SCO Grp v. Novell Inc

Filing 868

NOTICE OF FILING OF OFFICIAL TRANSCRIPT for dates of March 25, 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 by removing restricted text on 7/19/2010 (rks).

SCO Grp v. Novell Inc

Doc. 868

2384

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 vs.

IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., a Delaware corporation, Plaintiff,

) ) ) ) ) ) ) Case No. 2:04-CV-139TS

NOVELL, INC., a Delaware corporation, Defendant.

_________________________________) AND RELATED COUNTERCLAIMS. )

_________________________________)

BEFORE THE HONORABLE TED STEWART --------------------------------March 25, 2010 Jury Trial

REPORTED BY: Patti Walker, CSR, RPR, CP 350 South Main Street, #146, Salt Lake City, Utah 84101

Dockets.Justia.com

2385

1 2 3 4 5 6 7 8 9 10 11 12 13 For Defendant: 14 15 16 17 18 19 20 21 22 23 24 25 For Plaintiff:

APPEARANCES

Brent Hatch HATCH JAMES & DODGE 10 West Broadway, #400 Salt Lake City, Utah 84010 Stuart Singer BOIES SCHILLER & FLEXNER 401 East Las Olas Blvd., #1200 Fort Lauderdale, Florida 33301 Edward Normand BOIES SCHILLER & FLEXNER 33 Main Street Armonk, New York 10504

Sterling Brennan WORKMAN NYDEGGER 60 East South Temple, #1000 Salt Lake City, Utah 84111 Eric Acker Michael Jacobs MORRISON & FOERSTER 425 Market Street San Francisco, California

94105

2386

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 Christine Botosan Robert Frankenberg Terry Musika David Bradford Witness Tor Braham

INDEX Examination By Mr. Singer Mr. Jacobs Mr. Singer Mr. Brennan Mr. Singer Mr. Brennan Mr. Singer Mr. Brennan Mr. Hatch Mr. Brennan Mr. Hatch Mr. Singer Mr. Brennan Mr. Singer Mr. Brennan Mr. Hatch Mr. Brennan Mr. Hatch Cross (Cont) (Redirect) (Recross) (Direct) (Cross) (Redirect) (Recross) (Direct) (Cross) (Redirect) (Recross) (Direct) (Cross) (Redirect) (Recross) (Direct) (Cross) (Redirect) PAGE 2395 2414 2427 2433 2446 2466 2468 2473 2511 2533 2536 2540 2547 2556 2559 2560 2577 2586

2387

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

EXHIBITS RECEIVED INTO EVIDENCE: Plaintiff's: 9 to SCO 639, pages 39783 through 39801 89 88 123 2400 2411 2412 2545

Defendant's: C-33 2478

2388

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

SALT LAKE CITY, UTAH; THURSDAY, MARCH 25, 2010; 8:30 A.M. PROCEEDINGS THE COURT: Good morning.

Counsel, let me make you aware that rulings on the Rule 50 motion and the motion to strike have been issued, meaning whatever we do with them in the system. be available at the break. You have been given a copy of a packet that shows the latest changes based upon your filings yesterday to the jury instructions with a list of those changes that have been made, those that were not made. Perhaps of greatest Copies will

significance is the fact that as of this point the Court is not going to issue an instruction to the jury on privileges. A brief explanation as to why was given to you as well. The

reason we did that was so that those who were working on the jury instructions independently from those of you at the table might be able to take a look at that so we can have that addressed thoroughly at the three o'clock jury instruction conference. As to that conference, counsel, understand that the Court believes you have been able to make a proper record by all of your filings. I don't expect you to come

in here at three o'clock and to restate everything that you have argued in those written memorandum to the Court. Rather, I would ask you to please focus just on the changes

2389

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

that have been made or not made, and those that you believe you have not yet been able to make a record, please plan to state your objections. Before the day is up, I would presume by the first break, we will be able to give you a complete packet of the jury instructions as the Court intends to give them as of this morning. Are there any questions about the jury instruction conference or the instructions? MR. JACOBS: Your Honor, I think it would be

useful if both parties would state on the record their assent to the Court's understanding of whether that proper record has been made, and assuming that SCO would do so, we would assent as well. THE COURT: MR. SINGER: THE COURT: All right. Thank you, Mr. Jacobs.

We would do so. Thank you, Mr. Singer.

Is there anything else, counsel, before we bring the jury in? MR. BRENNAN: Your Honor, just a couple of

housekeeping matters, several pertain to the closing argument tomorrow and one pertains to an issue that arose yesterday. First of all, I do want to report to the Court

that based on my consultation with Mr. Singer, we've agreed that each side would have one hour and 15 minutes on closing

2390

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

and we anticipate that we would be held to that time. THE COURT: You will. If that's what you agreed Okay.

to, I will keep track of that time. MR. BRENNAN: Yes.

Thank you.

The second item, Your Honor, has to do with the use of the video clip segments of deposition testimony that was presented during the course of the trial. Novell's view

is that to allow the use of video clip testimony during the course of closing would unfairly accentuate testimony over that which was live testimony in court, it would give it a disproportionate weight and it shouldn't be given that weight. Instead, we recommend the use of trial testimony,

whether presented through live witnesses or through videotapes, should be presented in closing argument by use of the transcript rather than videotaping. THE COURT: MR. SINGER: disagree. Mr. Singer. Your Honor, on that point, we

Obviously now we know what's in evidence, so

obviously the only thing that we would use would be videotape that's been admitted into evidence. The jury is

supposed to give that equal weight to what live witnesses said in court. They have had a chance to see the live

witnesses, spend time in their presence, which the videotape just appears on the monitor and then it's gone. We don't

think it elevates the video testimony above the live

2391

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

testimony by playing a few seconds really, which is all we could do, of a witness's videotaped deposition testimony. It allows us to give it a more proper -- not even probably up to the weight of live testimony, but at least where the jury can recall, yes, that was a videotape, I remember who that was, this is what Jim Wilt looks like or Doug Michels looks like, and relate back to that testimony they heard for only a few minutes. We don't think it is unfair and we

don't think it elevates that testimony above the witnesses who they spent a great deal of time listening to in court. THE COURT: I agree with Mr. Brennan on this one.

