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Pool and Spa. Kentor filed a Notice of Transfer of Claim on November 22, 2005 with respect to

Pool and Spa.

Kentor filed a Motion to Lift the Automatic Stay to proceed with a divorce in state court.

This Court entered an Agreed Order Lifting the Stay to proceed on June 7, 2005. The Travis County

District Court entered a Divorce Decree on or about March 29, 2006. The Travis County District

Court ruled in the Divorce Decree that, pursuant to the parties’ premarital and postmarital property

agreements, there was no community property, that the property in Kentor’s possession is his

separate property and that, with one minor exception, all of the property in Dr.Thompson’s

possession is her separate property3. Divorce Decree-pg 13-16 attached to the Second Post Hearing

Brief in Support of Margaret Thompson’s Motion for Summary Judgment filed June 5, 2006. The

Divorce Decree does not order Dr. Thompson to pay any debts listed in Kentor’s proof of claim.

The Divorce Decree, however, orders Kentor to pay (and indemnify and hold harmless Dr.

Thompson) all of his divorce attorneys’ and expert witnesses’ fees and the Captive Audio claim and

the Big Red Sun claims that he listed in his Exhibit to his proof of claim. Divorce Decree pg. 16-

17. With respect to the Meredith Loan, the Divorce Decree states:

The Court recognizes that the “Meredith Note” exists and after the argument of counsel and witness testimony, the Court finds that said “Meredith Note” is not part of the community estate and that said note cannot be divided by the Court and it is THEREFORE ORDERED AND DECREED that this Decree of Divorce will not alter or affect either parties’ liability under the Note.”

Divorce Decree, p. 16. The parties therefore continue to be jointly and severally liable under the

Meredith Loan.

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Dr. Thompson was ordered to deliver to Mr. Kentor the Pineapple Dancing Ladies painting purchased by

him.

4

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