Free Transcript - District Court of Arizona - Arizona

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA _________________ ) ) ) ) Plaintiff, ) ) ) vs. ) ) PETER THIMMESCH, et al., ) ) Defendants. ) ______________________________) BILTMORE ASSOCIATES, as Trustee for the Visitalk, Creditors' Trust,

CV 02-2405-PHX-HRH Phoenix, Arizona March 10, 2008 8:34 a.m.

BEFORE:

THE HONORABLE H. RUSSEL HOLLAND, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS BENCH TRIAL VOLUME #6 Pages 1043 to 1255

Official Court Reporter: Elizabeth A. Lemke, RDR, CRR, CPE Sandra Day O'Connor U.S. Courthouse, Suite 312 401 West Washington Street, SPC. 34 Phoenix, Arizona 85003-2150 (602) 322-7247 Proceedings Reported by Stenographic Court Reporter Transcript Prepared by Computer-Aided Transcription

Case 2:02-cv-02405-HRH

Document 507

Filed 04/22/2008

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A P P E A R A N C E S

TIFFANY & BOSCO By: Christopher Reed Kaup, Esq. Andrew M. Ellis, Esq. Tracy Shelden Morehouse, Esq Robert A. Royal, Esq. 2525 East Camelback Road, 3rd Floor Phoenix, AZ 85016 For the Defendants: MARISCAL, WEEKS MC INTYRE & FRIEDLANDER, PA By: Gary L. Birnbaum, Esq. Timothy J. Thomason, Esq. Scot L. Claus, Esq. 2901 North Central Avenue, Suite 200 Phoenix, AZ 85012

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1 2 3 4 5 6 7 8 9 10 EXHIBIT NO.: 11 12 13 14 15 16 Exhibit No. 175 17 Exhibit No. 188 18 19 20 21 22 23 24 25 UNITED STATES DISTRICT COURT Case 2:02-cv-02405-HRH Document 507 Filed 04/22/2008 Page 3 of 213 Exhibit No. 50 Exhibit No. 103 Exhibit No. 153 Exhibit No. 157 Exhibit No. 158 Board of Director Meeting. Minute Binder E-mail from Cindy Thimmesch re: current spreadsheets Minutes of Special Meeting of Board of Directors Fax from D. Litt to S. Best Minutes of Special Meeting of Board of Directors E-Mail from Allan to M. Cardwell Board of Directors Meeting Minutes 1188 1079 1193 1190 1189 1134 1182 DESCRIPTION: RECEIVED: INDEX OF EXHIBITS WITNESSES MARCIA O'DONNELL CYNTHIA LEE THIMMESCH ALLAN KAPLAN MICHAEL O'DONNELL INDEX OF WITNESSES Direct 1046 1072 1106 1237 Cross 1057 1092 1194 Redirect 1067 1105 1229 Recross 1072

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q BY MR. KAUP:

P R O C E E D I N G S (Called to the order of court at 8:34.) THE COURT: and gentlemen. Please be seated. Good morning, ladies

This is the continuation of the trial in

Biltmore v. Thimmesch and others. We're ready for another witness, I think. MR. KAUP: Your Honor, we call Marcia O'Donnell.

(Witness duly sworn). MARCIA O'DONNELL, WITNESS, SWORN DIRECT EXAMINATION Good morning, Mrs. O'Donnell. Thank you for

coming this morning. A Q A Q A Q A Q Good morning. Have you heard of a company called visitalk.com, Inc.? Yes. How did you first hear about Visitalk? When it was created by a friend and my husband. Your husband is Michael O'Donnell? He is. And you were married to Mr. O'Donnell from 1998 to --

through the end of 2000? A Q A Q From 1987. The friend, was that Peter Thimmesch? It was. Did you ever hold any positions with Visitalk?

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A Q A Q

Yes. Were you employed by Visitalk? I was. What was the period of time during which you were employed

by Visitalk? A Q A Q From the fall of 1998 till April of 2000. What was your position with Visitalk in 1998? I did mostly administrative. Did that position change at all prior to you leaving

Visitalk in 2000? A It continued. And as well, I took on the new building

build-out. Q Could you describe for the Court what work you took on

regarding the build-out of the new building? A The process of finding property, the demolition, and

restructuring of the inside to accommodate our business. Q A Q A Q A Q A Q When did you start that work? I would say the spring of 1999. And how long did that project go on? Approximately a year. Where was the new building located? 7th Street and Bethany Home Road. Were you the person at Visitalk in charge of that project? I was a representative of Visitalk. What was the total cost associated with the build-out of

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the new building? MR. CLAUS: THE COURT: Q A Q A Q BY MR. KAUP: No, I was not. Were you ever a director of Visitalk? No, I was not. Did you ever attend any meetings of Visitalk's board of Objection, Your Honor. Sustained. Relevance.

Were you ever an officer of Visitalk.

directors? A Q A Q A Q I do not believe so. Have you heard of the term Founder's Warrants? Yes, I have. How did you first hear about the term Founder's Warrants? I heard Peter and Michael speak of it. In front of you, ma'am, there are folders with exhibits in Do you see -- there should be a folder with Exhibit 25

them. in it.

MR. CLAUS: THE WITNESS: MR. KAUP: Q A Q BY MR. KAUP: Yes.

25? Was that 25?

Yes. Are you there, ma'am?

Do you see exhibit -- did you see Exhibit 25 in October of

1999? A Yes.

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Q A Q A

Do you recall having received Exhibit 25? Not specifically. Who was Kimberly Clouse? I believe she was one of the representatives of Goldman

Sachs that spoke to us about wealth management. Q A Did you read this e-mail in -- in the end of October 1999? I do not specifically remember, although that is the date

on the e-mail, so I'm thinking I may have. Q Do you see in the center of the page the words "Structural

Planning"? MR. CLAUS: Your Honor, before we start reading from

an exhibit that hasn't been offered or admitted, could we offer it so I could object? MR. KAUP: MR. CLAUS: hearsay. MR. KAUP: Your Honor, it's not being offered for the Your Honor, we will offer Exhibit 25. Your Honor, I object on the grounds of

truth of the matter asserted, but merely for the fact that there -- that the e-mail was sent to her and she received it; and as a result of that, she took -- she subsequently took an action which is relevant to this proceeding. MR. CLAUS: THE COURT: about the situation. Except that -Let's find out what she knows and recalls I'm not sure that this exhibit does If it does that,

anything more than help her recollection.

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fine. Q BY MR. KAUP: Do you see the language under the words

"Structural Planning." A Q I do. Could you just read that paragraph and then the paragraph

under that with the names and addresses to yourself. A Q Yes. Did there -- did you once have knowledge relating to the --

your discussions with Ms. Clouse regarding estate planning work for you and your husband? MR. CLAUS: evidence. THE COURT: Try and rephrase the question so that it Foundation. Assumes facts not in

goes to her knowledge of what's going on. Q BY MR. KAUP: You mentioned earlier about estate planning

work with -- or wealth management work with Goldman Sachs. Was Ms. Clouse the person at Goldman Sachs with whom you had such discussions? A Q I don't recall. Do you recall -- did you have discussions regarding wealth

management strategy with anyone at Goldman Sachs during the fall of 1999? MR. CLAUS: THE COURT: THE WITNESS: Relevance, Your Honor. Overruled. I don't remember the dates exactly, if

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it was the fall of 1999.

