SCO Grp v. Novell Inc

Filing 856

NOTICE OF FILING OF OFFICIAL TRANSCRIPT for dates of March 9, 2010-Jury Trial(Parts Two and Three) before Judge Ted Stewart, re 567 Notice of Appeal,. Court Reporter/Transcriber Patti Walker, Telephone number [phone]. NOTICE RE REDACTION OF TRANSCRIPTS: Within 7 business days of this filing, each party shall inform the Court, by filing a Notice of Intent to Redact, of the parties intent to redact personal data identifiers from the electronic transcript of the court proceeding. The policy and forms are located on the court's website at www.utd.uscourts.gov. Please read this policy carefully. If no Notice of Intent to Redact is filed within the allotted time, this transcript will be made electronically available on the date set forth below. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 5/10/2010. Redacted Transcript Deadline set for 5/20/2010. Release of Transcript Restriction set for 7/19/2010. (Attachments: # 1 Part Three)(jmr) Modified by removing restricted text on 7/19/2010 (rks).

SCO Grp v. Novell Inc

Doc. 856 Att. 1

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THE COURT: we bring the jury in? MR. SINGER:

Do you have anything, counsel, before

Would it be possible to hear the last Is that go to

question read back before the jury comes in? be -THE COURT:

I think we have a new court reporter.

That may not be appropriate. MR. SINGER: THE COURT: question again. Okay. Mr. Brennan, you may have to ask the

And if you think you need to renew your

objection, you can do so, Mr. Singer. MR. SINGER: MR. BRENNAN: MR. SINGER: All right. Thank you. It may be the wording on the question

rather than -- that's why I wanted to hear it exactly. THE COURT: All right. Mr. Frankenberg, I think

you can sense this, but if at any time a question is asked of you and you see Mr. Singer stand up, if you would not answer until I've had a chance to hear from Mr. Singer. THE WITNESS: MR. SINGER: Yes, Judge. Thank you, Your Honor.

(Whereupon, the jury returned to the court proceedings.) THE COURT: MR. BRENNAN: Go ahead, Mr. Brennan. Thank you, Your Honor. 134

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Q.

BY MR. BRENNAN:

Mr. Frankenberg, you may recall

that before we took our break we were talking about the minutes of the board of directors of Novell held on September 18, 1995, as well as provisions of the asset purchase agreement. We were looking in particular at Schedule 1.1(b), the excluded assets provision of the asset purchase agreement. The language that you now see before you in Section -- excuse me -- in Schedule 1.1(b), that same language was presented to the board of directors of Novell on September 18, 1995; correct? A. Q. Correct. In fact, what you have before you as the asset

purchase agreement which you signed is in the same form that was presented to the board of directors the day before you signed the agreement; correct? A. Q. Correct. So let's go, then -- with that in mind, let's go And

back to admitted Exhibit Z3, the minutes of the meetings.

I'd like to continue with the account reported in the minutes, and the bottom last full paragraph on Page 1, which begins, various questions. A. Q. Yes. So that portion reads: Various questions were then posed by the 135 Do you see that?

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directors concerning: Possible analyst reactions; impact on employees; impact on Novell's relationship with Microsoft; the ongoing viability of SCO. And then it continues with other items that were posed in terms of questions by the directors; correct? A. Q. Correct. I'd like to have you focus for a minute on the What was it that

reference of the ongoing viability of SCO.

was discussed at the board of directors meeting before this asset purchase agreement was approved regarding SCO's viability? A. As I recall, the concern was the amount of cash

that SCO had and the size of the company relative to the size of the task. Q. In fact, SCO didn't have cash that it was even

paying to Novell under the proposed asset agreement; correct? A. Q. Correct. And then it continues. It says:

Mr. Frankenberg, Mr. Mattingly and Mr. Bradford responded to the questions and a discussion ensued. Do you recall responding to board of director questions at that meeting? A. I do, yes. 136

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Q.

Now, before we move on, to make sure we know who

the players were, as it were, the attendees at the meeting, you mentioned earlier in response to a question by Mr. Singer that there was a Novell executive at the time by the name of Duff Thompson; correct? A. Q. Correct. Mr. Thompson was not a member of the board of

directors, was he? A. Q. No, he wasn't. In fact, he was not even present at the

September 18th meeting, was he? A. Q. Correct. But there were other people at Novell who also were

not directors who were present; correct? A. Q. A. Q. Correct. David Bradford is an example of that; correct? Correct. Let's go to the top of the second page of

Exhibit Z3, the minutes, and we'll focus on the first full paragraph that begins with, the directors. quote: The directors next discussed various competitive alternatives and concluded that the transaction as structured was justifiable both from a strategic perspective as well as from a financial one. 137 It continues,

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Now, in terms of the structured asset purchase agreement, you understood at the meeting of the board of directors that what SCO would be actually transferring to Novell was shares of SCO's stock; correct? A. Q. Correct. There was no money, actual currency or cash that

would be transferred; right? A. Q. Correct. Now, you were not with Novell when it acquired the

UNIX business in its entirety from AT&T, were you? A. Q. were you? A. Q. No, I was not. Do you know how much Novell paid for the UNIX I was not. You were not involved in that transaction at all,

assets when it acquired the entire business from AT&T? A. Over 300 million. I don't remember precisely how

much, but it was over $300 million. Q. And the transaction that you were considering at

the board of directors meeting on September 18th, 1995, was not a transaction whereby Santa Cruz Operations would be paying Novell $330 million, was it? A. Q. No, it was not. As we've discussed, there was no cash that was

going to come to Novell; right? 138

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A. Q.

In the initial payment, that's correct. And all that was going to come was the SCO's stock

shares; right? A. No. The SCO stock shares plus the royalties and

buyouts of the SVRX. Q. We'll cover that in a minute. But in terms of the

actual compensation that would be paid to Novell, all that would come initially was the SCO shares; right? A. Initially, yes. But the other compensation was

part of the deal. Q. A. Q. I'll catch up with that in just a minute. Okay. Now, the SCO shares themselves at the time this

agreement was being discussed were worth how much? A. Q. In the range of 5 or $6 a share, I believe. So in your mind multiplying that out times the

number of shares that would be transferred, what was your understanding of the value of the shares that Novell would receive from SCO? A. Q. A. Q. In the neighborhood of 25- to $30 million. Far less than $330 million; fair? Yes. Correct.

