SCO Grp v. Novell Inc

Filing 859

NOTICE OF FILING OF OFFICIAL TRANSCRIPT for dates of March 12, 2010-Jury Trial before Judge Ted Stewart re 567 Notice of Appeal,. Court Reporter/Transcriber Patti Walker, CSR, RPR, CP, 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 Two, # 2 Part Three)(jmr) Modified on 4/20/2010-added text (jmr). Modified by removing restricted text on 7/19/2010 (rks).

SCO Grp v. Novell Inc

Doc. 859 Att. 2

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 COURT: MR. ACKER: Q (BY MR. ACKER) THE COURT: MR. ACKER: THE COURT:

(10:15 a.m.) Are you ready, counsel? Yes, Your Honor. If you would, please, Mr. Broderick. (jury present) Go ahead, Mr. Acker. Thank you, Your Honor.

Before we broke -- or actually Mr. Normand

was sort of asking you questions about a couple of schedules that were attached to the APA, and I want to ask you about those as well. So why don't we start with section 2.0 of the Seller Disclosure Schedule in the APA. Highlight that, please. Now,

this section 2.10 of the Seller Disclosure Schedule describes those -- that list of copyrights that you were talking to Mr. Normand about; correct? A Q I assume so. Let's take a look at it. The heading first is

Intellectual Property. A Q Yes.

Do you see that?

So this is a disclosure in the APA by the seller, Novell,

of its intellectual property; correct? A Q Yes. And then Attachment C to the schedule contains the most

current listing of pending and issued applications for

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trademarks covering products of the business. that? A Q Yes.

Do you see

And then Attachment D to the schedule contains a listing

of pending and issued applications for patents covering products of the business. A Q Yes. And then, finally, the attachment that Mr. Normand asked Do you see that?

you about was Attachment E, and it says attachment E of this schedule contained a listing of seller's copyright registrations covering products relating to the business. you see that? A Q Yes. So this is -- in the APA this is Novell's description of Do

intellectual property; correct? A Q Yes. And you've done asset purchase agreements, and you know

in an asset purchase agreement there will be a section of the agreement that says what gets transferred and what does not get transferred; correct? A Q Yes. Why don't we go to Schedule -- or Section 1.1(b) of the And Schedule 1.1(b) of the Asset

Asset Purchase Agreement.

Purchase Agreement, sir, you understand is the section of the Asset Purchase Agreement that says what assets were excluded;

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correct? A Q Correct. So, in other words, if we take a look at Roman Numeral V

of the excluded asset section, it says what intellectual property is excluded from a deal that is not transferred; right? A Q Correct. And so what this is is this is a subset of what is

disclosed later on in those disclosures we looked at, and this is saying what is not going in the transaction; right? A Q Correct. And what the deal was was intellectual property,

including all copyrights and trademarks, except for trademarks Unix and UnixWare were not being transferred; right? A It makes no since to use this language because it's been This language does not exist in the APA.

replaced. Q

Well, this was the language that was approved by the

Board of Directors; correct? A But it does not exist in the APA. It was -- it was

replaced with wording in Amendment 2. Q My question was was this wording, "All copyrights and

trademarks, except for the trademarks Unix and UnixWare," as intellectual property excluded from the Asset Purchase Agreement, was that approved by the Novell Board of directors?

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A Q

I would assume so. And you also see there's all patents are excluded;

correct? A Yes, but I don't believe -- AT&T didn't transfer any Unix

patents to Novell, so I don't think Novell had any patents to transfer. Q So these lists that we see, the disclosure lists that we

see at the end of the agreement that list patents and patent applications and that list a bunch of copyrights, that's simply a list of what exists, but you have to look to the excluded assets section to see -- and the included assets section to see what actually went and what actually did not go in the transaction; right? A Q That would be true. So now if we could take a look at -- well, let me --

first of all, you mentioned Mr. Burt Levine. If we could bring up his photograph, please. Is that the Burt Levine that you were referring to as the one that gave you these letters that went to customers? A Q Yes. And were you aware that Mr. Levine was an in-house lawyer

at Novell during 1995? A Q Yes. And were you aware that Mr. Levine actually reviewed and

edited the included and excluded asset schedules of the APA?

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Were you aware of that? A Q I didn't know that. And were you aware that Mr. Levine approved and agreed

with those included and excluded asset sections, including the section that excluded copyrights? A Q No. Let's go back to Schedule E if we could. Schedule E, Are you aware of that?

yes -- Attachment E.

Now, this is a list that goes on for

one, two, three, four, five, six, seven, eight pages; is that right? A Okay. I'm only looking at the section of one page -(voices overlapping) THE COURT: talk over each other. Mr. Acker, if you'd ask your question again. MR. ACKER: Q (BY MR. ACKER) A Q Yes. And you've looked at the APA, and you and Mr. Normand Yeah, I'll ask him another question. Just a second. Just a second. Don't

You see in Attachment E it says page 1 of 8?

have spent time looking at this together; correct? A Q Correct. And when you walk through these eight pages of these

copyrights, the first seven-and-a-half pages are all manuals, instruction guides; right? A Okay.

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Q A Q A Q

It's not code; right? Okay. Do you agree with that? I would agree with that. So the only code listed, again on this disclosure, is in If we go to page -Highlight You want to look at it?

the last four items; right? I'm sorry, Thomas. those last four.

Go to page eight, please.

And do you know what year that code was written? A Q I'd say the late 70's. And there was many, many improved or added on or new

versions of Unix after the 70's before the Asset Purchase Agreement in 1995; correct? A Q A Q Absolutely. And none of those are listed in this schedule; right? No, they're not. And in fact these copyright registrations -- if I can

hand those back to you, sir -487, if you could bring up 487, please. And the first page you see there's a section there in -three in the front page? A Q A Q Yes. The code is written in 1978; right? Yes. And the named owner of the registration or the copyright

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in this document that was being testified about was AT&T; right? A Q Yes. And SCO or Santa Cruz or Caldera never made any effort to

change this; right? A Q I don't know. And all of that code that was improved on, the new Unix

code that was written between 1978 and 1995, that's not anywhere in this attachment to the APA; correct? A Q Correct. And similarly, if you go to -- and I'm sorry. It's 488,

the next copyright registration. code was written? A Q A Q A Q Yes. 1978? Yes.

