M emberofI'
NrrltEpm TECIINOLOGIES,LLC.a Ntvada limited Iiability
m mpaay(tlle''Comnanv'hl;(ii)hcorsheha.
sreadtheAmcndcdandRestatedOperatingAgreementof
the Company dated and adeptr,
d msofJanuary 1,1999 (tl1e illntrrm'd Oncmin? Ayrreemontn),
spcraf
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'sputes-''and 'W aiver
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w priorapprovalbya MajprityitlIntcrestofthe
M mnbcl'sentitledtoVoteconcerfling tkeTransferofanyUnitgoftheCornpany oradtnission ofanynew
M embcrtotheComjlanypursuanttoArticle9oftheIntropidOperatingAgrccment(ifsoroquirod).and
upon exccuting and delivering thiscotmtemartsignaturc pageto thcM anagemontCommittec ofthe
Com pany,he orshe willbeceme a.now orsubstituted Clat
kqB M ombor,mqtllecasenzay b,oftho
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constitutohisacceptancq andagroom enttobeboundby thetermsand conditionstheregf.
IN W ITNKRS W IIEREOF,theundersigned,individually orby an aathorized ropreseatative,
hascxecutdandddivered thisCLASS B M EM BER SIGNA'IRJRE PAGE a:ofthe (lay andyearset
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ortraluferee Class B M cmberofINTREFID TECIINOLOG IES,LLC,a Novada Emited Iibility
company(the'C.
ompany'');(ii)lleorshehasreadtheAmcndedandRestatcdOperatingAgreementof
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snecificallv m
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forth beluw, wltich docum ent shallbe attached to and beoomc a partof tbo Intxpid Opcrating
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DATRD AND EXRCIJTKD ON;
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By hisyherorits signaturc below,the undcrsigned hcreby consentsto and agrecg to be
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datcd effective as ofNovcm ber1,2001bdween e'lw ppid Technologies.LLC,aN ovada limited
liability company tthc ftcompatly''),and its Membcrs (asamended from time t time,the
4'Operatin:Acreaement'),acurreutcopyofwhich hasbeenrcceivedbytheundersignodliom the
Com pany.
R1m tm dersigned horeby acknowledges thatthe undefsigtled has receive,d and reviewod
tlm Operating Agreemcnt. '
The undersigne.
d hereby Curthcrtcknowlezlgcsand agr s thattlm
und- igne shallhave a1lfthe rightq,prefercnces and oblkations ullderth: Operating

Agrocmentasa<*ClassA M embery''t'ClassB M ember,''or'tlassC M ember''or#genemllyasa
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exocution and acceptance of the Optrating Agreem ont, and this Am ettded alld Rostatcd
Operating Agreemx tPost-BffeotiveExecutiortPagoshallconstitut:an exxutd cotmtrapartto

tlle Operating A greem ent including any futuro am endm entq, restatem onts or modifications
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IN W ITNF-SS W HEREOF,this Amendod and Rtstatcd Operating Agreomo tPost-
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SIGNATUILE BLO CK FO R
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datod effective msofNovem bc 1,2901bctween c'
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1itsMembers (asamended from tme to time,tlle
x'Opefatin:Areemenf),acurrentcopyofwhicbhasbcenreceivedbytheunderslgne,dhom thc
Com pany.
Thc undeaigned hbreby acknowledgesthatthe undotsir ed hasrcceived and reviewed
theOporatin: Agreement. Theundersignedhefebyrurtheracuowledgga11(1agrezsthatthc

Imdcraigned shall havo all of the Hghtg,prerefcacos and obliga6ons under the Opemting
AgrcwcmentasauclassA M embcr#''X I%:B M cmber.''ortdclassC M ember''or#generally asa
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By his,berorits sigrtature below,thc undersigned hereby corksenu tp and agrccsto be
bound bythetumlsand provisionsofthatct
m ainAluendr,d and Restated Opcrating Agtecment
dated vffectivc as ofNovomber1,2001betweettc'l-rcppid Teclmologies, LLCIANevadalimited
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tdoneratinaAccemcnt'),acufrentcopyorwhichhaqbeenroceivodbytheuntlersigrleedfrom tho
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'I-he undcrsigned heroby acknowledge.sthatthe IzndersignGlhasrcceived and revicweed

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tmdcrsigne shallhave a1lofthe ripts,preferenccs and ohligatilts under tho Operating

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By his,herorits signaturc below,tbe undersignod hercby conscnts to and agrees to bc
bound by thc terms and provisiorksof thatccrtain Amcnded and Restated Operating Agreem ent
dztedcffectivcasofNovember1,2001between e'rrqlpid Teclmologics,LLC, a Ncvada ll
'rnited
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rom time to time,tho
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Tlzc undrsigncd herbky acknowlcdge.s thatttto undersigftH has rcceive,d mtd revitwed
the Operating Agteem ont. 'Fhc undersigtr,d hereby further acknowledgos and agrecs that tlle
undersir e' shall have 21 of the riglzts. preferencos and obligatilms under the Operating
Agreementasa ficlassA M ember,''if lassB M cmber,''orq'Class C M em ber''or) genemlly asa
uM ember,''asdefined and used therein. The undersilpcd's cxccution ofthls Amended and
Restated W orating AvcemcntPogt-Effoctive Extcution Page constitutes the undersigned's

exccution and acceptance of the Opeating Aveemcntj and this Amended and Restated
Operating AgreementPost-BfrectiveExecution Pageshajlconstitutean executcd counto aztto
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SIGNATUILE BLO CK FOR
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datod effcctlve asofNovcm bef1,2001bchveen e'Frcppid Technologies, LLC,aN tvadaIimitod
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execulion and acce tanco of the Opemting Agecmeats and this Amx dod and Restatd
Operating AgreementPost-EscctiveBxecution Page shalloonstitutean executod countelpart*
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SIGNATURE BLOCK FOR
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beund by thc terms and provisionsorthatcelain Amcnde,
d and Restated Operating A greement
dated effectivca.
sofNovember 1,20lbctwccn e-rreppid Teclmologics,LLC.a Nevada limited
liability company (the Ticompamz''),and itsMembers (asamended ti'om time to timc,the

t*operatinuAzreemenf'),acurrentcopyofwhichhasbccnfeceivcdbyth?undersignodfrom the
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thcOqeratin: Agreement. Tlleundersignedhercby furtllcracknowledgesmzdagrcesthatthc

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AM EN DED ANllRESTATED O PEM TING AG REEM EN T

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INTREPID TECHNO LO GIES.LLC

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AM ENDED AND RESTATED OPEM TING AGR EEM EN T

OF
INTREPID TECHNOLOGIEK LLC
TIH S A M ENDED AN D R ESTATED OPEM TING AG REEM ENT ism adealldentered
fmo and effective asofJANUM W 1,1999,by m1d amtmg those Membtrs(detined below)
executingthisAgreement.ThisAyeementismadewithreferencgtothefollowingfaots:
*
STATEM ENTS OF FACT;
A. lntrepidTechnolagieszLLC wasfonnedby tlleftlingoftheArticlesofOrgattization

with the Nevada Secretazy ofStateou September28,1998,forthe formatio? pursuantto the
applicableprovisioasoft:eNRS(asdefmedherein).
B. TheM em bersexecutingthisAgreem entwishtoadoptthisAgreem entastheOperating
Agreem entofthe Company,governing its organizxation and m anagtm entand the 11g,
111,peweo,
dutiesandobligaEonsoftheM anagtmtntcolnmittee,thcManager,andtheM embers,respedively.
NOW ,THEREFORE,in cgssideratipn of the fqregajag premises and tlze mutual

covenants and conditions contained herein,and with the intentian of being Iegally bound
herebs tlle partieshereto agreeasfollews:
ARTICLE 1
DEFINITIO NS
'
Exceptasol erwiseseparatelydefinedelstwhereinthisAgrtementfollowjngaretlteterms
andmeaningsastlsedthroughoutthisAgrefmeni:
1.1 ''Adiasted CapitalAccountDeficitf'm m'
m s,withrespectto any M ember,thedetidt
balarmozifany,in such M ember'sCapitalAccolmtasoftheend oftherelevantFiscalYear,after
givingeffecttotim followingadjllKtrnents:
1.1.1 h c- suchc& iG Ac x tbyr ya oc tswMchsc hM emW isobligated
tocontdbutetotheLLC (pursuanttothetenrisofthisAgreementorotherwise)orisdeemedtolx
oblig&tedtocontributetothelcptlrsuanttoRegulatiomsSedions1.704-2(g)(1)and1.704-2(i)(5)'
,
and
-
1.1.2 Rtd.
uoe s'uch CapitalAcctmt by ttle amountof the itcms described in
RegulaionsSections1.704-1(b)(2)(ii)(d)(4),(5)and(6).
i, !C
7211 662.
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2. 2003:06-cv-00056-PMP-VPC
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1
,
1.2 ''Affiliate''means,whenusedwithreferencetoaspeciti.
edPerson,(i)thePrincipal
ofthePersony(ii)anyPersondireotlyorindirectlycontrolling,controlled byorundercommtm
controlwithsuchPersona(i.
ii)anyPersonowringorcolttrolllngT'
EN PERCENT(10%)ormom ef
theoutstandfngvotittginterestsofsuhPerson,and(iv)anyrelativeorspouseofsuchPerson.
1.3 ''Aureenlmnt''meanstllisAmendtd artd Restated Operating Agreem entoftheLLC,
asoriginally executed and msmnended from time to tim ehereaher,msthe ctm textreqtlires.W ords
suchms''he.
rein '''hereinafterz''''hereto''''
hereby''and''hcreunder'whenusedwithreferencttothis
Agreement,tet'
rtothisApareemeatasawhole,lmlesstllecntextthetwiserequhes.
1.4 ''ArticlesofOrganization''meaasttteArticlesofOrganization(which inctudesa

desigaationoftesideutagentf0tseniceofproc
'ess)filcdwiththeSecretaryofStateoftheStateof
Nevadaon SV TEM BER 2s,1998,FtlingNo.1-:,C-5563-98,forthepmposeoffomzingtheLLC.
1.5
''AvailableCashFlow''meaas,wth respectto anyFiscatYem'orotherperiod,the
sum ofaljcashreceiptsoftheIICfrom anyartdallsotuces,lessa1lcashdisbursements(kaluding '

loanrepaymeats,capitalimprovementsandreplacemcntslandareascmablcallowanceforReservesp
contingenciesand D ticipated obligationsasdeterm ined by theM anagem entCornm ittee.
1.6
''Bf)t)k Depreciatien''menngforeachFiscalYearorotherperiod,anamolmtequal
totheDepreciatiow excepttilatifthcGrossAssetValucofanyassetdiffersom itsadjtlstedbasis

f0rfederalitzcometaxpurposeesatthebeginningofsuohyearorotherlheriod,''book depreciation''
withrespecttosuchassetshall,exotptmsotherwisercquiredbyRegulationsSectioa1.704-3(d),be
artamountwhichbearsthesameratiotosuohbegimngCzrossAssetVatueasthtDepreciationwith
respecttosuch mssetforsuch yearorotllerperiod bearsto suchbegnningadjusted txx bmss.

However,iftheRderalincometaxDepreciationwdlrespecttosuchassetforsuch yearis''zerop''
bookdepreciationshallbedeterminedwithreferertcetosuohbeginaingOrossAssetvalueusingany
reu onable m etllod seleoted bytlm LLC.
1.7
''Business''or''BusinessoftheLLC''m eanstlltbtlshlessofthe LLC a.

qdetined in
Seotion 2.7hereof.
1.8 ''CapitalAccountl'ofaM embershallhavethemeaning setforth in Section 3.5.3
hereofand shallbedeterminedin accordmlcewith Sedion3.6hereof.
.
- -
1.9
''CapifalContribution''shallhavttlw meaaningsetforth in Stdion 3.7.1htqeof.
1.10 ''Chs
k'A M embertz'fmeansthoseM embersreccidng a PrioritrRef
a'rn(defined
bdow)andhavingpriozit)rovtrtlm Class3 Membelsindie butionsfzom theLLC andinvoting
,
rights.
'
1.11 'lclassBM emberfsll'meansthoseMembersreceivingaprioritylu hunandreceivittg

subordlnated distributionsfrom thoLLC untiltheClassA M embershave received theirPrieritg
Renlrnandaretttm oftheiraggtezatCapitalCnttitutionstotheI-LC.n eClassB M embersshall
havenovotingrights.
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l.12 ''C:de''meansthelnternalllevenueCodeof1986,asamended,oranycorresponding
provisionorprovisiansofanysucceedinglaw.
.
1.13 'lcommitteeMembertsl''memlsanyorallofthetltrce(3)Personsappointeedbythe
M om bersto senreontheM anagelnentCom mitleepursuantto Sectio:l6.l.4 ofthisA greement.The
ConmzitteeM mnbersshallata11timesactcollectivelyastheM anagementCommittee,whichshall
bochargedwith thosepowers,dutiesandresponsibititiesassetfotth inAdioie6andelsewherehl
thisAgreem ent.
1.14 ''bepreciatlon''means,foreachFiscalYearorotherperiod,anamolmtequaltothe
depreciation,amortizztionorothercostrecovery reductionallowablewith respecttoan assetfor
such FiscalYearorotherpeliod.
*
1.15 ''bissolutioaf'meafts(i)whenusedwithreferenoetotheLLC,theearlierof(a)the
date upon which the LEC is term hlated tmderthe N RS,or any sim ilarprovision enacted in lieu
thereof,or(b)thedateuponwhichtlleLLC ceasestobeagoingconcerw and(ii)whenmsedwith '

TeferencetoanyMember,theearlerof(a)thedateuponwhichthereisaDissolutionoftheLLC or
(b)the dateupon which such Member'sentireinterestintheLLC isterminate,d l)y meansofa
distributionorseriesofdistributionsbytheLLC to suchM ember.
'
1.16 ''Eennomr
'clnterest''meansaPerson'srighttoshareintheNetProfits,NetLosses
orsirnilaritemspursuanttoSectioas4.1.1.4and4.1.2.5hereof,andtorcceivedisttibutionsfrom the
LLC pursuantto Sedierls5.2.5 and 11.4.6heref,whichtheaqsignorofsuch economicinterest
would olhenvisebecnitled,butdpesnotincludeanyotherrightsofaM emberi
ncluding,without
liraitation,thezightto Vote,toparticipateinthemanagementoftheBlzsinessand tlleaffaizsofthe
LLC,oranyrighttoiaformationcoscem ingtheBtlsinessoftheLLC.
1.17 ''Fiscal Year'tmeaus the fisoal yem'of tlle LLC,runniag for the period of
JANUARY 1to mldinoludiagDECEM BER 31ofeachcalendaryear.
1.18 ''GrossAgsetValue''mearus,withrespecttoartymssd oftheLLC,theasset'sadjugted

basisforfederalincom etax putposes,exceptasfollow s:
1.18.1 n einitialGrossAssetvalueofanyassetconfdbutedbyaM embertotheli c shallbethep ossfairnmrketvalueofsuch assetaasagreedbetweentheLLC aadthecontrlbuting

M ember.
1.18.2 Tlw GwssM setValueofallLLC ssctsshallbeadjzzsted to eqtmltlleir

respectivegrossfairmmketvalues,asmutuallyapcedbetweentiteLLCandtheaffectedM embd s)
upontheoccurreaceoftltefollowingevents:
1.18.2.1 n eacquisition ofan additionalInterestintheLLC by anynew or
existing M emberinexohangeformoretI)M a#-qminimisCapitalContzibution;
jkj
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1.18.2.2 ThedistributionbytheLLC toaM emberofmorethanaA minimis

amountofcashorpropertyascoasideratioafortheaoqusitionofa11oraportionofsuchM embet's
lmerestintheI-LC iftheLLC reasonablydeterminesthatsuohadjustmentisnecessaryorappropriatc to rctlectthe relativeeconom ic interestsofthe M em bersin the LLC;and
1.18.2.3ThtliquidationoftheLLC withinthemeaningofRegulationsSection
1.704-1(b)(2)(ii)(g);
1.18.3 Ttm GrossAssetValucofanyLLC assetdistzibutedto any M embershallbe
thegrossfairmarketvalueofsllclAassetasmutuallyagreedbythoLLCandtheaffectedMemberls)
ontl:datet)fdistributitm.
4.18.4 TheGrossAssetValueoftheLLC mssetsshallbeincreased(ordecreased)to

refled anyadjttstmentatotheadjtkstedbasigofsuchassetsptustu'
mttoCodesection734(b)orCode
section7430% butonlytotheextentthalsuchadjustmentsaretakenintoaccolmtindeterrnining
CapitalAccounts purmlnntRegulationsSection 1.704-l@)(2)(iv)(m)and Section 4.9 hereof;
providedohowever,tllatGrossAssetValuesballtmtbeadjustedptlrsuanttothisSection 1,18.4to
thocxtenttheLLC determinesthatanadjustmentplvsuuttoSection1.18.2aboveisnecessaryor
appropriateincontwctionV t.
IIthetzansactionthatwouldothem iseresultinanadjustmentunder
tlus
' Section 1.18.4.
IfGeCrrossAssetValueofanassethasbeendeterminedoradjustedpursuant
toSoctions1.18.1,1.18.2orl.18.4above,suchGrossAssetValueshallthereafterbeadjustedby
theBook Depreciation taken into accountwith respeotto suoh assd forpttqosesofcomputing
proftsandlosses.
.
1.18.5 lftheLLC aad any affected M emberpursuantto Sedions 1.1@.1,1.12.
2'
or
1.18.3 above m'

e unable to agree on the GrossAssetValue ofany mssetfol'puzposes ofthis
k
Agreement,amtztuallyacceptabltapprms
ershallbeselecttdbytllem fOrthispurpose,andthevalue
establishedbysucllappraisalshallbtbindingupoatheLLC and'tlze'affectedM ember.
1.19 ''G uaranteed Pavm eqf''hast

llem caaing setforthinsection6.6.z ofthisAgreem ent.
1.20 ''LLC''or ''Com nanv''m eans
Pm W CHNOLO GIES,LLC,t'
he N evada-
limitH -liability companyformedpursuanttothcArticlesofOrganization.

1.21 ''LLC Izaan.s''shallreferto any loans,lilwsofcfeditoradvances made by any
M embertotheLLC,ExceptasQtlzerwis:specifieedin thisAgreementmsuchLLC Loaasshallbear
interes'tatthemteagreedtobetweentheM emberandtheM aaagementCommittec.
1.22
''LLC M inim um -flain''m eanst'

heam ountdetenninod by computingw ith rem ectto
eachnortrecourseliabjlityoftheLLC,theamountofgain(ofwhatevercharader),jfany,thatwotlld
berealizzdbytlzeLLC ifitdisposed(111ataxabletransaction)oftheProperty subjectto suh
liabilityinfllllsatisfactioniereof,artdfornootherconsideratilm,andsubjecttotheotherrulesset
(D N/
J WWO AC
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forth in RegulationsSection 1.704-2,and by then aggregatingtheam olmtsso com puted assetfol'th
i.
aRegulationsSection 1.704-2(d).
-
1.23 ''M aioritv in Interest''or''M aloritv in tn.terexqtf)ftheM embers''means,lmless

othetwiscprevidedintheAgrccmcntathepercentagefnterestsoftheClassA M embers,whioh,taken
-
. ..
together,exoeedFIFTY PERCENT (50,4)oftheaggregateofallPercenugelnterestshcldbyall

ClmssA M embersentitled to Votc orgrantconsentwith respectto the m atlerin quesfon.
1.24 ''M anatfementCommittee''means,cllectively,t:etlu'ee(3)ComnlitteeMemhers

appointed by the H embersto manage tlw LLC pursuantto Sedion 6.1ofthisAgreem eatacting
togetherto managetheLLC irtaccordancewiththetermsandcondititm softhisApeement. The
M anagem entCom m itteeshallbccharged with thosepowers,dutiesand responsibilitiesassetforth
in Article 6 ald elsewhere in '
thisAgreement.
'
1.25 ''M anaaer''meansthe Persoa appointed under Section 6.1 ofthisAgreementto

managetheLLC.TheM anagershallbechargedwiththosepowers,dutiesandresponsibilitiesas
setfortltinArlicle6andelsewhereinthisAgteement,
1.26 ''M em ber''m eansa Person wl
lo:
1.26.1 Hasbeen admittedtotheLLC asaClassA M emberoraClassB M emberin

accotdancew1t.
14theArticlesofOrgatdzationorthisAgreement,orisa:lassir eeortransfereeof
arlIntorestsotherthananEconomicInterest,andwhohasbecomeaM emberpursuanttoSection9.3
hereof.
.
'
1.26.2 Hmsnotresigned,withdrawnorbeertexpetledasaM emberor,ifotherthanan

individual,hasbeen dissolved.
'
1.26.3 HaspailhisCapitalContzibutiont;tIPLLC inexchangeforanInterestinthe
LLC,Qr,intllecaseofakansfereeM ember,hassuoceededtotheCap-itz Accolmtofthetransferor

M emberratld who hmsbecom eapattyto thisAgreem entby execullngand subm ittingtotheM anager
acounterpartsignaturepagetothisAgreementaceptingthetermsandconditionsotlandagreeing
tobelxhundby,tbisAgreem ent.
Reference to a ''M em ber'shallbe to any one oftbe Class A M embers orClassB
M embms oftheLLC identifiedin Section 3.1below t)rasothenvisesupplementedalld identised

on EXH TRIT A attached to ard m adea partofulisAx eem ent,whioh oxhibitm ay beam ended or
mod ed fw m tlmetotime.
1.27 t'M em ber N onrecoun e Debt''has the m eaning setforth itlReguladons Sectitm
1.704-709(4)for''
parttlerzmnrecoursedebt.t
'.
1.28 ''M em berNonrecourse DebtM inlmum G alll''m eans an amotmt,with resped to
eachM emberNonrecourseDebt,equaltoGeLLC M inimtlm GalnthatwouldresultifsuchM ember
X Zjy4KVQO AX
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NonrecoutseDebtwerekeated asanonrecourseliability ()ftheLLC,determ inedin accordalleewith
RegutatkonsSections1.704-2(i)(2)and(3).
l.29 ''M emlbe
.rNonrecaurscDeductiotls''1:
% themeaaingsetforthinllegulatitmsSecticn
1.704-2(i)(2) for ''partnernoxuvcourse dedtlctions.' 'lhe amotmt of MembetNoarecotvse

D eductions with zespectto a M emberNonreoourx Debtfora FiscalYeazofthe LLC equalsthe
excess(ifany)ofthecetlncrease(ifanylintheamountofMemberNonrecourseDebtMinimum
Gain attributable to such M emberNottrecourse Dcbtduring lhatFisoalYearovertlieaggregate
amountofanydistcibutionsdttringthatFiscalYeartotheMomberthatbears(orisdeemedtobear)
theeconomiclossforsucttMemberNomecourseDebttotheextentsuchdistribmionsarefrom tlw
proceeds of such M ember Ncnrecourse Debt mzd are allocable to an inorease in M embcr
NonrecottrseDebtM inimum Gain attributabletosuch M emberNonrecourseDebtadeterminedin
accordancewfhRegulationsSedion1,704-2(i)(2),
1.30 ''M embershinInterest''or''tsterest''meansanQwnershipinterestinthel-tf,which
includesa M em ber'sEconom ic Interest,the rightto V ote orparticipate illthe m anagem entofthe
LLC,arld therightto inform ationconcerningtheaffairsandBusinessoftheLLC asprovidedZ this
AgreementandundertheNRS.TheM embership JnterestofaM ember(includiag the Econornic

Interest)constitutesthepersonalpropertyoftheMember.NoMembet,byvirtueQfhisownership
ofaM embershipInteresqhmsorom u,orisdeemedtohaveorosm aninterestina1loranypartof
the tl-'s Property.
1.31 ''NetCapitalContribution''m eansaM ember'sCapitalContlibution,msofany date,

REDUCED BY 11priordistributionsofaM em ber'sCapitalpursuanttoM icle5 and/orArticle ll
hereof.
1.32 dfNetProfittsl''and 'fNetLossesfesl'fmcanoforeachFscalYearorodlerperiod,aa
amounteqm ltotheLLC'Stqxableincomeorlossforsuchyrearorperiod,determinedinaocordaace
withCodesection703(a)(forthispurpose,a11itemsofincome,gai
.
p lossordeductionrequiredto
bestatedseparatelypursuaattoCodesection703(a)(1)shallbeino'lue'dV tzxableincomeorloss),
wit.
htllefollowing adjllsrfments:
1.32.1 Any klcome ofQle LLC thatisexemptfrom Federalincometax arld not
othenvisetaken intoacootm tilloom puting NetProstsorN etLossesshallbea'ddcdtosuch taxa-ble 'incom e OTloss;
1.32.2 Anyexponditures(hI'fIIeLLCdescribedincodeseotion705(b)(2)(B)rtreated
a.
qCodesecdon70504(2)1 )expenditureasptlrsttanttoReguladonsSetion1.704-1(b)(2)(iv)(i)and
nototlwnvisetaken into accountincomputingNetProfitsorNetLossessha'
llbesubtractedfrom
stw.
h taxablo kmom e orloss;
1.32.3 oain Qrlossresulting from anydispositionofPropertywithrespecttowhich
gainorlossisrecoW zedforfederalinoometaxptuposesshallbecomputedbyreferenoetothefair
markd value ofthe Property dispostd ofinotwithstanding thattlteadjusted tax hasisQfsuch
Property dffersfrom itsfairmmketvalue;
Smmzlk
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1,32.4 Inlieuofdeprcciation,amortization,andothercosttecoverydeductionstaken
into accoutlt in com puting such taxable incom e or loss, there shall be taken into aoount
Depreciation forsuch FiscalYearorotherperlod,conp uted ia accordance with the subsection
hereofeatitled ''Depreciation'
';and
1.32.5 N otwithstandingany otherprovisicm oftllissubsection,any item sofincom e,
gainzlossordeductionwhicharespeciticallyallocatedshallnotbeukenintoaccolmtincomputing
N etProtksorNetLosses.
1.33 ''NRS''meansChapter86,Sections86.011to86.571,ofthehlevadaltevisedStatutes:
msamendcd,oratzycorrespondingprovisionorprovisionsofany succeedinglaw. .
1.34 Rpercentag
yeInteresttsl''meansafractinn,expressedasapercentage,thenumeratof
ofwhich isthenum berofUnitsowned by aM em berand tlledenom inatorofwhich istheagm egate
ntunber ofa1lissued and outstanding Units ofthe M embers.The Percentage Interests ofthc
M em bers shallbe sd for on EXN TRIT A attached hereto and m ade a partofthis Agreem ent,
w hich exlzibitm ay be updated attd am ended fro'
m tim e to timeby theM anager.
1.35 ''Person''means an individual,partnership,lim ited partnership,corperation,trustj

estate,mssociatiop limited-liabilityoomparly,orotherentity,whetherdomesticorforeign,
1.36 ''Principal''meansthePezson wbich isinaltimatecontrolofaM ember.

1.37 ''Priorit!rRetum ''m ennstheprlority return to each oftheClmssA M embersarld the
Class B M embers of an accnzed cttmulative retlmz on each of thdr respective Nd Capital
ContributionsinanamotmtequaltoTW ELVE PERCENT (12% perannum,cumulative,butnot

com polm ded,pro rated foraay period which is a partialyear. N otw ithstanding tlw foregoing,a
Priority Return on in-ldnd CapitalContributionsshzlbecalculated and accnze in an amolmtno

greaterthantheaggregatePriorityRettlrn accrttingtoallcashCapitalContributionstotheLLC.
1.38 ''Preoertv''means a11or any pelsonalproperty aad otherassets oftlle LLC,both
tarlgibleandirltangibleaiacluding,butnotlixnitedlo,theTechnology(detinedbeiow),ormlyportioa
thereof.
1.39 ''Reeulations''or''TreasunrRepdationsi'm eausthefederall com etaxregulatioas
promulgatedbytheTreasuryDepnrtrnentundertheCode,msw chregulationsmaybeamendedfrom
tirnetotime.A!1refermv shtreintoaspecifosece nQftheRegttlationsshatlbedeemedalsoto

referto any corresm ndingprovisionsofsucceeding Regulations.
1.40 ''Resem ee''m eznqfsmrlssetasldefrom capiulContribufonsorrevenuessreserves.
SuchResenresshalibemaintainodin amountsrrasonably deemedsufticicntby theM anagement

Cornm ittee for working capital and the pam ent of tetxes, insurance, debt service, repaim
roplacementsmnewals,orothercostsorexpensesincidenttothe BtlsinessoftheLLC,orin the

altemadve,theDissolutionoftheLLC.
CJW IQO WMRO?AM
OPEM TmGAOREEMENT.PV:7
Case
3:06-cv-00056-PMP-VPC
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1.41 ''Secretax-y ofState''m ennsthe Secretary ofStateofthe StateofNevada.

.
--
1.42 <fUnlt(s)''lneatlsaunitofMembershiplnterestasaClassA MemberorasaClassB

M em berin theLLC representing a CapitalContribution to the LLC in theam ountofTwenty-six
Dollars($26.00)perUnit. TheCompany shallbeauthofizedto issllethe followingnumberarld

classesofUnits:
ClassofUllits
Authorized
N lunber
ClassA Units
ClassB Units
300,000
200,000
1.43 ''Vote''m eu s,exceptwhoresuperscdcd by anotherscction ofthisAgreem ent,oras

may berequired undertheapplicableprovisionsoftheNRS,theCodeorapplicable Regalations
therelmder,thevotesoftheClassA M embers,whetherbyballot,m ittenconsentoravoicevote,
wherein each ClassA M embershalihaveandcastanum berofvotesequaltotlmtClassA M ember's
Percenm ge Interest.
A RTICLE 2
INTROBUCTORY M ATTS-RS
2.l Form ationoftlzel c.Thepartieshaveform edtheli c puzsuantto Seotions86.151
and 86.201.1ofG eN RS by executiug,ackmowledgingand ftlingttt
e ArticlesofOtganizatioawith
the Secretary ofStatealld by eutering irlto and adopting thisAgreement.
2.2
Resignation ofO reanizer.ThepartiestothisAgreementacknowledgeantlap'
eethat
D OU GLA S J.FRY E,anindividual,actedastlzeorganizeroftheLLC solely forthepuzposeofftling
theArticlesofOrganizntionw1t11theSecreta:'
yofSfateasdescribed.
herein and that,immediately
upon theadoption and execution ofthisAgrcomentby it.
sM embers,the orgnnl
ezerslzallbedeem ed
to havcam om atioally resigned,withoutncdceand witholltliabilityorobiigatioa ofany kind tothe
LLC oritsM embers.Accordingly,tllepartiestothisAgreementhereby aca owledgtalldaffirm

a11actionsherdoforetakenon behalfoftheLLC by said organizer.
'
- 2.3
Nam e- 'Ihe name ofthe LLC Ls ''INTREPID TECHNOLOGIES,LLC.'' W e

-
M embersshalloperatetlteBusinessoftheLEC lmdersuchnarneorusosuch otheroradditional

namesastheM mnbersmaydeem necessaryordesirable,providedallsuchnameornamesshallbe
in compliane,ewiththeNRS andotherapplicablelaws.
..
2.
4 PrincipalBqsino sOm ce-TheLLC shallm ainfainitsptincipalbusinessofsceat590
LAKESHOREBOLJLEVARD,m CLINBVH-LAGE,NEVADA 29451,withamailingaddressof
P.O.BOX 4964,INCLINEVILLAGE,NEVADA 29450,oranyotherlocationasdetenninedom
tim eto tim e by theM anagem entCom mittee.
k'ztl
t/,Jaoa j% 4uc
OPEIIAITNGAOREEMSXT-age3
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'
'
.
2.5
..s
...,
R eq
videhtAsxnt;Rczistered Ofllce. Thenameand addressoftheLLC'Sresident
-
agentupon whom processm ay Leserved,oranoticeordem and authorized by law tobeserved upon

I eLI-C maybeserved,isGKLRESIDENT AGEN T/FILIN GS,INC.,aN evadacop oraton,whose
street address in Nevada is ll00 EAST W ILLIA M STREET, SUITE 207, CARSON CITY,
N EVADA 89701,and whose m ailing addressisP.O.BOX 3679,CARSON CITY,N EVADA
89702.Theregistered oflk eoftheLLC inNevada shallbetheaddressoftlzeLLC'Sresidentagent.
'llelocatio:toftlw LLC'
Sregisteredofficeorthenamaaadaddressofitsresidentagenta orboth,
may only bechauged by tilingacertilicateofchangewiththeSecretaryofStateirttheform and

mannerrequkedby suchoffioe.
2.
6 PerpetualExisteate.AssetfotthiatheArticlesofOrganiza
'tinoftlwtaLc,GeLLC
shallhaveperpetualexistence,tmtiltheLLC isterminated ordissolved in accordanccwith this
Agreement.'RleexistellceoftheLLC shalloonuuenceasoftheefrectivedateoftltisAgreement,
SEPTEM BER 28,1998.
2.7
Purpose and BusinessoftheLLC.ThepurposeandbusinessoftlieLLC shallbeto
develop,patentrdistribute,licenseandexploitinanymannerandonaworldwidebasistbatcertain
softwarecompressiontechnologyowntdbytheLLC tthe''Tecllnoloczv'')andtoIinanceanyand
a11ofthefertgolngactivities( lledively,the''Busit= s''l.TheLLC maycondud ortngageirk
mzy othcr lawful activities which the LLC deems is neccssaty,incidentalto or desirable in
connection 5v1t.
11tlle BusinessoftheLLC.
'
2.2 No IndividualA uthariw ofa M em bcr fpr Com

..-mi
ttee e ber. No M em ber or
Com m itteo M mmber,actm
' g aloneorwit.
h the M anager,any otherCom m zttee M ember,ofticeror
-
othernfm-managerM ember,shatlhavethe authorky to actfor,orto lmdere e orassume,any

obligation,debt duty orrespoasibitityon behalfoftheLLC.
.
2.9
Titleto Prnnertvin theNam ef)ftheLLC.A11Property ownedby the LLC shallbe
held arld owaed and oonveyance made in the name ofthe LLC. Al1v eements,documents,
ctrtitkatesmldotherinsttumentsprovidingfortfleacquisitonor'oth'
ertlispositionofPropertyof
theLLC slzallbevalid and binding upon it,exceptmsotherwiseprovided herein,ifapproved bythe
M anagem entComm itteeand executed by thePresidentoftlle LLC asprovided forheroin.
2.10 V a-intenance ofCom panv M lnute Beok:R ecerd KeepiuR Dutims. '
I'hc M aaager
(prtte Secretary,ifoneisappointedbytheManagementCommittee)shallkeepandmaintainor
causetobekeptandmnintainedacompanyminutebookto includetheArticlesofOrgnnizntioaof
tIKLLC andtbisAgreementyandanyamendmentstheretsandminutesofa11meetings(orconsents
inlieuofmeetings)ofth?ManagomentCotmnittee,writtenconsentsofthcMembers,andotlwr
im portantdocum entsoftheLLC.
z,wl
u,eul
OPBM '
IRNOAGREEMENT-Page9
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.
,..,
ARTICLE 3
M EM BEM ANllCAPITAL CONTRIBUTION S
3.l Nam esmA ddressesandClassesoftheM em.bers
..Thecom pldenam es,addressesatld
classvsoftheM embersoftheLLC aresetfbrthoaEXRIBIT A attachedheretoarldmadeapartof
thisAgreementawhich exhibitmaybeameadedormodifiedfrom timetotime.
.
3.2 M em bercapitalContributiolls.A1lCapitalContributionsoftlzeM embersshallbe

setferth on EX HIBIT A attachedhereto and madeapartofthisAgreem ent,which exhibitm aybe
am ended orm odifiexlflom tim eto time.The M em bers'CapitalConkibutionsshallbeinexchauge
forUnitsin theLLC assetforth onEM IIBIT.
A attache,
d hereto.
3.3
PavmcntT.er.
m
-.s (kfCapitalCoatributiaqs. IfaM emberfailsto m ake a Capital
- .
contribution within thirty (30)days.afterwritten requestby theManagerto do so,tllen that

M em ber'seatire M em bershipInterestshallterminateandthatM embershallindenm ify and holdtlw
LLC an.
d a11oftheotherMembersharmlessfrom anyloss,costorexperkse,including reasonablc
attomeys'feesandcosts,catlsedbythefailuretomakesuchCapitalContribution.
3.4 A dditional Caoital Contribution or Loans to the LLC. Additional Capital
Contributionsfrom tl)eClssA M embe'
rsmay becalled forfrom timetotimebytheM anagement
CommitteeuponwrittennoticetotheClassA Members(the''
AdditionalCapi/lContributionf')
toenabletheLLCtoconductitsBusiness.ThewtittennoticetotheClassA M embersshallsetfort
.h
theamotmtofAddidonalCapitalContributionsneeded,tlw dateby whichtheClassA M embers
shallcontribute,whichdateshallnotbesoonert11= ten(10)daysofreceiptofsuchnotice.Each
ClassA M em bershallberequiredtomakesuchAdditionalCapitalContributionsin proportion to
thek PercentageInterestin thc LLC.No Memtlermay veltmtarily make any AdditionalCapital
Contributions and shallnotbe required orperm itte,d to make any m ake any loan or cause to be
loanedany money orotherassetstotheLLC.
3.5
Itie
.-ht.
sm th Respectte Capital.
3.5.1 LLC Capital. N o M em ber shallhave the lightto withthaw orreceiveatky
rettlrn ofitsCapitalContdbution,and no CapitalContribution may be retumed in ttr form of

Propertyotherthancash,exoeptasspecically providedhereln.
'
3.5.2 NaIntereston CapitalContributions.Exceptasexw esslyprovidedforin

thisAm eom ent,no CapitalContribution ofany M embershallbev any interestorothmw ise entitle
'
theconkibutingM embertoanycompensationfortkse()fthecontributedcapitl.
3.5.3 EstablishmentofCapitalAccitm ts. A separate CapitalAccolmtshallbe
estetblished andm ai
ntained foreachM em ber.Forrecordkceping ptuposos,eaoh M em ber'sCapital
Accountwillbeseparatedintoaoontribuqonaccotmtanda!lincome(loss)accotmtandwillbe
.
maintained ascordhlg to gerterally accepted accounting principles. Sections 3.6 and 3.7 below
describothoappropriateaccotmtingtfeatmentfortaxpurposesoftheCapitalAccounts.
ltrk
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.
-,
3.5.4 N ()Pavm. etltofSalaries(j1-Draws.No Membcrshallreceiveorbeentitled

to receiveanypaym entofsalariesordrawswith respectto itsCapitalCentribution orthe balance
in itsC-apitalAccountorforsmvicesrendered on behalfoftheLLC erotherwise in itscapacity as
a M em beroftheLLC,exceptasexpressly provided forinthisAgreem eat.
.
3,6
G eneralRulesfo -Determ inin Ca italAccounts. The CapitalAccotmtofeaach

.
M embershallbedeterminedastbllows:
3.6.1 Increases.TheOapit;llAccotmtofaM embtrshallbcillcreasedby:
3.6.1.1SuchM ember'scashooutributions;
*
3.6.l.
2TheG ossAssetValueofpropertycontributedbysuchMember(net
of liabilities secureed by such contributed property thatthe LI-C isconsidered to mssum e er tako
sutjed tounderCodesection752)'
,
3.6.1.3 AIIliabilitiesoftlw LLC assumed by such M em ber,excludhlg those
provided forin Section 3.6,2.2 below;and
3.6.1-4 AIIN d PX IELSOftIK LLC allocated tosuchM emberpursuanttoArtiole
4 orotheritemsin the natureofincomeorgain specially allocated hereunder,and in each case,
appropriatelyadjlzstedtotakeintoaccolmtbookandtaxdifferences.
3.6.2 Decreases.TheCapitalAccotmtofaM embershatlbedectea edby;
3.6.2.1n e am otmtofash distributed to such M em ber'
,
3.6.2.
2 The Gross A sset V alue of a11 acm al and deemed distributions of
prom rty madeto such MemberpursuanttothisAgreement(netofliabilitiessecurmd by such
distributedpropertythattheMemberisconsideredtoassumeortkejubje-cttounderCodesection
752).
,
3.6.2.3A11liabilidesoftheV embernnmlmed by thoLLC,excluding those

Provided forin Section 3.6,1.2 above;and
'
- -
3.6.2.
4 A11Nd Lossesoftlle LLC allooated to such M ember pursuantto
Artide4 orotheritemsintlm natlveoflossctdeduction speciallyallocatedherelm der,andineaclz
case,appropriatelyadjtustedtotakeintoaccountbookmzdtaxdxerences.
3.7
S eclalRulesW ith Res ectto Ca italAccount:.

3.7.1 Tim eofAdiustm entforcapitalContributions.Forpurposesofcomputing
thebalancein aMember'sCeapltalAccolmtjnocreditshallbegivenforany CapitalContribution

which such M emberisto makr lmtilsuch contzibution isacmally made, Forpuqmsesofthis
Agreemens theteml'rcapitalCoutribution''meansthetotalamountofcash aniorthe Gross
AssetValue(netofliabilities)ofpropertyinitiallyoonkibutedorobligatedto'
becontributei-te
-the
hm rzoee*e- -
OPERATmGAGREEMENT.PVe11
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19.7214 F. 13
.
,-)
LLC bythatM emberartdany subsequentc/ntributiollsofcaslland/ortheG

efliabilities)ofanyothe
rossAssetValue(net
rproperty subsequtntly colltributed orobtigated to bo oontrilm ted to the
LLC by thatM ember,includingAdditionalCapitalContributions.
3.7.2 IntentteComplvW ithTreasua Regulatiotts. Theforegotngmovisionsof
S
ec
t
i
ons
3.
5
atd 3.6 aallthe otllcrprovisions oflhis Agreem entrclating to the m ahltenmw e of
C
a
pi
t
a
l
A
c
c
o
un
ts are im ended tta com ply w ith Regulations Sectioa 1.704-1(
i
b),and shallbc
nterpreted and applied in a m annerconsistentwith such RegulationsSection. To the exteatsuch
pr
C ovisiorlsareincoasistentwith suchRegulatioasSeotionorareinoompleteM !.IIrespectthereto,
apitalAccomm shallbem aintained in accordance wtth such Regulations Section.
.
3.8
Transferee', CapitalAceeunt. In ttm eveut a M cm ber tralzsfers alz lnterest in

aecordancz wltllthetermsofthisAppw menta thetransfereeM embershallsuoceedto theCapibal
AccolmtoftlzetransferorMembertotlleextclltitrclatastothetransferredlnterest. In thceventof
atransferby aM emberorbyaholderofan EconnmicInterest thetransfereeshallnotsuccged to
aay portionoftileCapitalAccolmtoftheq'
ansferorM emberorbolderofan BconomicIntezest.
3.9 LimitationsoaLiabiliw and OlyligationsoftlleM embmrsand M aners. Except

f
eraM mnber'sliabilitytotheLLC foritsCapitalContribtttiousmadeoragreaed to be m ade,orfor
any liability arising afteraM emherhaslighttlaljy received aretum ofcapitalpursuantto NRS
Sedion 86.391,andtheHghtsofjudgmentcreditorstocharaeaMember'sBconomicInterestfor
certainlmsatisiedjudm entsofaMembetputsuanttoNRSSectioa86401yandtmlessothefwise
.
providcd forin an agreementsir ed by aM ember, the M amgeror Committee M emberto he
'
charged,noMember,ManagerorCornmitteeMembershall%eindividuallyliableunderajudgment
decree ororderofcom't, orin any othermamer, foIaay debtoobligatioa QriiabitityQftheLLC,
whetlwrornotthatliabilityorobligationmiscsinccntrad ortom NoM embershallberequimdt

loan any m ndsto theLLC,exceptasprovided forin thisA greem ent
.
o
N o M embershallbercquh'
ed
temnk'
eanycontributiontotheLLC byreasonofanynegativebalmweirlhisCapit? A cootm t,npr
s
ha
l
l
a
n
y nogative balanoein aM ember'
sCapitalAocotmtereatqany liability on thepartefthe
M
omborto anytl'
tirdparty.
M
3.10
NfjR esoonsibilitvorlaiabiliw forPa -Form ation Com m itm ents. Intheeventany
embe:(QraaysuchMember'sshareholde:s,patoersorAm llates)basincurredanyindebtmlncs
oroblkationpriortothecommencementoftheexistenceoftheLLC thatrelatcdtoorotherwise
effects+eLLC,neithertheLLC noranyotherM embcrshallhavranyresponsibilityorliabilityfor
,
orw1t,
11respecttosuchindebtednessorobligatiow unlessassumedbytheLLC pttrsttanttoawritten
ingtrumentdulysigm dbya11M embtrs.
AR TICLE 4
ALLOCATION O1?NET PROFITS AND M T LOSSES

4.1 Allocation ofNetProfitsand Netlx sse-s. Ex- ta.
sothtrwise providcd in this
M iclc4,NetProiitsandNetLosscsofthebLC in eahFisoalYearshallbe allocated among the
M embersassetforth in Sxtions4.1.1and 4.1.2 below .
--
'
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I - IAA'RX'AM
OPEPUATTNG AGREEMBNT -Page 12
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4.1.1 NetProfits.NetProfitsshallbeallocatedamongtheM embersasfollows:

4.1.l.1First, N et Ptofits shall be allocated among the M em bers in the
proportioninwhichtheM emberssharedintheNetLosseslmtilaaamountofcumtllativeNetProfits
hasbeenallooatcdequaltothetotalofcumulativeNetLossespreviouslyallocatedtotheM embers
.
4.1.1.2 Seoond,anamolmtofNetprofitsequaltotheaggregateFriorityReturn
which has notbeen previously allocated to the Ctass A M em bers endtled to a Priority Return
ptvsuantto tllis Section 4.1.1.2 shallbeallocated,pro ratw to theClassA M em bcrsin accordanoe
withtheirrespectivePercentageInterests,
4.1.1.3 'Ikird,an amountofNetProtitsequalto tlleaggregatePriority Retum
wbich has noe been previously allocated to the ClassB M embers entitled to a Priority Return
pursuanttothisSectio:l4.1.1.3shallbr.dlocated,proratartotlleClassB M embersin accordance

w ith theirrcspectivePeroenlage Interests.
4.1.1.4Thereafter,NetProfits shallbe allooated among the M embers in

accordancewithttleirrespectivePerceatageInterests.
4.1,2 N etLosses. Exceptasotherwiseprovided in tlzlsArticle 4,N etLossesshall
be allocated am ong theM embersasfollow s:
'
4.1.2.1First,Net Losses shall be allocated among the M embers hlthe

proportioninwhichdw M emberssharedintlzeNetprofitsuntilanamotmtofctlmulativeNetLosses
hasbeen allocated equaltothetotqlcum ulative NetProftsprevioltsly allocated lo tlle M embers
.
4.l.2.2 Second,pTo z'

at.
a,to FCP/LP and FREM ON T TRUST, as Class A
M em bers,in proportion totheirpositivebalmwes,ifarly,intheirrespective CapitalAccounts,unti! .
FCP/LP'Sand FREM ONT TRUST'SCapitalAoceountbataocesarereduce,dtozero.

4.1.2.3 Third, to M ONTGOM ERY TRUST, as a Class A M em ber, ln
ptogortionto th.
epositivebalance,ifany,inhisCapitalAccotmt,untilM ON TGOM ERY IR UST'S
CapitalAccotmthatanceisredtlced tozero.
'
4.1.2.4fourth,Netlwosses shnllbe allocajed te tlle Clmss B M embersin

prom riontotitepositivebalanccs,ifmky,intheMtmtrrs'respectiveCapitalAccotmts,uatilsuch
biancesare reducedto zero.
4.1.2.5Thereaftcr,NetLessesshallbeallocatedtotheM embersinprom rtion
tthpositivebalu ces,ifany,inthtM embers'resm otiveCapitalAccounts,untilsuchbalr cesare
reducd to zero.
TheM embersinfendthattlleallocationsprovidedforinthlsSedion 4.1shallresultintheparties
-.
obtailtingclistributiom overthelifeofthel
iuLc (includinguponliquidation)whichwillbeidentical
to tlloseprovided forin Section 5.2 hereof,andBillalso restlltin theparties'adjlzstedfypital
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.v?
Accotmt balances upon tiquidation being in proportion to those necessary to achieve such
distributionsweretheLLCtomakefmalJkuidatingdistributionstotheMembersinaccordancewith
theirrelativeadjustedpositiveCapitalAccountbalances.Accordingly,totheextentnecessafyto
ensurethatthe allocationsprovidedforil1thisArticle4 resultindistributionsoverthe lifeofthc
LLC which areidenticaltothoseprovidedforin Sectic?n5.2hereof,theM anagershallmakesuch
adjttstmentstotheallocatiolu providedforinArticle4asarereasonablynecessarytoacllievethe
foregoicgresult.
4.2 RegidualAllocations.ExceptasothetwiseprovidedinthisAgreement,a1litemsof
LLC income,gain,loss,de-duction,and anyotlwrallocationsnototherwiseprovided forshallbe
dividedbetweentheM embersinthesamepmportionsasdley shazeNetProtitsorNetLosses,ms
the casem ay be,fortheFiscalYear.
*
4.3 Oualified lncomeOffset.IfanyMemberunexpectedlyreceivesanyadjustrfmnts,

allocatioas or distlibutions described in clauses (4), (5) or (63 of Regulations Scotion
l.704-1@)(2)(ii)(d),itemsofLLC incomeshallbespeciallyallocatedtosuchMemberinatlamotmt
and manner sufficient to elhninate the Adjusted CaptalAocotmt Descitcreated by such
adjttstments,allocationsordistributionsasquiclclyaspossible. ThisSe-ction4.3isintendedto
constitlzte a ''qualificd inconw offset' witl'
lin the meaning of Regulations Section
1.704-1(b)(2)(ii)(d)(3).
4.4 M inimum GaiaCh.arzeback.IftllereisanetdecreaseinlalucM irtimum Gaindttring
aFiscalYe.
ar,eachM emberwillheallocated,beforeanyotherallocationtmdertiiisArtiole4,items
ofincomeandgxinforsuchFiscalYeartandifnecessary,subsequentyears)inproportiontoand
totheextentofanamountequaltosuchM ember'sshareofthenetdecrmaseinLLC M inimum Gain
determinedinacoordance* t11RegulationsSectionl.704-2(g)(2).'ThisSection4.4isintendedto
comply with,andshallbeinterpretedconsistently with,thc''raiminlum qaia ohmveback''provisions
ofRegulationsSection 1.704-2(9.
4.5 M embprNo.nrecourseDebtM inimum Gain Clzrziback Notwithstqnding any
otller prodsion of tltis Articie 4,but except Section 4.4,if there is a netdecremse in M em ber
N onrecourseDebtM inimum Gain attributable to a M emborN orlrecourse Debtduring any Fiscal
YearoftheLLC,each M emberwhohas:shareoftheM emberNonrecourstDebtMinimtunGain
Y bA bletoxchM- berNovcowseDebhdcke edl accord=x u iTmao Re> aibns '
Soction1.704-2(i)(5),shnllbesm ciallyallooateditemsofLLC incomeandgainforsuohyeart=d,

'
ifnecessary,subsequentyears)iu wlamountmqtlalsuch Member'ssltareoftllenetdecreasein

M emberNonrecourse DebtM inirnum Cxain attributable to such M emberNonreoourse Debt
ddermined in accorflnncew1t1:RegulaonsSecon 1.704-2(i)(4). M locationspurstmnttothe

previoussentenceshallbom adein proportionto the respectiveam otmt.
srequh'
e,d to be aliocated to
eachM omberpursuantthereto.Theitemstobesoallocatedsballbedeterminedj.
naccordancewith
RoguhtionsSection 1.704-2(i)(4).ThisSedion4.5isintcndedtocomplywitllamsnimum gain

chageback requirementofthatStotion oftlke Regulationsand shallbe interpreted consistently
therewitlu
ggs
x@U*
ww-vre-
ut
opuju yw cjAGRSEMENT.pag;)4
'
Jiq.2
3. 203:06-cv-00056-PMP-VPC
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', E!;. 644-8 Filed 05/28/08 10.
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.
4.6
)
$
.)
.
M em berN onrecurse Deductlflns. Any M em berNonrecourse De-ductiousforany
FiscalYearorotherperiod shallbespedallyallecatedtotheMemberwhobears(orisdeemedttl
bei
u)tlleecontxnicriskoflosswithrespecttotheMemberNenrecottrseDebttowhichsucilNlember
NolvecottooDrductionsareattributableinaccotdalcewithRegulatiensSection1.704-2(i)(2).
4.7 SpecialAllocations. Any specialallocations ()fitemsofNetProfitspursuautto
Sections4.4,4.5 and 4.6 shallbe taken into ac-colmtin com puting subsequentallocaonsofNet
Protitsptlrsuantto Section 4.1,so thattbe netam ountofany items so allocated and the gain,loss
alld any otheritem atlocated to each M em berptlrsuantto Section4.1 shall,to the extentpossible,
be equalto the netam otmttitatwottld have been allocated to each such M em berpursuantto the
provisionsoftllisArticle4 ifsuch specialallooationshad notoccurred.
4.8 Fee-stt
lM em hersorAffiliates.NotwithstandingtheprevisionsofSection4.l,in tht
eventtllatattyfees,interes't,oroteramountspaidtoanyM emberoranyAffkliatetlmreofptlrsuant
to thisAgreementoran.
yotheragreementbetween theLLC audany M emberorAffihatethereof
providing forthe paym entofsuoh amount,and deducted by the Lt,C in reliaacc on Code sectitm
'/07(a)and/orCodesection707(c),aredisallowedasdedudionstoth
.oLLC oaitsfederalincome
tax rettlm and aretreatcd as LLC distributions,tlmn:
4.2.1 'IheNetProfitsorNetLosses,msthemsemaybe,fortkeFiscalYearinwbich
such fees,interest,orotheramountswerepaidshallbeincremsederdecreascdya.
sthecasemaybe,
by theam otmtofsuch fees,interestaorotheram otmtsthataretreated aqLLC distributions;atld
4.8.2 ThereshallbeallocatedtotheMembertowhich(ortowhoseAm liate)such

.
feeas,interest,orotheramountswerepaidvpriortotheallocatienspursuanttoSe.ct/ n4.l,anamount
ofgrossincomefortheFiscalYearequaltotheamotmtofsuchfees,interestjorotheramolmtsthat
are treated asLLC distribm ions,
'
4.9
Sectx
-tpnr/otltc)Allocation.M yitem ofincome,gain,loss,anddedttdiollwithrespect
toanypromrty(otherthancash)thathasbeenconeibutedbyaMerberfotlm oapitaloftileLLc
and which isrequired orpermiued to be anocated to suoh M em berforincom etax purposes under
Codesection704(c)soastotakeintoacmolmtthe'variationbetweenthetaxbmsisofsttchproperty
mld itsGrossAssetValueatthetimeofitscontritutionshallbeallocatcdtesuchM embersolely
forincometaxpuposesinthemalmersorequhedQrpennitted.IntheeventtheGrossAssetVlue -
ofanyoftheI-LC'SPropertyisadjustedinaccordnncewithSectioa1.12.2,subsequentallocations
of income,gainzlossand deducticn w1t11fesN tto such Property shalltake into accountany
vmiationbetweentheadjustedbasisofsqchPropertyforfederalincomefzxpuzposesanditsGross
M setValue in the same mannerasundersection 704(0)and the Regulatiortspromukated
tlzerelmder. M y olectioasorotherdecisions relating to suoh allocationsshatlbe made in any
m nnnerthatreasonablyreflectslepurposeandintentionofthisAgreem ent.Totlieextentpennitteed
byRegutationsSection1.704-1(b)(4Xi),a11itemsofincome,gain,lossanddeductionforfederaland
statetax purposesshallbeallocated inaccordmzoe with the eorregponding book iterns.
qklrlrzoem'enm- -
OPEM 'HNGAGREEMBNT.Page15
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ARTICLE 5
D ISTRABUTIONS OF AVM LA BLE CA SH FLO W
-
5.l
Distributi
onsofAvailabltCashFlaw. SubjecttoSection5.3below,distributions
. .-
from theLLC totheM embersshalli)emadefrolntimetotimetotheextentofAvailableCashFlow

lzs detennined by the M anazem ent Comm ittee. Prior to the determ ination of the am olmt of
diseibutions,provisionsshallbemadefora11knewa reasouableobligationsand liabilitiesofthc
LI-C,whetherornotsuchobligatiom andliabilitiesaredueorcontingent,exceptthatprovisionneed
notbemadeforanyportionofanyLLC fmancing,theamotmtofwhichcan bereasonablyexpected
to besatisfied fzom theproceedsoftlze saleofthetllentemaining Propet'
tyoftheLLC.
5.2
Prioritvalzd M annerofDistributions toM em bers. SubjecttoSection5.
3below,
alldistributio% ofAvailableCashFlow shalllx madetotheM embersin thefollow ingpriorityand
.
m azm er:
5.2.1 First,pm rata,to the ClassA M embersin accordancewith theirrespective

PercentageInterestslmtiltheyhavereceivedanamountequaltotheirtmdistributedPriorityRetum
accrued through the date ofsuch distribution.
5.2.2 Seoorld,pro l'
ata,totheClassB M embersin accordancewiththeirrespective
PeroentageInezestsuutiltheyhavereceivedanamptmtezlualtotlleirmldistributedPriorityRettmz
accruedtk oughthedateofsuch distribtttitm.
5.2.3 Thifd,pro ratw totheClassA Membersiu accordance.1t11theirrespective
Percentagc Irlterests until tlmy have received au aggregate amount equai to tlleir Capital
Contributionsto tlze LLC.
5.2.4 Foullh,pro rata,to the ClmssB M em bersitlaccordance witlltheirrespective
Pc ceuu ge Interests 1mt11 they have recdved an agparegate amount equal to their Capital
Contributionstothe LLC.
'
5.2.5 Thereafter,pro rata,to the M em bers in acoordance wit.
h their respective
PefcentageInterests.
5.3
Taxpistrjbutions.Exceptasothenviaemaybeprobibitedbyanyagreementsbetween
tlleLLC and itslendtrs,'w'

ithin ninety(90)dcsaftertb.
econclusion ofeaoh FisoalYear,the
M anagementCommitteeshalldetermlneandp ovidem ittenncdcetotheM embersoftheamolmt
ttheGTAZLiabil
-i? .
sllodfallAmount''),ifany,bywbich(a)theagm gatefederalandstatet'
tx
liabiiity (ifanylinourredby theMemberswitllrespecttothenetinoomeoftheLLC forsuch
proooding FiscalYear(which tax liability shallbedotenninedbyapplyingthehighesteffeotive
individualtax ratesthen itleffectfortheFiscalYearirtquestin),exceeds@)theaggmgate
distdbutiensofDistzibutableCmshmadebytheLLC w1t.
11resped tosuchFiscalYear(indudingany
distzilmoasmadetotheMemberswit.
hrespod tothefmalfiscalquartcrofsuchFiscalYearl.'
The
M anagementCommlttee shalluse allreasonable eFortsto causetb.
e LLC fo distribute theTax
LiabilityShortfallAmouattotheMembersintlm timeaodmannerrequiredheretmder,inqttldkng,
Il'
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Esq. 644-8 Filed 05/28/08 89.
721181 ?.
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butnotlimitedto,bovrowingon behalfoftheLLC sufficientftmdstoeuabletheI-LC to distribute

such TM Liability ShortfallAm ount.F-ach such (listlbution shallbem ade to theM em bersassoon
aspracticableaflersuohfundsafeavailable.Itistheobjectiveofttm MembersthatwhiletheTax
Liability SlmttfallAmolmt+ 11bedeterminedattheendofeachFiscalYear,totheextentpossible
aud subjecttothe forcgoing,distributionswillbemadein respectthereofon aquarterly basisto

facilitatetheM embers'abilityto makequarterly estimated tax paymentswithrespectto tllettnet
incomefrom theLLC.DistributionsmadepursuanttothisSection 5.3shallbetakenintoaccount
in cennection w ith any subsequentdistributionstm derSections 5.l and 5.2 above so that,to the
extentpessible,tlleM embersshallobtain distributioltsinthesameorderandpfiority they wottld
have obtained ifthisSection 5.3 were notin tl'
tisAgreement.Att
lte end ofeach FiscalYearas
ctmtemplatedabove,tinaladjustmcntsshallbemadctoretlecttheactualresul? ofsuchFiscalYear.
*
ARTICLE 6
M A NAG EM ENT O F TH E LLC
6.1 M anaeementoftlleLLC. Subjcctto tlleprovisionsoftheNKS,theArtidesof

Organizaationandtoanylhnitationssd fortllinthisAgreement(msmaybeamendedfwm timeto
time)relatingtoaotionsrequiredtobeapprovedbytheMembem theBusinessandafrairsofthe
LLC shallbe m anaged,and a11Com pany powersshallbevested illthe M u agem entComm ittee.
n e(layto-day opmationsoftheLLC shallbeimplementcdbyone(I)Maaagerdesignatedor

appointed pursuarltto Sedion 6.1.1below,who shallad asthePresidentofthe LLC and shall
conducttbeBusinessin acoerdaace'
$v11 and subjecttothepoliciesyprocedures,decisiolu and
direotiyesoftlle M anagem entCom m ittee.
6.1.1 Desietmtilm of'.

'M r1a2er''.TheM anageroftheLLC shallbeDOUGLASJ.
1 FRYE,allindividual,orhiss'uccessoras appointed by the M aaagementCom m ittee pursuantto
6.1.2 Eleetinn ofSuccessnrM anae
-en UpontheM anager'sresignation from oftice
orrem ovalfrom ofceby tlleM anagementCom mittee,asuccessorM anagershallbeappointed by
the M anagem entconunittee.
6.1.3 Subordinate Officers. n eM anagomentCcm mitteemay,in itsdiscretion,..

appointasecretary,achieffmancialofficer,aclliefteclmulogy o/ cer,and sucllotheroftkersof
theLLC astheBtksinessoftlleLLC may roquire,each ofwhom shatlhold Qfficef0rsuchperiod,
havesuchauthorityandperfonnsuchdutiesasprovidedforiathisAreementorastheM anagement
Cornmf
'tteem ay detennine 9om tim e to tim e.
The Comml
'ttee M embers,as evidenced by tlleir acu owledgnentto this
Agreem entahereby appointDENN IS M ON TGOM ERY to theofioo ofChiefTechnology Oflicer
to hold ofic,
e until llis resigmee n,rem ovalorotherdisquatification from service,or untilhis
successor hnR been duly apm inted by the M anagem ent Com m iuee in accordanct w itll this
Agreement.
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6.l.4 M aaaeem entCom m ittee.TheM anagem entComm itteeshallcoasistoft111'e.

:
(3)ColmnitteeMembers.EachofthcClassA Members,solongastheyareMembers,shaliappoint
one(1)CommitteeHember.EachClassA Membec,nayapm intoneormorealtematesforthe
Coaunittee M embers appointed by it. A.
a altem ate shallhave a11tbe pow ers ofthe Conmlittee
M cmberillllisabsellceorinabilityto senre.EachCbnmtitteeM embermayvoteby deliveringhis

proxytoanotherCorntnl
'tteeM ember.EachCla A M embetshalthavethem wertoremoveany
CornmitteeM emberappointedbyitbydeliveriagwtittennoticeofsuchremovaltosuchCommittee
M emberandto theotherCommitleeM embers.Vacanoiesontlw M anagementCommitteeshailbe
Elled by the CiassA M emberwho appointed the Committee M emberpreviously holding the
positien wllichisthenvacant.
The ClassA M em bersexecuting thisA greem clzthereby appointthosepersons
setfortlloppoRitetheirzespectivenmnebelow astheirdesignatedColnmitteeM em bertosen?e(m
tlw M anagmnentCom m itke ofthe Company,each of whom shallserve atthe pleasure of the
mspectiveappointingM emberandshallholdtheittespectiveotxcestmtiltlmirresignation,removal
orotherdisqualication from smvicc,orlmtiltheirrespedivesuocessorshavo been duly appointed
irlaccordancewiththisAgreement
N ame ofAppointing
ClassA M em ber
Friendly Capii lParters,L.P.
The Frem ontTrust
DennisM ontgomery
'-
Appointed
Com rnittee M ember
DouglasJ.Frye
W arfen Trepp
DezmisM ontgomery
6.1.5 M anazementcommideechairman.TheM anagementcormnitteeshatthave
achairman tthe''Chairmanl'),whoshallbconeoftheCommitteeMembersdesignatedbya
majrity oftheColnmitteeMembtrs. TheChah'
man initially shallbeWARREN TREPP,aa
individual,orhis successormsappointed by theM anagem entCom mttee in accordancewith this
Section6.1.5.n eChninnanshall(i)presideatManagementCommitteemeetiags;(ii)llavethe
authority to exem teand deliveron behalfofand inthenam eoftheI-LC any agreem ents,oolltraots,
notes, m ortgages, ovidenc,e of indebtedness, certificates, statemenls, conveyauces or other
instrumentsinwriting,andanyassiglzmentorendorsementthoreof;and(iii)exerdsesuchrklztsor
perform suchdutiesasareothenviseprovidedinthisApremenforasmaybeappm vedfrom timeto timeby theM anagmnentCommittee. n eC'Amrrnan may only beremoved from offceby a
majotityoftheCommitteeMembers.IntheeventtheChairmanresignsorisremoved,amajority
oftheCommitteeM embersshallelectareplacementChainnan.
6.1.6 Del ation-af Powerg and Duties. The M anagem ent Com m ittee m ay by
written resoluion from fmeto time delegatc any ofitspowersto tlzeM anager,the Chnirmm
om cers,em ployeesofaM ember,orto azly otherPerson. Such delegation ofpowersm a'
y inolude,
butnotbel'
tm l
'ted to,the authority to exocttte and detiveron bebalfofaad in tlle nam eofthoLLC
arty agreements,contracts,notas,mortgages,evidence Qfindebtedness,certiscates,sutements,
convevarlcesgrotlrrinsfntmentsin wrjtinz,andatlyassizmnentorendorsementterrof
CXXXZQ WQO WAM
OPEM 'ITNG AGREEMENF.PVClt
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20
.
.
...N.
6.1.7 M anaeem entColum ittee M eetinuy.