I will not allow the use of videotape portions of the deposition. You may read the depositions, but you will be

permitted -- both sides -- to show pictures -- a picture, not moving pictures, but a picture of the witness as they are being referred to. I think that would be helpful, but

not anything more beyond that. MR. BRENNAN: Thank you, Your Honor. When I

The third item is just a practical matter.

we left court yesterday, Mr. Tor Braham was on the stand.

understand that his cross-examination will continue and then likely redirect. Because we're on a tight clock today, I Before we call our

would ask for just this one indulgence.

next witness, who we anticipate being David Bradford, I would like to step out of the room for 30 seconds because I

2392

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

need to make a very quick calculation about time.

I don't

think the jury -- maybe it will be at a break, but I just need that indulgence. THE COURT: That should be no problem at all. If

I should forget, don't hesitate to remind me. MR. BRENNAN: The last item I have, Your Honor, is Just

this is really in the nature of a report to the Court.

so we can be clear, there was a discussion yesterday about reference during Mr. Jones' cross-examination to trial testimony. We do have the transcript. And if I could just

make the Court aware of what the transcript states. THE COURT: MR. BRENNAN: Go ahead. I think we can have it before, Your This is taken from page 2245.

Honor, if you would like.

And this is the cross-examination being conducted by Mr. Normand. And at line 13, Mr. Normand says, Mr. Jones,

while counsel looks at this, I wanted to show you, and read to yourself lines 16 through 20. trial testimony. Answer yes. So your point is he was the one who That is from the 2008

THE COURT: raised it? MR. BRENNAN: THE COURT: MR. BRENNAN: error.

He was the one who raised it. In that respect, I was in error. I didn't mean to point out any

2393

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 Thank you.

THE COURT:

No, that's fine.

But, Mr. Brennan,

even with that, I don't believe that the instruction beyond that which the Court gave the jury yesterday is necessary. Are you requesting something more? MR. BRENNAN: Here's the reason I raise it, and

perhaps the proper way to handle this is at the charging conference we might at least make some suggestion to Your Honor, if we feel appropriate, about an instruction that might pertain to that. THE COURT: MR. BRENNAN: You certainly may. That's all I have, Your Honor.

THE COURT: MR. SINGER:

Go ahead, Mr. Singer. I want to note for the Court that our

understanding, I think we're in agreement with Novell, is that Novell has an hour and 45 minutes to use today and SCO has an hour and 55. MR. JACOBS: THE COURT: That is ours as well. All right. As of right now my

Counsel, one other thing.

assumption is that as far as an alternate juror, it will be juror number 13. Unless one of you wants to argue

otherwise, and if I don't hear something from one of you between now and the time we finish tomorrow, that will be my intention, to dismiss juror number 13.

2394

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

MR. BRENNAN:

That had been our understanding from

the start, Your Honor, that's the Court's intention. MR. SINGER: any issues raised? THE COURT: You may. Again, what this is giving Can we address that later if we have

you the opportunity to do is if there is a juror that you think has not been observant, has not paid attention or something else, that I would require both of you to agree to it before I would do it. But it will be juror 13, unless

both of you agree for some other legitimate reason, should be the alternate. MR. SINGER: THE COURT: MR. JACOBS: THE COURT: MR. SINGER: THE COURT: We understand. Are we now ready, then? Yes. Thank you.

Mr. Singer. Yes, we're ready. Will someone be getting Mr. Braham.

(Jury present) THE COURT: Good morning, ladies and gentlemen.

For your information, it is clear that the parties will be able to finish the presentation of witnesses today. I anticipate that it will take the full day, meaning through 1:30. But that means that tomorrow we then will begin with

you being instructed by the Court on the law that you will apply and then you will hear closing arguments. So I just

2395

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

thought you may be interested to know we are at that point. You probably didn't believe that the end is near. Mr. Braham, if you would please come forward, and I will remind you that you are still under oath. Mr. Singer, if you would, please, as well. CROSS-EXAMINATION (Cont.) BY MR. SINGER: Q A Q Good morning, Mr. Braham. Good morning. Am I correct that while you were at Wilson Sonsini,

Novell was your major client? A Not my only -- I had several large clients. It was one

of the two that I did the most work with. Q A Would you say it's your largest client? No. I think my -- I had another one that was a little

bit larger. Q A Q Novell was also a principal client of the firm? Yes, it was. Now several years after that you left Wilson Sonsini to

become an investment banker, correct? A Q A Q That's correct. You currently work with Deutsche Bank; is that right? Yes. And you work in the technology sector of Deutsche

Bank's practice?

2396

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. Thus, you do business deals with companies that are in

the technology business? A Q A Q I do. And IBM is one of your clients at Deutsche Bank? It is. Now I would like to turn back to the time in 1995 when Am I correct that

you were brought into this transaction.

you and others who were working with you at the firm did the legal drafting of the asset purchase agreement during the last two weeks before the September 19th, 1995 signing of that agreement? A Q Yes. And the business people negotiated the essential

business terms of that transaction beforehand and your job was to document it, correct? A Q That is not correct. You believed that you could disregard what the business

people had negotiated beforehand? A No. I had to listen to the feedback coming from my But the deal that was done, as in every There are

client.

transaction, is embodied in the contract.

discussions before a transaction, but the deal is done when you have lawyers on both sides in the contract. Q Are there any business terms that you regarded as

2397

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

inviolate that you couldn't revisit during these last two weeks while you were working with documents? A If instructed by my client and negotiated, the terms There's the

are not inviolate until you negotiate the deal. talk and then there's the walk.

The contract and the

negotiation of the contract is the walk. Q So in this particular case your approach was in those

last two weeks you could try to change any term that you might be able to get into the document and the other side wouldn't object? A I had to listen to my client and the directions that

were given by the authorized people in my client to advance their interests. But there were a lot of people with a lot

of feedback many of whom were not properly speaking and looking after the interests of the client, and I had to look at the right people and watch the ball, not the crap. Q Well, before beginning the drafting process, did you

have any conversations with Ed Chatlos? A Q Yes. Did you understand that he was out there negotiating on

a day-to-day basis with representatives from Santa Cruz? A I understood that he was in discussions about a Ed was part of the UNIX business

potential transaction.

within Novell and I needed to listen to him for information. But in terms of actually protecting Novell, I was looking

2398

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

primarily to people who were not part of the business unit that were going to be moving over. So yes, I had

discussions with him, but listening to him for direction, that's where I quibble with what you're asking. Q You just regard what Mr. Chatlos was doing out there

for weeks if not months was just having discussions, not negotiating the deal? A Preliminary negotiations, but the negotiations changed And I think a lot of what he was

all the way to the end.

doing was negotiating for himself and for the business unit that was moving over. I mean, he participated in

preliminary discussions and negotiations, but the fundamental negotiations of the deal, like every transaction, happen when you get to the contract. Q Did you ever speak to Mr. Chatlos about withholding the

copyrights? A Q I don't recall. With respect to Mr. Ty Mattingly, did you ever speak to

Mr. Mattingly about withholding the copyrights? A Q I don't believe so, but I don't recall. Prior to your work and prior to the board meeting

considering the asset purchase agreement, did you have any discussion with Robert Frankenberg with respect to withholding the copyrights? A I may have been on prior board meetings where this was

2399

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

discussed, but I don't recall specifically. I had any direct one-on-one discussions with Mr. Frankenberg. Q

I don't believe

I would like you to look at your declaration, which is

put before you as Exhibit 639, and in particular look at Exhibit 9 to your declaration. Is this a term sheet which was generated in connection with this transaction? A I believe it's a draft of an unsigned term sheet.