I do know -- I do recall meeting with

someone from Goldman Sachs in their office. Q BY MR. KAUP: And what was the subject matter of that

meeting? A That we would need to start thinking about wealth

management. Q Now, did you have subsequent conversations with anyone from

Goldman Sachs on that topic? A I believe that we spoke with a Richard Weiss, if I am

remembering his name correctly. Q Now, Mrs. O'Donnell, do you recall -- did anyone from

Goldman Sachs refer you to any lawyers to assist you with estate planning? A Other than reading what's on this e-mail, I don't recall

them being specific about who to meet with. Q Do you recall that there came a time -- or did you ever

hire any lawyers for -- to assist you with estate planning work? A Q I believe it was Mr. Weiss from Snell & Wilmer. Do you recall who referred to you Mr. Weiss from Snell &

Wilmer? A Q A Q I believe it was Mr. Mallery. Would that be Dick Mallery? Yes. Was Mr. Mallery a lawyer -- did you know Mr. Mallery to be

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a lawyer at Snell & Wilmer? A Q Yes. Did Mr. Mallery refer to you Mr. Weiss shortly after the

date of this e-mail? A I don't remember the date. MR. KAUP: Judge, may I approach with a copy of her And, Your Honor, I have a copy for you

deposition transcript? as well. Q BY MR. KAUP:

Mrs. O'Donnell, do you recall having been

deposed in this case? A Q I do. Do you recall having been deposed in my office in this

case? A Q Yes, I do. And do you recall that your testimony then was given under

oath, correct? A Q you. Yes, I do. Could you look at page 24 of the transcript we've given to Ma'am, I asked you and it's at line 7: "You see this e-mail was dated October 28, 1999?" You answered: Then I asked: "I do." "Who would have been -- it would have

been shortly after that date that you met with Mr. Weiss for estate planning work?" And you answered: "Probably so, I would assume."

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A I do. A Q Yes.

Was that testimony true, ma'am?

On page 22, ma'am, line 11, I asked you: "Do you recall receiving that e-mail?" Being this e-mail, which is Exhibit 25 in this trial. And you answer: Do you see that? "I do recall receiving it."

Was that testimony true? Yes. MR. KAUP: Your Honor, I move for the admission of

Exhibit 25. MR. CLAUS: It's still hearsay, Your Honor, and it And -- well,

wasn't used to refresh anybody's recollection. that's it. THE COURT:

I think her testimony may have some

relevancy, but I don't think the exhibit does, so the exhibit will not be received. Q BY MR. KAUP: Could you look at Exhibit 100 before you

please, ma'am. A Q A Yes. Ma'am, did you see Exhibit 100 in 1998? One, I couldn't be sure exactly, if it was in 1998; and if

I did see it, it had no impact on me. Q Do you know whether you saw Exhibit 100 in 1999? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 11 of 213

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A Q

No, I don't remember the date. Do you recall that the law firm of Bryan, Cave represented

Visitalk in 1998 and early 1999? A Q A Q A him. Q Did you ever tell any employee of Bryan, Cave that any Yes. Do you recall a lawyer at Bryan, Cave named Joe Richardson? I recall the name, yes. Did you ever speak with Mr. Richardson? I don't recall speaking with him. No, I did not speak with

information in Exhibit 100 was wrong? MR. CLAUS: Foundation, Your Honor. She testified she

doesn't know when she saw it, if she saw it. THE COURT: Q BY MR. KAUP: Sustained.

Did you ever discuss with anyone at Snell &

Wilmer whether anything in Exhibit 100 was in error? MR. CLAUS: Same objection, Your Honor. And also

outside the scope of the designated expected testimony of this witness on page 22 of the Joint Pretrial Statement. THE COURT: Q A Q BY MR. KAUP: Yes. First, the first page of Exhibit 101, ma'am, did you ever Sustained.

Could you look at Exhibit 101 please, ma'am.

see Exhibit -- the first page of Exhibit 101 in 1998? A I've never seen this before. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 12 of 213

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Q

Could you look at the third page of Exhibit 101.

Are you

there, ma'am? A Q A Q I am. Did you ever see the third page of Exhibit 101 in 1998? I don't know when I saw this. Did you ever discuss the date on which Mr. O'Donnell became

a shareholder with anyone at Bryan, Cave? A No. MR. CLAUS: Foundation, Your Honor, and also outside

the scope of this witness' expected testimony on page 22 of the Joint Pretrial Statement. THE COURT: Q BY MR. KAUP: Sustained.

Could you look at the next page of this Are you there?

document please, ma'am. A Q Uh-huh. Yes.

Did you ever see Exhibit -- the fourth page of Exhibit 101

before? A Q A Q A Q A No. Could you look at Exhibit 105 please, ma'am. Okay. Have you ever seen -- did you see Exhibit 105 in 1998? No, I don't believe so. Did you see Exhibit 105 in 1999? I never had any involvement with the founders or any of the

shares whatsoever. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 13 of 213

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Q

Do you recognize the name of Michael Donahey as a lawyer at

Snell & Wilmer? A Q A Q A Q Yes. Did you ever speak with Mr. Donahey? No, I did not. Did you ever speak to Mr. Mallery? Yes, I did. Did you ever speak to Mr. Mallery about the Founder's

Warrants? A Q No, I did not. Did you ever speak to Mr. Mallery about the original

corporate records of Visitalk? A I never had any involvement whatsoever with founders

shares, original warrants, anything of that sort, so, no, I did not. Q A Q A Q Could you look at Exhibit 112 please, ma'am. Yes. Are you there? I am. Did you see Exhibit 112 at any time in the summer or fall

of 1999? A Q No, I did not. Did you ever discuss with Mr. O'Donnell a letter from Snell

& Wilmer regarding the Founder's Warrants? MR. CLAUS: The relevance of that discussion is

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objectionable, Your Honor.

If any such discussion took place,

she testified she wasn't a director or officer of Visitalk at any time. MR. KAUP: It goes to whether, in fact, there was a

letter that had been given to Mr. O'Donnell. MR. CLAUS: Also, I believe, Your Honor, Arizona

recognized a marital privilege that Ms. O'Donnell has not waived. MR. KAUP: THE COURT: MR. KAUP: THE COURT: It's also up to her to assert it. It's also what? Up to her to assert it. She's told us that she never had anything She's told us she never saw The

to do with Founder's Warrants. this letter.

