Testimony of Elwyn Berlekamp
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE BRANCH
-vs- CASE NO. C-95 20678 RMW
No. C-95 20679
ISHI PRESS INTERNATIONAL, et al.
ISHI PRESS INTERNATIONAL; a California Corporation, ELWYN BERLEKAMP, an individual, NATHANIEL BERKOWITZ, an individual, HARTLAND SNYDER, an individual,
RICHARD BOZULICH, individually, and THE ISHI PRESS INC., a Japanese Corp.,
SAMUEL SLOAN, aka ISMAIL SLOAN, an individual,
DEPOSITION OF ELWYN BERLEKAMP
JANUARY 8, 1997
REPORTER'S TRANSCRIPT OF PROCEEDINGS
BY JILLANNE STEPHENSON, CSR #8563
2161 SHATTUCK AVENUE, SUITE 201
BERKELEY, CA 94704
A P P E A R A N C E S:
For the Plaintiff: CRAIG MAR
ATTORNEY AT LAW
1073 WALKER AVENUE
OAKLAND, CA 94610
For the Defendant: STEVEN S. MIYAKE
NEAL & ASSOCIATES
6200 ANTIOCH STREET, STE. 202
OAKLAND, CA 94611
For the Defendant: HOWARD NEAL
ATTORNEY AT LAW
NEAL & ASSOCIATES
6200 ANTIOCH STREET, STE. 202
OAKLAND, CA 94611
MR. BERKOWITZ (Afternoon session)
INDEX OF EXHIBITS
Declaration of Elwyn Berklekamp in Support of
Defendants' motion for Corporations Code; 6 pgs.
07-13-93 Agreement of Sale, unsigned; 1 pg.
06-16-94 Memorandum of Sale, unsigned; 1 pg.
06-16-94 Memorandum of Sale, signed; 1 pg.
06-16-94 Memorandum of Sale; signed; 1 pg.
05-01-94 Memorandum os Sale; signed; 1 pg.
07-07-95 letter to Judge Flaherty from Hartland Snyder; 3 pgs.
8 03-07-94 Board of Directors minutes; 2 pgs.
9 02-25-94 IPI adopted resolutions; 6 pgs.
10 06-30-93 IPI List of Shareholders; 1 pg.
11 09-14-94 IPI List of Shareholders; 1 pg.
12 12-31-93 IPI balance sheet; 1 pg.
13 09-30-93 IPI balance sheet; 1 pg.
14 06-30-93 IPI balance sheet; 1 pg.
15 03-31-93 IPI balance sheet; 1 pg.
16 01-31-94 IPI balance sheet; 1 pg.
17 06-30-94 IPI balance sheet; 1 pg.
18 Register of Original and Common Stock; 1 pg.
19 Register of Original and Preferred Series A Stock; 1 pg. Register of Original and Preferred Series B Stock; 1 pg.
21 IPI Shares Certificate No. 16; 1 pg.
22 09-23-91 Promissory Note; 1 pg.
23 09-14-94 document from Nathaniel Berkowitz; 1 pg.
24 12-23-93 letter to Torode from Berkowitz; 1 pg.
25 01-27-94 Promissory Note, unsigned; 1 pg.
26 03-20-90 IPI board meeting minutes; 1 pg.
27 Page 2 of Exhibit No. 26; 1 pg.
28 10-05-90 IPI board meeting minutes; 1 pg.
29 02-27-90 IPI board meeting minutes; 1 pg.
30 02-22-91 IPI board meeting minutes; 1 pg.
31 07-22-91 IPI board meeting minutes; 1 pg.
32 06-25-92 IPI board meeting minutes; 1 pg.
33 Page 2 of Exhibit 32; 1 pg.
34 06-25-92 IPI board meeting minutes; 1 pg.
35 Page 2 of Exhibit 34; 1 pg.
36 06-25-92 IPI board meeting minutes; 1 pg.
37 03-16-93 IPI board meeting minutes; 1 pg.
38 01-27-93 IPI board meeting minutes; 1 pg.
39 07-13-93 IPI board meeting minutes; 1 pg.
40 09-01-93 IPI board meeting minutes; 1 pg.
41 09-01-93 IPI board meeting minutes; 1 pg.
42 01-27-93 IPI board meeting minutes; 1 pg.
43 Page 2 of Exhibit 42; 1 pg.
44 09-29-93 IPI board meeting minutes; 1 pg.
45 09-19-95 Confession of Judgment by IPI; 1 pg.
46 09-19-95 Judgment Pursuant to Confession by Nathaniel Berkowitz; 1 pg.
P R O C E E D I N G S
MR. MIYAKE: I'd like to make a statement on the record pertaining to three matters. First of all, there's a January 28, 1997 early neutral evaluation set originally for 9:30 in the morning. We since learned that Mr. Berlekamp, the deponent in this deposition, can not make it on that time at that date, but he can make it in the afternoon. So we have to reschedule the early neutral evaluation of January 28th to the afternoon of the 28th, and if necessary go on to the next day, the 29th of January 1997. Mr. Bass, who is the early neutral evaluator, has professed his -- he has directed us to contact him jointly so that there are no unilateral communications to him made by either party. Therefore, I suggested to Mr. Mar that at the time we break for lunch we contact Mr. Bass and reschedule the early neutral evaluation for the afternoon of the 28th. Secondly, we did receive the orders on our motion or protective order to bar Mr. Sam Sloan from attending depositions. The orders from Judge Trumble, Majestrate Trumble said Mr. Sloan can attend the depositions, but he can not ask any requests nor make statements or speak on the record, and we have served it upon Mr. Mar yesterday by mail, that if Mr. Sloan even passes questions in writing to Mr. Mar and we see it, we will terminate the deposition. Thirdly, this is to put you on notice that we intend to make a motion in limine at the time of trial to exclude Mr. Sloan from testifying as a witness by reason that he is attending the depositions of these other witnesses, and we feel that his testimony that he might be able to give at the time of trial would be tainted.
MR. NEAL: The point is, Mr. Mar, we want to make sure you are on notice, because it's your decision as to who you're going to call as a witness on behalf or your client, and we are taking the position that we have the right to exclude witnesses, parties or people who have been designated as witnesses and we intend to make that motion at the time of trial if you're going to have a witness who your client has designated as a witness sit in on any of the depositions.
MR. MAR: Is that it?
MR. MIYAKE: So far.
BE IT REMEMBERED, that pursuant to Notice of Taking Deposition, and on January 8, 1997, commencing at the hour of 9:30 a.m., at the offices of Clark Reporting, 2161 Shattuck, STe. 201, Berkeley, California, before me, JillAnne Stephenson, a duly qualified Certified Shorthand Reporter, License No. 8563, in and for the State of California, there personally appeared ELWYN BERKLEKAMP, called as a witness by the plaintiff, who, being first duly sworn by me to tell the truth under penalty of perjury under the laws of the State of California, was thereupon examined and testified as hereinafter set forth.
EXAMINATION BY MR. MAR:
Q. What is your name?
A. Elwyn Berlekamp.
Q. What is your address?
A. 120 Hazel Lane, Piedmont, 94611.
Q. What is your occupation?
A. Currently mathematics. At other times, I've been a professor of computer science and electrical engineering.
Q. At what university?
A. University of California Berkeley.
Q. And what's your educational background?
A. I have a BS, MS and Ph.D from M.I.T. in electrical engineering, 1962 and 1964.
Q. Have you ever taken any business classes?
A. Have I ever taken any business classes? No.
Q. Are you familiar with John Torode?
Q. Did you once ask John Torode to loan money to Ishi Press International, Limited?
A. In England?
MR. MIYAKE: No -- yeah, okay.
THE DEPONENT: Yes.
Q. (By Mr. Mar) Did you make this offer over the phone?
MR. NEAL: Objection; vague and ambiguous, misstates the testimony.
Q. (By Mr. Mar) Did you make this offer over the phone?
MR. NEAL: Same objection.
MR. MAR: What did you want to do?
MR. MIYAKE: Well, see your question that says did he make the offer over the phone --
THE DEPONENT: I didn't make an offer.
MR. NEAL: End the objection.
Q. (By Mr. Mar) If you asked John Torode to loan money, isn't that an offer?
A. No, no.
MR. MIYAKE: That calls for a legal conclusion and expert testimony from a lay witness; lacks foundation.
Q. (By Mr. Mar) Did you talk to John Torode over the phone about asking him to loan money?
A. I had many contacts with John Torode, both in person and over the phone and I do not recall details of all this, which phone calls and which conversation. This was at a time when all directors of Ishi, Mr. Bozulich and Mr. Connelley and everyone, wanted money to support the operation in England and I solicited prospective lenders, John Torode being one, yes.
Q. What year was this -- did you ask Torode to loan money?
A. This is all well documented in the record. My memory is not too clear, '91 or '92, I think. I'm not -- well -- I'm sure you know the answer.
Q. Who are you speaking to?
A. You. I mean, this is well known and documented in the records, which I believe to be accurate.
Q. Did John Torode discuss a guarantee with you?
A. It was well known to Bozulich, Connelley and me and I'm not sure who -- yes, I was involved in such discussions among all the parties, yes.
Q. What was the guarantee about with John Torode?
A. The guarantee of John Torode's note to Ishi?
A. Yes. The guarantee was if this loan was not repaid, that it would be converted into stock in the Ishi -- in the parent company, which was Ishi Press International based in San Jose, at an appropriate price.
Q. Did Ishi Press International, Limited pay the loan back?
Q. Did Torode ask them to pay it back?
A. Oh, I believe so, yes. I'm sure.
Q. Did he ask Ishi Press International of California to pay it back?
A. The note was in default; he attempted to collect, yes.
Q. From which company?
A. From the company that issued the notice, which is the subsidiary in the UK.
Q. How much money did Torode loan?
A. As I understand it, it was about $40,000; maybe it was 25,000 pounds. I'm not sure; something of that order.
Q. Did Torode request a 30 percent interest rate or did you request a 30 percent interest rate on this loan?
MR. NEAL: Objection; compound, ambiguous.
Q. (By Mr. Mar) Did he request a 30 percent interest rate on the loan?
Q. Did you agree with him on this interest rate?
A. Personally? The board of Ishi Press, which I was a member, which Mr. Bozulich and Mr. Connelley were heavily involved in all these negotiations, believed that this note would be -- were very confident that this note would be repaid within a few months. This was to finance him into the Christmas season with the view the outstanding loan was for three to four months, involved borrowing money at a total cost of perhaps ten percent, and that the advantages of having this inventory for the Christmas season way exceeds that. So yes, it was a decision of the board of Ishi Press which I was known, Ishi Press of San Jose.
Q. Was the loan with Torode ratified by the board?
A. Not only ratified by the board, negotiated by the board, yes. Mr. Bozulich was well aware of this, as well as Mr. Connelley.
Q. Do you have documentation to prove that?
A. Mr. Bozulich was chairman of the board and was in charge of the documentation. I'm not sure. I don't think -- I don't know what documentation Bozulich did or did not keep.
Q. Do you have any documentation that would tend to support your view that the Torode loan was ratified by the board?
A. I have no documentation that you're not aware of on this. There is some documentation in the file I believe. Yes, I think you have it.
Q. Isn't a 30 percent interest rate serious?
MR. MIYAKE: Calls for a legal conclusion and testimony from a lay witness; lacks foundation; assumes facts not in evidence; overbroad and burdensome. I instruct you not to answer.
Q. (By Mr. Mar) Did you buy Ishi Press International, Limited of London?
Q. What year?
A. In summer of 1993.
Q. Did John Torode agree to any guarantee in writing?
A. Excuse me?
Q. Did John Torode agree to any guarantee in writing?
MR. MIYAKE: Vague and ambiguous.
THE DEPONENT: I don't believe so.
MR. MIYAKE: -- overbroad and burdensome. You mean did John Torode agree to guarantee something in writing?
Q. (By Mr. Mar) The question has been answered.
A. I don't know what -- what guarantee are you referring to? That his note was convertible into the stock?
Q. That's what I'm referring to.
A. Yes, I believe so.
Q. And do you have any documentation that would show that?
A. You have all the documentation to it. I have no documentation you don't have. I think it shows that, yes.
Q. Does it show his signature on any of the guarantees?
A. I have not reviewed these documents. It was certainly agreed by all parties at the time.
Q. How much did you pay to purchase Ishi Press International, Limited?
MR. NEAL: Objection, vague and ambiguous.
THE DEPONENT: As I recall, it was some number of shares of stock in Ishi International and some cash.
Q. (By Mr. Mar) How much did you pay to buy this company?
A. I'm not sure. Approximately $50,000, and -- I don't know. I don't recall. Some stock which was not worth much then.
Q. Did you agree with the board to guarantee Torode's loan?
A. Yes, it was unanimous.
Q. Did you consider what would happen if Ishi Press of London defaulted on the loan?
A. Yes. All members of the board considered this.
Q. Was there a vote on this guarantee?
A. It was unanimous.
Q. How many people were attending the meeting when this vote was ratified?
A. I don't recall. Certainly Bozulich, Connelley, Berlekamp were involved. I don't recall whether Mr. White was involved at that time or not.
Q. Were you a director at this time in 1991?
Q. Was Bozulich a director in 1991?
A. He was chairman, yes.
Q. Was Mr. Connelley a director in 1991?
Q. Was White a director in 1991?
A. I don't recall. White was a director at one time. I don't remember the dates exactly. Most business was done by telephone in those days, often with a conference call including Bozulich and me and Connelley.
Q. Did you sell Ishi Press International, Limited to Berkowitz or any part to Berkowitz?
Q. What year?
A. December of 1993, I believe.
Q. Did you sell the whole company to Berkowitz?
Q. For how much?
A. Very little. I don't remember.
Q. When did Berkowitz sell Ishi Press International, Limited?
A. Excuse me?
Q. When did Berkowitz sell Ishi Press International, Limited?
MR. MIYAKE: Assumes facts not in evidence, lacks --
THE DEPONENT: I don't know. Did he?