Whether it was done in connection with the transaction -- it was done as part of communications prior to the transaction, but in connection with the transaction, it's a little confusing to me. Q I don't know --

This is part of the file that you attached to your

declaration that was submitted to the Court as coming from Wilson Sonsini on the case, correct? A Yes. MR. SINGER: I move the admission of what is

Exhibit 9 to SCO Exhibit 639. THE COURT: number, please? MR. SINGER: through 39801. MR. JACOBS: MR. SINGER: No objection, Your Honor. Let's take a look at this. Yes. This is Bates number 39783 Can you help me by giving me the Bates

2400

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 39801.

THE COURT:

All right.

Just a second.

The number again is what? MR. SINGER: Your Honor, it is 39783 through

THE COURT: MR. SINGER: THE COURT: Bates number pages.

All right.

That is to exhibit --

To SCO Exhibit 639. It will be admitted, those specific

(Plaintiff's Exhibit 9 to SCO Exhibit 639, pages 39783 through 39801, were received into evidence.) BY MR. SINGER: Q Mr. Braham, did you understand that this was generated

somewhere around September 10th, 1995, if you see the date which appears on the bottom of the page? A I can presume that's true based on -- I don't remember

what the date of this document was based on my independent recollection. Q Did you understand that this represented terms which

the parties had been negotiating prior to the draft of an actual asset purchase agreement? A I understand that this reflected somebody's viewpoint

of terms that they were discussing, maybe that they wanted. But when a term sheet is drafted, a particular document is drafted by an individual person. So to talk about it

referring to something that people on both sides are even

2401

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

discussing, put aside agreeing, you then have to say, well, did they discuss this. And the document might reflect one What actually happened in terms

person's proposal or idea.

of discussing or the state it played in a negotiation, I can't tell from looking at just the one page. Q Did you make any reliance on this during your work on

the APA? A Q Not that I recall. Just so we're clear about the business negotiations, if

businessmen out in the period before you got involved, before the last two weeks, had sat across the table and said to each other, in this case Novell to Santa Cruz, you're buying the whole business lock, stock and barrel, and then got to a point of bringing in the lawyers to document the deal, you felt yourself free to revisit buying the business lock, stock and barrel? A With input from my client. It happens all the time in

deals, and even varying material points of deals are revisited at the end once you're in final negotiations. Price changes sometimes in the last possible minutes. I do, fundamental terms move at the end. Q A Was the answer yes or no? I was not free to revisit independent of direction from Deals

my client. Q With respect to the copyright exclusion, when did the

2402

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

copyright exclusion first appear in the draft schedule? A I don't recall specifically, but sometime in the last

ten days or week of the negotiation. Q A You don't recall more specifically than that? I saw a document that I think you showed me yesterday Then I If I

that had the copyrights in the transferred assets. saw -- we have the exhibits that had it taken out.

looked at those two documents, I could probably look at those dates and make a judgment as to when it occurred. Q Do you recall it was sometime after September 12th,

1995 the schedules were even prepared? A I have trouble picking particular dates of something 15 It was during this period of negotiation, but

years ago.

exactly whether it was the 12th or the 11th or the 9th, I really have trouble with. Q Is it fair to say you don't recall drafting that

schedule of excluded assets yourself? A Q That's correct. And you do recall sending it to Burt Levine, an

in-house lawyer at Novell, correct? A I had seen a transmittal from me -- or from my team Do I have an independent No. It's in the chain

showing that that happened.

recollection of sending it to him? of documents that I looked at.

You look at a document and

you see what's happened, and it's hard to figure out exactly

2403

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

do I remember that happening or do I just look at that and see that that happened. Q It's somewhere in there.

You don't recall any conversation with Mr. Levine about

it; is that right? A Q I do not. With respect to presenting this to Santa Cruz, it's

your testimony that somewhere in the last week before the agreement was signed, this schedule was presented to Santa Cruz, correct? A Q A Yes. They didn't push back hard, right? We had a discussion about it that I remember. Whether

you call it pushing back hard or pushing back a little, I remember a discussion about the topic. Q Well, the discussion which you remember is at one point

Mr. Higgins, who was a lawyer for Santa Cruz, asked you about the entire schedule of excluded assets and asked is this a requirement of Novell? A Q Yes. And you don't know whether he was referring That's what you recall?

specifically to copyrights as opposed to the schedule as a whole? A I remember that it was my belief that what he was

talking about is is it really required that we're not going to transfer the copyrights. So he didn't use those words.

2404

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

He said the schedule, is this really required, but I understood the issue -- I mean, the issue of the copyrights was the biggest issue on that schedule, and I understood his question about that as referring to the copyrights, but his words, I don't believe, said copyrights. Q Now I would like to ask you a few things about the You discussed yesterday Santa Cruz being an

agreement. agent.

Under section 1.2 of the asset purchase agreement,

didn't Santa Cruz obtain legal title to the UNIX licenses? I think that's a yes or no question, sir. A That language refers to legal title passing to the

licenses, not to the IP, but to the licenses. Q When you hire an agent to sell your house, do they get

legal title to your house? A Normally not in a real estate transaction. In other

agencies, they do, they can. Q Now you indicated you were concerned about protecting

these royalties in the event that Santa Cruz were to wind up in a bankruptcy proceeding in the future, correct? A Q One of the reasons, yes. And you did so by including language that protected

Novell's royalties by providing that Novell would be the equitable owner of the SVRX royalties, correct? A Q Yes. So you could still transfer the copyrights to Santa

2405

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

Cruz and still protect the royalties in that way, right? A Hypothetically could we have transferred the copyrights

instead along with the licenses if we had chose -Q My question is simple. You already had separately from

anything involving the copyrights protected your interest in the royalties by saying you are the equitable owner of those royalties and reference to whatever appropriate sections to the bankruptcy code were necessary right in the agreement, correct? A We wouldn't have had the same flexibility we got by Royalties are just simply

virtue of owning the copyrights. a financial cash flow item.