I don't know where we're going with this.

objection is sustained. MR. KAUP: Okay. No further questions for

Mrs. O'Donnell at this time. THE COURT: MR. CLAUS: You may cross examine. Yes, Your Honor. Thank you. How are you?

Good morning, Mrs. O'Donnell. THE WITNESS: MR. CLAUS: Good, thank you.

Good morning, Your Honor. I promise.

This is going to be short and painless. CROSS EXAMINATION Q BY MR. CLAUS:

You testified on direct examination,

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Mr. Kaup asked you, did you ever hear about the Founder's Warrants, and you said "yes." Do you remember that? A Q I do. And then he said: And you said: it." Do you remember that? A Q I do. And then Mr. Kaup stopped asking you questions about the Let me pick up where Mr. Kaup left off. How did you hear about it? "I heard Peter and my husband speak of

Founder's Warrants.

You heard Peter Thimmesch and your husband "speak of it," the Founder's Warrants, at your house, right? A Q A Q Correct. Where at your house? In our garage. And you heard them "speak of it" on September 12, 1998,

right? A Q I did. Your husband was at the meeting where Peter Thimmesch and

your husband spoke of it, the Founder's Warrants, right? A Q A Q Yes. And Mr. Thimmesch was there? Yes, he was. And Cindy Thimmesch was there? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 16 of 213

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A Q A Q

Yes, she was. And you were there kind of, weren't you? Yes, I was. Now, I say you were there kind of because your children Where were your children at the time.

were also kind of there. A Q A Q

In and out of the house. In the house? In the home, out into the garage, in the front yard. Gotcha. And it was at this meeting on September 12, 1998,

that Peter Thimmesch and Michael O'Donnell authorized the issuance to them of Founder's Warrants, correct? A Correct. MR. KAUP: legal conclusion. THE COURT: I think we need some foundation before Objection, Your Honor. It calls for a

we -- I mean, she's told us she doesn't know a lot about this. MR. CLAUS: Honor. Q I won't ask for a legal conclusion, Your

I'm going to ask you about what you heard. I want to know, did you hear in your garage

BY MR. CLAUS:

on September 12, 1998, Mr. Thimmesch and Mr. O'Donnell say -your husband say, "Here is what we're going to do. We're going

to authorize ourselves Founder's Warrants" or words to that effect? MR. KAUP: THE COURT: Objection. Overruled. Hearsay.

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MR. CLAUS: THE WITNESS:

That means you can answer. Okay. I remember them speaking of They

needing to come up with Founder's Warrants or shares. started to discuss that. MR. CLAUS: BY MR. CLAUS: Thank you.

Now, we talk about who was at the meeting.

Let's talk about who wasn't at the meeting. Mark Cardwell wasn't at the meeting, correct? Correct. Now, you testified to Mr. Kaup that you were involved with You were there from day one,

Visitalk from the fall of 1998. correct? A Q A Q Correct.

I mean, it was your husband's new venture, right? Yes. Fair to say that for the period of 1998 -- you know, the

end of 1998 and 1999, Visitalk was a huge part of your life? A Q Yes. Before you became an official employee of Visitalk -- from

September 3, 1998, until you became an official employee, you were a Jack or Jill of all trades, weren't you? A Q A Q Yes, I was. You were a gopher? Yes. A messenger? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 18 of 213

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A Q A Q A Q

Yes. An administrative assistant? Yes. A moving company? Not very glamorous, yes. Well, let's talk about that for a second. Mr. Cardwell had no involvement with Visitalk at the

time of this September 12, 1998 meeting, right? A Q Correct. And there's a reason that you know that. You know that

because Mr. Cardwell didn't help with the move, did he? A Q Correct. Now, when you first -- let me just interject something

here, ma'am, because I think it's important for the Court to recognize this. Have you and I ever met before? A Q No. Have you and I -- except for when you received your

subpoena and called me and said, "Do I really need to be there on March 3," have we ever spoken before except when I introduced myself out in the hall? A Q No, we have not. Have you ever told me anything about Founder's Warrants,

about a meeting, about anything? A Absolutely not. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 19 of 213

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Q

Let's contrast that. Have you spoken with Mr. Kaup before, that guy right

there? A Q Yes. Did you tell Mr. Kaup before this trial started, "Hey,

there really was a meeting with Peter Thimmesch and Michael O'Donnell on September 12, 1998 where they discussed the Founder's Warrants." A Q Yes, I believe so. Did you tell Mr. Kaup, "Hey, you know what, Mr. Kaup, I

don't know why you're doing this because Mark Cardwell wasn't involved with Visitalk on September 12, 1998." MR. KAUP: THE COURT: Go ahead. THE WITNESS: Q BY MR. KAUP: Yes. Objection. Relevance.

Oh, I think it may have some relevance.

But I have never gotten the opportunity to

ask you any of these questions before, have I? A Q Correct. So let's just pick up on Mr. Cardwell for a second. You had said he didn't help with the move. Tell

the -- tell His Honor where Visitalk's corporate offices were from say September 3rd to September 15th. A Q Peter Thimmesch's bedroom. And did there come a time where you moved corporate offices UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 20 of 213

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of Visitalk? A From his bedroom, which I never entered, to -- yes, to

Dunlap and Central. Q A Q Was that Cocoon Capital's office? Yes, it was. And are you sure, ma'am, that Mr. Cardwell wasn't involved

in the -- well, let me back up and ask the predicate question. Was this meeting of September 12, 1998, where the Founder's Warrants discussion took place, that happened while the offices of Visitalk were still ensconced in or entrenched in Mr. Thimmesch's bedroom, correct? A Q Yes. So after that meeting there came a time when you moved to

Cocoon Capital, correct? A Q Yes. And Mr. Cardwell wasn't yet a shareholder, director, or

employee at the time you moved from Peter Thimmesch's bedroom to Cocoon Capital; isn't that right? A Q Yes. And neither was Lance Booth. Those were the two who came

on right after you moved to Cocoon Capital; isn't that right? A Q Correct. Let's -- and if you could pull up, David, please -- and may

I approach, Your Honor? THE COURT: Yes.

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MR. CLAUS: BY MR. CLAUS:

Thank you. Let me ask you, ma'am. Did your husband

issue press releases while he was involved with Visitalk? A Q I believe so. Let me have you look, ma'am, at Exhibit 521. Do you see

Exhibit 521, ma'am? A Q I do. And it's on the screen blown up. If you could look at the

hard copy, you see at the bottom there it says, "For more information reporters may contact..." and your husband is given there, isn't he? A Q A Q A Q Yes. And a phone number is given, correct? Yes. Was that your husband's phone number in September of 1998? I believe so. And you see, ma'am, at the top it announces the formation

of visitalk.com and it only mentions Peter Thimmesch and Michael O'Donnell, correct? A Q Correct. And that's consistent with your recollection that when

visitalk.com formed, it was just Peter and your husband, right? MR. KAUP: Objection Your Honor. This goes beyond

direct -- the direct examination.