You see the date that that

And you see also that the name of the registrant is AT&T? Yes. Now, when there was a switch, when the Asset Purchase

Agreement was finalized in the end of '95 and you moved from Novell to Santa Cruz, you actually stayed in the same physical building in New Jersey; right? A Q Correct. So, in other words, it wasn't as though the moving trucks

came and all of the folks, former Novell people who are now

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becoming Santa Cruz people, got moved to another location. You actually stayed in the same building; right? A Q For a period of time, yes. And if you take a look actually -- if we could bring up So this letter was the letter that you And this was a form

SCO exhibit 580.

talked about that Mr. Levine gave to you. letter, wasn't it? A Q In other words --

Pretty much so, yes. So you talked about thousands of these letters going out,

but this same paragraph was in every single letter; right? A Well, this letter was a little different because it was

addressing a specific agreement that needed approval, but, yes, there was a form letter that went to standard licensees. Q And if you take a look at -- this is March 25th of '96,

so about four months after the -- or three months after the close of the deal, the address for -- well, I'm sorry, wrong letter. Give me a minute.

Bring up SCO -- or rather Novell H6, please. Now, H6 is a letter that was sent in March of 1996 from SCO to Novell. A Q Yes. And do you see the address at the top for SCO and the Do you see that?

address at the top for Novell, same address; right? A Q Yes. And so how was it that you -- did you simply move

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those -- the Santa Cruz people over to cubicles on the right and the Novell people to cubicles on the left, or did you all just keep sitting in the same seats? A I think for the most part we just kept staying in the They did firewalls on I.P. computer systems,

same offices.

but if I remember, we pretty much stayed in the same offices. THE COURT: MR. ACKER: Are you going to offer this exhibit? I'm going to ask him about it. Yeah,

let me back up and I'll come back to this one. THE COURT: MR. ACKER: Q (By MR. ACKER) All right. Take that down.

Now, you -- there was some testimony you

gave to Mr. Normand about HP, Sun and IBM being able to develop their own flavors of Unix. testimony? A Q Yes. And what you said was that if and because HP, Sun and IBM Do you recall that

had a license, they had the ability to take Unix code and build on top of it and develop their own flavor of Unix; right? A Q Yes. And they did that, but they did not have ownership of the

copyrights; right? A Well, yes.

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Q

And so it's true, isn't it, that you certainly can have

the rights to develop your own version of Unix on top of old Unix and not own the copyrights; correct? A Q A Q That's true. There's nothing surprising about that; correct? No. Now, you also mentioned that Novell engineers changed

some of the language on the copyrights after the APA; is that right? A In the status meeting at one of the transition meetings

it was reported that the Novell engineers were changing -were changing the copyrights from Novell to Santa Cruz. Q Did you ever actually look at the code and see what those

changes were? A Q No. Let me show you what has been marked as SCO 641. THE COURT: MR. ACKER: Q (BY MR. ACKER) in the document. 641? Yes, Your Honor.

I'm going to ask you about the third page in Now, if you take a look at Roman -- or

number six of what we've -- on the third page of what has been marked as SCO 641, you see there's -- what is listed there is changes that were made to the Unix code after the APA; correct? MR. NORMAND: Your Honor, the document is not in

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evidence.

We shouldn't be speaking to the substance of it. MR. ACKER: I'm just trying to lay a foundation if

he even knows what actually got changed or what didn't get changed. THE COURT: Could you perhaps have him look at it.

And try to avoid referencing the content of the document, Mr. Acker. Q (BY MR. ACKER) Well, you're saying that you didn't actually

see what changes were made; correct? A Q That's correct. And so you don't know that in fact what happened is that

the engineers left on for Novell the ownership from 1984 to 1995. A Q You don't know that; right? I have no idea what was changed. And you don't know that the only time Santa Cruz is

mentioned as the owner of any copyrights is for UnixWare with a registration after the APA of 1996? that; right? A Q No, I don't. And as far as you know, that's exactly what happened is You just don't know

that the engineers left the Novell registration for the period before the APA, and they only changed it for UnixWare after the APA. A No. You simply don't know that; right? The only thing I know about it is when they said

they were changing the copyrights, I asked if they were going

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back into old, old versions of Unix, and they said no, they only do what is on a current software product. I know about it. Q But in terms of what dates were put on there for who So that's all

owned -- who owned the old Unix code from 1984 to 1995, you don't know that the engineers left Novell on, do you? A Q I have no idea. Now, between the period of the end of December of 1995

and October of 1996, that ten month period, you were at Santa Cruz; correct? A Q Yes. And Santa Cruz was issuing licenses during that period,

during that ten month period; correct? A Q Correct. Let me show you L7. Have you had a chance to look at

what we've marked as Novell Exhibit L7? A Q Yes. And the first agreement is a Supplement and Licensing

Order Form that was executed by SCO in March of 1996; correct? A Q Yes. And this is a license agreement in which Unix is being

licensed in March of 1996; correct? A Q Correct. And then if you go back into the document, do you see

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there's a second licensing agreement in May of 1996? A I've got -- where do you want me to look? Up on the

screen I've got a June 25, '96. Q Let me show it to you. THE COURT: Mr. Acker, you need to know that the L7

identified in the list you gave us is not the same as the one you're referring to. MR. ACKER: THE COURT: We can correct that easily. We'll fix that. That's based on the assumption you

ultimately will be asking for submission, which you have not been doing, so I'm not going to worry about it until you do. Q (BY MR. ACKER) Do you see that, sir, May 10th Software

License Agreement, SCO for Unix System V, release 4.0? A Q Yes. These were license agreements that were executed by SCO

in March and May of 1996; correct? A Yes. MR. ACKER: Honor. MR. ACKER: THE COURT: MR. ACKER: THE COURT: No objection, Your Honor. L7 will be admitted. And we may need to amend that. But just so that I -- for our records, You said that they were I move for admission of L7, Your

these are license agreements. dated.

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MR. ACKER:

There's two of them, Your Honor.

One is

dated March of 1996 and one is dated May of 1996, executed by SCO licensing Unix software. THE COURT: My dilemma is that the one -- the first

sheet of mine is the May 1996. MR. ACKER: THE COURT: Right. There's a subsequent one in here

MR. ACKER:

No, I'm sorry, you're right.

They're

The Court:

Okay.

That was why I was confused.

So

license agreements from May of 1996 is how we can identify them; correct? MR. ACKER: THE COURT: Yes, Your Honor. All right. And they're not objected to,

so they will be admitted. (Defendant's Exhibit L7 received in evidence) Q (BY MR. ACKER) So it was true that after you -- the APA was

executed and you went to work for Santa Cruz, you and your team were issuing license agreements during the period of time from December of '95 until October of '95; correct? A Q Yes. And did anybody during that period of time from Novell You don't have the rights to

say, "Hey, you can't do that. issue license agreements"?

