SCO Grp v. Novell Inc

Filing 347

DECLARATION of Edward Normand re 346 Reply Memorandum/Reply to Response to Motion, filed by SCO Group. (Attachments: # 1 Exhibit 1-2# 2 Exhibit 3# 3 Exhibit 4-12# 4 Exhibit 13-14# 5 Exhibit 15 Part 1# 6 Exhibit 15 Part 2# 7 Exhibit 15 Part 3# 8 Exhibit 15 Part 4# 9 Exhibit 15 Part 5# 10 Exhibit 16-19# 11 Exhibit 20-26# 12 Exhibit 27-34)(Normand, Edward)

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SCO Grp v. Novell Inc Doc. 347 Att. 3 Case 2:04-cv-00139-DAK-BCW Document 347-4 Filed 05/29/2007 Page 1 of 60 EXHIBIT 4 Dockets.Justia.com Case 2:04-cv-00139-DAK-BCW Document 347-4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Filed 05/29/2007 Page 2 of 60 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH --oOo-THE SCO GROUP, INC., Plaintiff/Counterclaim Defendant, vs. No. 2:04CV00139 NOVELL, INC., Defendant/Counterclaim Plaintiff, _______________________________________/ INDEX OF EXAMINATION Page Examination by Mr. Normand 6 INDEX OF EXHIBITS Number Description Page EX 1066 SCO's Notice of Third Party 7 Subpoena to Wilson Sonsini Goodrich & Rosati, PC, 2/09/07. EX 1067 Agreement and Plan of Reorganization, 8/01/00. EX 1068 Intellectual Property Assignment, 5/07/01. EX 1069 Exhibit 13.15D, Group Products. EX 1070 Exhibit 13.15A, Contributed Assets. EX 1071 Email from Greg Forman to Harrison Colter, 4/27/01. EX 300 Letter to Steven M. Sabbath from Barry E. Taylor, 9/01/95. EX 301 Email string from Shana M. Solomon to Steven Liu, 4/26/01. Email string from Regan Grilli to Shana Solomon and others, 4/30/01. 19 22 46 46 64 91 96 Videotaped Rule 30 (b)(6) Deposition of MICHAEL J. DANAHER _______________________ Friday, April 27, 2007 Reported by: Leslie Rockwood CSR No. 3462 Job No. 193580 15 16 17 18 19 20 21 22 23 24 EX 302 98 Page 1 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 APPEARANCES: For the Plaintiff/Counterclaim Defendant: Edward Normand -andThomas Strong (paralegal) Boies, Schiller & Flexner, LLP 333 Main Street Armonk, New York 10504 (914) 749-8200 Ryan E. Tibbitts The SCO Group, General Counsel 355 South 520 West, Suite 100 Linden, Utah 84042 (801) 765-4999 For the Defendant/Counterclaim Plaintiff: Kenneth Brakebill Morrison & Foerster, LLP 425 Market Street San Francisco, California 94105-2482 (415) 268-7455 For The Witness: Mark Parnes Wilson Sonsini Goodrich & Rosati, PC 650 Page Mill Road Palo Alto, California 94304-1050 (650) 320-4878 The Videographer: Marty Majdoub 25 Page 3 INDEX OF EXHIBITS (Continued) Number Description Page EX 303 Email from Shana Solomon to Regan Grilli and others, 5/03/01. EX 304 Letter to Ladies and Gentlemen, from Wilson Sonsini Goodrich & Rosati, PC, 5/07/01. --oOo-- 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 98 98 Page 2 Page 4 1 (Pages 1 to 4) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW 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 1995. MR. PARNES: That's fair. THE WITNESS: That's fair. Document 347-4 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 Filed 05/29/2007 Mark? Page 3 of 60 MR. PARNES: No. That was Aaron. So he didn't know when you guys were going to be ready for him. THE WITNESS: Sounds like he may have more knowledge of use to you. I'm afraid I'm not able to address some of your questions. Q. BY MR. NORMAND: What I was trying to get at with my question was, at least part of what I'm trying to get at is: Do you have an understanding of the intellectual property issue that I just asked you about as a result of reading the agreements or do you have an independent recollection of it being an issue or is it somewhere in between? MR. BRAKEBILL: Vague and ambiguous, compound. THE WITNESS: Yeah. MR. BRAKEBILL: You can answer. THE WITNESS: We were selling the business and the intellectual property rights that went with the business. So at a high level, my understanding of the transaction was SCO transferred whatever rights it had to Caldera. And I was not involved in any discussions about any individual right within that basket of rights on that. But I think SCO wanted to transfer whatever it had that was useful to that. To my knowledge, no. To my knowledge, no. Q. BY MR. NORMAND: So to your knowledge, is there any representation or warranty or statement in the agreement and plan of reorganization that you believe is inaccurate? A. To my knowledge, no. No. Q. I take it you don't know the answer to that question with respect to Mr. Liu's knowledge? A. Well, I'm sure that SCO and Steve Liu would have done their best to be honest. You do your best in these reps and in the disclosure schedules that go with them that have to be read together. Right? And you do your best to present all the facts that you have because