Q. (By Mr. Mar) Did he sell Ishi Press International?
A. Unknown to me whether he ever sold it.
Q. In January of 1994, did Berkowitz still own Ishi Press International, Limited?
A. Far as I know, he did.
Q. How many years have you known Mr. Berkowitz?
A. Mr. Berkowitz, at least 20; somewhere between 20 and 25.
Q. Did you know in 1993 that Torode wanted to sell his notes? Did you know in 1993 that Torode wanted to sell his notes?
A. Everyone knew this, yes.
Q. Did all the directors know this?
Q. Did Connelley know this?
Q. Did Bozulich know this?
Q. Did Berkowitz know that Torode wanted to sell his notes?
A. Obviously. At some point he bought them.
Q. Did you tell him that Torode wanted to sell his notes?
A. I'm not sure who he found this out from, possibly me. It was well known.
Q. When did you first learn that Berkowitz paid Torode $500 to buy the notes?
MR. MIYAKE: Assumes facts not in evidence; lacks foundation.
THE DEPONENT: I don't recall.
Q. (By Mr. Mar) On what date did you first learn that Berkowitz had acquired 158,397 shares of Ishi Press International stock?
A. This was the conversion of the note?
A. Sometime about when it occurred, which is -- I'm not sure.
Q. Can you put a year on that?
A. I think it was summer of '94 maybe, but I'm not positive. I don't know.
Q. From whom did you learn this information?
A. It was well known; I don't recall.
Q. What do you mean, "it was well known"?
A. I did not consider this a newsworthy event; still don't.
Q. It was well known among who?
A. Everyone knew the note was convertible and everybody assumed at some point it would be converted because it was in default.
Q. Did all the directors know this?
A. All directors, yes.
Q. Did Torode try to get repayment from Ishi Press International of California?
A. Torode would have been happy to have gotten his money; that seems clear, yes. Mr. Bozulich was very much against paying any money.
Q. Did Torode make a formal demand for payment from Ishi Press International of California?
A. No. The note was issued by London and guaranteed by Ishi Press of California. He tried to collect from Ishi Press of London. All of this was well known at the time.
Q. What was well known and by whom?
MR. MIYAKE: Objection, compound.
THE DEPONENT: Bozulich, Connelley and Berlekamp were all well-aware that the note was in default, the note was convertible to stock, and at some point if not paid, the note would probably be converted to stock. That was clear. Bozulich in particular was very negative of paying cash to anybody except Bozulich for anything.
Q. (By Mr. Mar) Did the board of directors ever ratify the issuance of 158,397 shares to Berkowitz?
A. I don't believe it required board ratification, but it was certainly well known and would have been ratified if proposed. I'm not aware of such transaction or don't believe it was required.
Q. Is 158,000 shares a material transaction?
MR. MIYAKE: Objection, calls for legal conclusion and expert testimony from a lay witness; lacks foundation; assumes facts not in evidence; again, vague and ambiguous, overbroad and burdensome; beyond the scope of permissible discovery. I instruct you not to answer.
Q. (By Mr. Mar) Wasn't the issuance of 158,397 shares to Berkowitz a transaction between a corporation and a director?
A. The transaction was a conversion of the note which had that provision in it.
Q. Was it a transaction between a corporation and a director?
MR. MIYAKE: Vague and ambiguous, "transaction" --
THE DEPONENT: I wouldn't call --
MR. MIYAKE: He testified the transaction was a issuance of shares on the note. That calls for also a legal conclusion because it calls for his analysis of whether Mr. Berkowitz was operating as a creditor or as a director when he converted the note to 158,000 shares. So it calls for a legal conclusion from a lay witness; assumes facts not in evidence; lacks foundation; overbroad and burdensome.
Q. (By Mr. Mar) Was this a contract between a corporation and a director?
MR. MIYAKE: Same objections. Besides, that's something for the judge to say, not from Mr. Berlekamp. That is a legal conclusion.
Q. (By Mr. Mar) How would you like to answer this, Mr. Berlekamp?
MR. NEAL: Instruct him not to answer.
Q. (By Mr. Mar) Did you tell Mr. Bozulich that Berkowitz had obtained 158,397 shares?
A. He knew it. I'm not sure.
Q. How do you know that he knew it?
A. He knew the note was convertible and he had the note. I'm not sure when he found out the note had been converted.
Q. Did you tell Connelley that Berkowitz had become the holder of Torode's notes?
A. I don't know when he found that out either or from who. I don't know. None of these were issues at the time.
Q. Did you tell Connelley that Berkowitz had bought Torode's notes?
A. These were not issues at the time and I'm not sure who found out what, at what point, when. Was well known.
Q. What do you mean it "was well known"? Well known among Connelley --
MR. NEAL: Objection, asked and answered.
THE DEPONENT: These were not issues -- none of these transactions were issues at the time they occurred. Bozulich decided to go back and reconstruct a fanciful history and make them issues later. They were not issues at the time.
Q. (By Mr. Mar) Can you clarify that? What do you mean "these were not issues at the time"?
A. Prior to October '94, these were non-events.
Q. What do you mean? They didn't happen?
A. No, they happened. They happened; they were known, agreed to and acquiesced by everybody.
Q. Are you saying they were no controversies?
A. They were no controversies. None of these transactions have all been a controversy prior to October of '94 when Bozulich decided to file -- attempted to take over the company based on reconstructions of as much as he could.
Q. Were you interested in taking over the company?
MR. MIYAKE: Which company? Ishi Press International?
MR. MAR: Ishi Press International.
MR. MIYAKE: Objection --
THE DEPONENT: No.
MR. MIYAKE: -- vague and ambiguous. What do you mean, "taking over"?
THE DEPONENT: I was a very large --
MR. MIYAKE: What do you mean, "taking over"? Becoming the sole majority shareholder? Buying everybody else's stock out?
MR. MAR: Yes.
THE DEPONENT: No.
Q. (By Mr. Mar) Were you interested in controlling the company?
Q. Did you once loan Bozulich $20,000?
Q. Was there a collateral?
Q. What was the collateral?
A. All of his stock and all stock of Ishi Press Japan.
Q. How many shares did he have at the time?
A. As I recall, it came out to about 11 cents a share for the collateral, which there was about 180 shares or something.
Q. And if he defaulted on the loan, you would have gotten that, right?
A. Yes. I think the loan was worth more than the stock. I think the stock was worth less than $20,000. That's why he defaulted.
Q. How do you know that the stock was worth less than $20,000?
A. If he thought it was worth more than $20,000, he could repay the loan. He didn't.
Q. What kind of sales did the company Ishi Press International of California have in 1993?
A. I don't recall the year-by-year. The largest sales ever annually in some years around that time were I think about something like $950,000 with a loss of 20 or $30,000, probably more if you include all the losses in the UK.
Q. What year was this?
A. Possibly '93. It was never profitable, however.
Q. Were investors buying up stock in '93?
A. I was by far the largest investor. I don't recall if I was still loaning or buying some stock in '93. I think I did.
Q. You bought Ishi Press International's stock in 1993; is that correct?
A. I believe so.
Q. How much did you pay per share?
A. I don't know; possibly a dollar.
Q. For preferred or common?
A. Don't recall. I think that was an average price, some mixture of both. I'm not sure of the details. There were many stock purchases over many years.
Q. Were people still buying stock in '95?
MR. MIYAKE: Vague and ambiguous; buying stock from whom? Directly from the corporation.
MR. MAR: Ishi Press International of California.
THE DEPONENT: I'm not sure. There were many transactions. Some of the loans were essentially defaulted and then converted into stock, and there were various attempts to untangling these various transactions.
Q. (By Mr. Mar) Whose loans were defaulted on?
A. Mine, many. Many loans I made to the corporation -- I never got any loans repaid to the corporation ever. All of them were defaulted, both to Bozulich and to the corporation.
Q. Did you ever buy up the game Sneaky Squares?
MR. MIYAKE: Objection; vague and ambiguous; overbroad; burdensome. What do you mean? He went into a store and bought a copy of Sneaky Squares? Is that what you mean?
Q. (By Mr. Mar) Let me rephrase the question. Have you ever bought the game Sneaky Squares -- the rights to the game Sneaky Squares from Ishi Press International?
A. The question misconstrues what was happening.
Q. In June of '94, did you sign a contract that would allow Ishi Press International to pay you 350,000 common shares if it so desired?
A. Your interpretation of the contract -- I did sign a contract and that's your interpretation of it, but the contract speaks for itself and you don't need -- this was at a time when the company, especially Mr. Bozulich, was eagerly earlier -- this was a time Mr. Bozulich and others were eager to expand the puzzle business and to finance the puzzle business. Various things were done, one of which was that we -- some of the money -- since loans made to the company were not being repaid, we decided to finance some of the investment in the company as -- along the lines of sort of limited R&B partnership type things, but these were different -- the monies were paid into financial development of specific products in which the company had the option to rebuy the rights for stock if it so wished to. And one of those was Sneaky Squares. There were, I think, four at the time, actually.
Q. Did you receive a line of credit from Summit Bank?
A. Personally, no.
MR. MIYAKE: Objection, vague and ambiguous.
THE DEPONENT: The company, yes.
Q. (By Mr. Mar) Did the company?
A. Yes, it did.
Q. Do you remember what year the company received this line of credit?
A. No. They had other lines of credit prior to that. This was a better one, a bigger one that they got from Summit Bank.
Q. Where is Summit Bank located?
A. It's on Telegraph Avenue in Oakland around 30th, 35th somewhere. I'm not sure. Its address is known.
Q. Did you acquire some stock options in 1994?
A. Probably. I'm not sure -- there were so many transactions over the years, I'm not sure which one you're referring to.
Q. I'm referring to the four contracts that were signed in 1994.
A. Yes. These are valid contracts; I signed them.
Q. How many stock options did you acquire?
A. I do not recall. The company was heavily in debt. The stock was not -- did not become a big issue until you folks have tried to make it a big issue.
Q. What did you pay to acquire the stock options in 1994?
A. Over a hundred thousand dollars cash.
MR. MIYAKE: Well, the objection is vague and ambiguous; mischaracterizes prior testimony; lacks foundation; assumes facts not in evidence. I don't believe you can characterize 1994 contracts as him paying for stock options necessarily.
THE DEPONENT: I would not characterize it that way. You have the contracts; yes, they are valid contracts; yes, I signed them. You can read them too.
Q. (By Mr. Mar) Did Ishi Press International exercise those options in 1995?
Q. But not all?
A. As I recall, I ended up with the rights to the mathematical game software and they re-acquired the rights to which they could sell to R&B.
Q. Did Bozulich know in 1994 that you had acquired 910,000 stock options?
A. Yes. Bozulich knew everything.
Q. What do you mean, he "knew everything"?
A. All these questions alleging somehow we were conspiring against Bozulich have no basis in fact. This is a scenario he has invented much later. He selectively chose to forget various things or disavow various things and then accuse us with somehow plotting against him, which is all very inaccurate.
Q. Did you show Bozulich the contracts you signed to acquire the 910,000 stock options?
A. I believe he was aware of them.
MR. MIYAKE: Let me make an objection. Again, mischaracterizes his prior testimony; lacks foundation; vague and ambiguous; overbroad and burdensome. He didn't -- the question is that he entered into the contract to acquire the stock options, and that's not the gist of the contract and not the gist of his prior testimony.
Q. (By Mr. Mar) Did you show Bozulich the contracts you signed to acquire the 910,000 stock options?
MR. MIYAKE: Same objections.
THE DEPONENT: There were phone calls with Bozulich throughout this period. He was well aware of all of this. Whether he saw them, whether he got them by fax, whether he heard about this orally -- it was clear from various things he said that he was very aware of this. And I do not recall whether I specifically showed him. It did not occur to me he would try to disavow knowledge. I did not try to spend a lot of time trying to document every detail, because I trusted him at this point.
Q. (By Mr. Mar) Was your acquisition of 910,000 stock options in 1994 ratified by the board?
A. I -- there are minutes of directors' meetings which you have, and I believe they accurately reflect what was happening at the time.
Q. Have you seen any that do?
A. Yes, I've seen minutes of various board meetings.
Q. In 1994?
MR. MIYAKE: Whether he saw them in 1994? Did you see the minutes in 1994?
THE DEPONENT: We have minutes in the file for 1994 and I believe they were accurate. I believe they were -- reflect pretty much what happened.
Q. (By Mr. Mar) And do they show that --
A. They were very consistent with what happened. I interpret it as ratification, yes. I don't know what you want.
Q. Do they show that 910,000 stock options were ratified?
MR. MIYAKE: Objection. The objection is the document speaks for itself. It's not fair for the witness, to have him recall 1994 board minutes of meetings. We produced those board meetings to you. They're available to you. You can show them to the witness at this time if you so wish. It's not fair to the witness to back him into a corner and ask him to recall every last detail of all the board meeting minutes of 1994.
MR. NEAL: Also calls for a legal conclusion. I think we should object on that ground as well.
Q. (By Mr. Mar) Is there anything in the minutes that mentions 910,000 stock options being issued to you?
A. I don't know, but if you show me the minutes I'll be happy to hunt for it. You can find it too.
Q. Did you make up these minutes?
A. No, I was involved in -- there were iterations of minutes on several occasions by Bozulich and Connelley and other directors. At one time, White was a director; at one time Berkowitz became a director, which these drafts were circulated, amended and approved.
Q. Who made up these minutes?
MR. MIYAKE: By "made up," you mean actually drafted them?
MR. MAR: Yeah.
THE DEPONENT: I don't know. Some were joint efforts; sometimes they were done by Don; sometimes I was involved.
Q. (By Mr. Mar) Did you read these minutes?
A. I certainly did.
Q. And you recall at least one of the minutes mentioning 910,000 stock options?
A. I do not recall this, no.
MR. NEAL: Objection, asked and answered.
Q. (By Mr. Mar) When was the 910,000 stock options ratified?
MR. NEAL: Objection, asked and answered.
THE DEPONENT: I answered this question.
Q. (By Mr. Mar) Who was present at this meeting in which it was ratified?
A. Bozulich was present by telephone in many discussions and approved the idea. He thought it was a great idea. It was more money into the company; he liked it. He was especially interested in the cash coming into the company at that time, not paying much attention to what was going on.
Q. Did he say this at a meeting?
A. Many times. He told me this on the phone. There were also meetings which were -- I believe, transactions are accurately summarized in the minutes.