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A Q

No. Did anyone during that period of time from December of

'95 until October of '95 say, "You don't have the rights -you, Santa Cruz, don't have the rights to build a new version of UnixWare on top of the old Unix code"? A Well, Novell knew we were doing this because this is a This is a read only right to look at the We continued to do them So I

reference license. source code. at Santa Cruz.

We did them at Novell.

This was ordinary course of business.

don't see why I should have had to have asked Novell for permission to do this. Q And exactly right. That's my point. Novell knew you

were doing this, issuing licenses between December of '95 and October of '96, and no one said, "Hey, you can't do that, Mr. Broderick," correct? A Q A Correct. Because that was your rights under the APA; correct? Correct. We owned the technology. We could do with it

what we wanted. Q Why don't we take a look at Section 4.16(a) of the APA.

Now, this is -- Section 4.16(a) is the section regarding the royalties that you were to collect, you being Santa Cruz, were to collect and funnel 95 percent back to Novell; correct? A Q Yes. And it's your -- as I heard your testimony, was that your

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belief was that the only royalties that had to go back to Novell were royalties for the binary licenses; is that right? A Q That's -- that's correct. Now, can you show me where in 4.16(a) it says that the

obligation to pay back to Novell 95 percent of the SVRX revenue is limited to binary licenses? A That's covered in Amendment No. 1 where they clarify --

they realized when they did this that they had forgotten about the source code and support fees. So Amendment 1 was executed

at the time of closing, and in Amendment 1 they carve out source code right to use fees, support fees, and they carve out everything, leaving only binary royalties. Q But the deal that was approved by the Novell Board of

Directors, you'll agree with me that 4.16(a) doesn't say anything about limiting it to binary code or binary licenses; right? A You have to know the contract's value. When I look at a

contract, I look at the whole contract, including amendments. So when I look at the APA, in my mind I have to consider all the amendments. Q Ane we'll take a look at that. But you actually wrote

letters to people describing this -- these obligations; correct? Letters were written by SCO describing what their

Obligations were under 4.16(a); correct?

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A

I -- we had some dealings.

I think there was an issue

with Unisys and probably with Cray and SGI where I sent a letter to Novell saying under the APA we need to talk about this. Q And I apologize. I don't think you wrote it, but someone If you'd take a look at H6.

I think at SCO did. A Q Okay.

Now, this is a letter written on March 12, 1996 by

Mr. James -- is it Machi? A Q A Jim Machi? Jim Machi? What was his job in '96 at Santa Cruz?

He was a Product Manager. MR. ACKER: MR. NORMAND: THE COURT: Your Honor, I move for admission of H6. No objection, Your Honor. It will be admitted.

(Defendant's Exhibit H6 received in evidence) Q (BY MR. ACKER) And if you take a look again at the top, you

see we have the same addresses, that Novell is residing in the same location as Santa Cruz; correct? A Q Yes. And if you take a look, if we could highlight the first

paragraph down to the end of the parenthetical, you see that -- is it Machi, Mr. Machi? A Q Machi. That Mr. Machi wrote, just three months after the APA was

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executed, he wrote, "Under the December 6, 1995 Asset Purchase Agreement, APA, between SCO and Novell, SCO has an obligation to collect and pass through to Novell certain SVRX royalties that are due under SVRX licenses listed in item six of schedule 1.1(a) and assigned to SCO under the APA. Such

royalties are payments of the type that prior to December 6, 1995 accrued to Novell under standard customer licensing agreements" -- and then he gives two examples of those sorts of agreements. And he writes, "For example, source code and Do you see that?

sublicensing agreements". A Q Yes.

And so at least Mr. Machi believed as of March of 1996

that what Santa Cruz was obligated to pass through to Novell was fees from both binary licenses and source code licenses; correct? A Up to December 6, 1995 I think -- it was up to the Novell got all the fees associated with the After the business closed,

closing date.

business up to the closing date.

they only got the binary royalties. Q No. But what he says is that under the Asset Purchase

Agreement, those royalties were source code royalties and binary royalties that used to go -- that used to be -- go to -- that Novell collected before the APA, now Santa Cruz collects and gives 95 percent back to Novell? A Not source code.

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Q A

Well, he says source code, doesn't he? Well, he's talking about such source code royalties are

payments of the type prior to December 6, 1995 accrued to Novell under standard licenses, source code and sublicensing. If you're trying to say that he's saying he's getting -they're getting the source code fees, he's wrong, and we never gave Novell source code fees and they never asked for them. Q So three months after the APA was signed in December of

1995 and it went into effect, Mr. Machi believed that 4.16(a) required Santa Cruz to pass through the source code royalties; correct? A I don't know if he believed that, but he was a product

manager, and -Q A Q That's what he wrote; right? That's what he wrote. Take a look at the APA again, 4.16(b). Now, you said it

in direct, and I think it's accurate, that you, SCO, could do nothing that would jeopardize the revenue stream for these SVRX licenses; is that correct? right? A Q That's correct. And you also said it was essentially money in the bank Do I have that testimony

for Novell; correct? A Q That's correct. So after December of '95, after the APA went into effect,

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Santa Cruz, and subsequently SCO, the plaintiff in this case, could take no action that jeopardized that SVRX royalty stream back to Novell; correct? A Yeah. What we were told is as -- as of the closing, if a

licensee was paying royalties that were going to Novell, we had to continue to collect those royalties and Novell got them. We couldn't do anything. That's the example I gave

about going to a licensee and saying, "You're paying a hundred dollars a copy for a royalty. we'll only charge you 50." that. Q But you'll agree with me that what your testimony was is Sign a license with us and

We couldn't do something like

that first Santa Cruz and then SCO couldn't take any actions that would impact or affect that money in the bank for Novell from those SVRX licenses; correct? A Yeah. For the binary royalties they were receiving, we

couldn't screw that up. Q Well, I understand we have a difference of opinion

regarding binary and source code, but it's true, isn't it, that you couldn't take any actions, you SCO, Santa Cruz, couldn't take any actions that affected that royalty stream for SVRX licenses; right? A Q True. And if you take a look at 4.16(b), the language of the

contract regarding this waiver provision, there's no language

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in there that limits this waiver provision simply to binary royalties; right? A Q Yeah, but you only have to consider the amendments. But in the contract approved by Novell Board of

Directors, it doesn't say anything about binary royalties; right? A No, it doesn't. MR. ACKER: That's why it was amended. I don't have anything else. REDIRECT EXAMINATION BY MR. NORMAND: Q A Q A Mr. Broderick, you testified you're a contracts guy? I'm a contracts guy. And what does that mean exactly? I work contracts and licensing for the SCO group. I've

been doing it since Novell purchased us from U.S.L.