So continuing now with the minutes of the board of

directors meetings, it says: Mr. Bradford and Mr. Sonsini then reviewed the 139

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terms of the asset purchase agreement between SCO and Novell. Now, was it the case that Mr. Bradford and Mr. Sonsini were asked to review the terms because they were both attorneys? A. Q. Yes. They were both familiar with the language of the

asset purchase agreement? A. Q. Yes. Mr. Bradford had been the one who was given legal

responsibility for the terms and conditions; right? A. He was given oversight responsibility of the legal

aspects of the transaction, yes. Q. And as you told us earlier, Mr. Sonsini was not

only a member of the board, but was a legal advisor that Novell looked to regularly for advice; right? A. Q. That's correct. And is that why you asked Mr. Bradford and

Mr. Sonsini, the two members that were present, one a board member, Mr. Sonsini, and Mr. Bradford, the general counsel, to review what the actual asset purchase agreement said? A. Q. Yes. So, did, in fact, Mr. Bradford and Mr. Sonsini

review the asset purchase agreement with the board at that time? 140

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A. Q. correct? A. Q.

Yes, they did. And you had a chance to follow that discussion;

Yes. You had a chance to look at what the terms and

conditions of the asset purchase agreement were; right? A. Q. continue: Both the financial terms of the transaction were reviewed as well as the non-financial terms including issues of Standstill, Registration rights, Board seats, Rights of first refusal, employee severance and what happens in the event of a change of the SCO -- of either SCO or Novell. Do you recall those items being discussed at the meeting? A. Q. Yes. And then it continues: The directors asked a variety of questions concerning the contract terms, and suggestions were made to improve the terms of royalty collection from SCO. Do you see that? A. I do, yes. 141 Yes. The notes -- excuse me -- the minutes then,

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Q.

Now, you understood under the asset purchase

agreement what would happen is that Novell's rights to royalties from SVRX licenses would continue to be 100-percent Novell's payment stream; right? A. Q. A. Less the 95 percent collection fee. Less the 5 percent -I'm sorry. Less the 5 percent. So 95 percent of

the royalties would remain Novell's, not 100 percent. Q. Just so we're all clear here. You understood that

under the structure of the asset purchase agreement, Novell would retain the right to receive royalties from SVRX licenses; right? A. Q. Yes. And you understood that those SVRX licenses were

part of the UNIX transaction that Novell had had with AT&T earlier; right? A. As well as any sales that may have been made

between those two events, yes. Q. And that what SCO would do under the proposed asset

purchase agreement is it would go out and collect those royalties for Novell, and all of them would be transferred to Novell except for 5 percent; correct? A. Q. Correct. And that 5 percent would be an administrative fee

that SCO would be paid for administering and collecting the 142

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royalties; right? A. Q. minutes. motion. Correct. Okay. Now let's go to the next section of the

It says in the next session, it says, then upon Let's focus on that. Quote:

Then upon motion duly made, seconded and unanimously carried, the following recitations and resolutions were adopted. Do you see that? A. Q. Yes, I do. So following orderly corporate governance after the

discussion of the asset purchase agreement, a member of the board of directors made a motion for resolutions and approval. That motion was seconded, and then there was a vote taken; right? A. Q. Correct. And the vote was unanimous in favor of the

resolutions reached at the meeting; right? A. Q. Correct. And you were one who would have voted unanimously

in favor of the resolutions; right? A. Q. Yes. Let's then look at the resolution. Next session,

first paragraph. Resolved. That the board of directors of this 143

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corporation, Novell, hereby determines that it is in the best interests of this corporation and its shareholders to enter into an asset purchase agreement with the Santa Cruz Operation, Inc., SCO. Right? A. Q. Yes. And again, that asset purchase agreement was the

one we were looking at that's Exhibit 1; correct? A. Q. A. Q. Correct. With the terms that we looked at; correct? Correct. Okay. Let's continue with the next paragraph in

the resolution. Pursuant to the asset purchase agreement, Novell will transfer to SCO its UNIX and UnixWare technology assets, a portion of the employee base in New Jersey, approximately 100 to 400 employees, equipment used in UnixWare business and certain assumed liability thereto. Do you see that? A. Q. Yes. You understood that's what was going to happen

under the transaction; right? A. Yes. 144

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Q.

And then the resolution continues: Pursuant to the asset purchase agreement, SCO

issued 6.1 million new shares of common stock to Novell. Right? A. Q. Correct. So you understood that the structured agreement

again is that Novell would get 6.1 million shares; right? A. Q. Correct. And then it continues: SCO will also collect and pass through to Novell 95 percent of the SVRX royalties. Right? A. Q. Yes. So those SVRX royalties were the property of Novell

before the transaction; right? A. Q. Yes. Novell will continue to receive 100 percent less

5 percent of those royalties; right? A. Q. Yes. Then it says: Further, SCO will pay to Novell ongoing royalties associated with their future sale of the UnixWare technology as more fully set forth in the asset purchase agreement. 145

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 resolution. right? A. Q. A. Q.

Do you see that? I do. And did you understand under the asset purchase

agreement if SCO which was granted the right to develop UnixWare were then selling new licenses to UnixWare, we're not talking about UNIX, we're talking about UnixWare. with me? A. Q. I'm with you. Okay. So with the UnixWare new licenses that Are you

Novell would be entitled to a portion of those royalties, but only if SCO hit a certain threshold of sales; did you understand that? A. Q. A. Q. Yes. And what did you understand that threshold to be? As I recall, it was $84 million. Do you know whether SCO ever sold $84 million worth

of the UnixWare royalties? A. Well, that would have been after I left. So

perhaps the same ruling earlier applies. Q. And you don't know because you left the company;

I don't know. Fair enough. Then let's go with the next portion of the And it bears particular attention: 146

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Novell will retain all of its patents, copyrights and trademarks, except for the trademarks UNIX and UnixWare, a royalty-free perpetual worldwide license back to UNIX and UnixWare for internal use and resale of bundled products exceeded with other miscellaneous unrelated technology. Do you see that? I do, yes. So at the meeting of the board of directors, it was

specifically presented to the board that under the asset purchase agreement Novell would retain all of its patents, copyrights and trademarks with the sole exception of the UNIX and UnixWare trademarks; correct? A. Q. A. Q. That's what it says, yes. And these are accurate board minutes; right? Yes. And these were prepared by Mr. Bradford, the

secretary of the corporation; right? A. Q. Yes. And you had a chance to review them and approve

them; correct? A. Q. A. Yes. And you did; right? Yes. 147

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Q. meetings.

If we could look to the last page of the board Under the section, adjournment, there's language Let's take a quick look at that. It says:

and a signature.