if you fail to leave some out, maybe there's an escrow claim or something. So they would have tried to be accurate on that, and for all kinds of reasons. One is integrity, and two, it's the right practice for protecting the client and for SCO to protect itself. So, you know -- so I'd be surprised if anybody felt that the reps and warranties and disclosure schedule were inaccurate. Page 41 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 record? MR. NORMAND: Let's give it 30 seconds. (Interruption in proceedings.) MR. NORMAND: Do you want to take a break, Q. And as you sit here, do you have any reason to believe that the reps and warranties and disclosure schedules in the agreement and plan of reorganization are inaccurate? MR. BRAKEBILL: Foundation. THE WITNESS: No, I'm not aware of any inaccuracy. I'm not aware of any claims that were brought up during the claim period. I'm not aware of that. Q. BY MR. NORMAND: Do you have a view as to whether under the agreement and plan of reorganization Santa Cruz intended to transfer to Caldera certain intellectual property? A. I know at the general level that they certainly intended to transfer intellectual property. That was the bulk of the assets. With respect to any particular copyright or license, you know, that I can't say because I didn't get involved in those details. The -- it looks like -MR. NORMAND: Why don't you stop, actually. THE VIDEOGRAPHER: Do you want to go off the Page 43 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. NORMAND: There's a phrase that's been bandied about in the litigation, and I'll use it, and your counsel can object or you can tell me if you're not comfortable with it. But as you sit here, is it your view that the agreement and plan of reorganization speaks for itself? MR. PARNES: You can answer if you understand. THE WITNESS: I think it probably does, but maybe there's a paragraph or section here or there that's not clear and people's memories might augment. But I think, you know, most corporate lawyers could pick this up and come to an understanding of it. Q. BY MR. NORMAND: And if I were to ask you the same question regarding the intellectual property assignment, what would your answer be? A. That it should speak for itself. Q. I had asked you a series of questions earlier about the principal negotiators on both sides with respect to the agreement and plan of reorganization. A. Uh-huh. Q. I want to ask those questions about the intellectual property assignment. Would your answers be any different? A. I expect it would not have gone up to the Page 42 Page 44 11 (Pages 41 to 44) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW 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 Document 347-4 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 Filed 05/29/2007 1070? Page 4 of 60 Doug Michaels level. It would have been handled by Steve Sabbath. That's my guess, but I don't recall discussions on those. Q. Do you have a view as to on the Caldera side who would have been focused on the intellectual property assignment? A. Probably counsel, I think. And -Q. You mean Brobeck? A. The Brobeck and -- I don't know -- I don't know who at Caldera they might have been working most closely with. Q. Do you recall whether there were any in-house counsel at Caldera in connection with these transactions? A. I was just asking myself that question, and there may have been, but I don't remember. There may well have been. Q. And why do you say that the intellectual property assignment would not have gone up to the Doug Michaels level, or why do you offer that view? A. I think Doug Michaels -- the high level agreement is that we're transferring over this business and all our rights that go with this business. That's all that Doug needs to know with respect to that topic. And then it's up to the attorneys and whatever to work through the details of implementing that. MR. NORMAND: 1069 is 13.15 D, group products. Q. So I don't want to take up too much of your time with this. But I do want to take a shot at seeing if I can refresh your recollection. A. Sure. Q. If you look at the agreement and plan of reorganization. A. Okay. Any particular page? Q. Yes, sir, page 75, which is Section 13.15, certain defined terms? A. Uh-huh. Q. And then if you turn the page -A. Okay. Q. -- to the definition of contributed assets? A. Okay. Q. That cross references Exhibit 13.15 A. A. Uh-huh. Q. Do you see that language? A. Yeah. Q. And then if you could turn your attention to Exhibit 13.15 A, subtitled "Contributed Assets"? A. Uh-huh. Q. The language of paragraph 1 begins: "With Page 45 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 So, you know, we weren't -- to my knowledge, we weren't