If a

customer wants to license a source code product, get rights to distribute a product that we have, or if we want to license a third-party product, some company may have developed something that we'd like to use in our product, I work with them. Q Have you spent a lot of time thinking about how contracts

operate in the course of your work? A Q Close to 20 years. Now, as a contracts guy, is it your view that perfect

clarity in a contract is always the goal? A That is the goal.

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Q A Q A Q A Q

Is perfect clarity in a contract always achieved? No, it is not. In your experience are contracts ever ambiguous? Yes, they are. In your experience are contracts ever amended? All the time. In your experience, when a contract is amended, is the

amended language of the contract, the old language, relevant to you anymore? A The old language does not exist anymore. When we amend

something, the old language is gone and the new language goes in. In fact what I do in a lot of cases, if we have a

contract that we amend, I will -- we have all the contracts in word processing. word processing. What I'll do is I'll take that contract in If we amend it, I will go in and put the

amended language in it so I'm sure to make sure I'm always looking at the current state of the contract, the original contract with the amended language. MR. NORMAND: Numeral V. Q (BY MR. NORMAND) Do you see this language, Mr. Broderick, Mr. Calvin, could you bring up Roman

that Mr. Acker spent several minutes asking you about? A Q A Yes, I do. Do you know whether this language has been amended? That language was replaced.

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Q

And in your experience as a contracts manager in

reviewing the APA, would this language be relevant to you anymore? A Q A Not at all. It's been replaced.

What language would you look to in your experience? The amended language in the -- the language that's

included in the amendment. Q A Q Which amendment is that? This was replaced in Amendment No. 2. Now, in your experience in working with contracts, has

there ever arisen an occasion where if you interpret a contract very literally, you can create an absurd outcome? A Q Oh, I can come up with some really absurd outcomes. Now, in your experience, if you read a contract

literally, and it would create an absurd outcome from reading it literally, do you take the language literally? MR. ACKER: opinion, Your Honor. MR. NORMAND: Your Honor, this goes to the first ten Objection. That calls for a legal

minutes of Mr. Acker's examination of Mr. Broderick as a contracts guy. THE COURT: Q (BY MR. NORMAND) I'll overrule the objection. Are there times, Mr. Broderick, when

interpreting a contract literally would create an absurd result?

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A Q

Yes. And when that happens in your experience, how would you

go about determining the intent of the parties under the contract? A I would talk to the parties -- both parties of the

contract, find out what they really intended the contract to be, and then we would do an official amendment to the contract to make it clear to everybody. Q In your experience, when a contract is ambiguous, would

you look to the way the parties had performed under the contract as relevant? A Absolutely. MR. NORMAND: Q (BY MR. NORMAND) Mr. Calvin, can you bring up 4.16(b).

Mr. Broderick, do you remember being asked

about this literal language in 4.16(b) of the APA? A Q Yes. Do you have an understanding as to whether this language

was subsequently amended? A Q Yes, I believe it was. And if it were amended, would this language be relevant

to you anymore in your work as a contracts guy? A Q No. I'd look at the amended language.

Now, Mr. Acker asked you about the types of agreements I think they

that you've overseen in the course of your work.

included the software agreement, sublicensing agreement, and

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what you described as the product license schedules. recall that -A Q Yes. -- series of questions and answers?

Do you

In your experience

in your time at Santa Cruz and SCO, what is an SVRX license? A Q A It's -How would you use that term? A product license. Anytime -- anybody, whether we were

at USL, Novell, Santa Cruz Operation or SCO, if a salesperson was dealing with a customer and the customer wanted to go to a latest release, he would call us up and say they need a license for "X" product. If a -- if the finance people wanted

to check the royalties that a customer was supposed to pay, they would call us up and say, "Can I get a copy of this company's license for "X" product?" And that would be the

product schedule because that's what the royalties are. MR. NORMAND: schedule 1.1(a). Mr. Calvin, could you bring up

Go to the next page, and the next page.

Now, could you bring up, Mr. Calvin, the top half. Q (BY MR. NORMAND) Mr. Broderick, do you recall what purpose

Schedule 1.1(a) of the APA served? A It was a listing of all the assets that were going to

Santa Cruz. Q Now, do you see item L in this description of the list of

assets that are being transferred?

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A Q

Yes. And it says, "Software and sublicensing agreements. This

includes the source code and sublicensing agreements that seller has with its OEM, end user and educational customers. The total number of these agreements is approximately 30,000." Do you see that language? A Yes. MR. NORMAND: item six. And now, Mr. Calvin, can you bring out And could you put on

I think it's at the bottom.

top of that the paragraph we just read? Q (BY MR. NORMAND) Now, Mr. Broderick, in this asset schedule

the APA separately identifies in item six SVRX licenses; is that right? A Q That's correct. Now, as a contracts guy, in your experience, would there Would

be any reason to make these two provisions redundant?

there be any reason to think that SVRX licenses refers to something that has already been identified in the asset schedule? A Well, they're different. Up in L, software and

sublicense agreement, that's why I talked about the umbrella agreements that really cover the general terms and protections of the company for our software. And item six here, the SVRX

licenses, those are the actual products that we will grant licenses for.

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Q

Now, Mr. Broderick, we're going to put on the screen -Mr. Calvin, let's go to Exhibit 168. Is this document, Mr. Broderick, among the ones that made

their way into your files and under your purview? A Q A Yes, I'm aware of this. And you've seen this document before, of course? Yes. MR. NORMAND: into evidence. MR. ACKER: THE COURT: No objection. It will be admitted. Your Honor, I move SCO Exhibit 168

(Plaintiff's Exhibit 168 received in evidence) MR. NORMAND: And, Mr. Calvin, can we pull out the

paragraph two in the middle of the page. Q (By MR. NORMAND) document? A This document relates to a binary royalty buyout by Now, Mr. Broderick, what is this

Hewlett Packard. Q And this language states in paragraph two quote, Novell retained or has acquired all rights to

"Purpose:

outstanding and future HP binary code royalty and licensee fee payments, but not source code royalties." language? A Q Yes. Now, was it your understanding over the course of your Do you see that

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work at Santa Cruz and SCO that those companies had any obligations to pay source code royalties to Novell? A No, they didn't. And Novell had a number of audits that

they performed to the royalty payments at Santa Cruz and the SCO group. business. The people doing the audits were aware of our They knew we were doing source code licensing, and All

not once did they say, "But what about the source code?" they did was review the binary royalty reports. Q

Now, Mr. Acker asked you some questions about the Sun and Do you recall

Microsoft agreements that he showed you. that? A Q Yes.