There being no further business to come before the board, the meeting was declared adjourned by Mr. Frankenberg at 1:30 p.m. Mountain Time. And then there's a signature above the printed words, David R. Bradford, secretary; correct? A. Q. Correct. Now, after that board of directors meeting, did you

then sign the asset purchase agreement? A. Q. A. Q. Yes. Did you read every word of it before you signed it? No, I did not. You were relying upon the advice of Mr. Bradford

and Mr. Sonsini among others; right? A. Also Duff Thompson, also Ed Chatlos, the other

people on the team that were -- including the general manager of the UnixWare business, I relied on all of those people, yes. Q. So thank you. Among others, Mr. Thompson,

Mr. Chatlos all recommended that you sign the asset purchase agreement; correct? A. Q. Yes, they did. And as we look, the asset purchase agreement that 148

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you signed and it was approved by the board of directors is in the same form as Exhibit 1; right? A. Q. Correct. And it's that document that includes the schedule

of excluded assets; right? A. Q. Yes. And that schedule of excluded assets is essentially

the same as the resolution reached by the board of directors where the board of directors unanimously approved a resolution stating that there would be no Novell patents, no Novell copyrights and no Novell trademarks except for UNIX and UnixWare that would be transferred under the agreement; correct? A. Q. That's what it says, yes. Thank you. Now, after the asset purchase agreement was entered into, the deal did not close for several months; correct? A. Q. Correct. And to your understanding, what was the reason for

the deal not closing immediately upon signing the asset purchase agreement? A. Well, I believe that there were quite a number of

things that had to be accomplished including figuring out who would move from Novell to SCO, how that integration might take place so the disposition of employees that weren't going to 149

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move, reexamination of the documents, to make sure that they were correct, all the things that are required to properly complete a complex transaction such as this. Q. correct? A. Q. Yes. This was more complex than a simple sale of the There were other moving parts; right? And you understood it to be a complex transaction;

entire business. A. Q. Yes.

You mentioned that one of the reasons that the

transaction did not close immediately upon the signing was because there was to be a reexamination of the documents; right? A. Q. Yes. There always is under those circumstances.

And so what Novell wanted to do is have a chance to

go back and carefully read the language of the asset purchase agreement that you had signed in its behalf on September 19th, 1995; correct? A. Q. Correct. And you understood that Santa Cruz Operation would

have the same right and opportunity; correct? A. Q. Correct. So for the almost three-month period between

September 19th, 1995, and December 6th, 1995, both Novell and Santa Cruz Operation had a full opportunity to review the 150

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asset purchase agreement; correct? A. Q. Correct. And upon the closing of the asset purchase

agreement that did occur on or about December 6, 1995, both Novell and Santa Cruz Operation reached an agreement that there were certain provisions in the asset purchase agreement that should be amended or modified; correct? A. Q. Correct. And those changes or modifications were set forth

in what's known as Amendment 1 to the asset purchase agreement; that is correct? A. Q. Correct. And you were still the chairman of the board and

chief executive officer as of December 6, 1995; right? A. Q. Exhibit T5. And as I understand it, Your Honor, there's a stipulation for admissibility of this exhibit? THE COURT: MR. SINGER: Any objection to T5 being admitted? Your Honor, it is already part of SCO I was, yes. Mr. Frankenberg, I hand you what has been marked as

Exhibit 1, so it's in evidence already as part of that exhibit. THE COURT: MR. SINGER: All right. I don't. 151

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MR. BRENNAN:

This is a standalone version, Your

Honor, just so we're clear. THE COURT: Okay. All right. You couldn't operate

from that portion of SCO's Exhibit 1? MR. BRENNAN: You know, Your Honor, I'm sure I

And if Your Honor would prefer me to do that, I would

be willing to, but I think it might be easier than flipping back and forth to see it alone. THE COURT: will admit Exhibit T5. MR. BRENNAN: Thank you, Your Honor. All right. Go ahead. The Court

(Whereupon, Defendant's Exhibit T5 was received.) Q. BY MR. BRENNAN: So looking at Exhibit T5, do you

recognize this as the Amendment Number 1 to the asset purchase agreement? A. Q. Yes. So let's look at the first page and the first And let's go down to just the first

quarter of the page.

heading of Amendment Number 1. So we've looked at this. This is the heading of And then

Amendment Number 1 to asset purchase agreement. we'll look at the first paragraph.

It states, quote:

As of the effective date indicated below, the September 19, 1995, asset purchase agreement, the agreement, between Novell and the Santa Cruz 152

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Operation, is amended in the following respects. Do you see that? A. Q. I do, yes. And what follows are certain changes or

modifications to the asset purchase agreement executed on September 19, 1995; correct? A. Q. Correct. Now, we talked earlier about Schedule 1.1(a) in the

asset purchase agreement that listed the assets that Novell was to transfer to Santa Cruz. A. Q. I do, yes. And Amendment Number 1 does not modify the language Do you recall that?

used in Schedule 1.1(a) to include copyrights, does it? A. Q. Not that I see here, no. There was no attempt made, to your understanding,

either by Novell or by Santa Cruz Operation given the nearly three-month period to examine documents to then in Amendment Number 1 come back and say words to the effect, oops, we made some mistake. We intended to include Novell's copyrights to That was

UNIX, and we now should go back and include those. never reflected in Amendment Number 1, was it? A. Q. It's not in there, no.

Now let's consider on the other side of that coin, We looked earlier at

if you will, that's the excluded assets.

Schedule 1.1(b), which was the list of assets that were 153

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excluded. A. Q.

Do you recall that? Yes. And in the September 1995 asset purchase agreement

that you signed that we looked at and is consistent with the board meeting, Novell excluded and Santa Cruz agreed to exclude all copyrights and trademarks except for UNIX and UnixWare; right? A. Q. Right. So then looking at the amendment, there was no

change in those exclusions, was there? A. Q. No, there was not. So is it correct, then, Mr. Frankenberg, that even

after the board meeting that was held at which the asset purchase agreement was approved, after you and other members of the board had a chance to thoroughly review the asset purchase agreement and even after Mr. Sonsini and Mr. Bradford, the legal advisors, apprised the board about what was contained in the agreement and even after a nearly three-month period to review it, neither Novell nor Santa Cruz Operation chose to include UNIX copyrights in the asset purchase agreement when Amendment Number 1 was executed; correct? A. Q. Correct. Now, still if we could focus on Amendment Number 1,

I'd like us to look to, it's numbered Page 11, which is the 154

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signature page. Now, to your observation, was Amendment Number 1 signed in Novell's behalf? A. Q. A. Q. Yes. And that was by Duff Thompson; right? Yes. And based upon your review of the executed Exhibit

Number 1, did you have reason to believe that Mr. Thompson would have reviewed Exhibit 1 before he signed it? A. Q. A. Q. Exhibit 1? Yes. Yes. Do you mean Amendment 1? My mistake.

Thank you.

I believe he would have.