-
6.1.7.1 Tho M anagem entCom mittee sNallm eetatleastonce each quartorin
Incline
.Village,Nevada,orsttchotlwrtimesorplacesastheChairmanshalldetermine(tmlesssuch
mcctirtgshatlbewaivedbyatlCommitteeMombers)oronthecallofthtChainnanortheMu ager
Suohmeetingsshallbecalleduponatleastten(10)dayspriorwrittennotice, exceptinthecaseof
.
'
an em ergency,in which eveatsuch anweting may becalled tlpon priornotice asthe Chairman
deemsappropriate,butinnoeventlessthanforty-eight(48)hours.Anagendaforeaohmeding
shallbepreparedinadvancebytheChaimlanortheManager, asthecasem ay be,and oirculatedto
the Committee M embers. Approvalofthe Mtm agementCornm ittee shallrequke a majovityitt
numberoftheCommitteeM embers TheManagcmentCol
umitteemayactwithoutamediagif(i)
theactiontakenisapprovedinm itingbythenumberofConmtitteeMembersnecessarytotakesuch
.
Ktion,and(kilm itlennoticeofsuchactionisgivento'theCommitteeMemberswhodidnotprovide
suchwritteaconsent.W rittenminutasof11mectingsshallbemairltained, alld thcm inutesforeach
mectingshallbeapprovedatasubsequentmeetingoftheM anagementConunittee.
6.l.7.2 T'
lteManagementlzotqmidx mayadoptwhateverzulcsandprocedures
relatingtoitactivitiesasitmaydeem appfopriate,,proddedthatsuchm losandprocedm'esshallnot
beinctmsistentwith orviolatetheprovisionsofthisAgreement, and providedthatsuch rulcs and
regulations shallperm itm extings by telephone,video cxmferencing or tlze like,and shallperm it
CommitteeM emberstoparticipateinmeetingsbytelephoneorvideoconfereneeortllelikeorby
written proxy,and such participation shall be deem ed attendance for purposes of determ ining
whetheraquorum ispresent.
6.1.8 Liabili/ forCertain A cts. TheM anagermzdthe Comm itteeM embersshall
e
r
f
o
r
m
t
l
a
e
k
m anagerialdutiesin good faith,inammmert
1
7
heyreasonablybelievetobeinthebest
m terestsoftlleLLC,and 5v1t11such cwv asan ordinarily prudentperson in alikem sition would use
uadersimilarcircumstances. A M atmgerorConunitte,
e M emberwho so fherformsthe dutiesof
M anagerorCommitteeM embershallnothaveany liabilityby reasonofbehzgorhaving bcen a
M anagerorCommitteeM emberoftheLLC. A M anagerorComxitiiM mbershallnotbeliable
to f
lle LLC orto aay M emberforany lossor damage sugtatrked by ttw Cotrpany or any M ember,
unless the loss or dam age shallhave been the resultof fraud, doceit p'
oss negligence,willfd
.
miscenduotabzeaoh ofa duciafy dutyj()ra wrongfulfaking by the M anagerorthe respective

CommitteeM ember.Nehhertlm M anagernortlleM anagementCommitteeshallbeliablrforv y lossordamagetothoCompany causedbystrikes) labortroubles,riot,flres,explosions,tornndoes,
ftoods,actqofapublicenemy,iasurrections, actsofUod,failurrto carry outtheproWsionsherecf

duetoprovisionsoflaw orrulosormgulationspromulgatedby any governmentalagency orany
otherdemand orrequisition ofanygovernment, orfrom anyothercausebeyondtheontrolofthe
M anagerortheM anagementCommlttee.
6,2 Pow ersq.Dutie.s and Responsibilities of the M anamem ent com m ittee. The
M anagem em Cornmittee shallhavo a)iof the Iights, duties and powers as spec ed in titks
-
Agreem eat,includmg
' witlloutlitaitation,thegeneralgowersand dutiesofmanagementtypically
vestedhltheboardofdirectorsandtheofficeofachiefexecutiveofficerofaco> ration. M atters
requiring the approval of the M anagem ent Cornmittee shal! include, without lhniutionz the
following:
-'
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6.2.1 Ttteattthorization,negotiation,executionanddeliveryonbehalfoftheLLC of
anymzda11contractsoragreements,verbalorw'rittea,haviogacontraotvalueorobligationametmt
iuexoessofFifty Thousand Dollazs($50,000.00),which azenecessaz'

y orappropriate forthe
developnw ntorexploitation ofthe Teclmology orare in ftutherance oftlw Businessofthe LLC,
includtog,butnotlimitedto,butexpresslysubjecttotllelinlitationsrequiringMemberapproval
pufslmntto Section 6.4.4hereotlcontractsoragreementsbe> een theLLC aftd/ritsAffiliatesor
any othetPerson to provide the LLC with goodsorservicesofany kind in which tlle LLC orits
M atmgermay havea!lactualorpotentialcoatlictofinterest,and including any amendmentsor
m odificationsthereto,orrenewalsorterm inatiol'
usthereof.
6.2.2 Theapproval,cxccutiol:delivefy andpzrformanceoabehalfoftlw LLC ofthe

M ontgomery TrustContribtttionAgrcement,andamendmenta
sormodificationsthereto.
*
6,2.3 Theapprovalofdetailedline-item budgetsfortheoperationoftheLLC andits

Btlsiness or fQr the developmentor exploitation of the Teclmotogy,and any anendments,
moditications,supplemenfsormnewalstherdo.Eachsuch budget(andanyamendmentsthereto
from timetotime),afterapprovi byttm M auagementCommittee,shallbereferredtohereinmsatl
''Approved Budget.''
6.2.4 SubjeottotheApprovedBudgrts,borrowingfundsfrom allylendertooperate

ormaintajn theBusinessorforanyotherpum osewhioh isinfurtlwrmzcr oftileBtusinessoftheLLC,
othertIIa.
n tradepayablesntheorditmrycourseofbusiness;toissueevidencesofindebtednessin
coanection therewith;torefinance,increasetheamtmntof,modify,amend()rchangetlletermsof,
orexten.
dthetimefortlm paymentof)aayZdebtednessorobligae noftheLLC;andtosecureany
indebtednessorobligationoftl!eLLC bymortgage,pledge,r'antingasecuritylterestin orother
lien on the LLC'Su sets.
6.2.5 Theappoiatm ontandtennination ofoflioers,hiring arld filing ofemployees,

ortlzeengagem entefconadors,subcontraotors,oonsultmlts,expertsand otherPersonsneoessm'
y
orappropriateto carryouttheBusinessoftheLLC,includingtheselrdionaridengagemtntofan
indepertdentcertifiedpublicaccotmtingftrm andlegalcolm selfortheLLC,andtoapprovetheterm s
ofany such appointment,em ploym entorengagementoincluding approvalofthetennsandpayment
ofcom pensation.
6.2.6 Theapprovaloftheam otmtandtim ingofaayA dditionalCapitalConz butioas

reqtlired bytlle LLC to conductitsBllsiness,including,withoutlim itatiop allcapitalrequiredto be
expended w 1t.
1:resm ctto the Technology.
6.2.7 Subjod totheapprovalbytheMemberspursualttoSection6.4.2below,the

sale,license,lease,tental,%sigmnent,transferorother(lispostionofa11oranymaterialpartoftlze
assets ofthe LLC,including the Tcclmology and any patentrightsthereto,w hether as a sitlgle
transaction ora selies oftransactionsaspartofa plan.
'
6.2.8 M ymaterialdecisicnsrelatingtothetestmarketirlg,marmfactum,distributionz
lioeltsureorexploit.
ationoftlzeTeclmology.
kr&.ZQ/TW-W*MAKWAR
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6.3 Powers.DntiesandRcsponsibilitiesaftheM anaGer

. TheM a
P
x
nagershallactasthe
residentoftheLLC and shalllx chargcd with therights, duties and powers ;
zsspecificd in this
- -
Ag
elizaitatlonssetforthinthlsArticle6andelsewhereirlthisAgreement The
M reement,subjeettotb.
.
anagershallhaverespasihilit'
yforoonductingtlteday- to-dayoperattasoftlm Blzstvmssandtle
LLC
a
r
l
d
f
o
r
i
mpl
e
me
nt
i
ngt
h
e
de
c
isionsanddirectivesoftheMmlagementcomntteeincopneotion
tl
Aerewith,subjecttothesupervision,directionaadcontroioftheM anagemeatCommittee
TheM anagershallhavethcgeneralpowersanddutiesofmariagementtypicallyvested
n theofficeofachjefoperatingOffcerofacorporation. Subjecttotheprovisionsandlimttatitms
setforth ittSections6.2 aqd 6.4 hereof, tlle M auager shallhave responsibilitr forthe following
i
matters(ttstedbywayofexampleanduotinlimitationtllmtoflandstallbavetheauthorhy on
llehalfofandinthenameoftheLLC todoorperfoun, orcause to bedong orprrform ed
uch acts
,s
or thirtgs and to negotiate, executejackmowledge and deliver a11apreem ents, doctunent
i
s atld
a
nstrtmzentsileormectiontherewith:
6.3.1 Prepare,cxecuteandfileonbelmlfoftheticatlapplicationstincludingpateqt
applications),licenses,permits,registmtions, andconsents,afldtootherwisecom m unicateanddeal
with afky axd allgovernmentalagenoieslhavingjmisdiction over, or in any way affectiag,tlle

..
Technology,theBusinessorany partthereof
6.3.2 M akeordinary andnecessazy expenllitttrcsand incurreasonable obligations

necessazy fortheconductoftheactivitiesoftheLLC'SBusiness, alIinacoordnncewithandsubject
to Approved Budgets.
6.3.3 Authorize,negotiate,executeaad deliveron bchalfoftheLLC auy mzd a1l
cfmtractsorapeements,verbalorwritten,havingacontractvalueorobligationamotmtoflessth=
Fiftyn ousandDollars($50,000.00),whichtheManagerdeemsarenecessazyorappropriateforthe
developm entorexploitfon oftlm Technology, orareinfurtheranceoftheBtlsiness,including
but
notlimitedto,butexpresslys'ubjed to tl)elimitationsrequiring Memberapprovalpursuantto
Seotion 6.4.4 trlew , ccntractsoragreementsbetweentle LLC and/oritsAffitiatesorany other
PerseutoprovidetlleLLC withgoodsorservicesofanyZnd,iawhichtheLLC oritsM anagermay
have aa aotualorpotentialcoM ictof interest, and including any am endm en.ts orm odifioattons
thereto,orrenewatsorterminationsthereoft
6.3.4 Subjed tothepriorapprovalbythrMembersptvstmnttoSecfion6.4.2betow

and tlm M anngementComrnitteepursuautto Section 6.2.8alyw e,thesale,licem e,leqse,rental,
&ssignment tvz
m qferorotherdip osition of a11orany materialpartoftke assets ofthe LLC
itlcludhlg theTechnology andanypatentrightsthereto, whetherasasingletmnnction oraseries,
ofrelatedtranqactionsaspartofaplan-
6.3.5 ToconfessajudgmentagaimttheLLC,orapprovethefllingoforsottltment
of
D arty daims,includitu litigatiotlmatters, fororagainstthe LLC, ofltssthanFi Thousand
ollars($50,000.00).
OPEM TING AGREEM ENT .page21
J3h.2,.. 2'045 ib:i4p:

dkslzs J. Fryg, Esq.
89.7214 8. 0'
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3:06-cv-00056-PMP-VPC
Document 644-8 Filedi'05/28/08 Page 86 of 95
. ' Case
('
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6.3.6 ExecuteanddeliverbondsandindenmitiesbyoronbehalfoftheLLC asmay
bertquired forthe ownelship antl/orsale ofany Property, asrxpressly directed to do so on a case

by case basisby the M mzagem em Conunittee.
6.3.7 To purohase liability and other insurmw e to prntect the Teolmology, the
Property and Businessofthe LLC .
6.3.8 n e MMager,subject to t
ite reastmable approval of the Managemeat
.
Czln'
tmitte,shilselectteou icalengineers,progranzmersandothercomputertehniciarustodevelop
orexploittheTeclmology.
6.3.9 From timetotime,aIXLeI/IIEXHIBIT AtothisAgreementtoreflectanychange
in tlze t
'nfennawtion conte
tinedthezeinrandprepare,executearldlilea CertilicateofAmettdmentor
Correction to the ArticlesofOrganization to reflectalzy change orcorrection in tite LLC, its
Manager,Members,principaloftice,ressteredagent,orthelates'
tclateuponwhichtheLIX may
bedissolved.
6.3.10 Prepare,executeandftleonbellalfeftheLLC tlleAnnualListofH anagers,

M em bersaad Agentw ith the Secrctaly ofStateand to pay a11ling R estherefor.
'
6.3.11 Asdirededftom t'

imetethm bytlw M R agementCommittee, to investthe
fundsofthelaLc inbankcelfficatesofdeposit, short-tenngovem m entsecuzitiesorothershert-term
securities,hmludingmoneymarketfunds,priortotlleexpendituteofsachcapitalitlconnectionwith
3m inessopefations
.
6.3.12 IftheM anagerdeemsitnecessaryorappropriate,to adoptaCbmpany seal,

iroularinfonnvotktainingtlw words''INTREPID TBCHNOLOGIES,LLC,''togotlmrvzithtljedato
offermation oftlleLLC,and such otherirdbrmationasshallbeappropriateforbankingand other
Businesspum oses.
6.3.13 M aintainaminutehooktoincludeleArticlesofOrganizxationof(IJeLLC,Y S
Agremmentaud anyamendmentsorsupplementshereto,andtl:emhmtesofmeethlgs(orconsonts
jn lieu ofmeetings)oftheM anagementCommitt
ee,written consentsofthcM embers, and otlmr
imprtantdoctunentsoftheLLC.
-.
6.4 LimitationsontheM u agem entcomm ideeaudM aapxer.NeitereM M agc o t

CommltteenortheM anagershallhavetheauthorityte de any oftllefollowing witimuttheplior
VoteofaMajorityinInterestoftheMembors:
6.4.1 Exoeptforthelimited authofityoftlleM anagertoamendEYFITRIT A hereto
and theA rticles ofOrganizadon pursuantto Section 6.3.9 above,materially amtndorrtstatethis
Areem entortheArticlesofOrganizxtion,inwholeorinpazt includingauyincreaseinthenumber
ofCom m itteeM em bersofthe LLC ptlrsuantto Section 6.1above.
jj
mjvNG e uc
opprjkAqyNGAGREW VF.pag;22
'
J21).Case
'
3. '
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6.4.2 Sell, liense, lease, rent, transfet, assign or othenvisc dispose of all or
substantially a11ofthe assetsoftheLI-C, induding the Tecbnology orany patentrightsthereto,

whetherin a singletransaction oraseriesofrelated tlunsactionsaspatteraplan.
6.4.3 ApprovetheTransferofaMember'sInterest(exceptfortheTransfelofupto
10% ofa M ember'sEconom ie Interestpursuantto Section 9. 1.
3hereog.
6.4.4 ApproveanytramsactioailwolvingthepaymentofcompensaticnbyttxeLLC
to a M emberoran AffiliateofaM ember, unlessotherwise expressly authorized attd approve,d
pursuanttotllis Agreem ent.
6,
4,5 Any merger,consolidation,divestittu'
eordissolutioa aud windingup ofthe
Btusinessand*affairsofthe LLC.
'
6.4,6 Any m aterialchange in the characterofte BusinessoftheLLC .
6.4.7 TheadmissionQfnew orsubstituteM tmllerstgtheLLC
64.8 ArlyactincontzaventienofthisAreementoro yvzida enO enthcretori e
ArticlesofOrganizxtioa orany am endm ontthmvof.
6.4.9 Knowiuglypcrfonnanyaot(otherthananyad requiredbyQlisAreemento:

bylaw oranaottakeningoodfaithlwhichwould,atthetimeofsuchact,subjectanyMemberof
theLLC toanylxrsonaliiabili'tyinanyjurisdiction.
6.5 Time-m v-o-ted tpM anayem est.Unlessothem isedeterminedbytheM aaagement
CommitteetobeinthebestintorestsofthtLLC andhsM ombeu, theM anager'ssenioesshazbe
noaexclusivetotheLLC.TheM anagerneedstodevoteonlysuchtimeandattentiontotheBusiness
and affairs offhe LLC a% hc shalldeem necessary and appropriato, n the exerciseofhisown
-
teasonablejudgment.'
IheM aaagermayberequiredtotravd fm nttimgyotimeirtfttrtlerarkceof
jlisdutiesandrespoasibilitieshereunder,
Unlessan altcrnativ: scheduleisdeterm ine,d from timetotimebytlleM anagement
Committee to be in the bestinterests ef the LLC and itsM emlxq'
s, tlm srrvioes ofDENNIS -
MONTGOMERY,an individual(sometimesoelledively,'tMONTGOMFRV),solong asheis

sen'ingasaCommitteeM emberand/orChiefTeclmolotz
y OK ccrpursuanttotltis
ment,sV l
beexcllzsivetotheLLC,andheshalldevotesttbstantially:11ofhisfulltimeao attenionandefrorts
totheBtlsinessandnflhl
'rxoftheLLCdllringreasonablebusinersshours. M ONTOOM ERY maybe
required to travel9om time to time in futheranceofhisdutiesatd responsibilitiesheretmder.
M ON FOOM ERY agrees,asacknowledged by NssignaturetothisAgreemen: sballprovidehis
selvicesin amarmerconsistentw1t11thepolioiosoftlm LLC asmaybeadoptedfrom timctotime
by theM anagementComm ittee.
.
6.5 Restzietion on IndependentActiviti- '

.Agreem ent'
N et to Com pete. So long as
M ONTGOM ERY is appointed as a Committee M emberatld/oras ChiefTechnology Officer
'
J8h.03. 2006 6:ib?lk

1
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i.72l# 8. 25

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...
pursuartttothisAgreement,M ONTGOM ERY andMsAftiliatesagreetlmt, dtlring thetenn ofthis

Agrvem cntanoneofthem slmllcom petewitl,theLLC ,whetherfortheirown accuntaad/orfortlle
accotmtefothers,individually,jointlywith others,orasapartofany otherlimitezd liability

company,limitedpartnership,generalpa> orship,jointventure,corporationorot
hereatity,by:(i)
developing,lioensingorexploitinginanymanneranysoftwazeprogramsorotherteclmologywhich
iscompetjtivew1t.
11theTechnologyortheBustnesst
lftheLLC,orprovidingartyservicesorsappties
which are encompmsscd within the defmition ofthe ''Busiaess'Qfthe LLC aa setforth in this
Agreement;(ii)purchasingorotherwiseacqttiring,owniag,holding,cperating,managing,investing
in rothem isc disposing ofalikebttsinessoftheLLC'SBttsitmssand intereststherein ofany khzd
oraature;or(iii)othenviseeagagingi.
ttartyora(1aspectsQfaEk.
ebusinessoftlw LLC'SBusilwss.
M olql-crclM lsllY 'sorhisAm liates'pmlicipationinanyoftheactivitiesrestrictedbythisparagmph
shallbe deenaed a breaoh ofM sdutiesand oblipatioztsasa Cornm ittee M emberherelmder.
*
6.6
Com nehsation to- -Nh xm tem entor M em bers.

-
6.6.1 M anauer'sCam pensation.TheM anagershallnotreceivecomperusationfor

hisserviceshereunder,tmlessothelw iseapprovodbytheM aaagementCommittee.
6.6.2 Om cers'Com pensation. Exceptforany com pensationtobepaidtotheChief
Technology O rneerassetfortltbelow,no om ceroftheLLC shallreceivecom pmuation forhisor
herservioesunlessothcrwiseapproved by the M arlagem entCom m ittee. In cortsidoraon forhis
fatt-tne,exclm iveservicesto t:e LLC,M ON TGOM BRY,asCbiefTeeimology Ofiker, shali
receive, in addition to any rdm buzsem ent for costs as provided for irlScction 6.7 below ,a
.
GuarartteedPam ent(msth2 11111isdelintdinsedion707(c)OftheCode)inteaggregateaamunt

ofElevenThousandFiveHtmdredDotlars($11,500,00)permonthpayableontheflrst(1st)dayof
eacikcalendu m onth comm encing asofO ctober1, 199:,andtenninae g onD ecember31,2001.
Thepgymentand amotmtefsuch Guazaateed Pam entotsuch olercompensation to bepaid to
M ONTGOMERY asChiefTeclmology Oflicerforhisservicesmay be adjustedarenewed or

tmm inatedbytheManagementCommittee&om timetottme.
6.6.3 M embel'
s'Compcnsation.ExccptasexpresslyPihXInitIM bytliis
ment
orany otherm itten am eem entotl)eLLC shallpayno compensationto mzy M em berorany lhincipal
ofanyM emberfortheirsmvicesasaM anagertotheLLC.

6.7 Expgnse Reimbursements. The LLC shall reimburse tlie M anager, o cers,
CommitteeM embers,M embersortheirAfliliatesforany expemsepaidby them onbehalfoftbe
LLC,thatistobeproperlybornebytheLLC,asprovidedforinan ApprovedBudgetorasothcrwise
appxovedfwm timetotimebytheM anagementConuniltee,
6.8
RestrictionsatkDistn'butians. Nodistributionto+ eLLC'SM emborsisvalidtmless
suchrllleributionhasbecnappmvedtitherimmediatelybeforeorimmediatelyafterapprovalbythe
M m agementCommittee.
-
.'
6.9 ItightsofInspection.'IheM anagerandCommltteeM embrrsshallhavetheabsolute

rightatanyreastmabletimetoimsped andcopy,11boks,recordsanddocumentsofeverykind, and
to irlspecttlw physicalpropertiesoftheLLC andabo efitssubsidiarylimitezlliabilitycompanies,
'
lxlrxl
edO- A'K
OPERATINGAGRFEMENT.page24
o4h.d7, 2005 6:1b?k
0qd!l2 J. Fryg, Fsk.
80.721) ?. 26
Document 644-8 Filedt 05/28/08
Page 89 of 95
1
)
;4-
dom estic orforeign. Such inspection by theM auagororany ConunltteeM em betm ay bem adeiEt
person orby agentorattom ey and includesthe rightto copy and obtaittabstl-acts.
6.10 '
Furnishlne IVLC Inform atian. The M anager m ay release such inform atioa
concem ing theBlzsinessand operationsoftheLLC to such sotlrcesmsiscustomary orrequired by
law orby ruleorregulation ororderofanyregulatorybody.
6.11 AtlthoritvtoSettlewithIRS.Iftherearetnorethanonehundved(100)M embersof

theLLC,the''TM MattersMmmzer''(asappointedinSection10.4below)shallhavetheauthority
toenterintoasettlcmentwiththeInternalRevenueServiceQnhehalfoftlmseM embersllavhgless
thanaONE PERCENT (1%)interestintheprofitsoftlw LLC,exceptwhereaMemberfitesa

statementwith theIRS,in accordance NVitIIapplicableTremsuryregulations, stae g thattim Tax
M attersM anagerIlasnosuchautimritytoacton thatM ember'sbehalf.AnyM embertilitlgsucha
'
statementwitrthelRSshallnotifytheMmxagerthereofwithirltlu'rty(30)daysofsuchiiling
ARTICLE 7
'
DEFAU LTS
7,1
Dcfaults.T'
hefollowingshallcoadituteatleventofdefaulttmderthisAgreement(a
<fD efault74),and,whereappli
cable,theM ember(itlcludingtheM auageroraCommitteeMember)
.
causing such aDefaultshallbedeemed theRDefaultlngM embe' and theM emberorM embers

who havenotothenvisedefaulted shallbedeem ed the GN ondefaultikm M em ber'':
7.1.1 fa-i
-lqre t4)Pav o bligationsor AdditionalCapitalContributioqs. Failuro
byanyM emberinthepam entofaay fmarlcialobligationorAddittnalCapiulContributiontothe
-
bLCwlliohoontinues%:aperbdofseven(7)daysafterwrittennotketosuohDofaultingMemlxr,
.
or failtlre ia tho performance ofany ofthe otheragreementsorobligations contained in fhis
Agreementifsaidfailurecontinuesforaperiodofthirty(30)daysafternoticetostzchDefaulting
M ember;prodded,however,noDefaultshatlbedeemedtohaveoccurrcdif(i)such Defaulting
M emther'sfailtvefperformanceiscurable,alld (ii)ifsuohDohul'
ftobectuable,butafterthe
exerciseofremsonablediligetweitisfoundsucllDefauttcnnnotbecuredwithinthit'ty(30)daysa'
Rer
notice,buttlw atlegedlyDefaultjngM emberhnqcpmm encedtocuresuchD efaultwitltinthe30-day
periodattdthereaftertliligentlyprtxecdslo curesuch Defalllt

7.1.2 Traasferin Violatitm ofA zreem -eqt. Anypurporte,dorattempteedTransfer
-
(asdefmedinSection9.1.2below)byanyMemberinvioladonofAltide9hetecfatanytimedllring
the existence oftheLLC.
7.2 RmmcdiesrqrDefault.Uponieocc= nceofaDehothceO der,theNondefe e g

M embersshnllhavetitefollowingchoic,
eofremedies,noneofwhich shallbeexclusiveorin any
way lim ittheN ondefaulting M embtrsfrem seeking any otherrem edy they m ay have in 1aw orin
equity':
CX '
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OPBFAIINOAeltBbbM .Faaels
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.
7.2.1 -Re
.--m edi
esforDefaultUnderSectin 7.1.1 ofthigA..ereem eat. In theevcnt
-
ofaDefaultdescribedinSection7.l.1above,tlaeNondefaultingMembershallhavetheright@ut
notthcobligation)toeither:
7.2.1.1MakeanadditionalCapitalContributionls)totlw LLCintheamotmt
oftheCapitalContribution orJmyadditionalCapitalContributionApprovedbytlteM embersthat
shouldhavebeencontributedbytheDefaultingMemberts).M ymuolmtsocontributedtotheLLC
byahlondefaulngMembetthatshouldhavebeencontributedbyaDefaultingMembershalladjust
thePercentageInterestOftheNondefaultingMembtrts)m1dtlleDefaultingMemberts)inthesame
prom rtion a.
stheratiooftheirCapitalAccotmtsimmediatelybeforetheDefaultbea:stotheratio
oftheirCapitalAccountsimmediately aaert:eDefaultttbe''Adiusted PercentateIntere.

sf').For
example,ifbeforea Defaultocctlrstheratio ofthe CapitalAccountsoftheN ondefatlltingM em ber
andthe Defatt
lting M emberis85:15arid theirPercentagelnterestsare 50% and 45% ,respectively,
*
andtilemtio oftheirCapitalAccountsaftertheDefaultis95:15,thertthcrespectiveAdjusted
Percentage Interest of the Nondefaulting M tm lx'r would be 55.8824% and for the Defaulting
M emberwould '
be 39.1176% .
7.2.1.2 Lend to tlle LLC the amotmt of the Capital Contzibution or the
AdditionalCapitalContribution thatshouldhavebcen contributed by the Defattlting M ember.M y
suoh am otm tso loaned shallaom m interestftxed on the date oftile loatzata perannum rate of
TWELVEPERCEAIT (12%),orthemaximttm l'ateofinterestpermittedbylaw,whicheverisless,

whiohiqterestshallacorueandslmllbeadjustedbasedupontlleforegoingrateandbecompounde.d
oneachfirst(1st)dayofeachmocthduringtheterm oftheloan.M ymnolmtssoloaned,togethcr
w1t.
h interesttllereon asaforesaid,shallbe irnmediately due and payable from the Defattlting
M emberto the Nondefaulting M ember. Aslong asthe amotmtso Ioaned aud interestthereon
rem ainstmpaid,any distributiontowhiclttheDefaultingM em berwouldothmw isebeentitledtm der
thisA g eem entshallbepaid totheN ondefaultgngM em berand applied hlrepap rmntoftheam olmts
soloaned,withany suchpaymentappliedflrstointerestthenaccmedatydtllebalancetoplincpal.
7.2.2 OtherRemedies-JntheeventofanyDefaultlmpr1isAgreementinoluding
aDefaulttmderSedion7.l.l.above,ands:longaqsuchdefaultremnlnsunoured,thrNondeatllting
M emborm ay,butshallnotbeobligated to,do any ora11ofthe following:
7.2.2.1Uscany LLC asstts,including,butnotlim itedtQ,a olmtsotiteM se distributabie to the Defaulting M ember,to satisfy the Defaultiqg M ember's fnnncialorother
obligations,in orderthattheN ondefaultingM emberneed notcontribute additionalftmdsto satisfy
theworkingcapitalandoperaionalreiuirementst)ftlleLLC.
7.2.2.2 Pursue aay and a11rightsto rooeverdam ages and al1otilerremed es
availableinlaw andequity,includinginjtmctiverelirf.
'
7.2.2.3M anageandconducttheBusinessandopemtiom oftheLLC,without

any participation,consentorapprovalofthe Defaulting M ember or its representation olltlle
M anagementCommitteewhichwouldotherwisel)erequiredpursuanttotltisAp eement.
jtm(
iijj1
11
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'
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2j. .kd3:06-cv-00056-PMP-VPC
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yg, Esg. 644-8 Filed 05/28/08 $Page
9.721191 of
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M W ICLE 8
M EM BERS'M EETINGS'
.ACTIONSW ITHOUT M EETINGS
8.1 M ettinzs.Ttw M mnbersshaltnotberequiredtoholdanyregular, imnuaiorspecial

m eetingsin orderto approve any action ofthe LLC asrequtfed by thisAgreem crttorthc NRS.
%.2
Ad iolsW itEouta M vding.
8.2.l AnyactionrequiringapprovaloftheM elnberspursuanttothif;Agreementmay

beappfovedwithoutthtcorkdud ofameetingand withoutpriornoticeifa writtertconseatasetting
fort.
h the action erastionsso taken, issigned by M em bersholding,in tlle aggregate, aMajorityin
l
nterestormorcoftheM embcru;,unlessagreaterVoteisrequiredunder, oralesservbteisprovided
.
foriw thisAqeemeatortlleNRS.
8.2.2 Unlessthelmazlimolzsm ittencoasentoftheM embem hasbeengiven, notice
ofany such action approved by lesst11an 11ofthcM mubefsshallbegiven to thosc M em berswho
didnotpartioipateinerapproveofsuchactienwitlzinten(10)daysfollowingttlekkpprovalthereof
8.2.3 AnyMembersvingawzittenqonseatmaytevokettteconseatbygivingwfitten
noticetotheLLC ptiortoth$timethatwritterlcom entsoftheM embersholding, in theaggregate,
theVote required to authorizetlleproposed action havebeen filed with theLLC Such revocation
iseffectiveonlyuponitsreceiptbytheLLC.
.
8.3
ExclusiqnofVotc.If,pursualttothe'
hlp.
sOrthetermsofthisAgreementaMembef
isnotmltitled to Vote on a specisc matter,then suoh M ember'snuaberofVc,

tes shallnotbe
oonsideredforpum oscsofdetorm iuiagwhetherapprovalbyvoteoftheM em belshasbeenobtained
in respectofsuch speciticmatter.
A RTICLE 9
M STRICTIONS ON TRANSFER OF M EM BEWSIIV N ERESTS'

.
ADV SSION AND SUBSTITW IO N O F NEW M H BEKS
9.1
TransferorAssiznmentfM cmber'stnterest. TheInterestofect

ehM emberand
-.
tlleEconomicInterostofa Perscnwlm isnotaM emberconstimtesthepersonalpropertyofthe

M emberorEconomich terestholder.NoM emterorEczmomicIntzrestholderluksanyinterestin
tilePropm'ty ofthe LLC.
9.1.1 A M ember'sInterestoran Econornic Intrrestmay only bo k'
mssferred Qr
mssigaed itstrictaccordance w ltlzthisA greem ent.
9.1.2 Nosale,tmnqfer,hypotllecatiow encumbrOceormssignment(a''Tramsfqr''l

ofaM ember'slnterestintheLLC V IIbevalidtmlessapprovedby aMajorityinInterestofthe
M embers,otllertlzarltheM emberproposing to disposeofitsIntertst Iflcsstlnm aMajorityi
n
'
InterestoftheM embers11otherthantheM tmberproposedtodisposeofitsInterrst doesnotapprove
O tjm
lst*
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Document 644-8 Filedj05/28/08
Page 92 of 95
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t
theTransfer,the transferee ofthe M em bcr'sInterestshallnothave any lightto participate in the

managtm em oftheBusinessandaffairsoftheLLC ortobecomeaMemberoftheLLC.
9.l.3 On6ormore Transfrsofup to an aggregate oftea percent(10%)ofa

M mnber's Econom icInterestm ay be donewithouttheconscntofthe otherM embers,the M atmger
orthe M artagementConmtlee,ptovided thatthetransfening M embernotifiesthe M anagerX
Nvritingatleutten(10)daysinadvanceofhisintenttoTransferanEconomicInterest.Suchnotice
shallcontain the date andamountofttm transferred EconomicInterest,and the name, adtlress,
facsim ile nklm ber and taxpayer identifcation num ber of the tram feree. The tzansfere,e of an
EconomicInterestshallnothaveanyrigl)tto Votc,participatein themanagementoftheBtlsiness
arld affairsoftheLLC,t)rt: LecomeaM ember.No rightsastheholderofartEconomicInterest
shallbeconferredupoathetraasfereetlntilthetransfereeagreestobebotmdbya11oftheSermsand
provisionsofetltisAgreement. Notwithstandi
ng theforegoing,anyTransfcrby aM emberofan
EconomicInterestin excessofatlagregateof10% shallbedeemedaTransferofsuch Member's
Interestatldshallbesubjed toSection9.l.
2above.
9.1.4 Exceptfor any Trc
m sferofa Class A M ember'sInterestto anotherexistklg
ClassA M emberoftheLLC,upon theTransferofanyClassA Member'sInterest(butnota!l

Economichterest),thetcansfcrceshallautomaticallybecomeaClmssB MemberandtlleClmssA
Unitssotransfen'
ed shallautomatically beconvertedto aClassB Uits.
9.2 Void Tra- fers.AnyTransferofanInterestwllichdoesnptsatsfytherequirements

ofSection 9.1.2 above shallbe nullartd void,shallnotconfer any lightsupon tlle propose,d
transfeTee,and ttke tx sferring Mtmbtrshalloontinue to be a M emheroftie LLC and to l)e
obligated lm dereach alld evc:y provision ofthisAgreem ent.
9.3
Admission ofNew M em bers.A new M embermaybeadmittedintotheLLC only
uponapprovalbyaMajorityinInterestoftheMembers.
9.3.1 'f'
heamotmtefCapitalContzibutien whichmustbmadeby anew M ember
shallbedetermine,dby theM atlagementCommittee.
9.3.2 A new M embershallnotbe.deemedaIIIIO OIIintotheLLC tmtiltheCapital
ContribntignrequiredofsuchPerson shnllhavebeenmadeandsuch Personhasbecomeapartyt
this Agreementby executing and deliveling to the LLC a covmterpartsigaature page t th's
Apeementacknowledglghisacceptanceofyandagreehgtobebolmdby,thetermsandconditions
ofthisAgreem ent
9.4
SubstitutionofM embers.upentb.
edeathofaM emberorupoathevalidTmnnferof
a M em ber's lntem stin accordaac,c with Sedion 9.1.2 above,a Person m ay be substitutcd as a
M emberandadm itted totheLLC,succeedingto1111oftheriglltsofanyM ema r.Thesubstittlte,d
Membershallhaveal1tllerigb.
tsandpowersalldslzallbesubjed toa1ltherestridionsandliabilie s
oftiletrnnqfeningM ember,exceptthatthesubstution oftlletransfereeM embershallnotrelease
tl!etrartsferringM emberfrom liabilitytotheLLC pttrsuanttoNILSSeditm 86.351.Nosubstituted
M embershallbedeemedadmittedintotlm LLC tmtilsuohsubsEmtedM emberhasbeoomeapazty
Sjyjjjm
c xmpe m
opw yjw asjjss.
.pagegg
J!q.23.
?qgC
S:lE.pk zodslhs J. Fry
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72!93 ?.
70
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3:06-cv-00056-PMP-VPC
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Page
of 95
.
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to this Agreementby executing and delivering to the M anagementConmlittee a coutlterpart
sktzaturepagetothisAgreement,ackzlowledginghisacceptanceof,andagreeingtobebotmdby,
thetennsatld conditiolzsofthisAgreement.
ARTICLE 10
O M ININTILATION AND ACCOUNTING M ATTERS
- -
10,1 M ah tenanceofBooksand Records.TheI-E.C shallcausebooksandrecords()fthe

LLC tobemaltaine,dinaccordazmewithgenerallyacceptedaccountingprinciples,andshallgive
reports to tlle M embers in accordaac: with prudent business practkes and the NRS. The
detenninationofthe ManagementCommitteemsto adjustmentstothefmahoialreports,books,

recordsandrsttlmsoftheLLC,intheabsenceoffraudorpossnegligence,shallbe15.
11a1aud
bindingupontheLLC anda1loftlleM embers.Tlmreshallbekeptattheprincipalbtksiuessoflice
eftheLLC,aswellmsattheregistcredoflioeoftheLLC specified inSection2 5(ifdifferent),at
ly
hdbrmation required tobemaintained by theLLC pttrsuantteNRS Sedion 26.241,asameaded
.
from timetotime.
10.2 AnnualAccoundng.W ithinonehlmdredtwenty(120)daysafterthecloseofeach
FisealYearoftlw LLC,the LLC shallprovide to theM em bersailinform ation necessary forthem

to complete federaland statetax rett
m ls.
'
10.3 lnspection aud A uditItights.Each M ember,atitsow nexpense, hastherightpuplm
TeasonablerequestandforpuposesreasonablyrdatedtotbeInterestfthatM embelytoinspedu d
copy during normslbusinesshotus any ofthe LLC booksand reoordsroquirtd to be,maintetinezd in
accordatzcewithSection 10.1above.Suchrightsmaylyeexercisedbyttm M embororthatM ember's
agentorattom cy.
10.4 TaxM attersHandled bvM anazer.ThcM aaagementConm'

titlceshalldesignatea
PersontobetheLLC'S''TaxM attersManazer''(delinedas'Tmx.
hlam rxslqartttet''ittcaodesection
6231)torepresentIeLLC (atieLLC'Sexpense)inoonnedionwithallexnminntiom oftheLLC'S
agairsbytaxauthorities,hwludingresultingjudioialaadadmirtistrativeproceedings,andtoexpend
LLC flm dsforprofessionalserviccsaztd costsassooiated therewith.In itscapacity as''TM M atters
M aaagmi''thedesignattdPorsn shalloverseetheLLC taxaffairsinleoverallbestinterestsofxle
LLC.
10.5 Establishm ent of Bank Accoun:Authqrized Sienatort

-eg.The M anagement
Cornm itte,
c shallauthoriz,e the rA blishm ent of one t)rm ere depository accounts in N evndn and
elsewhereforthefundsoftlm LLC.Alldisbursementsfrom theLI-c'sbnnk accolmtsshallbein
accordancew1t11thisAgreement M y checks)tlralts,andotllerirlstnnnentsobligae gtheLLC to
paymoneyuptoame mum amomtofTwentpFiveThousandDollars($25,000.00),including

hstrum entspayabletotlleM nnngerorotht'rPersonsauthorizedtosig,nthem,maybesignedonthe
''
LLC'SbehalfbytlzeM anager,actingalone.Any such checks,draftsorotherinstnlm ent.sobligating

theLLC topaymoneyinexcessof$25,000.00,wiketherasasinglelteck()raseriesofcllecks) sllall
k:tsli-
uc
opEltx'rmGAtlub%sm--x4'.paae29'
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Document 644-8 Filed(05/28/08
(
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-
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requim thejoilltsignaturesofthe Marmgetmad aPerson designated &om timeto timeby the

M anagem entCom mittee.
Cash balmweson hand m ay beinvested by theM anagem entComm itteeou behalfof

t.
heLfwc asprovided forinthisAgreement.LLC 11111(1.
sshallnotbecommingledwiththefundsof
tlkeM armger,auyconam itteeM em ber,M ember,oflk erormlyotherpersonorusedascom perusatitu
balawesforany othtrobligationsoftlw M imager, arly Comm ittteM em bm',any M em ber,ofticer
orany oflmrPerson.
.
10.6 FederalIncflrn.
vTaxElectiols.TheManagemerttConimitteeenbehalfoftlw LLC
m ay m akeallelectionsforfedoralincom etax ptuw ses, includingbutnotlim itedto,the following:
x
*10.6.1 Entitvclassification Election. Asadomestioeligibleentity,theM anagement

Com m ittees'
hallcausetlleLLC to electtobeclassified asapmtwrsllip forfedelaltax purpostsby
filingFonu 8232,Entity Classification Election,w1t11tlzeInternalRevtnueSenioeinthetimeand
manner prescribed by thr applicable regulations Thc elecion for such classifcation shallbe
efrectivemsoftheefreotivedatet)ftltisApeement.
.
10.6.2 Use of Accelerated Denreciation M ethods. To the extentpennitted by

applicablelaw andregulations,tlzeLLC;mayeled totlsea!laccelerateddew tciationmethodonany
depreciabletm itoftheasseta ofthe LLC.
'
10 63 AccountlnzM etbod.Forfmancialreportingpulw ses thebooksandrecords

ofthe LLC shallbe kepton tllc CASH M ETHOD OF ACCO
O applied in a consistent
mnnnerandshallreflectatltransactionsoftlzeLLC andbeappropriateandadequateforthepurposes
ofthe LLC.
10.6.4 ObligationsofM em berstoReportAllocations.'

I'
heM emborsareawareof
theincome tax consequencesofthezlocationsmadeby thisAgreementandhereby agreeto be
boundby tlkeprovisiorksofthisSedion 1,6in reporting theirshares.nftheLLC incomeand loss
forincom e tax purposes.
10.6.5 Tax Year. The M anagem entCommidee willcallse theLLC to adopttlw
CALENDAR YEAR ashsuxableyear.
.
10.6.6 OtherEleee qs.TheM aaagementCommitteeshallllavetherightinitsscle

discretionatanytimetomakeornottomakesuchotllerelectionsmsareautholizedorpermitte,dby
aaylaw orregulationforincometaxpuw ses(including,butnotlimitedto,atlyelectionunder

sectioas734,743and754oftheCodetoadjustthebmsisoft'
hePropertyoftheLLC intlioeventof
aTmnsferofa11orpartofthelterestofanyMember).Notwitlistaqdingtheabove,neMember,nor
theLLC,shallmakean electiontobeexcluded from tlr applicaon ofSubcbapterK oftbeCodc
orany sinlarprodsionsofstatelaw.
xw axi- w m
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ARTICI,E 11
TERM IN ATJ.O.N AND DTSSOLUTION
11.1 Dissolutlon. Pursllantto NRS Section 86.491ytheLLC shallbe dissolved um n the
oolmlw rtc.eofany ofthe following events:
.
11.1.1 'Ihetmanimouswritleaconsentt)fa11theMembers;or
l1.1.2 n eVotebyaMajorityinInterestoftheMembers;or
11.1.3 '
llw sale,license, lease, rental,assignm ent or other disposition of a11or
substantially a11ofthe assetsofttm LLC, including the Tcchnology orany patentrightsthereto,
wlwtheroccurringilzasirtgleh'
ausactionoraseriesofrelatedtransactionsa.spartofaplam
11.2 CorltinuhtipxtaadChnduct(IfBusinessAfterDissolution.Upontheoccurrenceof
any dissolutioneventspecifiedinSeditm l1.labove,theLLC shallceasetocarryon itsBusiness,
exceptinsofarasmaybenecessaryfortbewindingupofitsBusineas. 'I'heLLC shallcontinue as
aoompanyforthepurposeofprosecutinganddefendingsuits,acuori
s, proceedingsand claim sof
mly kind ornaturrby eragainstitandofenablingitgraduallytosettleandcloseitsBtzsiness, to
colled anddischargei1sobligations,todisposeofaudconveyitspropertyandtodistdbuteitsassets
andProperty,butnotforcoutinuingtlw Businessforwhich itwasesmblished.
.
11.3 Lim itation oa Actionsbv t)rAeainstRissolved LLC. The dissolution ofthe LLC
shallnotimpairAnytemedNorcauseofadionavailabletooragainstitoritsMauagtr, Com m ittet
-
- -- - .
M embersorMembersarisingbeforeit,
sdissolutionandcommenoedwithhvo(2)yearsaftetthedate
ofthedissolution.
11.4 Dislt
lzutinn ofNetProceeds Upon luipuidstlon. Tho M embersshallcontinue to
divideNetProfitsandNetLossesand AvailableCash'Flow duringthewinding-up peliod itlthe
samemnnnerandtilesamepriorie sasprovidedforinAtficles4gndl hereof.Theproceedsfrom
theliquidation ofProperty shallboappliedtoliabilitiesoftheLLC l
tnthefollowingorder:
- .
11.4.1 FirstztoQm paymentofcreditors,n theorderofprioritymsprovidedby law,
excepttoM mnbersonaccolmtOftbek conttibuoas;
.-
11.4.2 Second,totltepaymentofloansoradvaucesthatmayhavebeen madeby any

oftheM emlxlsorthek Pe oipalsforworkingcapitalorothm requirementsoftiteLLC;
11.4.3 Third,prorataltoFCPI P andFREM ONT TRUST,asClassA M embers, in
aocordaac,
e* t11tlteirpositiveCapiulM oountbalaaoes;
11.4.4 Fourth,toM ON TGOM ERY TRUST ,asaclassA M ember,inaccordancew1t,
11
hism sitiveCeapitalAccotmtbalance;
11.4.5 Fl
'fth,totheclassBM embersinaccordancewiththeirpositiveCapitalAcoount
balu ces;and
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l1.4.6 Theteafier,pro ratw to the M embel'

s in accordallce with their respcctive
Percentage lnterests attlle time ofsuch distribution.
W here the distribution pursuantto this Sectioa ll.4 cort

sistsbothofoashtorC-KSIA
equivalents)andnon-cash assets,1hecash (orcash equivalents)shatlftrstbedistrjbuted, in a

d
esccnding order,to fully satisfy each categorystartin:with them ostpreferred category above. Ia
tlle case ofnoncash assets, thedistributionvaluesarett
nbe basedon thefairmarketvaluethereof
asdoterm ined in good faith by tlze liquidator,ard the shortestm atttrfty portioa ofsuc.
ttnon-oash
assets(e.g,notesorotherindebtedness)shall,to theextentsueh non-cash assetsarcreadily
divisible,bedistributet inadescendingorder,totkllysatisfyeacllcategoryabove,startingwitlttlte
m ostpreferred category.
ARTICLE 17
ISSUANCE O F LLC CERTIFIC ATES
12.1 lssuance of LLC CerhE

' cates- The Ultits ofeactlM qmberin the LLC may be
reprezsented by an LLC certilicate designating theclassesofmembcrship and Units. Upon te
.
executionofthisAgreementandtlw payawntofthtCapitatCnnttibutiotu bytheMemberspttrsuatk

t
to Article3hereofltheM atmgermaycausetlleLLC toissueoncormorecortificatesinthenameof
eachM eml
yercertifyingthattbeMembernamedtherehlistherecordimlderoftheUnitsofInterests
setforththerein.ForpurposesofthisAgreem ent,thetetm 'trecordholder''shallmeantheM ember
.
whose nam e appearsillSection 3.lasthe M em berowaing the Unitsatissue.
12.2 Transfer ofLLC Ccrfificates. A M embersbip lnterest which Ls transfezw d ill
accordanoewiththetirmsofArticle9ofthisAgreementsimllI)etmnsferableonthebooksofthe
LLC byterecordl'
tolderthereofinpersonorbysuchrooordholder'sdttlyauthotizedattorney but,
,
exceptasprovided inSectien 12.3below withzesped tolosto stolen ordestroyed certificates, no

lansferofUnitsofM embershipInterestsliallbeenteredImtilthepreviously issuedt-lwc certificate
represenungs'uchunitsshallhavebenstmenderedtotheLlwc andcatlceledmldareplacementlalf
certifkateissuedtothetrR sfereeofsuchM embershipInterexstirlacccrdalwew1t11such pm cedures
astheM embersmayfrom tim:tetimeestalllish TheMemberssiallcausetlm Managertoissueto
tlletrmzsfening M em beranew LLC certifioaterm resem ing theUnitsofM em bership taterestsnot
1-1% transferred by tho M em ber, in the eventsuqh M emberonly trarssferred som e, butnotall,of
theUnitsmpresentedbytheorigl
'nnlI-LC cortiticate. Exoeptmsotherweiserequiredbylaw,ttz LLC
.
shallbeentitledtotmattherecordholderofO LLCcertiticateonitsbooksasiheownerthereovora11pup osrsregardless()fanynoticeorknowledgetothecontrary
12.3 Lost.Stelen or Destrayed Certtf

jc-t
a-m .'rheII C shallissueanew LLC certifcate
-
irtplaceofany LLC Cert

' catepreviously issuediftherecordholderoftlw LLC Certificate:
12.3.1 M akesproofbyaffidavikinform andsubstancegatisfactorytothe
apreviouslyissuedLLC oertifcatehmsbeenlst, destroyed orstolen;
.
erthat
12.3.2 Requeststheissu'mc,eofancw LLC certt

'fcatebeforetheLLC hasnoticethat
theLLC certificatehasbeeaacquiredby apuzchaserforvaluein good faithalzdwithoutnotic,eof
anadversodaim;
f'lD,zp
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Page 2 of 101
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12.3.3 Ifrequested by the remairting M em bers, deliversto the LLC a bondain form
arid substmzcereasonably satisfactory to theremaining M em bers, with such surety orsurdiesand
vvithfixedoropeapenalty asttteremaiaittgM embersmaydirect, in theirremsonable discretion,to
indem nify the LLC agahtstatty claim thatm ay be m ade(m accotmtoftiealleged loss, destrtmtion
orttettofthe LLC crrtiscate'
,aad
12.3.4 Satist-iesany otherreasonablereqtlirementsim posed by the M em bers orthc

M anagem eutComm ittee.
lfaM emberfailstonotifytheLLC withinareasonabletimeafterithasnoticeofthe

loss,deshuction ortheh ofan LLC cerc cate,andatransferoftlleUaitsofM embershipInteresl
representedbytlteLL0 certificateisregisteredbeforerK eiviagsuchnotiication,i eLLc shallhave
noliabilitywilhrespecttoanyclahnagainsttheLLC forsuohtrarlsferorforanew LLC certificate.
*
ARTICLE 13
I'
N DEM N IFICATION
13.1 Iudem nificatiorlofthcM em brrsand TheirPrincipd s
-.The LLC shallindefnnify
atldholdhazmlesseachoftheM embers,th1M anager,theCommltteeM embers, tlleirM filiatesand
each oftheirrespective ofticers,dhrctors,maaagers, tntstees,mem bers,shareholders,partnezs.
-
'
.- -
employees,agentsandPrincipals(individually,an ''Iademnitee'')from atzdagainstallyand/1

loases, claim s,dmnands, costs,damages, liabil
ities,jointand scveral,cxpenxsofany nature
(includingreasonableattomeys'feesanddisbursetncnts),judgmems,Snes,setllementsartdoier
am ourits arising from any and a1lclaim s,demands, actions,suitsorproceeHinss,wllei er civil,
t1,r1n111111,administa6vet)?itwestigative,ilzwhichtheIndertmiteeisinvolvedasapart.y arising out
of tlm Business of the LLC,excluding liabilities to any Member,rcgardless ofwhettmrthe

Indemnitet contirmesto be a M ember,an Afftliate,oran officersdirectr, employee,azentor
PrincipaloftheM emberattlx timeanysuch liability orexw nseispaidorincurred, to thefuliest
extentperrnitlcdbytheNp.sanda11otherapplicableLawsnprovidzd thattlm M emberorsruchlYrson
aCtXIingoodfaitk withinwhatisreasonablybelievedtobrthescopeQfitsallthodtz andfora

ptuw se whioh itremsonably believed to be in tlze bestintoresfa oftlze LLC ard tlte M embersor
otherwisoincompliancewithleprovisio!ksofthkApeement;providedvhowever(i)thattheLLC
shallnotberequh'e,
dtoindemnifyany Indemnitte,artdgny suchIndenmiteeshallbeliable, forN y
-.
loss.expenseordamagewhichthcLLC maysuffera.
saresultof(A)suchindemnitee'swi1tful
misoonductgrossnealigenceorbadfaithinfailingtoperformitsdutieshereunder,(B)aotionstaken
by suoh Indemnitee in violation oftlisAveement, (C)therecei
ptby such Indemniteeofany
fmatmiatbenefitsto which itisnotentitledpursuantto thisAgreementa or(D)thevoteby such
IndemniteeforadistributionofRndsoft:eLLC iltviolationoftllisAgreementortheAct;(ii)the
LLC shallaotbe required to inde ' ac.
y Indernnitee forariy breaclloftheprovislon.softltis
AgreTmentaorferanyloss,expenseordamagewhich itmay sufferasaresuh oftiebreachofthis
ApeementbytheMeml)ertowhichtlzcIndemnitceisrelated'
,and(iii)anyliabilityhereuudershall
belimitedsolelytotlleassetsandpropertiesoftheLLC,andnoMember(oranyAc liateofany
Member)shallhaveanyliabilityorobligationbyreasonQfdeseindemniticatioaprovisiorus.
fr ru
iw
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80.2211 ?. Tb
Document 644-9 Filed.05/28/08
Page 3 of 101
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n efotegoiugprovisionsofthisArticle13shallsurviveforaperiodoffouz(4)years
from thedateofdissolutionoftheLLC;provided)ifattheendofsuohpcriod, lhere areany actions,

proceediagsorinvestigatiorlsthenpending, thcManagershal!sonotifytheM embersatsuch time
(wllichnoticeshallincludeabriefdescriptionofeachsuchaction,proceedingorinvestigationand
oftheliabilitiesmssertedtherein),andtheforegoingprovisionsoftllisAtticle13shallsurvivewith
remecttoeachsuchaction,proceedingorinvestigatioasetfortlzinsuchnotice(oranyrelatedaction,
proceedinaoriavestigatioabasedupontllcsameorsimilarolaims)untilsuqhdateassuchactionz
proceeding orinvestigation isultim ately resolved.
TheLLC shallnotincurthecostofthe portion ofany insurance,otherth% public

liability inslzrmwe,which irlsurestheM anagerorColnrnitteeM emborsagainstany liability asto
wllichtheM anagerorCommitteeM embersarehereinprohibitedfrom beingindemnitied.
13.2 Expextses. Expessesincurre,
d by aIAIudtmniteoin defendiug any claim , demant
action,suitorproc4xdingsubjeottoSection 13.1abovemay,&om timetotimepbeadvatmedbythe

LLC priorto thefinaldisposition ofsuoh laim ,dcm anda action,suitQrproceede t
lptm recekptby
theLLC ofan tmdertaking by oronbehalfoftheIndemniteeto repay such amotmtifitshallbe
determinedthatsuoh Prrsonisnotentledtobehldemaifed asauthorizedinSection 13.1.
13.3 Iadcmnl
x catl
-an Rights Non-Exclusive. The indemnilkation piovided by
Section 13.1shallbe in addiuonto any oterrigittsto wilich tlmseindemnified may be entitlo
undermly agreemtntaVoteOftheM embers,asamadzroflaw oreqtlity orothenvise,bot
,
h asto
actioaintheIndemnitce'scapacityasaM ember,asarlAffiliateorasano ccr,direotor,employeer
agentorPrincipalofaM embe!andastoanyadion inanotlzercapacity,andshalloontirmeastoan
Inderrmiteewho hms ceasedto serve in such capacity alld shallinuze to the benefitofttteheks,
successors,assignsand ' 'stratorsoftheIndmnnitee.
13.4
Erroz-s and O m issioaslxlsuranee. TheLLC rnay purchaseand m aintain insurance,

.
attlle LLC'Sexw nse,on behalf(jftlle M embersand such otherPersorss astlm M embersshall
detennine,againstanyliabilitytatmay beasseltedagainst,orany expemsethatmaybeincurred

by,suchPtrsonin ootmectionwiththeactivitiesoftheLLC and/o'
rtlie
-M em
-bers'actsorom issiong
mstlzeM olnbersoftheLLc regazdlessofwhethertheLLC wouldhavethepowertoindemnifysuch
Person againstsuch liability undertlle provisionsofthisA prem ent.
.
ARTICLE 14
AM ENDM EN'I'S
14.1 Am emdmentorM odification oftheAzreem ent.Exceptfortheauthority graated t

theM anagerheretmderto amendEXTITRIT A to tllisAp eementfrom tirneto timewithoutthe
nooossity ofafolm alnm endm enttottisAgrtom ontrtheterm sandprovisionsofthisAgreem entm ay
ntbeadoptedoaltemd,amended,orrepealedandancw operatingap eementadoptedwitlloutthe
-
theapprovalbyaM ajorityinIntcrestofthcMembers.
14.2 Amevd
- me-mtm rM qdifieatitm gfArticlegofO rganizatlon.Exceptfortheauthority
pxnted to tlle M nnnger hereunder to amcnd or oon'
eot tlle Articles of Organizatiano and
-
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ie Aakuc
opBu 'j'mqAGPD MENT.puq24
Jih ?/. qdt L:1/FM
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80.7211 ?. 26
Case 3:06-cv-00056-PMP-VPC Document 644-9 Filed t05/28/08

Page 4 of 101
h
notw ii stantliag aay other provision to the contrat'

y in tl
ze Articles of Organization or this
Apzement,in noeventshalltheAl-ticlesofOrgaftizxation bemuertded withouttheapprovalby a
MajorityinlnterestoftheMembers.
ARTICLE 15
NOTICES:W AIVER O F NOTIC E
15.1 M ethad ofNotice.Anylmticeorcommmcationrequired orpennittedto begiven
'
heretmdershallbein writhlgandmaybeeitlter(i)persocally delivered,whichshallbedeemed

receivedatthetimeofactaalreceiptthereof;or(ii)sentbyregisteredorcertiedmail,withpostage
andchargesprepaid,which shatlbedeemeddeliveredseventptwo(72)hotu.safterdepositin the
UnitedStatesmail;or(iii)deliveredbyfacsimiletanstnission,whichshallbedeemedreceivedon
ttledateandltthetimeofelectronicconrmationofsuchtmnqmission,providedan origilml
mechaaicalsigae.dcopyofsuchnoticeorothercommunicationisalsoimrnediatelydepositedirtthe
UnitedStatesmailwit.
hfirst-clasststageandchargesprepaid;or(iv)deliveredbymessenger,
FedExorothertmckablecourierservlce,whichslmllbedeemeddelivcredonthcdateandatthetime
astmcked and confrmedby such cotuierservice;and incach case, addressed ordelivered to the
parqrtowhom thesameisdirectedatsuchpartysaddressand/erfacsim iletzumbersetforthbelow ,
oratsuchotheraddressand/orfacsimilentunbera.
sthatpartymay specifyl)ywrittennoticegiven
totheotherpartitsilzaccordancc withthisparagaph:
lftq t:e LLC:
PID U CH NOLOGIES,LLC
Attn: W arren Trepp,11 M amagementCormnitte,eChaitm an
590LakeshoroBoutevard
Incline Village,Nevada 89451
M ailiug Address:
P.O.Box 4964
InclineVithge,Nevada 89450
..
Facsimile:(775)231-4395
W itlla Courtesv Copv t@:
Frye& Hsiek LLP

Attn:DouglasJ.Frye,Esq.
24955PaoifioCoas'
tHighway,StdteM 0l
M alibuaCatifom ia 90265-4747
Facsimile:(310)456-0208
7,
$1$:,,
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40.7211
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Case
.
, . 3:06-cv-00056-PMP-VPC
.
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Iftqtl.
leM cm bcrs:
.
To ttte addm ss ofeach M ember as set

fortltonExtllBl'rA attached heretoand
made a partofthis Agreement,which
exhibit may be amellded from tim c to
tjme asappropriate.
W herecourtcsy copiesafeprovided for,tlw serviceofanysuchcourtesy copyshallnetconstitute

noticettlthepattyheretmder.IftheUnitedSutesPostalServiceretum stotheLLC ortheregistered
agentatty notii;easlmdelivemble,allfvturenoticestothatM embershallbedeemedduly given if
keptavailableforthatMembetattheLLC'Sprincipalpiaceofbusinessforone(l)year.
15.2 W aiverofNotice.Notwitlwtandingtheforegoing,when, tm dertheprovisionsofthe

NRS orundertlleprovisionsQftheArliclesofOrganizntion orthisAgreement,noticeisrequired
tobegiven toaM emberortotheM anageroftlzeLLC,awaivcritzwriting signedbythePvlsonor
Personseltitledtotlm notice,whetherbeforeorafterthetimestettedinit,isequivalenttothegiving
ofnotioe.
A RTICLE 16
M 1SCELLANEOUS PROVISIONS
.
'
16.1 Counterparts. 'fhisAgreementmay beexecuted in severalcolmterparts,and a11

counterpartsso executed shallconstitute one Agreement,binding on a11ofthe pm ieshereto,
notw ithstanding thatallofthv partiesare notsignato:y to tlze originalortilesam e countcrpart.
16.2 Survival(lfR iehts. ThsAgreem mltshallbe binding uponjand,asto pennitted or
aoceptedsuccessors,transfereeesandaasigns,inuretothehenefitoftlleM embersandtheLLC aud

theirrespectiveheizs,legatees,legalrepresentatives,successors,kansfmresandmssigus,inallcases
whetherbytilelawsofdescentanddiskibuon,merger,reversemerger,consolidation,saleofassets,
othersale,operationoflaw orotherwise.
16.3 Sevem bititp In theeventany sectioq subseoticm orany sentencewitllin any section
orsubsecionhereunderisdedaredbyacourtofcompetontjurisdidiontobevpidorunenforoeable,suchsedion,subsedionorsentenceshallbedeemedseveredfrtlm theremainderofthisAgreement
andthebalmweofthisAreementsllallremainillfullforceandeffect.
16.4 Cnnsta ction. The l
e in allpaltsofthisAgreem entshallbe ia a11cases
construod sim ply accordl
'ng to its fairm eaning and notstrictly fororagainstany oftheM embers.
16.5 Section H eadines. The captions ofthc Artides,Sections or subsections irlthis
A gm em cntare forconvenience only and iu no way deiine,lim it,extend ordescribe tlle scope or
intontofaay of'
lheprovsionshereof,shnllnotbedeemedpartofthisAgreementandshallnotbe
usedinconstnlingorinterpretingtl'
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Page 6 of 101
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16,6 Governine Law. ThisAgreemcntatld arlyamendmentsorexhtbitshereto,and the

rightsand obligationsoftlleparl
iesheretmder,isexecutedunderand inconformity withthelaws
oftheState ofNEV ADA relatirtg tolintited-liabilitycompaniesandistobeconstrued,enforcedand
govem ed in acoordmwe therewith withoutgiving effeotto any cenflictofIaw provision.
16.7 AdditiotmlDocRm ents.EbchM em ber,upontherequestofanotherM em bertagfees

to pedbnn a11furtheractsand execute,ackuowledge and delivera1ldocuments which may be
reastmably necessary,appropriate or desirabte to carry out the provisioas of tltis Agreem entv
iacludina butnot limited to acknowledging before a notary public any signamre heretofore or
herem erm adeby a Nfem ber.
16.8 PronounsaRd Plurals.W heneverthecontex'tm ayrequke,any pronoun used inthis

Agreementshallincludetlx correspondingmasculine,femkkire andneutefforms,andthesingular
form ofnokmrpronolmsandvtrbsshallinoludethepluralaudvicevcrsa.
16.9 Tim eoftlleEsscnce.Exceptasothem iseprovided herein,tim eisoftlleessencoiu
connection with eaoh arldeveryprovision ofthisAr eement.
16.10 FuxrtherActipun .Eachoftl:eM embersagreestoexeoute,aclknowledgeanddeliver

suchadditionaldocuments,andtakesuchfildberactions,msmayreconablyberequiredfrom time
to time to cazry outeaclkoftheprovisions,and the interttvofthisAgrcem entoand every agreem ent
ordocum entrolatinghereto,orenteredintoincofmectionherewith.
l6.1t ARBITR ATIO NOFDISPUTES.ANYMEMBBRRERETOMAYREQUI
RE'IIW
-
ARBIRX ATION OF ANY DISPUTE ARISINO UNDER OR IN CONNECTION W ITH TTES

AGREEM ENT OR ANY RELATED AGREEM ENT,SUCH M EM BER M AY IM TIATE AND
REQLRRE ARBITRARRON BY GW INO NOTICE TO THE OTHER PARTIES SPBCIFYING

THEM ATTERTO BEARBITRATED.IFLEGALACTION ISALREADYPENDING ON ANY
M ATTER CONCERNW G W HICH X41E NOTICE IS GIVEN,'
fiIE NOTICE SHALL NOT BE
EFFECTIVE UNLESS GIVEN BY THEDEFENDANTTHEREIN AND GIVEN BEFORE THE
EXPIM TION OFTW ENTY (20)DAYSAFTER SERVICEOFPROCESSON Tl!E PERSON

OIVINO Tc
NOTICE. EXCEPT A S PROVIDED TO Ti4E CON TRARY IN THESE
PROVISION S ON Y
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JM
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LBE W CONFOG
W M Y
AND SUBJECT TO APPLICABLE RULES AND PROCEDURES OF TilE AMERICAN