Q. How many board meetings did you have in 1994?
A. I do not recall. I recall one in particular in November of 1994 in Nat's office which is a virtually momentous occasion. There was one instance, at least several phone call discussions earlier. I'm sure there were several phone calls between me and Bozulich in September of '94 that were probably not meetings; there were just two of us then.
Q. So these are board meetings you're talking about; not shareholder meetings?
A. That is true. I believe the vast majority of shareholders were represented by members of the board, however. In fact, we personally had most of them.
Q. Do you have any evidence from 1994 in any of the minutes showing ratification of 900 --
A. You have the minutes; you can read them yourselves.
MR. MIYAKE: Plus, it has been asked and answered.
MR. MIYAKE: I need to use the bathroom.
MR. MAR: I guess we'll take a break or something. (Off the record).
Q. (By Mr. Mar) How many board meetings did you attend in 1994?
A. A very memorable one in November, and I'm not sure how many preceding that. I believe there was one in the spring in person. Both of those were in Nat's office in which everybody was present, and there probably were some phone meetings as well; I'm not sure.
Q. Was Bozulich present at that meeting?
A. Bozulich was certainly present once in the spring and once in November.
Q. Did Bozulich come over here from Japan to attend those meetings?
A. He was present.
MR. MIYAKE: He doesn't know where he came from.
THE DEPONENT: He came from Japan, but he had other purposes besides this meeting.
Q. (By Mr. Mar) Was Bozulich physically present at these meetings?
A. At least two, yes.
Q. Did he attend any of these meetings by telephone?
A. There have been others. There were many meetings with him. There may have been phone meetings with him, I suspect so, but I don't recall specifically.
Q. Was Bozulich physically present in California at the spring meeting of '94?
A. I believe he was, yes. I believe the minutes will reflect. He was certainly present in November at which all prior things were ratified.
Q. When did you first invest money in Ishi Press of California?
A. Approximately 1989.
Q. When did you first become a director of Ishi Press of California?
A. Approximately the same time.
Q. How many stocks did you buy in 1989 of Ishi Press of California?
A. Hundred thousand dollars worth, which I'm not sure, I think it was 20 percent of the company at the time or something.
Q. Who requested that you invest this money in Ishi Press of California?
A. Connelley and Bozulich, and Hartland Snyder served as the broker.
Q. Did you ever visit Bozulich in Japan?
A. Yes, several occasions.
Q. Did you visit him in '86?
Q. In Japan.
Q. What year did you visit him in Japan?
A. There were certainly visits in June of '93, in late fall '91, and in winter of '92. I remember those three specifically, and I believe there probably was another one earlier. I'm not sure right now. I could probably go back and reconstruct if necessary.
Q. Did Bozulich tell you he had considerable experience in dealing with the Go World and the Japan business community?
A. Yes, indeed.
Q. What year did he tell you this?
A. At the time of the initial investments in '89 -- he's represents this throughout.
Q. Was this a face-to-face conversation which he told you this?
A. Yes. He came to my house once in, I believe, '89 as well.
Q. Did you believe this at the time?
Q. Do you believe it's still true?
MR. NEAL: Objection, vague. What's "it"?
Q. (By Mr. Mar) That Mr. Bozulich brought considerable experience to the corporation dealing with the Go World and Japan business community.
A. I would now change the words from "experience" to "notoriety."
Q. Did Mr. Bozulich project increases of at least 50 percent per year in the corporation sales and earnings in the future, in '89?
Q. Did you believe that at the time?
A. I thought it -- I thought it was a plausible scenario, predicated on other promises and guarantees and conditions which he later reneged on.
Q. Did Mr. Bozulich tell you he had a virtual monopoly of the sale and distribution of Go-related products in the United States at that time?
Q. Did he represent to you that through the exclusive distribution agreement he would pass to Ishi Press International of California his marketing position?
Q. Did this meeting in '89 take place in California?
A. There was at least one meeting at my home. I believe '89, yes, which Bozulich and Connelley were both present and me, just the three of us -- maybe Snyder was there too. Actually maybe four. In fact, yes, I think Snyder was there.
Q. At this meeting, did Bozulich promise you that he would let the company Ishi Press of California distribute and sell the magazine Go World?
A. He had granted exclusive rights to the distribution of Go World to Ishi Press or to Ishi California, yes. It wasn't a matter of "let"; these rights were granted and passed in return for which he had received stock.
Q. What year was Berkowitz elected to the board of directors?
A. Early 1994.
Q. Can you give me a more precise date?
A. January 1994.
Q. Can you give me an even more precise date?
A. I'm not sure.
Q. Did you vote Berkowitz in as a director at that time?
A. Certainly, and as chairman.
Q. Did Bozulich vote Berkowitz in --
A. Bozulich agreed with us at the time, yes.
Q. Did Bozulich in '89 make any representations about a quota of products --
Q. -- from --
MR. MIYAKE: Let him finish the question.
Q. (By Mr. Mar) -- about a quota of products from the Ishi Press of Japan?
Q. Did Bozulich at that time in '89 agree to absorb foreign exchange losses?
A. If currencies weren't against him, yes. If currencies weren't for him, he would absorb gains.
Q. Did you ever sue Bozulich over $20,000 that was owed to you?
A. I gave him a notice of default.
Q. Did you ever sue him, though, over this?
A. No. I sold the note to -- later I sold the note.
Q. Did the law firm of Tomlinson, Zisco, Morosoli and Maser ever do work for Ishi Press of California while you were there?
A. It is my recollection that they were corporate attornies at one time, but I was not directly involved in dealing with them.
Q. Getting back to this guarantee of the -- of Torode's loan, did you ever consult with attorneys about the validity of the guarantee?
A. No, there seemed no need for such. Bozulich as chairman was very adamant against expending company money on legal bills at that time, quite unlike his more recent litigious behavior.
Q. Did you find out the price Berkowitz bought Torode's note at before the shares were issued to him or after the shares were issued to him?
MR. NEAL: Objection, vague and ambiguous. What shares?
THE DEPONENT: Don't know.
MR. MAR: The 158,397 shares.
THE DEPONENT: It is only long after the fact that you folks have decided this is an exiting, relevant event. I do not recall at the time. I did not attribute any great meaning to it at the time and still don't.
Q. (By Mr. Mar) Are you able to recall when you found out the price that Berkowitz bought Torode's notes for?
Q. Was Berkowitz issued a $50,000 note on January 27th, 1994?
A. Yes --
MR. MIYAKE: By whom?
THE DEPONENT: -- I believe so. By Ishi in return for money he wired to Mr. Bozulich.
Q. (By Mr. Mar) Did Berkowitz tell you that Ishi Press of California had guaranteed Bozulich's delivery of goods to Ishi Press of London?
MR. MIYAKE: Wait.
THE DEPONENT: What?
MR. MIYAKE: Wait, wait.
MR. MAR: Let me strike the question.
Q. (By Mr. Mar) Did Mr. Bozulich deliver goods to Ishi Press of London which were unpaid for?
MR. MIYAKE: Well, that's vague and ambiguous because --
THE DEPONENT: At what time?
MR. MIYAKE: Yeah, what time period? In any given time frame?
Q. (By Mr. Mar) Let's say '91 or '92. Did Bozulich deliver goods to Ishi Press of London which weren't paid for?
MR. MIYAKE: Vague and ambiguous. Payment in advance, payment right on the spot, payment c.o.d., payment six months down the line? Mr. Bozulich testified himself he had arrangements with the export insurance such that every time he would ship goods and have a bill of lading he would take it to the export insurance agency and get export insurance for that amount, which was -- I think he characterized it as a loan until he was repaid by the recipient of those goods. So of course, he shipped goods to both Ishi Press International and Ishi Press of London which were unpaid for at that time. Is that what you mean? I mean, he always did that.
THE DEPONENT: I'll wait for a simpler question.
MR. MAR: Let me rephrase the question.
THE DEPONENT: Shorter please.
Q. (By Mr. Mar) In 1991 or '92 did Bozulich deliver goods to Ishi Press of London --
A. I believe he did.
MR. MIYAKE: Objection, vague and ambiguous. Also by using the term "Bozulich," you mean Ishi Press Japan, right?
THE DEPONENT: And Bozulich, which were synonymous.
Q. (By Mr. Mar) Getting back to the $50,000 note which Ishi Press issued to Berkowitz, did Berkowitz tell Snyder that Ishi Press of California had guaranteed Bozulich's delivery of goods in '91 or '92?
MR. MIYAKE: Vague and ambiguous, unintelligible. Could you repeat the question, please?
THE DEPONENT: I don't recall any --
MR. MIYAKE: Wait, wait. Madam reporter -- (Reporter reads record)
MR. NEAL: Objection, also calls for speculation, asking what two other people discussed.
THE DEPONENT: Don't know what two other people discussed.
MR. MIYAKE: Plus vague and ambiguous. Deliver goods in '91 or '92 to whom? Ishi Press International or Ishi Press of London? Assumes facts not in evidence; mischaracterizes prior testimony; lacks foundation; overbroad and burdensome.
Q. (By Mr. Mar) Let me try here. Do you recall if there was a guarantee on Bozulich's delivery of goods to Ishi Press of London in '91 or '92?
A. I believe there was no such guarantees, my belief, at that time.
MR. MIYAKE: And just to clarify the question, you mean guarantees issued by Ishi Press International of California, right?
MR. MAR: (Nods head up and down).
THE DEPONENT: There was no guarantee.
MR. NEAL: In response to Mr. Miyake's question, all we got was a nod of the head. Was that a "yes," you were referring to a guarantee by Ishi Press International of California?
Q. (By Mr. Mar) Did Berkowitz tell you about this guarantee?
MR. MIYAKE: Wait, there was no guarantee.
THE DEPONENT: I don't believe there was a guarantee in '91 or '92, but if so, I was unaware of it and I don't know as I would have -- well...
Q. (By Mr. Mar) Did Berkowitz tell anyone that Ishi Press International of California had guaranteed Bozulich's shipment?
MR. MIYAKE: Of goods to Ishi Press UK?
MR. MAR: Yes.
THE DEPONENT: Is this part of a deal struck in 1994 or something you think pre-existed in '91, '92? I don't know what you mean. I recall this history quite well, but not in the form of the questions you're asking, which I think are misleading.
Q. (By Mr. Mar) In '94; I'm referring to Berkowitz's $50,000 note?
A. In January '94?
Q. January of '94?
Q. Did Berkowitz tell anyone in '94 that Ishi Press had guaranteed Bozulich's shipment?
MR. MIYAKE: Of goods to --
MR. MAR: Of goods --
MR. NEAL: Objection, calls for speculation. You can ask this witness what someone may have told him, but to ask him to guess whether somebody talked to anyone ...
Q. (By Mr. Mar) Can't remember?
A. Your question is based on many hypotheses that I don't happen to share. I don't know how to respond to questions, you know, "When did you stop beating your wife," or something. I just don't share the hypotheses. I do not see it as a meaningful question.
Q. Did you ever hear Snyder say there was a guarantee on Bozulich's shipment of goods to Ishi London in '92?
A. I was unaware of any discussion of such things in '92, or if it happened, I didn't see the significance at the time.
Q. Did Snyder say anything about a guarantee in '94?
A. I'm not sensitized to this set of transactions in the way you are, so I don't know. Don't think there was some -- except as part of the various deals we tried to strike later that may have come in as part of a settlement, but it was not an isolated transaction, no.
Q. Did Hartland Snyder ever write defamatory letters about anyone in the 1990s?
A. Not that I'm aware of.
MR. MIYAKE: Calls for a legal conclusion from a lay witness.
THE DEPONENT: Not that I'm aware of.
Q. (By Mr. Mar) Did Hartland Snyder ever work for you?
MR. MIYAKE: Objection, vague and ambiguous again. Him personally or Ishi Press International?
MR. MAR: For him personally.
THE DEPONENT: Work for me as an employee, no.
Q. (By Mr. Mar) Did he ever work for you as a contractor?
A. Not as a contractor, no.
Q. Did he ever work for you in any capacity?
A. He was a broker who -- with whom I did some business such as buying shares in Ishi International of San Jose.
Q. Did Snyder ever receive compensation for these services from you?
A. I believe the corporation compensated him by giving him a small amount of stock. I was pleased to find a director who seemed to be pleased with selling stock. It was unusual in the brokerage business.
Q. Did Snyder ever own stock in Ishi Press of California?
A. Yes, I believe he got a small commission on the sale that was made to me.
Q. Before he made the sale, did Snyder own stock in Ishi Press of California?
A. I believe he did not.
Q. What year did Snyder begin working with the board of directors of Ishi Press of California?
A. I believe I was the first investor he brought in, and so I assume he began -- I also believe I was one of the first people he contacted, so I assume it was about the time I joined, maybe a few months earlier. I don't know. I would say '89, maybe late '88. I don't know.
Q. Did Mr. Berkowitz ever do any work for the board of directors before he became a director of the company?
A. He became an investor, and I believe he attended one board meeting as a visitor. I don't know what work you might be referring to.
Q. What year did he attend this meeting?
A. I'm not sure. We had other investors who were prospective investors at the time. I can recall certainly several, but he was along a different -- among different prospective investors who were invited guests at various board meetings.
Q. Who requested that work by the initial investors of the company, Ishi Press of California?
A. I don't know. It could have been Connelley or Snyder or me or Bozulich or all of us. I certainly had known him longer than these other people, and I believe it was I who first mentioned this company to him, but that's only 'cuz I know him better than the others did.
Q. When did you first meet Mr. Berkowitz?
A. You asked me before, and I believe it's between 20 and 25 years ago.
Q. Besides Ishi Press of California, did Berkowitz ever work at the same company that you worked at?
A. As employees, no.
Q. In any other capacity?
A. As directors, yes.
Q. What company was that?
A. Is this relevant?
MR. MIYAKE: Well --
THE DEPONENT: I'll answer it.
MR. MIYAKE: We're off on a fishing expedition.
THE DEPONENT: Ishi Press. On what he's fising for -- first of all, what are you fishing for and what's the relevance of both questions?