Do you know whether those were part of the SCOsource

program? A Q A Yes, they were. And did you negotiate those contracts? No. I had -- I didn't really have anything to do with The Microsoft agreement, I participated in

the Sun agreement.

some reviews of the documents as they were negotiating them. Q Do you have any view or understanding as to the

individual value of the individual components of those agreements? A No, I don't, except for the fact that some of the values The values that anybody

are highlighted in the agreement. placed on them, I'm not aware of.

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Q

Now, as a matter of practice in 2003 and 2004, around the

time these contracts were executed, did SCO license all of the old Unix source code with the most current version of UnixWare? A The most current -- UnixWare was licensed with prior

products. Q A What are prior products? Prior products are the prior -- it's the -- sort of the

family tree or hierarchy of all of the development of the products through time. The example I used, I gave a house two

bedrooms and a bathroom, and you add a room and add a bathroom, and you end up down the road with UnixWare. They listed prior products. But when we came to UnixWare

7, I believe they took a lot of the older prior products out and only included UnixWare because the product people at the time made the decision that they wanted the customers to focus on UnixWare and not look at the prior stuff. Q Now, in 2003 and 2004, when SCO licensed any prior

products with any UnixWare product, did they charge the customer anything extra for those prior products? A Q No. You were asked some questions about the copyright Do you recall

registration certificates that we discussed. that?

Do you know whether all of the copyrights in the Unix

computer programs are registered, whether certificates exist

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for all of the copyrights in those programs? A Q What I've been told is they're not all registered. And so in your view do certificates exist for all of the

computer programs that are identified in the APA? MR. ACKER: Your Honor, That calls for speculation

given his prior answer. MR. NORMAND: Well, he testified to his

understanding, and this is an issue that's come up -THE COURT: MR. ACKER: Q (BY MR. NORMAND) I'll sustain the objection. Speculation. And who told you that copyright

registration certificates do not exist for all of the computer programs for Unix and UnixWare? A Q I believe it was Ryan Tibbitts. Now, as to the older computer programs that have been Who has

registered, who holds the copyright certificates? physical possession of them? A Q The SCO group.

You were asked about HP, Sun and IBM, and you were asked

the question whether Santa Cruz and SCO have been able to operate their Unix businesses in the years after the APA. you recall those questions? A Q Yes. And you were asked whether they quote, "Needed the Do you recall that? Do

copyrights to have done that."

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A Q

Yes. Now, I want to ask you about your understanding of how When you're involved in your work at Santa

this would work.

Cruz and negotiating contracts, does a copyright registration number play any particular role in any of the work you do? A Q No. Do you look to see if there are copyright registration

numbers and contracts that they're executing? A Q No. To your understanding, do programmers, when they're

making copy of source code, do they have to enter a copyright registration number or some sort of password? A Q Not my knowledge. To your knowledge, can a programmer copy the source code

without knowing what the corresponding copyright registration number is? A Q I would assume so. So is it your testimony that in the 10 or 15 years after

the APA, programmers have been physically able to copy the source code, and you have been physically able to sign contracts that license the source code? MR. ACKER: THE COURT: MR. NORMAND: THE COURT: Objection, leading, Your Honor. Overruled. It's an open-ended question. Overruled.

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MR. NORMAND: THE COURT: The Witness:

With a lot built in. Why don't you try it again. Thank you.

Q (BY MR. NORMAND) Have you been physically able to sign contracts with third parties since the execution of the APA? A Q A Q Yes. Has anything stopped you from doing that? No. When you do that, in the last 15 years has it been your

belief and understanding that Santa Cruz and SCO owns the Unix copyrights? A Well, yes. In our agreements we provide an

indemnification for infringement of a third-party product. Somebody licensing our software, we would -- we would give them an indemnification. So if somebody else came along and

said, "The product you're using infringes this, and I'm suing you for $1,000,000," we indemnify them and say, "Since we've licensed you the software, we'll protect you from that." We

wouldn't protect them from that unless we owned the software. And the copyright -- in software a copyright is how you own the software. Q Let me ask you another question, Mr. Broderick. I think

we spoke earlier about the fact that IBM has a Unix license with what is now SCO; is that right? A Correct.

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Q

And in your view as a contracts guy, if IBM were to give

away the Unix code that it licensed from SCO and it gave it away to a third party, as a contracts guy do you think you'd have an ability to sue that third party for breach of contract? A Q I'd have to sue IBM. What could you do as against that third party in your

experience as a contracts guy? A I think the only thing you could do is get an injunction

against them using the software. Q And how would you do that if you didn't have a contract

with them? A If somebody is using something that belongs to you and The only recourse we have

they're not authorized to use it.

would be against a person with a contract. Q And do you have a view as to whether if you own the

copyrights you would have any recourse against that third party? A We have ownership of the product, therefore, we could Copyrights is how you own a -- how you show

press the issue.

your ownership and protect your software is by copyright. Q Now, in your view is the ability to enforce prescriptions

against third parties integral to the operation of SCO's business? A Oh, absolutely. If we couldn't protect our software,

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we'd be out of business.

You know, if we couldn't protect our

software, the first person that we licensed the software could go into business for themselves and we'd be out of business. We have to be able to protect our software, and you do that through copyrights. it. MR. NORMAND: Your Honor, I had mentioned that I That's how all of the companies have done

wanted to move into evidence all of the copyright registration certificates that we had identified. I can do that now. It's

a fairly long list, or we can do it however Your Honor pleases. THE COURT: MR. ACKER: Have you discussed this with -We're going to have to take a look at

each of those, so maybe we can do it over a break. MR. NORMAND: THE COURT: MR. NORMAND: We'll do it that way, Your Honor. All right. I have no further questions. RECROSS-EXAMINATION BY MR. ACKER: Q Mr. Broderick, in response to Mr. Normand's questions you

said that sometimes, and in your -- your opinion is that the language of the APA was ambiguous. A Q Did I hear that right?

There's language in the APA that's confusing. And when language is confusing, it's the case, isn't it,

that two reasonably minded people can take a look at the

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language and come to different opinions about what it means; correct? A Q Yes, they could. And so two people might look at language that's

ambiguous, and one person might say copyright's transferred, and another person might look at that language and say the copyrights do not transfer; correct? A They could, but that wasn't the case. They looked at the

copyrights transferring and executed Amendment 2, which transferred the copyrights. Q And my question was if the language is ambiguous, two

reasonably minded people can look at the same language and come to different conclusions; correct? A If they take all the facts into consideration, that's a

possibility. MR. ACKER: THE COURT: MR. NORMAND: MR. ACKER: THE COURT: That's all I have, Your Honor. May this witness be excused, counsel? Yes, Your Honor. Yes, Your Honor. Mr. Broderick, that means you do not You may go

need to worry about being recalled as a witness. about your business.