So we would have had a whole

set of different issues if we had transferred copyrights as opposed to simply transferring royalty rights. Q But you would have protected your financial interest in

the royalties, correct? A Q I'm confused. Well, if you had did as you in fact did do and say that

the equitable interest in the royalties belongs to Novell under that provision of the bankruptcy code, you viewed that as protecting the royalties? A In the case of the royalties, it was an acceptable In the case of copyrights, it would have

methodology.

created a can of worms. Q What kind of -- just so we're clear about this point,

2406

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 rights to the revenue would follow the specific language on ownership of the SVRX royalties, correct? A Q A The rights to the revenue -Yes, the revenue stream. Well, the fundamentals of the deal and reflected in

many places is that we were -- Novell was retaining the rights to the revenue other than the five-percent collection fee, if you will, that we were allowing. Q Maybe my question wasn't clear, Mr. Braham. I'm

talking specifically about the language which says that you have equitable ownership of the royalties. The rights to

the revenue would follow, in the event of some bankruptcy or any other proceeding, that specific language on the ownership of the equitable interest in the royalties, correct? A Q Hopefully. Now yesterday you discussed these waiver rights that

you wrote into the agreement that had all sorts of handwriting, section 4.16 of the agreement? A Q Yes. Now that was in reference to a term called SVRX

licenses. MR. SINGER: on the screen. // Mr. Calvin, put 4.16 of SCO Exhibit 1

2407

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. SINGER: Q We turn to 4.16, it has capitalized SVRX license. That

means it is a defined term, correct? A I do not agree. When we do a defined term, we

typically -- in fact, in my experience we've always put a quotation mark around it and then defined the term. There

is no -- while it's capitalized, you can have multiple different reasons why you might capitalize a term in an agreement. So without it actually being defined with

quotation marks -- I mean, we can look at other places in the document that does that. defined term. Q Let's see if I understand what you're saying. Up above I don't agree that it is a

in 4.16(a) it uses the same term SVRX licenses as listed in detail under item VI of schedule 1.1(a) hereof and referred to herein as SVRX royalties. finish my question, please. Are you saying -- let me Are you saying when it says

SVRX license in 4.16(b), are you saying that doesn't mean what you said SVRX licenses were in 4.16(a)? A It's not a defined term. If you look at the quotation

on SVRX royalties, that is a defined term, because you can see the quotations. term. That's what lawyers do to define a

When something is capitalized, it may or may not be a

defined term. Q In your view, any decision by SCO regarding a UNIX

2408

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

transaction could be countermanded by Novell in its discretion, correct? A I think there is some constraints on what it could

countermand within its own discretion under 4.16. Q Well, if Novell wanted to allow a company as party to a

source code development license to release intellectual property that would otherwise be protected by those agreements, is that something under, in your view, 4.16(b) that Novell could do? A It could if it was part of the -- it certainly could if

it was part of the UNIX business, but not the specific UnixWare flavor of UNIX. Q Are you aware of Amendment 2 a year later restricting

the rights of Novell to act unilaterally even in a buyout of these royalties? A I'm aware of Amendment No. 2. I would have to look at

it to talk to you about what it actually does. Q Let's look at the manner in September 15th to 18th that Let's

this transaction is presented to the Novell board. look at Exhibit 754.

This is a memorandum that Mr. Bradford Did you have any involvement in

presented to the board. this preparation? A Q Not that I recall.

If we look at the term sheet that's attached to this

document, you agree that under the heading Novell retains

2409

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

there is no reference to copyrights? A Q On this document, that's correct. Now this was the Friday before the board vote on

September 18th, 1995, correct? A I would need to get a calendar and look at these dates If you've done that, I'll accept that.

and match them up. Q A Q

The board call was a teleconference? That's what I remember. I think you have before you Exhibit V-3, which is one

of the documents which you were shown by Novell's counsel yesterday, Mr. Jacobs. A Q A Q Yes. And I think you testified this was your handwriting? Yes. Are these comments where it says board call that you Can you take a look at that?

were writing on this draft of the APA during the board call on September 18th, 1995? A Q A Q Yes, I believe so. And refers to Mr. Frankenberg, correct? Yes. Up on the upper right-hand corner, is that your

handwriting that says license back? A Q Yes. Now you are using a draft agreement that was before you

at the time of this call, correct?

2410

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

A Q A

Yeah, it would be -I just asked a simple question. Yes. This document was before me. That's how I got my

handwriting on it. Q Would you look at the back of the agreement that's been

marked as B-3 and tell me if there are any schedules at all on this draft of the agreement that you used to write down comments during the board call? A this. Q This is the first time that we're flipping through I can tell you about my practice -I'm not asking about your practice. THE COURT: copy. BY MR. SINGER: Q There is a hard copy before you that's marked as It's one of the documents that is on your Why don't you let him look at a hard

Exhibit V-3. desk.

Do you see any schedules attached to that draft of the APA? A Q No. Now after the board meeting, did you file a

Hart-Scott-Rodino filing with the United States government? A Q A I did not. Novell did, correct? I don't recall specifically, but I would certainly

2411

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

expect that they did. Q Let's take a look at Exhibit 89. This has your name on

it, Tor Braham, correct? A Q Yes. You understand this to be a draft of a submission to

the United States government under the Hart-Scott-Rodino Antitrust Improvements Act? A Q Looking at it now, I think that makes sense. This was an act which requires big companies to file

certain papers in connection with the sale or disposition of parts or whole of the business, correct, in general terms? A If they meet certain thresholds, yes. MR. SINGER: admission of 89. MR. JACOBS: THE COURT: No objection, Your Honor. It will be admitted. I would like to move at this time

(Plaintiff's Exhibit 89 was received into evidence.) BY MR. SINGER: Q This was a draft that you prepared -- you were involved

in the preparation of this draft, correct? A Q A Q I don't recall. But it has your name on it, correct? It's not my handwriting. I don't remember. Do you see this

Let's turn to Exhibit 88 for a moment.