Q. (By Mr. Mar) Well, the relevance is past companies. That's the relevance.
A. Past companies?
A. Why does that relate to this one? We have had mutual business ventures before, yes.
Q. It has to do with evidence and stuff like that.
A. Has to do with what?
A. What evidence?
Q. Evidence of past things that have happened or past companies that relate to Mr. Berkowitz and to you.
A. Why is my history prior to my investment relevant to any of this?
MR. NEAL: We'll object to the relevance, instruct him not to answer.
THE DEPONENT: He and I were both on the board of Tomlinson, Zisco, Morosoli and Maser.
MR. NEAL: But so what?
Q. (By Mr. Mar) What year was this?
A. Why does it matter? I'm not reluctant to go off on this tangent. (sic)
Q. Okay. You want me to explain to you. Certain kinds of evidence based on past companies or past acts that people do are relevant in evidence.
MR. MIYAKE: Oh, so we can also go into Mr. Bozulich's past in this trial?
MR. MAR: Yes.
MR. MIYAKE: No, you're wrong, you're absolutely wrong. Past incidents of specific conduct is not relevant in a civil case. It might be marginally relevant in a criminal matter. In fact, in criminal matters, there's always a big fight as to whether you can get in a suspect's or defendant, criminal defendant's past instances of bad conduct to assassinate his character. In civil proceedings, past incidents of prior conduct almost are never allowed in.
THE DEPONENT: If we're allowed to put all this in, we can go after the other side. In this respect, I think this is a great opportunity and let's do it. It's absurd, because their past is checkered and ours is clean.
MR. MIYAKE: Falls outside of the scope of permissible discovery. Also, might impinge upon the deponent's right of privacy under the California Constitution.
THE DEPONENT: I have no contact with Berkowitz with which I'm ashamed. With respect to Mr. Bozulich, it was a big mistake from the beginning, but I did not realize that until much later.
MR. MIYAKE: I believe your question might also pertain to Mr. Berlekamp's association with Mr. Berkowitz with respect to Ishi Press England.
THE DEPONENT: Is that what you were driving at? That would certainly be relevant in this case.
MR. MAR: Yeah.
THE DEPONENT: I believe the history with Berkowitz is I had known him from prior business associations. I knew him to be somebody who sometimes invested in small companies. I knew he had various qualifications, including undergraduate from Harvard and master in business from London School of Economics. I knew he had quite a bit of experience as importer and exporter and also connections in the UK, as did Dr. Torode, and believed getting people like this involved in helping provide some sort of the oversight of Ishi UK as Mr. Hordern and Mr. Neilson -- getting professional management director types overseeing Ishi UK always seems to be a good idea. Connelley and Bozulich, to a large extent, agreed, at least in principle. So yes, I tried to get Berkowitz and Torode and these people interested in Ishi UK. I certainly did. Hordern as well, Neilson, all of them. But I believe the history of Berkowitz is he first invested in Ishi International, as I recall, and then became aware of our attempts to launch Ishi UK. And I was eager to get him interested in Ishi UK. So I'm not sure of the details of what dates, what happened exactly.
Q. (By Mr. Mar) Did Berkowitz ever work for a company called the InFerGene Company?
A. Unknown to me, if true.
Q. Did Berkowitz ever work for the Go Company?
A. Unknown to me, if true. Berkowitz has invested in many small companies, but I have not heard of these.
Q. Do you have a company called Hazelnut Futures?
A. That's not its correct name. It's Hazelnut, period. Yes.
Q. Was Mr. Berkowitz ever criminally indicted?
A. Not to my knowledge.
MR. NEAL: Can I interrupt? It's about ten to minutes after 11:00. I think if you're going to make your appointment at 11:30, we need to recess. I think that's what we had talked about off the record before we got started.
MR. MAR: So we're resuming --
MR. NEAL: 1:00 o'clock. (Noon recess taken).
MR. MIYAKE: I'd like to place on the record the fact that Mr. Berkowitz has appeared as a guest in this deposition. Mr. Sloan is at this deposition as well. Neither Mr. Sloan nor Mr. Mar are dressed in suits or coats and ties as befitting the gravity of this occasion. So that's the statement I'd like to make. Proceed.
Q. (By Mr. Mar) Have you ever been criminally indicted?
Q. Was Mr. Berkowitz ever the chairman of InFerGene Company?
A. I don't know.
Q. How much Ishi Press California stock did you pay to obtain Ishi Press International Limited?
MR. NEAL: Objection; asked and answered this morning.
THE DEPONENT: You asked me that this morning.
MR. MAR: Can we go back in the record? I'm not sure if I asked that question.
MR. NEAL: We're not going to sit around while she has to go through -- it was probably about fifteen minutes into the deposition.
THE DEPONENT: She can find it.
MR. NEAL: No, it would be very difficult. Besides, it's reflected in the documents already produced, which I think was part of the response this morning as well.
MR. MAR: Did I ever ask that question before, Jill? (Reporter reads record)
MR. NEAL: We've heard the question and answer.
MR. MAR: It was not asked how much stock, but it was answered that you paid some stock.
THE DEPONENT: $50,000 cash and some stock, which was not worth much at the time. I'm not sure how much it was worth.
Q. (By Mr. Mar) Do you remember how much stock it was?
MR. NEAL: Objection; asked and answered.
THE DEPONENT: Same as before.
Q. (By Mr. Mar) Do you remember how much stock it was?
MR. NEAL: Objection; same objection.
THE DEPONENT: I'm not sure.
MR. NEAL: It's been answered four times.
THE DEPONENT: No, I have not checked the records over lunch and I don't know any more now than I did this morning. I believe it is documented in records you have.
Q. (By Mr. Mar) Are you saying that you don't remember how much?
MR. MIYAKE: That's what he's saying.
THE DEPONENT: I'm not sure how much it was.
Q. (By Mr. Mar) You're saying you're not sure how much it was?
A. That's correct.
Q. Did the board in '94 ever come up with a number of a maximum amount of stock options which could be issued?
MR. MIYAKE: Vague and ambiguous; overbroad and burdensome. Issued by Ishi Press to anyone for any reason? That, I believe you're getting into the bylaws and articles of incorporation, because the articles of in corporation spell out how much the corporation is authorized to issue, how many shares the corporation is authorized to issue. So the question is very, very vague.
THE DEPONENT: 1994 was also a tumultuous year for the corporation, as you know.
Q. (By Mr. Mar) Do you remember if there was a maximum amount of stock options which could be issued then?
A. There were times in 1994 the company was desperate for cash, and the concern was wherever we're going to get more money, not the questions you were raising. So I don't recall this being discussed in '94. The company was controlled by debtors in most of '94.
Q. Did you ever -- did Richard Bozulich ever resign as director?
A. Not to my knowledge. He agreed to and then later refused, but I've not been involved since mid 1995 so I don't know what's happened in the last year and a half.
Q. Did Richard Bozulich ever defame you?
A. Directly or --
MR. MIYAKE: Let me make this objection: Calls for a legal conclusion from a lay witness; lacks foundation; assumes facts not in evidence; vague and ambiguous; overbroad and burdensome. That's the extent of my objections. Also, vague and ambiguous in terms of whether he means -- when Berlekamp personally or you as director of the corporation or the corporation itself.
Q. (By Mr. Mar) Did Bozulich ever defame you personally?
A. He's certainly said things that are untrue.
Q. What kind of things did he say?
A. For one thing, he denied, you know, being in a meeting which he was present which we struck a deal, which he signed papers, which we had witnesses, and he claims somehow I was involved in some conspiracy to forge his signature, which is a total fabrication, among others. This is certainly one of his most finer.
Q. Forge his signature on what document?
A. The declaration of a meeting on November 10, 1994.
Q. You didn't sign that?
A. He did. I saw it.
Q. No, did you sign it?
Q. Whose signature was a forgery?
A. All signatures were real. I witnessed them all myself. He later claims his signature was forged, which is a gross fraud, lie, fabrication. I don't know what else to say. It's one of the more outrageous of his behaviors that I've observed, but not unique. He's gone mad. He's hired you --
Q. Thanks a lot.
A. No, I mean he's hired you to harass us. It's not --
MR. MIYAKE: Nothing personal.
THE DEPONENT: He's hired somebody whose job is to harass us. I think it's outrageous. I'm not suggesting he might have hired a better or more skilled harasser or something. What can I say?
Q. (By Mr. Mar) Were you friends with Bozulich in 1994?
A. Certainly not by the end of the year, although -- well, we tried. I mean, we --
Q. Why weren't you friends with Bozulich at the end of 1994?
A. You want some statement about my relationship with Mr. Bozulich? He -- in '89, '90 when I started involvement with this company, I saw some talent and the appearance of competence in such things as producing Go World, later in producing Puzzle World. I checked his competence in various ways. It did not occur to me to check his business character and how he might act under stress because I assumed he was a man of some sort of honor, which I later decided was incorrect. But certainly in '89, '90, '91, '92, '93, we -- we were associates and we got along, yes. In '94, he got into periods of enormous stress, and my attitude began as one of compassion. I thought he badly needed to be bailed out of a huge mess he got himself into. And since I thought this was still some upside to the company, I participated in the bailout in early '94. He was clearly a very troubled individual at this time and --
Q. Troubled how? Financially, mentally or what?
A. All of the above, as is well documented in papers he has submitted into the record. There are letters he sent, a plea in January explaining why he was going over -- why the world was treating him so badly, and his wife had left, and his job, creditors foreclosing on himself because of his debts in Japan, he was in danger of going under, et cetera. And he was a troubled individual whom I had various dealings in the past. And my first reaction was an attempt to help him through this difficult time and maybe he'd recover; he did not. In fact, he got worse. So my attempts to rescue him failed, and what can I say?
Q. Did Bozulich try to remove the members of the board of directors in 1994?
A. Oh, yes. As you know, he sent this mad declaration to the shareholders in October announcing he was firing us at a time when all of his stock was in hock on a loan he had defaulted, when he had very little shares and which the company had enormous debts to Summit Bank, among others, which were in danger of foreclosure. And he was a very extrordinary act. So he -- yes, he announced that -- you've seen it -- that he was firing Ward and he was taking over and what, what, what. And I thought he was mad.
Q. Were you on speaking terms with Bozulich in 1995?
A. Well, follow --
MR. NEAL: Excuse me. That was 1995?
THE DEPONENT: 1995. Well, what happened is in 1994, following his increasingly stupid and muffed up takeover attempt -- which he had nowhere near enough stock nor enough votes, nor did he follow the bylaws, nor did he behave in anything in a reasonable way -- he sort of conceded through, when it all came to a meeting November 10 or 11 in Nat Berkowitz's office, which is documented in the minutes, in which he tried to strike a deal and more or less agreed that his takeover was aborted. And we resolved speaking terms and, you know, the company was still in sorry shape. He had wrecked the '94 Christmas season by this action. And there were many affairs in this company which were a mess largely due to his failure to bide his time and cooperate right to February; he did not. But he did seemingly try to apologize for this and make amends. And Snyder -- Connelley decided to quit. Snyder agreed to take over. Snyder thought he would work out some kind of deal with Bozulich, and we were going to resume. I was quite sceptical, but I did not want to walk away from the company in such dire shame because I knew the bank would foreclose whenever they wanted to. I continued to try to talk to him in '95. I made various telephone calls. He didn't want to do that. We had exchanges of e-mail. He had switched two appointments at one of our board meetings. We told him several times and he just refused to be present. He became very difficult to work with. And eventually I resigned in July of '95, and -- upon the culmination of the paying off the bank, getting the company out from under the bank debt which I was still involved in trying to do, we persuaded Billry Cheese Company (phonetic) to put up enough cash to pay off the bank, which was done, and whereupon it looked to me like Snyder had some chance of keeping his company going. So I quit. I walked away, left. I would not be involved anymore since, except for this lawsuit. But since then, he's been very adversarial and I think just mad. I think he's lost his marbles in some sense.
Q. When was Mr. Connelley removed from office?
A. Mr. Connelley stepped down around the end of '94, and was replaced by Hartland Snyder as acting president. Our first thought was maybe we could sell the company, and Snyder as a broker looked like he could do that.
Q. How was Snyder elected president?
A. Around January '95, I would think.
Q. By a board meeting?
A. I don't recall all the mechanics. It was not a contentious issue at the time. Bozulich was delighted to be rid of Connelley; Connelley was delighted to go. There was unanimity at the time it happened.
Q. At what point would you say your relationship deteriorated with Bozulich?
A. Fair enough. September '94 was the first hint of a real serious deterioration, when he in a phone call I had with him -- where he very much wanted us to get rid of Connelley as president forthwith.
Q. And you were opposed to that?
A. I told him it was certainly something we could consider in February of '95. I thought that would be a great time. At this time, the Christmas season was underway and Connelley and Lowenstein had a number of investors, a number of customers who were buying goods. And if they pulled off a great year, it looked to me like the company might recover. This was just an incredibly stupid time to try and change presidents. I told him then if he wanted to bring this up in February of '95, we'd see; if this Christmas season was as bad as the last few, it would be perfect to do that. But if it was as good as it might be, our problems would be past.
Q. What date were your stock options exercisable?
A. I have no idea.
Q. Were other directors were trying to get rid of Bozulich in 1995 as a director?
A. I don't recall the timing. Snyder certainly had many discussions with him and he had agreed to resign.
Q. In writing?
A. With Bozulich, you were never sure what was in writing because he was very slow. I don't know.
Q. Do you possess any documents showing he resigned in writing?
MR. MIYAKE: You mean do you possess --
THE DEPONENT: No, I have no documents at all anymore. I do not have documents. Our attorneys have documents; Ishi has documents; you have documents. Once in a while, I'm asked to review some of those documents and I do, and I have not found any documents in the file I'm aware of except for some of the things that have been filed in court by you folks which I view as incorrect in any material respects. So I'm happy to agree to all the various documents that I've seen.
Q. (By Mr. Mar) Does Ishi Press have a bank account at this time?
A. I have no idea what's happened since I resigned in July 1995 other than hearsay from what I hear from various allegations and charges. Don't know.
Q. Do you contend now that Bozulich did not bring considerable experience to the corporation in dealing with the Go World and the Japan business community?
A. Experience he brought was negative in many respects. He had some experience, yes, but not as claimed when it started, no.