And then on the left-hand side of the signature

page there appears to be a signatures for Santa Cruz Operation. A. Q. Do you see that? Yes. And you were asked by Mr. Singer about an

Alok Mohan, and I believe you indicated you believed he was the chief executive officer of Santa Cruz; right? A. Q. Yes. And in reviewing Amendment Number 1, did you

believe that Mr. Mohan had signed it in behalf of Santa Cruz Operation? A. Q. I did, yes. Now, Mr. Singer asked you whether you'd had 155

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discussions with SCO executives suggesting that copyrights were not to be included in the asset purchase agreement. you recall those questions and your answers? A. Q. Yes, I do. Now, after the asset purchase agreement was signed Do

by you on September 19th, 1995, did you have any discussions with Alex Mohan of Santa Cruz between the date you signed it and December 6, 1995, when Amendment Number 1 was signed? A. Q. A. Q. His name is Alok. I apologize. Alok Mohan. Yes. I'm sure I did.

And during that time period, did Mr. Mohan suggest

to you that he believed that copyrights had been transferred under the asset purchase agreement? A. Q. A. Q. I don't recall. He never brought that up, did he? I don't recall him bringing it up, no. Also there was a question asked about a Mr. Doug I want to make sure I get my

Michels or Michels. pronunciation. A. Q.

You probably can help me.

Doug Michels. Thank you, Mr. Frankenberg. Between the time you signed the asset purchase

agreement on September 19th, 1995, and December 6, 1995, when Novell and Santa Cruz signed the first amendment, did you have 156

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any discussions with Mr. Michael? A. Q. Yes, I did. And during any of those discussion, did Mr. Michels

suggest to you that he thought that UNIX copyrights had been transferred under the asset purchase agreement? A. I don't recall him saying that. I also don't

recall him saying that they weren't, so.... Q. And let me see if I understand this. You were an Do I have

executive at Hewlett-Packard for roughly 24 years. that right? A.

I was an executive for perhaps the last 10 years.

I was at HP for almost 25 years. Q. Thank you. And during the time that you were an

executive at Hewlett-Packard, you were involved in business transactions; correct? A. Q. Correct. And was Hewlett-Packard represented by legal

counsel in those transactions? A. Q. Yes, we were. And during the time that you were a Hewlett-Packard

executive, did you allow legal counsel to represent the interest of Hewlett-Packard in reaching those agreements? A. Not without discussions with me as the responsible You

executive or perhaps people responsible for the business. don't let lawyers loose and say, go negotiate a deal.

157

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Q. A. Q. A. Q.

You would have provided direction -Sorry. I'm sorry? No offense. None taken. Thank you.

You would have provided directions to legal counsel and expected legal counsel to carry out your instructions to obtain the best result consistent with what you asked them; right? A. Generally the way I've worked is to come to a

business agreement with the other party and ask legal counsel to memorialize that and be true to the deal that was made. Q. And in connection with the asset purchase

agreement, you had David Bradford and outside counsel Wilson Sonsini who were charged with making sure that Novell's legal interests were protected in connection with the asset purchase agreement; right? A. Correct. As well as the -- as well as the business

interest by the other members of the team. Q. And you believe that Mr. Bradford and Mr. Braham

accomplished their mission; correct? A. Mr. Braham was a lawyer for Wilson -- working for

Wilson Sonsini and working on this, yes. Q. I'd like to have you turn back, if we might, to

Exhibit 1, which is the asset purchase agreement signed on 158

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September 19th, 1995, where I hope to avoid being tedious. I'll do this as quickly as I can, but I do want to focus on a couple provisions in the asset purchase agreement itself. we'll turn to the first page of -- and you were asked a bit about this by Mr. Singer representing SCO, and we're going to look at Recitals A and B, if we might. Now, did you have an understanding that recitals essentially set forth the basic premises for the transaction? A. Q. Yes. So the so-called business that's the subject of the So

recitals is described in Recital A; right? A. Q. Yes. Okay. Then looking in B, is this language that we

looked at before that references the board of directors of each of the buyer and the seller believing that it was, quote: In the best interests of the each company and their respective stockholders that buyer acquire certain of the assets of and assume certain of the liabilities of seller compromising the business. Correct? A. Q. Correct. So you understood what was going to happen in this

agreement is that certain of the assets of the business were the subject of the asset purchase agreement; right? A. Correct. Certain other, such as Tuxedo, were not 159

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part of the transaction. Q. They were excluded; correct? So then let's turn to the language regarding what was actually to be purchased. This is Section 1.1 on the So Section 1.1,

bottom of the first page under, acquisition.

purchase of assets subpart (a) begins this way, quote: Purchase and sale of assets. On the terms and

subject to the conditions set forth in this agreement. Let me pause there. Did you understand that

whatever was going to be done in terms of the business transaction that it was to be done on the terms and conditions that were described and set forth and stated in the actual asset purchase agreement? A. yes. Q. And we'll look at this in a minute. But you Yes. To the extent that it reflected the intent,

also understood that there was a specific clause in the asset purchase agreement that said, that if there were any understandings or prior agreements or private thoughts, as it were, that were not reflected in the actual words of the agreement, that none of those mattered; right? A. Q. A. They say somewhere else, yes. We'll show that in a minute. Okay. 160

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Q. It says:

Let's continue with the description of the assets.

Seller will sell, convey, transfer, assign and deliver to buyer, and buyer will purchase and acquire from seller on the closing date all of seller's right, title and interest in and to the assets of properties of seller relating to the business. But then it doesn't stop there, does it? continues; right? A. Q. Yes. It continues as follows: Identified on -- and we'll flip the page -Schedule 1.1(a) hereto. Do you see that? A. Q. I do, yes. So you understood as you signed the asset purchase It

agreement that to find out what assets were actually being transferred, conveyed or sold by Novell to Santa Cruz Operation would be those assets described in Schedule 1.1(a); right? A. Q. Yes. And then it continues: Notwithstanding the foregoing, the assets to be so purchased shall not include those assets set 161

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forth in Schedule 1.1(b). You see that; right? A. Q. I do, yes. So you understood to find out what was not included

in the transaction you could look to Schedule 1.1(b); right? A. Q. Correct. Let's have a look at what the payments or payment And let's go to Section 1.2 subpart (a). It says:

was to be made.

Mr. Singer asked you about this.

On the terms and subject to the conditions set forth in this agreement -- and then these words -as full payment for the transfer of the assets by seller to buyer, at the closing buyer shall assume the assumed liabilities and issue to seller 6,127,500 shares of fully paid and nonassessable shares of common stock of the buyer. Do you see that? A. Q. Yes. And then that payment is described as the shares or

purchase price; right? A. Q. Yes. So Section 1.2(a) tells us, correct, that the

shares were the full payment for the assets; right? A. Payments, it says, is the title for 1.2, I believe.