trying to retain rights. We weren't planning to, you know, be in that business, anymore. So that would have been an implementation thing. Q. Apart from your discussions with counsel, do you have any understanding of the litigation that brings us here today? A. No. Q. Good for you. A. Okay. I don't think I was aware of who the parties were to the litigation until Wednesday when Mark told me. MR. BRAKEBILL: Can we take a break soon? MR. NORMAND: Yeah, why don't we take a break, then. THE VIDEOGRAPHER: We are now going off the video record. The time is 10:52 a.m. (Recess.) THE VIDEOGRAPHER: We are now back on the video record. The time is 11:02 a.m. (Exhibits 1069 and 1070 marked.) Q. BY MR. NORMAND: The documents that have just been marked Exhibits 1069 and 1070 are exhibits to the agreement and plan of reorganization. MR. BRAKEBILL: Which is 1069 and which is Page 47 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 the exception of third-party encumbrances as set forth in Exhibit 13.15 E, all rights and ownership of UNIX, UnixWare, and Open Server, including all versions of UNIX, UnixWare, and Open Server, and all copies of UNIX, UnixWare, and Open Server (including revisions, upgrades and updates in process) all intellectual property rights appurtenant thereto (excluding the UNIX trademark which is owned by The Open Group)." And the language goes on. Do you see that language? A. Uh-huh. Q. Does this language refresh your recollection or confirm your recollection that among the contributed assets that would be transferred to Caldera were the -all of the intellectual property rights appurtenant to UNIX, UnixWare, and Open Server? A. This is consistent with my understanding of the deal. MR. BRAKEBILL: I was just going to object to the use of the word "confirm." It mischaracterizes his earlier testimony. THE WITNESS: This is consistent in my understanding of the transaction. Q. BY MR. NORMAND: As you sit here, do you have any reason to believe that all of the intellectual property rights pertinent to UNIX, UnixWare, and Open Page 46 Page 48 12 (Pages 45 to 48) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW 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 Document 347-4 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 Filed 05/29/2007 Page 5 of 60 Doug Michaels left, Steve Sabbath left, and we were just called on, you know, on occasion to help with this or that, but our involvement was a lot less. So -- and then the company was sold. Q. The language we had walked through in the intellectual property assignment a couple minutes ago -A. Uh-huh. Q. -- as you sit here, do you have any reason to believe that any of that language I read into the record is inaccurate? A. Well -MR. BRAKEBILL: Vague and ambiguous. THE WITNESS: The language is what it is. I think you have to read it as a whole. Your questions have been more to did they own all of this or all of that. And that's not exactly what the language is saying. The language is saying you're getting all of our right, title, and interest. Q. BY MR. NORMAND: Let me make sure I'm clear. I wasn't asking whether -- I wasn't re-asking my question. My specific question was -A. Do I have any reason to think it's inaccurate? I'm sorry. I have no reason to think any of it's inaccurate. Q. And when you say "any of it," you mean the MR. NORMAND: I mean the language from the agreement and plan of reorganization. THE WITNESS: So you read the definition and then you read the -- was it 1.4? I can't remember. Q. BY MR. NORMAND: Yeah, I read from this document the definition of contributed assets or at least pointed you to that language. A. Yeah. Q. And then we looked at the Exhibit 13.15 A titled "Contributed Assets." A. Okay. These are -- how to explain this? You know, I think the document is not a representation of what is. So if you asked a true-false question. It's a representation of an agreement between the parties. So I'm not -- I'm not used to the question you said accurate or inaccurate. This is what we're giving you. And if you pull out any particular clause and say is that accurate or inaccurate, depends more on what the question is, what's that pertaining to. It's not intended to be a description of everything. Maybe I'm not being informative enough there. Q. Do you have a view, as you sit here, as to whether Exhibit 13.15 A of the agreement and plan of reorganization identifies all of the assets that Santa Cruz intended to transfer to Caldera? Page 57 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 language I read into the record from the intellectual property assignment? A. Correct, correct. Now, taken as a whole, you know, it's -- this is not a description of what the rights were. It's