ARBITRATION ASSOCJATION (OR ANY SUCCESSOR THERETOI.IF THEAM ERICAN
ARBITRATION A SSO CIARRON IS NOT TH EN m EM STO CE AND THERE IS N 0
SUCCESSOK OR IFFOR ANY REASON THEAM ERICAN ARBITM TION ASSOCIATION

FAILS 0R REFUSES TO ACT,'I11E ARBITPATION SHALL BE IN CONFORM ITY W tq'
il
AND SUBJECT TO '

ffIE PROVISIONS OFAPPLICABLB NEVADA STATUTES(lFANYI
RELARRNG TO ARBHRATION AT Tl TIM E OF Tiv NOTICE. THE ARBITM TORS
SIIALL BE BOUND BY THIS AOM EMENT A!fil M L RELATED AOREEM ENTS.
PLEADINGS IN AN Y ACRRON PBNDING ON '1TIE SAM E M ATTBR SHALL, IF
ARBIIRATION ISREQIXRED A8AFORESM D,BEDEEMED AMENDED TO LM T THE

'
ISSUES TO THOSE CONK M PLATED BY 'IH E RIJLES PRESCRIBED ABOVE.EACH

W C ER SG LPAYM COSTSOFU IM U ON,m CLUDm OG IW TOR'SFEES,
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AS AW ARDED BY TlIE ARBITPATORIS). THE NUMBER AND SELECTION OF
ARB
U
CE
ITPRAT
TN ORIS)SHALLBEINACCORDANCESVITHTHERIJLESPRESCRIBEDABOVE
TIiIEACHW ITM TORSELECTED SHM ,LBBNEUTPALANDFAAZ
IILIAR
m 'fld THE PRIN CIPAL SIJBJECT M ATTER O F THE ISSUES T0 BE ARBITRATED ,SUCH
A S,BY W AY OFEXAM PLE ON LYU W C> OLO GY AX SOO W DEVELOPM O T, OR
SUCH OTHER SUBJECT MAW ER AS MAY BE AT ISSUP

E (ii)THE TESTIMONY OF
W I'
INESSES SHALL BE OIVEN UNDER OATHUAND (iii)DEPOSITIONS AND OTHER
DISCOVERY MAY BE ORDERED BY THEARBITRATORIS).
THEPROW SIONS OF '
1718 8ECTION SHALE IN NO W AY LIH ITTHE RIGHT
OF THE LLC OR AN Y M EM BER TO OBTAIN PROVISIONAL OR AN CILLARY REM EDIES
FROM A COURT OF COM PETENT JURISDICTION BEFORE, AFTER TOR DURING 'IN E
PENDENCY/FANYARBIRXATIONPROCEEDING.THEEXERCISEOFSUCHREMEDY
SH ALL NOT W AIVE TilE PJGHT 0F THE ANY OF THE LLC OR AN Y M EM BER TO
ARBITRATE.
NO TICE:BY EX ECUTING TH IS A OREEM ENTUYOU ARE AGREEING TO
HAVE ANY DISPUTE ARISINO OUT OF THE M AW ERS INCLUDED IN THE

''AM IM X ON OFDISPO S''PROW SIONDECIDED BYX G
W ITM N ON M D
YOU ARE GIV IN G U P AN Y RIGHTS YOU M IGHT POSSESS TO HAV E '
1X E D ISPUT E
LITIO ATED IN A COU RT OR JIJRY TRIAL.BY INITIALING IN TH E SPACE BELOW Y0U
U GIY GW YOURO ICG W GG STODISCOW RY AU M PEM ,G ESSSUCH
RIGIITS ARE SPECIFICM LY IN CLIJDED IN '
ITIE ARBITM TION OF D ISPUTES'
PROVISION LFYOU REFUSETOSUBM ITTOARBITRATION AFTER AGREEING TOTHIS
PROW SION YOU M AY BE COM PELLED TO ARBIIXATEITNDER '
H'
IE AUTHORITY OF
'1TIE APPLICM LE STATE STAN JTE. YOUR AGREEM ENT TO THIS ARBITM TION
PROVISION ISVOLUNTARY.NOTHJNG CONTAJNED I'
IEREIN SHALL PREVENT ANY
MEMBER FROM SEEKJNG EQIJITABLE REM EDIESFROM A COURT OF COMPETENT

JU RISDICTION .
16.12 W AW ER OF JURY TRIAL. W l'l'llIIESPECT T0 ANY DISPW E ARISING

G DER OR m CO> ECN ON M O TY SAGM EG
OR N M LAW D AGM EM ENTa
A S TO SVHICH N O M EM BER IN VOKES T11E RIGHT TO ARBITRATION llEltEm
..
PROW DED,OR AS TO WHICH LEGAL ACTION NEVERTHEEESS OCCURS,EACIq
M EM BER IV REBY IRREVOCABLY W AIVES ALLIUGI'

ITSITM AY HAVE TO DEM AND
A JURYTRIAL.M SW G ERISU OU OLY,O O ONM LY,O VOLO TO Y
O
B BY H > M EM R EACH > > BR ACU OR EDGESTH ATN OM OY M
OTI'
IER W M BERS N OR AN Y PERSON A C'ITN G ON BEIIM ,F OF TI'IE OTIIER PA RTIES
HASM DE W M PM SN AH ON OFFACT TON UCEM SW AIVER OFTRIALBY
JU RY OR IN AN Y W AY TO M ODIFY OR NIJLLIFY ITS EFFECT. TIIE M EM BERS EA CH
FURH IER ACKNOWLEDGE THAT IT HAS BEEN REPRESENW D (OR HAS HAD TI!E
OPPORTUMTYTOBEREPRESENTED)INTHESIGNINOOF'
IHISAGR/EMENTANDIN
'
THE M AKD IG OF THIS W AIVER BY INDEPENDENT LEOAL COUNSEL,SELECTED OF

ITS 0% FREE W V L,Ar THAT IT HASHAD THE OPPORTUNITY TO DISCUSS TIIIS
W AIVER W ITH COUNSEL.TI4E M EM BERS EACH FURTHER ACU OW LEDGES THAT
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IT HA S READ AND U NDERSTAND THE M EANING AND RAM IFICATION S OF THIS

W AIVER PROV ISION .
16.13 Third PartvBeneficlaries.TherearenothirdpartybeneficiariesofthisAgreement
exept(i)AK liatesarldPrincipalsoftheMembersand(ii)anyotherPersonsasmaybeentiiedto
the bettefitsofArticle 13.1 hereof
16.14 No Partition. The M em bm'
sagreethattheProperty thatthe LLC may own orhave
an intcrestin isnots'uitableforpartition.Each oftlleM embershereby irrevocably waivesany and
a11rightsthatitmayhavetomainuin anyactionforpartitionofm1yPropttty theLf-C mayatany

time have an interestin.
16.15 EtttireAereement.ThisAgreement,togetherwitltallexhibitshereto,andtheArticles
ofOrganizaticncenstitutettteentireagreementoftheM emberswithrespectto)andsupersedesall
priorwrittenaudoralagreaementsyunderstaadingsandaegotiatioasnithrespectto,thesubjectmatter
horeof.
16.16 W aiver.N o failm ebyany partytoinsistuponthestzictperfonuanceofany oovenant
duty,agreementorcenditionofthisAgreementortoexerciseanyrightorremedyconsequtntupon
abreachthoreofshatlcenstituteawaiverofanysuchbreachoranyothercovenan: dmy,ageement
orcondition.
16.17 Attornevs'Fees.Intheeventofanylitigation,azbitrationorotherdisputeatisilgas
aresultoforbyreasonofthisAgreement,theprevailingpartyinany suohlitigation, arbitration or
otherdisputeshallbeentitledto,inadditiontoanyotherdamagesassessed,tsremsonableattorneys'
fees,anda1lotlzercostqand ' esincurredincormcctionwith settlingotresolvingsuchdispute.
Theattorneys'feesw hichtheprevailingpady iserdtledtorecovershallincludefeesforprosecuting
ordefending any appealand shallbe awarded forany supplementatproceedingsuntilthe f5.
11a1
judgmentissatisfiedinfull.lnadditiontotheforegoingawardofattomeys'feestotheprevailing
party,i eprevaitingpa!tyinauylawsuiterarbitrationprocedureonthisA/eementshallbeentitled
toitsreasonableattomeys'feesincurredinanypostjudgmentproceedingstocollcctorerdbroetke
judm ent.Tllisattozneys'feesprovisionisseparateandseveralandshailsucvivethemergerofthis
AgreementiIItO anyjudgment
16.18 AhtEoritv.Each signatoe tothisApeementrepresentsarldwarru tstha1heorshe
possessesallnecessmyoapacityandautiloritytoactfor,sign,andbindthemspectiveentityonwhose
behalfheorsheissigning.
(Remainderofthispageintentionallyle; blank.
ThisAgreementcoatinuedandsignedonthefollowingpages,)
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SIGNATURES OF TH E PARTIES
IN W ITNESS W H EREOF,thepartiesllereto haveexecuted ard delivered, orcaused to be
executed and delivered by aduly authorized rpresentative, this AM FN DED AN D RESTATED
OPEPVATIN G AGREEM EN T ofm TREPID TECHNOLOGIES, LLC asoftheday and yearfirst
abovcwritten.
Fnrther,the uadersigaed,msM cm bersofthe LLC,acknowledgc they have read and
uaderstand tlte faregoing Am ended and Restated O perating Agreem ent for INTREPID
TECI-INOLO GIES,LLC,includiqg spedfk alls bqtn9tljm ited to,Sectiatts16.11 aud 16.12,
''A rbitration ofDisputesy'land I'W aiver t'fJury Trialj''respectively,andyasevidenced by
tbeir signatures below ,the undersigned hereby acknowledge and agree to the provkqiolls
contained herein.
*
INTREPID TECHNO LO GIES,LLC
A Nevada Lim ited-Liability Com pany
Ily ItsM em bers
CLASS A M EM BERS:
FRIEN DLY CAPITAL PARTNERS,L.P.
A Califom ia Limited Partnership
By:F 'endly Capital,lnc.,A N evada Corporation
ILS reaeralParmer
By:
N TREPP,11 President
THE F
ONT TRUST,DATED M AY 16,1994
A N ev aRevocable rust
By:
TREPP>ItsTrusteo
M ONT
M ERY
LY TRUST
A CaliforniaRe cy!bleTrust
By:
GOM ERY,1% Co-Tnzstee
y:
/
K .M ON T
///
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M E ,ftsco-Trustee
.
/// (Signatw esctmtinuedonthefollowingpage)
ZCXOQ RVe WO MC
OPEIIATINGAOREEMENT'Pag'e40
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SIG NA TURES O F TIIE PART.IES (C ontinued)
-
IN W ITNESS W IIEREOF,thepaztieshcretohaveexecutcdapd delivered, orcausedto l>e

cxecuted aad delivercd by a duly authozizedrepresentative, thisAM ENDED AND RESTA'IYD
OPEM TIN G AGREEM EN T ofINTREPID TECIG OLOGIES, LLC asoftlleday andyearftrst
abovewritten.
CLASSB M EM BERS:
IREFER T0 COUNTERPART CLASS B MEMBER
A fNVESTMENT CERTIFICATION AND SXGNATURE
Ztiks ATTACHSD Ioilull'o AND MADE A PAR'

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rllzs AGREPM X'
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By:
Nane:
Title:
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- -
By:
Name:
Titlm
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By:
Name:
Tide:
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By:
Nmne:
'l-itlc:
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s/m rxrw* k- m
OPEM TING AGREEMN .page41
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SIGNAT
..URES 0F THE PARTIES fcoqtiaued)
IN W ITNESSSVHEREOF,thcpartiesheretohaveexeoute,
d nddelivered,orcausedtobe
executed fm d delivm'ed by a duly authorized representativo,this AM EN DED A ND RBSTATED
OPERA'H NG AGREEM ENT ofJNTREPED TECHNO LOO IES,LLC asofthe day and yearfirst
abovew ritten.
CEASSB M EM BERS (Continued):
*
By:
-. .
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Title:
By:
N am e:
Title:
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By: .
Nam e:
Title:
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Title:
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3:06-cv-00056-PMP-VPC Document 644-9 Filed 05/28/08 Page 12 of .101
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ACCEPTANCE OF APPOINTM EN T
O F 'FTIE M ANAG ER,C OM M IU EE M RM BER S
AM )CH EF TECH NOLO GY OFFICER
-
Eac,h of the kmdersigntd hereby (i)acczeptsttisIespective appointmentasa Manager,

Cgrnmittec MemberorofficeroftheLLC fortheterm slted ia this Operating A p cem entoras
.
othenvisesetbytheManagementCommittee;(ii)acknowledgeshehasreadandtmderstarldsthe
fom going Opem ting Agreem ent ofthe LIaC , partlcularly tb.
e restrietiortscontained itArticte 6
thereotlaadgprreestobrboundbythetenns,provisioms,covenantsand restrictiorkssetforthinsaid
OperatingAgreement asamended from timeto time;and(iii)hereby agreestoundertakethe

performanceofhisdutiesaresponsibilitiesalld obligatiorksofeach respectiveofticeinaccordance
w ithterm softlaisOpemting Agreem ent,theArticlesofOrganiz-atioaalzdtheapplicableprovisiolls
ofNevadalaT,asauymzdallmaybeamendedfrom timetot'
DOUGLAS 1.FRW ,astohisappointmtntas

M anagerand Com rnittee M em ber
TREP
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OPERA'
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FIRST AM yNp&e
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OPARATiNG A/IG EM ENT
OF
e'rreppidTeebpologio slA c
THISFIM TAm hmm NrttheIfAmelu'm> t':)TOA< O Eb> bY TATO

mympmv ltboKconmanv-le e e M ope la- 1
rm a Neve Y tVXIIiabnity
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aadadoptedonJULY % 2:0a,aqdenterrxlintoarnoag1
999mxl
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O PERA'D NG AGKEEM EN-T of G repptd Tedm olqgiea,
ompazty. Exceptas otherwjm desned lwve1. an caphaliRozllanns sk 11have the neatlitv s
mecdbedtoY em intim (4x1-1% Apeement
STAV AIENTS 01FAG :

AM
A.
W e H ia H a l ofiecla A M x e of*eco-
emixrsavedw rkghttoVote.
B.
h uw'uatjtto Sections 6.4.1 and 14.

1 Qftl!o O>
amondmeatto+ke
' Agrxracntrequire:the pricrA/o*
e olyl cl= s
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,
thesame.
Nm THEDIFORFOtlttClassA M tmbersherebyagrv'eaaf@lI- #:
1. '1YedeEnisionof'Uni1(s)*&etforthjnSe on 1.42 ofom Operab'nAgre znemtig
h
eteby amended iltitaratt
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*t.4: raiv
uxl'meaasa uak ofM tmbershp Illte= taq a
CIa A M emberozasa ClassB M lmivrin theLLc repteseqtinga
CapitalCxme ulioa* tlleLLC indm l

'nx
nt'aI
prir.e am ount
ofTWO -SW Dalhrs($A6.00hjxrUnit '

rilt1= Unit
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x adjusted from time to time by *t M anagnmen*
Comxni- hs.qedum nthcirvaluaEonoftlle
y, intte sole
A u euon.114Ceprapany !'halllx mdon'zed to '
Iqule tllefozowing
numlvrandolassesofUnita:
A*odad
C1- ofT
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CI- A UIU?
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Ex% :tsxpresstyumendedandmodifiedberoby the
' Agreementshall
rotbeSX tGIinanyolermannezaadshagrernainin ibn forcea,nde> tmqodginallyexecuted
3.
Eaoh of th: Class A M emh rs mvreseats and warranta that the ofticmvs er
mw esentauvesexecutinge Agreementazpdulyauthorizxadtoenferihlp
Amemfmentonb
scxacuteandddlverthis
ohalfofflm resw cdveM emberexmcudngthesame
.
4.
ForcenveniermesthisAmeadmo tm aybeiv cutetti:multiplec01:11teq)x1s
5fwhichshallbedeeme,danorl
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IN m TNESS W m IllEtm tllepmlieshe.rdobm m utod aad dnvrd Y sFIRST

G
TO G
EDO Y TATEDOPO U OAGTG M N OY
TECHNOLOGIES
e
eN PX
LLC andtbe xmeshallte xloptmlayertbeday andyearf!r/ a11- vAqittere'Pzvppid T lmologias, LLC
A NevadaLirnite tkability Company
By 11 Cla!sA Mqmixrs
TIlE
0147
ST,DATED M AY I6a 1994
By:
W 4 -hlN TF-EPP,!tsTrustee
FRLENDLY CAPIT
PARIN RLS,L.P.
By:Ftiol C# ,lnc..ltsGencmlPartu
By:
IREPP,IU Pmsideat
GO
RY FAM ILY TRUST
By:
.
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GO< RY,ItsTm a
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By
BRE- A M ONT
NitY 11 T
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SECO ND A M E NDNV NT TO AM ENDED ANb RESTATED

OPEK XTG G AG REESIENT
OF
eTreppld Technoloules, I-ZLC
-
THIS SECOND AM ENDMENT (the Cdzu

kmendmentm) TO AM ENDED AND
RESTATED OYEIIA TING AGREEM EN T ofG reppid Technoyogies,LLC,aNevadalim ited
liability ompany (the''Companv''ldated and adopted Janttary 1,1999,asamendyclby First
AumndmentlatedandadoptedJuly7,2000(the''OprratinaAaeement')isdatedandadoptedon
IWAY 15,2001,and is entcred into am ong the undersigned Class A M embers ofthe Company.
Except;
4sothvrwisedefmedherein,al1capitalizedtermsshallhavethemeaningsascribedtothem in
the OperatingA greem ent.
STATEM ENTS O F FA C I':
A. 'lnhelmdersir edarealloftheClmssA M embersoftheCompany,andonlytheClass

A M embers havethe rightto Vote.
-
B. Pursuantto Sections 6.4,1and 14.1ofttm W eratingAreement,any material

mnendmentttheOperatingAgreementrequiresthepriorVoteofaMajorityirtlmerctofthe
Members(entitledtoVote),andtheMembers,bytheirwritlenconsentdatedevendatehtrwith;
havodulyapprovedthisAmendmenttothoOperatingAgrecmentatldtimM embels'executionofte
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The defmiticm of fTriority Retum ''set fol'th i!l Section 1.37 Qf the Opeluting
A greem entishereby am endod in itsentizety to read msfollows:
::1.37 fpriritv Retxrn'm eansthepriorityrotw ntoe'

Achof
the Clmss A M embers and tht Class B M embers ofan accrued
umulative retllrn on each of their respedive Net Capital
ContributionsinanamotmtequaltoFIFTEENPERCENT(15%)per
mmum,acozuing cumlzlatively 90141thedateofoorttribuion oftim
LLC,butnotcompounded,proratedforanytperiodwlchisapartial
year. Notwithstandiug the foregoingjaPnority Rettlm on in-kind
CapitalC'
orltributionsshallbecaloulated andaccmeinanamountno
greaterthnntheaw egatePrioritylketum accningto a11cashCapital
ContlibuEonsto theLLC.''
'Ffe -idTte bltigies,LLC
Sctf:d AmedmlltffjOpervuttgAgreemeat-c-pagel
'
J3h.Case
22. 220
5 6:1qpk
zkllqs J. FrDocument
'
/0, 8sq 644-9 Filed 05/28/08 1.
72116 of
?.101
(8
3:06-cv-00056-PMP-VPC
Page
,r )
2.
.,
.)
Exc/ptasexpresslyamende,dandmodifiedhereby,theOperatingApoementshallnt
boaffected in any otherm annerand shallrem ain in tkt11force and effectasoriginally execttted.
3. Each of the Class A M embers represcnt.

s and warrants that the officers cq'
representativesexecutingthisAm eementaredulyautholizedtoenterinto,executeariddeliverthis
Am endzzzenton behalfofthe respective M em berexecuting the sam e.
4. Forconvenience,thisAmendmentmaybeexecutedinmultiplecolm terparts,eachof
whichshallbedeemedartoriginala
ouwndmeat,andallofwhichshailconstitutconeAmendmentto
be effectiveasofthe datoand in the mannerprovided herein.
IN W ITNESS W HEREOF,thepartiesheretohaveexccutedanddbliveredthisSECOND
AMENDMBW TOAM ENDED ANDRESTATED OPERATINGAGREEMENTOFeTREPPD

TECIINOLOGIES,LLC andthesameshallbeadoptedmsofthedayarldyearfintabovem itten.
eTroppid Technologies,LLC
A N evada Lintited Liability Com pany
By ItsClassA M embers
THE
ON T T
ST,DATED M AY 16,1994
By:
yjtspp,ItsTrustee
'
FRJEN DLY CAPITM PARN RS,L.P.

By:Frien ly Capital c.,1t.
sC'reneralPartner
By:
TREPP,ItsPresident
T EM NT
JW FAMILY TRUST
By:
D
i
By; /
6 RENDA
G RY,IE Tnlstee - .
'
RY tsTnzstee
;
'i'riffjidTie bljies,LLC
Se4ltdAmeadmenttoOperadngAgreement-Page7
J3,.Case
22. 203:06-cv-00056-PMP-VPC
26 6:00?k p-'.!13s J.FrDocument
kg.Esl. 644-9 Filed 05/28/08
.
8Page
0.721218 of
?.101
1
.
tr'
:)
tv.J
OPERATING AGREEM ENT

OF
INT
TECHNOLO G IES.LLC
'
A Nevada Lfm ited-u ability Com pany

naied and Adopted
ilfectlveasofSEPTEMBER 28,1998
Jap.Case
22.
223:06-cv-00056-PMP-VPC
26 6:22?k 2-'x132 J. Fr?
g. E!q. 644-9 Filed 05/28/08 io.
?21819 of
8,101
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Document
Page
(
1
. '
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r/
OPERATING AGREEMENT
OF
INTREPID TECHNOLOGI
-ES.LLC
THISOPERAMNGAGREEMENTiSmadeandenteredintoandeffediveasofSEPTEMBER Z8,1998,
by and be-een FRIENDLY CAPITAL PARTNERS,L.P.,a Cal

ifomia Iimited partneohip CFCP/LPJI;
W ARREN TREPP.R TrusteeofTHEFREMONTTRUST,DATED MAY 16,1994,a Nevadarev= bl
e trust
(&FREMONTm UST*I;andDENNIS MONTGOMERY 4ndBRENDA K.MONTGOMERY,asCo-Trustee:
ofthe MONTGOMERY FAMIW TRUST,aCali

fornia revoo bletrustCMONTGOMBRY TRUSX). Thls
Agreementis lade withfeference to the followingfads:
STATEMENTS OF FACT:
A
DouglasJ.Ftye,an ifldividual,executedlacknowledged andfiledlasthe Organi
zer,M cles
ofOrganizatienwi
ththeNo adaSezretaryQfStateonSEPTEMBER 2C,1998,forthefortnationof*INTREPID
TEGHNOLOGIES.LLC'pursuanttotheapplicableprovisionsoftheNRS (asdeqnedherein).
B. FCP/LPIFREMONTTRUSTandMONTGOMERYTRUST,asMembersQfmeLLC (a:defined
hereln).wl
shloenlerlnldandadoptthisAgreementastheOperajngAgreemenloflheLLG.governing+.$
.
organkati
onand managementandtherights,p- ers,dutiesandobli
gadonsoftheManagementCommi
ttee,
the Manager,and the Membe,respea vel
y,oftheLLC.
NOW .THEREFORE,in onqide
'ration oftheforegoing prernises and them utualcovenants and
coaditionl containqd herein,andwitiltheintention ofbeing Iegally bound hereby,the pArties llereto
aqreeas follows:
ARTICLE 1
DEFINITIONS
Fxceptas otherwise separately defined elsewhere in thlsAgreement,followlng are the terms and
meaningsasusedthroughoutthisAgreement
1.1 *Adiusted capd
'alAcco
.un
.tDeficit'mans.wi
thresped to any Member the defi
citbalanoel
ifanylinsureh Member'sCeaplhlAccountasofthe end ofth:relevantFi
scalYear,aftergiving effed tlthe -
folle ngadjustrnents:
1.1.1 Incfease suchCapitalA= untby any amunt: whir,h such Memberis obli
gatedto
'
contfibtzletotheLLC (purstm ttotheterx ofthisAgreementorotherwise)orisdeemedtobeobligatedto
contributeM ttieLLC ptlrsuanttoRegulaionsGecdons1.TG4Q(g)(1)and1.7> -2(i)(5)'

,and
1.1.2 Redtlce sue,b capitalAcccuntby the amountoftha Ite?rls described in Regula:ons
Secions1.704-1(b)(2)(Il
)(d)(4)I(5)and(6).
1.2 dAfflllate'meanz,when tl:edwithreferencetoa spK ifiedPersn,(i)the Prindpalofth
Pec n,(ii)anyPeoondirectly()rindirectl
yoontrolling,controlledbyorundercommoncontrole h such
Perrm ,(iii)any Person H ning orcontrolling TEN PERCENT (10%)ormeofthe oulstanding voting
Intere:l QfsuchPex n,and(N)anytelatlvenrspouseofsuchPerson.
Q* > >
$,z?*::t
$apM) e* &M
OPEM TINGABRCEMENT-P+ 1
'
J8p.Case
22. 223:06-cv-00056-PMP-VPC
06 b!01?k lp''llis J. Fry
g, Es9. 644-9
Document
0.7?1220 ?.
2
Filed 05/28/08 8Page
of 101
W
-
1.3
*Aoreefttent,means this Operating Agreementofthe LLC, as ori
ginally executed and as
amended from time ttirne hereafter,astl
)econtextrequi
re-s. W ordssuchas Mherein,'JhereinaAer''*hereto..
*hereby'andMhereunder,*when usedwithreference io thisAgreemenl,refertothisAgreementas awhole,
unlessthecontextothefwiserequires.
1.4
eArticles ofOrqanization'meansthe Arti

elesofOrgani
zation (whieeh includesa designation
ofresidentagentforservice ofprocess)fi
ledwtth the Secreta!y ofState ofthe State ofNevada on
SEPTEMBER 28,199:,Filing No.1
-1-C-5563-98,forthe purposeofforming the LLC.
1.5
xAvailableCash Flowmmeans,withrespecttoanyFiscalYearorotherperiod.the sum ofaI1
eeashfeceiptsoftheLLC from anyanda1Isouroes,d

essaI1eeashdisbursements(includingloanrepaymenY,
capltalimpm ement and replacements)and a reasooabl
e all
owance forReserves,x ntingencios an
anticipated obligationsas determined bythe ManagementCommittee.
1.
6
lBook Deoreciation*means fnreach FiscaiYearorothcrperi

od,an amountequalto the
Depreciation,Z ceptthatiftheGrossAssetValtleofanyassetdiffersffom itsadjusted basisforfederal

lno metax purpose.
s atthebeginning ofsuchyearorotherperiod,*bookdepreciatlon*wi
th resped to such
aleetshallbe an ameuntwl
lich bears the same rati
o to such begi
nni
ng Gross AssetValue as the
Depreciationwithresped tostlchassetforsuchyearorotherperiodbeaM tosuchbeginningadjustedtax

basl
s.Howevec ifthefederalin metax Deprm iatonw1
*1reespecttosuch assetf suchyearis*zefo.'took
depreciation shal
lbedeternned* 111reference to such beginningGross M setValue using anyreasonable
method seleded by theLLC.
1.7
uslness'or uelness oftheLLCPmeansthe busnessofthe LLC asdeqned in Sedion
2.T hereof.
1.8
*caoitalAccount'ofa Membershallhavethe meani

ng setfodh in Bection 3.4 hereofand
shal
lbe determined in aocordance with Section 3.5 hereof.
1.9
wcal:
h'
ltalContribution*shallhave the mearjng setforth in Secdon3.6,1 hereof.
1.10 V ode*means the lntemalRevenue Cod: of1986,as amended.orany correspondlng

provision orprovi
sionsofanysucceedingIaw.
1.11 X ommleeeMembedsl'meacsoneofthree(3)PersonsappointedW theMemberstoserve

ontheManagementCommi
ttee pumuantto Sectlon6.1.4ofthisAgreement Ihe CommitteeMembefsshal!
atafmesad collectivel
y astheManagerrentCommi
ttee,which shallbechargedwiththose powers,dutles
andresponsibilitiesassetfodh inM i
cle6 and elsewhere in thilAqreement
1.12 Y enfeltlon. mans for each FiscalYear of other poriod,aslamoklnlm uatt: 4hc.depe iation,amortjzadonorothercostrecoveryreducionallwablewith reespectto anassetforsuch Fiscal
Yearorotherperlod,
1.13 *Dissoluton'rrm ns(4whenusedwkhrefereocetotheLLC theeadierof(a)thedateupon

whleehtheLLC istennlnatedundertheNRS oranysimilarpfovislonenadedInlieuthereotor(b)thedate
uponwhictlQle LLC ceasesto bea going concern,and(iIwhenusedwi
th referencetoanyMember,the
eafierof(a)thedatekllwnwhichthereisaDlssol
ufonoftl
seLLC or(b)Q1edateum nwhicbsuchMerrer'
s
enGrel
ntere.
stIntheLLClstenninatedbymeansofadistn-buKonorse*.sofdistribuKonsW theLLC tosuch
M ember.
1.14
*Fconome
lc lnter- t*meansaPerson'
sfighttosharen the NetPlxle ,NetLo e.sorqimilar
ltems ot and to receive distributi

ons from!the LLCIbutdoes notinclude any otherrights ofa Member
induding,wlthx tIlmltatlon'the rfghtto Vote orto parjcipate in the rnanagenxntofthe Btlsincss and the
Q't'e e eb#* Phec
1f:P.
2 @XPM)
'
OPFM TING AGRIEEMENT -P% e 2
J29.Case
22. 223:06-cv-00056-PMP-VPC
05 6:q1pk )-''FI8s J,FrDocument
yg, Es9. 644-9 Filed 05/28/08 1Page
0.721821 of
8.101
t
.
''
affairsofthe LLC,or,exceptanyinformadon avai

lableforinspecticn by a MemberpursuanttaNRS 86.241,
anyfightto informati
onconoerni
ng the Busi
nessoftheLLC.
1.15 MFiscalYear means the fi
scalyearofthe LLC.runningforthe peri
odofJANI
JARY 1to and
induding DFCFMBER 31ofeachcalendaryear.
1.16
qGrossAu etViiue*means,withrespecttoanyasseloftheLLC,theasset'sadjuttedbasi
s
forfederallncome taxpurposes,exceptasfoll
ows:
1.16.1 The lntjalGrossM sotValueofany assetcontributed by a Membeftotbe LLC shall
bethe grossfairmarketvalqeofsuchasset,asagreed betweeothe LLC an1the contrlbuting Member.
1.16.2 The GrossAssetValueofa1ILLC assetsshallbeadjustedtoequaltheirfespective

gross fairmarketvalues,as mutuall
y agreed between the LLC and the affeded Memberts)upon the
'
occurrenceofNefollowingevents:
1.16.2.1 The acquisition ofanaddi
tionalIntereestin the LLG byanynew orexisting
Memberin exchangeformol.
ethan aJA minimisCapi
talGcntribudon'
.
.
1.16.
2.2 n e di
stributionbythe LLC to a Memberofmore thana M mintmisarnount
ofeashorpropertyasconsi
defationfortheacqui
sitionofalIoraportionofsuchMembefeInterestinthe LLC
ifthe LLC reasonablydetermine.sthatsuchadjustmentisneoessaly orappropriateto refled therelatlve

economi
c interestsofthe Membersinthe LLC'
tand
1.16.
2.3 The I
iquidati
onofthe LLC withinthemeanlng ofRegul
ationsSecdon 1.7X -
1(b)(2)(ji
)(g),
1.16.3 TheGrarnsAssetvalueofanyLLC amsetdi

slributedtoanyMembershalllx the gmss
fairmarketvalue ofsuchassetasmutuallyagfeedbytheLLC andtheaffededMemberts)onthedateof

di
stribution.
1.16.4 TheGrou M setValueoftheLLC assetsshallbeIncreased(ordecreased)toreflect
anyadjustmenl totheattlstetbasisof:uchassetspklrsuanttoCodesection734(b)orcodesection743*),
butonlytotheextentthatsuc.hadjustrrm tsareLakfm intoaccounti
ndetermining CapitalAcc-x ntspklrsuant
R ulatt
onsSedion1.704-1(bX2)(i
v)(m)andSecfon4.9hereof;provided,hpwovqr,thatGrossAssetValtle
shaklnotbeadjbstedpursuantto thisSection 1.1G.4otheextentthe LLC determinesthatanadjustment
pursuantto Section 1.16.2 above Is necessary orappfopsiate in eeonnectionwiththe transacti
onthatwould
otrlezwlseresultinanadjustmentunderthisSection1.16.4.
Iflhe GrossAssetValueofanassethasbeendeterminedoradjusted pursuantto-Sedions1.16.1,1.16.2or1.16.4above,sudlGrossAssetValueshal

lthereaqerbe adjustedbythe Booll
Depreciationtaken into accountw1111r% pectto such assetforpu> sesof mputing profitsand lou es.
'
1.16.5 lfthe LLC and any afleded Memberpursuantto Sedions 1.16,1,1.16.2 or1.16.3
aboveare unqbleto agreeonthe GrorysM setvaluecfany assetforpufposes ofth1 Agreerrpnt!a mutuall
y
accepKbl
e apo i
K rO allbeselo-rt
f/ldbythem forths purpose,and lt!evalue establishedbystlch appraim l
shal
lbe binding upenQ1e LLC and the affecte Member.
1,1T
A uaa nteed Pavmenr hasthe meanlngsetforthin Secti

on6.:.2 ofth1 Agreement
1.18 *LLG:orX om oanv'means IG REPID TECHNOLOGIES,LLC,the Nevada Iimlteliabi

li
ty
comp ny formedpuouanttothe Arti
desofOrganization.
'' '
ttr l
l=,
ir
uk.rap
) kopxuc
oeeflv xoAol
usuExr eaqe z
-
'
)t
)
i; i;:t
)1F'k l
'$-'/
(I2s J. FfyDocument
(). EStl. 644-9 Filed 05/28/08 1(
).?'
?
.lC
i22 i
).101
5
J?rl.2Case
2...2(
3:06-cv-00056-PMP-VPC
Page
of
(
1
'
jwr y
1.19 .LLC lnterest*orWlnterest@means an ownership interestin the LkC,which Includes the

E nomi
o Intere-st,therightloVoteorparticipate i
n the managementofthe LLC,andthe rightto informati
on
concerning the affalrsand Buslnessofthe LLC asprovided inthisAgreementand underthe NRS.
1.20 *LLC Loans,shallreferto anylx ns,li
nesofcreditoradvancesmade byanyliemberto th
LLC pucuantto thisAgreement,orata Memberzsoptionlwithoutobl
igation to so do,to the extentthe LLC
doesnothavesumcientresource.
s(assez,Orrowi
ngsorothefwise)tomeetitsLLC obli
gations. Exceptas
othefwisespecified inthisAgreementsuchLLC Loans shallbearinterestatthe rate agreed tabetween the
Memberand the ManagementCommittee.
1.21
*LLC Minim um Gainqmeans the arnountdetermined by compklting with respectto each
nonrecourseI
iabilityoftheLLC,thealnour)tofgaln(ofwhatevercharadef),i
fany,thatwouldbereali
zedW
the LLC ifitdi
sposed(I
n a taxable transaction)ofthePropertysubjecttosuchliabilityinfulsatisfaction
thereof,andbythenaggregatingtheamountssoceomputedassetfofthinRegulationsSection1./04-2(d).
1.22 *
V ajoritvlnInteostporlMaioritvin InferestoftbeMem bers*meansaMemberorMembers
-
wlwsePercentage Interestts)representmorethanFIFI'
Y PERCENT(50*A)ofthePercentageInterestsof
alIMembers.
1.23 KManaoementcommi
ttee*means,lledkely,thethree(3)CommitteeMembersappointed
bytheMem- rs to mqnage the LLC pu antto Section6.1of1i

sAgreernentacting togetberto manage the
LLC inMz-nrdancewit:thetermsand condltionsofthisAgfeement.The ManagementCommitteeshallbe
charged with th09* powers,duties and responslblli
tjes as setforth in Article 6 and elsewhere in this
Agreement.
1.24 MManaaer#means the Personappoi
ntedunderSedion6.1ofthisAgreementto manage the
LLG.n e Manaqersha!lbechamedw1t11thoseK wers,dudes and responsibil
iti
e.sassetforth i
nArbcl
e 6and
elsewhere in thi
s Agreem ent
1.25 lMemberNonmcouo:Debt*hasthemeaningsetfodhinRegulati
onsSection1-704-2(b)(4).
1.26
eM em berNonrecou- e DebtM inim um Gain*m emns an amount,w ith resped to edtl
MemberNonrem urse Debl eqvalto the LLC @inimtlm Gainthatwould resul

tifsuch MemberNonreo urse
Bebtwefe treatedasa nonrecourseliabdl
'
tyoftheLLC.determinedinaccordancewi
th Regulations Sections
1.7M -2(i)(2)and (3).

1.27
*Mem ber Nonrecourse Dedudlons* ha: the meaning setfoftb in Regulations Sedion
1.?04Q(p(2).n eamountofMem*rNonrecourseDedkldionswi* reslxd toaMemberNonrv klr,eDebt

foraFlscalYearoftheLLC equalstheexceess(ifany)ofthenetincfease(iIany)intheamountofMember
Honreo ut'
se DebtMi
nlmum GainatMbutabletsuchMm* NonrecoumeDebtdurlngthatFiscalYearover-
theaggregateanxuntofanydi
stribu:orlsdurlrN thatFKV IYeartotheMomberthatbeafsYrisdeemedt
bear)the e nomicI
ossforsucbMemberNonrecourseDebttotheextentsuchdistributionsarefrnthe
'
sofsuch MefnberNonfe ufseDebtand al

'ealkm bltoan increas: in MemberNonrec u- Debt
Minic m Gain attributableto such MemberNonrecoufse Debt determined inaccordance 1 111Regulatbn
Sedlon 1.704Qg)(2).
1.28
wMember*rneansa Personwho:
1.2:.1 Has been admitted to Q)e LLC as a memberin a= rdanm with 01e M des of
Organlation orthis Agreement oran arysignee ofan lnterest,otherthan an E rlomic Interest,who has
becorne a Memberpuauantto Sedion9.3hereof.
1282 Has notrezigned,wi
thdrawn or been expelled as a Memberor.i
fotherthan an
'
Zdi
viduatbeep($is/A e.
d.
ck-G lirkiavpklopxec
11z?* (
::
A&M)
-OPERAMNG M REEMENT-P:> 4
'
Jph.Case
27. 223:06-cv-00056-PMP-VPC
06 6:21?k p-''slhs J. FrDocument
8p, Esq. 644-9 Filed 05/28/08 h.
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p.101
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Page
xv.
v'
Reference to awM em ber*shallbeto anyoneofthe M em bers.
1,29 *Montqom qw TrustContribution qrevm int,shallhave the meaqingsetforthin Section

3.3.1ofthisAgreement.
1.30 kNetPm flta l'and MNetLossestesl/meanlforeach FiscalYearorotherperiodjan amount

m ualto the LLC'Stam bl
eincomeorl
ossforsuchyeaforperiodtdeterminedinaccordaqcrewilhCodesection
703(a)(forthispulm se,aIIitemsofincome,gain,Iossordeductl
onrequiredtobesfatedseparatelypursuant
toCodesection70Xa)(1)shal!beincludedintaxableincomeofl0ss)Iwiththefollowingadjustments:
1.30.1 Anyincomeofthe LLC thati
seyemptfrom Fedef'
alincometaxand nototherwlsetaken
into ac untin computing NetProfitsorNetLossesshallbe added to suchtaxable ncome orI
oss;
1.30.2 AnyexK ndi

turesoftheLLC describedinCodelttvtion705(b)(2)(B)ortreatedasCode
tcction705(b)Q)(B)ezpenditurcspuauanttoRegulationsSection1.704-1(b)(2j(iv)(i)andnototherwix taken
i
nto accountin com puting NetProfits orNetLossesshallbe subtracted from suchtaxableinoom eor10% '
,
1.30.3 Gain(>rIossresultingfl'
om anydism siionofpmpertywi
threspecttowhi
d lgainorI
oss
i
srecognkedforFedecalincometaxpurposesshallbecornputedW referenceIoihefairmarketvalueofthe
Propertydi
sm sedof,notwithstandingthattheadjustedtaxbasisofsuchPropertydiffefsfrornitsIairmarket
value'
.
1.30.4 ln Iieu ofdepreciation,amodization and othercostrecoverydedoctions taken into

actoulttin computi
ng suchtaxable incomeorIoss,there shallbetaken i
nto accountDepreclati
onfortuch
Fisc lYeaforotherperi ,computed in accpf'
dance wi
th the subsec:on hereofentitled*Depreciationw;and
1,30,5 Notwlo tanding anyotherprovisionofthi

ssubsection,anyitemsofincme.gain,I
oss
ordedkldionwhthare specifi llyallocatedshallnotbe taken into accountincomputlng NetProftsorNet
Losses,
1.31 ANRS*means Chapter86,Sections 86.011to 86.571.ofthe Nevada Revt

sed Statutes,as
amened,oranym rrespondingprovisionorprovi
sionsofany succeeding Iaw.
1.32 ipercentace Int4re ttel,means the percentage lnterestofeach Memberas setforth jn

EXHIBF A aoached heretoandfnadea partofthisAgreement.
1.33 *poon* means an indivi
dual,padnership.limited partnefship.corporation,trust,esiate.
assoce on,Ilmlted-llabi
li
tycomN ny,orotherentity.whemerdomesticorforelgn.
1.34
m n'ncipal.meapsthe Personwhichis inuldmatecontrolofa Member.
.- -
1.35 epl%me# 'meansaIloranypersonalpropertyandotherassetsoftheLLC,bothlngibl

eand
Intangible,oranyportien thereof.
1.36 eReoulationl' rneans the federalinrm e tax > ulations promtllgated by the Trem ury
D
entundertlle Code,assuctlregulatjonsmaybe arrended from time to tirne.A1referen= herein
to a specifl
c sedi
on ofthe Regulafons shallbe deemed alr.o to referto any corresm nding provisions of
su= eding Regulati
ons.
1.37 dReseaes*means funds setaside from CapitalContri
butionsorgross cash revenue.s a:
m erves.StehResefve,sslo lbe mai
ntai
nedinafnounl reav ablydeerned sufscientby the Management
Committee forwcrking capitaland the paymentoftaxes,insklrance,debtsewice,repairs,replacemenY
renewals,orothercostsorexpensesInci
denttothe BusinessoftheLLC,orinthe alternative.Qle DiqR luti
l
ofthe LLC .
-.-
'
i'
kkkthykilqxlkl
kxKEc
dsz/x(*x'pM)
OPEIRATI
K AGI
REEMENT-Paies
J8,.Case
23. 200
3:06-cv-00056-PMP-VPC
6 6:01?k p d8! J. Ff
Document
sl El, 644-9 Filed 05/28/08 h.
Page
L?1224 ?.
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1.38
aseoreta!v ofState*meansthe SecretaryofState oftheState ofNevada.
1.39 fvote*means,exceptwhere superseded byanothersectionofthisAgreement,orasmaybe

reqoiredundertheapplicabl
e provisionuofthe NRS,the CchdeQrapplkableRegul
ationsthereuader,theVotes
ofthe Members,whemerbyballctwrittenconsentoravoicevote,whereineachMembershallhaveand cast
a ntlmberofvotesequaltothatMembe/s Percentage Interest.
ARTICLE 2
INT-RODUGTORY MATFERS
2.1
Formation oftheLLC.The partieshaveformed the LLC puluantto Sections 86.151 and
86.201.1 ofthe NRS byexso ti

ng,acknowledging and 5ling tbe ArticlesofOrganizalionwi
th the Secretary
QfState and by entering into and Bdopti
ngthl
s Agreement
*
2.2
Reelanatl/n IOrlarlizer. The parti
es to thisAgreementacknowlelge and ree tbat
DOUGLAS J.FRYE,anIndhkual,adedastheorganizerorthe LLC sol
elyfortt!epurposeoftilingtheM i
cles
ofOrganizaionwiththeSecretaryofstateasdescribed herei
n andthat,immediately upon theadoptln and
executionofmi
se reementbyi
tsMembers th:organizershallbedeemedtohaveautorrlati
m ll
yslgned,
wi
toutnoticeandwi
thoutli
abili
tyorobli
gati
onofanyMndtotheLLC oritsMembeo.Acrordirmly,the parti
es
to thlsAgreementherebyacknowl
edge and aft
irm aI
lactionsheretoforetakenonbehalfoft:eLLC by said
organker.
2,3
Nam e. 'FhB narna oftho LLC iswINTRFPID TECHNOLOGIES,LLf.* The Membeo shall
operate the Businea:ofthe LLC undersut;h name orusesuch otheroradditi
onalnamesastbe Membeo
maydeem necessaryordesirable,providedalIstmhnameornafnesshal
lbeinO mpliance with the NRS and
otherapplicable l- s.
'
2.
4
PrincioalBuainess Om ce.TheLLC shallmaintai
ni
tsprincipalbusines: omceat685 GM Y
COURT,INCLINE VILLAGE.NEVADA 89451,wi
tha mailingaddre-ssofP.O.BOX 49641INCLINE M LLAGE,
NW ADA 89450,oranyOtherIocatjonasdetermined from tlmetodme bythe ManagementCommlttee.
2.5
ReeidentAoenk Repistered Ofsce.n enameandaddressoftheLLC'

Sresidentagentulxm
whom proces:mayt)eserved,Qranotj
ceordernandauthorkedW Iaw tobeservedupontheLLC maybe
served.is GKL STATUTORY AGENT & FILING SEI
W ICES,INC.,a Nevala oorw fati
on,wtlose street
address in Neeada i: 1100 EAST W ILLIAM STRFE'T,SUITF 707,CARSON ClTY,NEVADA 89701,and
wh
oseInailngadd- sisP.O.q5of
0X3
679,CARSONCI'I'Y.NEV
ADA 89702.'I'heP istered01t)eoftheLLC
in Npvada shalbe the addrnu.
- LLC'sresiuentagent.Tl
lelocationofthe LLC Sregistered o/ce orthe
name and address ofitsreidentagent orbcrh,may onlybechanged byslirlg a cediflcateQfchange wllh
theEecretaryofState in thefonn and mannerrequired bysuchofrlce.
'
- ''-'
2.6
Pvrpetualfxistence. M setforth tn the ArjclesofOrgankatbn ofthe LLC,the LLC shall
have perpetualexistence,unllthe LLC istermlnated ordlssol
ved inacm rdancewiththisAgreement.The
existence oftheLtC shallcommeoce asofthe effective tateofthisAgreement
aSFPTEMBFR 28,1998.
'
'
2.7
Purpose an4 Buslness ofthe LLC. n e purK se and business ofthe LLC shallbe tfl
devdop,patentIdistbute,lkenr.eand exploitinany mannerandon aworldwide basi
s *atcertainsoqware
Gxnpre.
ssiontechnologycontriY te.
dW theMontgomeryTrustto,andflt- ownedby,theLLC pursuanttothe
terms and conition.
iofapd asrnorepal
tl
cularlydee
scrl- d Inthe MontgomeryTrustContri
buti
on Agreement
ltheerechnoloav>)andfofinanceanyanda1loftheforegoingadi
vities(collectivel
y,thedeusjness').The
.
LLQ maym ndud orenga:e inanyotherIawfulactivi

ti
eswhic,htbeLLC deerns isne ssary,inddenllto or
desirablein npectionwith theBusinessofthe LLC.
1$m (
L%% )
V* PX'C
OPEMTINGAGREEMENT-Paqe6
'
3:06-cv-00056-PMP-VPC
Document
Page
5 0:8281 p -18: J. Fry',
ESk. 644-9 Filed 05/28/08 40.
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8
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22.. 2g8
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-...
'
2.
8
No lndlvldualAuthoritvofa Mem berorCom mittee Member.NoMemberorCommittee
Member.acting alone orwi
th the Manager,any otllerCommitfee Member,officerorothernon-manager
Member,shallhave the aklthority to ad for.orto undeftake orassume,any obligati

on,debt,duN or
resplmsi
bilityon behal
fofthe LLC.
2.9
rltfeto ProoeA IntheName oftheLLC.A IPropertyowned bythe LLC shallbe heldand
owned and conveyance made in the name ofthe LLC. AIIagreements,documents,certifi
cates and other
instnlments provi
dingforllle am uisition()rotherd
spositionofPfopedy ofthe LLC shallth
e valid andbinding
upon '
t.exceptasotherwise provi
dedherein,i
fapproved bythe ManagementCommittee and executed by
the Presidentoftbe L!.C asprovidedforherein.
2.10 MalntenanteofCompanvMinqteBook!RecordKeeoina Duties- The Manager(orthe

Secfptary,ifone isappointe by ihe ManagementCommittee)shallkeepand maintaiu orcause to bekept
andmainlinedacompanyminutebooktoincludetheArti
clesofOrganizationofthe LLC andlhi
sAgfeerrent
and any ame ments thereto,and minutesofallmeetings (orconsen? in lieu of meetings)ofthe

Managementtlommittee,wrxenconsenh oftheMembers,andotherimpodantdocumenl ofthe LLC.
ARTICLE 3 '
MEMBFR: AND CAPITXLCONTRIBUTIONS

-3.1
Nam es and Addresaes ofthe Members. The initia!Members Qfthe LLC are FCPJLP,
FREMONT TRUST and MONTGOMERY TRUST. The compl
ete namesand addrex es ofthe Membersof
the LLC are setfodh cn EXHIBIT A attachedhereto and made a partofthisAgreement,which exhibitmay
be amended orm odifiedffom tim etotime.
3,2
MemberCapltalContrlbtttlons.Immediatelyfollowingthe executi
onofthisAgreernent.the
Mee ersshallmakeorbeobli
gatedto maketheCapi
t lContributionstothe LLC assetforthinSectlon3.3
be w.A 1CapitlCeontri
butionsofl e Membersshallbe setforth on EXHIBIT A attached heretoandmade
apad ofthi
s Agreement whichexhibitmay be amended ormodifiedfrom time to tlme. Ifthe Memberfail
s
tomaketheini
tialCapltalContrlbutionsasspeciiedinSedi
on3.3withinthirty(30)daysaft
ertheeffecEve
dateofthi
sAgreefrent,thenthatMember'senfreMembeahip lnterestshallterminate and MatMem* shal
indemn'
l
N andholdtheLLC andaI
1oftheotherMembefsharrrlessIfom anylckq.rm torexpense,induding
reastmable altolrays'fees and costs,causedbytle failtlre to makesuchinitlalCapltalContributi
on.
3.3
PavmentTerms ofMembers'CapitalContributions.
3.3.1 FCPJLP'?CanitalContribution.FCP/LP shallmakeacapi
talContnxutiontotte LLC
in em h in the maxlmum aggregate alnountof up to Nine Hundred Seventr Five Thousand Dol
lars
($975,000.00),ofwhich E'
l
ghty n ousand Dollars ($80,K 0.00)has been preve sly adl/anced by-ltIn-furtherance oftheLLC'SBusiness,and the balance ofup to EightHundred Ninety-FiveThouu nd Dollars
($895l
0Qt).X )shallt)em ntributedandNidbyFCP/LPtotheLLC from timelotirneuplm writtenreqklestby
the ManagementCommitteeand inacm rdancewi
th anyApproved Budget(asdefined in Secti
on 6.2.3
hereof).
3.3.2 FREMONTTRUSTY CanitalContributlon.FREMONTTRUSTshallmakeaCeae' I
Contributilm to tle LLC in sh in the rnaximum aggregate anx untofup to n ree Hundred TwentrFt
ve
ThousandM lars($325.0(K1.(10),ofwhic.
hOneHundredTwentyn ousandDolkars($120,0(X1.00)hasbeen
prevkxlslyadvanced byItInfurtheranceofthe LLC'SBusiness,and thebalano ofup to T*o Hundred F&e
n ousandDoll
ars($205,000.00)shallbe ntributedandpaidbyFREMONTTRUSTtothe LLC from time
to ti
m euponwritten requestbythe ManagementCommlttee and in accordance wl
th any Approved Budget
3.3.3 MO-NTBDMERY TRUSTS Caoital Contrlbuton. Pursuant to the tem w and
condRionsofthatcertainContriixloqAgreementdatedthersamedateasthi
sa reernentbyandbetWtlthe
skak
rxt
twi
.,
k
zw
apwv
lxuaA.sc
opEevlsoAoRc cvr.awz
Case
3:06-cv-00056-PMP-VPC
Document
Page
of 101
202
6 6:02@k p - 32 J. Frk'.
Esl. 644-9 Filed 05/28/08
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10.
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?1826 ?.
0
J4h.2
.7.
.
r
..
(.
LLC andMONTGOMERY TRUST,asQ)eContributor(the'Montaomem TrustContributlonAcreemenip).

MONTGOMEIW TRUSTsharnmkeaCapitalContributi
ontotbeLLC of1heTechnol
cgyandhisRights(as
lhosa termsaremoreparticul
arl
ydesribedintheMootgomefyTrustContributionAgreement)havi
ng an
agreedinitialGrossAssetValueofOneMilli
oqn ree HundredThousandDollars($1,300,000.00).which
Technol
ogyandRightsshalsbecontrf
butedconcurrentlywithMONI-GOMERY TRUSTS admi
ssion tothe LLC
asa Member.
3.4
AddleonalCanitalContributionorLoans tothe LLC.Addi
tionalCapitalContributionsmay
be ceall
edfertow tirneto tjme by t
heManagementCommittee,bywrfte n/ti
ce tlm ntl)e Membeo from time
totime(theVdditbnalCaoita!Contributi
onsF)toenabletheLLC toconductitsBusiness.n ewrittennotiO
to theMembersshallsetforththe amountofAddi
tionalCapitalContributions needed,the datebywhich the
Membersshallcontri
bute,whi
chdateshallnotbesoonerthanten(10)daysofrecelptofsuchnotice.Eacb
Membershallbe required to make such AdditionalCapitalContributionsin proportion to theirF'ercentage
Interestin theLLC. No Membertnay volunhrilymakeany AdditionalCapl
talContributions.andshal
lnotbe
requifed orpeeni
ttedto makeanymake any loanorcaauseto be Ioaned any moneyorotherasseE to the
LLC,
3.5
Rlchta W itllRespectto Canital.
3.5.1 LLC Caoihl.No Membershallhavethe righttowithdraw nrfeceive anyretvrnofits

CapiialContribution,and no CaptalContribution may be returned inthe form ofPropertyothetthan cash
exceptasspecificall
y provi
ded herein.
3.5.
2 No Intere:ton CapitalContributlons. Exceptas exprmRsly provi
ded forin this
Agreemenkno CapitalContributl
onofanyMembershallbeafany interestorothelwiseentitlethecontributing
Memberto anyoompensationforuse ofthe contrlbuted capt
tal.
3.5.3 EstabllellmentofCaoitalAocounts.A sepacatecapitalA= untshalli)eeestablished
and maintained foreach Member. Forrecord keeping purposes,eac,
h Membef's CapitalAox untwillbo
separated into acontribkl

tionaccountand anincome (Ioss)acoountand willbemnintainedat= rding to
generall
y accepted accountiag principles.Sections3.6 and 3.7 below desri, theappropriate accounling
tatmentfortaxpurposesofthe CapitalAccounts.
3.5.4 No Pavm entofSalaries orDraws.No Membershallrecekeorbe entided to receive
anyG yrnentofr'
alarlesordrawswith re-specttoRsCapitalContribuboncfthe iralanc.einRs CapillAcc nl
orforrefvice.srendered on Y halfofthe LLC orotherwise in itscapaci
t/asa Memberofthe LLC.exceptas
express: provided forinthisAgreement
3.6
..
GeneralRul.: forDetermninu CaoitalAccounts.n e CapitalAccountofea* Member
shallbedetermined asfol
lows:
'
--
3.6.1 lncreases.The Capi

talAccountofa Membershallbe increased by:
3.6.1.1 Such Member'scash contributjons;
3.6.1.2 The Gress M setVal

ue ofpropedy contri
buted by st1c,#1Mee er(netof
Ilabll- ssecuredbysuchcontributedpropeftythattheLLC i
sconsi
deredtoassume()r1kesubjectk)under
Codesection'
J52):
3.6.1.3 A1l
temsY LLC i
n rre andgain(includingincomeandgalnexemptfrom taM)
allocated to such MemberpklrsuanttoM cle4 orotherprovisionsofthisAgreement;and
3.6.2 Deereaees. The capitalAccountofa Membershallbedecreased by:
'
t
Ve
f
rx
f
k
l'
:
wss(
s:
ri'
M)r- opxEc
OPERATING AGREEMFM -P4:e3
Document
of.101
J?q,Case
2,2.203:06-cv-00056-PMP-VPC
26 6:02pk q -38J.Fr
g,Esl. 644-9 Filed 05/28/08
4 8Page
9.721327 8
10
t-.
3.
6.2.1 The amountofcashdistributedto suchMembeq
3.6.2.2 TheGrossAssetvalueofa1Iactualanddeemeddi
stributi
onsofpropertyrnade
to%uctlMemberpursuanttothisAgreement(netofI
iabili
tiessecuredbysuch distl
jbutedprnpertythatthe
Memberisconsi
deredtoassumeorQ'
A estlbjecitounderCodesection/52):
3.6.2.3 AIIitems ofLI
X deductjonand I
oss all
ocated to such Memberpussuantto
Article 4orotherprovisionsofthtsAgreement.
3./
SpeciilRujes W ith Re:nectto CaprtalAccognts.
3.7.1 Time ofAdiustmentforCaoitalContributions. Forpurposes ofcomputing the

balance in a Membea CapitalAcx untrno creditshallbe given forany CapitalContribution which such
Memberistomakeuntilsuch ntributionisactualNmade.*capitalCcmtributionrefefstothetotlanount
ofcashandmo rossAssetvalue(netofIlabili
tl
es)ofpropertyintiall
yoontn-butedtotheI-IX bythatMember
andanysubsequentO ntributionsofcastlandtheGrossAssetValue(netofliabil
ities)ofanyothefproperty
subsm uently coptributed tothe LLC bythatMember,inclutingAdditi
onalCapillContributions.
3.7.2 Intentto CornplvW i
thYrea:uw Reculations.The foregoing provisionsofSecbons
3.
5 and 3.6 andthe otherprovlsionsofthisAgreementrelatlngto the maintenance ofCapitalAccountsare
intended to complywithRegulationsBection 1.704-1(b),andshal

lbeinterpfetedandappliedinamanner
consistentwith sudlRegulations Sedion. To the extentsuch provisions are inconststent with such
Regulatiens Secti
on or ere incomplete with respectthereto.Capi
talAcecounts shallbe maintained tn
accordance wtth such Regul
ationsSecti
on.
-
3.:
Toqsferee'sCaoitalAccount.lntheeventaMember,orthe holderofan Economi
c lntest
transfel
's an lnterestin accordance with tbe temw ofthis Agreement,the transferee shal
lsucceed to the
CapitalAccountofthetfansferorto the extentitrelatesto thetransferred lnterest.
3.9
Limitaiions on Liabiiih and Obligations ofthe Membet% and--Manners. Exceptfora
Member's habil'
ytothe LLC foriLsCapifalContributionsorforanyli
abili: adslngaAera Memberhasrightfull
y
receiveda retum ofcapitalpursuanttoNRSSecti
on86.391.andtherighh ofjudgmentcreditorstocharge
a Member's E nomic Intergstfprcertain unsati
ssedjudgmentsefa Memberpursuantto NRS Sedkn
86.401,and unlessothelwiseprY dedforinanagreementsi
gnedbya Membe.
rorthe ManagererCommittee
Memberto be charged.no Member,ManagerorCommittee Membersballbe'lndivl
dual
ly l
iable undera
''
jugment,decfeeororderofcourtorInanyothefmanneqfQranydebtobli
gationnrliabili
tyoftheLLC
whetherornotthatliabilityorobligationafisesincontrad ortort No Membershal
lbe requiredto Ioan any
hlnds to the LLC.exceptas provi
ded forin thisAgreement. No Membershal
lbe requi
red to make any
'
conkibtltl
onto theLLC byreason ofanynegativebalanceinhisCapitalAcx unknorshallany nepatl
ve
balapce in a Member'sCapitalAccountcreateany liabilityonthe partofthe Membeito anythirdpady-. -3.10
No Ru oonsibilitvorLiabilityforPre-Fennatlon Gommitmao . lntheevemtany Member

.
(oranysuchMembef'sA reholders IwrtnersorAj

ml
iates)hasipcurredanyindebtednessolobligae nprior
toKecorrznencenentoftheexi
stenceofthe LLC thatrelatedto orotherwiseeffectsthe LLC,neitherthe LLC
norany otherMembershallhave any r% ponsi
bili
tyorli
ability foq oswith resped to such indebtedness or
obligati
on.unlew essumedbythe LLC pursuantto awrltteninstrumentdulysigned byal1Members.
ARTICLE 4
ALLOCATION OF NET PROFITS AND NFT LOSSE:
4.1
AlloO tion ofNetProflh and NetLossee.Exceptsotherwiseprovided inthisM de4,Net

-
Pr
ofltsandNetLv esoftheLLCIneachFiscalYearshallbeallocatedamongtheMembef'
sass#-for
thin
Secfons4.1.1and4.1.2 below.
'
tiixkze
lazxta,
az,.l
'
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opEqvlsoAostnrvs-vr-pages
'
Case
3:06-cv-00056-PMP-VPC
Page
of.101
J)rl.2
.
2. 2i)(
)6 (;:t
)2?$$ i
) 'l3S J. Fr?Document
, Es. 644-9 Filed 05/28/08
.
tl(
).'
C'
,?1828 ?
11
.
%J
4.1.1 NetProflte. NetPro:ts shal

lbeall
ocated among the tembers asfoliows:
4.1.1.1 Flrst,NetPmfie shallbeallocatedAmong the Members.wi
thoutdeductionof
the Guaranteed Payrnenlinthe proporti

oninwhichthe Membersshared inthe NetLcsses tlnti
lan ameunt
ofcumula:ve NetProfi
tsbasbeenallocated equalto lhetotalofcumulative Ne1Losses previouslyallocated
to the Members.
4,1,1,2 Thefeafter. Net Prots shallbe all
ocated among the Mernbers.without
deduction ofthe Guaranteed Payment,pro rata,in accordancewiththeirPercenzge lnterests.
4.1.2 Alloeation ofNst Losses: Beductfon for Guaranteed Pavmenl. Exceptas
otherwise provlded In thisArticl
e 4,NetLosses shallbeall
ocated among the Membersasfollows:
--
4.1.2,1 First NetLossesshallbe allocated amongthe Members,withoutdeductiop
oftheGuarant&sdPayrnentintheprpporionM wllichtheMemberssharedi
rlele#etProfitstlntilanamount
ofcumulative NetLost.
em hasbeenall
ated equaltothe totalcumulative NetProfi
ts previ
ouslyallocatedto
the Members.
4.1.2.2 iecond,tbe $111amotlntoftheLLCY dedudion forme Guafanteed Payment
shallte allocated.pro cata.betweenFCP/LP and FREMONT in accordance with thei
rPercentage Interests.
4.1.2.3 n ird,pro rata to FCP/LP and FREMONT TRUST.in proportion to their