And my view of the transaction was that the shares as well as 162

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the royalties were the payment for the UNIX and UnixWare business. Q. Let's look at the language of the agreement to see

again what the language of the agreement states. A. Q. Okay. Back to 1.2 subpart (a): On the terms and subject to the conditions set forth in this agreement as full payment for the transfer of the assets. Do you see that? A. Q. I do. And then it identifies two things that will

constitute full payment, the shares and SCO's assumption of certain liabilities; right? A. Q. Yes. And those are the two items that are described as

full payment of the assets; right? A. Q. Yes. Okay. Now let's go to Section 3. You were asked

about this by Mr. Singer, as well.

We'll focus on the first

portion of this, maybe through the first full sentence, if we might. So looking at royalties, it says: Buyer agrees to collect and pass through to seller 100 percent of the SVRX royalties as defined and described in Section 4.16 hereof. 163

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. Yes.

Right?

So there's no statement that what Santa Cruz

Operation was going to do was pay to Novell these royalties in exchange for the assets, instead according to the language of the agreement what Santa Cruz agreed to do was to go out and collect and pass back to Novell those royalties; right? A. Q. Correct. In fact, the role of Santa Cruz in connection with

this agreement was to go out and essentially act as an administrator and collector for Novell; right? A. Q. A. I think that understates the role. That's what the words say essentially; right? That's what the words say, but I think it

understates the role. Q. continues: Seller agrees to pay buyer an administrative fee of 5 percent of the SVRX royalties. So you understood from the language of the asset purchase agreement itself that in exchange for Santa Cruz going out and serving the administrative function of collecting and turning over to Novell the SVRX royalties that an administrative fee of 5 percent of those royalties would be paid back to Santa Cruz; right? 164 Let's see what else the role is, because it

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A. Q.

That's correct. Okay. Then it continues:

Seller and buyer further acknowledge and agree that seller -That's Novell; right? A. Q. Yes. -- is retaining all rights to the SVRX

royalties, notwithstanding the transfer of the SVRX licenses to buyer pursuant hereto. Do you see that? A. Q. Yes. So you understood when you signed the agreement

that Novell was retaining all of the rights to the royalties; correct? A. Q. To the royalties, yes. And then it says: And that buyer -That's Santa Cruz; correct? A. Q. (Witness indicates by nodding head up and down.) -- only has legal title and not an

equitable interest in such royalties within the meaning of Section 541(D) of the Bankruptcy Code. Do you see that? A. Q. Correct. Now, you understood that the reason that that 165

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language was included in the agreement is that Novell wanted to protect itself in the event that Santa Cruz Operation were to somehow have financial difficulty and file bankruptcy and that Novell then wanted to make sure that it had retained the full rights to the royalties; right? A. That, as well as being assured that we would be

able to negotiate buyouts of those royalties with existing customers. Q. Yes. Thank you. And, in fact, that was an added

reason why Novell retained control over the royalties; right? A. Yeah. The major concern was making sure that we

received the royalties, because, as I said, we viewed it as part of the payment. Q. Now, I want to ask you a few questions about other We're going to skip forward all It's on

provisions of the agreement.

the way to Section 9.3 of the agreement, if we might. Page Number 47. I'm sorry. I misspoke. 9.5.

My apologies.

Now, I asked you earlier if you thought that there was a clause in the agreement that essentially had the effect to make clear between the parties that what mattered and really the only thing that mattered was what was in the agreement. A. Q. Do you remember me asking about that? Yes. So let's look at Section 9.5. Entire agreement. It states, quote:

This agreement and the 166

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schedules and exhibits hereto. I'll pause there. You understood that the

reference to this agreement was the asset purchase agreement signed on September 19th, 1995; correct? A. Q. Yes. And then the reference to schedules were the

schedules that were set forth in the agreement including the schedules of included assets and excluded assets; right? A. Q. Yes. And exhibits thereto. There were various exhibits

to the agreement; right? A. Q. Yes. Okay. (A). Then it continues: Constitute the entire agreement among

the parties with respect to the subject matter hereof and supercede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Do you see that? A. Q. Yes. Now, did you understand that the reason for that

provision was so that in the event that either Novell or Santa Cruz Operation, it had previous discussions, previous understandings, even previous expectations or hopes or dreams or desires, that all of those would be eliminated and what the 167

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parties would agree to would be what was set forth in the written agreement? MR. SINGER: the prior rulings. Your Honor, I object on the basis of

If I could -Can you refer me to the one you have in

THE COURT: mind? MR. SINGER:

Well, it involves the issue of whether

or not the intent of the parties is to be considered in interpreting the agreement. MR. BRENNAN: provision, Your Honor. THE COURT: the answer. Q. BY MR. BRENNAN: Mr. Frankenberg, do you have the I will overrule the objection and allow That's not impacted by this

question in mind? A. Q. Pardon? Do you have the question in mind? Do you remember

the question I asked you? A. Q. Could you repeat it, please? I'll do my best. That was a long one. Maybe I'll

shorten it this time. A. Q. Okay. Did you have the understanding when you signed the

asset purchase agreement that the reason for Section 9.5 was to make sure that if either Novell or Santa Cruz Operation had 168

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had either prior understandings or expectations or thoughts that none of those would really matter or be binding, instead what would matter is what was set forth in the written agreement? A. Well, clearly subsequently there was an amendment

to this, so the entire agreement got modified to be something else. Q. And that's because we looked at Amendment Number 1.

Both parties in writing agreed to that amendment; correct? A. Q. Yes. And, in fact, there is a provision in the agreement

that we can look at that says if both parties reach a modification in writing that that counts; right? A. Q. I assume so, yes. Okay. The section we're looking at says that if

before signing this agreement someone had a hope or expectation or thought they had agreement, rather than worry about that, we're going to focus on what the words of this agreement says; right? A. Q. That's what this says, yes. And it says: Supercedes all prior agreements and understandings. Correct? A. Yes. 169

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.

MR. SINGER: and move to strike.

Your Honor, I'm going to object again

This is ineffective as a matter of law

under the law of this case, this provision. MR. BRENNAN: THE COURT: MR. BRENNAN: Would you like me to respond or not? Yes, if you may. Your Honor, this is a written

provision that's never been amended, and it's a standard integration clause. And I'm simply asking the witness and

he's answered questions in terms of what his understanding was with respect to the meaning and effect of that provision. THE COURT: The dilemma that I have is in light of

Mr. Singer's question that was asked that you objected to that the Court sustained earlier that if you continue to pursue this I have no choice but to allow Mr. Singer on redirect to get into an area that you perhaps don't want him to. MR. BRENNAN: THE COURT: I understand that, Your Honor. If you want him to answer this

question, I will then have to allow Mr. Singer to revisit that issue. MR. BRENNAN: badly, Your Honor. THE COURT: All right. Now, you also understood that Well, I don't want the answer that

BY MR. BRENNAN:

lawyers would be involved; right? A. Lawyers would be involved in what? 170

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Q. A. Q.