a description of -- it's an assignment. It's something that affects you get this. But a description of what the rights were would have been more what comes with the plan of reorganization and the reps and warranties and disclosure schedule. Q. And of course, I can't read all the language of the plan -- maybe I should. But that language that I did read into the record a few minutes ago, can you recall whether you thought any of that language was inaccurate? MR. BRAKEBILL: Vague and ambiguous. THE WITNESS: Yeah, how do I say this? That language said, as a whole, SCO was transferring all it owned in those categories, and that's what was happening. SCO was transferring all that it owned. Q. BY MR. NORMAND: But I take it when you heard the language that I read into the record, you didn't think any of it was inaccurate. Is that fair to say? MR. BRAKEBILL: Vague and ambiguous. MR. PARNES: Counsel, you've lost me. Which language now are you talking about? Page 59 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 view? Q. BY MR. NORMAND: Is it the view of the law firm that Exhibit 13.15 A of the agreement and plan of reorganization taken in its entirety -A. Uh-huh. Q. -- describes all of the assets that Santa Cruz transferred to Caldera in connection with the A. As most good corporate attorneys do, they did this as a catchall and then with specific things identified. So the list itself of the specifics is probably not universal. But the catchall was, you know, all IP rights including the following. Does that answer your question? The list of particulars is not exhaustive. Q. And you're saying that's -- you're saying that is typical of what most good corporate attorneys do? Is that what the beginning of your answer was? A. Yeah, I think your question was: Does this represent all of the assets they were transferring, you know, in this category? And the answer is if you use the catchall phrase, yes, it does. Just the specifics were not exhaustive. Q. And the view you just expressed, is that the view of the law firm? MR. PARNES: I'll object as vague. What Page 58 Page 60 15 (Pages 57 to 60) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW 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 Document 347-4 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 Filed 05/29/2007 Page 6 of 60 A. It was probably more on the corporate and securities side of the transaction. Helping with that part of the process, helping make sure we handled shareholder approvals and proxies and SEC process altogether. The -- that was a big part of it. And as it turns out, I think the biggest difficulty arose in the transaction was this thing involving PWC and the SEC, and that had the potential to derail the closing another six months, which would have cost SCO an enormous amount of money given the ongoing losses. And the fact that we were able to help persuade the SEC to avoid that consequence, that was a major accomplishment for SCO. Q. In connection with the SCO Caldera transaction, at the time of the transaction, did you think it was possible that some of the representations and warranties that Santa Cruz had made were inaccurate? A. I would have expected them to be highly accurate, that the team there would have been very careful about what they were putting down. Steve and Regan and Kim were -- you know, were a good team. You testified just a few moments ago that -I believe that all of the schedules attached to the agreements for the Santa Cruz Caldera transaction were prepared by the Santa Cruz team; is that right? MR. NORMAND: Objection to form. Q. BY MR. BRAKEBILL: I think you said by Mr. Sabbath and team? MR. NORMAND: Same objection. THE WITNESS: All the schedules listing assets and the like would have been prepared by Sabbath and team. Q. BY MR. BRAKEBILL: Just so the record is clear, there was an Exhibit 1069 and 1070 that Mr. Normand showed you? A. Uh-huh. Q. One of them is called "Group Products." That's an Exhibit 13.15 D? A. Yeah. Q. And then there's an exhibit 13.15 A called "Contributed Assets." Do you see those? A. Yes. Q. Just so the record is clear, is it your view that these two schedules were prepared by Mr. Sabbath and company at Santa Cruz, and not Wilson Sonsini? MR. NORMAND: Objection to form. MR. NORMAND: I have no further questions. And Ken, I don't know if you do, so let me say now that I'd like to take the step of holding the deposition open. It may be that I need to speak with Page 81 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 Mr. Parnes about the nature of the deposition today, but that's a subject for a later day. MR. BRAKEBILL: I do have some questions. MR. NORMAND: Do you want to sit here? MR. BRAKEBILL: That's what I was