We never went into when

Mr. Cardwell became a shareholder or became an employee of the UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 22 of 213

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company. MR. CLAUS: It absolutely does not go beyond the scope

of direct, Your Honor. THE COURT: You may proceed. THE WITNESS: MR. CLAUS: THE WITNESS: MR. CLAUS: THE WITNESS: Q BY MR. CLAUS: Could you repeat the question? I can't, but I'll ask it again. Okay. Or something like it again. Okay. I think it's fairly within the direct.

The first sentence of Exhibit 521 is

consistent with your recollection that when visitalk.com was formed, it was only your husband Michael O'Donnell and Peter Thimmesch, right? A Q Correct. Now, if you look at Exhibit 520, please, and it's on the And at the bottom of the page, your husband's

screen as well.

name is given as the contact person, correct? A Q Correct. And again, if you look up at the top, in all capital

letters, bold, "visitalk.com announces new Chief Technology Officer." A Q A Do you see that?

Yes, I do. And it's dated for release September 17, 1998, correct? Correct. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 23 of 213

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Q

And the first sentence, "visitalk.com announces today the

addition of Mark Cardwell as the Chief Technology Officer and principal stockholder." A Q Yes, I do. Is that also, ma'am, that sentence, consistent with your Do you see that?

recollection that as of September 12, 1998, five days before this press release, Mr. Cardwell was neither an employee nor stockholder of visitalk.com? A Q Yes. Now, Mr. Kaup asked you about your conversations with Did you ever hear Mr. Mallery exert control over

Mr. Mallery.

the business operations of Visitalk? MR. KAUP: Objection, Your Honor. It goes beyond the

scope of direct and there is no foundation. MR. CLAUS: Mr. Mallery. THE COURT: MR. CLAUS: THE WITNESS: Q BY MR. CLAUS: Overruled. Shall I ask it again? No. No. I do not -- no, he did not. He asked about conversations with

In fact, ma'am, you never spoke with

Mr. Mallery about Visitalk, correct? A Q Correct. Now, let's move on to estate planning. There did come a time when David Weiss performed some estate planning services for you, correct? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 24 of 213

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A Q

Yes. You didn't try and hide from anyone at Visitalk that

Mr. Weiss was providing estate planning services for you, did you? A Q Oh, no. And just to be clear, ma'am, the issue of Founder's

Warrants never came up in your estate planning discussions, correct? A Correct. MR. CLAUS: Thank you very much, ma'am. Thank you. I hope it was

as painless as I promised it would be. Thank you, Your Honor. THE COURT: MR. KAUP: Redirect, Mr. Kaup? Yes.

REDIRECT EXAMINATION Q BY MR. KAUP: Mrs. O'Donnell, on the estate planning issue

first, the -- was -- were the Founder's Warrants a part of your estate plan? A Q I don't know. Did you understand the Founder's Warrants were property

belonging to you and your husband when you did the estate planning work with Mr. Weiss? A I don't recall understanding much of the shares, Founder's

Warrants. Q Now, Mr. Claus asked you about a meeting in your garage UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 25 of 213

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with the Thimmesches and with your husband on September 12, 1998. Had there been a notice of a board of directors' meeting

prior to that September 12 garage meeting? A As far as I know, there wasn't a board of directors prior

to that meeting. Q Was there an agenda for the meeting on September 12, 1998,

in your garage with the Thimmesches? MR. CLAUS: THE COURT: THE WITNESS: Q A Q BY MR. KAUP: No. Were -- was there a formal -- was there a written board Foundation. You may answer. Are you speaking of a written agenda?

Yes, ma'am.

resolution prepared following the meeting in the garage? MR. CLAUS: she testified. THE COURT: THE WITNESS: Q BY MR. KAUP: You may answer. That I do not know. Foundation. She is not a board member,

Did you ever see any documents prepared in

September of 1998 relating to this meeting in your garage? A Q No. Who chaired the -- was there a chairman for the meeting in

the garage? A Q Not specifically, no. Did Mr. Thimmesch -- you testified in response to the UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 26 of 213

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examination from Mr. Claus that there was discussion regarding Founder's Warrants. First, was that phrase actually used during this meeting on September 12, 1998, in your garage? A I couldn't testify to specific words of the meeting. I

recall them speaking of shares, warrants. difference to me. Didn't then.

The two don't make a

And make a very little

difference to me at this point. Q Was it just a discussion regarding the need for

Mr. Thimmesch and Mr. O'Donnell to obtain additional stock to address the fact that sales of stock were being made to investors? MR. CLAUS: THE COURT: Q BY MR. KAUP: Leading. Sustained.

Did Mr. Thimmesch and Mr. O'Donnell agree on

an exercise price for the warrants or the shares that were being discussed on that date? MR. CLAUS: THE COURT: THE WITNESS: Q BY MR. KAUP: Foundation. You may answer. That I don't recall.

Did Mr. Thimmesch and Mr. O'Donnell agree on

the length of the term for which they would have the right to these warrants during this meeting on September 12, 1998? A No, not that I recall. I should say that I don't remember them discussing any UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 27 of 213

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length of time on any of the warrants or shares. Q Did Mr. Thimmesch and Mr. O'Donnell agree on the number of

shares to be allocated to each of them relating to these warrants during this meeting in your garage? A Q I don't recall specifically. Was there a discussion at that time regarding the reason

for wanting these warrants? MR. CLAUS: in? Q BY MR. KAUP: During this meeting on September 12,1998, Foundation. Discussion she was involved

while you were present? THE COURT: THE WITNESS: You may answer. So I understand, the question was was I

present while they spoke of it? MR. KAUP: clear. THE WITNESS: Q BY MR. KAUP: Okay. Let me rephrase the question just so it's

While you were present during this meeting

on September 12, 1998, did Mr. Thimmesch and Mr. O'Donnell discuss the reason they wanted these warrants or additional shares? A Q I don't know. Did you ever discuss with anyone at Snell & Wilmer this

meeting in your garage on September 12, 1998? A The only one that I recall speaking to was Dick Mallery and UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 28 of 213

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we never spoke of shares or warrants or anything like that, so I would say no. Q Mr. Claus asked you a number of questions about when

Mr. Cardwell became involved as an employee and shareholder with Visitalk. Did you -- Ms. O'Donnell, did you ever discuss with anyone at Snell & Wilmer the date on which Mr. Cardwell became a shareholder in Visitalk? A Q No. Did the meeting in your garage occur after any other event

at which you and your husband attended with the Thimmesches? A Q Not -- no, I don't believe so. What was the reason you were in your garage with the

Thimmesches on September 12, 1998? A Because it was my garage and they were out there. My

children were out there. Q What was the reason you were together with the Thimmesches

on that day? A I believe they came over to discuss Visitalk and what they

were proposing to do. MR. KAUP: MR. CLAUS: No further questions, Your Honor. Your Honor, I have two followup questions.