In drafting and negotiating the agreement; correct? Yes. So let's look at the next provision in the document

that addresses the role of attorneys in both the preparation and drafting of the agreement. So if we could look at

Section 9. -- give me one moment and I'll direct you to it -Section 9.9. It says:

The parties hereto agree that they have been represented by counsel during the negotiation and execution of this agreement. Do you see that? A. Q. I do, yes. And you understood that Novell purposely wanted to

be represented by counsel in the agreement; right? A. Q. Operation. A. Q. Yes. And you understood that so did Santa Cruz They wanted lawyers to be involved; right? Yes. Now, speaking of lawyers, after you left Novell,

you had your deposition taken in this case; right? A. Q. correct? A. Correct. THE COURT: Ladies and gentlemen, let me explain to 171 Yes, I did. And that deposition was taken by Mr. Singer;

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you.

You heard reference earlier during opening by Mr. Singer

about depositions, and let me for your information explain to you that prior to trial the attorneys in this case had the opportunity to question the witnesses that were going to appear here. And that would be a very formal questioning. They would be

The witnesses would be put under oath.

represented by counsel, and their counsel could make legal objections to questions that were asked. A transcript of that

question and answer would then be prepared, and the witness would be given an opportunity to review it and to make any changes in it. And then the document would be signed, and it

can be used in trial for certain purposes. So you will hear references to depositions both written and video during the course of this trial, and keep in mind what I just explained to you what it is. MR. BRENNAN: Q. Thank you, Your Honor. Now, before your deposition was

BY MR. BRENNAN:

taken, and by the way, do you recall that your deposition was taken by Mr. Singer in February of 2007? A. Q. That's correct, yes. And before your deposition was taken, you had

occasion to meet with two attorneys that represent Novell; correct? A. Q. Correct. One was Mr. Ken Brakebill of the law firm of 172

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Morrison & Foerster; correct? A. Q. Right. And the other was Mr. Jim Lundberg, who was inhouse

counsel for Novell; correct? A. Q. A. Q. Correct. Do you recall where you met for that meeting? I believe it was in my lawyer's office. And at that meeting did you, in fact, confirm both

to Mr. Brakebill and to Mr. Lundberg your belief that under the asset purchase agreement you've looked at today that, indeed, Novell wanted to retain the UNIX copyrights in order to facilitate both buyout negotiations of SVRX licenses and to protect the revenue stream under those licenses? A. I did not say that. What I said was, I believe

that there might have been some conversations about that, and I asked them if they could refresh my memory on it. unable to do that, nor was anyone else. Q. In fact, do you recall when you were asked about They were

this that you said that you had a vestigial memory of that topic being discussed? A. Of the topic of intellectual property and

copyrights, yes. Q. And then after you met with Mr. Lundberg and

Mr. Brakebill you then met with Mr. Duff Thompson; right? A. I did, yes. 173

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Q.

And Duff Thompson was the Novell executive who in

1995 you were working with in connection with the asset purchase agreement; right? A. Q. One of the executives, yes. And when you were working with him among others at

that time he was a Novell employee; right? A. Q. Right. But when the asset purchase agreement went through,

Mr. Thompson left Novell's employ; right? A. Q. No. Well, he became a SCO -- member of the SCO board of

directors, didn't he? A. He became a member of the SCO board of directors as

part of the purchase of -- well, as part of the agreement between SCO and Novell. Q. A. He was still a Novell employee.

And how long -And later on he did leave Novell's employ, and I

believe he remained a member of the board, yes. Q. So when you met, then, with Duff Thompson before

your deposition in 2007, after you met with Mr. Lundberg and Mr. Brakebill, you then went and met with Mr. Thompson; right? A. Q. A. That's correct. And then you had your deposition taken; right? Correct. Before I met with Mr. Thompson I asked,

we asked Mr. Lundberg if that -- if he would object to that, 174

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and he said he would not object to it. Q. A. that. Q. A. Q. So you then met with Mr. Thompson; right? I did, yes. And you understood at the time that Mr. Thompson He wasn't opposed to that, was he? He said to my lawyer that he wasn't opposed to

was on the SCO board of directors; right? A. Q. Yes. Did you understand at that time that Mr. Thompson

was the chairman of SCO's litigation committee? A. I did not know that. I knew he was on the board.

I didn't know, in fact, I learned in the deposition that he was the chair of the litigation committee. Q. So at least what you learned after your deposition

was taken that when you met with Mr. Thompson before your deposition was taken that Mr. Thompson not only was a SCO director but the chairman of this litigation committee; right? A. Q. That's correct. That's what I learned, yes.

And do you understand that Mr. Thompson was one who

authorized the filing of this lawsuit against Novell? A. Q. I don't know that to be a fact. It may well be.

Do you know what Mr. Thompson's financial interest

is in the outcome of this litigation? A. I believe his partnership owns a significant number 175

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of SCO shares. Q.

I don't know how much.

Mr. Frankenberg, thank you for your time. I have no further questions at this juncture, Your

Honor. THE COURT: Mr. Singer? REDIRECT EXAMINATION BY MR. SINGER: Q. Mr. Frankenberg, you've heard a lot of questions Let me start with, was the Thank you, Mr. Brennan.

and you've seen some documents.

deal as you understood it with Santa Cruz to sell the copyrights in UNIX and UnixWare or to retain copyrights? A. To sell the copyrights in UNIX and UnixWare

excluding the NetWare copyrights. Q. A. Q. Excluding the NetWare copyrights? Right. And was that your intent at the beginning of the

transaction? A. Q. A. Q. A. Q. Yes. Was that your intent throughout the transaction? Yes. Was that your intent when the transaction closed? Yes. If any lawyers put in language into an agreement

that differed from that, would they be acting within or 176

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outside your authority as chief executive officer of the company? A. Q. lawyers. Outside. Now, there were some questions about you trust your Do you trust your lawyers to document a deal

consistent with what the business people negotiated? A. I trusted that they would do that, yes. Apparently

that didn't happen. Q. So to the extent there is language in there which

excluded copyrights, would that have been consistent or inconsistent with what the lawyers were supposed to do in negotiating -- in documenting this deal? A. They were supposed to be especially careful to make

sure that none of the NetWare copyrights or other Novell product copyrights transferred as part of the deal. They were

not instructed to withhold copyrights of UNIX or UnixWare. Q. And when you looked at the APA and you saw

reference to excluding copyrights, did you interpret that as being the NetWare copyrights, or did you interpret that as being the UNIX, the UnixWare copyrights? A. that. When I saw that, I'm sure -- well, I shouldn't say

When I saw that, what likely registered in my mind was So they were doing their job.

that was NetWare copyrights.

They were excluding the copyrights that were very important to us. 177

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Q. A.