:talAtrlounts,untilFCP/LP,
posi
tive balanoes,ifany.lntheirreiledi
veCapl
sand FREMONTTRUST'SCapi
tal
A= untbalancesare reducedtozero.
4.1.2.4 F rth,toMONTGOMERY TRUST,InprolrftialtotheY sitivebalan ,ifany,
I
n hisCapi
talAccount untilMONTGOMRRY TRUSTS CapltalAccountbalance isreduced to zero.
4.2
ResidualAllocations. Exceptas oKerwise provided in this Agreement alIitems ofLLC
I
noomelgain,Ioss.dedudion.and anyotherailocatons notothel
w ise pmvi
dedforshailbe dividedbetween
theMembers in themame proporti

onsastheyshare NetProfil orNetLosses,asthe case may 17e,forthe
FiscalYear.
4.3 Qualised IncomeOflet-IfanyMerre runexpectedlyrecei

vesanyadjustmenl,allo ti
ons
ordi
utributionsdescribedinclauses(4),(5)or(6)ofRegulationssecti
on1.'
?04-1(b)(2)(ii)@),itemsofLLC
inm me shaflbe:1x* * albcated toKch Memberinanamountand mannerstlcientts elifrlinaK llle
Adjusted capitalAcm untDofi
citcereated by suoh adjustmenl,aliocations ordistributi
ons as quickly ms
posslble. n is Section 4.3 is intended to constitute a 'oualmed income offsep wi

thin the meanlng of
Regql
aionsSedion1,7Q4-1(b)(2)(ii)@)(3).
4.4
Minimum GainCharqeback.Ifthere i
s anetdecreae,eIn LLC Ml
nkm lm Gainduring a Fiu l
Year,eachMee erwillte allocated,tefore anyotheralkxatbnundermisArti
cle4,itemsofi= meand galn
forsuchFi
scalYear(and#necessar/,eubsequentyearslinpropor
tiontoandto theextentofanamount
equlto such Member's share ofthe nqtdecrease in LLC Minimum Gain determined i
n a= rdance with
Re ulationsSection 1.7>Q(g)(2). n isSection 4.4 isintended to complywith,and shallbe interprded

consistentlywith,thedminlmum oaincharaeback,provi
sionsofRegul
ati
onsSA OI
I1.704-2(9.
4.5
Member Nonrecourse Debt Minlmum Gain CharqebalR. Note hstanding any olher
provlslonofthlsM icle 4,btltexceptSection4.4,iflhere isa petdK rease in MemberNonretm rse Oebt
M zimum Oain attlibkltableto aMemberNonfe urr,
e Debtduring anyFku lYearofthe QLC,e.2% Merr*er
wholms ashareofthe MemberNonreoxrseDebtMlnimum Gai;ate utabl
e tose Memlx rN reoxlrx
DebtdetermlnedinaccordancewithTfeasuryRckgulati
onsSnnfnn1.704-2(1)(5),shallbespeciallyalbcated
l
temsofLLC i
noorre andgainforsu* year(and,ifnecessary.subsequentyeaajinanamounteqjalsu&
Member'sshareofthe netdecrease i
nMemberNonrecourse DebtMini
m um GainatffibtrtaNetosuchVrri
ber
.ko kf
1f2?o(
sl17l)
opxec
Y EFIATI
NGAGREEMENT-pag.1Q
..
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Page
of.101
J)rt.Case
@2..2(
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()($ 6:t
)2F'k (
) l3! J. Fr8
9, Es(i' 644-9 Filed 05/28/08 8(
)'7?.1829 @
l2
1
fk
NJ
v
NoflrecourseDebt,determinedinaccordancewlthRegulati
onsSecti
nn1.704-2(i)(4).AlloM tionspufsuant
to the previous sentenco shallbe made inpropodionto therespectiveamountsrequired to be all
ocated to
each Memberpursuantthereto. The items to be so al
located shallbe detefrnined in act
zordanc,e with
Re uiati
onsSection1.'
/04-2(i)(4).ThisEedi
on4.5fsintendedtocompl
ywithamlnfmum gainqhargeback
requirementofthatSectionofthe Reguiati
onsandshallbe interpreted cansistentlytherewi
th.
4.6
MemberNoprecourse Boductions.Any MemberNonrecourseDeductionsforanyFiscal
Yearorotherperiod shalll
;e spedal: allpcated to the Memberwho bears (orisdeemed to bear)the
e nomic riskofIosswith respectto theMemberNonrecourse Debtto which such MemberNonrecourse
DedklctionsareadributableinaccordancewithRegul
ationsSection1.T04-2(i)(2).
4.T
Spe lalAllocations.Anyspeclalal
loo ionsofitemsofNetProfltspueuantto Sea ons4.4,
4.5and 4.6shallLe taken intoaccountincomputi
ng subqequentallocati
onsofNetProfrtspuouanttoSection
4.1.sothatthe netamountofany i
temsso allccated andthe gain,Ioss andany otberItem all
ocated toeach
MemO pursu ttoSedion4.1shal.totheextentpossibl

e,beequaltothenetamountthatwouidhavebeen
altm tedtoeachsuc.
h Memberpursuantto theprovisions()fthisArticle 4 ifsuch specialalltxations had not
occurred.
4.8
Fee.
s to Members orAffiliates. NotwithskndingtheprovlslonsofSection4 1.in tbe event
thatany fees.interest,orother amounts pai
d to any Memberorany Amliate thereofpllrstlantto this
& reementoranyotheragreementbetweentheLLC andanyMemberorAmliatethereofprovidingforthe

paymentofsucharrountanddeductedbytheLLG inrelianceonCodesecti
on707(a)and/orCodesection
707(c),are disallowedasdeductionst: the LLC oni
tsfederalincometaxreturnand are tfeatedasLLC
distri
butlons then!
4.8.1 The NetPfofitsorNetLossa ,as thecasemay be,forthe FiscaIYeai
-inwhi
sh such
--.
fees,intereq orolheramounts were paid shallbe increased ordecreax d,as the case may be.by the
arax ntofsuch fees,interest orotheramotlntsthatare treated asLLC distributions'
,and
4.8.2 Thereshallbeall
ocatedto theMembertowhi
cll(ortowhseAffi
li
ate)sklchfeel.
i
nterex Qrotheramountswere pald,pri
ortotheall
oo tknspursuantto Sedion4.1,anal
nountofg> s
i
ncomeforthe FiK alYearequaltotheamountofsuc.hfees,i
nterestorotheral
notlntsthataretreatedmsLLC
dlse utj
ona.
4.9
Secflon 7W c1AlloM tlon.Any i

tem ofinccme,gain,Ioss,anddedudi
onwltll'
esp.d to any
property(otherthancash)thathasixencontri
butedbyaMembertothecapitaloftbe LLC andwhich i
s
requi
redorpermittedtobe allocatedtosuch temberforincometaxpurposesundercode section 7tMtcjso
asto take irltoaccountthe varlation betweenthetaxbasisofsklchpropertyand 11 Gross M setValue atthe
tirneofI:JX ntfibtlti
onGhallbeall
ocatedtosuchMemberscl
elyfcrinccmetaxpurw sesi
ntllemanntrso
requi
red()rIv rnitted.lntheeventtheGrossM setValueofanyLLC Propertyisadjustedinil
cx rdancewith' 1.16.2.subsm uentallo ti
onsofj
ncome,gain,Kssanddeductionwi
thresped tostlchPropertyxhall
takeIntoac untanyvafiatkm betweentheadjustedbasisofsuchPmpertyforfederalincolrk

etaxjurpose.
s
anditsGrmrhsM setValueInthe samemannerasundersection704(c)andtheRegulatiol
lspromul
gated
the under.Any eledionsQromerdecislon:felating to such allx ationsshallbe rnade in @ny mannerthat
feasonablyrefiectsfheptlrposp an;jntentbnofthisAgreement Tothe extentPeM ZM W Rcxgulations

Sedi 1.T% 1(b)(4)(i),aIIitemsofi= me,gain,10* anddedudionforfe eralandsltetaxpurposesshall
be allocated In atm ruancew11 the X rresponding bookitems.
ARTICLE 5
DISTRIBUTIONS OFAVAILABLE CAGH FLOW
5.1
DistributionsofAvailabl.Ca h Flow. Distributi
cnsfrom the LLC to the Membersphallbe
madefrom :me totl'
fletotheG entofAvailabl
e Cash Fl
ow asdetennlnedbythe ManagementCo-mm'lttee.
ciWviW r-
laxfe?
.
,ax
uc
oecaalwsAs-s-usvr-pagelf
'
Page
J)h.Case
23, 223:06-cv-00056-PMP-VPC
26 610781 0 I8S J. FrDocument
89$ ESl. 644-9 Filed 05/28/08 00.
721830 of
8.101
12
.
'
.m,
y
$. )
Priorto the detezm inationofthe amountofdistribuionsjprcvi

sionsshal
lbe madeforaIIknown reasonable
obli
gation: and li
abilities ofthe LLC,whethArornotsuch obligations and li
abilitie.s are due orcontingent,
exceptthatprovision need notbe maleforany ponioa ofany LLC fi
nancing,the amountofwhich can be
reasonablyexpected to be u dsredfrom theproceedsofthesal
e ofthe thenremaining Property ofthe LLC.
5.2
Prioril andMannerofDistributyonsto Members-AldistributionsofAvailableCashFlow
shallte made bythe LLC pro rata to theMembersinaccordance withtheirapplicable Percentage Interests
as ofthe timeofsudldistri
bution.
5.3
TaxDistrlbotlons. Exceptasotherwi
se may be pfohibited by anyagreementsbetweenthe
LLC anditsIenders.wi
thinninety(90)daysaftertheconclusionofeachFi
scalYear,theManajement
Committee shalldetermineand provde written noticeto1heMembersoftheamotlnt(the''

Tax Llabilitv
SbortlallAmount#),ifany,bywbich(a)theaggregatefedefalandstatetaxliabili
ty(ifany)incurredbythe
Membem wi
threspecttothenetncomeofthe LLC forsuchprecedingFiscalYear(whicm taxIiabilityshall
be detqrminee by applyinq the hi
ghesteflective individualtax rates Ihen in effectforthe Fiso lYearln
quuti
on),exceeds(b)theaggregatedistribtltionsofAvail
abl
eCashFlow madebythe LLG withrespectto
suchFlsmalYear(includi
nganydistributl
onsmadetotheMemberswithrespecttothesnaltiscalquarl
erof
suchFlscalYearl.TlleManagementCornmi
ttckeshal
luseaI1reasonablee#ortstocauseMeLLCtodistribute
the7a LiabllityShoro llArnounttothe MembersIntl)e tlmeaqd mannerrequired hereunder,indudlng,but
notIirritedto,irfr- ing onbehalfofthe LLC sumcientfundstoenabl
e the LLC to distribute such TaxLiability
ShortfallAmount Eac,hsuchdisMbution shal
lbefnade to QIQ Membe assoon as practicable aftersuc.h
fundsareavailable. Itistheobjecti
veofth:Membersthatwhile theTaxUabil
ityShortfallAmountwillbe
detenminedattheendofeat;hFiscalYear,totheextentpossibl
eandsubjecttoltleforc oing,dl
stributi
ons
willbe made in respectQmre fon a quartedy basisto facililate the Members'ability to make quartedy
estimatedtax paymentswith respectto theirnetincome frpm the LLC.Atthe end ofeach Fi
s lYearas
''
contemplatedabove,finaladjustmenl shal
lbemadetoreflecttheadualresul
l ofsuch FlscalYeac
.
6.1
ARTICL.E 6
MANAGEMFNT OF THE LLC
ManaoementoftheLLC.Subjed tothepmvi
:lons9ftheNRS;theM i
clesofOfgani
zati
on
andk)@nyIimittiork
ssetforthinthisAgreement(asfnaybeafnendedflom timetotirne)relatingtoactions
fequired to be approved by the Members,the Business and affaif
'softhe LLC shallbe managed,@nd aI
!
Corrsm y powersshadbevestedirltheManqgerrentCofrFnittqe. n e dayto-dayopefationscfthe LLC shal
l
beimplemented by one (I)ManagerdesignatedoreppointepuluanttoSecti

on6.1.1bel
ow,whoshall
condud lheBusiness ina= ruanoewim andsubjed to the poli
cies.procedureajdecisions and cll
redlvesof
the ManagementCommittee.
6,1.1 Deslunation of HManaaere.The Managerofthe LLC shlllnltial

ly be DENNIS'MONTGOMERY,an indtvldual,orhis successorasappointe by theManagementCommittee pursuantto
' 6.1-2 bel
ow.
6.1.2 Eledion ofSuocessor Manaaer.Upon the Manager's resignation from ofrm or
remnvalfmm office by ele ManagementCommi

ttee,a suocessorManagershallte appointd W the
ManagementCemmittee.
6,1,3 SubordlnateOfficers.TheManagementCommitteemay,initsdi
w pti
on,ape nt
a presi
dent secmtafy,a chiefsnantialofflcer.and suchotherofficersofthe LLC asthe Businessofthe LLC
rnayrequlre,eachofwhom shall1lo1(1ofrlceforskl
ch y ri
Y ,have suoh authorl
'tyand perform suceh duties as
providedforinthlsR reelnentorastheManagementCommxeemaydetefmlnefrom tjfnetotime,
6.1.
4 Manaqementc*-mmlttee.R e ManagementCommlttee shalleznslstofth- (3)
Commi
oee Membeo.EachofFCP/LP,FREMONTTFIUSTandMONTGOMERYTRUST.solonj-aQley
.
llkzk
zo
ka
xklx
khie',.l o hEc
opcavlxoacsRes-slexv-eage12
'
..
Jh.Case
27. 223:06-cv-00056-PMP-VPC
26 6:07?k p- -I8s J. Ffy
i, E2;, 644-9 Filed 05/28/08
q
h,
7?1831 ?.
11
Document
Page
of 101
.
' '
'
'
(J
1.-.
areMembers.shallappdnt0ne(1)CommitteeMember.Eac.hMembermayappointoncormoreal
temates
forthe CommioeeMembersapm intedbyit.Analternate shallhaveaIIthepoweo ofthe Commxee Member
i
n his absence orinabil
ityto sefke. Each Commi
tt
eeMembermay vote by delivering his proxyto another
Committee Member. Each Membershallllave the gowerto remove anyCommittee Mem berappoi
nted by
itby delivering wri
tten noti
ce ofsuch f'
ernovalto such Committee Memberand to the otherCommittee
Membef>. Vacancies on the ManagementCommittee shallbe filled by the Memberwho appointed the
CommitleeMemberpreviouslyholdirlg the pcwlti
onw'
hl
ch isthenvac-ant.
6.1.5
charman (the*
M anaqementCommittee Chairm an. The ManagernentCommittee shallhave a

-
Irman*)whoshallbeoneoftheCommitteeMembersdeslgnatedbyamajorityofthe
Committoe Membem. The ChairmaninitiallyshallbeW ARREN TREPP!an individual,orhis succegsoras
appointed by the ManagementCommi

ttee inaccordancewlttlthi
sSection6.1.5. TheChairmanshall(i
)
preesi
deatManagementCommitteeaeetings;(ii)havet
j!eauthoritytoexecuteanddeliveronbehalfofand
intt!enameofthe LLC anyagreements,con*ads,notes.mortgages,evidence ofindebtedness,ceztificates,
sttemenlj(m veyances orottlerinstfumenLslnwfiting,and any assignmentorendorsementthereofiand
(ii)exerciK stlchrlghtsorperfrm suchdutiesasareothetwi

seprovidedJnthisAgreemenlorasmaybe
approved from time to dmebytheManagementColnmioee.TheChairman mayonlyt)eremoved from office
byamajorityoftheCommitteeMembers.InIIIQeventtheChairrnanresignsorisrerroved,amajofityofthe
Commi
ttee Members shalteled a repl
acementChaifman.
6.1.6 Deleoation ofPow
-mv and Dutfes. n e ManagementCommi
ttee mayW wO en
resoluli
on from t117V totirrB del
egateanyofi
ts powetstotheManager,the Chairman,oKcers,employa of
aMemter.(>rtoanyomerPerson.SuchdelegaKonofpowersrnayindude butnetbelimitedto,theauthor'
lty
toeaecuteand dellveronbehalfofaptjInele nameOfthe LLC any agreernents,conbucls,noles:Im rtgages,
evidenx ofIndebtednes:,cedifi
cates,statements,conveyancesorotherlnstruments inzritlng,and any
assignmentorendorsementmereof.
.
..
6.1.7 ManaqementCommittee Meetinqs.
'
6.1./.1 R eManagementCommitlee shal

laxxetatleastolme eac: qualterInlncline
Mllee,Nevada,orspchothertimesorplacesastheChai
fmanshalldetermine(unl
esysuchmeetingyhall
bewalvedbya1lCommi
tteeMembers)orontheca11oftheChairmanortheManager.Sudlmeeingsshall
becalleduponatleastten(1Q)dayspriorwrittennotice,exceptintNecaseofanemergeny,inwhichevent
Sudla meeti
ng may beM lleduptm priornoticeastheChairmandeemsappropniate,butinno:ventIessthan
fody-eight(48)hours.Anagendaforeachmeetingsballbe preparedinadvan bytheChairmanorthe
.-
Managef,a: the case may be,and circul

ated to the Committee Members. Approvalpfme Managernent
CommMee shal
lrm uireamajorityin numberofthe Com tttee Members.TheManagernentCornrrdtteemay
actwithouta meeting If(i)theadlontakenisapproyedinwfitingbythenumberofCommittee MembeM

ntam RqnrytotakeA chadon,and(ii)wrjttennoticeofsuohactioni
sgi
veptotheCommitteeMeme riwbo
did netprovide suchwrittenconsent W ritten minutesofalIIneeti
ngs shallbernaipllned,andtheInirltlteaforeach meeti
ng shallbe approved atasubx quentmeetlng oftheManagementCommi
ttee.
6.1.7.2 The ManagementCommittee may adoptwhateverftllee and pm M ures
fBlatg to 1* activlties as itrnay deem apprbpriae,pfw i
ded thatstlc,h tulesand pG us shalln/tbe
intzmsi
stentwithorvilate *epfw i
sion:Qf*lsAgreenvntland pfw idedthatsu& rule,
sandfegula rkqslla11
permltmedings W telephohe,vi
deo conferendngortha like,and shallpermitCnmmlttee Members to
a rti
dpate in meetingsbytelephone orvi
deoccmfereu orme Si
keorbywri
ttenpaw ,and rAlch partkipation
shal
lbe deemed attendan forptlrw sesofdetermlnlng whetheraquorum lspresent
rttee.n e Managem nt
6.2
Pow ers.Duu-qsand Responlibilities ofthe ManaqementComm Committee shallhave aIIofthefightsIdufesand p- ers asspeciNedin thisA(j:e./me4)t,indudingwl out
limitation,thegenet'
alpnwersd duti
esofmanagementtypdce
all
y vested iftthe board ofdiredorsand the
offre ofa tzbipfexectltive oflicero,a corporalion. Matters rm ulfinp the approvalofthe Management
Comml
ttee ehallinclude.withoutImilti
on,the fol
lowing:
-- '
-
..
to
i
-kA(
T*5
*2eM)
r
kf
o u c
$12+
OPERATING AGREEMENT-149: 13
.'
3:06-cv-00056-PMP-VPC
Page
Jih.Case
22.
,200
6 6:g2?2 7' -188 J. FfDocument
?9, E. 644-9 Filed 05/28/08
L
1'
7@1332 of
?,101
lb
.
'
(.
XtJ
1-.
6,2.1 The authorizati

on,negotlationlexecubonanddeliveryt)nbehatfoftheLLC ofany and
a1Icontractsoragreementslverbalorwritten havingacoqtractvalueorobligatonamountin excess ofFifty
ThotlondDollars($50,X 0.00),whicharenecessaryorappropriateforthedevelopmentorexploitati
onofthe
Technol
ogyorareinfue efanceoftheBusinessoftheLLC,including,bd notIimited*),butexpreasl
ysubjed
to the Iimi
tati
ons requiri
ng Memberapprovalpursuantto Secjon 6.
4.
4 hereof,contracts oragreements
betweenthe QLC and/oritsAfliliatesoranyomerPersonto pfovi
detheLLC withgcxldsorsel
vr
cesfanyki
nl
in whie.h the LLC orits Managermay have an actual(
Jrpotentfalconflictofinfereest,and Incltlding afly
amendment ormodifi
cati
onsthereto orrenewalsorterminations thereof.
6.2.2 The approval,executionldelivel

y and performance on behalfofthe LLC ofthe
MontgomeryTrustContributionAgreement,and arnendmentsormodifi
cationstbereto.
6,2.3 Theapprovalofdelall
edIlne-item budgetsfortheoperationofthe LLC and itsBusiness
orforthe devmlopmentorexplef
tati
onofthe Technol
ogy,and anyamendments.modificatfons,supplements
orrenewalsthereto.Eachsuchbudget(andanyamendmentstheretofrem bmetotime),afterapprovl by
the ManagementCommittee,shallbe referredto hereinasan dAnproved Budaet-*
6.2.4 Subjectto theApproved Budgets,borrowing funds from any lenderto opemteor

malntainti!e Busineer'
sorforany erpufm se whkhlsinfurtheranceofthe Buslness QftheLLCIotherthan
tradepayable.sintheQrdinarycourse ofbusiness'
,teissueevidencesofindebtednessinconneztiontereWith;
to refinanre,increase the amountof,modify,amend orchange the terms of.orextend the time forthe
payrnentof.any indebtednmu orobl
igationofthe LLC'
,andto secureany indebtedneu orobligationofthe
LLC bymortgage,pledge,gfantinga securltyInterestin orotberIi
enon the LLC'S assei.
6.2.5 The appointmentand termination ofofficers,hiring and firing ofemployees,orthe
engagementof ntractors,subclmtradors,consul
tants,experl and otberPex nsnecessarforappropriate
tp carl outthe Businemsofthe LLC,incltlding the selecti
onand engagementofan independentcerti
fied
ptlbllcaccounting 511n artd legalcounselforthe LLC,and to approve the terms ofany suh appointment
employrrentorengagement lncludingapprovaloftheterms andpaymentofcompensati

on.
6.2.
6 The approvalofthe amouniand timing forrequesY for additi
onaladvances on
FCP/LP'S and FREMONT TRUST'
S CapitalContribntkmspursuantto Sections 3.3.1 Rnd 3.3.2 hereofas
requiredW theLLC toconlintlethedevel

opmentorexploi
tationoftheTechnologyortoothelwiseconduct
il Buslnessln accordancewithanyApproved Budget
6.2.7 n e approvalofthe amountand:mingofanyAddi
tonalCapi
talCcmtributi
onsrm uired
by the LLc to oondud i
ts Buslness,including.wi
thoutIimitauon.aIIcapitalrm uired to be expended w tth
xsped totheTechnology.
6.2.8 Subjed totheappmvalbytheVemberspursuanttoSectiofl6.4.2below,the4aIe,

11*.17* ,e r,
2,rental,assignment,transferorotherdispositionofalIQrany materialpartofthe assets efQle
LLC,indudi% theTedlnolegy and any patentfijhl thereto!whetherasa :ingle transadiln ora serie.sf
transadi
otlsas pad ofa plan.
6.
2.9 Any materlaldecisions relatng to the test marketing,mantlfadure,distributi ,
licensure orexpl
oitation oftheTe hnology.
6.3
Powlrm Dlltlel-:nd ResponslbilitieloftheMana

-qer.The Managershallbe dlarged with
therl
ghts,duti
esandPJWe.
O a%specz'
fiedinthlsAgreementsubjed totheIimilti
onssetfortllinthi:Article
6 and elsewhere in thlsAgreement n e ManagerGhallhave responsibiiityforoondtldi
ng the day-to'day
opel
utionsofthe BusineK andthe LLG andforimpkmenti
ngthedecislorksand directivo ofthe Management
Commltteeinconneotion therewim,x bjed tothesupervisbn,diredlonand controlnf0)e Management

Committee
'
Q
k
keepA.
c.
c
ll'
mkG lz
w ) Fkkl
OPERATING AGREEMENT .Page 14
'
3:06-cv-00056-PMP-VPC
Document
Page
s 6'
.0l8k ? i3s J.Fr',
E!9. 644-9 Filed 05/28/08 h''
70l333 of
p.101
1b
22..Case
28. .280
,
.
''
,ry
.s
TheManagershal
lhavethegenel
'alpowersanddujesofmanagementNpicallyveestedinthe
officeofaGiefoperatingofficefofacomorati
on.Sub/cttotheprovisionsandlimitadon:setfollhinSections
6.2and6.4hereof,theManagershallhaveresponsibilityforthefoll
owingmatters(Iistedbywayofexample
andnotinlimitationtherm tlandshalhavetheaklthorityonbehalfofandinthenameoftheLLC todoor
perform.orcause tobe done rpefformed,suchactsorthingsand to negoti
ate,execute acknowledge and
del
iveralIagreementsldocuments ol'
tdinstramentsia connection therewzth:
6.3.1 Prepare,execute and fil

e on behalfoftl
he LLC a1Iapplim ti
ons (including patent
appl
ications),koense.s,pefmits,registrations.andoonsents,andtoQtherwisecommuni
cateanddealwithany
andaI
Igovemmenolagencie.shavingjulisdi
cti
onovf,orinanywayaffecdng,theTechnology,theBu:iness
oranypartthereof.
'
6.3.2 Makeordi
na@ andoecessafyexpendituresandi
ncurreasonableobjgatj
onsnecessary
forel
econductoftheactiviti
esoftheLLC'
SBusiness,aIlinaccordancewithandsubjectloApprovedBudgets.
*
6.3,3 Authorize.negotiate execute and deliveronbehal

fofthe LLC any and aI1contracts
oragreements,verbalorwhtien,hAvinga contfactvalue orobligation arnountofless than Fi
ftyThousand
Dollars (&5(),000.0),whi
cllthe Managerdeems are necessaryorappropriate forthe cevelopmentor
exploi
talionoftheTdchnol
y,orareinfudheranceoftheBusiness,i
ndudi
ng,butnotIi
mitedt7,butexpre,ro
subjed totheIknitationsrequiringMemberappfovalpursuanttoSedion6.4.4* 10w.contl'
acisofagreerrents
betweenthe LLC and/oritsA/liatesoranyotherPefsonto plw idethe LLC with goodsorsefvi
ceesofAny
kind,in whichthe LLC ori
ts Managermayhavean actualorX tentialconflictofinterest,and including any
amendmentsormodificationstheseto,orrenewal
s ortermtnationsthereof.
6.3.4 SklbjecttotheprlorapprovalbytheMemberspurstlanttoSedion6.4.
2bel- andthe
Manage- ntCeorflrnitteepursaanttoSectbn6.2.8above,the sale,i nse.Iease,rentllassi
gnment eansfer
orotherdisp lti
on ofaIIorany materialpartofth@ assetsofthe LLC,including the Techl
lology aqd any
patentdgb? thereto,whetherasa singletransaotion ora seriesofrelated tranmacZonsaspartofa plaft
'
6.3.5 Toconfe-ssajudgmentagafnsttheLLC,orapprovetheslingoforsettlementofany
cl
aims,indudi
ngIiigationmatters.forofagainsttheLLC,ofIessthanFiftyThousand Dollars($50,000.
.
00).
6,3.6 Fxecute and deliverbonds and indemnitjesby oron behal
fofthe I
-LC as may be
requi
redfortheownershlpand/orsaleofanyLLC Properly,asexpresstydlrectedto dosoona (N-IM bycase
basisby theManagementCommittee.
- 6.3.7 To purchase r
kabililyandotherlnauranoe to proted the Technology,theIA C Pr erty
and Busineu ofthe LtC.
6.3.8 The nageqxblecttothere- nableapprovaloftheManagbfnentClonlr1

li- ,ihalselecttedmlcalengineers,programfnersandother mputertechniclanstodevelop orexploi
tthe Tedmol y.
6.3.9 From frne to drnelamend EXHIBJ A to ihisAgreernentto rened any e ange inthe
Informationcontailed thereb,and prex re,execute and fil
e a Certjficate ofArnendmentorCrrredbptothe
Arti
desofOrganizatkm to refl
e anychangeorcorrectl
onintl)eLLC,lY Manager,Members,yincipalofrra
registercd agent orthe Iatestdate uponwhlchtheLLC maybe dissolved.
6.3.10 Prepare,exa teand9leon behal
foftbeLLC theAnntzalListofManagers,Members
andAgentwiththeSecretaryofSteandtopayaIlAlingfeestherefor.
'
6.3.11 M dir ted from tlne totirre by the ManagernentCommittee,to investthe funsQf
the LLC in bank cezti
scates ofdepositashort-term governmntsecurities orothershort-tenn secufities
Includingftoneymarketfunds,priorto Keexpendi
tureofsucehcapl
talinconnedion with Businc sop4fatien:
(Sa
WNa
XV(
T
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+
RpNMX)- CfPAK
:
3z
OPERAMNG ABREEM& IT-Paqels
'
3:06-cv-00056-PMP-VPC
Page
JFh.Case
2.3. 208
0 6'
,glF1 p
l8s J. FrDocument
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;
h'
'21334 of
?.101
17
$
6.3.12 IftheManagerdeemsitnecessaryorappropfiate,to adopta Company sealscircular

in form containing the words 'INTRFPID TECHNOLOGIFS LLC ''togetherwith the dateofformati
on ofthe
LLC,andsuch othefi
nformation asshallbe apgropriate forbanklngadotherBusinesspurooses.
6.3.13 Maintain a minute book to i
ndude the Artlcles ofOrgani
zation otthe LLC this
Agreementandaqyamendmeni orsupplementshereto andtheminutesofmeetings(or(xmseni inIieu
ofmeetings)ofthe ManagementCornmittee,written consents ofthe Members,and otherimportant

d uments ofthe LLC.
6.4
Llm ltatlons on..
-tbe Manapement Com m-ittee and Manaoer.Neither the Management
Commi
ttee northeManagershallhave theauthofityto do any ofthe followingwithoutthe priorunanlmous
Vote ofa1lofthe Membefs:
6,4.1 ExceptfortheIimited authority ofthe Managerto amendEXHIBIT A hereto and the

M ide.sofOrga i
zationpqrsuantto Section 6.3.9 above.materi
allyamendorrestate thisAgreementorthe
Arti
cl
eesofOrganization,inwhol
e orinpalt Incl
udinganyincrease in the numberofCommittee Members of
thekLC pucsuantto Sedi
on6.1above.
6.
4.2 Sell
,Ilcense,I
easesrent,transfeq assignorotherwise dispose ofaIIorsubstanti
all
y
alIofthe assets ofthe LLC,induding the Technology orany patentrights thefeto,whemerin a single
tcansaction ora eertesofrelated transactions aspartofa plan.
6,4.3 ApprovetheTransferofaMember'sfnterest(exceptfortheTMnsferofupto10% of
aMember':EconomicInterestpursuanttoScction9.1.3hereof).
6.4.4 Appfove any transacti
on i
nvolving the paymentofcompensation ty the LLC to a
MemberoranAliate ofa Member,klnlessothee se expresslg authorizedand approved x rsuantto this
Agreement
''
6.4.5 Any me/er,consoli

dation,di
vestitureordix olution aqdwindin: up ofthe Business
and a'airsofthe LLC.
6.4.6 Any cmterialchangeIn the characterofthe Business oftheLLC.
'
6.
4.
7 Theadmission ofnew orsubsti
tute MemberstotheLLC.
..
6.4.8 Anyat;tinconfraventionofm lsAgreelY ntoranyval

idam endm entheree theArele.s
ofOrganizatlon orany amendmeitthereof.
6.4.9 Kn- inglypefform anyact(otherthananyad requiredbythisAgreementorb/laworarkad takeningoY failhlwhichwould,atthetimeofsuohactsubjed anyMemberoftheLLC toany

IlersoflalIiabi
lltyIcanyjurlsdicti
on.
6.5
Time Devoted to Manaoement Unlemsanal
ternative scheduleisdetermined from timeto
tlme bytl:e ManagementCommilteeto beinthebestlnterestsofthe LLC and i
ts Members,the Man er's
servlce,
sshallbeexdusiveto the LLCfandbeshalldevote Gubstantiall
y aIlofhisfulltirneand attee onand
efforts to the Business and affai
rs ofthe LLC during reasonabl
e btlsine s hours. n e Managermay be
requiredtotravelfrom timeto tIM Infurtheranceofhisdutiesand responsibilities hereunder. TheManager
agreesto provi
de lisservi s in a rnannerconslstentwitllthe policiesofthe LLC as rrlay be adoptedf!om
time toti
m e bythe ManagementCommi
ttee.
6.5
Manaaer': Restrldion on IndqoendentActlvitles:Aqreem entNd to Com pata. n e
ManagerandhisAfsliatesagreethalduringtheterm ofthis& reement,noneofthem shal

l(Dmpetewi* the
LLC.whetherfortheirownaccountand/orforthe'accountofothers,indi
vidually,jointlywithothert,orasa
Qkk
#rkk
ot
rgpuopA.
E.
c
$
12-kit
.7
,-
OPEM TING AGREEMENV-Pagef6
Case
3:06-cv-00056-PMP-VPC
Document
Jh.k2.
,2926
s:0lFk 7- I3s J. Fr?
9, Esg. 644-9 Filed 05/28/08 8Page
9.721835 of
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18
(
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partofanyothefIimitedIiabil
ityccmpany,limi
tedpartnersip,generalpar
tnership,jointventure,corporation
orotherentity,by: (i)developlng,Iicensingorexpl
oitingin anymannerany software programsorother
technol
e y which iscompetitivewiththe Technology orthe Businessofthe LLC,orprovi
dlnganyselvices
orsuppli
eswhich are encompassed within the defini
tion ofthe GBusiness'
'ofthe LLC as setforth in this
Agreement;(ii)purchasl
ng orotherwiseacquiring,owning,hol
ding,operating,managing,investng i
n or
otherwise disposing ofa Ilke businessofthe LLC'S Businessand interesfsthereinofany ki
nd ornature;or
(iii)otherwiseengaginginanyoralIaspects()faIikebusinessoftbeLLC'SBusiness.TheManager'sofhis
Affil
iates'participation inany ofthe adiviti
es restri
cted by thisparagraph shallbe deemed 11bree
ach ofthe
Manager'
s dutie-s lereunder.
6.6
Comoen:atlon :nd Reim bursement. The LLC shallpay the following compensation and
reimburse- ntforservicesrendered to orQnbehal
fofthe LLC,orsuchotherryal
afy and benefits asshallbe
hereaoerapproved from time to tlme bythe ManagementCommittee:
+.6.1 Expense Reimbur:emenfs.The LLC shallrei
m burse the Manager and/or any
Commi
ttee Member,MernbersoftheirAmliatesforany expense paid by tnem on behal
fofthe LLC,thatds
to be propedy Y me bythe LLC,as provi
dedforinan Approved Budgetorasothelwise approved from time
to fme by the ManagefnentCeommittee.
-
6.
6,2 Compensation ofthe Manaoer.Guaranteed Pavment.In ccmsideration forhi
s h11ti ,exduA eservicestothe LLG,the Mqnage.rofthe LLC shallreceive,in additjonto anyreimbursement
foroostsasprovidedforlnSectio6.6.1above,aGuaranteedPayment(asthatterm isdejnedinsection
/0/(c)oftheCode)intheaggregateamountofElevenThousandDollafs($11,000.00jpermonthpayable
onthe flrst(1st)dayofeach calendarmonth commencing asofOctober141998.and lefmirlati
ng on
Mwdl3,20K .Thepaymentand amountofstlchGuarunteed PaymentQrsuch othercompensati
onto be
pakltotbe Managerforhissefvi
ces maybeadjusted,renewed orterminatedbytheManagementCommittee
'
from timetrlfrne.
s.1
R*etrictions on Distributions. No distribution to the LLC'S Members isvalid unl

esstuch
distributionhasbeenapprovedeitiefimmediatel
ybeforeorimmedl
atelyafterapprovalbytheManagement
Com Mee.
6.8
.
Righl ofInspection. The ManagerandCommittee Membersshallhave theabsolute right
atanyreasonable time to insy d and copy aIIbooksxrecordsanddocumentsofeveryknd.and to Insped

the physicalpfopertiesofthe LLC and also ofits subsidiafy limited l
iabi
litycompani
ea,domesticorforeign,
Suchinspedionbytl
)e ManageroranyCommlttee Membermay bemade in person orbyagentorattomey
and includu the rig:ttocopyand obtain abstracts.
6.9
Furrlio irlq Lt-c-lnformat

-lorl. n e Maoagermayrelease stlchinfofrrlati
on con m ing th/
Business and operatioxs ofthe U-C to such seurcesasiscustorrl

aryorrequlre'
d W law ocby nl
le
'orr ulation ororderofanyreguk-dorybody.
6.10 Authonw
' to 8ettlew'
lthIRS.Iftherearemorettkanonehundred(100)Men-..rsoftheLLC.
the *TaxMattersManaeer (asapx inted inSection 10.4 below)shallhavethe authofitytcenterintoR
-
ple rrentwiththelntemalRevenue ServiceonbehalfQfekoseMemberstlaving Iessthan aONE PERCENT
(1%)interestklmeIxofitsOfQIeLLC,exceptwhereaMembertitesastatel
nentwlththeIRS.inaccordarx
withappli
cableTreasuryregtllations,s'
tainpthattheTaxMattersManagerI
zasnosuc.hauthori
tyto ad onthat
Member's behalf.Any Membersling such a statementwiththe !RS shallnoti
fythe Managerthereofwithil
t
thlrty(30)daysofsuchfiling.
QY
-PM)
112. (ez2
AK
OPEM TING M REEMENT -Page17
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72,223:06-cv-00056-PMP-VPC
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89.7217 ?.18
wsvjct.r y
FA ULTS
7.1 Defaults.Thofollowingshalconsbttlteaneventofdefaultunderthi
sAgreemesit(aMDefaulr),
and,whereapplicable,theMember(incl
udingtheManageroraCommi
deeMembejcauslngsuchaDefault
shallbe deemed the KDefallltlno Member*and tl
he MemberorMemberswho have nototherwise defaul
ted
shallbedeemed the dNontlefaultlno Mem berl:
/.1.1 Failureto Pav Oblllations erAdditionalCaDitalContributions- Failure byany
Memberin lhe paymectofany financialobligation orAdditionalCapitalContribution to the LLC which
contl
nues fora periodofseven(7)daysafterwittennoti
cetosuchDefaul
ting Membec orfailufo inthe
performanceofanyoftheQeleragreement orobqgalonscontaknedinthi
sAgreenxnti
fsaidfail
urecntinues
foraperi
odofthirly(30)daysaiernoticetosuchDefaulti
ngMembeqprovided,however,noDefaultshallbe
teemedtohaveocourredif(psuchDefaulqng Membef'sfailklreofperformance i
scufable,and(ii)ifsuch
Defaultto becx bt
e,btltafterQleexerciseofreasonabledil
igence i
tisfound such Defaul
tcannotbe cured
wi
thinthi
rty(30)daysatternotke,butthealegedlyoefaultingVemberhascofnmencedtocufesuchDefault
.
withinthe 30-day peri

odandthereafterdiligentl
y proceedsto curesuchDefault.
7.1.2 T- erlnVlolationofAqreement.AnypughortedorattemptedTransfertasdefined
inSecdon9.1.
2bel
- )W anyMemberinviolati
pnofM icle9hereofatanyfmeduringtheexi
stenceofthe
LLC.
7.2
Remedles for Default Upon the occurreno ofa Defaultheretlndeq the Nondefaulting
Membersshallhavethefoll
owjng choi
ceofremediel,noneofwhichshal
lbeexdusiveori
n any waylirnitthe
Nondegul
ting Membefs from seeking anyotherrernedyteytnay have in I
aw orin m uity:
-
7.2,1 Remedv forDefaultUnderSection T.1.1 oftilis Anreement In fhe eventofa
'
Defaultdescribed in Sedion 7.1.1 above,the Nondefaul

ting Membershallhave the right(butnotthe
obligason)tomakeanAdditionalCapitalContri
butionls)totheLLC ortoIendtotheLLC theamountts)that
should havebeerl ntfibuted by the Defakllting Member. Anysuch amountso loaned shallaccrueinterest
flxedorlthedateoftheI
oanataO rannum I'
ateTWFLVE PERCENT(124
/i),orthemaxlmum rateofinterest
permittedbylaw.whlcheverisIess,whkhlnterestshal!accfueandshallbeadjustedbaseduponthetregolng r'
ate and be compoundedon eachfirst(1st)dayofeach monthdurlng theterm ofthe I
oan. Any
arrounY so I
oaned,togetherwithinterestmereonas afore> id,shallbeimmediatelydueand payablefrom
the Defaul
tingMemberto th: Nondefakltiw Mernber,M longasthe arnotlntso loaned and interestthereon
rem ajns unpaid,any distfibuti
on to which the Defaulting Memberwould othetwise be entitl
ed underthls
'
-
Agreementshallbe paldto theNondefaulti

n: M em beran appli
einrepaymentofthe am ounh so I
oaned,
withany such paymentappliedsrsttoattorneys'fees,costsandexpenses (ifany);thentointerestthen

accrued;then to ti
w balan in reduction ofthe principalamountuntilthe Nondefaulting Mqmberhasbeen
repaid aIIat
noun/ so l ned to tbe LLC to cure such Default,including allaccrued interestxfeeaand ibsf-asprovi
ded forherein.
T.2.2 OtherRemedlee. ln th: eventcfarly Defaultunderthis Agreemenk including a

Defaultundersecti
on7.1.1.abovg,and so Iongassuchdefaultremainsun red,the Nondefaulting Member
may,butshal
lnotbe obligated tn.doany oraIIofthe foll
owinq:
7.2.
2.1 Use any LLC assets incl
uding, but not Iimb d 1, arncunts otherwise
distri
buiable to the Defaulting Member.to matisfythe Defaulting Mem- r'sfinandalorotherobli
gations,in
orderthatthe Nondefaultlng Mem- rneed notcontributeadditbnalfundsto satisfy the working capitaland
operationalfequirementsofthe LLC.
7.2.2.2 Pursqeany afldalIrigh? to reawerdamage.sand a11othefrerlwadiesavailable

in Iaw andequf
'ty.
l$lo
azx.(
uf
,pk
v
uorxs
.1
rw
,.r
)ki
.
oeeu ya oAol
u euesy-page 1a
'
3:06-cv-00056-PMP-VPC Document 644-9

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7.2.2.3 TelminatetheLLC,bywri
tten noticetotheDefaultingMemberatanytirrw pri
or
to the Defaultbeingcured.
7.2.2.4 Manage and conductthe Businessand om rations ofthe LLC,withoutany

parti
cipadon.consentof approvalofthe Defaulting Memberorits representation on the Management
Committeewhichwould otherwisebe requiredpbfsuantto thisAgreement,
ARTICLE 8
MEMRERS'MEETINGS'
.ACTIONS W ITHOUT MEETINGS
8.1 Meetinas.n e Membelsshallnotbe requi

redto hoklanyr ular,annualorspedal(reetirlgs
inorderto approve anyadionofthe LLG asrequired by thisAgreementorthe NRS,
8.2
'
Y ctions W ithouta-Mletlnu.
8.2.1 Any action requiring approvalofthe Members pursuantto thls Agreementmay ba
apHov# with/tllthe ndudofarte rlgandwkhout# ornotir,eIfawtqte nsent.A oi

ngforthlheadi
on
oractionsso taken,issi
gnedbyMembersholding,intheaggregate,aMajofr
tyinInterestormoreofthe
Members,unl- sagreaterVoteis required undec ora lesserVote i
s proviledforin,thisAgreementorthe
NRS.
8.2.2 Unl
u sthe tlnanirrouswritten nsentofthe Membershas beengi
ven,noti
ce ofany
such acti
onapprovedbyIessthanaI1oftheMembersshal
lbe glventothose MembersWho didnotparticirlate
inorapproveofGuchactionwithi
nten(10)daysfollewingtheapprovalthereof.
8.2.3 Any Membergkingawrittenconsentrnayrevoketheconsentbygi
vlngwrittennotica
tothe LLC priortotl!etime tbatwrittenconsentsoftte Mernbef'
shol
dingkintbeaggregate,theVote required
to authorke the proposed action.
have been fi
led with the LLC. Such revocation iseffective onlyum n ita
receiptbytlle LLC.
8.3 Excluslon ofVote.Itpursuantto the NRS ortheterms ofthl

s Agreement a Memberis not
esitled te Vote on a specifi
c matter,then suc.
h Member's numberofVotes shallnoibe considered for
purposes ofdetermlning whemerapprovalbyVote ofthe Membershasbeen oblined in respectofsuc
speci
Nc matter.
' - 'ARTICLE 9
RESTRICTIONS ON TM NSFER OF LLC INTERESTS:

ADM
-I
-SSION AND SUBSTITUTION OF NEW MEMBERS '
9.1
'
-
Tran&feforA% iqnmentofMernbqr':Intereest 5tlbjecttotheprovi

sinnsofAfticl
e 11ofthis
Agreement the lntelw tofeac,

llMem- rand llle Econorpic lnteraltofa Persol
n whlo Is nota Member
costitutes ti
le pefsonalproperty ofthe MemberorEconomiG Intereztholder. No MemberorEconomic
lnterestholderhas anyInterestInthe Pfopertyofthp LtC,
9.1.1 A Meme r':Interestoran Econorni
c lnterestrnay onl
y be tramsferred 'assigned in
sttk,taccordRnce with thi
s Agreement
9.1.2 Notransfer,hypthecatk
on.encumbranceorasgn nt(aN-ransferk)ofaMerfker's
lnterestin the LLC willbe valid unl
ess unanimously appfoved by the Members,otherthan the Member
prom sing to dkspose of1L%Interest IfIe'ssthan unanimouscontentofthe Membersjotherthanthe Mem- r
proroxxdtodispose ofe Interestdoesnotapprove tho-rransferrthetratufereeoffhe Mernber'slnter:stshall
c
tt
,
kzk-w
xskr
:
li'
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..
3:06-cv-00056-PMP-VPC Document 644-9

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nothave any rightto participate inthe managementofthe Business and affairs ofthe LLC t)rto becomea
Memberoftbe LLC,
9.1.3 ATransferofuptotenpercent(10%)ofaMember'
sEconomiclnterestmaybedooe
withoutthe consentofthe otherMemberstthe ManagerortheManagementCommi
ttee.Thetransfereeof
ap Economic lnterestshallnothave any nghtto participate i
n the managementoftheBusi
nessand affairs
ofthe LLC orto become a Member. Noe i
thstanding the foregoing,any Transferby a Memberofan
EezmomicInteresti
n excess of10% shallbe deemed RTransferofsuch Member'sLLC Intereltand shallbe
subjecttoSecti
on 9.1.2 above.
9.2 Void Transfers. Any Transferofan Interestwhic: does notsati
sfy the requements of
Secfon9.1.2aboveshallbe nullandvoid,andthetransferring Membershallcontinue tobe a Memberofthe
LLG and to be obligated undereachand everyprovi
sionofshisAgreement
'
9.3 m dm iesion ofN@w Members.A new Memberfnaybe admi

tted intothe LLC onlyum nthe
unandmousVote ofaI
lofthe Members,
9.3.1 The arnoklntQfCapi
o lCntributionwhichmustbe madeby anew Membershallbe
determined by the VoteofallexistiflgMembers.
9.3.2 Anew Mem- rshadnd bedeene admitted intothe LLC untilthe Capb lContrlbuti
on
required ofsuh Person sballhave beenmade afldsucbPersonhas beeeom:a padyto QILSAgreementby
executing and dalivering to Qle LLC a counterpad signature page to thisAgree- ntacknowledging his
acceptanceof,and agreeing to beboundby,the terrt
:sandcondi
tionsofthisAgreement.
'
9.4
Substitutmn ofMembers.Subjectt
otheprovisionsofAfticle11hereol,a Person mayl)e
-
substitutedasaMemberandadmi
ttedtotheLLC,succeedingtoaIIoftherghtsofanyMembec ugonthe
'
deathofaMemberorupontheval
idTransferofa Membef's Interestin accordance wi
thSeclon9.1.2above.
The:tlbstitutedMembershallhaveaI1therbhtsandpowersandshallbesubjed toaI1the restrictionsand

Iiabili
tiesofthetransferring Member,exceptthatthe sklbstituti
on ofthetransferee Membershallnotrelease
thebansferfing Memberfrom liabilityto ele LLC pursuantto NRS Section :6.351. Nosubstituted Member
shallbedeefned admitted intothe LLC unjlsuchsubsti

tutedMernberhasFmbrnme a pa@ to thisAgreement
by exe ting and deliveri
ng tothe ManagementCommttee acounterpa!
tsignaturepage to thi
s Agreemetlt,
ackntw ledging hisacceptanceof,andagreeingto be bound by.thetermsan1 condi
tionsofthlsAgreement
ARTICLE 441
ADMINISTRATION AND ACCOUNTING MATFFRS
10.1 Maintenance ofBooks and Recorda.TheLLC shal

lM useth00% and records ofOYQ LC
to be maineained ln accordancewithgenefallyac ptedaccounting principl% ,and shallgke fepofY to the
M embem inacm rdance withprudentbusinesspradices andQle NRS.There shallbe keptatthe principal
businessoffl
ceoftheLLC,as* 1asetthereglsteredofsceQftheLLC specihedinsection2.5(1fdlserentll
anyinformationrequl
redtobemaintainedW theLLCIxlrsuanttoNR/Sedl
on86.241.asamendedfrmntirne
totim e.
10.2 AnnualM countino.W I

'
lhi
nonehvndreutwenty(120)daysaM rthex seofeachF'sr
wr'
.
nlYear
'
ofQ!e LLC,the LLC shaqpmldetothe Membersa1Iiqformation pecessaryforthem toO mplete fedemland
statetax returns.
10.3
lnsoection and AuditRiqhl. CadlMember,atits t>n expense,has the right ulxm
reaK nablefequestandforpufv esreasonablyfelatd tothe InterM tofthatMember,to insped and copy

during norrnalbusknesshtxlfsanyofthe LLC b001 andre rdsrequired tol)e maintained inaccord#!pewi
th
Section 10.1above, Suchri
ghtmay be exercise: W the MemberorthatMembef'sagentoraeom ey.Any
ck'
Watfx.
wikxrwe pxc
lurx t
a:lzr'ul
opeylAmNo AGREEMENT-eagex
Case
3:06-cv-00056-PMP-VPC
05/28/08
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J8q.
?2. 200
6 5:0bFk P -I:s J. FrDocument
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Membermay requireareview and/orauditofthe books,recordsand repodsofthe LLC.Thedeterminati

on
ofthe ManagementCommi
tteeastoadjustmentstothefinancialrepods,books.recordsandretumsofthe
LLC,in the absence offfaud orgross negligence,shal
lbe finaland binding upon the LLC and aIIofthe
M em bel
's.
10.4
Tax Matters Handled bv Manaaer.TheManagementCommittee shal!designatea Person
tobetheLLC'Sq'
axMattersManaoee (definedasqn xMattersPadner i
nCotesection6231)torepresent
the LLC (attheLLC'
Sexpense)inconneconwitha!lexaminationsofthe LLC'Saffai
rsbytaxatl
theri
ties,
indudingresul
tingjudici
alandadmini
strajveproceedings,andt:expendLLC fundsforprofessionalservi
ces
and costs associated therewith. In i
ts capacity as M-rax Matters Manageq'
'the designated Person shall
oversee the LLC taxaffairs in the overallbestinterestsofthe ttc.
10.5 EstablishmentofBankAccounts:Authorlzed Slgnatories.The ManagementCornmittee
shallauthorizetheestablishmentofone ormoredepositoryaccoun? i
n Nevada and elsewhere forthe funds
ofthe LLC.A ldisbursefrzntgfrom theLLC'Sbankaccounfssbal
lbeinac= rdark
ce withihi
sAgreement Any
checksy'dfafts,andotherinstrumentsobl
igati
ng theLLC to paymoneyuptoa maximum amountofTwentr
Five Thoumand Dollars ($25,000.00),including instfumen? payable to the MonagerorotherPersons

authoA edtosignthem,may besi
gnedonthe LLC'Sbelml
fbythe ManK er.ading alone.Any suchchecks,
drafts orotherinstrumentsobligating the LLC to pay money in qxcessof$25,000.00,whetherasa single
chet)koraseriesofchecks.shallrequiretilejolntsignaturesofthoManagerenda Person(Iesignatedfrom
time to tlme bythe ManagementCommitee.
-'
Cash balancesonhand may be investedbytheManagementCornm ittee onbehalfofthe LLC

as provlded forinthisAgreement LLC fundsshallnotbe commingledwi
ththe fundsofthe Manager.any
Committee Membeq Member oflicerorany otherPersonorused ascompensafng bal
ancesforany other
obli
gati* softhe Manager,anyCommi
ttee Member,any Member,officercrany otherPerson.
10.6 FedeolIncomeTaxElectlona.n e Managemantcommi

tteeonbehal
fofth:LLC maymake
aIIel
ection:forfedemlincome Q'hx purposes,including butnotlimited to,the foll
owlng:
10.6.1 Entl
-w Classification Flectlon. As a domestic eligibl
e eno' ,the Management
CommitteeshallcausetheLLC to el
ecttobeolassisedaaapartnershipforfederaltax purposesbyfiling Ferm
8832,Enti
tyCl
assificati
on Eedion.with the lnternalRevenue Service inthe time and mannerprescribed by
theapplicabl
e regulations.The elecionforsuch classi
rl
cati
onshallbeeff
ectiveasofthe effecti
ve dateQfthis
Agreement.
. '
10.6.2 U@eofAocelerafed Depreciation Methods.Tothe extentperm i
tted by applicable
Iaw and regulafons,the LLC mayel
ed to use anaccel
emteddepreciation method on anydepreciable uni
t
ofthe assetsofthe LLC.
10.6.3 Ac ountlno Method.ForfinanclalreK rtlngpurm ses,the booksa0d reia'

ds ofthe
LLC shallbekeptentheCASH METHOD OF ACCOUNTING appli
edina nslstentlnanfherand shallrefled
alIttansadionsofthe LLC and beappropri
ate and adequate forthe purposesofthe LLC.
10.6.4 Oblllationl ofMembers to ReportAlloatlons. The Membersare aware ofthe
inY rre tax pseqnencesofthe alkxati
onsmade bythisAgreementandhereby agreeto be bound bythe
pfovlsi
onsolthi
s Sedion 10.6 in rerortingedelrshares ofthe LLC i
ncofne and 1ssforincome taxpurpoees.
10.6.5 Tax Year.TheManagementCorwnitteewilcause the LLC to adoptthe CALFNDAR

YEAR as itstaxableye-ar.
10.6.6 Other Eledlonv. n e ManagementCommi

ttee shallhave the rightin il sol
e
discreti:natanytimetomakeornottornallesuchothereledionsesereauthorizedorpermi
ttedbyany iaw
-
orfegulationforinrnetaxpurposes(includinglbutnotlimi
tedto'anyel
ectionundersectioas734.M and
r.
w
ma,xx'
fzkGxtexec
1:z?su(e:$7Fx
OPEM TINQ AGRQEMENT-Page21
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2'7. 203:06-cv-00056-PMP-VPC
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?9. E!9. 644-9 Filed 05/28/08
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23
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;54oftheCodeto adjustthebasisofthePropertyoftheLLG in1heeventofaTmnsferofaIIorpadofthe
Inter%tofanyMember).Notwithstandingtheabove.noMember,northeLLC,shallmakeanelediontobe
excludedfrom the application ofSubchapterK ofthe Code oranysmilarprovisionsofstate law.
ARTICLE 11
PURCHASE OP-I-ION:MEMBFRS'RIGHT OF FIRST REFUSAL
11.$ LLC'S Purchase Option. Upon the occurrence ofany one ofthe followlng events (a
q'
riooerinqEvenr)wlth respecttoa Member,the LLC shallhave Qleopti
onto purchaseall,butnotIeM than
all,oftheLLC lnterestofsuchMember(thekselllnoMemberv)atihepriceandonthetermsassetforthin
Section 11.3bel
ow:
lntere-st:
11.1.1 7-he intended sal

e,transfer.encumbmnce or hypothecation ofa Member's LLC
11.1.2 n ewithdrawalofaMemberfrom the LLC,
'
11.1.3 7'hedeathofanindi
vidualMembeq
11.1.4 The bankruptcyofa Membeq
11.1.5 ThiwindingupanddissolutionofanentityMembeqor
11.1.6 The mergerorothorreorganizati
onofan entity Memberin which the entity Member
ts notthe surviving enti
ty.
EachMemberagreesto promptlygkewri
tt
ennoticetothe LLC ofaTri
ggeringEvent TheLLC
shallhavetlleoptionto purchaseall,butnotIessthanall,ofthe LLC lnterestofthe Selling Member,which
itmayexefciseonl
ybygi
vingwrittennoticetoSel
li
ngMemberonorbeforeQlethlrtieth(30th)dayfol
lowing
reoe'
lptbythe LLC ofthe Selling Member's notice. Uponthegiving ofthe noti ,the LLC shallbe obli
gated
to pua asethe LLC IntefestofmeSeling Memberlsubjectto the provisionsofthisAgreement. Ifthe LLC
doesnotexerckse Lsoptiontopurchaseal
l,butnotIess thanall,oflheSelli
ng Member'sLLC lntefesttheLLC
shalljonorber
lirethe5f)1(5th)dayfollcwingtheendofthe30.dayperioddeKribedabA e,givewrittennotica
to the remai
ning Members thatthe LLC lnterem has notelected tn purcha e tbe.selling Member'slnterest
11.2 Rernainina M em bers'Purchase Option. U& n receiptofthe noticefrom thgLLC described
in Seeetion 11.1 above,ea/h remalnlng Membershallhave the option to purchase the Sel
ing Membe/s
InterestIn tl
!eSarne prom rti
on asthatMember'sInte'
restbearsto alIQ!Q Membersso elecjng to purohase
theLLC Interest A remainingMembermayexercisehisptionon# bygivingwrittennoti

cetoLLC onorbefGetheQllrtleth(30th)dayfollowingreceiptoftheLLC'Snotl
ce,Eachrernaini
ngMembernotdesiringto
pufchaseanyQftheSelling Membefs LLC Intestshallgi
vewrittennotizethereofto the LLC during the same
3@.
day period. IfaIIorany ofthe LLC lnterM tofthe Selling Memberis rlotpurdlased by the remaining
Members,then.subjed tothe unanimousapprovalofthefemainingMemberspursuanttoM icle9hereof,

theSelng Membermay sellhIs Intereestto a bonafidethlrd-partypurchaseronthe priceandtermsm tfck
rth
in Sectbn 11.3 below. Forthis purm se.the Sel
ling Membershallprovide the LLC and the remaining
Memberswith etlch infofmati
onregardingthe third-partypufrehasefastheymayfeasonablyreqqest lfthe
rernaining Membea do notqnanimously approve the purchaserand the sale and transfrofihe Selling
MemO r'
s lnterestto sklh purchaser,thenthe Selling Membervhal
lremain a Demberand Nhallconti
nue to
beobl
igatedas a Memberin acoordan withSedlon 9.2 hereof.
11,3
Purehase Price andPavmentTerms.The purchase price forthe LLC Interestpursuantto
Sedi
ons 11.1and 11.2 ahwe shallbethe falrmafketvalue ofthelnterestasmutuallyagreed between the
Selli
ngMemberapdtheremalningMemberslthe*purchasePrlcew).11theSelli
ngMeme randtheremaining
r:
,
f
2zt
r
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OPERATINGAGFIEMENT-Rage22
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26
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.7213 F.21
Memberscannotmutual
lyagree onthePurchase Pricewi
thinthirty(30)daysafterthedate ofnotkea:
specified in Sedion 11.1 or11.2,as the case may be,thenthe Purchase Price forthe Selling Member's
lnterestshalibe determined by arbitrationassetfor!hbelow.
Within ten(10)day:aft
ertheexpirh
ati
onofthe 30.
.dayperioddescribed above,the Selling
Memberandtheremaini
ng Membersshalleachnameone (1)afbitrator.The disputed valuati
onsofthe LLC
lnterestand the Purchase Pdce determined bythe Selli
ng Memberand the remaining Members shal
lbe
submitled to the arbi
trator.Theafbitratorshallthendeterminewhetherthe SellingMemberorthe remaining
Members'Purchase Pric,
e i: rnure refl
ectke ofthe fairmarketval
ueofthe LLC and the LLC fnterest The
arbitratormustseled the valuation and Purchase Price submittod by eitherthe Selling Memberorthe
remaining Members. No otherkalue may be determined. The deci
sion ofthe arbi
tatorshallbe validand
bindl
ngonaIlparti
ees,andjudgmentrnaybeenteredthereoninanycourtofm mpetentjuri
sdiction.Theparty
orpadieswhose valuation is notacceepied shallpay aliofthe fees costsand otherexpenses incurd in
connectlonwi
ththe determination.
*
ARTICLE 12
TERMINATIOM AND DISSOLUTION
12.1 Diesolution.PursklanttoNRS Secti

on86.491,theLLC shallbediu olvedupontheoccurrence
ofanyofthe foll
owlngevente:
12.1.1 The unanlmouswrittenconsentofalItheMembers;or
12.1,2 Thesale,license,lease,rantal!assignmentorotherdisposi
tion ofal1orsubstantially
aIlofthe asset: ofthe LLC,includlngthe Technology orany patenthghts thereto,e ethero urripg ipa
singl
e tfansaction ora seri
es ofrelatedtl
nnsacdonsaspartofa plan.
12.2 Continuation and ConductolBusiness AfterDissoluflon. Upon the occurrence ofa0y

dissluti
oneventsrozifi
edin Section 12.1above.the LLC shallceaseto (:211& onitsBusiness,exceptlnsofar
as may be nece% ary fc?rtlle w'
i
nding up of12 8usine-ss. 'I'he LLC shall ntintle a: a campany f0rthe
purpose ofprosecutlng and defendingsuil.aetions,proceedings and clairns ofany kind ornature by or
agalnstitaqdofenabling itgraduallyto setteandclose i
tsBusiness,to lled and diK harge 1
ts obl
lgations
to displme ofand convey itsProperty and to distritute its assets and Prperty,butnotforcontinuing the
Businessforwhich itwasestabl
ished.
- - '
12.3 Llm ltatlon onActions bvorAuainstDissolved LLC.The dissolutlon ofthe LLC shallnot
impairany remedy orcause ofaction avail
able to oragainstitoritsManager,Commtee Members or
Membersarisingbeforei
tsdissolutbnandcommencedwithtwo(2)yearsafterthedateofthedlssolutioc.
vi
de Net
12.4 Dis.tribution ofNetProceeds Ux n Liauldatlon.TheMembefsshall ntinue to di
Prd tsand NetLossesand Available Cash Flow duringthe wirtdlng-up period In the same mannerand the
sanx pri
ori
tle.sasprovided fori
n Aricles4 and 5hereof.n eprcceedsfrom the liquldationofPfopertyshall
be applied toliabili
ties ofthe LLC inthe followingordec
--
12.4.1 Firsttofhepaymentofcreditors,i
ntheorderofprlorl
'
s asprovidedbyIaw,excepfto
Members on aco ntofthelrrmntribudns'
.
12.4.2 Next,to the paymentofIoans pradvan s thatmay havetheen made by anyofthe
Members ertheirPrintzipalsforworkdngcapktalorotherrequi
remen ofthe LLC'
12,
4.3 Next pro rafa,t FCP/LP and FREMONT in accordRncewi
th theirposltive Capi
tal
Aco untbalances'
,
i
tiokt
t
i
vi
iu)
i
fG kllqc
Tz
uv
el
ze
OPEM TING AGREEMENT-F'

age23
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25
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..
12.4.4 Next,to MONTGOMERY TRUST In accordanoe wi

th his posidve CapitalAccotlnt
balance;and
12.4.5 Ttlereaeq promta,to the Membersin accordancewiththeirapplicable Percentage
Interesl atthe time ofsuch distri
bution.
O erthedistribuionpursuanttotllisSection12.4consi
sts* 01ofcash(orcashequi
valerlts)
andnon-shassetssthecasl
ltoremshequivalents)shallfirstbedistributed,inadescendingordeqtoful
ly
sati
sfy each categofy startingwiththe mostpreferredcategoryabove. In thecase ofnoncash assel,the
distributlon valuesareto be based on the fairmarketvaluethereofasdetermined in good fal W the
Ii
qkl
dator,andtleshorteztrrlatun'typortionofsuchnon-cashassets(e.g.,note.sorotherindebtedness)shall,
tothe extentsucl
lnon-cashassetsare readilydi
visible,bedi
stributed,ina descendjng order,to fullysatisfy
each categoryabove,stafting withthe mostpreferred category.
ARTICLE 13
INDEMNIFICATION
13.1 Indem nm catlon ofthe Membels and n eirPrin-cipals,The LLC slvllindemnifyandbol

d
harrnless each ofthe Members,the Manageq the Committee Members,thei:Afsliates and each oftheir
rese ctive offi rs,directors,managers,trusfees,employee-s,agents and Pdncipals (i

ndividually,an
ilndemniteef)from andagainstanyandaIiIosses,claims.demands,c'osY,damages,Iiablli
ties,jointand
seveml,exponse.
sofanynature(indudingreasonableaQorneys'feesanddisbursefnentslrJudgments,fine-sd
'-
settlements and othefax unts arising from aoy and aIIdaims,demands,actions,suitsorproceedings,

whetherckll,crlmlnalladmlnlstrati
ve orinvestigati
ve,in whicb the lndemni
tee Isinvol
ved asa pady arisi
ng
outofthe Business d the LLC,excluding Iiabili
ties to any Membeq regardiess ofwhete rthe Indemnitee
cY ti
nuesto bea Member1anAmliatq oran officer,director,empl
oyee,agentorPrincipalofthe Memberat
the time any such Ii
abiityorexpense ispai
d orincurred,to the fullestextentpermitted bythe NRS and all
otherappli
eeable I
au ,pmvlded th#ttl)eMemberorsuc.hPersonaded i
n goodfaith,wi
thinwhati
s feax nably
believed to be the = D ofi? authority and fora purpose which itreasonably beli
evedto be inthe best
interests ofthe LLC and the Membersorothet
w lse in compliance wlth the provi
sions ofthis Agreeme.
nt;
provided!however(pmattheLLCshallnotberequiredtoindemnifyanylndemnitee.andanysuchIndemni
te,e
shallbell
able foranyloss,exm nseordamagewhichtheLLC maysufferasaresultof(A)sur.hlndemnitees
111*1misconduct,grossnegli
genceorbadfaithinfailingtoperferm i
tsduteshereunder,(B)adionstaken
bysuchlndemniteeinviol
adonofthisAgreementl(C)QlereceiptbysklchIodemni
teeofanyfi
nandalbeneflts
towhthItisnotenttledpursuanttothi
sAgreement,of(D)thevotebysuchIndemni
teeforadistributionof
fundsoftbe LIr inWolation ofthisAgreernentorthe Act:(ii)theLLC shallnotbe rm uired to indemnify@ny
lndernniteeforany breach oftlle provisions ofthi
s AgreementforforanylQss,expenseordamage whi
ch it
maysu#era:a resultnfthebreachnfthi
sAgrpementbythe Memberlowhl
ch the lndemnltee I
s related,
'and
(iii)anykablll
'tyhereundefeal
l1
:* limitedsolelytotheasGetqandprepertiesoftheLLC,andnoMembe (or'anyM liateofanyMember)shaljl'
m eanyIiabilityorobligationW reasonoftheseindemnlu donprovisions.
13.2
Expenses.ExpensesincurredbyanIndemniteein defending any claim.dernand,acti

on,suit
orprtreedingsubjed toSedion13.1abcverrkay,from timetotitne,t/ advan W QleLLC giortothelnal

dispsle ncfsuchclaim,demand,acti
on,suRorproceedi
nguponreceiptbytheLLC ofanundertakingW
oron bellalfofllle Indemnitee to repay sue,hamount11I
tshallbedetermlnedthatsuch Person is notentitled
to be indem nire dasaufhorized inSection 13.1.
13.3 Indem nie ailon RiqhtsNondxclusive.n eindemni

scation provided by RpH ion 13.1shall
be in addi
ti
onto anyotherrlghtstowllichthoseindemnzed may be entiled underanyagreement,Voteof
theMembers,asamatterof1
aw orequityorothefwkse,b0thastoati
oni
ntheIndemni
tee'sCaPM N asa
Member,as an Afsliateoras an offfceq directoc employee,agentorPrinclpalofa Memberand as to any
acljonlnanotherempadtylandshallcontintleastoanlndemni
teewh:hasceasedtoserveinsudlcapaciN
and shallinvreto the benegtoftheheirs,successors,assignsand admini&trator'
s ofthe lndemnite'
.
'
jl
'
4
f
i
z
bz
k
-t
kWem'
lzp
&M'
ni
lrkiizraec
OPERATINQAQRQEMENT-Page24
..
3:06-cv-00056-PMP-VPC
Jqr
t.Case
2:?:2()
()6 i
;:()6l
hk f' ,l2sJ.FfDocument
,E2(
1. 644-9
. .
.,
'v W
y
Filed ,
05/28/08 t
1Page
(),7l843 off).101
26
( )
v
.
13.4 Errors and Omissions Insurance. The LLC may purchase and maintain insufance,atthe
LLCY expense,onbehalfofthe Membersandsuch otherPersonsasthe Memberssl
lalldetermine,against
any I
iabilitythatmay beassertedagai
nst,oranyexpense thatmay beincurredby,suc.
h Personin connecti
on
wi
ththeacti
vi
tie.
softhe LLC and/orthe Members'actsoromissi
onsasthe Membersofthe LLC regardl
ess
ofwhethertheLLC wouldhavethepowertoindemnifysuchPersonagainstsuchliabiliN underthepfovisi

ons
oftlltsAgreement.
ARTICLE 14
AMENDMFNTS
14.1 AmendmentorModitkation
- oftllqAlreement. Exceptforthe authoriN granted tothe
Managerhereund/rto amend EXHIBIT A to this Agreementfrom time to time,this Agreementrnay be
adopted,altred,arnended,orrepealed anda aew operatingagreementadopted bytbe unanlmousVote of
the Members.
*
14,2 AmendmentorModiscationofAdicles ofOrqanization. Fxceptforthe authofdy