Q. Mr. Bozulich said at one time he held a virtual monopoly of the sale and distribution of Go related products in the United States, was that true at the time he said that?
A. No. I now believe it was not true. At the time he said it --
Q. Because why?
A. Well, at the time he said it, you know, we walked into a few game stores and certainly saw a fair number of books by Bozulich and not others, but there were other stores selling other things as serious competition then which I didn't realize until later, but I'm sure he knew about then but just didn't close.
Q. Did he say to you at this time that he would pass to Ishi Press International this marketing position?
A. He represented -- he and Connelley represented that it already had it. And he certainly represented that, that they were the lone English language supplier of all these materials and the problem was to try to grow the Go market. That was their representation. The reality was that Bozulich had already alienated a number of folks and so it was not so clear.
Q. What year did he alienate certain folks?
A. Prior to '89.
Q. And do you know which folks he alienated?
A. Well, certainly -- how long a list do want to go down?
Q. Can you name me one?
A. There was a chap who died a couple years ago. Was his name McKenney? A leader of the Go community whom I'd never met, but at his funeral and memorial services, everybody was talking about his early soured relations with Bozulich and how he had been such a good guy and how even though Bozulich had swindled and frauded him in the early days of Ishi Press Japan, he had, you know, managed to get on with his life and leave Bozulich alone, an idea which at the time I'd somewhat aspired to as well, but I have not succeeded.
Q. At what time did Ishi Press of California stop publishing Go books?
MR. MIYAKE: It's vague and ambiguous with use of the term "publish." The inclusive distribution contract as well as the June 1994 contract -- the June 1994 contract especially speaks of the Go World magazine being published by Ishi Press International. If the question is limited to the contract use of the term "publish," then the witness can respond. But then I remember one of the first few depositions with James Connelley we got into a mixup about the term "publish" because it's a term of art in the industry whereby another "publish," having a right to publish, you also have a copyright to the thing published. And I don't believe you're using the term "publish" in that respect here, and I don't believe if the witness responds he will be responding with that understanding in mind. So you're not asking him whether Ishi Press International ever had the right to copyright Go World magazine; is that correct?
MR. MAR: Yes.
THE DEPONENT: Am I supposed to reinterpret the question? I believe Go World Issue '94 appeared sometime in fall of '94 and may have been the last of those that went through the conventional channels. There was another issue Mr. Bozulich attempted to put out through Casavido, Vido, (phonetic), a new company he swindled some Japanese investors in called Casavido, in which he attempted to do this through a new entity that was that rival to Ishi Press International. But as far as I know, that's the last issue that's appeared. But this is based on my friends who are Go players who are eager to read these issues. I don't know he's put out more that I'm aware of, would be -- or tried to.
Q. (By Mr. Mar) For how many years did Ishi Press of California distribute or sell the magazine Go World?
A. I believe from its inception, which was before my time, '86, maybe '87, '88, '89, '90, '91, '92, '93 and '94. And this renegade issue appeared in early '95, I think, but I'm not positive of the date. I did not get a copy from Bozulich or Ishi, while I was given one by one of my Go friends much later, so I don't know when it came out.
MR. MAR: Exhibit 1. (Whereupon, Plaintiff's Exhibit No. 1 was marked for identification)
THE DEPONENT: What's happening?
MR. NEAL: He's just identifying Exhibit 1.
THE DEPONENT: Oh, this is my declaration, yeah, sure, okay. What clarifications do you seek?
Q. (By Mr. Mar) Let's look at the bottom of Page 1. It says: "In 1994 - 1995, I held the rights to certain products: Sneaky Squares, AquaMagic Hourglass, Tanglewire Singles, and Mathematical Endgame Software previously owned by Ishi Press International." Is that true?
A. True. Everything in this declaration is true.
Q. Wait --
A. I don't sign false declarations --
A. -- unlike your client.
Q. You say here on the second sentence: "I pay in excess of $110,000 dollars" --
Q. -- "for the rights to these products."
A. All true. I financed the development of some of these products, which was paid to Ishi Press International.
Q. At what time did Ishi Press International exercise the option on your stock?
A. I don't recall. Is it one of these attachments?
Q. Possibly Page 3, Paragraph 6 maybe.
A. At what time did -- when the corporation was able to sell these things to R&B, they bought them back and sold them to R&B, when did that transaction occur?
Q. No, no --
A. Spring '95 --
Q. When did the company issue the 560,000 shares?
A. I didn't have these 560,000 shares very long. They were issued to me in return to acquire these products in order to sell these products to R&B in order to get the cash with which to pay off Summit Bank. They did this, and soon thereafter I sold everything. These shares had very little value. The company was bankrupt or operating on the verge, you need to understand.
Q. It's operating on the verge right now?
A. Well, it was at that time. I viewed it as very little value.
Q. At what time?
A. Spring '95 is the period under discussion here.
Q. You say the company at that time was under capitalized --
MR. MIYAKE: Wait, wait. Calls for expert witness testimony from a lay witness; also lacks foundation; assumes facts not in evidence; vague and ambiguous; overbroad and burdensome.
THE DEPONENT: The main problem of the company is not its capitalization, but the expertise and mechanizations of Richard Bozulich. That's the problem with the company as of this time frame. If he behaved in a sane way, the company would have had some prospects, but he chose to go disruptive and get in all these fights.
MR. MAR: Two. (Whereupon, Plaintiff's Exhibit 2 was marked for identification).
THE DEPONENT: This is summer of '93, yes. No, this is the answer to the question you were harassing me with this morning. So 75,000 shares and $755,000 dollars is the answer. Assuming you guys have not forged this copy, it's true.
Q. (By Mr. Mar) It's true. It's a true and correct copy.
A. If you say so. As far as I know, it is. Our lawyers have records in their trust.
Q. Do you recognize this document?
A. This is not inconsistent with any of my recollections.
Q. It says here you paid 75,000 shares of Preferred A convertible stock?
A. Could well be.
Q. Is that true or not?
A. If this is a true document, it's true, yes.
Q. And: "Berlekamp asserts that he is a knowledgeable investor with net worth in excess of $1 million and that he is experienced in investments of this nature." Is that true?
A. Certainly was true when I signed it. Why is this transaction of some interest to you, is what I don't quite understand.
MR. MAR: Three. (Whereupon, Plaintiff's Exhibit 3 was marked identification).
Q. (By Mr. Mar) What transaction are you talking about?
A. All these transactions. A lot of money is being paid in; most of it is going to Bozulich; and now you're all excited about everything. This is the $50,000, money that was paid in for the -- to finance the development of Sneaky Squares.
Q. Yeah. Did you indeed pay $50,000 --
A. Certainly did.
Q. You recognize this memorandum of sale dated June 16, 1994?
A. It looks genuine to me. I don't detect any hanky-panky.
MR. MIYAKE: You know, I believe that we -- we produced to you, Craig, in response to your request, signed documents of these things.
MR. NEAL: Photocopies of the signed documents.
MR. MIYAKE: Yeah, photocopies of the signed documents. And insofar as it's a signed document, you may recollect terms not reflected on this sheet.
THE DEPONENT: This is a draft version in some way --
MR. MIYAKE: It may. Do you have the signed documents?
THE DEPONENT: These were not very original documents at all. Bozulich and everybody was aware of them. Everybody else had them. They were no-brainers.
MR. MAR: This one you didn't sign.
THE DEPONENT: Well, okay. It was just an earlier version, or the same version before it got signed. I don't think there's a substantive difference between the one signed and the one there.
MR. MIYAKE: Might be.
THE DEPONENT: Let me look and -- there was another condition added in, right?
Q. (By Mr. Mar) This one is Exhibit 4. (Whereupon, Plaintiff's Exhibit 4 was marked for identification).
THE DEPONENT: Well, this is the version that clarifies the options. I can either demand the company buy it back for $5,000 or they can insist -- take it back for 350,000 the way it got worded.
Q. (By Mr. Mar) Is this a true and correct copy of the original?
A. The one executed apparently. Looks like my signature.
Q. Do you recognize the memorandum of sale dated June 16, 1994?
A. Looks legitimate.
Q. Look at the top paragraph. Did you pay 350,000?
A. This is changed from 75. This is a different transaction.
Q. How much did you pay?
A. I don't recall. Total was well over all these numbers. Which pieces were for which, I'm not -- I remember the things were contentious. I don't remember some of these details of transactions that were not -- that were unanimous at the time. It says 350,000, I paid that. There were other options floating around at the same time. In fact, they may even have the same dates; I'm not sure. This is one package of several more, maybe.
Q. On or about June 30th of '95, did Ishi Press issue you 350,000 shares or common stock?
A. All this happened in the late spring of '95 when R&B was in a mood to pay cash for these various assets. Ishi got them from me and sold them to R&B for the cash to pay off the bank. That happened in '95. I did not have them in my possession very long. I then sold my stock too. The net of all these, the bank debt was resolved when the company was in a position to stay in business if it so wished at Hartland Snyder's level.
MR. MAR: Exhibit No. 5. (Whereupon, Plaintiff's Exhibit 5 was marked for identification).
THE DEPONENT: $30,000 for Tanglewire Singles, yes, including the misprint on Line 3, Word 7, "copyrightss" has two s's at the end; it should only have one.
Q. (By Mr. Mar) Do you recognize the document?
A. It looks legitimate. It's similar to the other.
Q. Is that your signature down there?
A. Certainly looks like my signature.
Q. Is this a true and correct copy of the original?
A. As far as I know. I have not kept any of these documents since summer of '95, however. I've given them all to Snyder when I sold out my interests to him and to the legal folks here when this thing became emerged in litigation.
Q. Is Tanglewire Singles a game or puzzle?
A. It's a set of puzzles.
Q. Did you pay $30,000 for the rights, title and rights to this property?
A. So it says, including trademark copyrights, yes.
Q. And you sold product back to the company in '95; is that correct?
A. I don't recall which of these went which way. There were four. I know Sneaky Squares was certainly of interest to R&B. I'm not sure -- I know I have the rights now to the Go Endgame software, but to the other two, the Hourglass and Tangle Wires, I'm not sure which is which, but I have no interest to them anymore. How far they went through this transaction, I don't recall. (Whereupon, Plaintiff's Exhibits 6-11 marked for identification).
Q. (By Mr. Mar) Do you remember this one, Mr. Berlekamp?
A. Certainly not inconsistent with any of my recollections, no.
Q. Is that your signature down there?
A. Certainly looks like it.
Q. Look at the paragraph down there. Did you pay $50,000 or $30,000 here?
A. For what?
Q. For --
A. I paid $50,000 for something else and $30,000 for this apparently -- 50 or 30, could be either. It was a mistake.
Q. It's sort of ambiguous there, isn't it?
A. It's one or the other. I don't recall which. I don't know. $20,000 discrepancy on Line 4. I'm sure the company records reflect. I believe there was $30,000 for this one and $50,000 for one of the others. I'm not sure.
Q. Did you sell the math game software back to the company Ishi Press of California?
A. I believe I own it.
Q. You own it?
A. I believe so. I believe it's now mine. How we got it back there, whether it's one or two, I'm not sure which. I believe it's the only one of these products that I own. Oh, this is Snyder, Snyder's statement of ownership of Sneaky Squares as of July 1st, '95, okay. This being a week or so before I sold out, and I don't recall ever seeing this document before. You can have me read it.
MR. MIYAKE: You want him to read it?
MR. MAR: Sure.
THE DEPONENT: This is Sam Sloan sued over royalties or something.
Q. (By Mr. Mar) Looks like it.
A. Mr. Yoshi --
MR. NEAL: What number exhibit is this?
MR. MIYAKE: Seven.
THE DEPONENT: Okay. Fascinating.
Q. (By Mr. Mar) Have you read the document?
A. Just finished it, yeah. I don't recall having seen it before.
Q. Down there at the big paragraph, second from the bottom --
A. Page what?
Q. First page. The second sentence there of that paragraph.
A. Okay: "Mr. Berkowitz represents that the $50,000 was a wire transfer from United Exporters, 1095 Market Street to Mr. Bozulich's bank in Japan." I certainly believe that to be true. Bozulich had receipt of it at one time. No one argued about it before. Snyder is now claiming it's much later. I view it as a fact.
Q. Look down there on the first page, the last paragraph on the first page: "Mr. Berkowitz's acquisition of Ishi, UK included the acquisition of Mr. Torode's interest which was largely two notes totaling $40,000 and" --
A. I once thought it was in pounds, 25,000 pounds, whatever, about that.
Q. Okay: "..and convertible into IPI stock per documentation in Mr. Torode's file and Mr. Berkowitz's file. We have no documentation of Mr. Berkowitz's acquisition of Mr. Berlekamp's interest in Ishi, UK. We know it happened in the expectation that Mr. Berkowitz would become chairman to IPI and according to Mr. Berkowitz and Berlekamp it was consumated for the sum of $500." Is that true, the final sentence?
A. I don't recall, but it wasn't -- it could easily be true.
Q. Let's go to the paragraph entitled "You may want to stop reading here." Second sentence: "Through April, 1993 Mr. Berlekamp had acquired 101,564 shares of common and preferred for $100,000." Is that true?
A. That's essentially true as of maybe '92; I'm not sure.
Q. Final sentence, it says: "He also loaned IPI $120,000." Is that true?
A. Yes, and I believe that was later converted into stock as well.
Q. Look at the next paragraph: "According to Jim Connelley in July of 1993, $75,000 of notes and 75,000 preferred shares were then exchanged for IPI's Ishi, operations."
A. That's a document you just showed me a while ago.
Q. And: "Furthermore, according to Mr. Connelley Mr. Berlekamp made a further investment of $75,000 in the Fall of 1993." Is that true?
A. Could easily be.
Q. And now let's look at two sentences down. It says: "I spoke with Mr. Berlekamp about this, and his recollection was that in the Fall of 1993 Mr. Connelley came to his office at Hazelnut in Berkely and convinced him to put in additional $50,000 or $60,000." Is that true?
A. Could --
Q. Is that true?
A. Could easily be.
Q. Skipping down a couple more sentences: "Then in July of 1994, Mr. Berlekamp put in additional $50,000 and acquired the rights to Sneaky Squares, Tanglewire Singles, AquaMagic Hourglass, and the Go Endgame Software." Are those the four games or puzzles or software you acquired?