Now -I should have read more carefully or clearly or we

might not have been here. Q. directors. Now, there were some questions about the board of Does any other board of directors member in this

case have the authority to negotiate the deal separate from what you and the team of executives at Novell was doing? A. Q. No. Were any of the board of directors other than

yourself negotiating the deal with Santa Cruz? A. Q. No. So the only way that the board of directors could

have agreed to sell the copyrights would have been with your knowledge and action; is that fair? MR. BRENNAN: leading the witness. THE COURT: Q. Sustained. Let me rephrase the question, Objection, Your Honor. That's

BY MR. SINGER:

Mr. Frankenberg.

Is there any way the board of directors

could sell the copyrights without you being aware of it as being part of the deal? A. Q. No. Now, I'd like to take a look with you at the And if you look at

minutes that you were asked to look at.

the first page, do you see any discussion in terms of what was 178

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discussed with the board about copyrights? A. I'm sorry. I'm having trouble reading it. But -This might be Maybe

when I was younger I could have. Q. easier. A. Q. discussion. THE COURT: Mr. Frankenberg? THE WITNESS: you, Your Honor. THE COURT: All right. Thank you.

I'm having trouble reading it, too.

Take a moment and look at the summary of the

Can you read that all right,

I can, yes.

It's much better.

Thank

(Time lapse.) THE WITNESS: copyrights. Q. BY MR. SINGER: Okay. On the top of the second Nothing on the first page about

page where it discusses that, the directors next discussed various alternatives, that paragraph, anything there that you see about copyrights? And perhaps Mr. Calvin can blow up that

top paragraph and make it easier to read. (Time lapse.) THE WITNESS: in there. Q. BY MR. SINGER: From your own personal 179 No. There's nothing about copyrights

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recollection, was there any discussion at the board meeting about the copyrights going or staying? A. Q. I don't recall any discussion about that, no. So then you get to the resolutions. Are the

resolutions pretty much a formality after the discussion at the board meeting to vote to get the formal authority to take steps? MR. BRENNAN: Objection, Your Honor. That's

leading the witness again. THE COURT: THE WITNESS: ahead of the meeting. Overruled. Generally resolutions are drafted And unless there are things that

change, a resolution is a result of the discussion or actions of the board. record. Q. BY MR. SINGER: Do you recall any special attention Those are generally what is put into the

paid at the meeting back in 1995 of the language of the particular resolution that had been drafted to approve the transaction? A. I don't recall that, and the minutes don't say They refer to

there's any discussion about the resolution. the discussion that we just talked about. Q.

If you had looked at the resolution and you saw,

pursuant to the asset purchase agreement Novell will transfer to SCO its UNIX and UnixWare technology assets, would you have 180

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understood that to include the copyrights? A. Q. Yes, I would have. Now, when you do get down to the second paragraph

that refers to Novell retaining all of its patents, copyrights and trademarks, you see that it's followed by a statement that says: Worldwide license back to UNIX and UnixWare for internal use and resale in bundled products. Do you see that? A. Q. Yes, I do. Does that refer to the license back agreement that

we talked about earlier this morning? A. Q. Yes, it does. And would there be any reason for Novell to have to

license back from SCO copyrighted technology if it, in fact, never sold it to SCO in the first place? A. Q. I can't think of a reason, no. Now, to the extent someone were to read these

minutes as excluding the UNIX and UnixWare copyrights from the sale, was that consistent or inconsistent with the deal that you and your executives negotiated with Santa Cruz? A. It was inconsistent or would have been

inconsistent. Q. And if the attorneys had negotiated language and

put language into the agreement that excluded the UNIX and 181

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UnixWare copyrights, was that consistent or inconsistent with what they were supposed to be doing? A. Q. It was inconsistent. Now, you've been asked about Amendment 1 which Was there any reason

occurred over the 90 days that followed.

that you're aware of why Santa Cruz would have thought that there was some problem with the language in the agreement in terms of getting the entire UNIX and UnixWare business including the copyrights? A. I can't think of any, other than if they had read

it more carefully than I did, they would have seen the reference to copyrights. Q. A. Q. But did any issue come up over those 90 days? Not that I remember, no. Do you know whether or not during that period plans

were made to transition the copyrights on the actual software? A. Q. I don't recall, no. But you're not aware of any issues that would have

come up that would have led at that time before Amendment Number 1 to having to make some changes to the agreement? MR. BRENNAN: Honor. THE COURT: Q. Sustained. Are you aware of any issues that Objection; leading question, Your

BY MR. SINGER:

came up between September and December of 1995 that would have 182

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drawn attention to this language regarding copyrights? A. Q. I'm not aware of any, no. You were asked about the fact, and this is in -- on

the first page of the minutes, Exhibit Z3, that there was also consideration of an HP license, a license at Hewlett-Packard at the same board meeting; is that correct? A. Q. Yes. Was there anything inconsistent with Novell

engaging in that license with its sale of the UNIX and UnixWare assets to Santa Cruz? A. to UNIX. No; because Hewlett-Packard already had a license So they were one of the companies that already owned

a license and already had UNIX-based systems in the market, and they were one of the companies paying royalties under the SVRX agreements. need a license. Q. With respect to the payment terms, was it your So as far as UNIX was concerned, they didn't

understanding that the payment was just the stock, or was it also the royalty stream? A. It was the stock and the two royalty streams, the

SVRX royalties and the UNIX royalties, less the 5-percent administrative fee on the SVRX royalties. Q. Now because the royalties streams would go in the

future, did you know how much money Novell would get over a period of years in return for the sale of the business? 183

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A.

Not exactly.

But we had pretty good estimates of

what that might amount to. Q. What was the estimated range of what Novell would

realize for the sale of the business through those three components, the stock and the two royalty streams? A. I don't recall the exact estimate, but it was in

the order of $100 million. Q. Did you recognize when you were pursuing the deal

with Santa Cruz that Novell may be receiving less for the UNIX and UnixWare business than it had paid AT&T several years earlier? A. Q. Yes. And did you have a view as to whether that was

still in the best interest of the company in terms of its overall business activities? A. It was in the best interest of the company. Just

looking at the estimates of what would come from SCO did not include payments that would come from buyouts of the SVRX royalties by existing customers. But monetary considerations

aside, the major consideration was to get Novell out of the operating system business and focused on networking businesses where it had an opportunity to compete with Microsoft as opposed to -- compete successfully with Microsoft as opposed to trying to assault a fortified (inaudible). THE COURT REPORTER: Fortified what? 184

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THE WITNESS:

Fortified (inaudible).

I'm sorry.