2412

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

is a final version which was submitted? A I don't know what the final version was. If you tell

me it was, I have no reason to doubt that, but I really don't remember. Q A Q Do you see Mr. Bradford's signature on the second page? Yes. Do you have any reason to doubt that this is the actual

Hart-Scott-Rodino filing that was submitted? A no. MR. SINGER: MR. JACOBS: MR. SINGER: BY MR. SINGER: Q Mr. Braham -THE COURT: MR. JACOBS: THE COURT: Just one second. No objection, Your Honor. Exhibit 88 will be admitted. I move admission of Exhibit 88. Do you have a copy, sir? Yes, we do. No reason. Without going and looking at the filing,

(Plaintiff's Exhibit 88 was received into evidence.) BY MR. SINGER: Q Mr. Braham, looking at Exhibit 88, you understand this

is an important document, something being submitted to the federal government, right? A Documents to the federal government are important.

2413

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

And if you turn to page 5, Bates stamp 41355 of SCO

Exhibit 88, this identifies the assets to be acquired by Santa Cruz in this transaction, correct? It says the assets

to be acquired by SCO are described with particularity in schedule 1.1(a) of the agreement. described therein are. A Q Yes. Item one is all rights and ownership of UNIX and The general categories

Do you see that?

UnixWare, correct? A Q Yes. If we turn back to schedule -- to Exhibit 89 for a

moment, the draft that has your name on it, you see the same thing appears on page 5 of that version, the assets to be acquired, all rights and ownership of UNIX and UnixWare. you see that? A Q Yes. So you didn't tell the United States government in this Do

filing that what was being transferred to Santa Cruz was all rights and ownership except for the copyrights? A As far as I know the agreement would have been publicly

filed. Q Do you see anything on what was the actual form which

says in the list here, the categories of assets, it says, all rights and ownership of UNIX and UnixWare, comma, except Novell retained the copyrights? You don't see that, do you?

2414

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

Not on this particular piece of paper, but you have to If you want me to look at the

look at the whole filing.

whole filing, I could tell you what was submitted. Q I'm asking you about what was presented in the summary

as to the assets to be acquired and how it was characterized to the government? A If you're asking me whether the copyrights exclusion is

on this page, I agree that it isn't expressly called out on this page. But when you submit a document to the

government, you incorporate by reference the whole document. Any individual page doesn't speak for the entire submission. MR. SINGER: THE COURT: I have nothing further. Mr. Jacobs. REDIRECT EXAMINATION BY MR. JACOBS: Q off. MR. JACOBS: screen, please. BY MR. JACOBS: Q A Do you have that in front of you, Mr. Braham, also? I have it on the screen. MR. JACOBS: If you want me to find it. Could we have SCO Exhibit 88 on the Let's rewind, Mr. Braham, with where Mr. Singer left Thank you.

Then could we turn to page 4.

Mr. Lee, could we blow up the first

full paragraph, Novell, Inc., a Delaware corporation. //

2415

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. JACOBS: Q Mr. Braham, what is this paragraph of this

Hart-Scott-Rodino filing doing? A This is referencing that the entire agreement has been

submitted and incorporated by reference that full sum agreement. Q When Mr. Singer was asking you whether the

Hart-Scott-Rodino filing revealed to the government the exclusion of copyrights, did he point you to this provision where the asset purchase agreement is attached as a documentary attachment? A Q here? A Q No, he didn't. What is this reference to the documentary attachment What is that referencing? The document is the definitive agreement, the APA. Now when Mr. Singer was asking you about actual

negotiations and you're referring to the client, direction from the client, Mr. Singer was distinguishing various individuals of the client and you were referring to the client. Can you explain to the jury again how this works in

terms of your representation of Novell in this transaction? A In all deals, but certainly in this, you have different People have different

constituencies within a corporation.

interests, different agendas, different motivations, different incentives. As a business adviser, whether it be

2416

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

an investment banker or a corporate lawyer, you have to figure out who is really speaking for the company, in the best interest of the company as opposed to maybe being important to a transaction and having important information that they are funneling through but might not be in the line of fire as to who was actually most empowered to look after the company and to give you direction. In the case of Novell, it was David Bradford and the board of directors of Novell who were speaking for Novell. In the negotiation of this transaction, there were numerous people who were involved in preliminary discussions and were important to those discussions. But at the end of the day

and when the transaction was really negotiated, I had to listen to David Bradford, who was communicating with the board of directors and communicating to me the interests of the company, which is similar to all the other transactions I worked on with Novell and in other deals, you have to find who -- figure out who the mouthpiece is as opposed to people who are around it but not speaking for the company. Q During the negotiations of the asset purchase

agreement, did you get specific direction from Mr. Bradford as to individuals that he was concerned about that might be providing you input and that he felt you should be careful about listening to? A Yes.

2417

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 A

Who? Well, one in particular was Duff Thompson. MR. SINGER: MR. JACOBS: THE COURT: THE WITNESS: This is outside the scope of cross. It can't be, Your Honor. Overruled. One in particular was Duff Thompson.

BY MR. JACOBS: Q What was the concern that Mr. Bradford expressed to you

about Mr. Thompson? A David told me that Duff had -- that the tentative

plan -MR. SINGER: THE COURT: BY MR. JACOBS: Q Did you gain an understanding in the course of your It's also hearsay. I will sustain the hearsay objection.

interactions with Mr. Bradford as to particular individuals who you should be cautious about in taking input from? A Q A Yes. Who was that individual? Duff Thompson. MR. SINGER: He's just calling for hearsay in a

different fashion, Your Honor. MR. JACOBS: Asking for his understanding as the

representative of Novell. MR. SINGER: His understanding of something like

2418

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

that is not relevant. MR. JACOBS: Mr. Singer made it relevant by asking

him if he spoke with the business people. THE COURT: not elicit hearsay. BY MR. JACOBS: Q Did you form an understanding as to whether I will overrule the objection, but do

Mr. Thompson might, in particular, have some conflicts that might render his input of less weight than the input of other executives? A Q Yes. What was the concern that underlay the understanding

you formed? A The concern was that Duff Thompson was expected to go

on the board of directors of SCO. Q A And therefore? Was looking after the interests of SCO, at least in

part, as compared to the interests of Novell. Q So ultimately this transaction was presented to the

board of directors of Novell for approval? A Q Yes, it was. And in a public company like this are there typically

rules governing what kind of transactions can be approved by executives without the board and what kind of transactions require board approval?