' granted
to the Managerhereunderto amend orcorrectthe M iclesofOrganization.and notwithstanding any other
provisi
onfo the contraly in theM clesofOrganization orthi
sAgreementfin noeventshallthe M cles of
Organi
zatiobe amendedwithoutthe unanimousVote oftheMembea.
ARM CLE 15
NOTICES:WAIVER OF NOTCCE
15.1
Method ofNotice.Any noticeorx mmunioatkm rm uiredorpermitted to be gken hereunder
shallbei
nwrlNngandmaybeeithpr(i)pefx nallydeli
vered,whi
chShallbedeemedrecekedatthetlmeof
.-
adualreceiptthereotor(ii)sentbyfegi
steredor* 115* mail,w1*1K stageandcharge.sprepaid.whichse ll
be deemed deli
veredseventy-two(T2)hoursafterdem sitinthe Uni
ted Sotes mall;or(iii)delivered by
facslmil
e bunsmission,which shallbedeerrKd received on thedateandatthe time ofeledronicconfirmatkm
ofsuchtansmission,providedan origlnalmechani
calslgnedcopyofsuGh notice ofothurcommunio tionis
also imnxdWtel
ydeposlted'intheUni
tedState,mailwithfirst-classpostage andchargesprepaid'
,o(i
v)
dellvered by messenger.Fe FXorothertrackablecouri
erservioe,whichshallbe deemed delivered onthe
date and atthe time as traGked and confirmed by such x urierseNice;and in each case,addres%ed or
del
ivered to the party towhom mesameisdi
fpcted atsuchpartysaddressand/orfacsimil
e numbersetforth
bekw ,oratsuchotheraddreu and/orfacsiml
le numberasthatpartymayrr
peci
fybywritten noti
ce givento
theotherpariiesin aocordanc.ewilhthisparagraph:
11to the LLC:
'
Attn:W arrenTrppp,12 ManagementCommittee Chairrnan
685Gary Couft
IndineM llage,NV 89451

Mailinu Address:
P.O.BQx4964
lndineVillage NV 8M 50
Facsfmi
le!@i2)831-4395
llI
III
///
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CW M TING AGFY EMENT-Pa> 25 '
..
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3:06-cv-00056-PMP-VPC
J3,
22:22
26 :gs8k 7 >lps J.FfDocument
yg,Esq. 644-9
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Filed (
05/28/08
Page
)
1
C''
72144
3 of?,101
27
W itb a Coudesv convto:

Fee & Hsi
eh,LLP
Attnr DuglasJ.Frye,Esq.
24955 PacificCoastHi
ghway,SuiteM 01
Malibu,Califomi
a 90265.4747
Facsimile:(310)456-0808
Ifto FCPI P as aMem ber:
FRIENDLY CAPITALPARTNERS,L.P.
Attn:Friendl
y Capikl,lnck,ltsGeneralPartner
Attn:WarrenTrepp.ItsPresident
685 Gafy Cotld
InclineM llage,NV 89451
Ma'
llinaAddre-ss:
P.O.Box49>
lncllneVillage NV 89450
FaY mil
e:(7i2)831-4395
lfto FREMONT TRIJST as a Member:
THE FRFMONT TRUSX DATED MAY 16,1994

Attn:warrenTrepp,ItsTrustee
685 Garycourt
lncinevillage,NV 89451
MailinaAddress:
P.0,Box4964
lnclineM llage,NV 89450
Facsimile:(702)831-4395
Wl
'
tllacourt*sv Gopvto:
'
FRYE & HSIEH,LLP

Attn:DouglasJ.Frye,Esq,
24955PaclhcCoastHi
ghway,Sui
te AN 1 -
'
'
Malibu.Califomi
a 90265-4747
Facsimile: (31Q)4562808
Ifto MONTGOMFRY TRUST .s a Member:
MONTGOMERY FAMILY TRUST

Attn:Dennis Qontgomery and Brenda K.Montgomery,1ts Co-l-rustees
818Cheney Court
Lodi,Cali
ffni
a 95242
Facsimi
le: (209)369-T530
lIl
III
/J/
III
///
1l1
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- ' -' ' - '

OPERATING AGREEMENT -Page26

'J)h.
@2.2206 6:08?k : -13sJ.Fryg,ESC.
..
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Filed 05/28/08 Page 45 of 101
t'
-
89,7212 ?.28
w jt: acourtesw copv to:
TEHIN + PARTNERS
Attn: Ni
kolaiTehin,Fsq.
BankofAmerir.aCenter
555CaliforniaStreet,33MFloor
San Francisco,Cali
fornia 941(+ 1609
Facimile:(415)951-8308
W here ox rtesy copieeareprovided for the seakeotanysuch coudesycopysballn0tccnstitute notieee to
theparlyllereqnder, Ifthe United statesPostalService retumsto the LLC ortheregisteredagentanynotioe
as undelivefuble aIIfuture noti
ces to thatMembershal
lbe deemed duly glven ifkeptavaslable forthat
'
MemberattheLLC'
Sprincipalplaceofbtl
sinessfofone(1)year.
15.
2 W aiverofNotice. Notwithstandingthe foregoing,when,underthe provi
sionsofthe NRS or
underM e provisions ofthe Artides ofOrganizabon orthisAgreement,notice is required to be given to a
Memberorto the Managerofthe LLC awaiverinwriting signed bythe Peon orPersons entltled to the
noll
ce.whetherbefore orafterthe tirne statedinit,i
s equivalentto tle givlng ofnotice
.
ARTICLE 16
MISCELLANEOUS PROVISIONS
1s.1 Countemae .Thls& reementmaybeexecutedi

pseveralcounteqlads,andaIIcounterpads
-
so executed shallconsti
tuteoneAgreemenfabinding ona1lofthe padieshereto, notwlthstanding thatalIof
thepadi
esare notsignatoryto the originalorthesame oounterpaft
16.2 Su-ivalofRiol
lfs.ThisD reementshadbebindingupon,and,asto permitted oraccepted
surrmu ors,transferees and au igns.i
nure to the benefi
tofthe Membem and the LLC and thei
rrespedke
heirs,iegatees,Ialrepresentativessucoerssol
'sbh
ansfereesandassigns.i
naIcaseswhetherbytheIaws
ofdes ntand distribdi
on,merger,reverse rnerger,consolidation,saleofassel , otherR l
e,operatlonof1
>
orol efw ise.
16.3
Seveo bilitv. ln the eventany section, subsection orany sentenoe within any section or
- -
eubsedlonhereunderi
sdeclared byacourtofcompetentjurlsdidiontobeVei
d orunenfor able.mlch
secti
on,subsecti
on oreentenoe shallbe deemed severed from the remalnderofthis Agreementand the
balance ofthi
sAgreem entshallrem aininfullfo= andeffed .
16.4 Conetruction. The l

anguage i
n qI
Ip,
)1: Qfthis Agreementshallbe in alIcases cnnstmed
simplyacm rding to its falrmeaningand notsbidl
yfororagainstanyofthe Membefs
-
' -
16.5 Sedlo n Headinus.The captionsoftheArti

cles,Sections()rsubsectjonsin lhisAgreement
are forconvenienoe only and in no way define,limit, extend ordescribp Qle scope orintentofany oftho
pfw islons hereof,shallnotbe deemed pad ofthi
s Agreementand shallnotbe used in construing or
interpreting thisAgreement.
-
-- -
16.6 Governlno Law.ThisAgmementandanyamerk

dfrentsorexhibh hereto,and tlle rlghtsand
obligadonsofthepar:eshereundeq jse.xeoutedunderandinconform'
ltywith theIawsofthe512 ofNEVADA
relasng to Ii
m itecn abili
ty mpaniesand isto beconstrued enforoed andgovem ed irlaccordance therewi
m
withoutghi
ng ef!ectto any conqictof1- provision.
-
'
16.7 AdditionalDocum enh. Each Member, upon the reqslmstofanoterMembes,agrees to

pedbrm al
Iftlrlheracts and e-xecute,x knowletge and deli
veraIIdocuments whlch may be reasonably
'' Cl
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'
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'
Case
Document
J?h.
k3. 23:06-cv-00056-PMP-VPC
205 6:@68k p 'lqs J.Fr
yg,Esg. 644-9
.
Filed 05/28/08 1
Page
101
'?2146
8 of?.
28
v)
ner,
esrxn% appropriateordesil
abl
etocarryouttheprovisionsofthisAgreementtincl
udingbutnQtIimitedto
acknowledging beforea notarypublicanysignature heretoforeorhereafterI
'
nalle bya Member.
16.8 Pronoun; and Plurals. W henever tlle contextmay require,any pronoun used in this
Agreementshalllnclklde the corresponding mascuti
ne.feminine and neuterforms,and thesingularform of
noklns,pronounsand verbsshallinclude the pluralandvice versa.
16.9 Tim o ofthe Essence. Fxceptas othefwlse provi
ded berein,time is ofthe essence in
connectlon wi
theachandeveryprovisiooofthisAgreement.
16.10 FurtherActions. Fach ofthe Membersagreesto ex ute,acknowledge and deli

vefsuch
addi
bonaldoctlfnenl!andtakesuchfurtheradkns,asmay feasonablyberequired from time to timet,
o (*r1y
outeach ofthe provisionsland the intentaofthis Agreement.and evefy agreementordocumentrelating
hereto.orentered i
nto inconnedl
on herewil.
*
16,11 ARBITRATION OF DISPUTES. ANY MEMBER FIERETO MAY RFQUIRE THE

ARBITRATION OFANY DISPUTF ARISING UNDER OR IN CONNECTION W IT8ITHI; AGREEMENT OR
ANY REI-ATEDAGREEMENT.SUCH MEMBER MAY INITIATEAND REQUIREM BITRATION EYGM NG
NOTICE TO THE OTHER PM TIES SPECIFYING THFMATTCR TO BEARBI
TRATED.IF LEGALACTION
IS ALREADY PENDING ON ANY MATV R CONCERNING W HICH THF NOTICE IS GI
V EN,THE NOTICE
SHALL NOT EE EFFECTIVE IJNLFSS GIVEN BYTHE DEFENDANTTHEREIN AND GI
V EN BEFORE THE
-
FXPIRATION OFTWEN'I'Y (20)DAYSAFTER SERVICEOFPROCESS ON THE PFRSON GM NG THE

NOTICF.FXCEPTM PROVIDEDTO THE CONTM RY INTHESE RROVISIONS ONARBITM TION,THE
ARBiTFIATION SHALL BE IN CONFORMITY > TH AND SUBJECT TO AFPLICAHLE RULES AND
PROCEDURES0FTHEAMERICANARBIIEATIONASSOCIATION (OR ANY SUCCESK R THERETO).

'
IF THE AM ERICAN ARBITFIATION ASSOCIATION IS N0T THEN IN FXISTENCE AND THERE IS NO

SUCCESSO RJ OR IF FOR M Y RFASON THF AMERICAN ARBITRATION ASSOCIATION FAILS OR
REFUSFS TO ACTT THE ARBITRATION SHALL BE IN COKFORMIW W I
TII AND SUBJECT TO THE
PROVISIONSOFAPPUCABLENEVADASTARITES(IFANY)RELATINGTOARBITM TIONATTHETIME
OF THE NOTICE.THE ARBITM TORS SHALL BE BOUND BY I'HIS AGREEM ENTAND ALL RELATED
AGREEMENTS, PLFADINGS IN ANY ACTION PENDING ON THE EAME MATI'ER SHALL, IF
ARBITM TION IS REQUIRED AS AFORESAID,BE DEEMED AMENDED TO LIMIT THE ISSUES #0

THOSE CONTEMPI-ATED BY THF RULES PRESCRIBED ABOVE.FACH MEMBFR SHALL PAY THE
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THENUMBER AND SELECTION OFARBIIRAIORIS)SHALLBEINACX RDANCEW ITH THERULES

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A Nevada Limited-uability Com pany
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Attn'
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$1811500.006
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:W arrenTrepp.IY President
590 Lakeshose Boulem rd
IndineVillage,NV 89451
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Mailinn Address:
maxim um aao untof
P.O.Box4964
lndineVillage,NV 89450
FEIN 95-4412683
$975,000.00
THE FREMONTTRUBX DATED MAY 16,1994
$1201090,0
Attn:WarrenTrepp,11 Trustee
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Montgomery,ItsCo-Trustees
818 CherleyCotlI1
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PatentApplication Publication M ay 22,2003 Sheet 3 of5
US 2003/0095686 A1
Z 300
302
Com pare fram e

w ith subsequent
fram e
Yes
320
3z2
stop
'
ao4
No
M ore
Fram es
No
Increase in size
Yes
305
React
Figure 3a

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US 2003/0095686A 1
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Case
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PatentApplication Publication M ay 22,2903 Sheet5 of5

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Document 644-9 Filed. 05/28/08
Page 59 of 101
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US 2003/* 95686 A1
M ay 22,2003
1
M ETHOD AND APPARATUS FOR DETECTING

AND REACV ING TO O CCURRENC E OF AN
are coprcssed.and operated ulx)n wbi

le compressed l
o
determ inetbeoccui'reuccofaoevenl.
EVENT
f()0(jkl Mcthodsofoperalinguponthcdatarelatingtothc
1.FIEI-D O F '1RIE INVENTION
sceutoneaneventisdczczdincludeprovidingastillim age
atintcrvals typicallyevely 5-l0fram e.susingtlx dau from
1(*:12 n ej'
rcseutinveati
onf'
enainsgenerallylovideo
i
m agccouecuoc,.More particularly,te prosealinveution
relate-stoIuetuodsanda!'
paratusfordel
ectioganclreacting
.
furtber embodirneul still image,s from other rocordiug
Io cbange in afiold ofvlcw ofavideo camera.
tbcrecordingdevicetbatdctcclcdtheevcntarcalsooblaic'
ed
2.BACKGRO UND
t(
K*21 Casinasare multi-billiou dollari
ndustries Even
lboug/tIegalized gambling isarclati
volyyoung iodustry in
lbisccmnlry.itconlinuem logrow.
atIcasttlle recordingdevicetbatdetccted tbcevent.II

aa
devicesthatarcassociatedinapredetermioedmanaerwilh
atinzrvals.
4. BRIEF DEScjtlpa ox oyTHE Dju w lNt;s
(()
:1()j n e presentinveation is illustraled by way of
examplop and no(lim ilalion.inthc guresofllx accompauying drawings in whicb like referenc.es denote sim ilar
1*031 A nccersaryelementforancffrctivecasinoopera- CI
CEEIC/LS.andinWhich'
tionisaneflicifmlcasinomanagemenlandsecurilysystem. (()
(j1.
1) FIG.1illustralcsancxcmplarysystcm according
Casiaos spend subslardialamounts of azorley lo obsonre
to (he presentinvenuon and variousdiflcrentdevicestbat
!jamblers,dlalelw and olizersin tbccasioo.ttsingtxltb w.

111aljow forthcvarioi permutatioasdewribedbereinto
ol
ectronicsurveillaoceequipmcn!and l
iveporsoqnel.Elcctronic survcillance usually takes tbe form of dectronic
ca
mtraglce.
.s orvisible cameras (collectively cameras)
whicbblaaketthew allsand ceiliugsoftbccasinos.n e.se
bouudel
stood, altbougb itisunderstood lbatth1 exem plary
systcm sbould nolbc colzslruetl ms limiti
ng tbe preseut
invention'
'
tmfncfas gerl
eralf CnolTtlollS am ounts Ofdala' whi
ch bas
WB121 FIG.2illustralescompreswdframesprcducedby
convcntioaallybeeustoredonvideolalyesforpossojolazr
acamerawhicbhasanobjectparxsthroughitsfieldofview;
retrieval.
t()(j13) FIG.3a illustrazs a process fordetecting and
((*(
)4J Inmostiastances camerasarestatione(
jjnareas reactingtoachangtinthesiz:offramesofasource'
whoreatlemstsoum partofthoimageframebeinglalle.
ddoes y()14j y'
lc.:
5y igustrate.sseveralpossibl
e exaplesof
nolchangeoften.Forcxample.a camcramay bcsutioned
outside a vattltordoorin a stairwell.11is only whcn an
actionoccltrs,suchassomeone entersthevaultorcrossesa
doorin tbe stairwelllhata portion of thr im age fracoes
oPcrationsthatcaobeperforme,
d inreactionlotbedetemion
ofanoccurreaceofancvontaccordinglo&neml
xdimtntof
the prescntlvention..and
notchange.
porsoncau.sed achangem tho sizeofframes to occur'
changos,arxleven llen otberportions oflheimagoframedo
(00151 FIG.4illttstratesfourscroendisplaysinwhicha
((- 5) sinoetbcimage framcscbangciafrcquentl

y,ilis
5.DETAILED DESCRIPTION OF'

ITIE
desirablelo useimagecompression lo lowerthe traasmis-
PREFERRED UM BODIM ENTS
si
oo and slorago rrquircmcnts.Onccimage frames llavo
1
(*16) Methodsaodapparattsfordetectingand reacticg
been comprer
xsed,itisstilldesirablc l
o t)e able to furtber
procmss thc compressed image framts to determinc ifan

ovcnlbas occun'ed.
(* 061 Forexamplem itLsdesirablelolyeabletodetecttbal
tlw im ageframeshavechange.d due to :chaogo

n thc field
=' i
ofvicw (e.
g.
ssomeoaecrossingthroug.h tbe cjaofvi
ow)
withoutbaving to aecompre,x
s tbe prcviously comptessed
imageframes. n epresentioveution providesamecbaism
fOfdetectiog tllatachange in tbc seu ofview prewouuy
occurrcd in the dau mssodatcd nritb scquontiauy stored
framesw itimuthavingtodecomprmssimageframesandal
so
provide,
sxveralmcchanismsforreactingtotbedetectiooof
tlm change.
3.SUM
'
to acbangcil
ztbe Iicld ofview of avidco camera wl
x)se
oulputLsdigitizrxt aodtypicallycompra od,aredescn-lx d.
Jn tlw following descciption, forpurposesofcxplanation,
nllmerousSPCCihcdftailsafesetfortb lnorderloprovide a
thorougflunderstandin:of11:. prox ntinvention.Itw illbe
lvidentvboWever,looneskilledintheartthattilepresent
inventioamaybtpracti
cedinavarielyofcompreswddata
systemsiswi
tichtbeoccurrcnceofan cvcnt.Lsreaectea in
tbt'sizeoftbe compressa data.In otborirustnces>wellknown C'Irrations,stem .fuuctioas and oloments are not
sbown inorderl
o avoid obscuring lhe invontion.
ptjjrj partsoflhe doscription willbepresenlod using
tenninologycommoalyempl
oyedby tbcscskille.dinthem
to cxmvey tbesubatan oftbeirworklootbersKlrillodintbe
art sucb as compression, pattern recognitios. frames,
(1X1071 A mtthcd ofdel

cctinganoccurrcnceofaneveot imuos,Iiel
dofvicw'andsoforth.Variousoporaliorksw111
thatcxisw within asequeoceofstored fyames rolatingto a
s
ceneisdec ribed'aswellasmetbodsthaloperaleu& nthe
da
ta relatiag t
o thesceneoace an oventisdetected.
..
bdescribedas mulliplediscrelestepspcrform ed in mrnin

z
mannertbatis moslbelpfuliauoderstanding lbe present
inve
ntieu.However,lbeorderofdescriptiou sNould nolbe
constrle.
d as to imply thattheseoperationsarc necmssari
ly
(*081 Themeti)od ofdetectingoccurrcnce ofanovenl perforedintheordcrthattbeyarcpresentcd orcvcnorder

icclude.s comparing a flrs!storod frame to a lalerMored
flame to delennine whctber acbange in sizebet
w cen 1bc
framesexiststbatisgreaterthauapredetermincd tbrcshold.
In apreferrtdernlxxlim ent lbe firstaudIate;rstoredfram es
depcndcnt.Lastly,rrpcatcd usagc oftbe pbrases Nn onc

emtxh
dimcnt't
'analt
ernalveembedment
amoran''ailernale
emtxxlimenl''doesnolI
mcrssarilyrefer(othesameembodirnenl although ilm ay.
---
Case
3:06-cv-00056-PMP-VPC
.
.
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1
US 2003/0095686 A 1
M ay22,2003
2
(t*1.8) FIG.lilluslfatcsanexecnplarysystem 100accord- (00221 Fortmagefzamescorrcspondingtotbcsce.

uctbal
ing to tht pEeset)tinvcutlon,w hich isshowu as having a
computer120 thatcom ptessesaad operatcsupondigitized
(lata '
xsog tlxe fcalures oftbe presentiovention descri
bed
berein' compuler12(pmay also operate to comprc.s the
digiliz.ed data and transm ititto anotl,eracvice.show',asa
bave been txnmpressed,ltisdoslrable lo be ablelo furlher

ofrrale ulx)ntbccompressed imagefram es forexam ple lo
dctormineilancvcnthasoccalrretiinlbeimageframes.For
cxamplc.itisdesirable 'o be able to detcc,tilattilc image
frarneshavo chaaged due to a cbange in thc field ofvicw
server130 solhatserver130operatesupondigitizeddata
(eg.sometynecrossingtlrouglzlbefieldofview)wililout
related strcaras ofdigitizcd dala can be operated upou

accordir)gtoouccmbodimentofthoprexntinvcntion as
(#0M 1 FIG.2 illust

rates compresscd framcs tballave
beea produccd by acamera tbathas had an objectpass
'amresofll
us
ing thcfe
ae;prmsenlinvention descred herein.
W bil
o. com preswsbn may be acheved by computer 130'
pracucally1bisisnoleKcient.A numbcrofcomputcrs12(j
aresbown asproviding digitizeddalalo server13@>which
aspectisilluslvaled in orderto explaio furtherbow various
llaving to dccom prerxs the images.'I'lx prcscntinventiou

provides a mechanism for detecting tha.l a cbange bas
.
occun'
ed iaIhc fielclofview wilbouthavl
ag todccompress
unage framos and also provdes severalmechantsms for
reactingto (becletectionofthochango
descn-bed hereinafler. .
tbrougbitsfield ofview'
.Cam era202 ism intcdatdx rway
(*
2% iuastairwellandacomputer(notshowu)altached l
o
CamCE3z()2sucbascomputors12:ofFIG.lproducesa
19) Wlxiletbesystem asdescribedaboveiilustratesooe
manoerin wbicb the advantages oftbc prcsentitwention

doscribe.d horein can bc usod. tllis is exemplary. For
exam ple.tlx computers120 and 130couldlx:implcmented
as a notw ork of computors or zs a device othtrthan a
sequenccofdigitiadandcomprcsscdframcs208J-a, 210Jn.ajaa-a.atxlajzu-a.comprossioncanbeacNicvodusing
ljlc,lcchniquesdescribe.dinU .S.PalentApplicationbearing
atllorney reftTre:ncttytzx 3/tlzsg66s entitledGM ethod And
tr
omputertlzatconlalnsaprocersorthatisableloimplement Apparatus j2or Determiniog Patterns Within Adjarlt
the invcnti
oms tkscribe.
d hereiu.M any othervariants are
possiblo.And while adevicesuch as menlioncd willlypi.
cally include a procesm rofsom c type,such as an Intel
I'entium 4 microproces rora DSP in conjunclionwilh
BIocksofData-fLI:
,.I
IonOct.31,2001atxiassignedto tlc
assigrrcofbepresentapplication. and applicztion Ser.No.
tjqp zg(.y.)6 entitled ttM ethod M d ApparatusForEocoding
jnform'
atioa Usiog Mull
iple Pmsses And Decoding In A
program instructioasthalarewriltcn base.d uponthetcachings borein,otlwr hardware tbatimplerncrlts the prcscnt

iuveation can also be usedpsud)as a Iicld programmable
gal
s array.'fhe progtam instnlcl
ioasarepreferablywritten
inC++ orsom cotbercomputcrprogram minglanguage.For
refmtitive routines thalare use.d repealedly,lilese can be
svritten in assernblcrfor fmsterproceasing.As mentioned
above lbezprescntinvontiou opcratesupoa data preferably
siniljc pass',file.d on Nov.29.7..

(00 and assigncd to the
assignee of lbc preR nt application, b0th of which are
expressIyjscorporated bereinby refercnce. Itisnoled tbat
wjjetlusipg tjjex technique-s.particularlyforpatlerorecognitjonyttjat rotalioaal and diagonaltravm'ryals of x arch
bIocks aro typically not necessary, particularly when a
camera isftxed jnpositiofu
Ibrtlaerlmreinafter.Fordala thatLsnottemporally related.

theblockscanbefoanatte.d into framesthatmayormaynot
have lbc abilityl.
ostoretheaqme amouotofdata.Fordata
thatislomporallyrclakd> s'uch asim ageandaudiodataycach
irnageaadfl
srelatodaudiodatawillprtferablybaveitsowu
frame altboughtha!Lsnotanecessity sinccimageandaudio
datacanbestorexlonseparate tracksand analrzed independently.
214J.narcoptrale,duponitzessentiallyreal-lime,slore.d and
operated upon,copressed and then operated upon.comprelsecl.slored al
xl tllen operated upon.orcomprmssed,
transrnilted? stort.d atanotberlocation and lhen opecated
upon,tileinvealioasdescnbcdhcrcinarccquallyapplicablo.
Forastillrgxm having ascqucncc offrames theuncomprer
,sed framtzsw111have actrt
ain relalively coastantsize,
svhelberilhasboencomprov dornot.and wlmtlwrthereis
action orrnovcrncotornot.bccatuv.c lhesame sumbcrofbits
formaltedintoamatrixarraywilNinaframe,msdescribed (0024) W'

bcther(beframes208J.:),210a-a,212/-5,and
(*20) Accrdipgtooneembodiment.tlm computer120
i
suscdtoreprescnlthrfrzme.Oncecompresscdyhowcverp
orx rver 13(is assumod lo bavc rcceived digitalim agc/

audiofn mc.
stbatmlaleloasr.
qutncr.whichK quencchas
tbeamo'
unlofdatanocde.d lorepresenttacb framotbatisof
lhesamescenewillbesubstantiallyIessthanlbeszmesceue
boendigil
izxdintoframesandcomprsrx
srdinsomemaaner.
t
hatalsoasotherobje'cl
ssuperimpce.
e,
d lhereow and that
n ese frames may becomprmssed in mssentially rcal-time

And operated upon,orcempressed andtrark
smilled forst
or&geto inaaothcrI ation.Fuftber,therearesil
uatioaswhru
com pression isunnecesrsary.such asifpatteru recognition
betwe'
en framesisperformeddurbg substantially rtaltimc
tv rali
oason framrs.
compresscd sccne wil comprer.

s lo rougbly lbesamosiz.r
lhough lbert.willbcsomenon-uniformity duc to noiscand
otherfactors. n us.a& sbown in FIG.2 lhe compresse,d
frames of212/-a are largerlhan tbe compresxsed frames
zfo -a aod21(k-nbecauscIyerson2(14basontered tilrougb
dx rway 2:6.W hcoperxm 2% leavesthctield ofview of
(*2li Inr
Aymcinslaaccsthedataoblainodcorresm ndsto
camcra2@2'lhesizeofcompressr
,d framesrotur'
nto lhe
nochangeoftcn.Foroxample,acamcramaybestatioued
(*25) FIG.3/illustl
atesaprotzess3* fordcteaingand
'
locationsw bere Ihescencsbeing montored and store.d do
outside a vattltordoorin aMairwclland record (hescerie

whichisthenreceivcdbylhocomputer100.11isonlywbcu
somoone entersthevaultorcrosses ad rin lhe Maifw ell
lbattbe irmge frame cllaoges substaotially (since eveu
.-
.-
nreviotks reiativelvsmallsize assbow n iu fram ms21O -5.

r
.
'
reacting to a cbange in tbe siz.e ofcornprr;rxsed fram r.s

oblainedfrom lhesamorxource.11shouldboapprcciatedthal
presonlinvontionLsriotlim itodlo com prer,sed vidtofram es.
Evenlbougllabovclheframesbavcbxudescnbcdin thc
bctwec.
n sequential framrs that record the same sccae
changesin tbedatarepreRqting lhe framewillexisldueto
conlcxtofvideo dalalhe framescould be audio data ora

mixtureofaudioaudvideodalaoreveaanoll
aerform ofdata
atI
eastnoiseeFects).
lbatprovidcsanindication oflhot
xcurrenceofanevent.
'
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'(''-
US 2003/0095686 A 1
M ay 22,2003
3
According to oue er
nbodimenl,pcoccss300 opcraleson
(80291 '
lXeexl
ernalpaltcmsofintetestzrecxmtaiaedina
objemwhichcntcrstbefielt
lofvicw causingachangei
nthe
size ofthe comprcsscd video framos Eachofthefraroesis
data orcoprerxscd dala.rcspoctivcly.'

n e compressed
Objects ofinterestare stored using tlm same compression
comfzressseclv'idcot'caoesfrem thclicklofviewrofacarsrra
whichllasaoinilialperiodofsubstautiallynoaclivit
y intbe
tiold of vicw followed a period ofactivity causcd by an
Pceferablystorodincompressedform asablockofdalallaat
fdbleofprcferablybot?luncookwegsr.daud zrlprcxsea flle.s

anclwhicltof1hciile.slxmguscdwr
illdepeodupou wbelber
paltcrnrccogniloowillbe madcbaseduponuncom pressed
l'asasizs wsockatcd witlait.Irlprxe,

xszoa, foreachfrarr,ep
lecbniqucthatisuscd to obtain comprer

xsionofthcfrauxs>
lbusallowing formoreemci
entpatteru rocognitios'
ittsdetermiuedalslep320wberberlherearemorcfollowing
(:030) Ifas arcsul!ofllw externalpatlcrnmatching a
Ifthereare foraootberframe tbesizeofadjacentcom-
i
ndicati
onwtllcausean:lertofsometyw lobegeneraled
fraa!e.stoprocess.Ifnot,t
ll
enproce.
ss3% stopsalstep322.
pressed fralnestscornpared in stcp302.Ifthe subsequeat

frameisgrcater304 lhan thrprcviousframe by accrlain
thrmsbold,a rcad step .
505 follows lo iadicaledetection of
tht occunrnce of!heee a'.
(*261 FIG.3: illustralesseveralpossiblecxamplesof
rrlat
cllis found Lo exist,asshown by step 312.a matcb
i
n slep314.Thiscanoccurateitbercomput
er1.
2: orx rver
130.An alert can bcifor example,an indication on tlm
moaiorofasecurityguardorolherauthorityindicatingtle
i
dentily of lbe pevsoo identied by !be rxlrrzlal vauera
rocogaitioa or11x localoa oftho event orilcoultlbe an
audibl
e alcrloverawireleasradio to a'sccurityguard to
operalionsthatcan bem rformedin roacliontoli

edctectiou
ofanx cqznrneeofancvcntaccordzg l
o ancmbodimcntof
flleprescnti
nventiog.Sm ciscally,asshown inFIG.3#one
ormorc ofllre;
e possible operations306 310 316 ean be
p
for
me
.
d).5a.saresultofarleventoccuaing'msdelcrr
nined
bers
top
z(
(
31
1ygAdd
itob
ioosaell
or
t
n
i
ve
,ip
css
3*
llorws
a
s0
e0
cu
rit
uard
ry
vi
nga
:l
1e
:r
f
ia
ot
ld
ol
fyv
er
woc
of
th
ccaa
mc
aon
gxz7j Iftborewasanevonldotermined operaton3% can
:monllortotagormark anobject/personlbatcauwd tbe

claage in tl)e sizc oftlm framesr.o as lo Jxrmfleasy
bc irustituted which willcause asequcnc.c ofslillimages

obtained atsonae intergallom oacb olherthatfollow the
initiation ofthe evet)tto be obtainotl.n ese stillframes
reprcsontasigaificantrsduction from (belotalnumberof
frameselataparticularcamerahasobtaincd Bymakingthe
istervalt'
etwocnevee zui)lo 10th framo preferabl
y ovory
confrontsonwone with a ccrtain dewription ata certain

location. An cxample of an alert w111bo dcw n'bod in
tjjIqc . 4 boiow.
connectjou wi
following oftbe pcrx nmsthe person navigatesiu frontof

(he cannefa and appeaH oo lhe naonilor as shovnaby stcp
316.Differeutshapes and colors oftags can bt usod lo
dierootialclxlwcea diFerentlevelsofscrtklinytl
zatshould
beapplicdtoeachobject.Forcxample oneshapqdobjoct.
such as a trianglo,can be wwd to designate aa external
6
msf,ra
mc,oneboefotb
hj
eec
st
tit
abzitma
gesobtaiticdwulcootaiua Pa
lle
rntballzmsaMgb priority,dwb
ero.sarotuersbapea
--t>e.
view-oft
lzascausedtleincreaseinsize t'
bir
-ct-suclzas.circlecant.use.
todesignatcaacxterual
r tse compressed sauw.witb eac: stiu frame obtafned
patle:'
n 'bathasaIow priority.similarls oriucombiaation
o
*
operatiox canboNrformedvsucbastrausmittingpviacmail
orotbertraasm ission mechanism suowtziustc :* . cach
.
1?
slt
tlimage to a predelermiued Iocatioa.Ifdms
u.
e.d,.
image
recogaitioncaubeIxtrformed oaeacllsqllimage assbown
w-ittltbesbapesbeiag usecl
w color,suca asred canbe
, ol
'rcolor
uset
ltodesignaleadil
rerenthighpciorily'andanotbe
s
u
c
h
a
s
g
r
e
e
n,
c
a
o
bc
t
t
wu
l
o
de
s
i
g
na
t
e
a
d
i
f
r
t
xn
tlow.
prioriyy.
ceewsedrorextornalpater'
ntocoguilionofanobjcclsucbas
apcl
son or article,asperforamd in and described'bvstcp
r
abjectcaobeusedtocauw tbcmarkertoappoaradjacentto
'hCimaqc.Ofcourse.tbisfeltum auIxlume.
dofrifdesixd.
bystep3e9indicatingthatthestillframeshouidbepro- (08321 Onceanobjectofinterestisloc.alod,laggingtbal

:
51e detailcdbercinafler.
'
* *
fraums.n ispauernrecogsi
liontsoownastxinginitiated
FIG.4llustralesingreaterdeut
'latcdhnkuoforfac'
zlitating
I'
ollowsganimagcofanobjecr.sucbas;,pezxw amonga
troup ofobjvctsdisplayod on a moaitorby marving tl.
m
imageof(
l1eobjectont
llemonitorwitllaugormwrk-FIG.
4ilusdratelfourKrtendisplays402,404 496 4@8iawhiclz
anobjectcauwd&chaug.
cintbesizeofframest
otxctm In
c
ompresryedpexternalpatternrocogaitionca.
notxc
uron the
uncompressed dalathalisG ingsearched forl
detennineif
(
*33) Displays402 4:4 40
6 al
xl40: al
sosbow ina
torner of the disply an alcl
1& regio As dmw-ribed in
externalpattorusofsgnifo nc.
c existtberein using tochniquessucbasdescribedinU.
s.PalentApplcati
ooentitlrd
T'M e;Lf
)CXTAI
XIApparalus ForDctcrmining Pattcrnsw ftlzin
nnoction witb FIG.3 ac rding lo one embckliment a

vistllalertisgeneratedwbentbe externalpattero recogai'ikm Proce= 31l?lalprt
xlucesaafndicatioltlalamalchbas
AdjacenlBlocks of Data''lilexlon Ckt.31 2G)1 and

uwnuone.
d above with atleastone separate tuvad preferablybeingi
nitiateaforeachdiakrontcxternalpatternlhatis
OCCUfred.AEZ idfntiflesbotbtlx matchnameintMscaw a

Person'sname and (beIocation whorell)omatchoccurre,d
'bus describin: tbe idenlity and l
ocatkm oftse objoct
usqd-kooblainsearcbblockstbeexzrazlpauem isuxdlo
(*:3.
4) nus melxxl
sandapparat.sforex-zmalpatcrn
E(*2g) '
nw slep 31(j exteroal paltera reeognition ls
direuedtolxkiogforpreviouslyobtaine.doxternalpatterns
withiueilhercomprmv
ssedoruncompreac.
e,
d dataroprosonting
by xep3t)s anerax mprcsw d rramo I).sseea acted upon.

hicb Lsprefenxd for previ
ously compressed data sincc
W
T
exterual pattern recognition nee.
d not be performcd on
frames tbalhave roughly the samr size thatindicates no
motioa Ls takirw place.l:or frames tttatbave nolbeeo
bciue ,.earcl
zed for, and insleadofa referenceframe bcing
obtainRarchblockstbataresearched forin!hclargetframe.
Ofcourse,otherc'onvenlionalpatlcrurecognitionrechniques
caubeused.
scrr. dzvzlay 4:4 a'ag 4ala ksaaacbe.dto tbsimagrot

PCESOR401.AStbei
IIIVCOfPeraon4iilmovtsfrom disphy
4G4, to display 406 and tbeo display 408 tag 401 a
faciht
.alesobservancc>
ofwberctbeimzgeofpcr?
son 4th1
son
'bedisplay.
idenli
fied.
recognition have bccn describcd.Althougl

z tbe present
tnvcntion bas been doscribed witb reference lo speciflc
qxemplaryel
ntxydimcnts.itwillbetvklentto oneofortii- --
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US 2003/* 95686 Al
M ay 22y2 3
4
nary skillinthe arttbatvariotusmodlficationsand changes

Inaybematleto lheseombodknentswithoutdepartingfrom
thebroaderspiritacld stxppeoftbe invecltion asselfortb in
ttleclaims.Accocdiagly,t
hespecicalioa aud drawingsaz'
e
(o be regarded in an illustrayivc rathcrlhan a restriclive
6.n cm cthod ofclai!rl2 furtbercom prisfng performing

exttrnalpalternrecognitionon tlle lalercomprerxse:
d frame
usiag aI)extcnlalpatternaud f'urthercom prisiug generaling
ao alertwbco lhe cxlernalpattern recognition malcbesthe
sense.
exlcrnalpatlem tothetmw object.
Wc claim:
1. A mcthod ofdotocting occurrence of an evenl'!hc
mcthod comprising:
visualalertindicatng
cornparingaErstcomprcsse.d digilalframesizeto alatcr

compresxd digitalframe size in asequeoceofcom prrrxsed digitalimagc frames to determ inc whetber a
cNange in sizo existstilatis zrealcrtban a prccleter.
m ine.d amountanG l
'einsizcisgre'alerthan
ftbccban''
g
lhepredeterm incdacnoutat,usingtbatuetertnination to
inditzale !bcoccunvucooftbo ovent.
2.n emolhcd ofclaim 1 wl
xrein throccurrexeofthe
evcntisanappearanceofancw objeclin lbe l

atcrcom-
7.n c mclbod ofclaim 8 wbercin thoalertincludcs a

; j
tjer
jtjty
'
oflheI
ww objecl.
8.n em ethod efclaim 8>w hereln !healen lncludesan

audiblc alcrl.
9.'
I'
bemelbodofclaim 2'funbcrcopfisingplacingatag
onanimagcofttcncwobjectlhatisdisplayedonamonilor
sucb lbalthe tag faci
litates following lm image on the
monltorasthe x w oblectmoves on the;monitoc
18.'I'lae melbodofclaim 1 wbercin tbe firstcompressed
digitalframe provdesan im agtofastationaryscenethat
doesnotcontainmovementtbereinand thelatercompressed
digitalframeincludcsanew object indi

cating movement
pmssed fracm.
3.n emethodofclaim 2.f
'
urthercomprising periodically
selectingAfzam eiutbesequeoceofcompressedframe.safter
t
fbeoccunvoc.e oftbeeveotaod transmitting eacbselcictcd
ram o.
4.
n emetl)odofclaim 3,wbex intbestcpofperiodic-ally
occurring willdnti
m scetm.
jj n cmetj
)cd ofclaim l0. furthercomprisingperiodic
aIjy'sejectjag a frame in ,he sequence ofcomprorxsed
frame.
s afterthe occurrcnce of!he eveotarld traasmitting
each sclectod fram c
'
5 n e awtl
xydofclaim 4 funhercomprisingperfonning
exterttalpalteru recogaitionon theselcctod frafneusing an
framcs duringthe occurrcnceoftbecvent.
selectingsel
ectsalleastoneofevery 1: adjacentframes
duringtl
x occurrenceofl
heeveut.
externalpattern.
12.'lhcimetbodofclaim 11pwhereintheslepofperiodically selecting selectsalleastone ofevery 10 adjacrnt

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ASSIG
ofU.S.Origu
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W HEREA S,theundef
signed, to wit:D ENNIS L. MONTGOMERY,(hrreinattm'M SIGNOR)
has m ade atz inv> tion entiued RM ETH OD AND APPAR ATUS FO R STO RIN G D IGITAL,
VID EO C ONTENT PRO VIDED FR OM A PLU RALITY OF CAM ER AS'' for which an
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lilicatien forLedersPatentoftheUnited StatcswasfIICIIinthcUnited StatcsPatentand Tradcmark
ce on N ovem ber21,2001, undcrSrrialNo 09/991,527.
,and
W HEREAS, e'
rreppid Technologia , LLC,M SIGNEE, a colporation duly organized and
e
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oftheStatcofN evacla and lmving itsprincipaloftice and placc ofbtlsinessat
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.
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NOW ,'ITIEREFORE,forgood atAd valuable comsidee on,tlereceiptand sufriciency ofwhich

are hmzby acknowledgcda said ASSIGNOR does hcreby sell, assign and trarlsfm'unto M SIGNEE
itssuccGsols, assigns and legalrrprescntadvc , tbe fulland exclusivc Iight titlc and interestto thc
,
,
said iavention in the United Statesand allforcign cotm tri> , asdescribed in the
afoiu aid application
and to the said application and to a11 continuatiors, divisions,reissuu and substim t> of said,
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Ipplication,togethcrwith therigiltofpriority tmdertlze Intem ationalCoavention fortlte Protectilm of
ndtzstzialPropm'
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and atly other intem aonal agrtenm ts to wbicb tbe United StatO of A merica ac rres ,
ASSIGNO R h
, and
ercby autbolizrsand rrqu ts the Colnm issfonerofPatentsto issue said Letlms Patent
t
oM SIGNEE,foritsintcrestasM SIGN EF., itsm ccG sors,assiptsand lcgalreprescntatives.
AhlD ASSIGNOR hcrcby agreu to execute any papersrequ%tedby ASSIGNEE itssucccsols
,
assignsand Iegalrepl
rsrntativcs, dcem ed essentialto ASSIGNEE'
S S IIprotecdon and title in and to,
theinventionherct)
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M SIGN OR furthmm ore agrees um n request os said ASSIGN BE and without further
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rem tm cvation, to executcany and allpapersdesircd by saidASSIG'NEE forthe
Gling and granting of
foreign applicatitmsandtheperfecting oftitle thereto inSZIIASSIGNEE.

NOTE :n etmdersigmed hereby autholizes Pzlsbtzfy W inthrop L12 , oftbc above addrcss
,t
iltsertX 'theridentiscati
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ounecessafy ordcirable forrecordationofthisdocum cnt
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Executedo
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Date Signed
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(12)U nited States Patent
(10)PatentNo:
Us 6,978,047 82
M ontgom ery
(45)D ate ofI*atent:
(54) METHOD AND APPARATUSFOR STORING
6($43897A
DIGITAL VIDEO CONTENT PROVIDEII

FROM A PLURALITY OF CAM ERAS
D ec. 20,2005
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FOREIGN px'
rjyN'
rIIOCUMENTY
(21) Appl.No.:09/991,527
EP
WO
w o 94/22072
0729237
8/1996
(22) filed:
WO
WO97/602
2/1*7
Feb.22,2002
(65)
PriorPublicationData
US 2003*161539A1
(continued)
Aug.28.2003
oTgjjm ptysj-jcr oNs

Ageenko Forward Adaptive Modeliag for Cootext-Based
Related U.s.Applicution Data
(63) corl
tinuation-in-paf
tofapplication No (19/727(196
.
filed on Nov.29 2000.
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Referencu Cited
5
5N :932 A.
17.71996 SnmselaI.
9/1998 Kawaslkima
870.087 A
2/1999 G au
5,892.966 A
4/1999 Petrick
5.901,246 A * 5/1999 HoG rgetaI............. 382/209
,
G011,
901 A * j?.
l@
Compression of Large Binary Images in Applicatioas
RtlquiringSpatialAcccss IfnageProc. 1999 ICIP 99 Poas

1999 IntelConf.onKobeJapanOct.24-28, 1999 IEEE pp.
757-761.
lcbntinuex
.
Primary Fxtwuner-loseL.Couso
(74)Auorney Agen, orFfrzn- pillsbury m nmrop Shaw
Htbman LLP
(57)
U S.PATENT DOG JMENTS

4.841,3% A
6/1989 Icaugirietal.
5,533051 A
7/1996 Jamcs
5.583/62 A * 12/1996 Birchr.tal..................7:
15/151
5.586,2% A
9/1994
Kirsten .......................3+ /1:

23
AKSTRACT
n e prmsentinvention pcovides a distributed survcillancc

system thatallows forth:'
digilz.lstorageofdala,aswellas
lhe rccognition of extornalpalleras obtaiued in parallel
ojycralions. Furtber.di
gjtaldatac-an be stored atdiffcrcnt
jevels ofcomprcssion, and paltcrn recognitioa achirvcd
whil
eI
lx digitaldatais stillin itscolupressed form .
.
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Page 66 of 101
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US 6,978,047 B2
Page2
wo
WO
wo
FOREIGN PA'
FENF DOCUM ENT'
S
InBrief:ucompetili
veParallelProcerxsing forComprerxsion
wo 98/39699
oiDalae
',l%'13sTcchrlNotcs,(May1990).p.379.
wo (*/45516
w o 01/20489
9/1998
8/20*
3/2* 1
Stiller,f
'Fstimting Motioain Im ageSequencesinTutorial
On Modeliug and Computati
on of2D M otionn IEEE Sig.
OTHER PUBLICATIONS
Proc.Mag..16:4,(Jul.1999),pp.78-91.
Bsbouly e!al.y<'compressiollofDicti
ouaricsviaExtcasions
t
Fro9
n2
tCoding,'*Computing and lnfonnation. 1992 Proc.
IoCCI
h lnt'lConfmTor
. 4t
ontoCanadaxMay28-30,1992),
.
I
EEE
Co
l
n
pu
tSoc,US,pp.361-364.
C
han,i
<eview of Block Malching Ba:,
OCIM otion Eqimalion
Al
goritbmsforVidco Comprcrxsiou''
.Elec dComp
Eng, 1993.Canadian Conf- vancouvcr.BC .SMep.
14-17.
.
1993,USA,IEEE,pp.151-154..
Dufaux, GMotion Estimation Tecbniques forDigitalTV:A
Revicw andaNehvContribution''Proc OfIEEE 83:6(Jun.

1995), pp.858* 5.
' >
llaan.Rprogye;
rx
sinMotionEstimationforConsumerVdeo
FormatCorlversionv IEEE Transactioa on Cors Elecl.
'
*
46:3,(Aug.2G:)).pp.449-459.
Hsu,uAutomaticSynlbesi'
sofCompreasionTechniques for
HslerogcneousFilts''Softwa
vePrac.Ar)dExp.. 7
w5:1()'(Oct199$.p.1097-1116.
I
nBrief:W .51UniversaiNoiselessCodcrsN'
H STechNoles
(Mar.1990),p.2M .
.
'
Yokoyarna, uw ry j-ow yjk: Ratc vl
x o coding Using
Arbilrarily Shape.d Reson-Bascd Motion Comm nrs
ationJ',
IEEE Trans on Cirand Sys forVideo Toch 5:6, (Dec.2,
1995).pp.5* -507.
('han et al., K'Review of Block M atcbiug Base.d Molion

LstimatioaAlgorilhmsforVidooCompressioo:y''IEEE.vol.
j7(No 93) p. pp.151.154 (sep.14,1993).
I)o uaa
'n Jtal
.su<zProgre
'rxsiuMotiolzFstimation for
corksume
rVi
:deo FormalConversionnxnIEEE. voL46(No.
3),P.PP.44 ..4
59.(Aug.z(o)). echuiquesf
Dufauxe!kal'uuM()tjoaEsjioatiouT'
orDigital
TV
butionq'
'IEEE,vol.85(No
6), ARovcw an(jajuw conlrj
p
.p
.
58-875,(Jun.6,1995).
'
'p
o;
.
<F8
Still
erv
-slimating M otion irjImagr Sequences,
.,,,jpxs,
x 4)
vol.16( o. ,p.
p
p.
.
y
t
l
f
j
j
,
(
y
uj
.
1
9+
.
4.
YokovaaetaI.uaveryLow BlRatcVideo Coding Using
Arbitv
rzrilyShap'
ed Rcgion
ba
s
ed-50
Mot
i
oIn
Compe
n9s9a5
ti
o
n,'m
Ijyjys vol
.
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)
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Figur: 2
US 6,978,047 132
1
M ETIIOD AND AFPARATUS FOR STORING

DIGITAL VIDEO CONTENT PROVIDED
FROM A PLUM I-ITY OF CAM EM S
descriptionwbichfollows. w ithrcforenc.elo tbsdrawingsby

wayofnon-bmibing cxemplae embodimentsofthepresenl
iuvention wllerein Ekcrcfeceocertumeralsrepreseutsimilar
partsoftbeprcsenlinvenliontbrougbou!scvrralview.s and
'
fllis applicati
on i
s aconhjnuation.i
n-partofU.S. appl- s w bcrein'
cationSer.No.09/727,
096cntitled uMttbodAndApparatu.
s
FIG.1 illuslrates a block diagram oftbe digitalvicleo
Fov Eocoding Itdofmati
oq Using Mtklti
ple Passes Aml umteltstoag, system according to ttm prese.
nti
w euti
on
Decoding In A Single Pas''hle.
d on Nov. 29.2tXX).
aud
FIG.2 ilyustrales a block diagraf
n ofx ftwaremodeles
FIELD OF THE INVENTION
10 used by dlTcrntproce&sorsaccording to the presentinvcnlion.
Tbepresentinvealioa telatesa nletbod and apparattlsfor

sloring digitalvideo contentprovi
ded from a pluralily of
camras.
BACKGROUND OF'
ITIE REI-ATED ART
s
urvcglancecamerasam extremelywellknowoanduscd
toI
belp detertbc'.crimeandtbclr
ke.
DETAILED DESCRIPTION OF THE

PREFERRE'D EMBODIMENTS
15
n epreseplinvontionprovidesadistribuled surveillancc
systcm and methodsofusing thesystcm . Fealuresincludcd
are digitalslorage ogsurveillance information tloth viszal
aridaudible.
pms
attcof
rnsr
ercvecjtni
tn
io
ffe
cma
te
sile
wif
le
hnt
in
tisalso wellknown to store asasequenc.
eofimageson :0 oblained strea
u
lla
cn
eo
in
oxt
rlua
tiol
npa
frt
o
mrnd
somctypeofcuedium tt
ateventtha!tbesurveillancecarncra sources distribuling extemalpauemslo variotsscomputer
is recordiag.ConverltiouAlly,s'
uch storage has been done locations where sucl
z exlernalpattelus can be used for
using VCR'S and st
oring 1h<:images obtained from thc scarching inl
erpreting automatically patlerns ofrcp.etitivc
eveuton a tapo.Such a storagemcdium however hms the activityanclgcneratirlg reponstberefrolu dislnbutiug indidisadvantage ofrequiriag the frequenlremovalofafld old 25 vidualimagestba!are automaticallydetermincd lo contain
tape and insertion ofa new tapc every few hours which
a particularimagcofiutorestcstabltslliug pattcm rqcoguiwhenmanycamerasarcboinguscd i
salimecof
rmmingand tiou ru1es lo delectactivity ofintercs! as wellas others
tcdiotus procer
ss.Furtber disadvantages occuf sir)ce it is descfibed hereiD.
diKc-ultto aulhenticateth<recordingstoredou(hclape. St
ill
Thepresentinventionisimjier
zmnte,dusing acombina(uttl
m r,asarcsultoftapez
sdegraddgovertime,aswellas so tionofhavlware.and softwaroelemtnts.FIG . 1illustraicsan
then typicallybeingplayodback onaplaycrdiferenlfrom
exemplary systcm 1(h
0 according lo thcprescntinventiou,
t
hatwhich recorded l
he tam ,the:resulting scquence of aod variousdifl'
erentdevices lhatwillallow forthevarious
ima
gesmaynotbeclear.
permulalionsdescribed lmrein tobeundcrstood, although it
'
nm storage of imagea obtained from sucb cvents in ksunderstcxxlbattbiscxcmph7 system 1(m shouldnotbe
digitalform hasalso been coatemplatcd.Ins'uch asystem . 3s coastruedaslimitingtbeprescutmvention.FIG.1illmstrates
imagtsfrom tl
w evtntrecordedby thtcameraarecouverted aplurality ofcoaventiooalcamcras 110- 1to 11:-a aualog
lodigitalform and bavobcencomprerxsed in somemanncr ordigltal eacb ofwhicb isconnected toa computer120-1
sucb asusing tboknown MPEG formatTo date however lo 12-m and preferably containssystemsfordetecting both
sucb systems havc notproved feasiblo for a variety of imagcs and souacl. n e connectiotts lxtween tbe cameras
reasons.Iu simatioas rcquiring Inany cameras siroulla- 4: 110 and the computel
s 120 can be maay being rzlowa as
neotusly tbc bandwidth roquired as a resultof a1lof the bolhconncct
ed in aone-to-onecotrcslxmdencr aswcllasa
camorasbeing tlscd basprevented storageofimagcsover& nurnl
x rof lho cameras 110 being connected to a ingle
period oftime llatislong enoug,h andwticbhassumcienl computer129.Furthtr..acompulcr129 isalsosbowns
asnot
resolutiontodecreax theoverallcostofinformationsloragc beingconnectcd loany camerax to illustcaltthatdigitaldata
to apointthatdigitalstorageLseconotaical.
4s stored in any digitalform atcan be oeerated upon by tllc
ooe conventionalapproacb to tbisproblcm Ls to tvgin
preselz:iuvenlion sucb asbeing storedon acom puter-
rocording whenmovementofsometypcisdetocted so thal

Tbecompulels 120 areeaclzprtferablycoupled using a
otbelwise stillimagr,
s are.notconlinuously rocordr.
d I
llus nctwork150 ofsomelype;
cb asthc Inttrrmtor:privatt
,su
reducingtbeslorag,orequirertmnlsncczrwsaryforoperatiouof actwotk to aceatralRrve1M . Eacboftlx compvtter-kI.2: the system.Usageofsucbeventinitiation indicalorsirllhis 5Q and lbe cameras 110 coanecte
.d t
bereto carlbc in any
manser intrcducc problecas of their own sucb as for number of disparalc locationrn W hilc tlx comput
er 120
examplt:
,nothaving acontinuousrccord.
conncctcdtoacamcra.110 &repreftfablywitbin orclct
.z t
o
Ao immove.
d suweitlaoce system istbusdesirable.
be samebuilding in ordcr lo minimize tbe distalxx lhat
signal
sfrom (becamera1.
1(1mkls!lraveluntillheyrcach l
he
SUM MA RY OF THE INVENTION
r.
s compuycr121), the camerascanbeon diflbrenlfl
oorsoftlm
samc building,arld lhccompulcrs 120can bcwitllindiserTbe presentinvention providesaJislri
but
ed survei
llance enlbuildings. And wlzizc tbesystem is illustrated forconsystem tha:allowsfortbedigitalstorageofdata, aswellas venenc.
ehereiclashaviug as'inglecentralserver130 itw111
tbe recognition of extcm al pattems obuined in parallel btapprcdatr.d tlzatanyorallofthecompuzrs121)couldbt
operati
oas.Further digilaldata can be st
orcd atdiFerenl 60 configurod to zc'
tas thc ceutralsew erdescnbcd heren. lt
levels of compression alxl pattern mcognition actzicvcd sbould be undcrslood however thatitisadvautageous to
while thedigitaldataks stillin itscompressed form .
haveLbecenlralR rver130alalocationthatis.remotefrom
1belocatioowherc tbcsurvcillaoceisbeing porformod and
BRIEF DESCRIPTION OF '
IM E DRAW INGS
eveo rnoreprcferableto have tbatremot: lcrati
on I
x ia a
'
n
65 physicall
ysepzratebuildf
ng.Intypicalopsflljpnzaplrticuw aboveandotherobjects,fcatarespandalvantagesof 1arcompanycnayhaveitsownservcr130, and.it'des-i'
r.
e
- '
the prcscnlinvcntion are fudhcr descnYed in lbe delailcd
'
each ordiTcrentsereccs l30 can bc connectcd logether

Page 70 of 101
(
M z
'
US 6,978,047 132
3
through the network 150 to permi!shadng ofceruindala
tbcrebetwcen.In tbe;df
scussion tbatfollows howevcr ll
xc
systcuz 100 v/illbc dcscribcd vzitb rrfepzncc to a singlc
server130 wNich catlservcramultitude ofclifferentcompanieq;pLo illustrate tl
w mostflexible aspecl
s ofthesystem 5
4
l
ocalmulli-pa.
ssmodulc 210-3'
l
ocaleocryption/dccryplion module 210-4'
localserinlerfacenaoduIe210-5'and
Iocalpfiority dztastorage mcdule210-6.
M oduks 21t)tbatare typically contained wilhin and
1.
*0doscribed herctn.
operateinconjunctionwilhthesefver130arc:
a DSP in coajurml
ion with program imstructioms thalare
typicallyassociatedwilhasinglecompany.MIIkoeptrack
to tbepresentinvertlion.n eprcsentinvenlionalso i
ncludes
camera wltiehcaninclude ootoolya localionthatitviewq
Furtbermore as illuslrated avadely ofolbercomputels

netsvork pattcrn recognition modale 210-12 wbicb as
141 1 te 140-5 each conlaining a monilor142 are aiso
described bereitlafler allowsfortyotb internalpattern
illustrated as being couplcd to the sen'er1M through thc
recogrliLion and exlernal palteru recognition and
nelwork 150. Data reccivcd by computcrs 140 can bc 10
includcsuetworkpriorityinformation evenlalertgerldccryptcd &ud decoded forsubsequcntusagc suchasbeing
eralion andrepctitivcaclionpatlern analysisandas<x)perceived visibly using Inoaitor 142 and audibly using
ciale.d rem rlgeneralioo asdescribed bereinafter'
speaker144show n.
network m ulti-passmodule 210-13'
ARais palicular cxcnlplary systonn 1@0 lhus alloxzs lhc
nctwork cncryption/decryption naodule210-14.
camerms110lo provideatl
eastimagespandsoundifdesired 15 nelwork interfacemodule21.
8-15.and
whichcanbe encoded and storedforsurveillancepurw ses.
nerwork priority dalaMorage rzzcdule2111.6.
n isdatacanbestoftd irldigitalform onacomputerl20or
Each of lhe modulcs derrribed above will bc further
a compuler 130e sdcscribcd furtherhercinafter.Furlher
discussedso tbatopcralionofthe systcm 1* isunderpatteraswithinim agcsorsouodobtained froracameras110
stood.
thatcompareto oxlerualpaltornscan al
solyoreoognize.d as 2: Local front end prx essing modulc 210-1 local uscr
willbe dcwrilyed furtborhertin.using ritherthe computcr int
erfac.emodule21.
0-5.and networkinlerfae.cmodulc210120 provided with ltlcimage dalafrotn thocamcra110 thc
15
scrver130 orhltlz.
n c localfronlel
)d processing modtzle210-1 l
ocaluser
Traosmiasionofdala betweeueachc'
omput
er121)or140
interfaccmodule219-5.and x tworkinlerfacemodule210and w rvcr130 Ls al
,
x preferably oncryptod,asdescribed 25 15V IIfirstbcdmscrilxd.M dev ribcd gencrally abovc.tbe
furtllcrhereinafter.Fordata tralzsmittcd to computers12e
surveillancc sp l
em 100 according to lhc presentinvenlioo
140 orserver130 the data isdecrypted in orderto operale
alows forrtcording devicess lypically cameras110 lo be
on il.
placed atvarious locationsassociated with abuildi
ngsand
W hile thc abovc network is provided to illuslrate one
allows for buildlngs at disparale locatio% to be served.
manncrin whicl
z the advanlages of 11
x presenliavention 3: Accordingly,in the preferred embodimen! each building
described herein can be used, tllis is exemplary. Fof w111contain atleastone loclcomputer120 althougb lhe
example.each ofthediFereutcomput
erst20 130and 140 nttmberoflocalcomputersneeded willvarydependingupon
could lye im plem ened as a single computerand dcvices
the amount of procmexsing powcr de-sirexl relativc to lhe
ot
hcrthancomputersthatcontainprocesc
s
olsthatareabl
c to nutnberoftecordiug dcviczs and otber prorxsing operaimplcment tbe inventioas descrlxd bcrein can bc used 35 tioasthattakeplaceattbelocation itsclf.Intbisregard.tbe
instead. Many othcr varianls are pouible.And while a localustrinlerfaccmodule219-5 isused tosetup and keep
devicesuchasmeutioned willtypicallyincludcaprocesx r trackofconncctionsbetween camcras thatare includcd on
ofsome type,such asanlnlelPentium 4 microprocessoror the localsystcm.'
n us a single local itlterface 'mcxiulg,
writtenbasedupontizc:teachingsberein otherbardwarethat 40 of compatly informali
on camera information and uscr
implemeotsllx prcscntinvcntion can also betlsed sucb as informalion
an licldprogrammablegatearray.n e program inslnlctions
Company informalion tracked wiiltypically ioclude the
are preferabl
y writlcn in C++ or some otber computer compznyname,and thoaddres'
siufonualion foreachbuildprogramminglanguage.Forrcpetilivcroutiuc.
slbatareuscd ingofwbichsurveillanco isrcquired.
repeatedlyptbese can bc writlen in assembler for fastcr zss Camera information thatis associated with a particular
processing.
building,includes1Ne modcloftbe cam era a camtrzpriFIG.1 illustrated anddescribed previotusiy,describmsthc .ority,acamrra i
dcatifierthkatcan beuscd bybothlbelt
xml
bardvzareclenaGn? ofdaesurveillanccsysten11:0acccidiag system zs vzellas lht nepeork systena the 1ocation ofthc
H ftware2% tbatisresidcntoueacb oftbecompute.
rs120 sa butreference t
o :parlicular activity,such as a particular
and140,aswellaslheserver130.to?rovi
defortbevariety
gaming table numberin an cmbodimeutformsage ala
variousmodulms210oftlm soflware 2@0am msidenlou

difrercntcomputerw tberebyallowingfortl
)cfunctiousas
gaminglable,auoperationstatl
.
usidenlifier(fuoctioningot
out-of-servicc) andacamerapurposciderltierwhicbcack
of functions dmscrilxd hrrein.Itwlllbe apprecwialr lhal
casino agaming tym identif

ieriftht cameratsuscd fora
dewcn-bed berein lo be achieved.