Assault somebody who has a virtually assured position in the marketplace that you have no possible way of winning, is a better way of saying it. Q. BY MR. SINGER: Sorry. There was some questioning about

whether there was any discussion with Mr. Michels or Mr. Mohan about the transfer of the copyrights. Do you have any reason

to believe that Mr. Mohan or Mr. Michels needed to raise an issue of the copyrights transferring during the time that you were chairman of the company? A. Q. No. And had anyone to your knowledge ever gone to the

buyer and said, we want to change the language of the deal, or, we want to put in language in the agreement to keep the copyrights back? A. To your knowledge did that ever occur? It may

I have no knowledge of that occurring.

have, but I have no knowledge of it. Q. Your knowledge as chief executive officer was that

the lawyers would document a deal consistent with what you and your executives had negotiated? A. Q. Yes. Thank you very much. THE COURT: MR. BRENNAN: THE COURT: Mr. Brennan? Yes, Your Honor. Go ahead. 185 Just a few.

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 BY MR. BRENNAN: Q.

RECROSS-EXAMINATION

Mr. Frankenberg, you were just asked by Mr. Singer

about what would be in the best interest of the corporation. I'd like to look back to what's been introduced into evidence Exhibit Z3, the minutes of the board of directors. to turn to Page 2 and look at the resolution. Now, first of all, you understand that the purpose for minutes being prepared for the board of directors was so that there would be a clear record of what occurred so people could look back in time to see what really happened; right? A. Q. Yes. It's to create an official record of the I'd like

corporation; correct? A. Q. Correct. And these board minutes were prepared for that same

purpose; right? A. Q. Yes. So that, for example, those of us today in March of

2010 looking back to something that happened in September of 1995 could have a clear understanding of what was discussed and importantly what decisions were made by the board of directors by virtue of a record being prepared; correct? A. Q. Yes. That's the intent of minutes; right.

And you told us that you had a chance to review and 186

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approve these minutes; right? A. Q. I did. So let's, then, look at the resolution. I believe

you suggested that the resolution that was -A. I'm quite sure if you look at a subsequent set of

minutes you'll see that the minutes were approved. Q. A. Q. Yes. In fact, that's what happened; isn't it? Yes. I appreciate

I believe so. Thank you.

I have had that benefit.

you pointing that out. A. Q. Okay. Now, the resolution itself, are you suggesting that

the resolution was prepared in advance of the meeting of the board of directors? A. Q. That's generally what is done. So even before you went to the board of directors

meeting, you knew that this was the resolution that was going to be considered; right? A. I would say that the resolution would have been I don't know whether I looked

drafted ahead of the meeting.

at it ahead of the meeting or not. Q. But I think you told us earlier that there was a

package of materials prepared even before you went to the meeting; right? A. Yeah. And generally that would have been 187

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included -- any proposed resolutions would have been included in the package. Q. I don't know for sure that they were.

So you expect, then, that you and other members of

the board of directors even before they arrived for the meeting on September 19th would have seen a resolution that would describe what was going to be considered and the business that would be before the board that day; right? A. Q. That would have been the normal procedure, yes. So there wouldn't have been any surprise even at

the board of directors meeting as to what the board was being asked to approve, the members would have had a chance to think about even before they get there; right? A. Q. Generally the case, yes. So looking, then, back at the resolution, and this

is the official action taken by the board of directors of Novell; correct? A. Q. A. Q. Correct. The governing body of the corporation; right? Correct. So again, in the first paragraph let's find out

what, in fact, was in the best interest of the corporation. It says, quote: That the board of directors of this corporation hereby determines that it is in the best interest of the corporation and its 188

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shareholders to enter into an asset purchase agreement with Santa Cruz Operation. Right? A. Q. Yes. So you and the other boards members felt that what

was in the best interest of the corporation was to enter into the asset purchase agreement; correct? A. Q. A. Q. Yes. And the version of which you signed; right? Yes. The version of which you had a chance to review

before you signed it; right? A. Q. Yes. The version of which was discussed with you and the

other board members at the board meeting; right? A. Q. Yes. The version of which two senior Novell either

executives or board members, Mr. Bradford and Mr. Sonsini, walked through with the board at the meeting; right? A. Q. Yes. It was that version of the asset purchase agreement

that you and the other board members thought was in the best interest of Novell to enter into; right? A. Q. Yes. And that's the one you signed; right? 189

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A. Q.

Yes. Now, Mr. Singer came back to you again and asked

whether or not it was the intent to withhold copyrights from Santa Cruz under the asset purchase agreement. Let's look at

the last sentence in the resolution where it says, Novell will retain. So you're at the board meeting. what was presented. look at before. given. We've talked about

We talked about what you had a chance to

We talked about the legal advice that was We

And we talked about how the terms are reviewed.

talked about how you had a chance to review and this language, quote: Novell will retain all of its patents, copyrights, and trademarks except for the trademarks UNIX and UnixWare. You see that; right? A. Q. Yes, I do. And that language is consistent with the language

in the asset purchase agreement; right? MR. SINGER: Q. Your Honor, I object to this. As signed on September 18th, 1995.

BY MR. BRENNAN: MR. SINGER:

Objection; seeks the scope of recross,

simply repeats recross. THE COURT: MR. BRENNAN: Overruled. I'll re-ask the question because I 190

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got muddled there.

I'll try again. Go ahead. The language that we just read in

THE COURT: Q.

BY MR. BRENNAN:

the resolution is consistent with the language that's employed in the September 19, 1995, asset purchase agreement regarding exclusion of copyrights; correct? A. Q. Yes. So what the board reviewed and approved is

consistent with what you signed and what SCO signed; right? A. Q. Yes. Thank you. THE COURT: excused? I appreciate your time. Okay. Counsel, may this witness be

By that I mean, he doesn't need to be worried about

being recalled? MR. SINGER: MR. BRENNAN: THE COURT: I believe that's correct, Your Honor. Yes, Your Honor. All right. Thank you.

Mr. Frankenberg, you may go about your business. You do not have to worry about being recalled as a witness in this case. But I would ask you to, please, not discuss your

testimony with any other witness or in the presence of any other witness or allow in any way your testimony as presented here today to become part of another witness' understanding of what has taken place in this trial. THE WITNESS: I'll do that, Your Honor. 191

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THE COURT:

Thank you, Mr. Frankenberg. Thank you. Thank you.

You may

step down and be excused. THE WITNESS: THE COURT:

We'll go ahead and recess, ladies and But I do want to emphasize by

gentlemen, for the afternoon.

reading to you again the instruction that I gave you yesterday about your conduct. so important. First, I instruct you that during the trial you are not to discuss the case with anyone including fellow jurors or permit anyone to discuss it with you. Until you retire to the And the reason I do this is because it is

juryroom at the end of the case to deliberate on your verdict, you simply are not to talk about this case. Not talking about

this case means not talking about it in any way including by Internet, e-mail, text message and instant communication devices or services, such