2419

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

Typically companies have thresholds that certainly

enable day-to-day transactions to occur without the board. No company can operate with having the board involved in all the day-to-day matters. When it comes to mergers and

acquisitions and dispositions, many companies require all of those to go to the board, and other companies have thresholds where very small mergers and acquisitions could be done, immaterial deals done without board approval. But

above a certain threshold or in transactions that would be visible and might be interesting to the investing public, those transactions require board approval. Q So if we're trying to understand the process by which

board approval was actually given for this transaction, what document would one look to? A The minutes. MR. JACOBS: Lee. BY MR. JACOBS: Q Z-3 is the minutes of the board meeting -- the minutes Let's take another look at Z-3, Mr.

of the meeting of the board of directors of Novell, Monday September 18th, 1995. MR. JACOBS: If we go to the second page, Mr. Lee,

and the resolution where copyrights are mentioned. BY MR. JACOBS: Q So, Mr. Braham, in terms of whether the negotiating

2420

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

team representing Novell had authority to exclude the copyrights from the asset purchase agreement transaction, what does this board of directors resolution signify to you as someone experienced in representing Novell in transactions? A Well, it expressly states that the company would retain

the patents, copyrights and trademarks, other than the trademark UNIX and UnixWare, which combined with the fact that the asset purchase agreement is incorporated by reference into the minutes makes it completely clear that the board approved and directed that the transaction be done with these terms. Q What about all the input from somebody like Ed Chatlos

or Ty Mattingly, how would that relate as a matter of corporate governance to the board approval that was obtained? A Q It would not be relevant. Even the CEO, Mr. Braham, let's assume that Mr.

Frankenberg had it in his head at some point that the copyrights would transfer, would what was in his head be superior or inferior to what the board actually approved? A It would be inferior. It would not matter. The board

approval speaks for the company in actions where a transaction that is submitted, required to be submitted and evaluated by a board.

2421

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

At the beginning of your cross-examination yesterday Do you recall

Mr. Singer asked you about Amendment No. 2. that? A Yes. MR. JACOBS: BY MR. JACOBS: Q

Could we have N-8 up, please.

Now he asked you whether you understood that Amendment

No. 2 -- I forget his exact words -- replaced the language in the excluded assets at subsection A. question and answer? A Q Yes. If you look at the as of date in the first paragraph of Do you recall that

Amendment No. 2, do you see that? A Q Yes. It reads, as of the 16th day of October, 1996. Do you

see that? A Q Yes. So what does that signify to you in terms of the

effective date of the replacing effect of Amendment No. 2 and the language of the asset purchase agreement? A 1996. Q Now as a transactional lawyer, if one wanted to draft This would be effective as of the 16th of October,

an amendment like this -THE COURT: Mr. Singer.

2422

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

MR. SINGER:

There is no foundation.

They

objected yesterday and, in fact, this witness wasn't involved in this amendment. THE COURT: I am going to sustain the objection.

You are, in effect, eliciting expert testimony from this witness. MR. SINGER: I move to strike the testimony that

he just elicited on that. MR. JACOBS: Your Honor, Mr. Singer asked the

witness whether he understood that this language replaced the language of the asset purchase agreement. THE COURT: Mr. Jacobs, I have been quite

concerned about two or three of your questions now because, again, you are having Mr. Braham act as an expert, in effect. I would discourage you from doing that again.

BY MR. JACOBS: Q Mr. Braham, in the asset purchase agreement that was

negotiated in September 19th and signed September 19th, 1995, did it anticipate that the actual assets would transfer on execution of that agreement on September 19th, 1995? MR. SINGER: Those are issues of law that the

Court can direct the jury on to the extent it's relevant. MR. JACOBS: THE COURT: He's the negotiator of the agreement. I'll allow you to answer the question.

2423

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 WITNESS:

It anticipated that the assets would

transfer upon the close and the execution of closing documents. BY MR. JACOBS: Q What kind of closing documents did you contemplate in

negotiating the asset purchase agreement? A Q A bill of sale. What did you contemplate by way of a bill of sale?

What would that document look like. A It would be a piece of paper -MR. SINGER: Outside the scope of my cross. This

is just more direct that he wishes he had done yesterday. MR. JACOBS: THE COURT: BY MR. JACOBS: Q Mr. Singer asked you some questions about the back and Do you As you wish, Your Honor. I will sustain that objection.

forth with Santa Cruz about the copyright exclusion. recall that? A Q Yeah. With Mr. Higgins, yes.

And as you were exchanging the drafts with Mr. Higgins

and with the Brobeck team, the Santa Cruz team, what was your understanding of the copyrights that would be retained pursuant to the excluded asset schedule? A Q All of them. All of them then extant, all of them into the future?

2424

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

All of them that existed at the time of the signing and In the future, they would

the closing of the transaction.

build on -- the expectation is that SCO would build on top of that base of technology and build their own substantial improvements and develop a very successful commercial product with their own R and D investments and innovations and they would own the copyrights exclusively to those. Q Let's explain that to the jury because it seems

intuitive to a transactional lawyer, but let's explain how that works. So your anticipation when you proposed that language was that Novell would retain the then existing copyrights to the then existing code; is that right? A Q A Yes. Then what would happen? Then SCO would go off and improve it, add to it, build

a better mousetrap out of the base mousetrap, would have the ownership all of those improvements, which would give it a competitive advantage in the marketplace. And they were

expected -- they were allowed to and under the agreement expected to go off and market and succeed with that flavor. Q Mr. Singer asked you whether under 4.16(b) if Novell

could waive licensees' rights as to the old UNIX licenses, whether you had a concern that that might somehow allow Novell to destroy Santa Cruz's business.

2425

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

I was not concerned that it would allow them to because

if they did a good enough job as they were expected to, to build a -- to take vanilla ice cream and make a strawberry sundae out of it, they could succeed with it. Q If they succeeded with that and they build a sundae,

what ownership rights would they have in the sundae? A They would own the sundae and they would own the cherry

on top and the strawberry sundae, and all the elements that made it attractive for people to go in and buy the strawberry sundae other than the basic vanilla ice cream, which the other licensees could go make a banana split out of. Q To use your analogy, who would own the vanilla ice

cream in the asset purchase agreement? A Q Novell. Now you seem to have a recollection of this copyright It is a long

back and forth -- or the copyright exclusion. time ago. A Why do you remember it so well?