Very brief so we don't have to call Ms. O'Donnell back. THE COURT: witnesses? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 29 of 213 You have her listed as one of your

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MR. CLAUS: THE COURT:

I do, Your Honor. Go ahead. RECROSS EXAMINATION

BY MR. CLAUS:

Could you pull up page 28, line 14 through

I just want to clear up. Could you just read please line -- or page 28, line 14

through 18 to yourself, ma'am. A Q A Q Yes. And just tell me when you're through. Okay. Ma'am, does that refresh your recollection that at the

meeting in your garage, the purchase price and the amount of warrants or options was discussed? A Yes. Now I see that. MR. CLAUS: THE COURT: MR. KAUP: THE COURT: THE WITNESS: THE COURT: MR. KAUP: Thank you. That's all I have, Your Honor.

Mr. Kaup, anything? No, Your Honor. Thank you, ma'am. Thank you. You may call your next witness. We will call Cynthia Thimmesch. You may step down.

(Witness duly sworn) CYNTHIA LEE THIMMESCH, WITNESS, SWORN DIRECT EXAMINATION BY MR. KAUP: Good morning, Mrs. Thimmesch. Thank you for

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coming this morning. A Q A Q Good morning. You've heard of the company known as visitalk.com, Inc.? Yes, I have. In 1998 through the end of 2000 you were married to Peter

Thimmesch? A Q Yes, I was. What was the relationship between Mr. Thimmesch and

Visitalk? A Q He was the CEO. Did you hold any positions with Visitalk at any time

during -- from 1998 through 2000? A Yes, I did. I was the -- originally the

Vice-President/Controller and then I became the Vice-President of Investor Relations. Q In September of 1998, what was your position -- during

1998, what was your position with Visitalk? A Q Vice-President/Controller. What were your duties as Vice-President and Controller in

1998? A I handled all of the money related to the sale of stock. I

handled payroll, all purchasing, procurement, things like that. Q A When did you become Vice-President of Investor Relations? I believe it was June of 2000 -- not 2000. I'm not quite sure. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 31 of 213 June of 1999

maybe.

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Q

What were your duties as Vice-President of Investor

Relations? A I was managing all of the interaction with the

shareholders. Q What -- did there come a time you ceased to be employed by

Visitalk? A Q A Q A Q A Q Yes. When was that? In August of 2000. Why was that? I was part of the very first wave of layoffs. You've heard of a phrase "Founder's Warrants" in this case? Yes, I have. Did you have an understanding -- do you have an

understanding -- strike that. Did you have an understanding in 1998 of what the Founder's Warrants were? A Q Yes, I did. There are a number of exhibits in front of you, Could you look at Exhibit

Mrs. Thimmesch, in file folders. 100, please. A Q A Yes.

Are you there, ma'am?

Did Visitalk have a lawyer in October of 1998? I am not sure of the date that Joseph Richardson was put I don't know if it was the date of this UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 32 of 213

under retainer.

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document. date --

It was sometime in September.

I don't know what the

THE COURT: THE WITNESS: THE COURT: THE WITNESS: Q A Q A BY MR. KAUP: I don't know.

What was the name again, please? Joe Richardson. Thank you. With Bryan, Cave.

Do you recall seeing Exhibit 100 in 1998?

Do you recall having seen Exhibit 100 in 1999? I know I have seen it. I don't know the date that I have

seen it. Q In 1998 did you ever speak with Joe Richardson on matters

relating to Visitalk? A Q Yes, I did. Did you ever speak with Joe Richardson in 1998 regarding

the initial issuance of stock to shareholders? A I probably did. THE COURT: What issue are you actually referring to?

Common stock or preferred stock? MR. KAUP: Thank you, Your Honor. Common stock.

THE WITNESS: common stock.

I don't know if I spoke with him about

I would have spoken to him most certainly about

preferred stock. Q BY MR. KAUP: Did you ever speak to Joe Richardson in the

fall of 1998 regarding the formation of Visitalk? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 33 of 213

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A Q

I don't recall. Did you provide Mr. Richardson with information to prepare

corporate documents for Visitalk? A That would have been provided by either Peter Thimmesch or

Michael O'Donnell. Q Could you look at Exhibit 101 please, ma'am. Are you

there? A Q A Yes. Did you ever see the first page of Exhibit 101 in 1998? I don't believe so, because I believe this was a

spreadsheet that was created in 1999. Q A Q Did you ever see Exhibit 101 in 1999? Yes. Did you speak with any employee at Bryan, Cave regarding

the first page of Exhibit 101? A Q I do not believe so. Could you look at the second page of Exhibit 101. Did you see the second page of Exhibit 101 in the early part of 1999 or 1998? A Q I don't recall when it was. Do you recall having seen Exhibit 101 during the time you

were employed at Visitalk? A Q Yes. Did you ever discuss with anyone at Bryan, Cave any of the

information contained on the second page of Exhibit 101? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 34 of 213

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A Q

I do not believe so. Could you look at the fourth page of Exhibit 101. Did you

see the fourth page of Exhibit 101 during the time you were employed at Visitalk? A Q Yes. Did you ever discuss the fourth page of Exhibit 101 with

anyone at Bryan, Cave? A Q Probably not. Could you look at Exhibit 102 please, ma'am. Did you see

Exhibit 102 while you were employed at Visitalk? A Q A Q A Q A Q Yes, I did. Do you have an understanding about what Exhibit 102 is? Yes, I do. Could you tell us that understanding? It's the financial statements for the first year. Of Visitalk? Yes, of Visitalk. Did you have an understanding about whether

Ernst & Young -- let me ask you. Who were the auditors for Visitalk in 1999? A Q Ernst & Young. Did you ever speak to anyone at Ernst & Young relating to

Exhibit 102? A Q Yes, I did. Did you ever tell anyone at Ernst & Young that anything in UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 35 of 213

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Exhibit 102 was wrong? A Q No, I did not. Did you ever speak to anyone at Snell & Wilmer regarding

Exhibit 102? A Q I did not. Could you look at Exhibit 103 please, ma'am. Do you see

Exhibit 103 is an e-mail? A Q A Q Yes. Do you recall having prepared this e-mail? I don't recall. It was a long time ago. I'm sure I did.

Were you the person at Visitalk charged with maintaining

electronic stock records? A Q Yes, I was. Could you look at the next page of this exhibit please, Do you have an understanding about what this page of

ma'am.

this exhibit is? A Q A Q Yes. What is that? It's a record of all the common shares issued. On the first page of this exhibit you see that the date on

the e-mail on the "received" line is March 3, 2000? A Q Yes. Can you read the -Well, first, Your Honor, we would move for the admission of Exhibit 103. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 36 of 213

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MR. THOMASON:

Well, Your Honor, I'm going to object.

It is hearsay and I don't believe he has laid a business record foundation for this at this point. THE COURT: BY MR. KAUP: Get the foundation for it.