55 be fortxamplcintbccontextofusage atacasinopwhelher
One aspcct oc soflw'
are 7.0: Ls that the mcxlulcs are thec'arnrraisusr.
dforgamingornon-gamingpurposes.How
preferably comprised offunctionalitics lhat&llow interop. theseareused willbc furtherdesclibed hercinafter.
erability therebetwoen,as discussed hcreinafter.n atlhis
User informalion identmes user.kwho can accer.
s the
interoptrability Ls porxsibl
c will become apparcnt in thc systcm,and lhc dcgrre of access tbat tbcy havc lo !he
diwussion tbatfollows.Inthisrcgard asshown by FIG.2. 60 smtem.Ctrlaiouscrsw111havcvicw accessonlyywbichmay
modules210 tbataretypicallycontained within and operate beofoslycertainviewsorallvicws wbileolbcruserswi
ll
iuconjunctionwithlhecomputcrs120are:
localfrontcnd processing module 210-1;
haveacceasIo makecbanges nm rcports,and tbe h'keas

described furtbcrbercin.
local pattern rc gntion module 210-2 wbich as

W ith respeclto tbesel-upofcachcamcra lhe indidddal
described bereinafler allows forbotb inlemalpatlern.65 camtra 110tl
otol
zly I
mecl
sto beset-upacdcpylaqcl
llFjth
recognition and external pallcrn recogaitiof
l as 1hesystem usingthe localuserinlerfacemodule 21:-5 but
descrined hcrcinafler'
aLso needs lo be conhgured to opcrate properly. ln dbi
--

US 6,978,047 82
5
regard tbe local front end procersi

ng module 210-1 ls
Dilferencesbetiveen tbe lcxzalpattera recognition modulc
prcfcrably uscdto propcrly conhgttrclhccamerato opcratc 210-2.1nd thcnetwork pattern rccoP ition modulo 214-12
aseTectively as itcau.Conguriug lhe individualcamera cxist OIx signifi
caaldifference,typltzally.is thatwllile llze
11@ usmg1heloca)userinterfaco module210-5 Lsdescribed
localpatlern recogaition module 210-2 lypically operatcs
inU.
s.patentapplicationSor.No.09/991.528filedNov. 21 5 upoauncompresrddat
aasdescribcdinU.S.applicatotlser.
2(x)1catltled '
xMeltt
od Arl
d Systcm Fo:sizeAdaptationAnd No.* 1999 116sledonOct. 31 zO lcntilled nM ctllcxlA:d
storag,
c Mickimizatiou rsourcc Noise correctioo And
Appaatus For Deterttkilkirkg I'attoros witl

un Adjaczot
sourcx watermarking OfDigitalDataFrames'' which l.

s Blocl:sOfDauoreference above the network pattern recassi
gk
aea to tl
w same assigncc ast:c preseutinventiou- thc ognition module2le-t2 win operate upon data iu a comcontencs of wtucb are horcby expxssly incorporatel by lo prersod form .
reference hcrein.
specmcally,ll
w netwo:k palternrecoguiti
onmodule211).
x e loca!userinterface moauu 2lg-s is alsocoafleurcd
12 krz.
n operate upon uatatbatbasbee.
n voosiuenuy comtotransmitt:einformatiourelatinglot:elocalsystem tolhe pressed.Compre
-ssou ispreferably aclieve.dusing theteclzniquesdescribcd in applicatioo scr. No.09/727,
network inlerface moduIe 21(>1s.Itisunderstoca lhatthe
096 entitud
oetworltinlerfacetnodulc210-15willpreferablycontainthe 1'
5 'MtsthOdAnd& paratusForEncoditlg Informalion Usirl
g
same information s exists with respeclto each difkrerlt
local user intcrface modul: 210-5. Jn addilion,sirlce ttle
Mullipl
f.P'
km/And Decoding In A Single Pasr ltd on
NOV.29,2iKO.ln tbiscompression scbeme asnoted iu lbe
nctworkinterfacA modulo210-1Srexxivcsinformationfrom
SCCEOEIE'
CIOW%recorded datacanbosubjecled lo multiple
mOdule2l0-1slogelberanow foraccesstotlx resultsofthe
n e nttwofk interface modulc 210-15>in conjunclion
interfacemodule210-5andnetwr
orkint
erfacemodule210
15vas mentioncd atxnvc the 1oca1userintrrface module
parti
cular,anutcrualpattem willrepresentatlobjecl'wbich
objectcouldbetlm faccofaperson,aparticulararticlesucb
flkrenlcomput
crs120,tbenetsvorkintefface
am uItitudeofJi
PWWSt0 K I
G VC fuftbe.
rcompreKi
on.
module 21:-15 win al
h lhe l
ocalpattern recogaition module210-2 aod lhe
so include network related feamres, 20 Bot
suc1)asnetwork establishmontofnetwork exterau pattoms networkpatlel
'nrecognitioncaodulez10-12alsoprovide for
dGSired forpatzrn rocognitiou asdescribc.
d furtbcrhcrciny 'be fecor ition ofexternalpattcrns witbi
o imagesthatarc
networkcamefapriority rulcs.networkback-upprocedures, CxtCTEIZIIY B'enfrzle'd' SO tha! extem al patlerns can be
aad aetwork rGportgeneration.n emznnerin wvco tbesc delcctcd ircespoctive of wbich amouatorcompreasion Ls
VKiousIocaland networkf:ature,
s m'
cimpleuxntedwillbe 25 tlxd,a.
'
inoted in furtl
x rdctailbelow%11 rxlerrlalpalleras
described uexfnafter, butits
vin I
aeundcrsr
'
aodlbattbeIocal arestored ateac.bofll
x differestlevelsofcompressontlzat
user interface module 2l()-s and the network interface eusj.
operatioas pedbrme,
d by tl
w otbermodulcs21f
)described with tbe localpattern recoguition module zla-2 and the
l
aereinaftes
30 Detwork palt
orn fecogl
zition l
ncdule 21:-12. Ls used lo
W1t13resped lo localaad Izctwork cam ea priority rtles identify and keep lrack exterualpatternsdesired forpat
lern
lba ate for conveniencc discussed witb tbe local user recognition and tlm priority of tbatextem alpatter'n. In
-
210-5?whon sottingup acarnera,willeslablishapri

ority of 35 as a purse,card,a vehicle or a vehicle license plale.
thatcamera,wlliclkprifxity FZEe.XXI/catktakemaqytliKoett whatovor tbe object,1he presenlinvention %111store a
forms, one bcing a 0-10 pliority,w11.110 being tlm bighcst reprors
entationoft
hatobjeclandcompareuscthatreprcscnpt
iorily and 10 being lhe lowestpriority. In additionlolhc lation to compare witb pallems tharare witbin tbe image
localprioritystzlting. tberemaybeanotbcrnetworkpriority rect
xded.
seltiug, thus cfksuring tha!cerlain lypesofdataare lrans- <) A limitingf.ctofinttleabllilyoflhe system 100 to lrack
ternalpaltcrnsLsthatlhesystem 1.00Lsakcady obtainisg
mittefl from ttm computev 12: lo the server 139. n '
us e
dx
notworkcamerapriortyseltings al
soexfst'whichc.
a
ause1he d lafrotnvariouscameras11(jandcompressingtbatdataas
networkintelfacemodule210-15 toinitiate lraasftrsofdata
mscribod abovo.In or
dsr to Iyorform lbatlask alone>subfl'
om certain camers 110 ata Mgherprorily tban otber st&alialprcu rx
sing powcr is roquired'leaving oaly somc
cameras 110.
4s Iycrcootagepbasedupon the compuling poweravailable' to
LocalPAucl'
nR
tion
Mo
dule 210-2 and
Nctwork Patternegn
Rtcoign
itio
nM
cdul: 21112
track externalpattonxsofobocts.'
thtm thenetwork intctfacemodule 218-15 willkeep track ofthepriority ofeacb
cxtmmalpattorn thalwilllx x arcbed forbascd upon the
i
nputfrom cacb camefa 110. Certainoftbehighestpriodty -
n
stl cxtefnalpatlerns are distributed lo computers H 0 in afs
e localpattol'
n tecognition modulo210-2 and nctwork urtcomprtsse.
olm.ttsiag a sumcitmtuttmlx.
rofpoints,
paueru recognili
on module 210-12 each provide for (he 5uch as 25ydth(
al allows forw Kcicntly accurale paltem
c:pability lo recogaizepatteraswithin datz.Typi
cally
tectioninvectorform using(x )ol
dztaincludesimagedat:tbatisformattediftframms.Pat,trtrhuast de
setsasisknowna for
attern rccognitiosthattakespla.cy
eusi
P
ng anotberproccuor
rocognizcd include patterns within 11x dala as wcll as 5s tkread fortbrp
ofsearcbing foraparficuhrpattorn,
cxlernalpatterns thatAre extemally generated and bring ase writx.dioU.
S.application Ser. No.(1W999y776 $8e.
d on
scarchedforwitbinthedataaasdescrj
'
bedfurtherhereioafter.
oct.3l,z leutiged -Me4NGIAnd Apparams ForDcter-
80th tbe 1oca1pattern rcoguition module 210-2 and
nmtworkpatttm rocognitiooInodule210-12canuseavariety
miaickgPatlerasWithinAdjacenlBloclcsOfData''rcference
atovc. Lowerpri
ority eztem alpatterus are relained on tho
ofpattcrn rccogaition leclmiques.butprcfotablyusepattcrn 60 servor130incompressd foau and arescarcbe.d forwitlzin

rvcognition tectltdqur.szsdescrite in U.S.applicationNo.
9
1999776 tntitledffMetbtxlAndApparatus ForDeterminingPatle
msWitNinAdjacentBlocksOfDzta**CLI:.
CIonOcL
31,2(m1.whi
ch is assiglmd to the samo Arsignec as tht
tbestrver13B in beimanocrdiscussed above.

Since the compulers H 0 arc lypically operating upon
rcal-time iuzage.slbatarc rcceivod itis apparenttballhc
externalpatleraslocatedbycomputer.s120willbcobtained
p
invceompr
ntione
,rcanbeused toperform patterurewgqi- 65 moy quicklythanexternalpalternsfpund py jlyel4#!,
tir
oensen
at
ad
ssion.and lbo contenl
s of wich are
' '' whlcbtxternalpatternsnoednotbescarcbetffor'inreklli'
uze
'
exprrasly incorporatedby rcferencehereirl.
Ifhowcverthecomputer12(hcannotcompleleitssearchfor
.
'

Page 72 of 101
i
.
US 6,978,047 132
7
externalpalleras,ilwit
lsonolifyscrver13t)wl
aichwillIhen
prefcrably search for all dcsired Gxtema1 paltcrus and
assutue tbattbecompulcr12f)did noll
ind any.
recorded atoneofl 7, 5.10 l5or20passes. tlxnexlem al

paltcrnsmustt
x obtaiocd foreacbof1. 2.5,10 J.5 al
d 20
passesaso tbattheappropriatclycoizlpresxsedextcrnalpattern
Ogyeralions using paltern detection,whetber usiug the
caobeusedduringcomjarisonoperatioasdepeadingupoa
Aud ApparalusForDetermiaing Patferrm WilhinAdjaccnt
LocalEacrypti
ockmccryptlonModuie210-4and
pallecfldetcction techaiquesdescribod in U.S.application 5 (he com prmss-iou ofthelmagc.

Scr.No.09/999,
776 flled onOcl.31 z lcntitledxtMctbcxl
Blocks OfData- refcrenced above orotberconvenlional

Nctwork Encrypti
on/m cryption M odule210-14
leclmiquesarefurtberdescribediuothcrapplications.These
applLcati
onsincludeU.S.patentapplicalionSer. No.* /990 1(
) '
IYc Iocalencryption/decryptioa mcdule210.4 aud aet868 l
iledNov.IQ 2001enlilledifMcthodAndApparat
usFor Work encryptiou/decryption modulc 310-14 eacb rerform
Delectiqg And Reactir!gToOccttrreucr OfAn Event',U.S.
lhc same funcliorls- encepting and traesmittiug data lo a
pateutappl
icationScr.No.09/991490 fue.
d Nov. 21 2 1 source deslinalion aud rtceiviug and decrypting dau lhat
entilled '
zsystem And Melhod ForGeneratingAlertCondi- ha'
sbcenpreviouslyeucryptcd andtrarismitted. W hilt many
lioasInA surveillanceSysttm''aud U.S.patentapplication 25 cncryplice decrypti
ontechniquescxistsonetechniqunthatis
Ser.No.09/991.531 tiled Nov. 21 2001 eutitled 'TDal& advaatageously implelneatcd isdescribtd ittU .S.applicaGalbcring ForGamesOfChance'' cach oftber.
e applica- tiou Ser.No.09/823278enlitled zdMethod And Apparatus
tiocksbeing assi
et
zd to the samr a ignee as thc pmscnt ForStreaming Dau Using Rotating Cryptograpttic Keyrsn
inventiow and lhe conlents of eacb of lhesc applicalion f
il
edon Mar.29 2 1 andssigncd I
o lhcsamea%ignceas
being expreasly incorporated by referencc l
aerein. Each of :
,(1 he preseltinvcntion tbe contents ofwhich are expressly
thopalternrccojnitiooo&rationsdmwnlxdinthcscapplicltioos can lx kmplemented by tlle system 1% dmsclibed

herein,if sired.
I-ocalMulti-parx
sM oclule 210-3 and Network
M ulti-pasx
s Module290-13
25
irtcorporaled byreftronccherein.
LocalPriority DataSl
orage Modulc21:-6 and
Nclwork Priority Dau Storage Module 210-16
Tholocalpriocitydal!storagemodulc210-6 andtrts
vork
priorily dalastoragcmodule21:-16 keep track ofthedata
n e localmuli-pass modult 218-3 and netwovk muhi- stored on eacb of lbe computels 12: and server 131
),
parwsmodule210-13 operateloprovidcfurthercomprcrxsion respeclivcly.'
Theseprioritydau storage modulesarcdiFerfrom thatobtaincdby 11
x localpattcrn rccognition modulo 30 :nttbandatabackup and assumeawolsl-caserccnaiotbal
210-2 atld networkpattern recognitionmodule210-12. n al no data backup bas occurmd. ln esscnce,botb the jocal
furtbercomprer
xsion Lspreferably achioved tusing the tech- prioritydatastoragemodulc210-6and Imtworkpri
orilydata
niqt
lcsdewribed i
n applicationScr. No.* /727 096el
gitled slorage mcdule 219-16 operate in lhe same malmer .
--lo
GM.
ethtxlArld Apparalus ForEncoding Information Using kttp tbatdalawhicb is mostimportant. Specihts on how
Multiple Pasw.
s AtltlDecoding In A Single Pass''filcd on 3s data is differentiatcd and these modulcs om rate aro
Nov.29,20(
X),and a igntd to tbe samc assignee &x;the dmscribcdirtU.S.applcali
onSer.No.09/991487 sledNov.
prexnlirlvention,thecontentsofwbicb arecxpresslyincor- 21. 2(X)1 entitlod 'Systtm And Melhfxl For Managing
porat
ed by refcrence hercin orothcreacoding/decodirlg
MemoryInASurveillanceSyslcrn''andwhichisa knodjo
processes.
tbesame aasigne.
e as tbe prers
entinvcslion tbe contents of
w hile eacb of the localmulti-pass module 21:-3 and <) wbich areexprcssly irycorporzle.d by reference herein.
network mulli-pass modul
e 210-13 can bc consgumd to
A1so,each localuserinterfacemodule 210-5 cmnojxratc
operale in tbe same tnanner typicaly thatis uotthe case.
ifnotconnected lo tho nelwork wilh thercsidentsoftwarc
Rather, typically, lhc Iocal mulli-parx
s module 210-3 Ls conltlmingtoperform thefttnctionslhalitlypim llywould in
conguredtopcrformsomepredrtermincdnumberofparxses conjunction with itawxi
ated computer 120. Tlx data
on 1
b0datatl
iatitrcccfvesinordertopartiallycompreasthat 4s saved should prioritizing bc necesxsaryywillbe in accordata Ix fore itis transmitted by ttle cornputort20 lo the dance witb thepatentapplication referred lo in tbeimm eserver13eforfurtbereperations,includingfurtbercompres- .diately abovcparagraph.
sionoperationsperformod by the nctwork multi-passmodule210-13usingft
lrtberpasscslofurtbercompressthedata
OtlxrEnvironzxlenl
s
- ln thisrcgardaitispreferable tha!eacb of:he localrnulli- stl
parxsmodule.
s21.
0-3usingtbesamenumberofparx
sesaadthc
n e survtillance system as described herein describes
samccomptcrxsionroutinr.
s so thattl'
lcdata receive,
d by thc security in tht contrxtofacasioo wbich includesgam iog
scrverand furtheropraled upon usiug tbe network multi- lables vaultareas and othcrcommon arcas requiring surpass modulo 210-13 is alrrady coasislently comprtased
veillance. ltw111lx undersltxxl bow ever, thalthc preseut
belween tbe various sources from wlkich itreceives dala. 55 inventioncanbeimplemente.
d itlanyenvirontnem reqtdring
n us,asisapparent,tlm network multi-pars mcxlule210-13 sccuriyy, including tinancialinstitutions largt commercial
willpreferably contain additionalmulti-pass compression buildings, jcwelrystorcs.airports.and thelikc.
routinesnotfoundintheIocalmulli-pa.
ssmodules210-3lhat
In cortain buildiogs, aiqxlrls aud tbc like therc c-an be
allow forfurtherpasmsto cur. Typically,passcs l and 2 variousIevtlsofsecuritycstlblishcd atvariotlslocations.A t
areporfort
ncd by thecompul
cr120 wlxreasfurtberpasses 60 anairport. forinstance the inilialgalcentry arcareprcsenls
are p6l
forme.
d by tbc.server 13:.Furtber since lhe more one l
ovclofsecurily and tbe aclualgale can represenl
compressionrequesledthegrcatcrlbonumberofpasse.
s and anotber Itvd of securhy. ln a casino jewelry sloro or
also flle slower tEe systzm ydata caa be save.d witlz a tizanclatmstitut
iorlaamotryoae. canveprmstm ontlevelof
user-spcczed Amountofcompression.Sinceimagesmaybe securityand avaullwithin represculanotherleve!ofsecurecorled atdifferentkvelsofootnpression foreacb diffor- 65 rily. Comparisons ofimages from theseTelaled areas. and ..
cnlcomprcrxsion lcvellheremustbeanassociatedcompres- generaliug alertsattdolheriuformationbased Ihcreugmx'as
son of al1of !he externalpalterns. n us if imagcs arc furthcrdoscri
bcd in tll: applicalions entitled U.S.patenl
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US 6,978,047 132
.
10
applicatioo Scr.No.09/990 868 (iledNov.21,2(X)1el

zlillttd exlcrnalpatternpwbi
ch initiallycomprerx
sedexteraalpalteru
GM ethcd A nd A pparalus Fot Dctectlng And Rcacking To
corrlspofxlsto the alleastoncextcm alpatlern tlsed in thc
Occurrence OfAn Eveol'' U.S.patcnlapplication Ser No
srcpofcomprcrxsing
09/991,490 tile.
d Nov. 21, 2(
X)1 enlltled syslcln And
5 n e mctbod accor
di
ng to clai
m 1 whcrein the slep of
Molhod ForGeneralingAlertConditions Io A Surveilance 5 furtber comprcrxsiag and perform i
ng pattcm recognition
systemz*.and U.S.patentapplication Ser.No.09/991531 performs patl
ern recogcition on tbc iaitially compressed
filod Nov 21.2001cnlitled'iDataGatheringForGamesOf stream ofdigitalimage data witb the initially comprered
Cbance>
'.referenced above czn be used in tbese cnviron- extcrnalpallern,whicllinitiallycompressedexternalpallera
mcnls.Ccnain characteristics ofeach environmenlcan be wbichdtvsnotcorresm ndtolm atleastoneextcrnalpaltern
used iq making com parisons Forexample,in a Jcwclry 10 used in 1bestc.
p ofcom pressing.
More,comparisons can lx made betwerrla mask of an
6 n e method according to clairn 1wherein thc stcp of
u
abrokenglassdi
splaycar
pc,sttchthatifthecasebreaksaan f
unj
lcrcompressing and performing pattera recognition
alertcan be soundod.
Perfofm s paltem recogaition on the initjally copressed
stream ofdigiul imagc dala wilh a plurality ofinilially
)5 comprcsscd exteraaIpatterus.
n presenlinvenlioncanalsobeadaptcdforsurveillance
7''
f'
he melhod according to claim 1wbercl thc st
ep of
in eoevi
omp
rcssing and performingpattern recognilionoperatcoa
ronmcntw wbere a w'
ired connection bet
aveou the c
w strtam ofdigitalimagedala.
computer120 and thescrver130 isnotporxsible.sucbson rcal-lime imagesthatform tl
.
n
e
me
t
h
od
a
c
c
or
di
n
g
to chim 7 wberein lhc st
ep of
anairplane.Insuch an environm ent'tbeavailabletraasmis- 20
f
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a
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c
o
gn
i
t
i
on
p
e
r
f
orms
s
ion bandwdlhl
x comesevenmoreo a
in
patteru recognitionontbestroam ofdigitalirnagedatatssing
a
wi
r
e
d
n
e
t
wo
r
k.
Ac
c
or
di
n
g
l
y
,
i
n
s
u
c
h
a
n
e
nv
i
r
o
nme
n
t
.
tim computer120willlypi
callybclimited t
o pedorming lhe anuncom preased extem alpaltern.
compression operations describcd above and wirel
esu
sly
9.'
n e mtlbod according to daim 8 wllerein tbcurl
com.
trzasm ilting tbe compresscd information. and patteru rec- z5 Pressed rxtemal pattcm use.d in the step of compressing
ognitiol
zand olhcroperalionswilltakeplace atscrvcr130
Contaias alleast25 referrnce points.
which isadapted to reccivc tl
xcwirclcssly transmilted data.
10 n e mctbod accordi
sg to claim 7wbereinthestcpof
n e cmbodimeutsdescribed abovc have bceu present
ed
ftrther comprer
xsing and pcrforming paltern recogaition
forpurposesofcxplartation oaly,and thepresentinvcntion performs pattern recogaiti
on oa 1.
h/ initially compresse.
d
should notbeconstrucd lo btso Emiled.Variationson the x stream ofdigitalimagt data with tl
x initially comprerx
sed
present invention w111bccome readily appatenl to lbose cxterualpattero.wl
ichinitiallycomprossed extornalpattern
skillod in tbe ar1 after rcading this descnp
'tion and the corrcsponclsto tbe alleaslone externalpauem used in lhe
pmsenl invention aDd appended claims are intended to slep ofcomprersing.
oncompwssuch variationsa.
gwcll.
11 n emetbod aecordingtoclaim 7wherein lheMepof
Iclaim :
35 furthcr compressing and porforming pattern rt gui
tion
1..A molbod ofproviding fordigilaldala storage ofa performs pattcrn recogniti
on on the initially compressed
stfeam ofimagedataand pattern recognitionofatkastone sl
ream ogdigitalimagr data with lbcinitially comprcrx
se,
d
exlcrnalpatternand atticitiallycornpressedexternalpattern extcrnalpaltern,whiclziuiliallycomprerxsed externalpatern
oo tbeslream ofimagedalacomprising tbesteps of:
doesnolcorrcspond to thtatleastonoexternalpatlernused
comprcr
xsing aslream ofdigilalimagedatausing atl
easl <) in tbe step ofcompressing.
afirstthread toobtainaninitiallycompressedstrcam of
la '
rtm methodaccording to claim 7 wherein tbestepof
Adaptation forW irel
erssEnviroument
'
dijitalimagedataal
xlperformingpattcrn recognilion
furjl
w'r compxs
xsing aoclperformiug patteru recognition
uslng 1he atleastone cxt

ernalpattern and atltasla
second tbread to attemptlo recognizematches>theIil
'
st
performs paltcru feccf

gnltion-on the iuitiaily comprersed
Saeam ofdigilalimage data with a pluralhy of initially
and second lhreadsbeing proccsscd using aproccssing 4s comprcssed externalpatterns.

S'
ystern'
,
13.Tbe method according to claim 7 wherein:
transniuing lbe iaitially com pressed stream of digital .
i gedatz to atotberprocerx
tize step ofcompressing and l
yerforming patteru re-cogaising system;ari
d
furma
t
ion performs paltern recognitigq on ti
le strtam Y f .
t
l
l
e
r
c
o
mp
r
e
s
s
i
n
g
l
h
e
i
n
i
t
i
a
l
l
y
c
o
mpr
e
s
s
c
d
s
t
r
e
a
m
of
di
di
gitalimagedatawith aplurality ofcxtcrnalpattcras.
gitalimagedatausingatieastatbird thrcadto oblain 50
a furtbercompresscd stroam ofdigilalicaage dalaand
14.n emelbod accordingtoclaim 13 whereinlhcslepof
m rfonning paltern recognition of thc at Icast one cotnprrasing and pedbrming pattem rocognition fvrthef
x anotlmr
cxternalpattern using atIoastafourth tl
zrcad and 1he includes tbestcp ofproviding a notilication to tl
initia11ycompressed externalpaueru to attemptto rec- Ptocersing systcm iftheMeP ofperforming pattern recogognize matchcs, tize third and fourtb lhreads being s5 nition for all tbc plurality of extrrnal patlorns was nol
processed usiug thc. Anothe.
complctod'
rprocerxsingsystem.
.asd
2. The method according to claim 1wbcrcin thcstc.
p of
Wberein tbe stepoffurt
hercompreasing and performing
Comprer.
sing and perfortning patternrecoe itionperforrns
Pattern rccogaiti
on,um n roceiptofthe notifkationp
PAttef.
nrecognitiououtbexlram ofdigitalunu edalausing
G rforcas pattem recogaition on tlm initially coman urlcompressr.
d cxterualpattern.
6o
Preur.dstream ofdigitalimagedatawiththepl
urality
3.n e mcthod accordiag to claim 2 wherei
n llw uncomOfextekrnalpalterzss.
preased exleroalpaucrn uscd in the slep ofcomprmssing
l5.n e mclllod according to claim 14 whcreia the step
contaiasatleasl25 reforcncopoints.
compreasing and performing pattcrn rccogaition Ls pcr4.n e metbtyd according to claim 1 wberein lhcstrp of forcned by aplurality ofdifcrenlprocessirl
g systems,cacb
further compressing and pcrforming paltem recognition 65 proceasing system operating upon a di/erent.strea .of
performs patzrn rccognilion on the initially compresscd
image dalaxlo oblain a plurauty of streams ofii
fftiilly
stream ofdigitalimage datawith the inilially compresscd
cemprcssod imagedata.
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xv
US 6,978,047 82
11
12
16.Tlm metbod accordiagtoclaim 15whereitltllcslep of stroamsofinitiallycomprcssedimagcdatawith theiaitially

furthercompressing amd perfocming operatosuponeacbof comprcsscd extcrual paltcrnrxp wbicN initially compressed
tleplurality ofstreazzlsofinitiallycompresscd iruagcdata. cxtcrnalpalterns eacb cofrospot)
ds to one ofthe exlcrnal
t7.'
Ihetaetil
od accodiagtochim 16woteirttkk
eslepof pztterxm used in ttstepofcomprmssing.
further comprerssing and performing hzrther comprcsses 5 22. n emelhod according toclaim ISwbcreiu tlm stcpof
cacb of tll: pluralily of streauxs of initially comprcssc.
d furtlcr cornprcr
xsing and ptrforming pallern rlcognilion
imagc data.
perfort
ns palteru rccognilion on cach of the pluraly of
18.'
n emethod accordingtoclaim 16whoreintllestegof slreamsofinili
allycompressedinagedatawit
h ttieiai
tialty
furlbercompressiug aud perfoanirig perfom)s pattern rec- compressed extemalpattemw whi
cb iuilially compressed
ognition on each of the plurality of streams of'iqiti
ally lo cxlernalpatlcmsdo no1correspond to lheexteraalpatlcrns
compressedimagedatausing theiniliallycomprerx
sedcxter- used irlthestep ofcomprcssing.
ualpattern.
23. '
I'bemttbod according toclaim 1 wbcrein tlm slep of
19.'
n cInethod according toclaim 15wbcreinthcstcp of comprersing and patl
ern recognitiorlis perfonned on a
c
o
mp
r
e
s
s
i
n
g
a
n
d
I
l
c
r
f
o
r
mi
n
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p
a
f
t
e
r
n
r
e
c
o
gn
i
t
i
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n
pe
r
f
o
r
'
m
s
s
i
o
gl
c
p
r
o
c
e
s
r
or
l
ha
t
op
eralcsonmultipleproccssorlbreads
foreach JiTerentprocessing syste,patteru recogntionon 15 24
. n emet
hod accordingto claim 23 whercintbestvpof
acorresponding one distrentstream of im:ge dala using furthercompressingand patt
em rccogaitionism rformedon
unc
omp
r
o
s
s
e
d
e
x
t
e
c
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a
l
p
a
t
t
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r
n
s
.
a
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i
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l
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pr
o
c
e
a
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o
r
t
ha
t
o
pe
rales oo multiple procerxscv
2fj.
n e meld according lo clai
m 19 wherein racb l
hrcads
ur
tased exteraalpatlernused inthesttlpofcomprsrxs25.n cmel
intgcompr
hodaccordingtoclaim 1furtberincludin?ttte
containsatIoas!25 refcrencepoinls.
20 step of sloring thc furllwr comprmssed slrram of dlgital
21.'
l'
bomtttt
oclaccodingtoclaim 15wixrointl
x ste;
p of imzgcdaa.
fttrthr compressing and pcrforming pattern rccognition
m rforrns paltcrrlrecognilion ocleacb of the pluralily of
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is stlccessors assipls and legalrepresentatives

fulland exclasive right title and 111fe10 -tto the,
said invention,in theUnited Statcsand allforeip,lthe
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tsptbe reference ryzme i
nitialy
beisg setlo an iaitialframc oftl)e plurality ofxqueatial
frames and lhe largetfrarnc initially bcing setlo a subsequcnt framc of lbc pl
ural
ily of sequential frames.n e
Plttralityofcompatod bloc:lus isuse.qlto obtain aEepvosentationoflhe t
argetframetbatiscompressed.n ereafter' the
refcrenceframeI.srodesignat
edastbesubsequentframelhat
wastbetargctframeam thelargelfranw isreesignatedas
anotberst
lbsequeulframolbatfollowsthcsutwequcntf
ramc
'
vzitlzthestcpsofcom paring and usiag relmated.
((xjl2J lnanotlwraspcclv tllcre is provided a mellxd of

obuining alinkcdli
stofredul
xlantpatternstba!existin a
targclframcfrom arefcrence f
aume cacboftbcrefertnce
aod urgetframcs comprised of a p
plurality of bits. n e
metlmdcomprismslllestcpsofcomparingeacbofaplurality
ofsearctiblockporticmsofthoreferenceframelo aplurality
oflocatietuswitllinlbelargelframc todettrmincaplurality
of
cbes,aud,forcachmatch,rcpresentinglhatportiouof
tb mal
eurgetfracecortespol
xhug to tl
w mhtq:
llwitllwlocation
identi
nerthalislinke.
d lo thesearclbl
ock porlion.
mcthcd Ofcompressiog abit-sizeofapluralilyofsequental

framo,eacb frame comprised ofa pluralily ofbils. n e
m etbodcomprisescomparing aplurality ofdiferentscarcb
bloclcswi
tbin arcfcreocc frame toa largctframetooblaiu
aplutalityofcxylnpatodbloclls, tborefeteuccfanctyeingset
to anif
lilialframeofll
eplurality ofsequentyalframesand
tbe largetframeinitially being setto asubsequeotframeof
thepluralilyofsequentialframes. n e slep ofcompanng
uses3pburality of(lilcrenll
brcads Drcomparing and thc
searchbloclcswitllin eacbofthe thrcads having a,uni
form
size,sucbthal!becorrospondingcomparedblock.sal
sohacd
ve
theunifofm sizr smethodusesthepluralityofcompar
block.stoobtain.nari
e
pr
e
s
s
n
t
a
t
i
o
o
o
f
t
h
e
t
a
r
g
e
t
f
r
a
me
t
b
a
t
i
s
cornprosscd jrc/
m an origiaalslale. n e step of using
iacludes determioing whelberadjacentcomparod blocks
cxisttllatca.a becofzzpxsred,arkd fora.tleastcertaiooftbe
a
zsetuon
:compa
e
bbl
looclcsthatcaobecomprorxse.
d,creatiog
ad
tj
Ia
ef
a
csuperr
sdet
ckofnon-unifon'nsiz.othatincludes
(l
w ccrtaiuadjacenlcomparedblcvk.stiereio.
(X 161 1r
lanollicraspectxlheprcscotinventionprovidcsa
( 1
methotlofsoarcbing for pattcrns within a plurality of
3) In anotheraslxct,lbereisprovided amei
lixyd of sequentialframes,each frame comprised ofaplurality of
.
searciuzforpattectswitikiaaplualityofseqtteutialfvzme
ws,
eacb frame compri
sed ofa pluralily ofbits arranged in a
ma
trixarrayl
hatc.atlbctravolsed inborizonul verticalArjd
diag
onaldirections.n e mcthod comprising comparing a
p
lunlilyofdiferenscarcbblockswitbin areference Iramc
to
atargctframeloebtaiclapluralityofcomparedbl
oclts tbe
refcrenceframebcing setlo an iaitialframeoftboplurality
ofxquentialfraesand tbetargetframeinitiallybeing r
et
to asubsequentfratfleoftbcpluralilyofsequontialframes.
n
ing includestraversing the targetframe
i estep ofcompal
bit
s m aagetl iu a malrix array. Tbe mctbod comprises
comparing inaIosxsy rnamwra pl
uralilyofdiffereotscarch
blockswithin arefercnc frameto
atargetframe l
o obtain
apluralityofcompared be
locks,therc
fercnccframcbcingsct
lo an initialframeoflbepluralityofsequentialfraesand
tbe targetfrarncinitially Ixing % 1to asubsequcnlframeof
tbe plurality ofxquential(ramo
s.The step ofcompafing
uclucksobtaining, fora ftrstrs
earctlblock a GrM weigllt
indi
cati
veofa porceqtagoefcomparisonstbatcxistwitlzin
1l
1etargetframeandobtaiuing, forasecondsearchblocklbat
searcl bl
ocks to correspondzg borizfmta!targr.t bl ks
v
erticaldireclion to comparc atleasla se
xxmd group of
search blocks.wbich I
uay ormay uotbc diflertnltbau tle
fi
blrsgroupofseaxcbblocks to colxspofldingvenicallargct
ockswitbin 1he targelframe.
ekh
clhat
i
of
ax tlmr jxrcentagc of comparisous thal
cxit
si
lnd
Vi
i
nve
lhe
jargetframe. Iftbefirslweigbtand thesecond weightbolb
haveapcrcentagcofcomparM nsthatexcced adttermined
thre-sbcdd.lbereocc'urs di
scarding lha!compared bock of
tbefustand scczmdsearchblocksthathasa Iowerpercenl'
agc ofcomparix us.
((*14i Irlarl
othe.
fmspectythcpresentinventonprovidosa
((*171 Inanolheraspccqtlvprmscutinventionprovidosa
n ahorizontaldirtction tocomparcatlraslafustgroup of
wilhin tbe targelframe and Iravcrsing :be targelframo io a
metbou of searcie g for patterms witbin a plurality of

soqueotialframesseach fr11:1: compriscd ofa plurality of
bi
ts arrangcd in : matrix array.n e methcd comprises
comparing a plural
ly ofdigcrrntsoarcllbltxks witbin a
rtfmrcncc frame to a largetframe to oblain a pluralty of
c
omparedblocks,llm referenceframe tving setloan initial
fr
at
mc
fthe pluralty ofsequtnlialframes and tlm largel
fra
tkt o
ir
kitially bqiug set to a sut
v qulut frattm ckf tbo
plurality of sequential frames. n c step of comparing
i
ncl
udestravcrsingthe.lal
getframcinapluralityofdiflerenl
direclionslocompam searcbblockstocorrespondinglargct
blockswit
hinth largclfratne thcstep oflraversingirmluding initiating ac
pluralily ofdilrcrenltbmads thatare processcd in parallcl Gach diflkfenlthread operating witb at
'
overlzpslhetirstscarchbloik a's
-'
econd-w
mctbcd of samhing fer patt:rns within a plurality of

scquentialfrzrnes,radlframe comptiscd ofa plurality of
bil
s arranged in a malrix array. n e melhod complise.s
compariug a plurylily ofdiFcrcntsearch blocks within a
rtfrrtn framc to & targclframr So obtain a plurality of
comparedblockw tbercfcrcuctframebcing
el
t
aniaitizl
frame ofthe plurahty orscqueotialframessa
xt
lotl
ufget
fxame initialy txing se.tto a subsequent fram ew of
tbe
plurality of sequontial frames. Tbe slep of compafing
includcsinitatingapredictivctbrcad lhalcomparr.
alrnum bcroftliffcreo:prodictivc scarch blocl
cs baving sdi
crcnt
blocksizesalvariouspositi
onswithinlhcmatrixarrayof
he
reforenc.eframewittlvariouscorrespondingpredlctivetart
gel
bl
ocks in lhe largetframc to obtain a prodicled oplimum
--
'

Page 95 of 101
yUS 2* 3/0081685 A 1
M ay 1,2 3
.
blocksizcandaprcdiclr-dmovementdirectionfofthelarget (0021) Inanothera.

specl,tbeprtsen!inventionprovidcs a
framt.n cstepofcomparingalso inllialesalravcrsaloftbe
targetframe in adlrection corrmsptmding to lhe prodicted
movemcl)t direction wilb a search block having a size
corresr uding t
o the predicled optimum blocksize.
methcd ofcompressingabi1-slzeofapluralltyofsequeutia!
frames each frame coruprised ofa plurality ofbil
s. The
metl)odcornprisescom paring aplurally ofdiffcrentsearcb
blockswithin areference framelo atargetframe to obtain
(*18) Inanotberaspectoflbepresenlinveation thercis apluralilyogc'

omparedblocks>thereferenceframeiaitially
provided a metbod ofscarching forpatternswitlli'n a pluralfty of sequcotial fcamcs' cach framc comprised of a
plurality ofbits arraoged in a m atdx acray.n e m etbod
compriscscomparing a plurality ofdxercntsearcbbbcks
.
wilhin a refereuce fram e lo a targe: frame to oblaia a
plurality ofcompared blocks'tbe refereuce fram ebeiog set
to aninitialframeofthc plurality ofsoquenlialframesand
tbe urgelframciniliallybeing relto asubsequentframeof
the pluralily ofscquentialfram cs.n e step ofcomparing
bei
b ng s.t:1to an inltia1frameaad tbe largetframe initially
ieing setlo a subscquentframe'Tbe slep ofcom paring
bncludes determ ining wbctheradesired compression ratio
etwccn the rcfcrcuce framc and lhcsubsequentfraf
ne Ls
reacbed.Ifthedcsircdcom prerssionratioisreached,thtn thc
step ofctlparmg istermiaaled.Iflhc.desired comprmw ion
ratiol
)isnotreacbcd lhontheplural
ity ofcompared blx ks
areusedlo obmin ar'
eprcsentationofthetargetframehbatis
compressed as compared to an originalslale'
iuclude.
siniliaringapredictivelhreatll
batcomparesatmm-
(00221 Otheyaspect
sadvantage
.sandobjoctofthopresent
berofdigerenlpreclicEr
c xarch bloclts baving dilferent
invt
mll
ou willbccome apparen!ashereinaftercl
escrfbed.
blocksizesatvariouspositlozkswltl
tinthemalrixarrayoftbe
rcfercuce&4mevzitbvadouscoao pondiugprcdictiveurgct
BRIEF DESCRIPTION OF THE DRAW INGS
blocksin:be largclfraraeto obtainapredicted oplbnuna
(09231 71caboveand otherfealures,aadadvantagesof
blocksx andapredicted mrnvcnaentdirectionfortbeurget

frame.n e step of comparing also includes initiating a
travclsaloftheu rgttframt in adirtctioncorresm ndiuglo
tbepredi
cted movemeotdireclioawitha scarch block having asize correspcmding to the predicted optimum block
size
1hepresentinventzon am ongothers are:aruzerdesche z

lhedetaileddescriptiouwhichfollows with referenc.et
o tlw
drawmgsbyw ayofoon-lim itingtxcmplaryelubodirnentsof
thcPrcscntioventi
on whtrcinlike reference uumeralsrcpresent sknilar parl
s of tbe prcsen!invention tbrougbout
scveralviewsand wberein!
((*19J Inanotbermspoctxtl< prescntinveutionprovidesa (00241 FIG.1itl

ustral
esablock diagram oflbepr
esenl
method of scarcbing for patterns witliin a plttrality of

s
equcntialframesyeach fxamecompriscdofapluralityof
bi
tsarrauged icla malrix array thatcanbe travel
v d in a!
lex
sthorizoatalaud verlkaldirectocs.n e mcl
hod comprix scomparing apluralityofdilecentscarchblockswithin
inventiou
(0025) FIGS 2Av2B1,2B2 and 2(7illustrate exemplary

.
digitaldata formatted ioto framesaccordinz to the presenl

j
svcutjon.
*'
'
are.
fcronc.
eframetoatargclframetoobtainapluralilyof 100261 FIG.3 zllustratmsinfurtherdelailmaslerblks
compamdblocks,tbcrefcrenccframetxingsetto aninilial
framo ofthe pluralily ofsequentialframes and thc larget
frame initially being selto a sutvqucntframe ofthe

pl
urality of sequenlial fram ms. n e slep of compariug
iocl
udestravcrsing tbctargo!fram einatlcaslhorizonuland
v
icaldirectioasatincrealeatsthatarogrcatcrlhanasingle
bc
hrt
colum norbitrow*rcspectively,tocomparescatchbloclts
to corresportdirlg targelblockswithin1hetargelfram e.n e
slcp oflravsrsing includes,forthck

se Rarcb bloclus and
wilhirl a frame ofdata and xarch blocu thatoporatod

ti
leret
)a According to the presentinvention.
(9027) FIG. 4illtustrate,sancxcmplaryinitialsearchblock
itjljn aa initk
w
al o-frame mast
or block a corresm ading
inilialsearcb area lvitbin a subsequcn'
t O-frame tuaster
block,and vcrtical,borizonlaland diagoaalpattcm xarch
directionsused according to lbe preseulinveotion
.
(0028) FIG. 5 i
lluslratts a''
gortion of a subsoquenl
matiou&)tbatasizeofthtscarchbl kandthtcorresjxmding targotblock can bemaintained forlbe cntire step of
O-frame mastc;
r blcg:k within an cxcmplary video data
slream fram e and excm plafy saarcb bloclcs om rating
lbfreon.
(a0292'Flc. 6 illustrates oxcm plaz'y rotational patlem
searching used according l
o tl
x prescn!invnton.
tnversfng.
((*2(j Inanotbcraspecloftbepresenlinvtntion,tbtrcis
(0030) Fl
'GS.7A-7D illttstratcdataaadhe.
adcrsthztare
usedinob
taimn
gtban
edpattbe
terurer
ccotgn
tonaccording lotll
e
knvcny
ion
sul
ii
p
rovTde.damclbcxlofscarchingforpalterrks.nemclhod
comprir,exs oblainng a pluralily ofsequential and tkne.
resu
corresm uding targelblocksatan edgcoflbcm atrixarray,

padding biIpositionsw ithin lbe search blocks and colx sm ndng largetbloclcs tbat aro outside oftbc rcfefence
frameand targetframe>resjvctively,withidenticalirzfor-
Present
'-
ng data format wbich
jtiagdalaforlatcaolbcnbefurthorcomprmsxd
'
.
related fnmeseach comprised ofapluralityofbitsllza: (0031j I'

-lGS.#A-SC 2
'lustralt z flow diaglam ofthc
representvidooinformaionand anotbe.
rpluralilyofbitsthat
represcotzudio information.Comparing aplurality ofdif-
Overalloperatiouoftbepatlef
u recognition system accord.
ing lo aPreferredcmbodimentofttlcinvention.
fcrrutscarch bl
oclr
s wthin a refcrrnccfrarl
w lo atargel (()toag jzjt;s :A and I)Ijillustratereprestntalvc amp
framooccursto obtain aplurality ofcomparodblocks, tbe

referenceframc initially beingsetto aoinitialframeoflae
pluralityofsequentialacdtime-relate;
dframe.
saud thctargt:t
frame inil
lly being sot to a sutscquentframe of the
pluralityofsequentialalldtime-related framms. Thepltkrality
tivc x arch block and a lckrxsy urgetblock. resjxcres

cnu
j
v
e
l
y
a
t , ccordingtoanembcxli
mculof1beprmsentinvention>
'
DETAILED DESCRIPTION OF THE
PREFERRED EM BODIM ENTS
ofcompamdblocksisuse.dloobtainarepresenlalionofthe
(0033) n epresentinvontiouprovi
de.
sapalternmatching
targelfram cthatiscompressed.
mcusod lha: asa rcsultofproviding an indication ofthc
'
'
'
US 2003/0081685 A 1
M ay 1, 2003
4
malcbelpalleras,resultsilcompre-ssion.bulal
soallowsfor
comprerssioooflbedatatbalrepreseutsthcmatctte.dpallerus
lo be (urtbercompressed.Aswasfnentionr,d above while
tbepreseuriovenlioncacitbusbe msed lo oixratc upon aay
t
eofdigitahdata-sinccanytypeofdigitatdatatl
aabc
cyp
omparod to otberdigitaldata- itisofpanicularsignificanceforapplk atioas inwhicNlheexislcoc.cofpaltcrzksin
dataisNighlyprobablcpsuch asasequenceofvide.o imagcs
frorn a di
gitalmastc.rof a movie a sequencc of images
oblainod from arealaz
medigitalca*
mcrafeed'ascquenceof
relaled medical knages,a sequenc.zlof data represenling
audioconteotorredundautdalastor#gedevicesltlatareeach
intende.d bea copy oft
he olhcr.
beorzcralcd upon witboulanydifcrenliationtberebctween

allhough as wallbe descdbt
sd hereiuaflcr certain advanlagescaa beoblained by partiouing tbc audio aad vide,o
datawitllin agivtnfram e
(0e37) n epre-scntinvenlioodtx s however wben worki
*
>
ngwilhscquencesoffram e.stbatcontainAudioiaform alion'
mo
s
l
p
r
e
f
e
r
a
b
l
y
o
pe
r
a
l
c
s
b
u
t
u
o
t
n
e
c
e
s
s
a
r
i
l
y
o
d
>
'witb audi
alatbathastleonlranslaled tl
singlbe tecbniquesdcscnbed
i
U.S.PateatAppli
cation eotitlcd uOplicalEncoding of
Anudi
oDala*'vhle.dbytbesamc irjveoloronlbesamedayas
tbisapplicatoa and Ixariug applicant'sattorney reforonc,e
num bcr042503/0261933.'fbts olberinvention doscribe,.sa
tcchnique tllal convcrl
s audio digitaldau lo color-spacc
(IKM) ltisalsonolcdlbatoNrationofthtpattcrurecog- digitaldalaohion aspem oftbepfmverz

lwention forvelatedsmpences
sucbasvideoimages,preferablyom ratesuponfram e.softbe' (0038) AsGscribe.dintbcOpticalEncodingapplication.
originaldigilaldatatbaecanuscd todisplay tbeim age and

rtproduce11
w audi
o.n us,forinstance,afeedfrotnadigital
vidoo camcra> wbctberrcal.time c!
r delaycd> or a digital
vrsion olw movie c1n bt opu atg.d upcm . lf'howevq.
r'a
previouslyknowncompressiontecbniquehasbeenused lo
storetlw dataassocialedforasequencc,suchasM PEG'lhe
pmscut inveution will prefcrably dccode tbc M PEG to
obtaiuacorrespoadingsequetlceofframestha!moslclosely
correslxjad to ttt
e oci
ginalalastersequeuceofframe.s'and
operate upon lllat>allhougl
llhalis nolnecorxsary and tbe
M PEG eocoded data can bc opcrated upon in ilsxencoded
form.andadvargagesaccordinglotlw presentillventionslill
deri
vcd.
a digitally sam pled audio signalis a sequence ofdigilal

values,also referrcd to as digitalaudio signalelemonts'
w bich are spaced apartby tbesame limc interval. Sfnce
audioandvitlcodalabavediForrntfonrats'audiodalaLsnol
conv
T entioually apm ndcd tovidco dataandencodcdw ith it.
he OplkcalEoccding providesa mechanism for maaipuIallng audiodataso (batitcanbeappended tovidoodataff
ar
lalereucodingconcurrently witbthevideo data. In particularyadigitallysampl
edaudio signalclemrntismapj
ycdto a
colorselecteclfrolrlapalell
e ofpossiblc col
ors. Audio data
f
rom vanouspointsirltimc istracked intimcbased upon
a
hcader(notshowu)thatindi
cate.
stheplaybac,
krat
e'wtu.ch
then allows playback of the sequcnce of digital audio
elem cntsalllw appropriateIime.A11oftlteaudiosignalstbal
(*35) M 8411become apparenk one rrason thal t

he
occuratdi
llcreutpoi11?intknctbatbavc!bcsamcamplittlde
prescntinventionhaslheabilityteoperateupondal.ofany
lypt.whetlmrthatdal
a srandomly collected previously
compresxd.orpreviouslyplaced ilgo aknowndataformat
1 lhzt tho paRern pscognition opcrati
ons arc preftrably
perforoaed attbe bitlevei conaparisg bi? 1 one frame oE
datawitb bitsinanolherframeofdala.n us forexample
ifasearchblockcontainsdatathalreprmscntsanimageusing
pixets :nd eacbpixelisrcpresentedas24 bi
tsand isinone
frameyifacorrmspondingscarchblockareascontaimspi
xels
tkk
wtax eacidonti
't.
flaszving22oftbe24bitstxingtbe
same asinacorrespondingpixelintbesearcbblock'witb
only 1wo bilsbeing differet
;l>(hecomparisonaccording to
theprtv l
ztinvenlioncandeteuniaethksdegreeofsim ilarity,
aud since atleast22 ofcvery 24bil
s Ls tl
:
l
esame creale a
littkrdlistymsdcscrilxd M rtirkaftr.ttkatideatifkcst,l'kexaszt
areaasbeing thesam:astlw searcbbloclqaodstillachieve
considtrablocomprcasiou,audstillmtainagreater(ban90%,
accuracy.
(*36) FordatallalLq;rclatt:
dt
cl
xlrally,suchasavideo
oraudio aKlationsbipcxkstsbuweenthevariousframes.ln
thecol
xextofa movie lbatctmtainslyoth vide.oand audio
c'orreslxmding loeacbimageinlbetnovicisalso thatportiou
ofsotmd thatulustbesyncbrcmized witbti
x movie. While
in a system alcb as MPEG llmrr Ls an ntirely Kparatc
comprosion oftbe audio Lbatrequkes a separale audio
st
iream thatLsseparatrly oncododand declxledz thepreserlt
nventiorldoes noldistinguisb betwoen theGtype''ofdata
l
.
d above.'
Fhus irltbc prcseol
ihalLsoperate.dupon,as nott'
nvmntion,thcre is no necd foraRparatestrem ofaudio
(lalawbrm delcrminlgwbelhtlrpaltor?sexistwhhinaframc
tlzatcorztairk
sbotb audio anJ videodala.n epresentinveutioncan recognizepalle sittbotb byoperatiog um ntoth
typr.
sofdatalhatexistwitbintbesafflcframe.n isdatacan
havc tbe same colorassigned lo lbem . n e process of

mapping assignscol
ot
'
slo thecorrcspooding audio dataat
each differcntpointin time. Afterthc procer,
sofmapping
eacb ofthcaudio signalm instead ofbavag an associated,
auaplitude kas an assodatGd colorobtained kona a color
l
ookup table. Diglalaudio sigualelcments lhalhave the
same amplitade.s w illthtts have !he same color. Aad tbc;
oblairt
cd paleue isasub-paletteofthe palctte ofI
yorxsible
colorswbichcanbea-ssigned.
'
(tK39) '
I'
lltprocsssformappingadi/talysamplcdaudio
sigaalelemcntloacolorsclocte.
ttfrom apalctte ofpoasible
COlOrSintbeOplicalEocodingapplicationbeginsbyreading
theafnpliludeforacurrentdigitalaudio signaloletneut. ltis
tben delermined wbelber a color has be'eu previously
assiglwd to tlze am plittlde. Ifa color bas bocn proviowsly
.-
assigne to tbeamplimdc,lhepreviouslyarxsigned color

lookup forthe.colorisar
xsigned to tbe curreatsample. Ifa
colorbasnolb= npreviouslyauigncd to tbt amplitude a
'
-
--
new colorlookupisassignedlolxltbthecolorandamplimde
aadtbecolo:tsaddcdtoasub-paleue.'
T'
il
csub-paletteistbe
sctofcolorsthathaveIxc.na ignedtothezuzplitudesoftbe
diglally sam pled audio signalelements. 11L% tben X terminod wbetlmr lhcre are aay more digital audio sigual
clemtntsto process. Ifthcre are moro digitalaudio signal
elemcntsloproccrx
s. l1x:procmssadvanccstoIlm nextsaalple
aod tbe ampljtttdefortbecurrex sampleisread in. Atthe
eDd ofptoceo . thesub-paleltecontaius allthe colors that
wereneededtodescri
bctheamplitude.sata!ltbelirne.
sofalI
oftbedigitzllysampledaudio signalelcmonts.A.
I
SOforeacb
sample inst
eadofznamplitudetbereisanassoc-iatedcolor
from thesub-palelte. '
l'beoutputof1heproccssare afrxne
thatconlainsINesub-palelle and thcsequcnccdigitalatldio
signalclcr
oentsin tbeirtransformedcolorformat.
..
US 2003/0081685 A 1
M ay 1, 2* 3
5
t% 4(j) Afrrtbeaugmenttdvideoframcirydeeotktltbe suctlasi

mageand audi
o (lala each i
mageal
xlitrclate.
d
color audio can bc separated from lhc augtnentr.d video
frame aatltlw digitalaudio signalelcmenls recovcrcd as
dcscri
bedintheOplicalEtlc.
xlingappli
cati
ou.Wbeurocoveriag tbe di
gitalaudi
o sigrl
alelecaen!s>the digilalcoior
valueforthec'urrentdigitalaudlosignaleleqmnlisread in
and 11
.
x:corresm ndingdigjtalaudio valueisrelricvedbase.d
um nthe colorIookup.11istlmndclerm iood wbethertbcrc
autliodatawillpreferablyhaveitsowuframe allboughtbal
isnota ueeersily.
(0044) FIG. 2.A illustratesrepresenlalive frames220 par.
titioned w itll frame blfxks 230 lhatconlaiu dala tbat
T is
ptaccdiatottteframeblocks230.'
lht
sdatamayormay uot
j
yetrr
zl
poraljy yclal
ed.
are anymotedigilalcolorv'
aluesrepret
keorir
g tbedi
pol (0045) FIG.2B(l)'llustcates an cxampleofsequemzes
JUdiosignalelcmcnts(oprolxrxs.Iftllerearcmorcvalue-sto
210-1,210.2 ..2l0-n>whichcouldbeadigitalmoviethal
proce.ss' the proi

xssadvancss l
o lbc nextsample and the
amplittt
deforttw uow cucreutsat
zvtc i
srcadit
zTtleoutput
coulainsdau foreach image.whichimagcsar: temporally

relat
ed to eacb otber.as wellas tbe correspooding audio
ofprocessistbcorigiualdigitally sam plcdaudo signals.
dala,wllichtemm rallyrelatesto the imagesaswell. Each

sequence zt0willcoutain f
zames220 +atarc tbwslernpo-
(*41) '
a e colorspaccclnvcrled audio aigilaldau is
preferablyorgani
zodwilhinaframoinasimilarmannerfof
allframe
.sinsuch frav s '
vilhthore being amarker as
describet
l(urtherbcl
ow,tl
aapmdicateswhichoftheframe
blockswilbin a framccontaintbisaudiodatgpasw111bc
cxplainedfurlherherein.
(*42) FIG. 1illustratcsantxomplarysystem 100accord-
i
ng yo thepresentinvention.wllicb includesadigilaldelivery device 1.
1@ which could be a digitalcamera a hard
drive,adiskcont
vroller,oranymedium thalcantraas,mitdala
ofariytyjx inastream lo adownstream dtvice1.20.Devict
120 asillstratcd.isprcferably acomputerthztincludcs a
proc,essorulha
lcanperfocua culti-threaded paralleloperatiorks. After patlerrl rccogmtion is performcd using tbe.
dcvice 120.subsequenlencodingofthestream lhatcontains
outpu!dau according lo lheprereutinventon (lan lx performed.Also sbowaisa tmtwork 130 aad anotberdevice
t4@
,
whkbcanperform Jocoding,aswellasrc-generatcthe
ogjnally oycrated upon data so thatthe datacan tbcnbc
rallyrelaledloeachotberasshownbythetlzrceframes22:
illtustrat
cd inFIG.2B(2).n cseframcs220aroshowu as
baving some fmmberoffranae blocks230 (20 forthe
illustrativepurposesherein)ofwbicb15(230V1.D V2...
23Vn)arcsbownasbeing forvideoimagedatapand5of
which(230A.
1 230.
*2,230An)areshownasbcingforaudio
information. Ot
m signi
licanlasm ctistbaltbeoverallmalrix
arra.y ojtjle fram eblocks 234)v corresporjdslo thcimage
tjjJ1(uee.
tkstobgdepicted.with tbeframeblocks230A being
l (j Iscwhere suchasattht:bottom u sllov?nimreiu
p
a
c
e
r
y
.(
t
L& also noled that
a marker232 Lsplaced ttlwcen ttlolas!
jr j
agc f
xamebl
ock (shown as23o19 and 1% first
auadme
io fmame
bl
o
c
k
(
s
h
own
s2
30A1
).n risinal
lows
vjescntyer
tjfurtbcrhsreinaf
ter,a
an
eas
y manne
whi
ch' a
ls
jdfnyify thos,
e frarne bloclts thalcontain image and audio
o
inlormation rg tbat(tmy cu bt oprated upon usiag difjexottllroads
' aswilll
ycdescribed hcrcinaftern e m arkcr
.
jsaunquecoal
tyjsationofbitstbatw illnototbe.svi
seapN ar
j tlje tjata.
'
uxdasinlcoded.Inl
hisrogard,lbeapplicationlcrcinwill (90461 Typically,andpreferablyintheconlexlofframes
descn'bc the rnculotts used to obtain pattcrn recognition
according lo rlm preseutinvcution.1:willbeapparenttlial
oncetlx plternsarerecogsizezlyaudarecorrelaledusingtle
linkrd list binary lree orotherdat
a storago formats as
doscnbed hcrrin lhatobuini
sg tbe originaldata from the
dala formatted msdescri
bcd heroin Lsa simplcmatt
rr.
tbatcontain temporaly related dala eacb frame willhavc

the abilily lostoretbesame amouotofdasa lbougb ltlalis
notancccrxsity.Andwi
tbinthecont
exloftemporallyrelated
frames,atleas!the fi1
stframe ofa xqutncewil becorne
whalisreforred lo as akey frame,and in tbeca ofNigh
movemenlvidco.otherframe.swithintbesequencemayalso
bccomekeyframes.asdiscussod lmreitlafter
(*43) W l
zik lbeabovcs3sttm tsprovidcd to illustralc
- - - .
onemannerinwhich1beadvaulagtsoftheprewntinvention (00471 RGS.2C(1)-(2)illuslratclhemanncrittwlu'
chdata
describcd lzerein can be used, tlxfs is exemplary. For
oxamplc,eachortlxe dilereotcom puterdevices 1.28 aod 140
i
.
'
lPMitionedintoaframeblock 230.Dataforawboleframe
Ls thus paztitioue.tl to be placcd into framc blocks tilat
could Ix im plemented as a single compuzrand devices
tr icallycan eacb M ld tbesameam ouutofdata.
ot
hel
r
ant
cotmp
tho
al
nri
pr
oces
ls
&
tn
are
abl
imp
el
uh
xu
heul
ine
vls
emi
nc
sont
dea
si
c
lxd
hs
eo
rr
intll
c
be
ueseto
d
((KM81'FIG.:
)Clillustrzttszfrzmtblock tbaconui'
as
instead. M any otbcr varianls are poasible.And w uilc a

devicr sucb asmontioned wr
illtypically iacludoaprocrssor
ofsomelypc,s
u
c
b
a
s
a
n
I
u
t
clPcntium 4 microprocessoror
a DSP in conl.unction wilh program iastructioas liotare
wr
ittenbasedulx)ntbeleactlillgsberein'otberhardwaretbat
im pl
ementstim prerxenlinventioncmnatm;o beused sucbas
aneldprogram mablcgattarray.Tlm pregram ins'
ructi
ons
are preferably writtcn in C++ or some otbcr ct
omputcr
program ming language.Forrcpelitiveroutinestlzal&reused
repeatedly llwx caa be wrtten ittassemblcr for faster
.-
dalalhatis rx)llemporally relaled. Asshown in ttdsparticularcxample,lbe.dataLsformed of16bitwor

'ds
he
, and t
valiouswerttsarcpositioacd startingaltheupm rleftlland
corperoftl
m frarncbl
ock230aod rkserteduotilcompleted
withcachdoti
zln G.2Clrtprescnting asinglebitm sition'
wbertMolageis avai
lable.Illtzslrated in tbisFv
. c istbat
forbitposiorzs atthe end ofa fralue tbatdo notctmu.in
dala, ill
ustrat
ed as underlincd bit positions' tbe preeest
invc
nlionwi11preferably pad lhmsrpositions aswellmsany
otherempt
y bi!m sitions'with abilItvel0'value.
proce.
ssirtg.M meuti
onedaboveatlm prqrerltitweqtionomr- (0049) FIG.2C72 illttstrate.
s afraam bl
ocktbatcont'k
ins
ates upou dala prcferably forfnatted into a matrix array
whbi
naframe asdescribedfurtlltrhcreinafter. Fordalatbat
is nottemporally related,tbeblockscan bcform atted into
frame.
s thatmay ormay tI
(ltbave lhe ability to slored tbe
same amountofdata.l7ordata tbatis teroporally relatr.d
dalaccmtaiing imagedala wbich maybe parsofa frame

thalt
cmporally rtlatcslo anotberframe butmaynotbe as
well. Ksshown ia *1sparticularcxampl
e tbedatais24bit
RGB data and tbus 24 bilsperpixel. Ofcour..;e tM sdata
formalisprovided puroly forrepresentative purpascsy and
'
.
I
2
Case, 3:06-cv-00056-PMP-VPC
''
x
Page 98 of 101
)
z'
.
. 7
v
US 2003/0081685 A 1
M ay 1, 2 3
6
.
t)therdata fonoats and lypt;of imagedataartapplicable.