You have periods in your life that are important and And from a

that you recognize at the time are important.

business standpoint, this was one of those for me. Q A Why was that, Mr. Braham? Because I knew I was dealing with fundamental industry, Sometimes you do a lot of deals where

important technology.

you are dealing with very small pieces of technology,

2426

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

semiconductor software, what have you, but I was dealing with the fundamental UNIX operating system, which was critically important to the balance of power in the technology industry. And at the time the concerns that

Microsoft was monopolizing -- had the chance to monopolize -- essentially monopolize the whole IT infrastructure stack. And UNIX was extremely valuable. We

paid $300 million for it. But from a strategic standpoint, it was even more important. And I knew that then, this was not something

that was -- I think it was well known that UNIX was a fundamental underpinning, and I was dealing with the rights to UNIX, and I knew that this was something that, you know, I might not have that many times in my career that I was going to be touching something as significant. Q How about the copyright exclusion, why do you remember

that so well? A Because it was critically important to having

flexibility not only for Novell but for the industry to continue to grow in ways that might not have been completely predictable at the time, and it was important that not one company could clamp down on it, and Novell had the ability to retain that. We negotiated for it and I was proud of the

defense that we did, David and I, that was supported by the board of defending Novell's interest. It was work that I

2427

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

thought was important. my career. Q

You know, this was important work in

Mr. Singer asked you about your role at Deutsche Bank.

You joined Deutsche Bank in what year? A Q 2004. At this time have you had any involvement in any report

that Deutsche Bank has released relating to SCO or the SCO litigation? A Q No. The people who write those reports with projections,

are you involved with them on a day-to-day basis, in general? A Not involved with them at all. In fact, I'm not

allowed to speak with them without a chaperon lawyer in between, the way the information barriers that are enforced in an investment bank. Q Do you have a financial interest in the outcome of this

litigation? A I do not. MR. JACOBS: THE COURT: Thank you, Mr. Braham. Mr. Singer. RECROSS-EXAMINATION BY MR. SINGER: Q The business is dealing with technology companies like

Novell, correct?

2428

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

A Q A Q

It is. One of your clients is IBM, correct? It is. Now you had testified near the end of the redirect

examination that this was critical intellectual property to the industry, the copyrights and the UNIX operating system, and that's why this is vivid in your mind, correct? A At the time I perceived it to be very important Primarily it was technology owned by Novell and Yes, I knew this was important

technology.

I'm defending a client. technology. Q

So it's your testimony that this critical element, the

copyrights controlling UNIX technology that is so important to the computer industry, is something which was dealt with in this transaction on the last week of the transaction by simply putting it into a schedule of excluded assets, there was not substantial discussion about it across the negotiating table? A That is your position?

I do not agree there was not substantial discussion We discussed it, and

about it over the negotiating table.

on both sides I think both parties must have spent a tremendous amount of time absorbing the implications. Q I think if we recall from a few minutes ago what you

recall, the actual discussion was a reference to the excluded asset schedule and you thought the other side was

2429

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

talking about the copyright solution, but you don't even recall Mr. Higgins mentioning that specifically, correct? A In terms of my actual discussion in the room with the

other side, that's correct. Q And this is such an important part of the transaction

that the United States government, if they wanted to learn that Novell had withheld the copyrights while otherwise selling all the UNIX and UnixWare business, would have to go look at a schedule to an attachment rather than seeing it in your summary of what the key elements of the deal were, correct? A It's four pages that define what assets were Those are the

transferred and what assets were withheld. key elements of the agreement.

And, yeah, if the government

wanted to evaluate it, it would need to look at the core document that defined what moved and what didn't as opposed to a summary that may have been put in by a paralegal, for all I know, what the agreement was. Q A paralegal decided what was submitted by Novell to the

United States government? A The definitive agreement is what they would need to

look at, and particularly the specific schedules, which are only four pages, of what moved and what didn't. think the government would be confused. common. So I don't

That would be very

2430

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

When we talk about the board and you are talking in

response to Mr. Jacobs' questions about board resolutions -you are a transactional lawyer, correct? A Q Correct. You know that what we're dealing with here is the

interpretation of a contract, right, not a board resolution, the interpretation of a contract? A Q A Q Yes, the contract controls. There are two parties to the contract, right? Maybe more. That's not a difficult question. There are two or more

parties to the contract? A There may be more than two parties. I think you have

subsidiaries. bit. Q A

That's why I'm tripping up on it a little

In this deal there were two parties? I think there are parents and subsidiaries. I actually

would need to look at the signature page to make sure. Basically, yes. Q And the issue that is before the jury is determining

the intent of the parties in that deal where they had language in the agreement and they negotiated with each other. The issue isn't what a board of Novell internally You know that,

may have done in a corporate resolution. don't you?

2431

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

What I know is when an agreement is clear on a point --

if you're asking my legal viewpoint about how a contract should be interpreted, I'm prepared to do that. But when a

contract is clear, I don't know that you look beyond the four corners of the agreement. I mean, this gets to what

the rules of construction are, which I could get into, but -Q Mr. Braham, am I right or wrong that in a contract case

where if it's determined by a Court that the parties' intent is important, you look at what the parties said to one another, how the parties acted towards one another, and you don't look at what one party unilaterally did in a board meeting? A Is that true or not?

You look at the plain language of the agreement, unless

it's ambiguous. Q And if it's ambiguous, you look at the intent of the

parties as expressed to each other -MR. JACOBS: raising. THE COURT: BY MR. SINGER: Q One final area that was covered yesterday. You were I will sustain the objection. Same objection Mr. Singer was

not involved in Amendment 2, correct? A I was not involved in Amendment 2. MR. SINGER: Thank you.

2432

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. SINGER: MR. JACOBS: THE COURT:

May this witness be excused, counsel? He may be excused by us. Yes, Your Honor. Mr. Braham, that means you do not need

to worry about being re-called, but I would request that you not discuss your testimony with any other witness in this case or in the presence of any other witness or communicate in any way your testimony. Thank you, Mr. Braham. THE WITNESS: THE COURT: ladies and gentlemen. Thank you. We have to take a little recess here, If you want to stand up and stretch

your legs, you may do so. Ready to proceed? MR. BRENNAN: Novell wishes to call as its next

witness Mr. David Bradford. THE COURT: Mr. Bradford, if you would pause for

one second and raise your right hand and Ms. Malley will administer the oath to you. DAVID BRADFORD, Having been duly sworn, was examined and testified as follows: THE CLERK: If you would please state and spell

your name for the Court. THE WITNESS: David Bradford. D-a-v-i-d, last

2433

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

name Bradford, B-r-a-d-f-o-r-d. DIRECT EXAMINATION BY MR. BRENNAN: Q Good morning, Mr. Bradford. Could you please tell us what your current business position is? A I'm chairman of the board of a company called

Fusion-io. Q A Q A Where is that company located? Based here in Salt Lake City, Utah. Could you summarize your educational background for us? Sure. Going back many years ago, I graduated from high And

school in 1969 in a little town in Red Lodge, Montana. then I came down to Brigham University. mission. Served an LDS

After that, I came back to BYU, finished my

undergraduate degree in political science in 1974 at BYU. They just started a new law school at BYU, so I dove into that and became a graduate of the BYU law school in the second class, and that was in 1977. I then went and I also

practiced law for some years in southern California.

got a master's in business administration in the early '80s from Pepperdine University. Q A Q That's in Malibu, California? Yeah. Have you ever worked for Novell?