wondering. Maybe it's better to switch. THE VIDEOGRAPHER: It's up to you. MR. BRAKEBILL: I don't care, but you won't be looking at the videotape. MR. NORMAND: You've got a nice profile. MR. PARNES: Why don't we switch. MR. BRAKEBILL: Actually, I want to take just a second, go off the record. THE VIDEOGRAPHER: We are now going off the video record. The time is 11:57 a.m. (Brief interruption.) THE VIDEOGRAPHER: We are now back on the video record. The time is 11:59 a.m. MR. BRAKEBILL: I can still say good morning. THE WITNESS: Okay, good. EXAMINATION BY MR. BRAKEBILL Q. I'll try to be quick. I have a handful of questions relating to some topics that Mr. Normand asked you as well as just relating to the Caldera transaction generally. Page 83 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 Caldera. Q. BY MR. BRAKEBILL: The schedule of contributed assets was not prepared by Wilson Sonsini; is that right? A. That's right. Q. For the contributed asset schedule, is it THE WITNESS: Okay. By the way, I don't mean to exclude the possibility Caldera and their side might have been involved, but the exhibit group products which is the list of products, source code, other products under development, and auxiliary products, that would have been prepared by the client, and perhaps the Caldera product people would have gotten involved to cross-check against their list. The exhibit contributed assets, I'm sure part of the drafting was done by Brobeck. But particularly when you go down to the attachment to that, which is the -- you know, two pages of fine print on the things here, that would have been prepared by the client. Q. BY MR. BRAKEBILL: And the client is Santa Cruz; right? A. Santa Cruz, yeah. And again, Novell may have cross-checked this -MR. PARNES: Not Novell. THE WITNESS: Not Novell. Pardon me, Page 82 Page 84 21 (Pages 81 to 84) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW Document 347-4 Filed 05/29/2007 Page 7 of 60 EXHIBIT 5 Case 2:04-cv-00139-DAK-BCW Document 347-4 1 2 3 4 5 6 7 8 9 10 11 12 Filed 05/29/2007 Page 8 of 60 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH --oOo-THE SCO GROUP, INC., Plaintiff/Counterclaim Defendant, vs. No. 2:04CV00139 NOVELL, INC., Defendant/Counterclaim Plaintiff, _______________________________________/ INDEX OF EXAMINATION Page Examination by Mr. Normand 5, 142 by Mr. Brakebill 138 INDEX OF EXHIBITS Number Description Page EX 1072 Letter to Dear Sirs from Scott 137 D. Lester, 5/01/96. EX 1073 Strategic Development Agreement Between Novell, Inc., and The Santa Cruz Operation, Inc. EX 305 EX 306 Exhibit 8, Filed 4/20/07. Fax to Jeffrey P. Higgins from Brobeck Phleger & Harrison, with attachment, 9/18/95. --oOo-138 140 137 Videotaped Rule 30 (b)(6) Deposition of AARON J. ALTER _______________________ Friday, April 27, 2007 13 14 15 16 17 18 19 20 21 22 23 24 25 Reported by: Leslie Rockwood CSR No. 3462 Job No. 193580B Page 1 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 APPEARANCES: For the Plaintiff/Counterclaim Defendant: Edward Normand -andThomas Strong (paralegal) Boies, Schiller & Flexner, LLP 333 Main Street Armonk, New York 10504 (914) 749-8200 Ryan E. Tibbitts The SCO Group, General Counsel 355 South 520 West, Suite 100 Linden, Utah 84042 (801) 765-4999 For the Defendant/Counterclaim Plaintiff: Kenneth Brakebill Morrison & Foerster, LLP 425 Market Street San Francisco, California 94105-2482 (415) 268-7455 For The Witness: Mark Parnes Wilson Sonsini Goodrich & Rosati, PC 650 Page Mill Road Palo Alto, California 94304-1050 (650) 320-4878 The Videographer: Marty Majdoub Page 3 BE IT REMEMBERED that on Friday, April 27, 2007, commencing at the hour of 1:03 p.m., at the law offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California, before me, LESLIE ROCKWOOD, a Certified Shorthand Reporter in the State of California, personally appeared AARON J. ALTER called as a witness by the Plaintiff-Counterclaim Defendant in the above-entitled action, who, having been duly sworn, by the Certified Shorthand Reporter to tell the truth, the whole truth and nothing but the truth, testified under oath as follows: --oOo-THE VIDEOGRAPHER: Good afternoon. Here begins Videotape Number 1 in the deposition of Aaron Alter in the matter of SCO Group versus Novell, Inc., in the United States District Court for the District of Utah, case number 2:04CV00139. Today's date is April 27th, 2007. The time is 1:04 p.m. This deposition is being taken at 650 Page Mill Road, Palo Alto, California. The videographer is Marty Majdoub, here on behalf of Esquire Deposition Services, 505 Sansome, Suite 502, San Francisco, California. Would all counsel please identify yourselves 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 