Datarcpresentaliveofeachbitposiliosi
spzeferablyplaced
w itbin tbefratneblock in .positionlhalcorrcspondsto thc
Pixcl eosilion of tbe rcutlered portion, allbotigh otber
O-iracnepaltbougbthctargo!O-framewi
llbercpresenttdas
anR-frar
ne.(helargelO-frame.w'
ittltbc.origlalO-frame
data willbc usod as lhe new referesce O-framc to obtain
searcbblockstbararctbcntaket
landcomparedwitlztbcnexl
SCbeme.
scaaofcoursebelhougblup.EacbdotkiFIG.2(22
agai
n reprerpents a singlc bilKsition where storage is
oradjacentO.frame,w'
llichwilllbenbecomcthcnew urgc!
O-frame.Bylbusdetectingpalterns(balexistwtbinadja-
available.
cenlfraEnes auJ, in thecaseoffram cs witb um vcmenllbe
((*50) Fora framc block tha!contains data cootaining
mo
cmcra
ldg
iro
ei
cti
ti
on
oe
fsu
pa
ls
t,
era
an
sdtha
atl
ein
xi
tdwi
ts
lz
incza
ti
let
f
as
me
s'
zm
eco
patv
o
ur
lt
kse
Ii
l
u
bru
be
audio datax as menlioned above,tbis dala i

'
s Prcfcrably
conver
l
ed
l
o
a
c
ol
oc
spa
ce,
s
ucb
as
RGB
dal
a
an
b
' dcao thus
reprosentedinti
ResamenIannerastbeimagcdltta'sbosvu
le
jFIG.2CQ.Ofcourse otherdataformalscanbeuscd.Data
>bit position is prcfcrably phccd
rtprcscntative of eacll
withiu flw frame block iclaposition tllatcorresponds lem porally to llx otherdata reprex alit)g Othe:rN rtionsoftbe
s
amcatldiostrcam,altvughotbcrschemcscanofcoul
sebe
1houghlup.
(*51) Havingdescribtdttm manncrinwbicbdatathatis
lo beoperaled Lsinilialypositiooed within frames aspects
of lhepresentinvenlion thalallow ferthe recognilion of
pallemsthalexislbetwecnf)ameswillnow bcdcscribed.lu
particularabefore providing amoredclailed dcscriptitm of
tbeopecationoftbepattern le gnitionsystem according lo
tbepresentinvenlon,certaia aspects oflhe searcbing and
pattern recognition strategit:s.w bich are individually and
togptlles patqntably siguifick
mt,willbq discussed.Aslyas
b
eennwntioned,rhcpreseatinvention(lm ral
esupoudau at
a bil-level.Search blocksofdata in a reference framcare
eachcompared wilbvariousblocks asdcscribe.dpreviously
anu
d bereinafler oftbetarge:fram e.M atcbesareprcforably
dctcrmined at lhe bitIevtl,although tbey ca.n also lx
Dttcrmincd almtllli-bitbyle,artd multi-bytcIevtlsaswell.
chesisbasedufx)clpatlernmatching(yperatielermiaingmat
ous t
hat mpare a represeotativc soarch block ofbits
within fbe refercrlcc frame lo various positiocswithintbe
t
dairgclframe,using a combination ofvcrtical,Norizoatal
agonaland rolalionalseaz'
ch tecbniqucsypreferably opera
ting itlparallel,nd using dilerentthreacls as descri
be.
d
hc
rcinafter.
(*52) Forpurjese.
sofdewription,tbeoriginalframsof
datawillbercferredlo asoriginalframes,orO-frames,and
tbosc frames in M'hich lhe data needed lo rcpresenltllal
f
bramebasbeenreduoedisIessinovcrallsizeducfopattom s
oing found willbl feferred lo as reduced orR-frames.
nt
ls,lbetargc!O-frame aflerpattem matchiag operations
asdcscri
bed Lertinarem rfoj'
medywilll
xcomeafedaccdor
R fram: since the represeplation of the data urithin ttkat
f
fracuc w'ill in mostinstances.be reduced from iusorigiual
orm. If notreduced.il'
VJD continue to bc an original
O-f
n cw,witb th1dal
adescl
ibing thatfzamcidcnticaltothe
data tbat existod prior to any of tbe patleru matching
operatioustakiug,place.Sucb a.tzorigiualO-fzmetbatisBot
reducetlis also rcfrrred to as a key frame heroin.n us
according lo a preferred tm bodimrntofthe invcntion ao'
iuitialO-frame is used asa rcfcrence frame from whicb
rflectsthescpalzfus Itisootedp bowevef,

create(jwjjich l
thatallbough ilinlheprefcrre,d embcdimenttbc Iww referet!c.
e O-framc aad
tl
e rt
ew targptO-frame wiadow eoaci
x
oxi
lhe
r such tbattxltj move,otbcrembodiments can also
ss'
e ,osuch ashaving theinilialO-fram: rtmain thercfcrCEI
CC -frame, aod eacll of a subscquent plurauly of
(Jdramesbeing Gmseculive lrgeio-fraoes tbattbesame
xforen o-fraYecompareslo j
u(
jjvfdualiy..
(
)zalFI
G.
3ki
lu
trat
esthin
he
dseta
f
at*5
i
ve4
fr
cb
loc
sl
2s
30
wi
infu
art
r
cpr
rz
tli
tl
at
iourrepresenl
vc O-frarae ef
dataand a represcntalive search block 310 lhatisdetiocd
tllex in. Asdisctsssed previously.ofwhatevcrtype
refcrably formalzd iuto frames220 thateachcontaio.aLs
mp
atrix
away of tlala- W hilo tbatdata m ay l>e unreb tv , r.itber
lemporally or otlxrwise znd thtks formatled into framc
blocksofdataofany siz,e, frame bloclcs230 tbathave tbe
abiljly lo slore an equalam ountofdala lend them selve-s
more uasily to faster procsssing. ln lhc:d'Lscttssion oftbe
invention lbatf
ollows howtverpaparticularcxampleiutlw
conteslofavideo, lhat,containsfram esoflemporallyrelalcd
data and various data types witbin each frarne so tbat
certakjoftlx si
gnifcauladvantagesoftheprexntinvention
cau tx:descfbed and lhus understood. n us a video will
conuinavitlc,ostrca,wilhscquetxxsofframes. Sincethc
imagodalaalxlaudioda'acorrespondm
'gto lbeimagemust
bckeptt
ogelberiopropersequenceandsyncbzonism aswas
m eotione,dabove,asingleffamc;c-anstorcbotblypesofdata.
Insucha case each O-framewillnitially havea size that
corresponds lo li
m combinalion of tNe aumbcr of bits
requircd to rcproduce lhe visualirnagc and tbe numberof
bitsrequircd to reproducethecorresponding audio.
(*55) FIG.3 a.L%o illuslrates gex rally lhat lbe rxearcb
block310hasasmallcrsizeihan(
Le
'fram
-(:block230.W lzile
thesizeoftlm scarclblock310canvafyindependcnceupcm
tbesizeofthcO-frame aswtllasthopatlicularportion of
a givcc frame lxing om rated upom preferable sizes of
seam:blx kslhatbavebecndetermincd tobcadvaotagoous
forvariousframcsizesarcprovided bclow in Table 1
'
.
'rABL.E I
Fram tym
Seaxcbblock
3:2f)xz,tlsytravw o sacoe x . 3:bpesseax:uock
xoxzk3cwyte.svqetybacw IA4 x64bykcssearch btxk
1440x960bytesvi
aeof
zxm: ,z8xx'
z.llbyte.xRarcbblxk
M ditlNo'ckb
8k8bytrssezrcbbkxnk
seazcb blocks aretakeo ant

lcompare.dwitb au adjacenl
largelO-frame.Theinitialfl-fraam wt
llretainitsoriginal (0956) z
A.
s willIx descn'
bed furlborbexinaher,wilbin
dalain itsorvi
' najform, anf1lhe targetO-framewllIikely
bcde-scribablewith areduct'
d dalaselorR-frame.
'
(*53) In operation,n aprefen'

od cmbodimentaod as
descbed bereiuafter once tbe ioiti

alrefereucc O-frame
complefe.
s iLs patlern matchtng operations with the targel
S*O CDCr,
'
SSllCb&*21t1A-210D assbownirlFIG.2B1'thcm
wi11existframes22e tha.
twi
llncod lo beoperaled upon lo
dett
xmi
ne iflbere zre pattemstbalcxkstwiliin 1he fraznes
220.Todothisa.searcbblYkisused.n esearcbblocksizc
once let
euuiaed, wiE lypi
cany remain Qic san7e forgauae.
blocks230thatconlain thesame lypcofdata. Tbus while
'-
-'
''
'-
US 2003/0081685 A1
M ay 1, 2003
7
thc same searctlblock can bc used to scarcb frames thal

cxmlan frameblocksw ilbbolh irnagedata and audio data
i
thasbtenfound atlvantageousto usea(ktermiueclsearcb
bl
ocksizrswhcnscarcbil
ag framcblocksthatconlainknage
dala andanothcrdctcrminedsearchblocksizowhensearching,frameblocks thatcontain imagcdata. Theimmodiately
precedi
ng andsubsequeu!Irame.s telalive to lbatsetjuence
ma
d y be relatetlkltime and content as noted above but
ctermincdtol
>e.uorclated boweverforpurpasesofpattc:
'
n
rccognilionaccordingto tbeprescn!iovention. Forexamplc
a
dsubsequenlframe aflerthe sequence of frames may be
lcrmined lo be ancw key frame.since itwillnolbe

re
cd
ucod due to the pallern recogniliou doscribed bereiu
.
Sucb#Ilcw keyfratr)eI
uayhavcasearcbblockofadillkrcnt
size tlxan lhcsequencc ofprevious fraams thatwtrt determized to beR-frames aswilbecome appaveatNeveinatt
er
altl
aough fordalawillA temporallyrelat
od frames tbisis
typi
cal1yu0!thc.case.
k%s7) FIG.3 alw sbowsarrowscorrcspondi
ngto tbe
vertical32Barkdhorizontal330,directions.'
Ihisisinteoded
to show thatwithin agiven reference O-frame, tlosearch
window willbcmoved acrou framcbl
ocks33@soll
zattlze
cnlirtrdcrcoceO-framcwillbavedalawithiueacbpordon
used xs ascarcb block.As V IIbc dscn'

bed hereinafl
er,
modern processors.which have theabilily tooperafeusing
mu
lli
plolhreadssarepreferablyconfiguredso thalditlr
ercnt
t
hreads
can simultancously be processing either different
scarch bloclcs, orindiftkrel;tdiroctioas asdescribcd bcreinafter. Witb rraspecto tbemannerinwbicbdI
Yerentsearch
blocksareselected.thesearcl
blockisprcferablymoved a
single bi1positionz so lhat(lverlapping windowsofscarch
blocks exist although movomerlts of 2 4 8 or greater
numberofbils aswellasbyttand multi-bytt movemcnts
whichprovideforlcssorevennoovcrlap ofselcctedsearch
blocksscanbeused.Ttlesinglebi(N sitionmovementw111
thusonsurethatalIbloclcsalong asameborizontallwvela
ro
searcbed*and 1he search bld
xk w'
indow can lben bc inde
pendcnlly movtd vcrtically downward'withanothersetof
sexrcbestllus lalting place akoag thatnew borizontallevel.
Ofcoulse>othermannersofsel
ecting (be orderin which
searcllblocksarc choserlcan beusod.
((*5:) AsshowninnG.4 wl
zenaparticularsearcbblock
f
diagonalmovemenldnrectonofthesearchblock410w ithin
alargetfram e.M shown starting from (liesearclarea410
ofthc targelIrame tbosearcb block310 lhen movesdown
oracttkssfortbc rcspccti
vevtrticalorborizontal
dircctions preferablyonebitintbecol
umuorrowmovtmenl
directi
on
at a tim o (o: ttw cortespm diug vertical ankl horizont
al
movcmenldircdi
oas respcclively and forlbe 45 degree
diagonalsbowaitwillprcfcrably move acro.usot
w bitRud
downonebitwhichcanboreferrodtoasa(11)diagonal
movomenl. Diagonalmovemenlscorresponding to various
otheranglescanbeachievedusingx f
orexample(1.2)(13)
(1,4) ..(1g1)movtmcnlspaswellas(2 l).(3.1)(4,1)...

(n 1) movements.Asatt
;
o shown by tbc wrap-around
arrows alloflhevarieus pixclpostions withi vcrtkal
horizontalanddiagonaldireclioascanbesearchednal
lhoug,h
asdescvibed furtberberdnafter allsucb searclzing ma
ybe
unnecessa:y aod thusnottake place.
'
(j6(j) wjjenthcsearchwindow 310isappliedloasearch

E(j
arta41tbztisatwntt
lgerofamaserbtock,tbeatjat
xm
asterblock pixtldata Lsuscd and ooco attbe edgeofa

frameplbeftlrZlrsearching as aresultofthe wrap arouod
s Pessrmetj.
gtlafjj Atedges ifthe movemenlofthesearci block
wi
ndow isasingllbiqattlm edgeoftheframe22o1 lhe
scarchwindow wilthenvp totheopm sitesidtoftllefrvame
224),.(.aodbegi
tianothercompari
son.If bowevery !beseazch
blockwindow'jurrlpsmulliplebits,at
'edgesofIhefra
22()-r datawi11beunavailabletohl1thcsearch area41:m e
.l
n
h cases.tha!dau wilhin lhescarch arca410 ispaddc
suc
d
w
tjyzeros
and tbe cono ponding bitpositions witbin the
xarch bloc
'k31e are padded withzeros sotballbesizeof
.
Skkoseirc.blockwirzow 31B andthesiz.
eofiiesearcbblock
arca410 need nolchange.
5i(1ofaEefexeticeO-fraax frameblock236)1tofa rcference
O-framc220R applicdto aninitalsearchArea410 withina
ur
O-framo framc blk D @T.'IXLS particularwarch
blogcekt:
510 isillustrated wsablockof24x24 bitsvwbichsize
ofwindow isusedonlyforp
ofunderstanding. n e
searcbw indow 310isshownatthreeconx culivehorizzm tal
dircctionscarchareas.410 412 and414 witlltheupperldt
window locatioaontheIargetO-frame:
120 being jxxsitions
(36,24$ (37,2*,aud (18y 24) resmctively.Similarsuc.l&
seatxzbAmasa1e taine.tlfo:tbeborizxmtaldirectioam ovemcats, such asfl

om tbe (36,24)msition to the (36,25)
position,anddiago'
naldireclioa movlmrntsy- ch astim 1-1
rderenceR-frame220R.A!l
bisiaitialpositi
on,abinarybit
cio
rson,tt
singauAND operationforlosslerx
scetnpress
omp
n. a
and otberoperatiork
s asdescribe
.d ft
lrtherhefeklfor
l
ouy operalion, isperformed atthe billevd between the
datatbatisatthattunewilhintheKarcbblock310and th
corresjxmdiugdatawilhi
nthesearchblock area410ofllle
e
targrlO-frame2301 asdcscn-bedfurtbcrbercinafzr.Once
tbltinitialcomparison iscomplete,tlesearcbblock31B is
lbenmoved invariousolllermovemen:directiouswithinttlo
framo22f)R.'indudingvcrtical420,horizootal430 di
agoaal
t
errjsoarchk
ngy'f
apattcruasshowninFIG.6A.anda!lhe
va 180 andz70or
degrcepositioas. asslmwnitlFIGS.KB-6D
mrsic
iv
ly.nerolationalpaterpscarchingbase-donthese'
jt
1
e.se
kmpjemonled. such tlla!rotationsp atdifP
r
l
c
P
fereat posca
iliaoalx
s ob
tained using slkifting oporatioas zs
(jc
eacb sucb position along a movementdirectiow loothcr

comparison altbe bitlcveloflhe datawitllin tlle search
window take.
splace.
used in oblaining the patlern recognition according t

o the
prtxsef
)tinvcntion'and the rtmllting dau forma!' wllich
rcsul(ing dataformalcan lbcn l
x furthcrcompressed.This
movcmentfrolnthe(36J4)msitiorltothe(37.25)positioa.
((
j%3) mGs 6A 6I)igustratesexemplafy rotationalpal.
stcrm.
rihod jjereio as wcll> dezct rotational sbifts in tbe
t
440,and rotarionaldirections,asdescribed here'

in* andat (* 64) FIGS.7A-7D illustrateJataaud beaderslbalare
(*59) FIG. 4 alsoillustratespreferre;dvorticalmovecueat l
ht
ana
nc
lbie
erslewi
ll
xplaiaing bow tbe
i
uve
tj
on
sa
imp
mc
nbe
ted mm
toed
obwbe
lainnpe
attc.ro m atchiug,in
and horzonlalmovemcnldirections antlone preferrcd
''
bandbitposition:wbichcanbeusedloidcntz
'
fy lhcRarch
O-frame2201 thesearcbbld
c.
k31@isirtitiallyapplieda!a
wilbin lhefrarlm block230R Rltbesamem sitienwithinll)e
(0062) FIG.5illtlstratesauoxemplafyiuitialsearchblock
311)from a refcrencc O-frame 220R. isapplicd l

o A target
search block area4to witttia tlzo frame block 7,
3* oftix
largelO-frame22th1 thatcozree
spouds t
o the samem sition
'
conjul
lcti
onwith1hefl
owcharlofFIGS. 8A-C

Page 100 of 101
j'
.
U.
S 2003/0081685 A l
M ay 1, 2003
8
(00651 FIE;S.#/t-C illusllateaQowchartofa prefcaed
tMsts foreacb di/erentlypc oflbrcad. For instance a

ditrctcnlcembnalit)oofscarchbltlcklraversaloFsetscanbe
use foreach uierenthori
zonla! verlica! diagonal ant
l
rolallonalsearcb. Al.
so diflkrrntsearchblock tcavorsalofll
setscaubcuscd whenx archingdllfcrcnlty'Posofiuformationw'
ithindilercnlframebloclcssuchasvidcoinformation
urilhin certain fram eblocks and udio infounation witbin
otherframeblocks.n eolfsetssv;(with1)1
.1
:orizontaland
vefticalcomjyo% ots,willtlcterminti:besbifkingprogrcssiocl
(* 66) n roverallcompression targetratio Lsadesiretl wi
lhintbereferenccframetbatisusedtoobuinanewscarcll
ovcrallcornpressioqofthe Iargetframc.Thisovcralcom- biockafter(llepreviotislyusedsearchblockllastinisbed11
ompari
sonsof1hetargelframe.Variousprogreasionscanbe
prerxsion includeslhatcompressionobtaioed by tbe pattern c
used,with thc progression preferably including thc maxir
ecognilion according to tbe presentinvention'but alrs
o murn oumbcrofdifrcrentscarcb blocls corrtsm nding to
includesfurthercomprerxsionoperatiousthatareintendedlo
'
takeplace,wbichfurthercoclpressionoperalioosareoutsido ezch ofthovariousm rssible posit.iol
xswilbintbercfercncc
.
1b
frame,suchLhallbelikeliboodofmatchesbeing foundwitla
scop
coflbeprcscnknveaticm.lncenaincircumslances' lhctargelframeisinclease.d n us lbcscarchbiock traveraa!
aserxpl
ai
ned berciaaflcr,ifa largernumberofpalletus are
els will d6terminc !l1e'Iocal'
icm witllin (be referrncc
r
ccognizedpthepallernrecogniliondescdbedherein willbe ol
frars
slopped and tNefurtbercemprerxdoa operations menliened
m eof'and th% lile contcntsof>thc nextsearch block
aboveare instcaduscd forallcomprmssion.Forcxample in witbin 1herefcrencc frameaflerlbc previoussearch block
'
basjxdovmecompartwn operationswtiltbetargeth'ame.
a
cowquenceofframeswilhinamovie'iftwoadjacentframes n emovemeatofthesearcb block based upcm thesearcb
ntaintotallyblack images(forinstanceasaprecul
worto block traversaloFscts
>
lll
eintrtxluctorycredil
s)lheoverallcompressi
ontargetratio
>can lyo bit>multi-bits'a byte'or
will bc excceded becaus
' c tllose two im ages are in fact mulli-bytes,asnxatiolwd prcvously.
embedimentof1heinvection.tksilluslratedinstep10 inilial
condi!i
onsateset.Ttere iuitalconuitmosit
wluetbeoveallcompreasiou largttralio a predelcrm incd courllvalue
defaullscarch block sizes a lchrxsy perceulagc if lce.sy
compressiouisinvolved ad.
ofaultpatterndirection verlical
and horizonlalR arch block (raversaloffsets botb aad verlicaland Norizontaltargetx archareasoffsets. Eachoftbese
wil!tv discttsscdnow ia szoedotail.
identical
(% i7) 'rbe predelermi
ned counlvalue i
s ttsed by lhe
(00721 '
l''
llrlargetsearchareaoffsetsalsoneedtol)eselin
am anaersim ilarlo tbe seardtblock travcrmalotsels.Tl
w
(* 681 n edefaul
tsearchblock sizesvalue providesa
havttakenplaGvwiilbeshiflcd inacolumadirectioaas
prexatinvention to t
ormit
u te lhreads that arc shifli
search blocks in a parti
culaldirectiou and are notfindin
nB
g'
m alcbes. In particular>aflcrw meminimum rarcb arcaof
lhe rcfcrencc block bas boon searched for instance 20
percenc itu% likely thatK mom alches bet
'w oerlthe search
a
blocltswi
t
hinthat29percenlazcaoftim rdcrenceframewill
havcfoundrrmenumberofolatcbeswilbinthetargetframe.
n us. thepredclcrrrlincdcounlvaluecanbeuscd tosettllis
count. W bilelhiscouutcould be setlozero itcould alsobe
'
setlosomc bigherintegernumber.
valueforadefaullsearchbltlck sz.e. Ifwithin aparticular
framcmore lhanoscscarcb blocksize i
susr.d forinstance
ol
w search blocksi
ze forlhefrarne blocluscontainingvideo
informati
on and anotbcr rs
cu'
ch block for frame blocks
conlu1ng audioinformaation.tbenacomnaensuratenuuaber
ofsearch block sizcs aredesned.
targetsearchareatraversalojrseLsdetermnelheamounlthal
a.
particularscarcbblock is movcd witbin tbc targelfzam e
altcrperfonxing atomparisonoperatiolzofthcsearcbblack
wilhaparlicularscarchblockareaatthetargelfzam e.n us'
foroxample.aflerauinitialcocrlparisonoperalion hastaken
pl
accv using a tbread tbalis operatiug in a borizoatal
di
rect
ion> I
bc borizontaloFsetwilldeterminc the amount
tbatthesearch block willbesbiftcdwibin t
hetarge.
tframe
solhalthenextcomparison opcralioucan takeplace. 'fllat
same search bltx:ky after having bcen shifted witbin 1he
targetframtsolbatallcomparisonoperationsalagivenrow
delerrninod by tlm colum n olfset. 'rhereafter,subsequrnt
rrlovel
nent
sarelbeKarchblock wilhinthetargeframew111
takeplace bascd upon tbc horizont
alolfsets asdmscrz
'
bed
alxlvc.'
I'
ilr shifting oftheM atelabloc
-k basetlupou lbe
targetstarch areaofx a canbe bit, multi+ia a byte,or
m ulli-bytes asmentioucdpreviously.
(*69j M hasbcen rmtcd hore previously,1he present (00731 Aflerbavingselthe.

seinitialconditionsp om ration
inveci
licm canbcojxrationinlyotha l
osslcssmodeanda Ihtnfol
iowslosl
tp 12,as(
kscri
btdbtronaf
ltr.
lossy mcxle. W hen operating in a lor
xsy mode,tl
ac present
.
inveotionallowstbesettingofal
ossypercentagetodeter- (e(
)74J Instepl2,iftbisbasnolbcenprcviotl
slydone'tbe
mine tbe amountof10r
,.$
:thafcan tpe loleratcd w itlzin tbe
patzm recogtdtion operatioasas describtdbcrein. Accordingly,thelossyperceutagecanbesc.
tasaninitialcondition
''
.-
originalframesareformatted intoframcblcx:ks>anda first

frzll
w isdesignatqlaldtrtnt
x framemand anextframts
designateclastlx yargelframe.
s
levv
tbbl
cs
ctortbread1 stadod thal4411
uo
pod
nia
th
sh
ee
an
rch
oe
ca
kpc
ahblocA isnaakingilscooaparisons g:07sj jnuep 14 aprodi
rxe.
aroof
fth
tawi
rgc
f
ratme
cbl
hc
bc identied iflhe:numl
be
its
tt
bi
n
he,
sa
eama
rchl
oa
cn
k
arca tha!artthGryarnereachcstbe lossy percentagc.
a
yze tbeorigizlframcs.Sucb origiualframrsy as
dnal
.
escrit
mdpreviolzsly.w lcuused wr
jlhthcprcseujinvcnl
ioo
io addition lo tbe frame dala headorinfonnation w111be,
ltxcel n edcfaullpatterudirocuooinitialcorzitooisset addedduringprocessing,someofwuichismaisuainedand

in lbc directicm tllalwillbeuscdtolraverselhetargclframe
RtxseI
E
l(tbeproaictorthreaddetermining tllalapaltecndirec-
tionoll
zorlbanthedefaultpauerudirocti
onshouldbeused
fortbe srstnread.
WillCV':DII
'RII'become Ocoded*Wl
liletltberboaderiaformation islemporargy used aod a'erldiscarae,dyas.,
0 be
apparentfrom tbe:dcscrptionprovcl
edberein.asilltkstralod
in FIG.7Ayin additio:tto tbe rramedatzassociated witb

eachframc a roferencc frame uumberorframe ID G IIbe
((*71(
j Searcbbl
ock lraversalocetsarcalso setasau storedsothaljxlinltrswithiuol
bcrframt:
scanreferenccthis
initialconditicm.Iti
spreferablethatacombinationofofsel.s
frame apointerlo wbere thepcxtframewillbe locate.d in
h
h-
US 2003/0081685 A l
M ay 1,2 3
9
mcmory(i.
e.tt
:efgatnrID oftbcncxtframe)audtheframe
blocksize>vcnicalandhorizonlalsearcbblocktraversalaci
d
PredicTorlilreadwilsmakesomeoumberofcompari
soas
(0079) St
ep 24 iniliates tbzs lirstllread'and step 26
cxsociated with the fram odatafor

size willbe added and aeacilframe n c framedala i
s preferably folmatted into a
matrix an'ay as prcviously dcscribed. In particular> lhe
sucb as 70 belween lhe iaitalrefercnceframe lb<subse.->
targetscarcilarcosels, andaprcdictedmovementdirem ion

for'
lhatl
hreafl
foljows.
qucntlarge!frameforsomelimiledareasoflheseframes.In (()
(,
41()) Asshowo inxep 26,ascarcb block cotmteris
Parti
cular.compari
sonswilluk.
eplacebaseduglsdiFcreot jlulianzed.n issearc.hblockcouateri
sused lodet
e.ctthc
portionsoftbe refortmcefralnc and oprrateusmg diferent
siz.o x archblocks.n e siztofthe searcb blockscan vary
considerably,with a range ofdilerentsizestbatspao thc
raog.
eofpolcntalpoasibililles,from 8x8 bytesto 128x128
bytesand largerpdopeodng ufx)n the sizeoflheframe.In
geoeraltbclargcrtbcframo thelargcrtbesearchbl
ocksizes
tbaaretu%d.Asamsult,tb4predictortbrcad canJctcrmine
zmofevrou moveumntdirectio?ofau iuitialsearc:
bblock a
Predi
cledsearchblockMzetuatshouu t,eused,a:xlamalch
numberofmatcb i
nstancesbetwr'cn axarclzblock and the
corrcsponding search block areaswithin lbe targctfram e
tbatare comparcd. xts11
x:numberofcompzrisous tllattake
Place betwecu asearclzblock aad a correspocding searcN
blockareaarckoown. aratlooftbecounlfrom seaz'
chblock
countcrwith rcspcctl
o !bc numberofcomparisons madc
mdicales of I11r percentag: of malcbes that have been
obtailwd.
Percentageindicalingwhettlefmatcheseccurredinthecom- 1*811 Afzrinitiali

zingtbesearchbl
ockcountcriastp
parisoasthattookplacc.
((*76j Accordingly atstep l6,tbe prodictorthread will
h
avc analrztd atleasta firsttargetframe so tbatthreads
relating tocomparisonsIxtweerllheinitialreferflce frame
an a subsequznltargetfsame can lakeplact,
.W bile the
predictorthreadwillcontinuewithotbersubscquentframcs>
t
zs will then take placc
bhe search comparison operatio!
fetweeu1heinilalreferentx frameand tbesubsequeuttarget
ram e.11isunderstood tbe prv iclortbread willcontinue
ntrltliogiaparallclwitbotherlhreatlsthatarelbenaddedx as
descnbed hereinafr
er.
26.step 2.
8 fol
lewsand axarchblock i
sobtained from an
i
ni
t
i
a
k
po
s
zi
o
u
o
f
t
k
i
e
e
f
e
r
e
n
c
e
.
f
x
a
me
.
'
Ihereafter stc
'p32
followsandthesearchblock oblainedfrom
11x initialxarcl
j
t
oa
i
s
c
o
mp
a
r
e
d
a
g
a
i
n
s
t
t
h
e
i
n
i
t
i
a
!
s
e
a
r
c
h
a
r
e
a
i
pos f
n tlw
target rauw Io N zrm incifamatchcxists usfng thcAN D
operaliou for 10%1e.% comparisons, and tbe AND,OR.
ply, clivjcleznd otheroperalioasforpurpose.
IDUjtj
sofdet
orujzg ma
tches iflossy comparisors arebeing perforrned,
as rroted abovc.
(00521 Depeading upon lbc lypeofcomparisou thatis

takingplacc,aswcllaswl
m tberamatcbisfound'sl
epM J,
(
34,or34cw111foll
ow.ln step34z,ifthesearcb block
*77) hsindi
caledabove,ttleprcdictorlbrcadwiliobtaicl matcj
lesideatjml. indicating that&l1tbcbitsaretlm search
.
aprediclcdmovenmnldired
onaswellasapredic
edwarch
bl
ocksizo.TheseaCeusedto initiatelhesettingsforIhelirst
t
read tbatis setforcomparisoas between the refereltce
fh
rame apd the target frame. Furthcrrnore, the predictor
th
read a.
L* obtains a match perccntage based upon the
s
e
a
r
c
b
s
a
alplesthalwere oblained.n us.forcxample,if20
di/ereuls
amplr
,sfrorn tbereferenceframewere Yatchcdto
thetargetf
rame,plferablya!l ationscorrespondingtothe
specm
'c areas ofthe reference frame :nd some boundary
arourk
dthoseareas(ortheerlfirelargclframt)anumberof
'
predicsive matcties can be eltrmined.Typicalty,if ba

numlxrofpmdictivlmatcbesislow itislikely thatthere
wi
l Iml.be a largc corrosponding uumbcr of matdi
cs
bctl
wccn !ho two fram os.In contrastvif lbatm rcentage is
bigh.sucb as 14 ou!of20 oflhe samplcs matcbiug,tban
there i
s a much higber probabilily llyere will bc many
difcrent
malching areasbdwrerlthefzames.Inthu
'
sregard,
when llm data being analyzed in th: :wo frame,s is a
sequcncrofvideo information,a low numlxrofpredictive
matcltes suggests a bi
gh rootion sequence, aod a high
number of prodictive matehes w ggr'
sts a lowr rnotion
u oc.k were fouod within lbe correspov ing searcb block

areaoftue targetfram e,(hen tbe x arch block counleris
inc
remeotexl fcj
fji
catitlg :hatan identicalmatch t
ook plac.
c
and ajlink 1s*croat
cd sbowing thc relatioaship Y tween the
searc lblocka
dthereferenccframefnthesearclzblockarca
sna
of
t
h
e
t
a
r
g
e
t
me Ifalmwover,alossycomparisonopcfatton LsI>eymkttot
j,bif
ttm searcblock matcboswithtbelcesy
range,lb3e4/
search lockcounferisalsoincrementedassbown
by stGp )aud a lir
lk iscreatcd sbowing the rclationslzip
bewoeu(hcsorch blockand lhemferer
xx frameiulbe
blx k area.oftkle targetframe.lf,bowever ilzstep
s
e
a
r
c
h
34c.ljx scarchblockdoesnotmalchw itlzintheIorxspyrange
>
v
tjlen oe
s block area withintbe targetframe fortbal
j searcc
,a ux kLsmarked asno pattern.A ccordingty,
par
t
i
ct
t
ar
w
ar
skje.
can insumcj
onlrelalionsNipbrt
weenttkesearchblockof
c.e jrame aod the xarch blockare.

ljm xjcxnf
aoftheurgel
frameWM 0m1(j.th1 istreatedasiftherew'
ereoomatchand
tl'kt.conpariw rlj3x mc,s wig tueo oootiyjuo tpetw oen tbat
S
afcjjbjock andanotbcrsearcbblockzrcawitbinthotarget
frfam
e.
'
'-
sequtmco.Tbeuttmlwrorporceatueofpodi
cti
vomatctxs (0t383) Tqtt
laterkd,sttp36fottews.w tl
ntt
bcsaarctkblock
can t,
e usedy as desccibed lzerei
nafter, to detefminc tbo
numberoftlzreadstoselinaparticularmovomenldirectiou.
(K7:) Upon complction ofszp 16, il is dctermioed
wlwtberthe prediclortbread provided informtion on tlc
p
ed movenwnl direcllf
m and the prediclod search
br
ledkt
k size forthetargetframe.Ifyes,then ll1e;predicted
sroac
rcb block sizt and prtdicled movmentdimction are
passedoolobeurzdbylheinitiallhreadthalissel. Ifnot,
cantraversc tbcurgetfnme.aodtbesoarchblock Lsshifled

lo tbe rkextsearcbpositiorlwilbiq t
lw targelfra e.TMs Ls
donevsingtlzcCargfelxarchaureakoF
sotstbathavementiose.d
j
previoujsla
y.Tbl
.
us orexamp , tboirjitialt
btead issetlo
search n jjoum'otaldiroction,andtbeendofarow wilbin
a horizonlaj
Idirectio(
1isrk
otrr.
ac11ed,tI
wn tj)e l
m rizxmul
t
a
r
g
e
l
s
e
a
r
c
)
a
z
e
a
og
s
e
t
wi
l
l
l
x
urzd lo move the Karcb
bl
tbeiuitiallbreadthalisset,willusethcdelaultsearclzblock
(0084) '
fhertzfterstt.
p38follows wbichMcpuse.dagain.
size and a defaultprediclr.

d movemcnfdireclion.Slcp 20
followsand lhc firstlhread is set aiso setking tbe searcb
ock t
o tbencxtadjaceulpositionwithintbeyargetframt:.
defhendinguponlhetypeofmatchtha!isfound atl
d thetype
ofmalcbingoprrationlbatispermitled. If thesearcb block

- J
'US 2003/0081685 A l
M ay 1, 2 3
10
masche.sidcntical'Sbcn slt:
p 3'84wiliizlcromeottbe scarch
block cotmtcr and create a hnk sbowkug the relatioaship
betwoea tbe scarcb block and tbe reforence frame in the
soarchblockarea()flhetargetframe.If howevertlesearch
blockm atchesudlb1 the Iossy rangeaud loss1 peunittcd
thea lheresultsoftbiscolngarkson arecompared toresults
corrcsponding fo tbelocationswhero thelargetsearcbarea

us oot fille.d by lhe targt,t frame. Ac rdingly,fzl sucb
ckrcualstauces lbesearchblockisalsopaddedwilb zercksso
thattbcsearch block i
scompared againsl. cerresponding
targetsearcLarcaoflhesamcsize.
step3% 1 o38:2. ln step 38:1'iftl

w resultswitbin thc
ci
ureutIossy rzag,e wrt.equalto orless tbau tbe ptvi
ous
Iossy rangoobtaincd from lhe previousscarcb block arca
thentlzisparticularsearclableck areaisrccord
'
ofslepstbatarcuscd lotenniuatcaparticularlhreadthathas
been sel.Asdiscussed bercinafler*multiple lhreacl
s witb
dlffereutsearchesw illbe rttnnmg in parallel. In order t
o
lerm inatecerlainoflhc.threadstbatare lx ing unproduclive
range are greaterthao tbc I'

esultsz'
om theprcuottslorxsy
rangcp tbt
:n instep331,
2,ali
tt
k iscrcaled,and thcprevi
ous
lirkkisdcstroycd.Tlxrcaftcr,wbetherstcp38J'step38:1or
3852 wasused> st
ep 40 follows.
uaprcductivc threads./
ts descdbed by stop 46' afte.r a.
miuimt
ml searcll area of the refernce frame bas lxen
searcl
wd'such as20 percent.ofthe warcb oftberefereuce
framc' i
l otber directiouallhreads are geucrating yiclds
grealtv lan o!equallo tbe tbreads correspoM ing to tbc
direct
icm oftllisthread,thenlhispartjcularthreadandotlwr
threadsbaving :samecorrespondingdircdionalrnovement
areterminale.
d.
I(
0090J lnasornewbatsilnilartypeofopcralionpinslep48
'
ahertbe mi
nimum searcb area hms been covered'if zll
threadssearcbngin tl
x samedirect
ionyieldlessthansome
predclorminedcountvalut'whicbcountvalt
lecoul
dbczero
orsome oumbe.
rhighcras setin ll
w initialconditioasas
described abovc. lhen all thrcads having tlais partimllar
scarchdirectlon are tenninated.
from thepreviousscarchIxl
silionasdescrit
vdfrom eitlmr (0089) Sleps46'48nd50describotbre.
edifferentlmes
edxsbaving
nopattern.If*however,tbersultswitbintbecurreatlcrxsy
(t*85) In stcp 4e,t

'ere is repealofthe slufting and
searching steps unliltbc enlire urgetfraum is scarchr.d
unle&solberwisclerminat
ed.svben theentire targc!frame
b
a
s
b
e
e
n
s
e
a
r
c
h
e
d,
a
n
t
c
l
z
orcckhi
soocb
nae
y
sllifting tl
zesearcb block w
usis
ne
gar
t
ll
c bl
xa
bl
kta
ti
r
vd
ersb
al
oEscts'wtlichsbifling rrpeal
suntilthcmreadlerminates.
1(
is atso aoted that ia order to mairlair
l ttte scarch block
location> aslartingposilionoisetthatprovidestholocatiou
ofthc initialposition ofthe. search block in the reference
frameisusecl. Furtber,attheendofasearcboperatiouusing
aparticularsearch block, kbenextseaycb bltxk LsobTaine.d
acd operalcd upos using tbat same thread. An esding
position formovemenloflherscarch block position within
thereferclzceframe.andlht
u;tenninationoflbetlread will
b
e obtakned as a rcsultofanotv rthread beingcreated as
descn-lxd llereinafmr.
(
matchcshavingnoIbecnfound)'stcpsareuscdtoterminale
(()()91j Lastly,iftbeoverallcompession targelralio as
dewrityedatxwewit
b resptc-tto !b iaitialconditionsismet
then al1tbethreadsincludiug tlxecur
.
ttzread islerminated. W ith respecttostep 50 ifsleprcn!
50 results lhen the
targot frame Ls savcd in its original state and stcp $2
(*86) Whilelhesbming andsearcbingoperalionstakt
described l
xrtinafttrfollows.K%oolcd abov:the targct
place*ilbasbernrwcognizetlthatifthereLsahigh number
ofmatchosthatoccur'contirming lo search wi'
thinafram e
block particularly iftheoEsd Lsasingl
e-bilcolumnorbit
row, docsnotneedtobeperformed.Accordingly as showa
,
framc is mw r
.d il
kits odgik
u lstate.
d becavu% tix patte.rn
matchingaccording lbepresentinventi
oa isnotneeded arld
subsequrnlcompression roulines oukside tbe r

giom oftlle
instcp42,ifauserprmsetnuml
xrofidenticalmatcbesoccur
((*9zj oncetfl
ethrcadterminalesasdescribezlbyslep40
wi
blthinagivenframeblx k tbentbcnextsbiftoftheKarcb
ock,inslead ofboing dctermirl
ed by tbe oFsots,willbe
move
.d toaninitiatpositiont'
fa.oextftameblockwltNintl
w
urgctframe.IftbatinitialJxsitionoflheImxtframeblock
wilhilz(lw targetframe tlzen prcxllzces :m atcb, instead of
se
arclzing furthcr svitizin tlzat particular framc blockv t
hc
mov
bl cm eotcaulx Ieptated to tbe subsequentncxtframe
presentinveatioocan beuse.d.
above sl
ep52* 1follow aaddatafrom thethread i
swrittgrl
totbefile,prcforably asalinkcdlistincluding thecompare.d
blocy.slhalmatcb.TbisisRlmstrazedby H GS.78 and 712
1
tbatiljl
zstrale ll
w reduced framc bcgder.aud thc link Iisl
block(Iala. Eacboftbeidentitie.dportjonsoftbedataforthe
(*87) Slcps 44 througb 50 derrril

xd bcreinafttrtake
framcnumberfor1l)cTypeO frame. Tbem inlertotlm Iwxt
potentfally atthconcl
usionofopecationsoosubxquent
((:)881 Fkssetforfh.instolv44 iftbesbiftofthelarget

s
ar
cha
1
lhe
eat
lz
tgDl
llbtedgesoflhelarget
fe
ra
mr
ar
o:
dak
sgr
eq
rjc
tba
n aesiY
nga
le
bitpositi
oo(sinc:no
(4
)093) poinlerlolhenextR-framtblockv
q
;4j Au 10 ovroferenceuucaberforteR-9ae
()q
block
singlcbitcolumn)thentheurgetsearcbareaofthcurgel
(0095) amatchty> iodicatingwhetherlor

ssyorloss-
frame w11 bave empty bit pcsitions in those localions
referesceorkey frame andtbepointerlo tl

oreduced R
frames.'
l'
tm numl
xr of rtducr.d frame blocltswithin tbe
f
ramccanbemsedforkcepi
ng track ofoperationsslatl
an e
overlap willoccuriflheshiftingisonly asinglcbilrow or
fram c can lx added as thtv locatious arr detennined

,
pla wltil
e (heshiftlgaods6ardlingoperationsaretalting
place. Nonethele.rss'ttmy are set fortb lxre for eare of
discussionv tbougb itLsnotr,dlbattbescsteps,orotberstcps
diwxksscd bercinxOCOInoltakcplacein thL%dewribcdorder
position
.
.-
reduced franw serve a purptxse witb rospe.ct to these

descrilxdoperalioas, and asdescribed above indudinfor-
ockwitlzintbrtargctblock.IfmatchrsoccurneachIirst mati
onlbatwilltpeulatcdaadtlsedduriogthcoperations
positionofeachf
n m:block (hisindicaterstoahightlegrte dcscrit
wdllcreia.n efram:ID istbesamc astlm rcfcrenct
ce
x tween
tlrtainty,thatallofthecorresjxludiugbitpositionsl
w iaitialpositi
oasoftbcx adjacentframeblockswillalso
bt matcbes.
'
blocks ofdata llxreaflerill

ustrat
e.d in FIGS.78 antl762
r
e
pe
a
t
f
o
r
c
a
c
h
f
r
a
me
b
l
o
c
k
wi
t
hi
n tl
ze frame'witb tbose
bjock
sucjuding:
'
lcss malches arc permittcd and ifltx'

xsy a lossy
'
v.p'
US 2003/0081685 A 1
M ay 1, 2 3
11
percentagcswbicbcanbebcnccialifusedloassist (0105J In sl
ep 62 aft
er baving obtained lhe supersct
inallowz glbesyslem toprocessstbestcpsdcscrlbed
bercin morequickly,
blocks tbeJala isagain updalexl, prrferably in tl4e form of

a 1:111 listlbatsbows lhe matches betwceu the refereace
1#4
/961 tbeframebl
ocksiz
.e
ffamcand(betaz'
gelframewr
bi
chupdleddataissavedlo1bc
((*97) ttle matched bbck coordinatesoft
l)e target fllc.n ereafler'in step 64 lbetargetframe issetas1he
frame,tiw coatoats ofwhicb are shown in milre
xI
detailit
yi'
f;. 7(2'andsbow bothsizx andlocalionof
tllcscatchbloclq as.w'
ollasthcIocati
onoftbetarge!
searcbart.awhereamat
cb i
sfound.Asshowo thcse
coordinates are thcllnked Iislwi(l)tj:jeo.x w'col
z,
and nth located largtrlsearcharapositioas,'indical-
refereuce frameand'lnslep66>ifanotherfram ecxisls>tben

theanotberframe i
sselastbenew targetframesothatslcps
261tl
uough66 caolx vei
peatei
tl.'nwrcafter* asillustraledby
step 63 ifaaotberframe does nolexist.tben tllc.end is
obtalned.Accordingly,astrtam ofdafalbatincludesoriginal
CT'EDCSaswdllasreduccd fzamcsp asodicatcdiaFIG .7D ,
ing wbore amatch(wtmttl

ertossyolor
xslorx
s)bas W'
i
l'EC&uEt.
o
c
c
u
r
r
e
d
.
f
e
r
t
h
a
l
s
c
a
r
c
h
b
l
o
c
k
wi
l
h
i
:
l
t
l
w
t
a
r
g
e
t
j
0l
(
)6) W ih respectto the above* itLs noted lhalm any
frame Tbis isthen le
'prated foreacbsearcb block.
.
((*9#j n ereafter'jus
Ftmsstcps46,411and50 dcscribed
termioatingtkeaclstha batlbeen creatod.step 54describes
lI
)c prcxmrx
s ofthread crcati
oo.In parli
cular,immodiately
aftersetting tlw tirstthread ashasbcrrldescril
xd above,a
nextblock searcb size offsetsaoddirlctionarealso deter-
variauousarepossible.Forexam ple tbeordtsrtbat1beslops
areimplemeutcdcaclvary Al
so,forcxample,tbemaalmrin
.
whi
chlbedatakstracked alvariotu poiutsintbeprocesscaa
vary andwbilealinkedlistorbina!y trceisprefefablyuse.d
'
llw'
o rm aunersofsloring!be dat
a can beimplem ented.
mine.dfrom tl
Repredictivethreadasdescrz
'bedaboveanda (01071 FIG-9/$.illtsstrale an exomplary patcm fora
oew tbrcad issel.W ith respecttosetting :1)19new mrcad a
numbrrofconsideratioas are used.ID no prdcn'
ed order
thoseincludez
(f*991 thatingeneralanew tl
xeadLssetspacodapart
from llx:previotlsly&eltlzrrad itltbesam odirectiou
beforcscttinganotbcrtbreadioJtdifcrenldi
fcmion'
(01(*j thatanew tltfeadissctevery1(X)kilobytmsof*
d
atafortypicaldata,althougbforllighmotionvideo
anew thread ispreferablysetevery 50 kilobylesof
d
ata(lbedistioctioubetweenlow mouon arld hgh
mo
tl tionvideo bcing obuinable from llle prodiclive
lrcadrcferred toabovc);
(0101j tl
zalaftersoltl
glhetbreadscorrex
spontlingto
tl
ze initfal direction lhathas bcen searci
md based
upon apredictivothroad, thetypicalddaultordcrof
ical,diagonal
searclisg tbrcatls is borizontal.vcrl
d +en rotational'and
(e102J thatthe numberofthreadslhatareselare
rrentiallyproceasorlimitr.dsuchthallhenumberof
threads set are limited by the coastraints of the

prf
xossorbeingused.n us'assbownbyszp 56'for
oachadclitionaltbm ad' xeps22 to52 are rem atcd.
'
search blocka wbich iflosslessly malcbed *411m atch to a

targe!blcck tllatisidealical. FIG.#B illustrate.
san oxcmplary largetblock thalfallwilbin thc percentage ofloss
Permittcd,whichis90% intbisexarnple.
(010:1 .fho abovc descri
ption descn-bcdboth Iossyand
10% 1:,.u palternrecognitiontechoiquos, andt
esco
ari
betweenthesearchblockandtbesearcbare.h
wa
pmp
erfor
mson
ed
tisix auAllll optration. W ttile forlosslessrkattera recogjlition and AND operatioa or its logical equjvalenl i
s
ossleascompres'sion. otberojyeratioas,such'as
needed.forI
xoR OR subtraclion ormulliplication,ruay in fac!oblain
betlcr
'rcsul
'ls
((
)1()9j R
'
cferringback to FIG.1.tl
w above-operalionsas
descri
bcd can takeplaccwitbin arl
y one oftbe computcrs
10>and thefltheresulting strcarn befurthcrencodcd.Such
blltbe emcodirlt can f(
7' instance usc tbe multiple pass
oocoding dcscribed inU.S.applicationSer.No. (6
3N21096
ej
xitjeduurthtxlml(jAjlparal
usForEn-codiugInfonnauon
Using MulliplePassesM dDecie nglnA singlcPa oftlr.d
oq Nov.29p2(KO,aad assi
gyt
e.
d to ttte.szme assipleeastbe
preseutinvention* orotlwrencoding procev s. Oncefully
cucocledandtbenlransmilledtodestinalioadevice sucbas
(()1tk3) M shown byslep 58withanumbcroflhreads lhecoaiputer14@illustratcdinFIG.1,dccodingthatistbe
ilwiagpreviouslyboenrunningicparallelifA.IIlhetllreads
ax terminae ,st
op 60 thon follows.Othenvise,lbe continuation of the diFercatsbifting,searchiag aud thrcad
cma
sociatcd Mrps
dtionandtcrminationol rationsandlhearx
escn'
bed abovecontinuc.
reciprocaloftheeucodingwilbeusod,and astbelaM Mep

oflhatdocodingprocer
xs,tbeoriginalx tofO-fraamscanbe
reproduccdfrom tlw combinationofO-framcsandR-frame.
s
thalresullfrom lbeurageoflhoprcr ntinventien through
y
usageof111e.linked 1istyandm intefsasdescribed herein
.
.-
--
lr)
pltlz
q Iustcp6: tueli
nkedlisttbalilasbeenobtaine.
das ligbtoftbcdetaileddescriptionrelatinglotl)
eobtainingof
arosultoft
lw comparedblfx:
ltstbatwerefound asmatcbes
botwcea tbe scarch blodcoftbe rofrronce fraine aud the
scarcb block ama oftlle targetframe arell
w nupdated lo
oblai
n suptrsetblocks Tepvvsenting tkm matcbed data.In
particular lle fi1st second,and nth locatcd targelframe
searcb aream silioasillustratcdinFIG.7C arecollapsed lo
tilelinke.
d 11s1based upourocogni
zedpattcmshemin, itwill
be appartnl to one of ordinary ryill thaloblaicdng the
origi
naldatasctfrom 111scondeaseddatasd::can bereprouce.
d bytbe expansion oftbetlatavsing tbe orighlaldxa
tba!exisl
swilbintheO-fra- sthalarorelained asO -fram es.
obtaint
lw sapersetblocks.n us,wbilctlwrcmaypreviously
(01l0J Although various prefen'

cd embodimenr
s bave
.
bavt bcen a numbcr of different rclatively smal size

matebe.
d blcpclcs,to tbe extentthattl
wre is an ovcrlap
betwocnthesesmallblocl
cs alargcsupersetblock(which
ooodnotnecessarilybavotbesbapoofablockcanbefound.
boen dcscribe.d indolailabove tl

m r,
cskiled in llw arlwill
rcat
lilyappreciatelha!manymodifkati
onsoftheexemplary
omKydimcn!areKr
xsiblcwboutmateriallydcpartingfrom
1henovelleachingsand advantagesoftbis i
nvention.
'

Page 3 of 14
'
J
.
z)
US 2003/0081685 A 1
M ay 1, 2 3
12
lclatm :
l AI
netbod ofcol
zlprouiag a bit-sizeofapluralit
y of
soquoatialframeG each frame comprised ofa plurality of
bils.Ebemelhod comprising tbestepsof:
cotuparing a pluralityofdillkrentscarcb bloclcswithina
referencx frameto atargetframetoobtainapluralilyof
10. n eIrethodaccording toclaim 9wbcrein tbcprcde:lcnni

ned numbcrisoue.
11 n emethod accordmgtoclaim 9wbcrelnthcmalches
arc required to bc identcalmat
cbes.
12.3'hcmethodaccordingloclaim 9whereintbematcbes
can iotltyducc loss.
n cmclbodac rding loclaim 7 theMep ofcompar

c
ro
liabl
s'lh
rcuuc
ftr
aqit
a
!
blefin
sesl ingl3.
toomp
ana
in
it
lo
frc
ak
me
oe
fr
te
bf
Gepl
rae
l
yame
ofsi
c
ui
el
nl
tla
rag
me
comparosseafch bl
oclts with targetblocl
;s wil
hin lbe
-
and ll)ctArgetframe irkitiallyl

x ing setlo&subsequent
framcoftlx pluralily ofscquentialfram es;
repealing thestepsofcomparing and usitlg.

2..'Ihemelhodaccording toclaim 1furtherincludiog the
targelIraumpand furthcrincluding the step ofterminating

slyccif
ic olws ofthc search blocks used by the steps of
lraversi
ng the Erstsecond third and fourth groupsif affer
a predetermined porti
on ofltle targc!frame Ls compared
otheroae.softlw searc.tzbloclrs resultin a pxditem itke.d
greaterpercenlagcofmat
cbesbetwccnlheonescarch block
and lhccorrespouding largelblocks.
14.'
nl
e nwlhodaccordingtoclaim 5 wbercintheMepsof
traversingtbehrslgroup,$hesccondgroup, thethrd group
areomral
ed ouinparalleloporati
ons.
15. Tbcmethod accofding to claim 14 furtherZcluding
tbeslepoftcrminaling tbestep oftraversing oneoftbefu'st
sllsofrepoatingtbeMepstlfredosignatingandreP'atingso
second aod Ihird group bofore t

erminating tbe steps of
usirlg theplural
ityofcempareclblockslooblai
n arepresentalion ofthe largetframethalLq;compressad;
redesignatingasthcreferenccframetbesubseqgentframe
thatwastbelargelfrarnoatxlrrdosignatingasthetarge!
frameanotbersubsquentframe thatfollowsIbesubrequerjtframe'aX
tlatoactlof tile rzmliniqg plln lity ofr

equentlalftamt;
s
bocomc tbe:L'trgelframeorle timr while tlleslem ofcom paring and l
zsng areprlformed.
3. n e metlzod according to claim lwherein tlw Kpresenutioaofthetargetframelhatiscomprcssedusesaliaked
list.
4.n e mcthod according to claim 1 wherein tbestep of
com paring iucludostbcslspsof:
lracompaa
velsing tleacb
e targelfralzle in a borizontaldirection lo
of a firslgroup of tbe plurality of
di/erenlsearchblockslodifl
krentpositioaswjllziothe
targetfrnme'
' aud
ttw elsing tlx ottmo oftbt;(ilsty R cond andtkdrllgroup.

16.n cmclbodaccorlingloclaim 14wimreint
hesttpof
comparingcompartsscarchblockswithtargetblockswilhi
a
thtltargctframe, aud furtherix ludingtbcstep oflcrminat
ing specifi
c onesofthosearcbblocksu.se.d by tllcslepsof
travcfsing the filsl secood arxl third groups if after a
Predelermined portion oftbe largetframe tscompared, a
Prcdelermined numberm atches lxtween tbe ene reavcb
block aad tbc correspooding targetblocks isnotreacbed.
17
d . 'n e metbcd accodiogto claim 16 wbcrein lbeprcct
nednumberisonc.
1e#r.mi
n e mothod according to claim 16 wberein tbe
matchesarc rexjuired lo be i
denticalmatcbes.
travelsing tbe larget ftame iu a vertical direo-tion to
19. Tlw method accordin: lo claim 16 wNerein tlze
compart tach ofa setxoud group of lhe plurality of matchescan introducoloss.
di/erentsearch blockst
o dilfercntpositi
onswilllin the
20. n c mothod according to claim 14 tbe sttp ofcom targetfram.
parirlgcomparessearcbblockswitbtargelbloclr
.swi
tllin1hc
5.'l'hem etlx)d according loclaim 4 w llereio theszp of largelframcp and furthcrincluding tbc step ofterminatiag
compatitl
gincludcstraversirtgtbetargetfraax inadia!onal speciiicoaesofthcsezrch blocksused by thc slcpsof
ditectiontocompareeachofati
lirdgroupoftbepluralltyof travcrsing the Iirst second and tbkd groups if after a
diflerentsearchblocl:st
o dilrertntpositionswilhintl
w large! piedclcrmiaedportionofthq.targ!fram.iscompAred,otber
frame.
ontsofthcsearchblocksresultiu a prcdclerminod great
er
6.Ttte rlx tlmd accordingto claim 5 wM reia tlx stepof percxm u cofmatclwsbotvxeatlltotm searctbloc:k atxltbe
oom paring furtberindudcs tlx step of traversing tlm target
fi
rf
yme
d
f to compare cachofafourlh group of11x?luralityof
f erentsearcbblockstodzkrentm sitionswithln11m target

nme aldiTtrentrGatkmalpitioas.
7.'I'bcmethodaccording toclaim 6 whereiatbestem of
traversiagtheftrstgroup,thesecondpoup.tbethirdgroup
and tbefourtb group areoptrated onlnparatlelom ratioas.

8.'
Ihemethod according tocla'
lm 7 furthcrincluding tbe
rxtopoftetxrkinztiag th stop ckfeave.k-sitg ont oltG fip-;!
sccoud.tbird and foarth groupbeforelerminuing 11)eslcps
oftraversiag theolbersofthefrsqwcondathirdand fourtb
gxmp.
9.'
Ih:method according lo claim 7 wl
xreiolhcste of
comparingcomparessearcbblockswitlltargotbloc.kswl#tbin
thGtargetframe,andfurthorincluding theslep oflerminat-
ing s
'peczc ouesoftbc searchbl
ecltsuscd by tlx slepsof
travcl
sing tbeErst,ry
ccond ll
zird and foullhp'
oupsif, after
aprtdeterm ine.d portion ofthetargttfram eiscompared a
predetermined num txr matszbr.s belween lhe ooe searcb
block and thccorresm ndingtargetblocltsisnotreached.
..
corresponding targelblocks.
21.n emet
bthdaccordingt
oclaim 4whereinlhcstc'
psof
travelszg tbe fustgroupand l

bexccmdgroup am om rate.d
oninparalleloyrat
ioas.
22. n e metbod according lo claim 21 furtherinduding
--
tht.slepofterminalingtbcstcpoftravcrsingoncofthefirsl
al
xlsccond groupbeforelcnninating tlzcstepsoftravtoing
thc othel
s ofllefirstandsecond roup.
23.*111:.mtte accodingtoda!
un21wbcreintikestcpof
compariogcomparessearchblockswilhtargc!blockswithin
1bc targelframe, and furtherixluding lhestrp oflerminalingspeciticonesofthc searchblocksusod by tbe stepsof
lraversing lbe l
krstand second groups if afler apredetcr, red aprodetermincd portionof!belargelframrLscompa
mined numbermatchr.s bctwezn tbcone R arch block and
lhe correslxmding targelblcxzksisnolreacbed.
24.'
flx melbod according lo claim 23 wbertin tbe predeicrmined tm mbcrisone.
25. n e mctbcd according lo claim 23 wbcrein lhe
rntchesare requircdto be identicalmatches
'
>-?
US 2003/0081685 A 1
M ay 1,2003
13
26 e
rtje metboG wcovtlmg to claim 23 wtierdn the
maleb'oscan introduce Ioss.
z7 'rbem etuoclaccorling to claim 21 tuestep ofcom.
Parin'
gcomparessearchblockswirhfargelblockswrith,
'
ntbe
targetframc,AI
AJ funbcriaduding llzc Mep ofterminating
speciiic ones of (he searcb bloclls used by the steps of
.
1Q Tt
w.lnettsoaccoiog todaim lwbereintbestepof
compari'.gcompareslbesearct,blockwithtlw targetfr'
ame
usic. AND om ratioas.
41.n emelbc'
d accordi
ng t
o claim lwlwreiutbestepof
using oblalas tbe representalion oftbe targelframc tl
zati
s
compressedascomparr,dlotheoriginalslatewithIossbeiog
travolsiag t
he ti1
stand sccond groupsit aflcr apredetez-
inlrtxl
uced.
I
niaedportit
an oftbe.tavgetf
zaum Lscomparcd ottteroac;
sof
tbosoarchbl
ocl
csresullinaprcdctcrmine.dgreaterpcrtrntagc of matches bclweu lhe onc scarch block aad the
cortesN nding targetblocks.
J.8.Tl
w method accordinglo chil
zt4wherein t
hestepsof
travcrsing traverse the target framo such thatsequential
diflkrent positions withiu 1hc target frarne overlap ooe
anotlxt.
29.'
The metbod according lo claim 28 wherein the
sei
quenlialdillq
erontpoliotls dilrerby atmostapredclerm nod nufnberofrowsofbitsandprmletrmikwdnurflberof
columnsofbits.
N).The method according to claim 29 whcrcin the predey
crmined numbcrofrowsofbitsLsoneand thepredettrmiaed ttuallxrofcolumnofbitsistme.
f31
th.n emethodaccording toclaim 4whercinatleastone
O e sttpsoftravcrsiag tbe targctframein tbeborizorltal
direction and traversing lhe target framc in tlle vertical
diroction travcrscs(becizti.rtllargotframe.
32 n e nlethcd according lo claim 31whereio.
traversing the entirc largelfram ein lhe holizcm taldircction indudesfnaki
ngrepealr
,d pa
ssesin l11tborizonlal
dircctionatdit
lkrentvcrticalpositionswilhiutbctafget
fram e'
. acd
lrai
versing theentire targetframeinlbcvcrtie-aldirecli
on
ncludes making relxated passra
sin lheverticaldireo
t
on atdillkrcr!tbocizontall
yck
sitoaswitllin thctarget
fri
am c.
42 n ouwtbod acctxdiog.toclaim 41wtmreiotbestcpof

comparingcomparestbtscarcb blockwith tbeIargetframe
using ANllom ratioas.
43 '
IneInctbodaccordingtoclaim 41whereiothestepof
comparingcomparesthescarcb blockwithtl
Aetargolframe
using OR operalioms
44 'nw uxthodaccordingtoclakn41wboreiotbeslcpof
com panngcompat.stbesvarcbblock withtheult.tfrAmv
usiog XOIlor ratioas.
45 n e awtbod accordingtoclaim 41wlmreitltlm stcpof
'ring com parestbesearch block with tbe largetframe
compa
using add omratioas.
46 n emetbodaccording loclaim 41whereinl
estepof
' ingcompares(bescarch blockwilhtl:etarb
c(7mpac
gelfram e
usiagsubtvactopralios.
47 n e method according(oclaim 41wbereotlm stepof
cemP'
aringcomparcsthescarch blockwith the targelframe
usngm ultiply opcrations.
48 n c xl
ctbod accordingtoclaim 41wbereintbestepof
comp'
aringcomparesthescarcb blockwitbllw largetfram e
using dividooperations.
49.1Ye
neltlodactxxuing to claim 1wberein1beMep of
ltsiai
rC'
Ombine.soveflappzg ones oftbe plurality ofcompare.d blocu to oblainasuporsetblock thatLsux d forthc
rejyrex utatjon.
5: '
nje methodaccordin toclaim 1w hcrcin 1bestepof
'ring hmludes tbc stcg
compa
p of(racki
ng compared bl ks
Ihatxprcsentanicl
enticalmatch between tht searchblock
arxlacxvvespondit:gurgotblock tbztu i
stswitEnllm ta%t.
t
33,'
f'
lztmcthodaccordingtoclaim 32whereinadjacent frauw
di/e
entverti
calposilionsandadjacentdiffcronthorizontal
51 '
j'j
x methodaccording loclaim 50where.in <ep of
ilr
i
pos ocswithin 1hetargetframedillerby atInosta predelerminexlnumbcrofrowsoftlitsaad prcdeterminednumber

ofcolumnsotbits.
d M .n emethod accordin: to claim 33 whormnthe preezrmi
nmd Immberofrowsofbitsisonc and tbeprtdelcrmiaed numbcrofcolumn ofbits i
sone.
35.Tbc motllod according lo claim 32 wherejIzcachoftlzr
stem oflravtrsing simplemenle
.d using aditfertntprocmssorlhread.
36.11x methodaccordi
ngloclaim 35whereineachofthe
steps of lravcrsing is implemente-d using a plurality of
diFerentproccssorthfcads.
:
5.
7.'l'
bcmgthod accordingtoclaim 1whereiuatleastone
vidco processorthroad Lskused in tl'
l
e step ofcomparing to
c
do
mparerefemncefl
amevidc.
odatawitbtargetfraamvi
dco
ata and atlcastorlc audio proccssor tk cad Ls used lo
o datawitbtargelframeaudio
dcomparereforenceframcaudi
ata.
38. n emethtxlaccordiug to claim 1wberein allemstone
procesw rthread ismsediotbestcpofcomparingt
o comparc
rdcrencframevideodatawithurgotframevideo dalaand
alsorefcrenceframeaudio dataw itlzlarge!frameaudiodata.
39.'
rbtmethodaccordirig lo claim 1wherei
n Zest
cpof
using ob4ainstim rrprcscntation oftlm l
argelframe tbatis
compressed as compared to the orip'nalstate withoulauy
lorx
sIxing iatroduced.
trwki
'ng Ls uxd to provide a dynamic indication of an
a
mo
u
ntofcomprcssioc achievable I
x tween tix refcrencc
frameand tlletargetframeand wherein theslep ofcomparing furtile: includes lhc slo.p of solectirlg a coprerxsion
urgv;
trztio
52 n e metbodaccording to claim 50wlxreizztbe;stepof
' ing ismoppcd when lhedynamicindioati
compac
on iodicales
thattlm compresx
si
on largetralio is reacbe.d forthe target
frxnt.
s3 n emetbodaccordin oclaim 52whereinthestep of
com p'aring funheriacludmsg1t
1x:step ofselecling adesired
amountoflor,
stllatcA betolclwtr.;witbin tbelepesentation.
.
s4 n e metbcd according Io claim 53w hercin thc cotnPareibtlxkisconsidere
.didenticalt
othcsearcbblockifa
perceclAgeofbilswit
h
i
n
t
i
m
t
a
r
g
e
l
b
lock isatleaslequato
tlzedesire.d amountofk)s.s.
55.
n emetb
od accordingloclaim 1wberein tbeslepof
co
mpa
ring jurluerrkcluestheslepofscleuing an amounl
f
I
o osst
56. hatcanbc tolerated within tbereprescntation.
n emetbodzc rdingto claim 1whcreintbestep of
cemparing includeslbestepsof:
iniliating apredictiveprocessorthread lo obtain a.ae'stimate ofa likel
ihood of mat
chcs bclween tbesearcb
block #nd thetargctfiam;and
--
'
VJ
'
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US 2003/0081685 A l
M ay 1, 2 3
14
passng tbecsllmatconlt)atleastone comparingprocessorthread l

hal Ls uscd t
o compare tbe plural
ity of
diFerenlsoarctlbltycl;sw'ithintbcrefeeuccframetottm
targctframclo'
obtainthe:pluralityofcomparedblocks
57.The mclhod according toclaim lwherein !hestepof
com paring com parts atabitlcvcl.
58 n cm othodaccording toclaim 1whcrointheslcp of
corupariag. compaxs atabyw l
evel.
sk.A method ofobtainisg a linkcd listofrcdundant
pattemsthatexu
stin atargelframefrom arcfcrencr fraaw,
eacb ofthe reference and larget frames comprised of a