Ma'am, you prepared -- in connection with the

duties you mentioned earlier about keeping the electronic stock records of Visitalk, the second page of this document is one of those electronic stock records? A Q Yes. And did you send the first e-mail which is the first page

of Exhibit 103 to Ms. Strick and Mr. Donahey at Snell & Wilmer as part of the ordinary course of your duties as an employee of Visitalk? A Yes. MR. KAUP: of Exhibit 103. THE COURT: I think I missed something, ma'am. Was Your Honor, we would move for the admission

this record prepared by you as a part of your duties in the ordinary course of the business of Visitalk? THE WITNESS: THE COURT: Yes, it was. Exhibit 103 is admitted.

(Exhibit No. 103 admitted into evidence.) BY MR. KAUP: Again, to the second page of Exhibit 103,

ma'am. A Yes.

Do you see the column "Cert Number."

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UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 37 of 213

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Q

And do you see the row that has the number "3" in that

column? A Q A Q Yes. And then do you see there's a column "Number Of Shares." Uh-huh. Do you see the number of shares in the row for number 3 is

one million? A Q Yes, I do. And then do you see there's a -- the fourth column is

labeled -- can you read that? A Q A Q A Q Date assigned. It's not a very good copy.

Could that be "Date Acquired"? It could be. And then do you see the date in that column is 9/4/1998? Yes. And the column -- the next column over you see reads Do you see that?

"Shareholders." A Q A Q Yes, I do.

And the name there is Mark Cardwell? Yes. Did you ever tell Mr. Donahey in 2000 that there were any

errors on this spreadsheet which is the second page of Exhibit 103? MR. THOMASON: Time. Context. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 38 of 213 Objection. Foundation, Your Honor.

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THE COURT: THE WITNESS: THE COURT: THE WITNESS: BY MR. KAUP:

You may answer. Do I need to answer? Yes. I don't recall. I'm sorry.

Could you look at the Exhibit 105 please,

ma'am. A Q A Q

Ma'am, did you see Exhibit 105 in 1998?

No, I did not. Did you see Exhibit 105 in 1999? I believe so. Do you recall seeing Exhibit 105 in 1999 during the period

of time Bryan, Cave represented Visitalk? A Q No. Did you ever discuss with Mr. Richardson any matters

relating to the Founder's Warrants? A No. Those discussions were between Peter Thimmesch,

Michael O'Donnell, and Joe Richardson. Q A Did -- were you -- do you know when Exhibit 105 was signed? I do not recall. I know this document was formalizing a

meeting that happened in September of 1998. Q Did you discuss with Mr. Richardson the date on which

Mr. Cardwell became a shareholder? A Q No, I did not. Did you discuss with any lawyer at Snell & Wilmer the date

Mr. Cardwell became a shareholder? A No, I did not. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 39 of 213

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Q

Did you ever discuss with Mr. Richardson the date the

Founder's Warrants were claimed to have been authorized? A Q No, I did not. Did you ever discuss with any lawyer at Snell & Wilmer the

date the Founder's Warrants were claimed to be authorized? A Q I may have had a discussion. I don't recall.

Now, you mentioned a meeting in September of 1998 relating Did you ever discuss with

to the Founder's Warrants.

Mr. Donahey the meeting that was claimed to have occurred in September of 1998 relating to the Founder's Warrants? A Q I may have. I don't recall.

Did -- the meeting that you mentioned regarding the

Founder's Warrants from September of 1998, when in September did that meeting occur? A It was very early in December -- or September. I do not

know the exact date. Q A Did you ever attend any Visitalk board meetings? Technically, that one was a board meeting, and yes, I did

attend it; but I did not attend any subsequent board meetings. Q You say technically that was a board meeting. Was there a

notice of a board meeting prior to the date of this claimed meeting regarding the Founder's Warrants? A Q We had not done anything so formalized at this point. Was there an agenda for this meeting at which the Founder's

Warrants were claimed to have been discussed? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 40 of 213

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A Q A Q A

It was not written, but there was clearly an agenda. Were any other topics discussed at this meeting? Yes. What other topics? We were discussing the selling of Class A stock, dilution,

things like that. Q Was there any relationship between the discussions

regarding the selling of the Class A stock, the dilution, and the discussion relating to the Founder's Warrants? A Yes. The discussion was to be able to maintain control,

going through several classes of stock and not ending up being in the minority. Q Were there ever any minutes, written minutes relating to

this meeting in September of 1998 prepared? A Q A Q I don't know. I did not create any.

Did you ever see any such written minutes? I don't recall. I don't believe so.

After the meeting on September -- in September of 1998

relating to the Founder's Warrants, was there ever a written board resolution prepared by any of the attendees at that meeting? A Q I don't recall. At that meeting did the board agree on the exercise -- did

Mr. Thimmesch and Mr. O'Donnell agree on the exercise price for these warrants? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 41 of 213

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A Q A Q

I believe so. What was discussed on that topic? I don't recall exactly. It was ten years ago.

Did Mr. Thimmesch and Mr. O'Donnell agree on the length of

the term of these warrants at that meeting in September of 1998? A Q I don't recall. Did Mr. Thimmesch and Mr. O'Donnell agree on the number of

shares to be allocated relating to the Founder's Warrants at this meeting in September of 1998? A Q A Q A Q Yes. They did agree on the number of shares.

And what was that? Whatever it ended up being. I don't remember.

Who at that meeting suggested the concept of warrants? I don't recall. Looking back at Exhibit 105, ma'am, could you look on the Are you there?

last page of this document. A Q Yes.

Do you see that the document is dated as of September 12,

1998? A Q A Q A Yes. Do you know when Mr. Thimmesch signed this document? I don't know. Do you know when Exhibit 105 was prepared? I don't know. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 42 of 213

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Q

Could you look at Exhibit 112 please, ma'am.

Are you

there, ma'am? A Q A Q Yes. Did you see Exhibit 112 in 1999? I'm not even sure that I have ever seen this letter. Did you ever discuss with Mr. Thimmesch concerns regarding

the claimed authorization of the Founder's Warrants? A Q Wait. State the question again, please.

Did you ever discuss with Mr. Thimmesch concerns regarding

the claimed issuance or authorization of the Founder's Warrants? A Q Yes, I did. Did you have discussions with him on that matter in the

late summer of 1999? A Q I don't recall when it was. What is your understanding of the concerns regarding the

claimed authorization of the Founder's Warrants? MR. THOMASON: THE COURT: THE WITNESS: Objection. Foundation.

You may answer. That it was not properly disclosed to

the Series A shareholders. Q BY MR. KAUP: Is that the only concern relating to the

claimed authorization of the Founder's Warrants about which you had an understanding in 1999? A Yes. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 43 of 213

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Q

Did -- did you ever discuss with Mr -- you know the name

Michael Donahey? A Q A Q Yes. You understand Mr. Donahey is a lawyer at Snell & Wilmer? Yes, I do. Did you ever discuss with Mr. Donahey the topic of the

Founder's Warrants? A Q I don't recall. In the third paragraph of Exhibit 112, ma'am, could you

look at that on the first page. A Q Yes. That paragraph reads: "As we understand in early November 1998 after the closing of the Company's offering of Series A Preferred Stock, Messrs. Thimmesch and O'Donnell authorized, pursuant to a resolution of the board of directors dated September 12, 1998, the issuance of the Founder's Warrants in order to prevent dilution of their ownership percentages through the initial capital raising activities of the company." Do you see that language? A Q Yes. Do you have any basis to dispute that statement? MR. THOMASON: Objection, Your Honor. Foundation.