Page 2 Page 4 1 (Pages 1 to 4) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW 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 Document 347-4 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 Filed 05/29/2007 Page 9 of 60 Q. You say insufficient consideration was being paid. Wasn't the Novell interest in the revenue stream designed to bridge the price gap? MR. BRAKEBILL: Argumentative, foundation. MR. PARNES: You can answer. THE WITNESS: It was certainly intended to be a -- a bridge. I don't know that it was a sufficient bridge or that was viewed by Novell as sufficient. Q. BY MR. NORMAND: Do you have a view on that front on behalf of the Wilson Sonsini firm? A. My view is that the rights that were retained, including but not limited to the revenue stream, including the equitable title, including the patents, including everything that's set out at Exhibit 1.1(b) was exactly what the intention of the parties was, was to retain these rights on behalf of Novell. Q. Was it Novell's view that owning the copyrights in the UNIX and UnixWare source code would permit Novell to continue to have rights in the revenue stream if Santa Cruz were to go bankrupt? A. I can't speculate, and I'm not sure I even understand the question. MR. BRAKEBILL: By the way, I don't know if it's intentional. You keep asking Novell's view. It's clear, it is his view, not Novell's. We will be categories of assets retained and consideration paid by SCO in the transaction. Q. Was it the view of the Wilson Sonsini law firm that if Santa Cruz were to go bankrupt, that the rights to the revenue stream would follow the intellectual property that Novell had retained? A. I don't -- I don't know what our view was at the time, but I certainly don't -- I don't conceive now of the linkage of those two. Q. And why not? A. Because I don't understand the theory that's underlying the question. Q. Was there any link, in the view of the law firm, between Novell's decision to retain certain intellectual property rights, on the one hand, and on the other hand, the fact that the consideration being paid was not cash? MR. BRAKEBILL: Vague and ambiguous. MR. PARNES: You can answer. THE WITNESS: Okay. I don't recall a distinction being drawn between cash versus stock consideration. So I guess the answer would be no. Q. BY MR. NORMAND: So it wasn't cash. Let me say that to myself. Was there any link, in the view of Page 37 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 providing a Novell 30(b)(6) witness. MR. NORMAND: Well, I think I'm entitled to ask the Wilson Sonsini firm for its understanding of Novell's view. MR. BRAKEBILL: You are. True. I think the question reflects that. I think that's implicit. I just want to make the record clear. Q. BY MR. NORMAND: I guess what I've understood you to say is Novell would be in a better position to claim the rights to the revenue stream if it retained certain intellectual property in UNIX and UnixWare than if it had not retained certain intellectual property rights. A. No, I don't think that's what I said. If I said that, I may have misspoken. I think Novell -Novell did retain the rights to the revenue stream and the royalty payments, and it did retain other intellectual property rights in the assets that were transferred. They -- that was done in -- I wouldn't tie the retention of the other intellectual property rights to the specific exigency of maintaining rights to the royalty stream in the event of a bankruptcy of SCO. It was there was consideration of stock in from SCO, of collection and payment of the royalty stream, and retention of rights as three different Page 39 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 the law firm, between Novell's decision to retain certain intellectual property rights, on the one hand, and the fact that the value of the consideration being paid was less than what Novell thought the value of the assets were? MR. PARNES: I think that's been asked and answered, but you can answer. THE WITNESS: That is my recollection. Q. BY MR. NORMAND: And this will be a question I guess I asked earlier. Let me try to make sure I understand or twist it a little bit. Is it the law firm's view that the Novell interest in the revenue stream was not sufficient to account for the full value of the assets as Novell saw them? A. I think my answer is "yes," that I view the deal structure as giving Novell three different forms of -- well, I don't know quite how to -- so the deal structure had three aspects of it for Novell. One was stock in from SCO; the second was retention of 95 percent of the royalty payments from the USL licenses; and the third was the underlying intellectual property assets that had been acquired, or