But I do have to instruct you to please

not discuss your testimony with any other witness in this case or in the presence of any other witness or in any other way communicate the nature of your testimony broadly. All right?

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MR. NORMAND:

Your Honor, I hope to reach agreement

with Novell on the issue, but I suppose I should mention that if we need to have Mr. Broderick technically on the stand to get in the remaining registration certificates, maybe we shouldn't let him go. THE COURT: That means you may come back after all. No, that's not true.

Forget everything I just said. THE WITNESS:

Does that mean I get to sit out there

or I have to go back in the box? THE COURT: I think you ought to stick around until

at least the end of the next break, all right, which will be approximately an hour from now. MR. NORMAND: THE COURT: THE WITNESS: THE COURT: I think his question, Your Honor -Whether he can stay in the courtroom? Can I watch or do I go in the closet? Counsel, do you oppose if he stays in

the courtroom, Mr. Acker? MR. ACKER: THE COURT: No, Your Honor. You may stay here if you would like.

But, again, the instructions about discussing your testimony with any other witness or in the presence of any other witness -THE WITNESS: THE COURT: next hour, okay? No problem. Thank you very much.

-- Survives, whatever you may do in the

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THE WITNESS: THE COURT: MR. SINGER:

Thank you. Go ahead, Mr. Singer. Your Honor, our next witness is Ty

The Clerk:

Mr. Mattingly, do you want to come

forward and I'll swear you in. THE WITNESS: Sure.

(Ty Mattingly, Plaintiff's witness, sworn) The Clerk: Thank you. Please be seated.

And if you would please state and spell your name for the court. THE WITNESS: M-A-T-T-I-N-G-L-Y. THE COURT: Thank you. DIRECT EXAMINATION BY MR. SINGER: Q Good morning, Mr. Mattingly. I'm Stuart Singer, one of Would you briefly describe Ty D. Mattingly. It's T-Y, D.,

the attorneys for the SCO group. your educational background. A Sure.

Graduated, and came up to Brigham young university

in 1980, and graduated from B.Y.U. in '87 with a degree out of the college of Engineering in the design engineering world. And then took a job with IBM after that, and spent 14 months going through IBM's advanced education program, where basically spent 14 months learning about computers and

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information technology, etcetera. Q A Q A And after that? Educationally? In business? You know, on and off would go to postgraduate types of

courses, education. Q Could you briefly summarize where you went to work after

school, after college. A Sure. I worked for IBM for just under five years, and

then left and joined Novell in 1992, about February of '92, and then worked with Novell until 1987. Q A Q 1987 or '97? '97. Can you describe what you worked at after you left Novell

in 1997? A Sure. I started some companies up that were in the

consulting world, and built some internet types of businesses there that we later sold. And then I've just been an investor

since about 19 -- excuse me -- since about 2004. Q A Q Has your investments focused on the technology business? Correct. Was one of the companies that you invested in sold to SCO

group? A Q It was. Do you recall when that was?

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A

I don't recall exactly what the time frame was, but it

was a company by the name of Voltis, and it was a real small company, very small transaction. Q As a result did you receive certain stock in the SCO

group? A Q A Q A Q I did. Do you know approximately how much? It was a little more than 9,000 shares. And do you still have it? I do. Are you good friends with certain members of the SCO

group? A Q A I am. Such as Mr. Tibbitts? Ryan and I met in 1980. How do you know Mr. Tibbitts? We were teammates at B.Y.U. And Ryan was an I

attended B.Y.U. on a football scholarship.

upperclassman and one of my teammates, so I have known him for 30 years. Q A In fact were you an All-American at B.Y.U.? Well, I was an Academic All-American, so it's a little

bit of a combination of the school room as well as the playing field. Q A Q Do you also have good friends at Novell? Sure. And does that include David Bradford, General Counsel?

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A

Yeah.

David Bradford is the person that I approached

when I wanted to leave Novell -- excuse me -- IBM and go to Novell, and he actually set up my interviews with Jim Bills back in those days and really helped me get into Novell and mentored me a lot through Novell. Q A Q A Q Let's go back to the time when you joined Novell. I also know Dana Russell over there, who is their C.F.O. You're friends with Mr. Russell as well? Yes. Going back to the time when you joined Novell, can you

describe your responsibilities? A Sure. When I first joined Novell, I was a product

manager working in the marketing group. Q A Did your responsibilities change at some point? Yeah. After about a year Ray Norda, who was the Chairman So

and CEO, grabbed me and asked me to start working for him. I spent the next couple of years working in the Chairman's Office on various projects. Q When Robert Frankenberg became CEO, did you continue in

that role working closely with the Chairman? A Yes, I had. I had the same role and stayed working with

Bob Frankenberg for probably a year-and-a-half. Q A Was that your position at Novell in 1995? No. I'd left working for the Chairman's Office and took

a role as Vice-President of Corporate Development Strategic

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Relationships. Q A Q Who did you report to at that time? Duff Thompson. Were you involved in the sale of the Unix business to

Santa Cruz in 1995? A Q Yes. Do you recall who the principal negotiators were in that

transaction? A Sure. The principal negotiators on the ground and living

in California for, you know, two months were myself and Ed Chatlos, with me having the relationship and kind of the high level strategy aspects of it, and Ed Chatlos, who was very detailed oriented, assigned from the business unit, to work out all of the details. Q Did you attend negotiation sessions during those two

months that you were living in California? A Q A Q Sure, daily. Was that the reason you were in California? Correct. How personally involved was Mr. Bradford, the General

Counsel, in the negotiations? A Well, Dave was the General Counsel of Novell at the time,

but he was not involved on the daily basis and was not on the ground in California. Q Are you familiar with a gentleman named Tor Braham, who

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is an attorney from the Wilson Sonsini firm? A Q A Sure. Tor did a lot of work for us, very good guy.

How involved was Mr. Braham in the negotiations? You know, I don't recall that Tor was that involved on When we finished coming to

the ground with the negotiations.

a meeting of the minds, then docs were turned over, and that's when the legal team took over for the last period of time, and Tor would have been a key component in that. Q When the lawyers came in to document the transaction, had

the principal business terms of the deal been agreed upon? A Q Yes. What was your Understanding from the negotiations as to

how much of the Unix business was being sold? A Well, it was the majority of it. I mean we sold the

business.