Q. And: "These contracts gave IPI to (sic) right to reacquire these products for various amounts of cash or stock."
A. Yes, you've seen all those. Well, it is documented.
Q. Second to last sentence: "I found the four contracts in the computer and reproduced them." So there were four contracts?
A. So it -- and, yeah, I believe that. I believe some of them have been handed about very recently here, yes.
Q. Go to the last paragraph: "Though there is some uncertainty about how much Mr. Berlekamp has invested it seems to lie between $320,000 and $345,000." Is that true?
A. I believe that's true. This is a direct investment in Ishi International, yes, not including investments in Ishi UK and monies advanced directly to Bozulich, which are more money.
Q. Go to the final page. It says here that Mr. Berkowitz as of July 1st, 1995 owns 168,397 shares."
A. I have no idea whether these numbers are accurate or not. Within a week or two of this time later, I sold all my interest out. I resigned from the board, sold my interest out. I could see no future in this company because Mr. Bozulich was in a very cantankerous mood, and it looked to me like a big fight over nothing.
Q. This sheet says here you own 586,564 shares at this time. Is that true?
A. I don't know. I sold all my shares whatever they were.
Q. To who?
A. Hartland Snyder.
Q. For how much?
A. I don't recall. A small amount. Would have been happy to have taken more if Bozulich or anybody else offered more, but nobody was. I just wanted out.
Q. Was there a board of directors vote?
A. I don't believe you need a board of directors vote on the sale of stock. I do not believe this is required. I sold. I resigned.
Q. My question was, was there a vote?
MR. NEAL: Objection; irrelevant. There has never been any requirement that a shareholder get a board of directors to vote to sell his shares to a willing buyer. It's completely irrelevant.
THE DEPONENT: Nor do I believe there had been anybody, except that Bozulich wanted to make trouble, there had been anybody contending any contract.
Q. (By Mr. Mar) Was there a vote?
A. I don't know.
MR. NEAL: Objection, irrelevant.
Q. (By Mr. Mar) You don't know, okay.
A. Don't know whether it was raining that day either. I mean, there is all kinds of things that -- you make it sound as though they have meaning where it's a fact they don't. Do we have a signed version of this? There were many that were signed, and some that were signed by some and not all, and some that were in various versions. Oh, this is the March '94 meeting. Okay. It certainly happens. This is the bailout of Bozulich. This is an accurate report of that meeting, I believe.
Q. Have you read the document?
A. Yes, yes, yes. I believe this to be true.
Q. It says here in the first paragraph --
A. Yes, they were all present, certainly were.
Q. And on this date, were they all the directors of the corporation?
A. That's what it says.
Q. Were you the one that wrote these minutes?
A. I may have participated in drafts of these minutes; I do not recall. They were certainly discussed back and forth among various people. I believe copies of these minutes were circulated and everybody agreed. And whether they did or didn't sign them or kept proposing changes or minor amendments, taking out a sentence or two here or there, the meeting certainly occurred. This is a close approximation of what happened at the meeting. Yes, I think it's true and accurate as of that time. Later, for instance, Tim Meyrick turned out to be a fraud, but we didn't know that when we wrote these minutes.
Q. At this meeting did you discuss the product Sneaky Squares?
A. Yes, indeed.
Q. Does this document accurately reflect all the relevant topics that you discussed on the date, March 7th of '94?
A. It was the decision of the folks who met there that these would be the minutes of that meeting. I don't know what else we did. I presume we chatted about other business that we chose not to include in the minutes. I don't know. I don't recall anything substantive. None of the four people there wanted to add any more minutes at one point; this was it. This was obviously a summary of our whole day. So I don't know.
Q. Who normally --
A. Not whole day, sorry; one afternoon.
Q. Who normally wrote out the minutes?
A. Usually Connelley would or I, or both would, you know, put some kind of version up and we'd go back and forth. Bozulich would usually be happy to acquiesce with sometimes some small changes. On some occasions, Nat would start, you know -- had points he wanted to make sure were signed. It was a joint effort.
Q. Were these minutes regularly made in the course of business?
A. Yes, the minutes -- most meetings had minutes, I mean, yes. They did not get through the lawyer into the corporate minutes book however that was -- you know, as has been observed that seemed to get stalled because of extreme opposition from Bozulich and Connelley at various times to paying legal fees. I hope he pays you -- he was very much against paying lawyers.
Q. Tell me about it.
A. No, I mean so some of that legal work didn't get done. And later, you know, when somebody goes over the corporate minutes books and finds they're not all there, that doesn't surprise me. I believe we should pay our lawyers and accountants and keep business more up to date than it generally was. These were never signed.
MR. MIYAKE: I've never found any signed agreements.
THE DEPONENT: Of this one?
MR. MIYAKE: Of this one, yeah.
THE DEPONENT: So it may have been -- I don't know. Was this the last meeting we had before the attempted takeover?
MR. MIYAKE: Yeah.
THE DEPONENT: I mean the last physical meeting? Sometimes the occasion to conclude the minutes is at the next meeting. It's common at the beginning of one meeting you start, "What's the accrued minutes of the last meeting?" Someone gets them out and it's done. It was the last meeting before the attempted takeover. The meeting after the attempted takeover was eclipsed by the attempts to get back on track after the attempted takeover, so these minutes, that's why they sort of -- my assumption is that's why they never got signed. These are Class B shares or something? I don't recall this. February '94. I don't recall what we're doing this for. I don't recall what this is all about, but again, my signature looks genuine, as do theirs. It was at a time when shortly after the -- is Berkowitz a director yet? I'm puzzled as to times and dates. Berkowitz became director in January of '94... here's evidence he is not yet a director. So I presume maybe it's March before he's a director; I don't know. I'm puzzled by the date here.
Q. (By Mr. Mar) Are you fairly certain he was a director in January of '94?
A. This leads me to wonder. I don't recall this at all. Why are we doing this, I don't know. Who are we going to sell these shares to? I don't know. See, maybe -- here's another --
MR. MIYAKE: There's no question. Don't make any statements.
THE DEPONENT: Speculate, a possibility --
MR. NEAL: He doesn't want you to speculate.
THE DEPONENT: I will not speculate on the record.
Q. (By Mr. Mar) The back page here, is that your signature down there?
A. Certainly looks like it.
Q. Do you recognize the top signature as being that of James Connelley?
A. Could easily be, you know. His signature is not easily recognized.
Q. Have you ever seen this document before?
A. It looks like something I signed. I have no reason to doubt its authenticity, but I don't recall it. I don't know what it's about.
Q. Let's look at Page 4 at the bottom: "RESOLVED that this corporation is hereby authorized to sell and issue up to a total of Three Hundred Fifty Thousand (350,000) shares of its common stock (the "Common Stock") at a per share purchase price of Forty Cents to qualified prospective investors." Do you remember ever reading or agreeing to that number, 350,000?
A. I really don't recall this document at all, but other than that, I'm not denying it. It could be it's all true.
Q. Let's go to Page 2 here, second paragraph: "RESOLVED that this corporation is hereby authorized to sell and issue up to a total of Two Hundred Fifty Thousand (250,000) shares of a new class of Series B Preferred Stock (the "Series B Preferred") at a per share purchase price of One Dollars and Thirty Cents ($1.30) to qualified prospective investors subject...". Do you remember agreeing to the term 350,000?
A. Don't remember this. Does Connelley comment on this?
MR. MIYAKE: No.
THE DEPONENT: I don't recall this -- I don't know. June 30th, '93.
Q. (By Mr. Mar) Have you ever seen this document before?
A. Don't recall.
Q. Do you recall ever seeing a stock registry book of the company?
A. Don't believe I ever did. I have no recollection.
Q. Let's look down here at Elwyn Berlekamp, Preferred, it says 77,172. Is that accurate as of this date?
A. I recall at one time I was buying 20 percent around a year or two earlier, and this thing's gotten diluted. This is approximately right, but there's also a big note outstanding still which I understand is later, into quite a bit more stock. This doesn't show notes later to be converted into quite a bit more stock. See, Nat Berkowitz is already in here, 10,000 shares back in June of '93; so is Torode.
Q. Is it true that John Torode owned 10,000 preferred?
A. That's what this says. I'm not verifying the authenticity; I'm saying it's not inconsistent with anything. It's somebody's attempt to be accurate at the time. The thing I think is missing is there is something like $120,000 dollars in debt outstanding to me which the company is not able to pay at cash, for which will be converted into stock very soon around this time. This may be the reason this was put together. This is probably another document just prior to that transaction, is my guess.
Q. This person, Kotaro Matoba, I believe he's the sixth person down the list, were you acquainted with Kotaro?
Q. John Rambo, did you know him?
A. Name doesn't ring any bells right now.
Q. Roger White, did you know him?
Q. Did he resign as a director?
A. Yes, he did.
Q. He had been a director for a while, is that true?
A. This is the famous list as of the 14th of September '94, which became the basis of much discussion about the attempted takeover. These were Sloan's notes or what? Written on this? Is that correct? I think they are.
Q. Have you ever seen this document?
A. I've seen this document lacking all of the annotations that are written in pencil by various folks.
Q. Look on the right-hand side of the document. I believe that says "Fax to Bozulich"?
A. "From Berkowitz." That may be.
Q. From Nat, period, Berkowitz, and then it gives a phone number or something?
A. Yeah, yeah.
Q. And then on the right side it also gives the date 10/18/94.
A. Yeah, this is approaching the time of the aborted takeover, yes.
Q. Let's look here at the names. The fourth one down is Elwyn Berlekamp, and it says under "Options," you have 910,000. Is that true?
A. Could easily be. This is a total of all these various rights involving all these various products which had been converted for various amounts of cash and other things, yes.
Q. And on the name list, go down ten names to Nathaniel Berkowitz. It says here preferred, 10,000, and your common it says 158,397." Is that correct?
A. Certainly sounds right to me.
Q. Under "Loans" for Nathaniel Berkowitz, it says 50,000?
A. That's the money he advanced through the company to Bozulich in January of that year. All of Bozulich's stock at this time, of course, was in default on collateral loans. Line 1 is -- needs -- Line 1 is the most misleading on the page.
Q. Were you mailed a copy of this document without --
A. I don't recall. I've seen copies of this document on several occasions, yes. There was much discussed at the time of the aborted takeover.
Q. Let's look down here at the very bottom of the names. It says, "Guaranteed of bank debt," with a little symbol or asterisk there. Do you see it?
Q. Go up on the fifth column on the loans. I believe that the asterisk matches that of James Connelley, and it says a hundred thousand.
Q. Is that the Summit Bank loan or what?
A. I'm assuming so. This is a balance sheet as of December 31st, 1993.
Q. Do you recognize this?
A. My memory on these matters is less. I don't have any reason to question it right now.
Q. Did you ever look at the balance sheets --
A. Oh, I studied them frequently as we were going along, but I don't recall any of these details anymore.
Q. Who did these balance sheets at the company?
A. Jim Connelley, and his staff of Janice Martin often was very involved. We had accountants of various sorts. At one point, Sue Lowenstein got involved. He authenticated some.
Q. Why did you study these balance sheets?
A. As a director, it's one of my fiduciary responsibilities.
Q. Was this balance sheet used in the normal course of the business?
MR. MIYAKE: Objection, vague and ambiguous and burdensome. "Used in the course of business"?
THE DEPONENT: I don't know what you mean.
Q. (By Mr. Mar) Did you use balance sheets in the normal course of business?
A. Did I? We certainly looked at them every year, and every quarter there would be an income statement and balance sheet. Directors look them, yes. I don't believe employees paid much attention though. Certainly salesmen didn't know what they were or people in the warehouse, no.
Q. This is Exhibits 13 to 17, balance sheets.
A. Usually they were accompanied by income statements for the same period, which you've chosen not to provide now, or what?
MR. MIYAKE: I think he has them, this, income statements.
THE DEPONENT: But he's ignoring them. I have not reviewed these lately.
Q. (By Mr. Mar) Were these balance sheets used in the normal course of business?
MR. MIYAKE: Same objections; it's vague and ambiguous.
THE DEPONENT: I don't know what you're driving at. I don't know how to answer.
Q. (By Mr. Mar) Did you look at any balance sheets for 1993?
A. I looked at all the balance sheets as they were prepared quarter by quarter throughout this period, as well as income statements which I tended to pay more attention to at the time.
Q. Were these balance sheets used regularly by the company?
MR. MIYAKE: Vague and ambiguous; overbroad and burdensome; lacks foundation; calls for expert witness testimony from a lay witness. Do you understand the question? The witness has indicated --
THE DEPONENT: I don't know what he means by "the company." We're talking six or eight people.
Q. (By Mr. Mar) The company is like Ishi Press International of California.
A. Bozulich never paid much attention to balance sheets or income statements other than what case was coming to Bozulich. That was always his main question. Connelley not only was heavily involved in preparation, but paid a lot of attention to them. And I honored them and occasionally talked to accountants who -- that the board retained.
Q. Did Bozulich ever look at these balance sheets for '93?
A. Oh, I think he looked at them and they were passed around at directors meetings, but he never had many questions. They were not of much interest.
Q. Do you recall seeing balance sheets that looked like this one?
A. These might all be genuine. I would have no reason to quarrel with any of them, but I -- my memory is not such that I can authenticate them. I have not looked at them since. Retained earnings of minus $233,000 today is not out of line with my recollections.
Q. What page?
A. I'm looking at the "Retained Earnings" line. The company as of this time has a loss of $233,000 and by the time we get onto next year, it goes up to 264. So that's certainly commensurate with my understanding that we were losing about $30,000 a year at that time, and we lost a lot more than this in the past. Yes, that's one number I recognize. That's very compatible with my memory. Others here, you know, accounts payable to Ishi Press Japan, the kind of numbers Bozulich would be excited about. It says $40,000 --
Q. What date?
A. September 30th, 19 -- oh now you said as of that day. $35,000 June 30, 1993; $68,000 March '93. That's the number on this page he would be excited about, and paid down to a mere $12,000 as of March 31st, 1994. And here it's paid down to $22.56 cents as of June 1994. And those are totally compatible and with my recollection. Yes, those numbers are very much in the ballpark with what numbers I remember very well.