Pluralityofbits.tlle metbcxlcompcisiug tlm xepsof:
coraparing cacllofapluralyofsearch blockportions of
thercfefeticeframetoapluralityoflocati
onswitbinthe
largetframc to dtcrm irm aplurality ofmalcbes'
'asd
forrach matcl),rcpYesettting thatportion oftbe lazget
fram e contsponding to tbe m atcb w1t1: a location
id
merthatislinkod to tbe searcb block portiou.
60. nent
em etbodaccordingtoclaim 59whereintbeslep of
comparirtg includestheslepsof:
iuttiating aprextictive processortktaklto obtain auestimate ofa likelibood of matches between thesearch
block asd thttargctframt;and
passinglbeestimaleonlo atleastonecomparingpmcesK f elread tualis ux a to cornpare tlx pluralily of
dcereotsearchblockswitbin therefereuceframetothe
l
argetframetooblaintll
opluralityofcompare,dblocks.
61'n emethod according to claim 59 futtborincludiag
!bostopsof:
oblaining anothertargm fram e;
comparingcachofayuralityofx arcbblxkporlioasof
tl!erefercaceframetoapluralit
y oflocaionswithin (he
zame lo dctermiae a plurality of
another ucgel f
matches.
o and
foreacb malcb,reprmsenling tllalPortion ofthe another
targetframccorrespondzg lo!hematchwitb alocation
idcnlitiertll
atislinked to lhe scarcbblock portion.
62.'
l'bcIncthod according to chim 61whereia forIocalionsof(11c:largefframeti
otmat
ch witb tberearclz
blockK rtionsoftbereferelnactcdforanmc
a
r
e
s
d asremaining
dalathatisassociated witb (betargetframavec
.
63 n eInethodaccordktg to claim 62 wrher
tinforIocatiorm ofthcanolxertargetframe tbatdo notmatch wilhtbe
searchblock portionsofthe.reference frame arc saved as
r
emaining data thal is asrociatcd with tbe znothertarget
j.
ram e.
64.n emetbodaccordingloclaim 59wherein11 stcpof
czympa
slosstssly.
6 ring comjlarr.
5.'n emetbcxlaccording lo clam 64wherein forl= t
iorm oftllo urgelframctbatdo rl
olmatchwith thorearch
bl
ockBm ionsoftlx refcrenceframearesavtdasremaining
datatbatisarssociated w1t11lbe largetfram e.
66
.'
Ihemelimdaccordin:toclaim 59wbereinlbeMcpof
comm ringcompareswr
itbinlrodtzcti
ouof10% beingpermitted.
67.Themetbod according to claim 66 whercinforl
cr-atiorksoftbc;targelframe tbatdonotmatcbw.
1:1:the scarch
blockm rtionso1berdercocoh'
amcwitbinaperrniltcdltxss
perceutage aresaved as renl
ainiug data tbatis zssociated
wit
ht
helargetframc.
68. n e Inethod according to claim 59 wberein!he plu- '

ralilyofl
ocal
iousinthetaTgelframeoornpnseatraversalof
an clztirc tarzct frame aad the plurallty of seatcb block
Iocalfousintbe;rcference frzme comprise alfavcrsalofan
elltirr rcferentx frame.
69.'Flzemetbodaccordinglo claim 59w hereineachframe
includes apluxalily ofbitsreprcsox ative ofan im agc.
7Q.'rlm caethodac t
xlik
v todzim 69whexiueactlfxame
inclucksanotberplural
ityofbitsreprcyentalive ofaudio.
71.n emttbodaccordingtoclai
m 59whertinthesrcpof
comparing comparesatabitlevel.
72.Th0mcthod accordingtochim 59 whereinthestcpof
cclmpas-ing comparmsM lbytotovel.
73.Themcthod gccordingtoclahn59wherin!hestepof
compartlg iucludcsIhf:stepsof:
traversinag l
he lazgtlframe ia a horizontaldireclioa lo
c
t
a
mp
r
r
each of a Erstgfoup of lhe pluralily of
djg.ereljtsear
chbloclks todifferentpositionsw itllinthe
targotframe'
.x)(j
tFai'frsing tbt tzrgelframc in a vertical dirccti
on to
c
omp
rc
cb ofa sccood group of lilt;plurality of
tl
ilera
eo
tsc
eaa
rcbblockstodi
ferentpostionswitbinthe
tf
t
ar
ge
r
ame
.
,
74 'nw methodwcordiogo cjai:rl73wl
x rem thcslepof
comparingincludestraversingtl
m urgetframeirtaliagpnal
diroctiontocompareeachofatllirdgroup oftbepluralityof
difcrentsearcbblockslodiiferentposilions'
kvillintl
x larget
framc.
75.''
IYCmethfhd iccording Io claim 74 wherein lheslcps
of travof
sing lhc fi1stgroup.11)0 sccond group. the third
grotzp areoperaledonin paratleloperations
76 x c mr
tuodaccort
jingtoclaim 75ftfrtherif
lcluding
tb*&tCPOfterminalingthcstepoftraversingolm oftbe::st.
Kctmd and third group beforo terminating tbe stops of

lraversiog tbeotlcfsofthc frstm xcond and third group.
77.'I'hem elhodzccordngtocjaim 75w horein thestcp of
comparingcomparcssearchblockswithlargctbl kswithin
thetargetframe, al
xlfurtheriocl
udmglhestep oftcrminat.
in spccifk oues
ofthe:scarcb blockstl
ed by thestepsof
lravelsing thc firsq sccond and thirdsgr
oups if after a
predelcrmincd porti
on oftbe talgclframc is comy arcd a
p
predezrmined ntuobcrmatcbesbel
thr oneseafch
block and thecorresponding targetbw
loe
ce
k.u
is ootreached.
7s n e metlmd accordingto claim 77swbor
ein the pre.
deler'
dnmumberisone.
79mle
ne
ethcd accordiag to claim 77 wbertin the
mat
cb
'os arere
quirod tobe identicalmatches.
ya' n e mey
hcxj according jo claim 77 wberein 1he
Iyjatchescanintroducclx s.
g1 n emethod according to claim 75 tbestep ofcom'oompayesscarcbblockswithtazgelblockswithinlbe
Paring
largetframe and fuzthorincluding !he step ofterminaling
spociftc ones of tbe search blocks used by tbe steps of
lravelsing lbe fusl, second and tbird groups if after a
predetermiue.dportionoftbetargotframeiscompared
sot
ber
onesoftbesearcb blocksresuh n 1dprexletermine,d gr
cater
percealagcofmalcbesbchvecntbtoacsearcbblcx:kandtbe
corresl
xmding targTlbltxks.
82. n emethodAccording lo claim 73 wherein lheMcps
of traverskl
g lhe flrslgroup and 1be second group are
operafed ou i
n paralleloperations.
83. Tbcmethod according loclaim 82 furtherincluding
thestop oflermnatngtheslcpoflravcrsingoneoftbehrst
-'
US 2003/* 51685 A1
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M ay 1, 2* 3
.
15
and setxmdgroupbcforcterminatingthestepsoftraversing
theothels of1be hrsl()d second group.
:4 n o mctbotlaccordingtoclaim 82whereirttheslepof
compadugcomparcssearcbblockswilhtargrlblock.
swithin
l
h
c
t
a
r
g
e
t
f
r
a
me
,
a
n
d
f
u
r
l
b
c
r
i
o
c
l
u
d
i
n
g
l
h
e
:
s
t
c
p
o
f
t
e
rmi
nating specilicones ofthesearch blocksused by tbestepsof
traversing 1he fim!atxlsecond groups if aftcra prcdeterminod portionofthe largetframeiscom pared,apredetcrmincd numbertnatches belween thcone rellrcb block and
thecofrespoocling urgctbltlcksisnotreached.
:5.n e mtthod according lo claim 84 wherein theprodel
erznmd numberisone.
:6
. n e mcl
hod accerding to claim 84 wherein tbc
m atchcsap require.d lo bc identicalmalches
.
#7. '
Ilw melhod according lo claim 84 whcrein tlm
malchescan inlroduc,
eloss.
% .'
IYc method accfding lo claim 82 the slepofcompariugcomparessearchbloclcswilhtargetblockswilbi
n the
urgetframc, and furtlieriocl
uding lhe step ofterminating
sm cific one-s of tbe searcllblocks use,d by tilc steps of
(ravel
sing the firstand scmd groups if aherapredcter'red.otberoncsof
minedportionoftllctafgye:framtscompa
thoscarchblocllsresultinapredelennine.d greaterpercenlage ofm atclze..s betwecs tbe otte x arcb block aud tl)e
cor
reslxmdingtargetblocks
89
.'
l'lm mcthodaccordinlytoclaim 73 wbefe.inttm stcps
oftravcl
sing travers tbetarge!frame such thatwqucntial
dtfkreat positio> wilhin tlie tacget frame overlap orm
anotber.
90.Tlm m ethod according lo claim 89 wherein lbe
sequenlialdifereutpositi
tmsdifl'
erby atmce.taptttleteftpincdnumlxroftom ofbit
sand prodeterminednumberof
colum asofbils.
91. Tlw methtxlaccording to clzim 96 wlseveikjlbe m edelermined numbtrt;frowsofbil
sisonc aad lheprcdoterm iaed numberofcolumn otbits isone.
92.Tbcmctl&oaccovdiogtochim 73wbeveinAtleaskotlt
oftheslepsoflraversflg thetargelframein lhehorizoutal
direclion and traversing tbc targel frame in tho vcrtical
dirtction havetse;sthe enlizttargetfram e
.
93. '
flm metbodaccording to claim 92 whcrein:
trwersingttm tntiret'
tmetfraqm in tlm boriztmtaldkeclion includesmakingrepeatodpasscsintheborizontal
di
ecdonatdiierentverticalpositionsw itlziatlx targc!
frarm
ex'and
traversing tlx tntirelargelbameintbe vcrticaldiredion
includesmaking reated pwc,esintlevetticaldirection aldilrcren!horizonlalpositioaswilhin tbeurget
f
94.rame.
Il
bl
od
ds
'rere'
n
lmvcme
rticta
poa
sc
ic
liordingtoclaim 93whcreinadjaccnl
on
nad
adj
ent
Fererltborizontal
positionswithia tlletar
gos
a
fr
me
da
ic
Fe
rbdi
y atm ostaprede(erm ine.clnuberofrowsoflyit
sand predelerminednumlxr
ofcolumnsofbiw.
95.n e method according to daim 94 wlereitltheprecklenrdned numlmrofrows(#fbitsi
sone and tlw predelermined numberofcolumn ofbit
sisone.
% . Tbcmethodaccordingloclaim 93whereineachofthe
stepsoflraversiugisimplemeatodusiugadifErerltprocessor
lhread.
97
.'
l'hemethodaccording l
oclaim 96wbcreiafachofthe
steps of twltsing ks impltt
m ot
tr
.d usiut a plurzli
ty of
dfffcren!processorthreatis.
98. n cmethod accotding(oclaim 59w hereinaleastotm

video processorlhread isttse
. di
n tbostep ofcom paring lo
com'pareceferex eframevideodata with largetframe vldeo
data and atleastotm audio proccssor lhread is USC.II to
comparorefcrenceframe audiodatawith targelfram eaudio
data.
99 n emethodaecordipgloclai
m 59whorein alIeastoac
ProcerxsortbreadLsux dinthestepofcomparingtocompare
roferenceframevjdeo datawitlitargelfram evidoodalaand
alsorefer:uceframeaudiodatawithtargetfz'am eauttiodata.
1% .A I
ncthodofxarcbingforpattornswitbi
napl
urality
ofsequentialframr,s eachframecomprise.dofapluralilyof
bits arranged in a matrix array lbat can lx traverse
.d i
u
horizonlalpvenical and Jiagonal direclio% lbo metbod
comprising:
comparingapluralityofdiffercnlsearch blt
xkswitbin a
refereocefranm toatargetframetoobtai
napluralityof
comparcd block.
s'tl
w rderooceframeIxing setto an
initialframeoftbe plurality ofsequcntialfrAmesand
the targel frame inil
ially being set to a subxquetjt
frameoftbeplurzlityofxquentialframes'Qm step of
comparing including:
tzaversing tbo largetframeina horizonlaldi
rection l
o
cotnpare atleasta firstgfoup ofserarch bl
ocks io
corrcsjxmctiag horizontal targetbltxlks witlzin lhe
targelframe'and
travorsing lhc largetframe k)a verticaldirectioo to
compare atIeaslasecond group ofK arcb blocks'
wbich may ormay nolbe ditlkrcnttllau thc firsl
group ofsearch blocks'to corresponding vcrtic.al
largttblockswitllirlthe targetframe.
101.n tmctbodaccordingtoclaim 1G)furtberincludiug
1beslopsof:
detenniaingw bethertbetraversaLsinthehorizonlaldirection and tbe vertical direction msult in a suKcient
u
rofcomparisonsbeing fonod betwrmnfbetarget
fru
aml
rlxyea
nd lll
e reforesceframe;and
ifasudelltnumberofcomparisoasarenotdelermined
t
o cxi
sq travel
siag tlw tafgcl frame in a diagonal
uiacion to comparo alleasta tbirllgroup ofsearcb
blocksawlzicbm ayormaypotlyediForentthanthe5rst
and SXOrZ
ITgroum ofsearcb blocks to conzsponding
diu onalta
..
rge.tbloc;
ksw ithin tiyetavgetframe.
1.
02''
Tl
m mctbfKi'Co fdia:10Cl4im IIO Whertz thestcp
Of O EEIPHZ: is repeated On 16 Plurality ofsoquent
ial
frame-s,audfurtiwrinclude.
s tbexeps oI:
redesigpatiugas11x:rcfemnceframetbesubsequlntfratnc
ttjatwast
lletargetframea.ttdredmsiguatv as(beSatgos
frameanotbcrsul
v quentframethalfollows tbe subtfraum .an
scqucn
, ;j
relxating thestep ofcomparing.
103. '
l'
hrmetbodaccordinglocllm 1% furtberincluding
th> slepsof:
redesigaatiag as 11
x targel frgme atmtber subscquonl
frame lbatfollows(besubsexjuentframeaqd>
'
repcating tbc sleps rcdesignat
isg and rtpealing so lbal
each of tbe remaning plurality ofsequcntialframes
tmcomt the. target frzme one time wbile theslep of
compal
ing isIycrformed.
..

V J
.
)
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US 2 3/0081685 A l
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16
1G4.'l''bt mttbod accorcltng to elaim 103 wbeen tbo

reference fram eremairxslhe sam e.
105.n emethotlaccordingtoclaim 1G)wbereitzttleslep
ofcomparing includcs traversiug tlx largel frame in z
diagonaldirccli
on to comparc eacb ofatlird p'
oup ot1.
1:6
gluralily ofdiferenlsearcllblocks lo dilereat positions
wilhin llctargelframe
106.Themethtxlaccordingtocla.l 105whercin1hestep
of comparing furthcr includes thc step of travcrsing the
t:rgt.l frame lo com pafe edcb of a fourth gfoup of thc
plurality ofdiffcrentsearcb blocks lo diflerentpositlons
witbinthelargetframe atdifecentfolatiooalpasitlons.
107.n em ethodaccofdingtociaim 106whereinthesteps
oflraversing thc lirslgroulp, the second group.the lhird
group and 11%1 fouflb group aro operated on iq parallel
operxi
ous.
108.n erzmtl
zodaccfdiag l
ocl
aim 107furlberincludinz
11.9.Tbe m elbt'tlaccordlng to ctaim 116 whercin thc

m atcllescan inlroduce loss.
aa n
l . o mc:bocj accordjug (o claim l14 tlle stcp of
com palagcom parcsscarch1,10c:1c.,
&wilhtargetblockswithm
thctatge!frarne acld hirtllc.rSncludi
ng thestcpoflcrm rlat'
ing specihc oncsoflhesearch blocksused by thestcpsof
traveoing tlx (irsl'sccotld and third groups if, aftcr a
prcdelermined poflionoftbclargetframeiscompared'othcr
ontsoftbcsearcbblocksresultin apredeterm inedgreater
porccnlageofm atcbcsbetwcca (heonrsrarchblockandthe
corresponding targttblocks.
121.'
17zemethodaccordingtoclaim 1tX)wbereintbestcps
of travcrsing tbe flrsl group and tbe socood group are
opcraled on in paralleloporasious'
122.Thcmctbodaccordingtoclzim 121ft
rltmrincl
uding
lheStepOftcfmiaaling tbestcpoftravcrsing oncofthcfust
t:cszpoflerminating lbcslcp oftravcrsiogoncofthetil

wt
-,'
&ecosd.t
hiru and fourlhgroll
p beforelerminatijv tlx steps
oftravcrsingtl
zeotl
xlsoftlleti1
stsccoud tbirdand fourtb
group.
199.n emelbcxlaccorthngkoclailn 1@7wheleintbestep
ofcomparing compares scarcb block.
s witb largetblocks
within tbc targttframe,and furlherincluding tbe sttp of
tormiuati
ng sm citicones oftbesearch bloclls used by tbe
stepsofeaverziug,thetkr,
tsecoud tllild audfourtgw ups
if,afler a predetermined portion of the larget frame is
comparecl1,aprcdeterm ined numbcrm alchcs betwccn the
oaesearc1blockand thecorresponding targetblocksisoot
reacbed.
tll).
n e mctbod accordlg to claim 109 whercin the
predeterm inod numberisoor.
t11. Tl
x method accordillg to claim l09 wherein the
m alchesarerequired lo be iclenticalmatches.
H2. n e metl)od according lo claim 109 wherein the
ujal
che.
scan irltrcduce lor
xs.
H3. 1
l
l
e
me
l
b
o
d
a
c
c
o
rding lo clazm 109 tbe sto? of
comparingcomparesseam hblockswithtargetbloclcsm thin
tbe targclfralne,and furtherincludingti
lcstcpoflerminalicg spec.
tfic (
m esoft
lle seal
'
ch blocksused by tile stepsof
traversing tlx firsl'x cond'tbird andfouuhgroupsif after
'ared,
a prodetcrmined m rtion oftbe targelframe iscomp
otberones oftbe searcb bloclts resultin a predetenninr.d
gfeaterpercestagoofm alcbesbefwecutheoncsearcbblock
ar'
dseeond group t'eforelecminatinglbe stepsoftraversing
tbeotnel'
softhe fi1'
.
stand seconflgroup.
123.n em ctllcd according loclaim lz1whereintbestep
ofcomparing compares scarcb bl
ocks svitllurgetblocks
witbin tho largelfrarne, and furtberincluding the step of
tcrminalingspecificonesoftbe searcb blocksused by lbe
stepsoftraversing the flzst:nd secoad grou;ys if, aflera
predeteluained portion oftbc targclframo is compared a
pteducticke..d numbo matcuc;
s betvat;
ttttm oae x arcb
block and the corrcsponding targttbli
xlcsisnotrcacbcd.
jz4 'nw mcttkod accordicg to claim 123 wberein tbe
Prrdeto'rmined Immberisone.
12
.5.n e m et
laod accordiog to daim 123 wheroin lbe
j
matclwsare requred jo beideulicalmatcbe-s
126 n o method accordkjg to claim 123 wbercin the
matcboscan inlroduceIorss'
127.Tbc metbod accordisg lo claim 121 lhe stlp of
comparingcompafesRarchblockswithlargctblxkswilhin
l
e targe:frame'acd furtberincluding tbcstop otterminatib
ng specificones ofthe x archblock.sused byttle stepsof
travtxsiog tbe ftk
stand xcxm
lgroum if'afteram eueter.
mil
w dportionoflbttargctframeLscompared'otheroncsof
tl
w searcb blocksresultinapredetcrmincd grealcrperccnt2V* Of I
llatcbe.
s betV'
rn 16 Ope scx.rcb block and the
correspoadiag targetblocks.
1.2:.Tbemtltboflaccordingtoclaim 1* wbereiIllesteps
114 n cuwthodaccordingt
o claim l0swsercint:esteps
oftraversiag tho rkfstpottp,tlk
e second gtoup, ttle third
group arcoyrated oninparalleloperatioas.
115.n omelhoclaccordirlgloclaim 114 furtbtrincluding
1hestepoftcrminalingllw slepoftraversingoocoftheIirstx
secoud aad ttt
ird troup befom tcrminatirz tbe sttps of
trzvejsing 1% otlw rsoftlm fust, second and tbird group.
116.n e metbodaccording toclaim 114 whercintlm st
ep
ofcomparing comparcs searcb bloclcs with largctblocks
wilbin tl
e large!frame,and further indudin: tbe slep of
term inating sm cific onesoftberxearc.h bltx kstwed by thc
stol)softraversing lhefu'sl second and lhirdgrourksif afler
apredetermif)
e.
d portionof!bc urgctframe iscompared a
pmd
etermined number marclt.
s bet
wccn the onc search
block aod tlzecorres& nding largelbloclts is noIrrached
.
117.n e method according to clairn 116 whereirlthe
pre1detcrminetlnumberisone.
.1
8.n e fnct
bcxlaccordmg l
o claim ll6 wherein lke
rcalchesarerequired to be identi
calnzatchcs
di/treot I'csilioas within tbe large, frame overup one

'llozmr.
129.The method according lo claim 128 wbercin the
Sequeut
ialdifferectJxxsilioas dillerby aymosla predeterm inednumlx rofrowsofbitsaadpredeterminednumberof
columpsofbil
s.
13:.The molht)d according lo claim 129 whereia lbe
predelcrminod numlxr of rews of bil
s is onc
predeterminrxlnumberofc'
olumnofbitsisont. and the
tzt 'nx metuodaccouiog to chim l(xJwhezein atleast
d llle corrtsponding largc!blocks.
..
Of traversing travorse lbe targetframe such thalsequential
one o
ilhestem oftraversiog !be targetframe rj1be
ho
rzor
ltaldirecti
on and traversiog 11. targctframc in lhe
ver
licaldircdion traverxsthocntiretargrtframe.
13:.R11cmttbod according to claim 131w bereim
lravorsing 1beentirt largelframe in tl
x klorizontaldirecl
oo iucludesmakingrepeated pasxsin 11
x horizonlal
direction atdilferentverlicalptksili
onsn'
ithintletarge.
t
fr:nae'and

Page 8 of 14
h
. z)
..
US 2* 3/0081685 A l
M ay 1, 2003
l7
lraversing the eatiretargetframcin lbe vcrllcaldircctioo

includes rnaking repealel parxv
es in the vertlcaldirtc.
tion attl'fflrcntbori
zontalIyositioas withiu the urgel
framc.
133.'Ihcmetbodaccordingtoclaim 132whereisadjaceat
diForentverticalpositionsaadadjacentdilrercntborizorltal
posiliousw'ithin thetargetframedxerby atmoslapredeterminedtmmberofrowsofb1lsandpredetermined aum ber

of1
c34
olumo
ofbits.
Ths
e method according to claim 133 wherein the
pretlelevmiae.d l
m mber of tows of bits is orm antl the
pre1d
elermined numbcrofcolumoofbitsisoue.
35
. Tl
w mrlhollaccordingloclaim 132wherein each of
tlw st
eps of traversing Ls i
m pltmentcd usiag a difereat
proce
rxsorthread.
136
th .Themethod accordingtoclaim l35wberein eacbof
e stepsoftravetsing+ impkmented using apltirality of
diF
erentprocessorlhteads.
137.Tbemetbod zccordingtoclaim 1(X)wbereinatlcasl
o
vicko proccssorlhrrad isused in thostepofcomparing
lone
co
tt reference frame video data witb largelframe
videompa
(lataand atleastoneauioprocessorkbreadisusedto
com parrrzferencefralneaudio dalawitbtargotframcaudio
data.
D #.e11w metbod zccordingtoclaim 1(O wbcrei
n alleasl
one processorlhread is mscd in the step ofcompariug to
com parercfcm nceframcvideodalawilhtargetframevidco
dataand also refetence frameaudio datawilh largetframe
Audiodata.
D 9. Tlw methodaccordingloclaim 1(O furlherincluding
tlm stcp ofusirtg tbeplurality ofcomparodblockslo obtain
a rcpresentatiorkof the targc! frame tbat is compressed
w ilboutany10%.lxing intrtxluced.
lzl:.-flm metbodaccordiuglo claim ltX)whereinthcslep
of
f comparing com pare.s the search block wilh the larget
ra1
me
singAND operati
orus.
41u
.'
nm met
lztxlaccordinglo claim 1(O wbereinthoMep
ofGsingoblainsthereprosentatiooofthelargetfram cthatis
com sresx dascom naredtotbeoriginalMatew itblossbeing
iatrod
Uucod'
'
142.n cme111odaccording toclaim i41wberein lheslep
of comparing comparms the search block witb tbe targct
frametssiag AND operatioas.
1.
43. n emethodaccording (
o daim 141wberein l
bestep
of com pariog comparms thc w arch block witlltbe urge!
fcameusing OR opefations.
144.n eI
xmtbodaccordingtoclait
u 141wl
ercisI
hestep
ofcomparing compares lhe search bloc.k with tbe urgel
frauw tlsing XOR opcratioas.
145.'
Dm methodaccordingtoclaim 141wbercinlhestep
of comparing compare.s tbe seavcb block witb 1be urget
frameusing add om rat
ions.
146.-111.Izmtbcd accordingtodaim 141wbereintbestep
ofcomparing compzres the ryearch block with 1be urgel
frameusing sublractoperations
.
147. '
I'
l
w metbodaccording toclaim 141wlzereintbestep
ofcomparing comparms thc warch block wilh tl
w target
fra1
me
us
i
u
g
mul
t
i
p
l
y
o
p
t
t
a
t
i
o
u
s
.
48.
'Ihomethod accordingtoclaim 141wberrintbeslcp
of
c
f ompzriug compares the search block Nvitb tbe urgel
rame
using divideoperations.
149.-111:mcthod accordinglochim 100 furtherincludipg
lhestep oftlsing llepluralityoft'
ornpargdbl
ockstoobtain
a represcntati
on of the targeI frame tba! is compre%e
.d,
whcreinthestepofusingcombmcsoverlappiog onesoftbc
plurallyofcomparrdblocksloobtainasum rsctblocktbat
i
s use.d ferthefepresentalion.
150.T11* methcd accordiogtoclaim 100wlereinthestep
of'cotnpariugincludestheslepoftrackingcot
uparedbl
ocls
thalrepreseotaflidenti
calmatcbbetsveentbesearchbltx k
aad acocrcsport
dingtargetbiockthattxi
stsV.'iCi
Ii
.
Bttetarget
frame.
15t '
I'
he tbod accordingloclaim 150whcreinstep of
trackin'g is me
uscd lo provide a dyuamic indication of an
amo
'untofcomprcsslon achicvable tx lwecn tbe refcronce
jrameand thc targetfame andwhereintboslepofcomparing jurljlcr includes r
tbc slep of sel
ecling a compreasion
targctraljo.
152.n eamjl
)cxlaccordingtoclaim 150wbereintheslep
ofcomparing Lsstoppe.d wfjen Ijjetjynamiciodication isdil
c
ae.
st
hatt!
)c comprcssioa taygelratio Ls reached forti
m
t
f
arges
r
ame.
1
53.n cmclhtxlaccording toclaim 152wberein tbestep
ofcomparing fufthcrincludeslhostcpofselecting admsired
a
mounlofIossfbatcanb:tolcrazd within lim represcntati
on.
154.n e mtlhod according lo claim 153 wherein (bc
c
.ompared block iscoasidered idcnlicalto tlx searcb block
tfaprxcentagqofbitswtbinttketatge.
tbtockisz.tleastequal
to lhedesircd amounlofloss.
155.Themelbodaccordingloclaim 14X)wlxcreinthesttp
of coparing furlher includes tbe step of selece g an
amountollossthatcanbo tolerat
cd withiu tbe representa.
tion.
156.'RIernetbtxlaccordingtoclaim 100 wbereinlbcslep
ofcom paring includesttLestepsof:
rzitiating aprodicliveprocessorllzread lo oblainaclestimale ofa l

ikelihood ofmat
cheslvtween ll)e search
bjock and thetargetfrarne.and
Passing tlicestimaleon foatlemstonecomparingprocesr'Of tbread tbatis ur'ed to comparc the plurality of
difcxntwarchbl
ocltswit
hintl)creftrencoframe t
o tl
w
Qfllc'SlmftOObtaintbepluralityofcomparedblocks.
157.'
Fhcmctbtxlaccordiu-gloc
laifn 1(X)whoreintbestep
-.
ofGlmfha.
ring comparesatabitlcvel. .
158.Tbcmt
lt
hf
xlaccordingtoclaim 1G)whoreintbessop
ofcomparing com patesalabytekvel
159. A metlxxlofsearchingfo:patternswithinapluralily
ofscque
lut
ialframcs.tachframecorcprksed ofapluralityof
bitsarranged ina maeix array, (bcm etbcd comprising tbe
slem of:
comparing aplaralilyofdiffrrrnlsearch blocluswitbifla

rcferonc'
eframetoatargetfraum oobtainapluralilyof
compared blocks'tl
x refertnce frame being setto an
initi
alframcoftheplurallty ofsequenlialframeszl
xl
tbe target frame inikially t'
eing setto a subsequont
frameofth:pluralily ofsoqucntialframms, tim stcp of
comparing jncluding:
waverstog jbr;lazgelfzame in :1pl
uralhy ofdihemnl
dircctioask)compate Rarch blockslo corresponding targelblockswithin lllctarge!frame.theslcp of
lravelwing including iui
tiating aplutalityofdiffertnl
lbreactsthalare procmeused in pacallcl each difrerGnt
thread operaling witb al l
easl onc of a dilrertnt
search block and adifferentdirecliotq and
'
--
'
'

*!'J
...e)
U S 2(03/ 81685 A 1
M ay 1, 2* 3
18
dtlcrlniningwbetilerthctraversalsresultinasuKcicnl
numborofmatchesbeing found between the large.l
framc and tbcroferenc.efrarne'and
lerminaling certa.
iz oftheplttrah.lydtEererlllhreac
.t
sythe
s
poftermmating occurring fora parli
culartl
readif
itte
f,s
detsrm irled tbat1helraversalrelatedltl(heparticularlhread isnotrosultfng in fbesufficientnutnbe.sof
clms.
16m
0.al
n em elhtxlaccordiag to clairn 159whrreintheslep
oftravcrsing iucludcstbcstepsof:
170. 'I-ilcmelbodaccordit)gloclaim 161wNereintbesleps

of ttavelsirlg lhtlfirs!group,the secxmd group. the third
groug areoperatcd oo in parallelojyerations.
171.n cmetbod accordingloclaim 170whercinti
lesstog
oflcm lirlating term inalestbestepofIravtrsing oneoftlac
rstsecorldarlcllhirdgroupbeforeterminatmgl11estepsof
' j
traver
ler,
softhe til
st'secondand third group.
172srlg tgjcolj
.'
Flx mclhod accordingtoclaim l70 whereinlbestep
ofcomparing compares scarcb bloclts wilh targetblocks
wi
tloGeargvtffame,andwtteyein tbestepofttrminating
lcrmm atesspecific oaes of!hc searcb blocks used by the
yravcrsing thc largetfral

ne in a borizontaldirecti
on to
comparr cach of a j
itstgroup of tbc pl
urality ef
di
lerentsearchblocksto differentfyositionswittkinthe
stepsoftraversing the:Erst*Kcorld aad thirdgroupsif' afl

er
apredctermined portion ofthetargelframe iscompared>a
predeterm iuod Imazbt m atcbe.s lxtwct.n ttx one. rmarcq
targetframe'
'and
traversing tbc targ/ frame in a verlical direction lo

compare ezcb ofa sccond group ofthe plurality of
ditfercntsearcbblockstoditferentpositionshvitllintbe
largetffam e.
161.n emethcd accordingto claim 160wbcreinthestep
oftravcrsingincludestravcrsingtbclargetframeiaadiagonaIdirectiontocompareeachofatbirdgroupoftbeplurallty
ofdiffereotseardlblx ks to dill'
erentpck
silions vvilbi
n tbc
targetframc.
1u2 n emetbodaccordir,g todaim 161whcrcitttlcstep
oftraversingfurtberiscludes!bestepofu'aversingtheurget
frametocompareeacbofafourtb group of!bcplurahl
y of
df
rcrcntsearchblocp.
stodi/crontpositioaswittticthclarget
frame aldillzrontrotalionalpcksitierus.
163.'
Ihomethotiaccordingtoclaim i62whereintbest
cps
of traversing the ::s1group,tle sccond group.thc lhirtl
group aud the fourtb group are operated oo in parallel
ojycratiort
s.
1t;4.n emetbod accordisgtoclaim 163whereinlheslep
oftenninat
ing lerminates tbeslep t)ftraverslng oneoft
hf:
firstasocond'tbrdand fourtl
zgroup lxfore termi
oating tho
uem oflravorsingtheolbersof1hefirst, secondxthird and
fourth group.
lfs.n e rlletliodaccordingtoclaim l63whereinthestep
ofcompacing comparos searcb blocks with targetblx ks
withintim urgetframe,andwhorcirktbeszpoftcrmiculiug
.
terminates specc
oncs oftllescarch blocksused by th:
slc.lxsoftravcaingtl
zelirsl>seccmd lbird and fourlllgroups
ify afler a predelermine.d portion'of the targel frame is
compared, a predelerm ined number matchesbelween thc
onescarchblock and l
becofresm ndi
ng l
argetblocksisno(
rrachcd.
166.n e mcthod according t
o clairn 165 wberein thf
predetermined Rumberisonc.
167. n e method according t
o claim 165 wherein the
matchesam roquired to be idenlicalm atcbes.
168.
n e method according lo claim 165 wberein tho
m atcbescan intrtxluce 1cexs.
169.'
nm method according to claim 165 the sttp of
compariagcompare,
sstarchblockswitblargetblockswilhin
thelarge!l
iame,and wlloreic leslep oflenuoaliag termi.
oate.sspecificonesoflhesearcbbloclcsused bythestepsof
traversing tl
x Iilslsecond lllirdandfourtbgroupsif aftef
a predetermijmd port
ion oflbc targcl framc i
s compared
otheroncsofthe search bl
ocks resultin a prcdeterined
great
crercentagoofmatchesbetwcenlbe:ooesearchblock
and tbe corresponding targe!blocks.
block aud the corrcsponding targetblock.s isnolroachocl.

173.n e method according to claim !72 whrrein thc
predclcrmined numberLs one.
174. '
I'
tw mctlod wcordirt: to ctail
n t72 wbertin thz
malcbes arerequired lo be ideoticalmalches.
175. n e metllod accordfog to daim 172 wherein tlm
mat
chescan iul
roduce lass.
17t;. 'flm tnetllod accordiag to cla.it
ll17Q the step of
comparngcomparessearcbblockswitlllargctbloclkswilbfn
(helargelframe and wberoi.n lm stcpofterminating lenninatess
'pccilicone,softbcsearcbblx ksuse,
dbytlx stcm of
lravclsing lhe first.second and tbird groups if after a
Predetermine.dponionofthe(argetfrarnoiscom pared.otlzer
Onestflhsoarchbloclcsresultin aprodetermined greater
pereestagcofmalcbesbctween theouesearchblockaadtbe
corrcspondiog targctblocks.
177.'
l'
befnctirdaccordiugtoclaim 160whereintbesteps
Of lraversi
ng tlc lirsl group and tlc 5v ..01
x1group are
Operaled on in paralleloperations.
17:.n ernolbod accordingtoclaial177wbereiu thestep
ofterminaing tcrminates t
hestepoftraversiug ooeofthe
lirslaod sccond group bcfore terminatiog tlle stops of
travcrsing theotbef
s oftbe fi1stand second group.
179'Tim mctbodacX rdingto Claim 177wbereinthcstcp
Ofcompaliug cofnpzrcs searcb blocks wi
lh targetblocl;
.s
withiolhetarge!framc>and svhereitltbcstepoflermiaating
termi
nal
ossmcific oues oflbe searcb blocksused by tlle
st
em oftravelsiag tbe lirstand.socoad groups if.aftera
pretl
clcrmiot:
d poniou ofkbe urgelirafne ks xmpareda a
predelerm ined nttmber m atches lyetwecn the one searcb
block and the cormsm ndug largelblocks is nolreached.
180..n e motbod according to claim 179 wlxmn the
pe termine.
d zumbttisont.
t8t.n e melhod according to claim 1'
F9 wbecein tbe
m alcbes are roquired lo beidenticalm alcbes.
1:2.n e m etlm d accoraa
.ng lo claim 179 wbvrein the:
ma1
tc
h
e
.
s
cz
u
i
o
t
r
o
d
u
i
z
e
1
o
s
s
.
83. n e metbcd zccording to claim 177 the step of
comparingcomparessearchblockswithtargelblockswitllin
thrtargcyframe, and wherein t
ix stcpoftcrminatinglermiuate.
sspecitk oaesofttm xafcbblcxzksmstxlbylbestepsof
travef
sing the lirstand second groups if afler a predetermined porlionofthetargc!frameiscompared olberonesof
thcsearchblocl:sresultin aprodeterminedgreaterporcerjlage of malcbcs between tim oac search bl
ock aud tt.
corresjyooding largetblocks.
1.84.n emetbodaccording l
oclaim 1r>0whcreintbcsteps
oflravcrsiag travcrsethe targetfrarz)esucb tba!sequenlial
differentpositjous within the:larget ffame overlap orte

aoolber.
'

V
US 2003/0081685 A 1
M ay 1, 2* 3
19
1.85.The tnethod actyarding to claim tm wtw reitztlw

secjuenti,ldilrercntposilions dll
fcrby atmostapredelef.
m ifmd avmlxrofrowsofbttsand pretlcterm inednumberof
columasofbits.
186. Tbe m ethod accilrtlirlg o ckaim 1B5 w bcrein tbt
predetermjned number of rows of bil
s is onc and the:
predclermiaednumberofcolumuofbilsLsone.
187 n em etbodaccordiogloclaim 160wlwrcinatIeast
onc ofthe Mcps oftraversing lhe targclframc in thc
horizontaldirecti
on &nd traversing lbe targctframcin tb
e
verticaldimcti
on traverses tbetntire targct(ramc.
188.n e metbod accordi
ngto claim 187 wbcrein:
cletcrmisiug whetktev adlacfm com put.d Mtxlks ex'ist

lba!can bt:cf
amprmued'and
foratIeaslcerlainoflheadlacerltcomparod blcxlksthal
can be comprtrxsed%crrating al lcastone supcrsel
blockofnon-uqiform size lba!includcs lhc certain
adjacentcomparedblockslhcrcin.
196.n e melhod according lo claim 195 wherein llte
ceruinadjacratcompare.
dblkswludesatlcvnainadacentcornparedblocks
197. '
1lx mdhod according to claim 195 wbereiu a
pluralilyofsupcrselbl
ockofnon-urdform siz.z are c'reated'
lbateachinclutkscerta'nadjaccnlcoparedblockstberoin
traversingtbccutirelargetframeirlthehorizontaldi
rec- z:xlwbereinlbcccrlainadjacentcoparedblocluswitNin
liouincludcsmakiogropeale
.dpassc.sinttleborizontal eacboflhtpluralityofsupersclblocksarenoladjacentto
direction atddrercatverticalpositiouswitbintbotarget
frame;and
.
cach olber.
1.9& The mcthod according to claim 195 wlwrcin tbe
traversingtbcenliretargelframeintbcverticaldireclion
certaiuzdjaceotcomparedblocksl
batcaclbocompresse.
dare
includrsm aking repeat

ed pwsesin theverticaldirection atdifferenthorizonlalpositionswithin 1hclargel
framc.
189.
n emetbodaccordirt
gloclbm 188wltereinadjacent
difeteatverticalpositi
ousaadadjaccutdx ereutlnrizoutal
rcpresentcd using almkod Izsl.

199.The metbod acxxluing to claim 195 wherein thc
certainadlaccntcomparodbl
ocksthatcanbccomjyressedare
rcpresentedusing abinary lree;
.
200.
AI
uctbodofsoarchingforpatternswithinapluralily
positiouswithin1b$ltargetfgamcdilfcrbyalmostaprtde- of
bscqucntialfnmcs'cachframccornprised ofapluralityof
tcrmiae.dnumberofrowsofbil
tsarranged in amatrixarrzy,lhc method compfising:
sandprodeterinod atl
m lxr
ofcolumnsofbils.
compariaginzlossymaanerapluralityofdiFercntsearch
1% .The metbod according to claim 189 nz
imroin lc
block.s witbin arefereacg franw Io a targetframr to
predeterined numbcr of rows of bits Ls one and lhe
obtain a pluralily ofcomparcd blocks the reference
predctermined numberofcolumn ofbttsisone.
framebeing selto an inilialframe ofthe plurality of
191.n emethod accordingtoclakn 188whereineachof
rqucatialframtsand tbe largetframc iaitially being
Che steps oftraversing is lmplemeute.
d using a difreront
sr:tlo asubscqueutfrzmeoftbeplurality ofsequenlial
procosschrthread.
fram es. thcstepofcomparing including:
192.n c methodaccording toclaim 19lwherefnoacbof
tbe stepsoftravtrsing isimplernenled usiag apltsralityof
obtaining,foraErstscarchblock,afitslweightindicadi/crentprocessorllireads.
llvcofaperceatageofcopacisoustilalexistw itbin
193.Themetbodaccordicg loclaim 159wimrcioatleasl
thelargef
=' framc'
'
onevideoprocessorthread isuscd in thestepofcomparing
obtaining, forasccoudstarch block lhatoverlam the
to compafe refercnce framc '
vitl
eo data with largetframe
hrsl search bock a secood weigbl indicative of
videodataand atleastoneall
dioprocessorthread isuszdto
anotheflrcentagtofcomparisons lhatexislwitbin
comparemferenceframr audio dalawitbtargetframeaucl
io
thctargd frame;and
data.
194.'fbemetbodaccordiag toclaim 159wl
iftbefi
stweigblaudtbe'
s'
ecot!r
lweightbolh havoa
mreinat10=1
pcrcenlagtofcompalix nsthattxccc.cladetormined
one procorwsor tllrcad isused in the stop ofcomparing to
tbreshold,discarding thalcompaccdblockofthclir-;l
com parereferenc.cframevidoodalawitlztargetfram evide.o
dataand alsoreferencefrafuoaudio datawitbtargetfram c
andw coodscarc'bbloclusthatbasalowerIyercestago
of m parisoas.
audio dala.
201.'
rlm method according to claim 2. wbercin tbe
195. A mothod ofcomprcssiug abil-sizcofapluralityof
sequentialframes,cach frame comprised ofa pltl
c
ompa
r
e
d blocks tllatcan be compressed !re represcnled
ral
ity of ttsinga uu
bis, thcmetbotlcomprisiog tbeMepsof:
kcd Esl.
202.n e uwtbod according lo claim 2 wberein lhe
rrlparing apluralityofdi
ffemntsearclzbl
ockswithi
n a compartd block.stha!can bc mpmsscd are representrd
rcferenceframet
ol
itargetframttoobtainapluralityof using 11biuary tree.
comput.
u blodts ttm xfetxx framo beingsetto au
2::
5. 'W t m ctbod accoriling to claim 2 wbercin lbe
initialfzameoftl
x plurality ofsoquentialframe.sand dctcrminedtbresboldLsRleclablyadjtzstable.
thc Iarget framc initially being r,c1to a subsequcnl
204.A ayethodofRarcl
zl
'agforpauernswithinaplurality
frameofthepluralityofsequentialframes tlm stcp of ofsequcntialframe
.s eac
bframecomprised ofaplurality of
c-omparing using a plurality ofdxerenl llreacls for bitsarrange.d in amatrix array lbemetbod cotnpdsiug:
conapauag,and tbe soarcb blocks wutuu each ofthe
.m s
lhrrads baving a un'tfol
ize' stlcu +at uae conrcoraparl: aPlurauly Ofdrerentsearcs blocksvzitul a
sponding coparedblocksalso bavetbeuuloroa<zr'N
rcfercncefrAmctoalargetframctoobtain:pluralityof
and
couaparrdblocks:therefepcnctlanao belg setlo an
initialframeoflheplurality ofsequcnlialframe.s afld
using 1he pluralilyofcompared blockstoobtaiuareprethe targetframe iuilially being set to a subsequent
srntalionofthtllargetframethatiscomprtrxsedfrom an
Irameofl
11:pltlralilyofsequentialfram es. thestep of
originalstate thestep ofusing including thc stepsof:
comparing including
'-
--
..eJ
-)
.
US 2003/0081685 A 1
M ay l, 2 3
20
initlatjngapfedictivelhreadthalcomparesanumberof
dtlkreutpredictivesearcb blocks baving diffetcnt
block slzes alvariflus posilioos w itbin the m alrix
array oflhc;rcfercnce frame with various corrcspondingprediclivelargerbl
ocksintbelargelframe
lo oblal:l a predicled optimum block size and a
prodicled movemenldireclion forthe targe!fram e'
'
and
licalinformation so lbala sizeofthc searcb block

and the correspooding larget block can be maintained foItbcentirestep oftraversing.
214 A method ofsearchin forpattcrnscomprising the
stcj)sof:
obtaioingapluralityofsequefltialzndlime-rclaled fram es
cacb compriscd of a pluralily of bits lbatrcpresont
video information and another plurality of bits tbat
reprcx ntaudoinformati
on'
inilialing a tgavcrsaloLbetrgelzramein adi

rcction
corresponding to lbeprcdiczd movementdkeclion
with asearch blockbaving asi= corrcsponding to
Coparin:3PluralltyOfditlkrtntsearch blcxzkswilhin a
the prediced oplimum blocksize.
refereaccframetoatargetframctoolylam aplucalilyof
205. n c nxthod accorng to claim 2j
x w hereu oc
compafedbl
oclc
s>lbercferenc.
eframeinfliallybeiogset
prcdictcdoptimum bl
ocksizeiswitzn arangcof8x8byles
to atliaitizlframeofthe pluralily ofscqueolialand
and 128x12.8 bytexs.
time-xlatedftamesandtlw targelframcinitiallybcing
286. n e melbod ae rlEng t
se!t
o asubsequentframeoft
i)epluralityofsequential
o claim 205 wl
wl'
tin the
predict
ed movcmcntdircction isoneofhorizontal vertical
&nd limc-rclate,d frames>'
atyl
diagouat
usjog tbepluvalilyofcoo pare.dblx ksto obtainarepre2:7
. Thc mct
hod accortling l
o claim 2(/1wNtrein the
wntation oftbetargctframethatLS compressed.
predfctcd movcmcntdirectionisoneofhorontal,verlica.l
215.Tbemethod accordingloclaim 214hzrtlwrincl
uding
aod208
diagoual.
thostcj)sofrepoating lhestc.psrodesignating and rcpeatiflg
. n e met
bodaccordillgto claim 2t)4whcreinthestep
j
ofinitialirlg ibe traverr
tt,zteea
chof1h:rcmainingItluralityofsequenrialframr.
s
yalaitiate.
s tht txaxersal using a r
b'
M m tllctargetframeooe tlmew lzilethesleps ofcom proc- rlbread.
j
2.09.Themethodaccording toclaim 204whereintheslep PK216
Ilg and using arejyerformed.
.'
fhemctbodac rdingloclaim 214w berein tbeste:p
of inlliating the lraversalinitiale..
s the traversal using a
pluralityfproccssorthreads,eachproceseofthreadl
ravcl
s- of
b oblaining furthcrincludeslhestep ofplacing a marker
inglbetargctfranm tbe prediucd movemcntdirccti
wewa tlevideo iaformatioa ard tbe audio information
oawith weit
tllin each oftlx plurality ofsequentialaud lim e-relate.d
tlcprcdicted oplimum blocksizt.
210.
.
n emethod accordingtocl
aim 209ftzrtherincluding lam cs.
tbest
cpofinitialiog furtlxrtraversalsoflbelargetframein
217.The mcthod aecording lo claim 214 wlmrdn the
anotberdirectionlhaldocs notcorrespond to tbe predicted roprosentatiou oftbc.largetframe lhatLscom prcssed tu% sa
movcm cntdirection.
Enked1M.
211. n emetbodaccordingtoclaim 210 furtherincluding
218.'I'
he method according lo claim 214 w herein the
tbestep oflerminaling oneofthe initialtravetsalsand tbe pluralityofbitsthatrcprescnttheaudio informationrepro.
furtbcrtraversalsbefore ttl
attravefsaliscompl
et
e.
seat(heaudio infocmat
iontt
sing acolorspaceand !heslp
2t:
).Ttw metltxlaccordingtoclaim 210wbereiutlw step ofcomparing inciudesthcsl
epsof:
of terminating occurs wlwu a prodeterm hmd number of
lraversing the targc! frame including botb !be vidco
matclwsofcom pared bloclls isnotrcacbed afterlraversing
z form ationandthtaudi
o'i orm ation in ahorizontal
t
he targetfrarnewith dijferenlsearchblocksrepresenling a
,
direction to comparo eachnfof
a first group of llm
pre
d
e
t
e
r
mi
n
e
d
p
or
t
i
o
r
l
o
f
t
b
e
r
o
f
e
r
e
n
c
o
f
r
a
a
w.
j
u
r
a
l
j
t
y
o
f
Ji
f
f
e
r
e
n
t
x
213.A metllodofsearching forpancrnswithiaaplurality
P
archbl
ockst
o dilrereatpositions
witMa tbetargetframe
-.atid-- 'ofsequcntialframcs.cachframvcomprz
'
sedofapluralityof
'
bitsarranged in am atrix array tbalcaa bo travefsed in at
traversing the urgetframep ineluding botb the video
leasthorizontaland verlcaldirections'tlx m etbod comprising lhestepsof:
inform ation aod tbc audio intorm atioo, io a vcrtical

directfoa to cemparc eacb of a x cond group oflhe
mpar'
irtg aplurasty oftliftreutsearch blockswithina
roferenc.eframeloatargo!franletoobtairlapluralityof
c
ompared blocks,tberefe.remx frameixing selto An
in
itialframe oftbe plurahlyofsequentialframms and
the largttfrzme inilially being setto : subsequtnt
frameoftbeplualityofsoquentialframespthestepof
com paritlg including:
lravcrsing tbo targetfrarl
m in atloasthorizxmtaland
vonicaidimctionsatincromeotstbataregrcalerlbzn
a singlc bit c01111110 or bitrow, respectively, to
compare search block.
s to correspondi
ug target
blk
xkswitb:n lbetarg'rlframe,thcMopoftraveaing
including,forthosescarc.
hblocksandcorrtsm ndiag
largetblocksatanexlgtofthemalrix array,padding
bitpositioas witbin lhe search blocks and correspondi
og targelbloclusthalareoutsideoftl
x mfereoc.eframeand targetframe rospectively withiderl-
witu ;
ltlw targctframc.
.
219
. n enxt
bt:xlac rdingIo claim 218 wbcrein1hestcip
of
di comparing includes traversing (be target framc in a
'-
pluralilyofdifcrcnlKarchblockstodifercotposilions
agonal
di
rection.iocludingbotbI
hevideoipformatiouaud
j
j
t
h
c
:
a
u
d
o
sj
o
r
mz
t
j
o
o
,
l
o
c
o
mpa
r
e
each ofathird poupof
tb
epluralilyofdif
rcrcntscarcbblocksto diftkrentposili
ons
within lbe targetframe.

220.n emethcd accordingtochim 219wil
creinlhcstop
of comparing furtber includes tbe step oflravcrsing lbe
targetframe,including bolh !hevideo infoanati
on and lbe
audioinformati
on j
o compareracbofafourth groupoftl
w
pluralil
y ofdilferenlsearch bloclcs lo dd
- erentpositioms
witllirklbe largelframeatdillkrentrotationalpositions.
221.Tbemetlmdaccording t
oclaim 220wbcrein thcst
eps
oflravelsing (lw flrstgroupp 1be secoud group,tbc tbird
group arjd :be fourth group are operaled on in parallel
orratioas.

..- .7
US 2003/0081685 A1
M ay 1, 2 3
21
112.n emelhodaccordi
ngtoclai. 221ftm herincludlog
theszlyoflcrm iuatinzlbeslepoftravorsingorm oftl)olifst
secood lhircland foafthgroupbeforetorminating thesteps
oftravcrsing 1bcoth:rsofIhc(irx;tsccond thirdandfour!b
group.
223.'fhe method accordingloclaim 221whereinttlestep
oftrompanng compares scarch blocks with largetblocks
within lbe largetfralnc and (urtber including thr step of
lermiualing spcciNconesoflbesearch blocksuscd by the
sl
oftrw ersing thcfirstsococd third aod fourlbgroups
i(eps
after a predelermined porlion of tbc targel frame is
compave a predetesminmsoumber matcbesbetween lbe
oncsearch block and the ctlrrsponding targetblocksi
snol
reached.
224. Tlw mcttkod accxlrdiag to claim 27
.3 wt
lexia t(3e
predeterm ined numberisoac
225.n e method aFconliag lo claf

m 223 w'
herei
n thc
malche.sare require,d to bcidrnlicalmatchcs.
226.n e method accortl
iag to claim 223 wberein l
he
matci)r.scan inlroducx Ioss
227.n c melhtxlaccortling to cl
aim 221 tlzc step of
comparingcomparesseacchblockswithtargetblockswillin
t
ihrlargetframe and furtherncludinglilestepofttrmioatng specil
ic oncsoftbe searcb blocksused by tbcstepsof
traversingtl
w firu,sccoud tlurd and fourtb groups1, after
a predelermined m rtion of tbe targctframe iscompared
othrone
.s oftllr scarch bloclts resultin a prcdelermirmd
grcalerpcrcontageofmatchcslxtweenlheoncsearcbblock
al
xlthccorrcsponding targelblocks.
228.'11)cmctbt
xlaccordingtoclaim (219wber:in1bestops
ofuavtrsig tbe tirsp oup. tbe rs
tcond groupptbe tbkd
group are operated on inparalleloperatiorus.
229.n emcthod accordi
ngloclaim 228 furthcrincludiug
tlm stepoftermi
aatiagttt
estqpoftrw ersingxmeoftbefirst
secend and third group btTfore lcrminating lhe ste;ts of
travcrsing tlw othersoftberst second and third group.
O 0.n emetbotlaccordiogyloclaim 228whereintllcstep
ofcomparing comparrs scarch blocks wilh targetblocks
witbil tbe targetframe,aod furtherl
w luding the step of
(orrninating spccitic cmesoftbesearcllblocksttsed by tho
stepsoftravcrsingthoIirstsccond and thirdgroum ifaft
er
apredetermined portion oflho targetframc iscornpared a
predelermined numtmr malcbes l
x twvcn lbc one scar'
cb
block and tbecorresponding largetblocksisnotreacbe .
231. n e m elhod accordtog to claim 230 wberein the
predelenzlined numbcrisone.
:
132.n e metbod accor&ng to clai'
i
u 2* wherein tbe
malches are required to bcidenticalmztchms.
:
133.Tlzt met
hod ac rding l
o claifn 230 wberein the
matce.scan intrtxlucti1osxs.
234.Tbe melbcd according Io claim 228 tbe step of
comparingcomparessearchblteltsw1t1largetblockswilbin
t
hetagptframe,aud furttmriuclldfng ttm step ofteTmmtin
g speecific onesoftl)cRarchblx ll
s usedby lhc stepsof
lravgrsing tbe tirst,second and lbrd groups ifv after a
precleterminedportionofthctargetframciscomparedsother
onesofthesearc:bl
ocksresul:in apredetcrminexlgreater
pcrceut
ageofmakhesbetwet
m 1heoncscarcllblockandtbr
cor
r
m
s
l
x
mdi
n
g
t
a
r
g
c
t
b
l
o
c
k
s
.
r 5.n cmc'thodaccordingloclaim 218wbtrcinbf:steps
of traversing the tifst group and tlm second group are
opcratedon icparalleloperal
ions.
236.lheuml
hodaccordi/ tlclaim 235 furtherincluding
lhest
cpofterminaling lbestcpoftravefsingooeofthe5f'
st
andsecorjdgroupbct
brelerminating tbestepsoft
raversing
theothersoflhe tirs.taad rsccoad group.
237.Themethcd accordinglocIaim 235 whereinthestep
ofcomparing coa:parcs scarch blocks witN largetbloclcs
lvithio the targclframe and furtherincluding tbc step of
lerm inatiag spedsconesoflhesearch blocks used by the
st
eps oftravcrsi
ng lbe fi1stand second groups if aflera
precl
elerrnined Ixlrtion oftbc targetfram e is cornpared a
predctcrm ined nurulxr m atchts l
xrwecn lbt one w arcb
block atld thc corresm udiug targr.tblocksisnolrrachtd.
238. 'I'be melhod acoording to claim 237 w herefq lhe
pretlelcrmine.tlnumberLsone
239. 'l'ho method accordng lo claim 237 wherein tbe
matcbesartrequirodlobc idenlicalmalct
lcs.
:
14(1 Tbe method according to claim 2
3l werein the .
m alchescan intzoducr10=
241. n e melhtxlaccording lo claim 235 tbc slop of
compariagcoraparesreacc!lbloclsw'
ithtargcfblockswitbm
'
the targetfzame afld f'
urtherincluding thoslcp ofteaninal.
irlg spccificonesofthesearchblocksuse,d by thcstopsof
traversing til
e firstand sccond groups if aflera prcdot
ermincdportionoftbetargelframeLscompared, otl
zeroacsof
tbesearch blocksrcsulliuapredel
crmined grealcr cenlage of malcbes betwoen the one Rarcla block pet
and lbe
corrosponding targetblocl
cs.
242.n emetbodaccordisgtoclaim 218wl
aerdotllcstcps
oftraversing travej'
sc !ht largclfrarnc such thalscquential
di.ti
krcnr jxsilions within tbe target fraa)e overlap one
another.
243. 'l'he molhod according lo claim 242 wbereilzthe
sequentiadiferentpositious dierby atmosta predeterminednumlxrofrowsofbits&Exlpredcteriaod numbcrof

colllmnsofbiLs.
244. Tbe metlod wcorvling lo daim 24:
5wlzereio 1bc
pmdetermincd number of rows of bits i
s one arld tbe
predcterm ine.d num bcrofcolumn ofbilsisone.
245. '
llm etlzod accorditlgtodaifn 2l8wl
lereiu atkut
one of (he steps of ltaversing ttlc targe! frame i!l llle
hodzontaldircclion aad travelsiug lbe targetfram e i)a the
verlicaldireclion traveraestbeentirolargctframc.
246. n e method according toclam 245 whercin:
' lravorsing the onlirotargctframc in thehofizxmtaldirectionindude
.smaking Iopealedpassesintbeborizzmta!
directionatdi/crentverticalpositionswitbintbetarget
framc;and
travezsing thocnti
retargetfraaze in 1heverticaldirection
includesmaking repeatodpassesiu the verticaldirection atdi/crenthorizontaljxjsition.swilhin the urgot
h'
amt.
247.Tb:mrlbodaccordiugloclaim 246whtrtinadjaccnl
' -
dilferentverticalpositiocksandadjaccntdderenlhorizonlal
posisiomswitbirtbotargptfxamtuiq'
e.tby a!mosapredetcrmiz)e.dnumbcrofrowsofbitsaadpr
odtterminedoumber
ofcolumnsofbils.
248.Tlm metlm d accordint to claim 247 wbmrri.o ttw
pmdetermined numbcr of rows of bits Ls one aud
11:w:
predrtcrminr
.d numbe
rofcolurnn ofbits isone.
249 n cmcthodaccordingloclaim 246 wbercineacbof
Qm Meps of trwtfsing is imple
m ente.d using a diflkrenl
processorlhread.
250. n emethod according toclaim 249wbcrcineachof
!he st
c.psoflravtlsm
'g fs ifupl
emenlcd using apluralily of
diFcreulprocessortltreads.
'

.-
'
- 't
US 2* 3/0081685 A1
M ay 1, 2 3
22
251.Themelbodaccordlng (o claiua214w hereinalloast

onevidco procctsorthreadLsused iuti
le stopcj
fcomparing
lo com
pare reference fraae vi
deo data wir
.b l
argetframe
viaeo dafaarjdatlcasloceaudioprocessorllveadisusedlo
comparerefcrciiceframca'
ldiodatawitlatargelframcaudio
data.
M z''I'bemetbod accordmgto claim 214w lwreinatleasl
orte processortiwead is used irldw stepofcompacit
v to
compareroferenceftamcvideo dalawitlltargo!framevideo
data and al
so rcference frame audio datawilillargc.tframe
audio dala.
253.'
Tllcmelbt
'd according loclaim 214whereint
beslep
ofusingobtainslltereprescntatiouofthctargetframclhatis
comprr-ssed ascomparcd td)tbe originalstate w itboutany
l
ossbeing introdutxd.
734.TheIuethodaci rding loclaim 214whereintlw slep
of compa
dug compares ttw searcllblock with tl
x taget
f
ramc usingAND oporatiolts.
:55.n em othodaccordillg loclaim 214 wberein thcstep
ofu.singobtainsthereprmsell
taioaaftbetargetfrarnefbalis
compressedascomparedto theoriginalstzlewitblorxsbeiog
introduccd.
256.'Themethod accordiug toclaiuz255wherein theMep
o
f
ccimparing cornpafe.
s tizt
lK arch block whb tix targel
frame
usiugAND oporatjons.
757.-memethodaecofding todzim 255wbtftinlhe;step
ofcomparing compares the searcb block witb tbe target
framcusiog OR operatitms.
25*
.'
lllemethodaccordingloclzim 255whereinthe:stcp
of comparing comparts t
hc Karclablock with tbc l
argtt
frameusing XOR operalions.
259.Them elhodaccordingtoclaim 255w herciflthestep
of com paling com
pams l
he search block with tbe farge!
frame using add oN raticms
26:.
.
37)emetbodaccordingtoclaim 255wbereintbestep
of compariog coavares t
lle Karch block witb 1l
x target
framl usmgsubtractoperatiorus'
261.n ert
lell3od accordingtoclaim 255 whcrein th:step
of
cornparing comparcs the scarch block witb the larget
frame
using mulliplyoperations.
262.Tbemethodaccordingtoclaim 255whereinth<step
ofcomparing compares tbe search block witb tbe Iargel
frameusiogdivdeoperati
ons
.
263.n emetht
xlaccordingloclaim 214wbereintbestep
bf usirl
g comblnes overlapping ones of tbe plurality of
complRdbloclo loobtain asuptrrelblock lbatisusedfor
tbe reprcsentation.
7.64.115.mett
:cxlKcordiagtodzim 21.4wlmm intikostep
ofcorupafing includestl
w stepoflracl
dng comparr.
d blocks
lhatreprcxnlan idcnticulmalchbofweeu tlzcsoarcbblock

andacorrespondingtargelbkhckth
atexi
slswilhfnthetarget
framc.
765.n cmetl
zod according lo claim 264 whcreinst
ep of
(rac'
kiog Ls used lo provde a dynamic indkatioo ofao
amouutofcompression acltvable between tbe reference
frameaod thetargelfmmeandwberein t
lpestep ofcompariog furtl
wr includos the sttp of stklecting compreasion
tar26
ge6
lralio.
. Tl
m ulqtlloclaccordiugtocla.im 2.
64wlmreintl
K step
ofcomp
aring Lsstopped whontl
acdyuamfc indicalionindica
sion targelrltio is reached for thc
u tr.s thatlhe comprerx
rgelframe.
267.-lXcclzetbodaccorditzgtoclaim 266wtkereintbe.
ofcompafing furtberiocludesthcsdepofselecling adcss
it
rep
ed
artityutltofIoss t
llalcan be lolcral
ed witt
)in lhcreprcseul
llon
a268. n c cnethod accordi
ng lo clair
s 267 wherein lhc
cem paredblock iseotusidered ideoticalto khe scarcb block
if3Percontageofbitswilbinlbelargetblock is alleaslequal
tothedcsired araouatof1
/1%
269. n emetbodaccorditlg toclairn 2l4whercintheMtp
of com paring furtlicr includes lhe slep of seltcling an
amountoflosstbatcaabe tolerated wllhin tbe representa.101$.
27:.'n emctbodaccordioglo claim 214whcreintbestep
ofcomparing includesthe stepsof: .
lnitiati
mg apredicliveprocessortlread l
o obtaia an eslimate ofa I
A eE:CKXIc)fmatcbes betwee;n lhe sea-r
cl
bl
kw;k and tbelafgt.tflam e'aad
parxsing tbeesLiruateontoatleaslorlecomparingprocessor lhread lbatjs usea ro compam !he pluralily of
diffeirentscarchblocl:soithintberefcrenceframetolhc
tugetfrartm toobtaiuttlepl
tttllityofctzmpaxdbl
ockks
2.
7jn e t
ywr
jjcxjaccordfng toclaim 214whercinthcstep
ogcom'paring comparcs ala bitlevcl
27a''
n ememcd accordingto claim.214wbcrein thstep
ofcomparingcomparesalabyteIevel.
273. A mctbod efcompreasing a.
bil-sizoofapluralyof
sequentialframcs each framc comp
rised ofa plurality of
bit
s th<mothod comptisiug tlx steps
of:
comparing apluralilyofdillkrcntsr-arcbblcx;kswilin a
rderencmframetoatazgelframctoobtainapiuralilyof
comparedblocksytbcreferocl
coframciniliallytleitlgret
o ajainitialframtand the tacgetframe initialty beiag
I
t
Se o a subscquent framey 1hc step of cocnparing
including fheslegsof:
dctermining whctber a desired comprexsion ratio
bctwoen tbe teference frame and lbc subsoqueul
fraam isreacbcxl'
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Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 1 of 159

:ASE NO. CV06-00114

ETREPPID TECH, INC. VS. DENNIS MONTGOMERY

Plaintiff's exhibits 2 through 17

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 2 of 159

::ASE NO. CV06-00114

ETREPPID TECH, INC. VS. DENNIS MONTGOMERY

PRELIMINARY INJUCTION (Cont'd)

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 3 of 159

PLTF: ETREPPID TECH, INC.

Diagram of Etreppid office

Amended and Restated

Amended and Restated

Exhibit A to the Amended

Assignment of U.S. Origin

Assignment of U.S. Origin

Print Date: 2/8/2006

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 4 of 159

PLTF: ETREPPID TECH, INC.

Assignment of U.S. Origin

Assignment of U.S. Origin

Assignment of U.S. Origin

Assignment of U.S. Origin

Assignment of U.S. Origin

Assignment of U.S. Origin

Assignment of U.S. Origin

Agreement and Modification

Copy of pages 18, 22, 32,

Print Date: 2/8/2006

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 5 of 159

PL TF: ETREPPID TECH, INC.

Copy of check in the amount

Copy of United States

Copy of United States

Print Date: 2/8/2006

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 6 of 159

;ASE NO. CV06-00114

ETREPPID TECHNOLOGIES, INC VS DENNIS MONTGOMERY

Court stood in recess.

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 7 of 159

:;ASE NO. CV06-00114

ETREPPID TECHNOLOGIES INC, VS DENNIS MONTGOMERY

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 8 of 159

:ASE NO. CV06-00114

ETREPPID TECHNOLOGIES, INC VS DENNIS MONTGOMERY, ET AL

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 9 of 159

::ASE NO. CV06-00114

ETREPPID TECHNOLOGIES, INC VS DENNIS MONTGOMERY, ET AL

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 10 of 159

PILLSBURY WINTHROP SHAW PITTMAN, LLP.

IN THE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA

IN AND FOR THE COUNTY OF WASHOE

...... [/)~ "d

ETREPPID TECHNOLOGIES, LLC., a Nevada

PLAINTIFF ETREPPID TECHNOLOGIES, L.L.C.'S MOTION TO

Pursuant to NRS 600A070.3, Plaintiff eTreppid Technologies, LLC. ("eTreppid"), hereby

for an order permitting the record to be filed under seal.

Case 3:06-cv-00056-PMP-VPC Document 644-2 Filed 05/28/08 Page 11 of 159

for Order Shortening Time.

This Motion is supported by the following Points and Authorities.

POINTS AND AUTHORITIES

eTreppid's Motion for a Preliminary Injunction.