We acquired it from USL, and we were selling the

business to accomplish some very high level strategic objectives for Novell and hopefully for the greater industry. Q A What was not being sold? Oh, certain functions, like SCO was acting as Novell's

agent to collect some of the existing SVRX binary royalties, and so that was retained, and SCO acted as the agent to collect it, and I think the distribution was 95/5 towards Novell. Q Other than that, was the remainder of the business, the

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Unix and UnixWare business, sold -A Q A Q Absolutely. -- To Santa Cruz? Absolutely. During the months of negotiations that you attended, did

anyone from Novell ever say that we are selling the Unix business but we are retaining the copyrights? A Q No. Would that have been consistent with your understanding

of the deal which you negotiated, holding back the copyrights? A Holding back the copyrights would not have been

consistent. Q Let's advance to the time of the Board of Directors What

Meeting to approve the sale in September of 1995.

responsibility, Mr. Mattingly, did you have in connection with Board of Directors meetings at Novell? A Well, prior to that time I had attended all of the At

meetings when I worked for Ray Norda and Bob Frankenberg.

this time where I worked for Duff Thompson I did not go to all of the Board meetings, but I did present at a number of them when they involved transactions that I was involved with. Q Who was responsible for preparing Board materials for the

Board of Directors to review prior to the meeting? A Dave Bradford as the General Counsel and Corporate

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Secretary usually prepared and presented all of that information. Q Like to show you exhibit 570. It's on the screen. I'm

going to show you a hard copy.

Can you identify exhibit 570,

Mr. Mattingly, as a memorandum sent to the Novell Board of Directors from Mr. Bradford on September 15, 1995? A Q Yes. And was this in connection with the Santa Cruz

transaction that we've been discussing? A Q A Yes. Did you receive a copy of this yourself? I did. MR. SINGER: MR. BRENNAN: THE COURT: I move the admission of exhibit 570. No objection, Your Honor. It will be admitted.

(Plaintiff's Exhibit 570 received in evidence) MR. BRENNAN: Your Honor, just one point. There are

some highlights that have been apparently -- excuse me -apparently placed on the document, and we don't have the source of that. Perhaps I should withhold the acknowledgment

of admission until we have an establishment as to the source of that. THE COURT: I think these traditionally, as I've

observed, these are the things that will be highlighted now, but the document that will go to the jury will not include

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these highlights; is that correct? MR. SINGER: and will be removed. THE COURT: MR. BRENNAN: All right. Your honor, just so we're clear, the That's correct. These can be removed

submission of the exhibit has the highlights, so -THE COURT: Again, the one I have on my computer

also has those highlights, as have others. Again, I will say to you, Mr. Singer, that none of the exhibits that will actually go to the jury should contain the highlights. MR. SINGER: The Court: Mr. Brennan? MR. BRENNAN: Honor, thank you. The Court: Q (BY MR. SINGER) Exhibit 570 again will be admitted. Subject to that clarification, Your We understand that, your honor. Okay. Are you all right then,

Now, was this provided to the Board on

Friday, September 15th? A Yes. It's very typical to provide information ahead of

Board meetings. Q And was this for the Board Meeting at which the Santa

Cruz deal was up for approval? A Q Yes. Do you recall how soon after this September 15th meeting

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the Board was to have its meeting to consider the transaction? A Well, you know, I can recall by looking at it that it

was -- I think the transaction took place around the 19th, and so we had the Board Meeting on the -- I think the 18th. Q And that would make -- do you recall if you were --

looking at the last sentence on the second page where it talks about weekend review, do you know whether September 15th, 1995 was a Friday? A I don't know that, but I assume that it was a Friday.

We'd have it for Saturday, Sunday and then a Board Meeting Monday, and then close the transaction sometime after the Board Meeting. Q And do you see the reference on the first page to a term

sheet for the proposed transaction? A Q Yes. I'd Like to show you exhibit 83. Mr. Mattingly, can you

identify exhibit 83? THE COURT: the jury. Excuse me. 83 should not be shown to

It's not there, is it? The Clerk: It's not.

Q (BY MR. SINGER) A Yes.

Can you identify exhibit 83?

It's the Novell/SCO term sheet that's referenced as

letter "E" under the memo from Dave Bradford. Q So this was part of the memorandum that we've just been

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looking at from Mr. Bradford dated September 15th, 1995? A Yes. MR. SINGER: MR. BRENNAN: I move the admission of exhibit 83. Your Honor, subject to the

qualifications that were given previously, we have no objection. But, again, we're going to have to clean up the

highlighted portions. THE COURT: All right. Exhibit 83 will be admitted,

understanding again that it will be cleaned by the time it goes to the jury. MR. SINGER: Yes, Your Honor.

(Plaintiff's Exhibit 83 received in evidence) Q (BY MR. SINGER) Was this the term sheet that -- did you

receive this term sheet along with the memorandum to the Board that's marked as exhibit 570? A Q A Q I did. These documents were together at that time? Correct. Can you review what is stated in item one, "Novell

transfers to SCO." A Q You want me to just read it? Well, can you give us your understanding of what is meant

by transfers to SCO the Unix technology assets and UnixWare technology assets? A Well, the Unix technology assets is the Unix business.

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UnixWare technology assets was the binary version of that that Novell shipped that had some integrations with Novell's network product offering. Q Now, under the second item, item number two, does that

indicate what Novell was going to retain -A Q Yes. -- after the transaction closed with Santa Cruz

Operation? A Q Yes. And do you see that patents are listed as being retained

by Novell? A Q Yes. Do you see that there's a license back to Unix and

UnixWare for internal use and resale in bundled products? A Q A Yes. Do you have an understanding of what that was? Well, sure. I mean Novell had some other product

offerings that were bundled with UnixWare, you know, such as Groupwise or some of our network management products, various other products. So Novell was retaining a license back from

SCO so that they could actually use those products bundled with Novell's products internally and for resale as bundles. Q A Q Do you have an understanding of what Tuxedo was? It was a transaction processing monitor. And that wasn't being sold?

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A Q

It was not. Do you see any mention under item two of Novell retaining

the Unix and UnixWare copyrights? A Q No. So if Mr. Frankenberg -- well, let me ask this. If

Novell was retaining the copyrights, would you expect to have found that listed here under item two? A Q Yes. So if a member of the Novell Board of Directors was

looking at the package that went to them the Friday before the Board Meeting, with the term sheet pertaining to the deal, would they have seen anything that would indicate that Novell was retaining copyrights in this term sheet? A That's a pretty material omission, so it would have to be

listed here on Novell's retained assets. Q So if Mr. Frankenberg, for example, was reviewing this

term sheet provided by Mr. Bradford, the General Counsel, the weekend before the Board Meeting, would it have alerted him in any way to Novell retaining copyrights? MR. BRENNAN: Objection, Your Honor. This calls for

speculation as to the mind of Mr. Frankenberg. THE COURT: MR. SINGER: THE WITNESS: I'm going to overrule the objection. Yes. Yes. And I think it would have also You know,

alerted any of us that were on the business team.