Q. What figures are you talking about?
A. The two I have strong memory on which I am willing to assume those are not entirely wrong are accounts payable, Ishi Press Japan, which is fluctuating between $40,000 some quarters, $60,000 some quarters and paid down to $22.56 as of June 1994. That's correct, there were monies going to him in these kinds of amounts. Retained earnings, negative line between $230 and $260,000 is again correct. I believe it to be approximately correct. Others I certainly have no -- not enough memory to make a comment on really. Inventory was something we'd always be looking at, how much we owed the bank, you know, various other things here.
Q. What about assets?
MR. MIYAKE: About assets?
THE DEPONENT: At book value. That's what you're --
MR. MIYAKE: That's -- what's the question? Assets?
Q. (By Mr. Mar) What are these numbers on the right-hand side?
A. I have no idea. I don't think they mean too much.
Q. Do the fixed assets mean anything to you, June 30th, 1994?
A. Investment in affilliate $30,000 had been paid -- I think mostly inventory moved to Ishi UK. Yes, I think that number is correct. These other numbers are all pretty small and probably right.
Q. What about the figure for total assets there, $401,319.49?
A. Current assets?
Q. Total assets.
A. I have no idea.
Q. Is that number pretty accurate, $401,319.49?
MR. MIYAKE: Are you asking him to read and digest this document here as we sit today and asking him whether his computation of these figures today is -- accurately renders $401 dollars and $1,310 dollars is the result, or are you asking him for his recollection?
MR. MAR: Well, does Mr. Berlekamp recollect if these figures is accurate?
THE DEPONENT: I don't have a good recollection. Could be.
Q. (By Mr. Mar) Let's go down to "Shareholders Equity" at the bottom, "Preferred Stock," $346,331.52. Is that accurate to your recollection?
A. I have no idea at all. Now, this is shares issued from the stock book or something?
Q. I believe this is Exhibit 18.
A. I don't know what Exhibit 18 is.
MR. MIYAKE: So your question is?
Q. (By Mr. Mar) Have you ever seen this document?
A. Don't recall ever seeing this document.
Q. So let's look at Elwyn Berlekamp, stockholder name.
A. Misspells my name too. If I had seen this before, I would have corrected it at the time, so obviously I haven't seen this.
Q. It says on the date 6/16/89 we have 6,098 shares; is that correct, on the top one, Row 6?
A. This is common stock. Could be. This could be correct.
Q. Do you remember ever making a purchase for 6,098 --
A. i agreed to spend a hundred thousand dollars to buy something, and this was done in combination of common and preferred, and presumably this is a common portion of that transaction done in four installments over roughly this time frame. So plausibly accurate. I see no reason to challenge it. It could be wrong in details. They didn't spell my name right; that's one error.
Q. Look at the bottom, Row 16, "Nathaniel Berkowitz." It says, "158,397 shares." Look at the date, September 1994. Is that accurate to your recollection?
A. I don't recall the transaction, so I don't know. But presumably that's issued in conversion for the loan, would be my guess. And that's about the time they say it happened. So it could be. Preferred stock, yes, here's all these other people, also misspells my name. Who did this? Connelley?
MR. MIYAKE: Attorneys.
THE DEPONENT: Oh, the attorney.
MR. MIYAKE: Okay. The question is?
THE DEPONENT: Don't have dates on some of them.
Q. (By Mr. Mar) Let's look for your name here, column -- Row 13.
A. 13, 14, 15, 16 as well as 11.
Q. And do you recall Row 11 --
A. This 11 through 15 appear to be the portion of the initial hundred thousand dollar investment. Row 16 is some subsequent transaction, but there were many so I'm not sure which one this was. And they're plausibly correct.
Q. It says here "Martin Lowenstein." Do you recall Martin Lowenstein buying 71,795 shares on April 5th of 1994?
A. I believe that's the date the certificates were issued. I believe that he -- that he had agreed to make this purchase somewhat earlier. So it was -- and he started buying, I think like a year -- at least more than a year before this, perhaps. So I don't recall how -- and we -- the board met, decided or sort of welcomed him into the company and all that, and that happened earlier. It was part of that deal. He was going to buy roughly $100,000 worth of the stock. It all happened. I think this is one of the final conclusions of that transaction, but I've never seen it before so I don't know.
Q. Do you know how much he paid for common shares in this transaction?
MR. MIYAKE: In this transaction reflected in Exhibit 20?
MR. MAR: Yes.
MR. MIYAKE: Exhibit 20 is preferred Series B stock. There is no common stock reflected in this transaction.
Q. (By Mr. Mar) Do you know how much he paid --
A. I believe he paid about a hundred thousand, and that was for some mixture of preferred and common. I don't recall any more details. I've never seen this before, but it likes genuine to me. Certainly --
MR. MIYAKE: Wait. There is no question pending.
Q. (By Mr. Mar) So have you ever seen this one before?
A. No, I've never seen this.
Q. Is it true that Nathaniel Berkowitz was issued 158,397 shares in the year 1994?
A. On September 14, 1994, as far as I'm aware, yes, so I believe. This was a conversion of the Torode note.
Q. How did Mr. Berkowitz obtain all these shares?
A. By conversion of the note for $40,000 plus interest. Yeah, this is the Torode note, presumably.
Q. Okay. You recognize this document?
A. It's consistent with questions and testimony you asked this morning, yes.
Q. Did you write this document?
A. No, I did not write this document. Don't believe I wrote this document. It's conceivable one or the other asked me to get involved in some revision of some draft or something along the way, and I might have made some suggestions; I don't know. But this does not look like anything I wrote, no.
Q. Let's look at the signature here. Do you recognize that as James Connelley's signature? I'm not an expert on signature authentication.
A. I didn't see him sign it, unlike other documents I saw him signing. I am not positive, but consistent with what he reflects signed, I assume it is correct.
Q. Look at the first paragraph here, last sentence: "The principle amount together with a proportional share of interest owing shall be due in three equal installments on January 31, 1992, February 28, 1992 and March 31st, 1992." Is that your understanding of when these installments were due?
A. My recollection is they were all due after, after the Christmas season. I did not this morning recall there were three installments, but this is more detail corroborating the general recollection, yes.
Q. Do you recognize this document?
A. No, I don't recall having seen it before, but it certainly is consistent with everything else.
Q. Look at the signature.
MR. NEAL: Do we know what exhibit this is?
THE DEPONENT: This is Nat Berkowitz's demand to convert the unpaid note.
MR. NEAL: Exhibit 23.
THE DEPONENT: Yeah. Well, in default and delinquent.
MR. MIYAKE: The question was what?
Q. (By Mr. Mar) Have you seen this document before?
A. I don't recall having seen this document before.
Q. Look at the signature down there.
A. Looks like Nat's signature. Yet I'm not an expert in the forgery denial, authentication business. I was unaware this was a real possibility until so alleged by your client. He misspelled Torode's name, which is unusual. He misspelled Ishi. He needs a new typist and secretary. Nat, you should be ashamed of yourself.
Q. Have you ever seen a letter on the top of this document before?
A. The letterhead?
Q. No, the letter --
A. I've not seen any of this before, if I can recall, unless it was in a stack someone showed me in documents preparing for this case or something. I don't recall.
Q. Have you looked at the document? Have you ever seen this document before?
A. Only if it's in some stack that I've been asked to review at one point for some of the legalistic proceedings. I believe it to be genuine, but I have no --
MR. NEAL: What's the Exhibit number?
MR. MIYAKE: 25.
THE DEPONENT: Promissory note from Ishi Press to Nat Berkowitz ... part of the Bozulich bailout. This one is not signed, but I assume another one is and I assume Nat still has the original probably. I don't know. It's only my promotion. This is a meeting at my house apparently. There was such a meeting. There were others.
MR. NEAL: Is this Exhibit 26?
THE DEPONENT: 26.
Q. (By Mr. Mar) Do you remember these minutes?
A. I haven't seen them in several years, but it all looks very plausible. Yeah, I assume it's correct.
Q. Do you remember James Connelley, Berlekamp and Bozulich were present?
A. There were many meetings at which we were present, yes, so certainly -- very consistent with what the company is doing at this time.
Q. Were these minutes used in the regular course of business at this company?
A. You asked me before --
MR. MIYAKE: Vague and ambiguous; overbroad and burdensome; assumes facts not in evidence; unintelligible.
THE DEPONENT: Believe they're an accurate account of what happened.
MR. MIYAKE: Calls for expert testimony from a lay witness; lacks foundation.
THE DEPONENT: I don't know what difference it makes. Does IBM use their corporate minutes in the course of their business? I don't know what it means. Increase of directors. They are increasing number of directors in order to make me a director of the board at this point.
MR. MIYAKE: There's no question pending. Exhibit 27 is a two-page document. We've been given only the second page with the signatures on it. The two-page document refers to an October 5th, 1990 meeting with the board of directors. And again, we are just being given the second page. Do you have the first?
MR. MAR: No, I don't.
THE DEPONENT: It says Bozulich and Connelley are directors, and they are authorizing the number of directors to be increased to five. So -- I believe at this point, I'm in the process of buying in with the agreement I will become a director.
Q. (By Mr. Mar) Were you a director on October --
A. I don't remember. I was in the process of buying in, and part of the deal was as I bought stock, they were going to make me a director, yes. This is part of their doing that. The date, I think it's a little late here, but what can I say?
MR. MIYAKE: 'Cuz we don't have the first page -- we don't know whether this October 5th, 1990 was just a typographical or a relic of a form that was used by whoever created these minutes to create these particular minutes to -- to --
THE DEPONENT: The minutes may have been created earlier than this or --
MR. MIYAKE: I'm looking across the table and I see minutes of a meeting of the board of directors dated October 5th, 1990, on which Mr. Berlekamp's signature is on.
MR. MAR: Uh-huh.
THE DEPONENT: So I think as of October 5th, 1990 I am a director and this is a document they are signing prior to that meeting to make me a director, is what's happening. I think, but I don't know. I don't find any of this to be terribly exciting or irregular or anything else. It's pretty routine. Okay. So there is a meeting October 5th, 1990, at 2140 Shattuck, Suite 900, okay. He's going to lease a new building, expanding the board, pending the appointment of Roger White to the board.
Q. Is that your signature down there?
A. Looks like it.
Q. Do you remember attending this meeting?
A. I strongly suspect there was such a meeting on that date. I don't remember it specifically, no. We're now six and a half years back.
Q. It says here on the top, 2140 Shattuck Avenue, Suite 900. Is that address familiar to you?
A. Yes, that's where I was at. That's my office as of that date.
Q. So this meeting was held at your office?
Q. So on this particular date in these particular minutes, Connelley, Berlekamp and Bozulich are all the directors of the corporation; is that right?
A. I really don't know, but yes, I would think that would be true. But this other document -- believe that other document is something that they should have filed earlier and didn't get around to signing until that date, and that's why they're a couple months late. Bozulich is chairman of the board at this time and is engineering most of all this, and he's doing a sloppy job. What can I say? I don't see it as a big deal however yet. February 27, 1990. Yeah, okay. So it's pretty clear. Here now I'm a director as of February 27th, whereas in October they're still making me a director. So they're behind by about a year I think on that particular resolution, which needed to be filed in Sacramento or something.
Q. So you think February 27th, 1990 you were elected a director?
A. I don't know when I was elected a director. It was part of the deal which I started buying stock. They were going to make me a director, and all that happened. And the dates which I acquired the stock are also documented, so I believe I was director from the beginning.
Q. Do you remember writing these particular minutes?
A. I doubt if I wrote these minutes. These minutes were -- tend to be briefer than ones I would be more involved in. I don't know. I certainly agreed to these minutes. More minutes. Roger White has now joined us, yes. February 22nd, 1991. I think these minutes are primarily being done by Timothy Tomlinson.
Q. Who is Tim Tomlinson?
A. Apparently a lawyer being elected to assist the corporation, it sounds like. Not sure I ever met him. I don't think I did.
Q. Do you remember attending this particular meeting on February 22nd, 1991?
A. There were many meetings. This is not inconsistent with my recollections.
Q. And did you sign --
A. Looks like my signature, certainly looks like it.
Q. Let's look at the second to the last paragraph. It says they reviewed and approved a plan to establish a UK subsidiary of the company and passed resolutions required for such establishment.
A. I believe that's about the time we decided to do it. All sounds right.
Q. More minutes.
A. July '91. Connelley, Berlekamp, White and Bozulich. We decided that we thought stock was worth -- common stock was worth 45 cents a share in July of '91. Could easily be.
Q. Is that your signature down there?
A. Looks like it.
Q. Do you remember attending this meeting?
A. Not specifically, but there were certainly many meetings in which this looked like it might have been one, yes.
Q. Did Roger come in as a director?
A. Roger White attended many meetings at this time, and looked like this was one. That was a shareholders meeting which we elected Ernst & Young as independent accounts and all this. And they were very uncontentious meetings in these days, yes. So these minutes of the shareholders meeting which I did not attend, I don't think unless nobody showed up, which could be -- no, we did have shareholders meeting which Janice or somebody showed up. I don't remember; I'm not sure. There certainly were board meetings when Bozulich, Berlekamp, Connelley and White attended, yes.
MR. MIYAKE: What's the question?
THE DEPONENT: Have I seen these documents? The answer is yes, now I've seen these documents.
MR. MAR: This looks similar to the last ones.
MR. MIYAKE: So 34, you're not asking about.
MR. MAR: Looks like this one is also a copy of the last one.
MR. MIYAKE: Wait. I don't know what 35 and 36 are. 37.
THE DEPONENT: So this time Mr. Tom Rogers is present. He's one of these other prospective investors like me; he was visiting the board meeting.
MR. NEAL: To be clear, this is 37.
THE DEPONENT: 37 is a meeting March 16, 1993, attended Connelley, Berlekamp and Bozulich; Roger White participating by telephone and Snyder and Rogers present. Snyder is trying to get Rogers to buy some stock. Rogers is a well-known puzzle collector.
Q. (By Mr. Mar) Is that your signature down there?
A. Certainly looks like my signature.
Q. This one, I think we did this one already.
MR. MIYAKE: Okay. What's the date of that meeting? January 27, 1993, okay.