She said she's never seen the document before. MR. KAUP: It's just a factual statement.

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THE COURT:

The question is does she know of any basis You may answer.

for disputing what's stated there. THE WITNESS: No.

I don't have any basis for

disputing that statement. Q BY MR. KAUP: The next sentence in this document reads:

"Although the issuance of the Founder's Warrants was authorized by the board of directors effective September 12, 1998, the issuance of the Founder's Warrants was not disclosed to the Series A investors because it actually occurred in November." Do you have any basis to dispute that statement? I would say the intent to issue the warrants was there

in -- I mean, maybe the document wasn't signed until November, but the -- the reasoning behind it was from September. Q Do you have any basis to dispute that the issuance of the

Founder's Warrants actually occurred in early November 1998? MR. THOMASON: conclusion, Your Honor. THE COURT: BY MR. KAUP: Sustained. Objection. That calls for a legal

Could you look at Exhibit 106 please, ma'am.

Are you there? A Q Yes. Do you see Exhibit 106 is an e-mail -- is an e-mail from

you dated March 20, 2000? A Yes. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 45 of 213

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Q

And do you see that the body of the e-mail begins with the

name "David"? A Q Yes. Could you look at the second page of this exhibit please, Are you there?

ma'am. A Q A Q Yes.

Do you see this is a memorandum to David Weiss from you? Yes. Looking back on the first page of Exhibit 106, do you know

the David to whom you sent this e-mail? A Q A Q He's a trust attorney. Would that be David Weiss? Yes. Mr. Weiss did estate planning work for you and your

husband? A Q Yes, he did. One of the assets -- was one of the assets that was the

subject of the estate planning the Founder's Warrants? A Q Yes. Was -- were the Founder's Warrants an important part of the

estate planning? A Q Yes. Do you see the time on the "received" line next to the date

as 16:36:26 or 4:36? A 4:36. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 46 of 213

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Q

Do you see the "received" line marked 2,000 and then digits

next to that? A Q Yes. Do you know whether that -- it reflects the time this

e-mail would have been sent? A Q Quite possibly. Could you look on -- at Exhibit 107 please, ma'am. Do you

see Exhibit 107 is an e-mail from Cathy Vehovic at Snell & Wilmer? A Q Yes. And do you see on pages 2 and 3 there's a copy of the

memorandum from you to Mr. Weiss? A Q Yes. Do you recall having received from Ms. Vehovic a copy of

the memorandum which is the second and third pages of Exhibit 107? A This is something I wrote. THE COURT: THE WITNESS: Q 106. BY MR. KAUP: Which one are you looking at? 107. Sorry.

The memorandum -- let's go back to Exhibit

Do you see in the body of the e-mail on 106 you state

that you made one addition that comments the total number of warrants chosen and that you have reviewed the memo with Peter and he is in agreement with everything. A Yes. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 47 of 213 Do you see that?

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Q

Did you actually review the memorandum which are the last

two pages of Exhibit 106 with Mr. Thimmesch? A Q I probably did since I say I did. Did -- was everything in Exhibit 106 -- the last two pages

of Exhibit 106 -- accurate when you transmitted it to Mr. Weiss? A Q There may be an error in here. I don't know.

Do you recall ever telling Mr. Weiss that there was a error

in the last two pages of Exhibit 106? A Q No, I don't recall. Did you and Mr. Thimmesch agree on March 20, 2000, that the

factual information in the last two pages of Exhibit 106 was correct? A It says that I do, so we must have. MR. KAUP: the transcript? Q BY MR. KAUP: Ms. Thimmesch, do you recall being deposed in I don't know.

Your Honor, may I approach with a copy of

my office in connection with this case? A Q A Q Two years ago, right. Do you recall that? Yes, I do. Could you look at page 59, at line 19 of the transcript of

your deposition. A Q Oh. 59?

Line 19. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 48 of 213

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A Q A Q A

Yes. Just read lines 19 through 25. 19 through 25? Yes. Question: "But Mr. Thimmesch and you agreed that the

information contained in the memorandum which begins at the second page of Exhibit 12 was correct with the exception of the total number of warrants chosen. Answer. Yes. Q A Is that accurate?"

"Does it list the number of warrants in here?

That's accurate." So that testimony was true? I believe so. These are events that happened a very long

time ago. Q Now, Ms. Thimmesch, did there come a time when you were

employed by Visitalk that it began to have cash flow problems? A Q Yes. You testified earlier that there was a wave of layoffs and

you were one of the first persons to lose a job as part of that wave of layoffs? A Q Yes. Did Visitalk ever have the ability to pay its debts out of

its revenues? MR. THOMASON: THE COURT: Q BY MR. KAUP: Foundation, Your Honor.

Sustained.

Ms. Thimmesch, you testified earlier that you UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 49 of 213

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were the Vice-President and Controller of Visitalk, correct? A Q Correct. As the Vice-President -- and as Vice-President and

Controller you dealt with financial matters associated with Visitalk? A Q A Q In the beginning, yes. But you were doing that job through June of 1999? Yes. During the period of time you were the

Vice-President/Controller of Visitalk, did Visitalk generate any revenue from its business operations? A Q No. Do you have any knowledge about the financial aspects of

Visitalk's business after the date on which you moved to become the Vice-President of Investor Relations? A Q It was much more limited. Did you have -- did you gain any knowledge regarding

Visitalk's revenue and expenses during the period of time after June of 1999 through the date you left the company? A No. MR. KAUP: Mrs. Thimmesch. THE COURT: You may cross examine. CROSS EXAMINATION Q BY MR. THOMASON: Good morning, Mrs. Thimmesch. I don't have any further questions for

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A Q

Good morning. My name is Tim Thomason and I'm one of the lawyers for You and I have never met, correct?

Snell & Wilmer. A Q Correct.