a portion of them that had been acquired from USL. And that's why -- that's why there's a long list of assets being transferred and those Page 38 Page 40 10 (Pages 37 to 40) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW 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 Document 347-4 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 Filed 05/29/2007 Page 10 of 60 was transferred, the assets which were retained are specified. And of the assets that were transferred, they constitute a sufficient bundle of rights to give SCO the ability to use the technology and develop enhancements and run their business and run the UnixWare business going forward. If you characterize it as a license, I don't see language saying it's not a license. I don't see language saying it is a license. I think we can parse what a license is. But I believe that the rights that were granted were sufficient to enable SCO to run the UNIX and UnixWare business going forward from the point in time that the transaction was done. You know, the only reference to a license I recall -- and I'm just sort of refreshing my recollection in 1.6 -- was that there was a specific license back of the enhancements so that Novell wouldn't have to pay additional consideration to the extent that SCO developed additional improvements or enhancements on the UNIX and UnixWare technology that was deemed licensed back to Novell. Q. And in the view of the law firm, were the rights, bundles of rights that Santa Cruz acquired, ones that constituted a license? MR. PARNES: Objection. Lacks foundation, rights as a license to Santa Cruz? MR. BRAKEBILL: Vague and ambiguous. MR. PARNES: You can answer. THE WITNESS: I would describe it as a transfer of assets to enable Santa Cruz to run a business that Novell sought to sell. Q. BY MR. NORMAND: And did Novell intend to retain the right to develop UNIX and UnixWare source code? A. I don't know what the intention was in retaining these rights beyond what I've already testified to. I'll stop at that. Q. In the firm's view, following the execution of the APA, would Novell have had the right to develop the UNIX and UnixWare source code under the terms of the APA? MR. BRAKEBILL: Calls for a legal conclusion. MR. PARNES: Also calls for speculation. But you can, if you understand the question, you can -THE WITNESS: Could I ask you to repeat the question, please. Q. BY MR. NORMAND: The question is whether following the execution of the APA, in the view of the Wilson Sonsini law firm, would Novell have been within its rights in developing the UNIX and UnixWare source Page 53 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 but you can answer. Q. BY MR. NORMAND: Well, they acquired a bundle of rights; correct? A. Yes. Q. Okay. In your view, were those bundle of rights ones that constituted a license? A. Well, I -- you've characterized it as a license. Q. No, I'm asking you. A. Okay. Q. I don't have a view that I'm articulating today. I just mean to ask you. A. Okay. So I understand, but you've framed it in terms of it being a license per se, and I'm -- you're asking me -- perhaps, why don't you ask me the question again. Q. So I thought we had just agreed that there was some bundle of rights. A. Yes. Q. Everyone can argue about that, but there is some bundle of rights that Santa Cruz acquired. A. Yes. Q. And I am using a label in the form of a question and asking you as an attorney or as someone involved with this, would you describe the bundle of Page 55 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 code? A. Yes, insofar as they retained those as assets. Q. But you don't know whether that was specifically part of Novell's intent? A. That's right. I do not know. I have no reason to believe that was an intention in retaining those rights. Q. And similarly, after the execution of the APA, in the view of the law firm, would Novell have been within its rights in making copies of the UNIX and UnixWare source code? A. Yes. Q. And do you know whether that was among the reasons that Novell intended to retain certain of the intellectual property in UNIX and UnixWare? A. I don't know. Q. And similarly, in your view or the view of the firm, following execution of the APA, would Novell have been within its rights in distributing copies of the UNIX and UnixWare source code? A. I don't recall a prohibition against their doing that in the asset purchase agreement. Q. And do you know whether the right to distribute copies of the UNIX and the UnixWare source Page 54 Page 56 14 (Pages 53 to 56) Esquire Deposition Services 216 E. 45th STREET . NEW YORK, NY 10017 . 