2434

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

A Q A Q A

Yes. For what period of time did you work for Novell? That was a long time, 1985 to 2000, almost 15 years. What positions did you hold while you were at Novell? When I first joined Novell, my position was corporate Shortly thereafter, probably six months in, I And I held the

counsel.

became the general counsel for the company.

position of general counsel the entire rest of the period I was at Novell into July of 2000 when I left. Over the

years, I had varying assignments and other responsibilities, corporate security for the company, corporate business development, government relations, those sorts of things reported to me as well. Q In general, what were your duties and responsibilities

as general counsel and corporate secretary? A Well, certainly as the chief legal officer of this

corporation, I had a responsibility to review contracts, negotiate contracts, be involved on a day-to-day basis to ensure that the legal aspects of Novell were protected and so forth. I was also secretary to the board of directors,

and in that capacity I recorded and wrote essentially the board minutes and attended all the board meetings for Novell for those 15 years. Q I would like to have you focus your attention on a Do you recall playing any role

period 15 years ago, 1995.

2435

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

in the preparation of the asset purchase agreement between Novell on the one hand and Santa Cruz Operation on the other hand? A Q Yes. Has it been necessary for you to, in essence, look at

some documents to try to remember what happened 15 years ago? A life. It's been a busy time, and I stay busy in my day-to-day So yes, I have gone back and looked at the asset

purchase agreement and the board minutes, and so forth and so on, that I prepared and was involved with at the time. Q Do you think without reviewing some of those documents

you would have as clear a recollection without that review? A No. I'm appreciative of the fact that I did document

things at the time. Q What were your general duties with respect to this

asset purchase agreement we made reference to? A Well, in many ways over the years whenever we would do

a transaction at Novell, I kind of acted as a point person for the company to involve the technology people, to involve the financial people, and to kind of bring the team together as we would negotiate these deals. over the years at Novell. We did hundreds of deals

And, you know, this was, you

know, an important one, but certainly not as big or broad as some of the other transactions that we did in terms of

2436

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

mergers and acquisitions and so forth. Q In connection with these business transactions, did

you, as Novell's general counsel, look to outside legal firms to assist in that work? A Q A Sure. Was there a primary outside counsel that you looked to? Yes. Wilson Sonsini Goodrich & Rosati was the primary

outside counsel for Novell during many of its years, corporate existence, and worked closely with guys like Larry Sonsini, who was on the Novell board, as well as Tor Braham and others at the Wilson Sonsini firm. It's an outstanding

law firm and probably the best law firm that we could find. Q What was your relationship with Tor Braham in the 1995

time period? A I began working with Tor probably -- I want to say in As we did various transactions together, I

the early '90s.

looked at Tor as kind of chief outside drafter of contracts assisting with negotiation of agreements. And so I deferred

a lot over the years to Tor and relied on him a great deal to help protect our legal positions as a company. Q In connection with your work with Mr. Braham, did you

trust him? A Q Absolutely. Did you find that he would follow your instructions as

you gave them to him?

2437

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

Yes.

There was a trusting relationship.

Whenever

trust exists, things accelerate and you get deals done more quickly and so forth. So there was definitely a

relationship of trust between Tor and me. Q Again, I recognize it's been 15 years ago now, but

thinking for a moment about the Santa Cruz Operation transaction, do you recall any other Novell senior executives that had any role in reviewing documents or writing input on that transaction? A Certainly Jim Tolonen. Jim was the chief financial

officer at Novell, was intimately involved in these sorts of transactions. I relied on Jim's financial expertise a lot

as we would work through these deals. You know, going back in time, gosh, Bob Frankenberg was the CEO of the company at the time, so Bob would have been involved to some degree. Duff Thompson, when we acquired WordPerfect in July, I think mid 1994, Duff was the general counsel at WordPerfect corporation. And when Novell and WordPerfect corporation

came together, I retained the legal function for the combined entity Novell-WordPerfect, and Duff did business development. And Duff was with the company actively for

about a six-month period of time following the Novell-WordPerfect acquisition. So Duff would have been

involved peripherally in the deal.

2438

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

Ed Chatlos, as I've gone back and looked at some of the memoranda and so forth, Ed was involved. in New Jersey. He was based out

So I didn't see a lot of Ed, but he

certainly would have been involved. Q Focusing on the transaction itself and based upon your

recent review of some of the documents, do you recall there being any particular points of issue regarding this transaction in terms of special deal points that came to mind? A Well, certainly as you look through the documentation,

you look through the contract itself, you look through what was stated in the board minutes that were drafted contemporaneously with the close of this deal, absolutely that, you know, it was very clear that Novell had retained the patents, the copyrights, et cetera, associated with the UNIX rating system. Q You mentioned the board meeting minutes. Do you recall

whether the Santa Cruz transaction was approved by Novell's board of directors? A Q Yes. How is it that you are able to remember that now 15

years later? A Q Going back and looking at my board minutes. You say your board minutes. Who actually prepared

those minutes?

2439

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

I prepared the minutes. Was that because you were the secretary to the board of

directors? A Q That's correct. What is the purpose of minutes of meetings of the board I ask this in a generic sense.

of directors? A Sure.

It's certainly to document particular And it should be emphasized

transactions and so forth.

that, you know, not everything that happens in a board meeting gets documented, you know, to the nth degree. I

think it's important to note that material aspects of any transaction -- a large transaction get voted through the board of directors, but -Q Again, we're in this transaction talking about a

meeting that was held almost 15 years ago, what are the benefits of board meetings looking back in time? A Well, fortunately, I've got those things and the

company has those things as a corporate -- permanent corporate record to accurately reflect what occurred at that point in time. Q That's why the board minutes are kept.

What was your habit and practice, say in 1995, with

respect to preparing the board meeting minutes relative to the actual holding of the meeting itself? A Well, I would, prior to the meeting, give deep thought

to -- I would prepare the agenda to the meeting, outline

2440

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

what was going on.

I would typically sit down with the CEO

and kind of review -- at that time it would have been Bob Frankenber