You probably haven't seen my face or heard my name until

just a minute ago. A Oh, I've seen it on some legal documents somewhere. I have

a huge pile of them. Q I'm sure do you. Let me just talk about you for a moment. business degree; is that correct? A Q Yes, I do. And you were for a period of time a Financial Analyst and You have a

Systems Manager for the Arizona Biltmore Hotel, correct? A Q Correct. You worked at Visitalk from the very beginning until August

of 2000; is that right? A Q Correct. And while you were there, you were at various times the

Secretary of the company, Vice-President of Finance, in charge of Human Resources, in charge of the financial systems, in charge of investor relations, and also paid the bills from time to time, correct? A Q Yes, I did. You had real meaningful jobs at this company during the UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 51 of 213

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time you were there, correct? A Q The entire time I was there. And you also during periods of time worked on SEC

compliance issues, correct? A Q Yes, I did. All the way up until the time that you stopped working

there in August of 2000 -- I mean, you considered Visitalk to be a real company with real -- with a real future, correct? A How much money did Skype just sell for? Yes, it was a real company. Q You didn't -- despite the various positions that you had,

you didn't ever consider that you were working for a company that was just a Ponzi scheme, did you? A Q Oh, absolutely not. In fact, ultimately, what happened to this company in the

year 2000 was just a matter of the market and the financial markets just dried up, correct? A Absolutely. MR. KAUP: speculation. THE COURT: THE WITNESS: You may answer. Yes. I think absolutely it was the Objection. Foundation. Calls for

result of the financial markets. Q BY MR. THOMASON: And based upon your experience with this

company and the jobs you had, you considered the technology to UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 52 of 213

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be promising and the business model also to be promising, correct? MR. KAUP: THE COURT: MR. KAUP: THE COURT: Q BY MR. THOMASON: Objection. Overruled. Calls for speculation. Overruled. Go ahead, ma'am. Can you go ahead and Foundation.

answer. A Oh. Yes. I have a very strong background in technology

and that's part of the reason why I did the investor relations, because I could explain the technology and how it would impact the market to the investors. Q And let me break it down. You believed that the technology

was promising, correct? A Q Oh, absolutely. And you believed that Visitalk's business model was

promising, correct? A Q A Q Absolutely. It was just bad timing, wasn't it? Yes. Let me go back a little bit and let's talk about when Tell me

Visitalk started, because it's an interesting story. about how this concept first came about. A

The concept came about -- Peter was working on a RFP, which

is a -UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 53 of 213

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Q A

Request For Proposal? Request For Proposal for AT&T -- for KPMG, actually, and

they were using Microsoft NetMeeting because they have, you know, 80,000 employees all over the world. And they were

having a very difficult time with the employees being able to connect with each other. And one employee, you know, like the guy in Singapore almost had to call the guy in Calgary on the phone before they conducted their NetMeeting call. And he -- he came up with the

idea of being able to put everything, you know, in one spot so -- and to identify those computers so that they could call each other up without having to arrange for the meeting ahead of time. And he woke me up at -- I don't know, 2:00 or 3:00 in the morning and said, "I've got the greatest idea," and I told him to shut up and go away. But, yes, that's -- and that was in August of 1998. Q But he literally woke you up with this Eureka moment in the

middle of the night? A Q In the middle of the night, yes. And did he actually actively start working on this soon

thereafter? A The next day -- well actually he probably didn't go to

sleep that night, but yes, the next day. Q He may have started working on that it night? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 54 of 213

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A Q

Yes. You told us before that Bryan, Cave was Visitalk's initial

corporate counsel; is that correct? A Q Correct. And you just were not quite sure exactly when they came

onboard? A Well, I mean, I believe that Peter had gone down and done

all of the initial filings at the Corporation Commission, because when we were -- it was a bare bones operation. the very first group of people that invested saw the demonstration in my house. be honest. Q We've heard testimony today that the original corporate Actually, it was in my bedroom, to I mean,

offices of Visitalk was in your home? A Q Yes. And I think -- did Peter go down and get forms for the

initial articles and even the Series A term sheet? A He had bought a book of legal forms at Borders that Joe Yes. That's where --

Richardson asked me to burn later.

And it was a 15-page, eight point document and I typed the whole thing out in Word so that we could use it. Q So it was actually at Borders? We've heard Kinkos, but it

was actually Borders? A Q I think it was Borders that he got it. Mr. Baker, could you pull up Exhibit 100. UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 55 of 213

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Mrs. Thimmesch, you were asked about this document which was the Unanimous Consent of the Board of Directors in Lieu of Organizational Meeting. Would you go to the next page. after that, please. Just keep going. of 1998? A Q Yes. And you'll see in paragraph 13 above that it says: "Resolved, that the officers of the corporation are authorized to retain Bryan, Cave, LLP as counsel to the corporation in connection with the organization and operation of the corporation, such law firm to serve at the pleasure of the board of directors." I think you said earlier that Bryan, Cave started doing some work sometime in September, but you weren't exactly sure when. A Well, and the connection is that Mark Cardwell's -- I mean, Actually, the page

Paragraph -- paragraph 13, I'm sorry.

And you'll see that this is dated September 4

once we hired Mark Cardwell, his wife was a partner -- who had just became a partner at Bryan, Cave. And so she suggested Joe

Richardson and he was willing to take us on. Q Now, let's talk -- and we'll come back to Mr. Cardwell now

in a moment, but let's talk about the Founder's Warrants just for a few minutes and the genesis of the idea. As I understand it and can you correct me if I'm UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 56 of 213

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wrong, your husband -- for former husband, Mr. Thimmesch and Mr. O'Donnell, came up with the idea based upon what they had heard from Allan Kaplan and Nathan Raciborski about their experience with PrimeNet, correct? A Correct. MR. KAUP: Objection. Calls for hearsay.

MR. THOMASON: Honor. THE COURT: Q BY MR. THOMASON:

I'm not offering it for the truth, Your

You may answer. And your understanding was that this

concept came about because Allan Kaplan and Nathan Raciborski had their interest in PrimeNet diluted because of subsequent securities offerings, correct? A Yes, and essentially the venture people forced them to sell

and, you know, they would have had probably a billion dollar IPO otherwise. Q A So -And speak of the devil, he just walked in the door. MR. THOMASON: THE WITNESS: any means. That's Mr. Kaplan, Your Honor. I'm not saying that he is devilish by

He is a very nice man. Figuratively speaking, of course. And so based upon your involvement with

MR. THOMASON: Q BY MR. THOMASON:

this concept, what Peter and Michael were trying to avoid was that very dilution of their interest; is that correct? UNITED STATES DISTRICT COURT Document 507 Filed 04/22/2008 Page 57 of 213

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A

Well, yes.

And in the technology field, I mean, a lot of

companies end up being controlled by the venture capitalists and they did not want that to happen. Q All right. Now, let's talk about the September meeting

that occurred at the O'Donnells where these Founder's Warrants were discussed, okay? You recall this meeting vividly, don't you? A Q Oh, absolutely. I mean there is no question that this meeting occurred at

the O'Donnells' home, is there? A Q No. And do you recall that it was on September 12th exactly, or

do you just recall it was sometime in the first half or so of September? A It was in the first half or so of September. The

Diamondbacks were home.

We had gone to a Diamondbacks game. We shared a baby-sitter that You know, the

My kids were at their house.

night and we stood in their garage for hours.

poor baby-sitter was -- I think we were talking until three o'clock in the morning. Q Okay. And various items about Visitalk's business or

potential business were discuss