1-800-944-9454 Case 2:04-cv-00139-DAK-BCW 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 Document 347-4 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 Filed 05/29/2007 Page 11 of 60 code was among the reasons that Novell intended to retain certain intellectual property? A. I do not know that. Q. In 1995, did Novell convey to Santa Cruz its intent to retain the UNIX and UnixWare copyrights? MR. PARNES: I'm sorry. (The record was read by the reporter as follows: "QUESTION: In 1995, did Novell convey to Santa Cruz its intent to retain the UNIX and UnixWare copyrights?") THE WITNESS: It's -- on the face of the agreement they are retained. So absent that, I don't know what else -- how else to answer. Or aside from that, I should say. Q. BY MR. NORMAND: In 1995, did Wilson Sonsini convey to Santa Cruz Novell's intent to retain the UNIX and UnixWare copyrights? A. I would answer the same way, Ted, that it's -- in my judgment, clear on its face and evidenced in the document. Q. And apart from that, if there were some other manner in which Novell's intent was communicated, you're not aware of that; is that what you would say? A. That's correct. one. What is the purpose of that section? A. So that section is part of Article 4, and the covenants relate primarily to obligations between signing and closing and then to certain ongoing obligations like bulk sales filing under the commercial code or tax -who's going to do the tax returns and taking positions on the tax returns that are consistent. That is also meant as a fairly standard catchall provision to capture that which is not specifically set out as a covenant. And from the language, you can see it extends to obtaining consents and approvals from third parties as well. Q. There's a Section 4.12 as well. A. Yes. Q. Do you see any difference between 4.9 and 4.12, or what is the purpose of 4.12? A. I think 4.12 refers with some specificity to the execution of instruments and documents to effect the purposes whereas I read 4-9, which may be a superset of 4-12 to be focused on taking actions and obtaining documents from third parties as opposed to agreements between the two parties in 4-12. Q. Do you think the sections we've just looked at, 1.7 C, 4.9, 4.12, would apply in a situation where the agreement did not reflect the intent of the parties? Page 57 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. I'd like to direct your attention to Section 1.7 of the APA, and in particular 1.7 C, which is on page 6 of the APA. That section is titled "Taking of Necessary Action; Further Action," and states: "If at any time after the closing date any further action is necessary or desirable to carry out the purposes of this agreement, the parties agree to take and will take all such lawful and necessary and/or desirable action." Do you see that language? A. I do. Q. Do you have a view as to the purpose of Section 1.7 C of the APA? A. I would say that it's a fairly standard provision in asset transactions and mergers where if there was a loose end or something that clearly was intended by the parties to be -- to be done prior to the closing date, but subsequent to the transaction, there was no binding obligation, this would -- this would spur the parties to take such actions to the extent that there was an agreement between the parties to do so. Q. If you look at page 22 of the APA, there's a Section 4.9. And let me just ask you to read that to yourself. And let me know when you're done. A. Okay. I'm done. Q. Same general question. I know it's a general Page 59 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 MR. BRAKEBILL: Calls for a legal conclusion, speculation. MR. PARNES: You can answer. THE WITNESS: Ted, can I ask you to clarify -- so is it -- I would say that if the parties had an agreement and there were actions that needed to be taken to reflect that agreement, one could -- one party could turn to the other party and say take these provisions, we'd like you to execute this document, the certification, send us a copy of the tax return to carry out the intention as manifest in this agreement. So if that's -- is that responsive? Q. BY MR. NORMAND: It is. And it is, you know, a hypothetical so there is some speculation involved, but I'm just asking your view as to if the parties had come to a landing and decided that the agreement didn't reflect something they had agreed on, would these provisions apply where the parties were trying to now have that agreement reflected? MR. BRAKEBILL: Same objections. MR. PARNES: I'll join. If you understand the question. THE WITNESS: I think I do. I -- I should -I have to respond. MR. PARNES: I mean, if you understand what Page 58 Page 60 15 (Pages 57 to 60) Esquire Deposition Services 216 E. 45th STREET . 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