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you'd have to put this in perspective.

At that point you're

in the 11th hour and 59 minutes into this process, and to have something as material as the copyrights excluded from this Asset Purchase Agreement, it would have alerted everyone in the room. Q (BY MR. SINGER) Would it have -- were you at the Board

Meeting on September 18, 1995? A Q Yes. Would it have alerted you that there's a problem here

that someone thinks that the copyrights are being retained? A Q A Q Yes. And that didn't happen, did it? Did not. Does the term sheet indicate what Novell expected to

receive from Santa Cruz Operation in exchange for the business? A Q Yes. And does that include a number of different forms of

compensation? A Q Yes. Was the first of that the stock equal to 16.6 percent of

Santa Cruz Operation's stock? A Q Yes. Was the second 95 percent of all royalties received by

SCO on the existing Unix business?

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A Q

Yes. Now, for fiscal year 1995 alone, was that estimated to be

47.65 million dollars? A Q Yes. And would you continue then to get those royalties in

future years from Santa Cruz? A Q Yes. And that would be part of the compensation that Santa

Cruz would be paying Novell for the business? A Q Yes. In addition, was there also a possibility of Novell

receiving additional royalties based on the UnixWare shipments by SCO in the future? A Q A Q Yes. And is that covered in item C -Yes, it is. -- of what Novell would receive? And it says, "If SCO

hits our business forecast, which is admittedly aggressive, royalties on future UnixWare shipments by SCO through the year 2002, those royalties could have a net present value of 50 to $60,000,000," correct? A Q Yes. And then also if there was NetWare technology included in

UnixWare products, you would have rights to royalties on those as well?

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A

Correct. MR. BRENNAN: Objection, Your Honor. We're leading

the witness. THE COURT: Q (BY MR. SINGER) Sustained.

Would you have contained -- would you have

received any royalties on NetWare technology included in the UnixWare products that Santa Cruz would sell? A Sure, since its says continuing royalties on NetWare

technology. Q Now, I'd like to turn to the minutes for the Board

Meeting that was held on September 18th, 1995, which has already been admitted into evidence as Novell's exhibit Z3. If we look at these, you recognize these as the Board minutes for that meeting? A Q Yes. And if you go to the top page, do you see that in

addition to the members of the Board itself, also present by invitation were Dave Bradford, yourself, and Jeff Turner of Novell? A Q A Q Yes. And you attended this meeting; is that correct? Yes. If we turn to -- you understand the first part -- do you

have an understanding as to whether the first part of the Board minutes seek to summarize what was actually discussed at

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the meeting before the Board of Directors? A Q Yes. Do you see any reference in that part, which runs from

the beginning of the minutes all the way down to the resolutions, of any discussion at the Board over the copyrights of the Unix and UnixWare systems specifically? A Q No. Do you on your own recollection recall any discussion at

the Board Meeting of the copyrights? A Q No. You then get the resolution which -- by which the Board Do you know whether there was

of Directors approved the sale.

any time that's typically spent at that point in the Board Meeting reviewing in detail documents which are being approved by the resolution? A No, I don't think that would be typical with the Board of

Directors to get into the details of a asset purchase agreement. Q And if we compare for a moment what was listed on the

term sheet that was circulated on Friday before the Board of Directors Meeting, and then this resolution of what was summarized in the Board minutes, if we go back to the term sheet, exhibit 83 -And I don't know, Mr. Calvin, if it's possible to split the screen and put one up on one half and one on the other.

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If so, that would be helpful. So on the right-hand side of the screen we have the term sheet that we have been looking at, and if on the left-hand side we can have page two of exhibit Z3, the minutes. The Court: A JUROR: Ladies and gentlemen, can you read that? Not really. We're going to need to highlight.

MR. SINGER: Q (BY MR. SINGER) two.

We'll go back and forth then between the Do you see

If we can go to the term sheet for a moment.

under Novell term sheet, Novell SCO term sheet item one the reference to Unix technology assets, UnixWare technology assets being transferred to SCO? A Q Yes. We turn now to page two of the minutes, which I think

Mr. Calvin has now successfully put on the right-hand side of the screen. And if you can highlight the resolution. Do you

see a reference here in the resolution that pursuant to the Asset Purchase Agreement, Novell will transfer to SCO its Unix and UnixWare technology assets? A Q Yes. And if you keep reading it says, "A portion of the

employee base in New Jersey and equipment used in the UnixWare business." A Q Yes. And if we turn back for a moment to exhibit 83, do you Do you see that?

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also see under item one the reference to Novell transferring to SCO the portion of the employee base in New Jersey and the equipment used in the UnixWare business? A Q Yes. And that's under the category of Novell's transfers to

SCO; correct? A Q Correct. Can we now look at what Novell was retained. If we turn

back to exhibit 83, do you see on the term sheet that was in the Board package the reference to patents, the license back to Unix, UnixWare and Tuxedo and other miscellaneous technology? A Q Yes. Can we now look at the Board minutes, and where it

says -- do you see where it says here that, "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 in bundled products, Tuxedo and other miscellaneous, unrelated technology"? A Q Yes. Now, is that -- the term copyrights that's in the

minutes, that's not in the term sheet, is it? A Q It's not. Do you have an understanding of why it -- well, let me

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ask you this.

Are you able to reconcile the reference in the

minutes to Novell retaining its copyrights with no mention of Unix copyrights being included on the term sheet? A Sure. I mean Novell bundled its products with Unix and

UnixWare, and so the copyrights being referred to as well as the trademarks are the Novell copyrights pertaining to the Novell products that they retained, not those that they sold to SCO. Q So would you understand the reference to copyrights here,

where Novell will retain all of its copyrights, as pertaining to the Unix copyrights being sold to Santa Cruz? A Q Yes. I'm sorry. Let me read back that question. Do you

understand -MR. BRENNAN: clearly heard. THE WITNESS: Q (BY MR. SINGER) Well, no. Say it again. Your Honor, I think the answer was

My question is does the reference here of

Novell retaining its copyrights mean the Unix copyrights or does it mean copyrights other than Unix copyrights? A It's the Novell copyrights not the Unix copyrights.

Those were sold with the business to SCO. Q You see the reference to the worldwide license back to

Unix and UnixWare? A Yes.

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Q

Would that have made any sense if Novell was retaining

the copyrights to Unix and UnixWare? A Q No, because they would have already had those copyrights. I'd like to show you what is marked as Defendant's Is this a memorandum on September 19th, '95 from

Exhibit G4.

Ed Chatlos -- excuse me -- from David Bradford to Ed Chatlos, copied to you? A Q Yes. And is