THE DEPONENT: This is one is signed by Connelley and Berlekamp; and Bozulich hasn't yet signed it. It's a meeting July 13th, 1993.
Q. (By Mr. Mar) Do you remember attending this meeting?
A. The date I -- well, this I could check. The date is -- in a stressful time. Could be. Oh, okay, yeah, I guess I believe this. Elwyn Berlekamp and Richard Bozulich were present by telephone. Uh-huh. So -- this is a meeting at which we're --
MR. MIYAKE: The question was do you recall attending the meeting.
THE DEPONENT: It says I attended by telephone. There certainly were many telephone calls throughout this period. Could easily have been one of that date.
MR. NEAL: For the record, this is Exhibit 39.
THE DEPONENT: This is July of '93 and --
MR. MIYAKE: Okay, you answered the question.
Q. (By Mr. Mar) Let me get the question first.
A. I don't specifically recall this one conversation. But there were many around this time.
Q. It says: "RESOLVED the corporation sell all of its rights in Ishi Press International, Ltd., including all capital stock, notes receivable and other debt owing from the subsidiary to the Corporation, other than short-term trade receivables currently outstanding in exchange for 75,000 shares in Corporation's series A convertible preferred stock owned by Elwyn Berlekamp and 75,000" --
A. Let me read it. So we're converting Ishi Press Inc.
MR. MIYAKE: So after reading that paragraph, what is the question?
Q. (By Mr. Mar) Was -- is this paragraph true?
A. Paragraph 1?
Q. No, the "Resolved" Paragraph 2, "Resolved."
MR. NEAL: Objection, vague and ambiguous.
MR. MIYAKE: Yeah, there's a number of events or transactions that Paragraph 2 refers to. Which one do you want him to testify as to whether it's true or not?
Q. (By Mr. Mar) Did the corporation sell all of its rights in Ishi Press International Limited to you?
A. So I believe. I believe that happened, yeah.
Q. Let's look at the exchange for 75,000 shares of the corporation Series A preferred stock. And 75,000 is a reduction of notes payable by the corporation?
A. I believe that happened. Isn't that what we said this morning?
MR. NEAL: In fact, I think that's what Exhibit 2 is. What number was that, 39?
MR. MIYAKE: Yeah. What's the question?
MR. MAR: I'm letting him read first.
Q. (By Mr. Mar) Have you read the document?
Q. Did you have annual meetings of shareholders in September?
A. There were some shareholders meetings held in conjunction with directors meetings, like immediately after we would invite shareholders in. And the directors meeting began at 5:00 o'clock and the shareholders meeting began at 5:10, and one or two would show up; maybe Janice Martin or someone. I don't recall this one, but I don't know. There were supposed to be annual shareholders meetings; there certainly were, yes. Connelley and people tried to keep these things happening. There was never much shareholders interest in these things.
Q. Did you hold one in September of '92?
A. I don't know. Bozulich is still chairman of the board, and this is at this time primarily his responsibility.
Q. I think we may have done that one before. I think we may have done this before. This is 43 and 44, exhibits.
A. This was a meeting of September 29th, 1993 at Ishi International which Snyder and Lowenstein are present. I do remember Lowenstein -- one of Lowenstein's sales presentations. In fact, I think it was this one.
Q. What was his presentation about?
A. Oh, puzzles -- he had just come on board, I believe. Is this the right date? Let me think about that. Yeah, this is the right date, within a month or two. Yeah, well, I was impressed. He seemed to be getting up to speed fast, yeah. He had only been there a short while and at the presentation he seemed to understand the various Go and puzzle equipment we were trying to sell.
Q. Look at the first page there under -- "Discussions," that paragraph: "Discussions of how to handle the losses of old-Ishi UK had begun in the spring of '93. Everyone agreed that it was very much in the interests of all stockholders of Ishi International to shield our company's balance sheet (and banking relationships) from the negative impacts of old-Ishi, UK. The outline of the plan was to divide these debts among the major shareholders." Is that true?
A. Yes, this is very true.
Q. And: "Berlekamp would buy all of the stock of old-Ishi UK and face value and take that loss."
Q. And: "Bozulich would take the losses on the uncollected trade debts resulting his..." I suppose the word "in" is probably missing there -- "...resulting (in) his shipments of goods to hold Ishi UK."
A. "From" would be a better word.
Q. The last says: "Implementation of these plans began in the summer of 1993, when Berlekamp acquired full ownership of old-Ishi UK." Is that last sentence true?
A. I believe that, yeah.
Q. Did you write this document?
A. I don't know. That sounds like something I was certainly involved in in drafting, yes. Some of these sentences look like they were probably composed by me.
Q. Which sentences?
A. Oh, trying to explain away Bozulich's failures.
Q. In what paragraph?
A. "A rising yen had seriously curtailed the export business over the prior few years." This sounds like a sentence I may have imposed as a euphemism to partly explain why Bozulich was in such trouble, which is -- it's certainly not untrue. Yeah, I believe this is accurate. What's this?
MR. NEAL: Is this Exhibit 45?
MR. MIYAKE: 45, yeah.
THE DEPONENT: This is a Confession of Judgment by Ishi Press International.
Q. (By Mr. Mar) Have you ever seen this document?
A. No, I don't think so.
Q. Let's look at the signature here of Hartland Snyder. Do you recognize that?
A. Yeah, it looks right.
Q. Look at the signature down here at the bottom, Arlo Hale Smith. Do you recognize that signature?
A. No. Don't know Mr. Smith very well. Think I met him once or twice. I don't think I'd seen his signature.
Q. Who was Mr. Smith?
A. It's my understanding that he's an attorney who is -- I guess he was retained by Snyder or by Ishi since Snyder has been president, would be my guess.
Q. Did Ishi Press California owe Berkowitz a $50,000 note?
A. Surely, as discussed many times before.
Q. This one might be part of the other document.
Q. Have you ever seen this one before?
MR. MAR: Take a short five-minute break here. (Off the record).
Q. (By Mr. Mar) Did Bozulich make any advances of money to the Connelley Group as far as shipments in '91?
A. Shipments or money? I don't think he paid money, no.
Q. Okay. Shipments?
A. He was shipping goods to the Connelley Group, yes; I believe that.
Q. Do you recall whether he made a shipment of 3,639,800 yen on May '91?
A. A shipment in '91 for which he billed that amount, I don't know, but it could be.
Q. Were these shipments to the Connelley Group paid for by the Connelley Group?
A. I don't know. I believe so, but don't know.
Q. Did Mr. Bozulich, while you were there at Ishi Press California, promise to resign?
MR. MIYAKE: I'm going to object, Craig. It's obvious that you're reading questions prepared by Mr. Sloan. You have in front of you five pages of handwritten questions on yellow sheets of paper that are obviously not in your handwriting. We've made a statement at the beginning of the deposition that Mr. Sloan was not to ask any questions, and we consider this a purposeful circumvention of that requirement. What do you want to do?
MR. MAR: I'm going to continue asking these questions. I don't think there's anything wrong with it.
THE DEPONENT: With what?
MR. MAR: Anything wrong with me asking these questions.
MR. NEAL: We're going to object and instruct the witness not to answer if you continue to ask questions that you've been fed by Mr. Sloan. We'll terminate the deposition. This is a direct contravention of the judge's orders.
MR. MAR: We can call the judge right now and decide what we are going to do, or I can go ahead and ask the questions.
THE DEPONENT: You could file a motion later or something.
MR. NEAL: We'll object to all further questions and instruct the witness not to answer.
MR. MAR: All the rest of these questions you're instructing the witness not to answer?
MR. MIYAKE: Of questions you're reading from those five sheets of paper, yellow sheets of paper. If you come up with some questions on your own --
MR. MAR: How do you know I haven't come up with these questions on my own?
MR. MIYAKE: One, we saw you discussing these questions with Mr. Sloan, both me and Mr. Berlekamp saw you in the hallway, in the corridor of the bathroom. You were holding these sheets in your hand. Two, you're sitting here reading from the sheets of paper. I mean, if you guys were a bit more -- showed a bit more finesse --
MR. MAR: Well, if you guys would show a little bit more finesse --
MR. NEAL: Excuse me, Mr. Mar. We have a court order that specifically states Mr. Sloan is not to be asking questions and that can not be circumvented by the subterfuge of you writing out his questions and purporting to ask them. And that's what appears to be taking place.
MR. MAR: What do you want to do? I could call the judge, have the judge decide it.
MR. NEAL: You want to certify on the record right now that none of these questions came from Mr. Sloan? If you won't certify that, it is terminated.
MR. MAR: Is it relevant?
MR. NEAL: It certainly is with a court order in the record. If you want to certify these are all your questions and yours alone in accordance with the court order and Mr. Sloan had no input whatsoever in the questions you're about to ask, then we can proceed. But if not, we're going to terminate the deposition.
MR. MAR: If you terminate the deposition, I have the right to file a motion to ask these questions.
MR. NEAL: You can do whatever you want, but I'm asking you -- we're willing to proceed if you're going to certify these are your questions and your questions alone. But if indeed they are questions given to you or Mr. Sloan has asked you to ask in circumvention of Judge Trumble's orders, which you were given a copy of earlier today, we will terminate the deposition.
MR. MAR: Why do you say it's in violation of the court order?
MR. NEAL: You can read the court order. It's very specific: Mr. Sloan shall not ask questions at the deposition, period.
MR. MIYAKE: Or make any statements.
MR. MAR: Is he --
THE DEPONENT: We believe those to be Sloan's questions.
MR. MAR: I think the court order is he can not verbally ask questions.
MR. NEAL: I certainly don't think that's what Judge Trumble had in mind.
MR. MAR: The order says he can not orally ask questions. These are not oral questions.
MR. MIYAKE: It doesn't say that.
MR. MAR: Let's read the court order and see if there's a violation.
MR. NEAL: I don't think we have to go any further than the last sentence, right above Judge Trumble's signature? "Sloan may attend the depositions but may not ask any questions." Period. It doesn't say orally or anything.
MR. MAR: We have to get some sort of clarification on whether he can write me any questions.
MR. NEAL: So he has written the questions. I think --
MR. MAR: It says he may not ask questions. I think the interpretation should be may not orally ask questions. If he wants to write me questions or if Mr. Berlekamp wanted to write you questions, but not orally ask the questions, that's okay.
MR. NEAL: Oh, no, it's not. That's not what the court order said. Mr. Berlekamp's rule was not additional. This is a motion to exclude Mr. Sloan, and the judge ruled he may attend, but may not ask questions. Our position is to allow Mr. Sloan to feed you questions so you can ask them circumvents the court orders, and that's exactly what's taking place.
MR. MAR: I respectfully dissent from your interpretation of the court order. And if you want to walk out right now, go ahead. But otherwise, I'm going to go through with the deposition questions.
MR. NEAL: We'll give you an opportunity to certify these are your questions, not questions given to you by Mr. Sloan. If you can not make that statement, then any further questions you're asking are in direct violation of Judge Trumble's orders.
MR. MAR: Okay. I will take that risk, sir.
THE DEPONENT: So we're leaving, right?
MR. MIYAKE: We will ask the question, then we can instruct --
THE DEPONENT: We're done, I guess, what it sounds like.
MR. MAR: I still have more questions, but I want to put it on the record that I will ask more questions, but Mr. Berlekamp is refusing to answer any more of my questions.
THE DEPONENT: No, refuse to answer Mr. Sloan's questions.
MR. NEAL: He's being instructed to answer your questions, because you will not state on the record these are your questions as opposed to questions given to you by Mr. Sloan to ask.
MR. MAR: I will state on the record that I am asking these questions. That's what I will state on the record.
MR. MIYAKE: Are these your questions?
MR. MAR: I am asking these questions. That's all I will say on the record.
MR. NEAL: That's not good enough.
THE DEPONENT: Let's call the judge.
MR. MAR: If you want to call the judge or refuse to answer any more of my questions, you may do so. But I'm going to ask these questions.
MR. MIYAKE: Craig, do you have any questions not coming from those sheets, that are coming just straight from your head?
MR. MAR: These are coming from my head.
MR. MIYAKE: So those are not Mr. Sloan's questions, is what you're saying, that are on those sheets?
MR. MAR: Is it relevant?
MR. MIYAKE: Yeah, it's relevant.
MR. MAR: Who writes the questions, I don't think so. Who asks it, who asks the questions, which is relevant.
MR. NEAL: Let's call Judge Trumble.
MR. MAR: Okay. Let's call the judge.
MR. MIYAKE: Well, you want to go forward? We don't want to go forward. It's your burden to call him then.
MR. MAR: It's not my burden to call him.
MR. MIYAKE: Well, ask the questions. We'll instruct him not to answer.
Q. (By Mr. Mar) Did Bozulich ever make that promise that he was going to resign?
MR. MIYAKE: That he will --
THE DEPONENT: I'm instructed not to answer. It's a question whether he wants to read these into the record. I guess he can. I'm instructed not to answer and will follow the advice of my attorneys.
MR. MAR: Okay. If you guys agree that you're not going to answer any more questions, then I can go. Is that true? But I have more questions to answer -- I mean to ask. So are you agreeing that every question that I'm asking --
MR. MIYAKE: From those sheets.
MR. MAR: -- from these sheets, you're not going to answer the question? Mr. Berlekamp is refusing to answer the question?
MR. MIYAKE: Because you're refusing not to certify that, on the record, that these are solely your questions, that you didn't receive any help on those questions from Mr. Sloan.
MR. MAR: Objection, vague and ambiguous. What do you mean by --
MR. NEAL: This is not a deposition of Mr. Miyake. We have stated or position. If you are not going to certify these are your questions, not the ones, as Mr. Miyake said, provided to you by Mr. Sloan, then we are going to instruct our witness not to answer. Without that certification, there's no further need to continue with the deposition.
MR. MAR: I will certify I am asking these questions.
MR. NEAL: That's not what we asked.
MR. MAR: These are my questions. I'm asking these questions. I'm not sure who wrote the questions is really relevant. I'll talk to the judge if you really want me to, and if you want to try to resolve it right here, that's fine.
MR. NEAL: I think without that certification, then we're going to instruct our witness not to answer any further questions.
MR. MIYAKE: We'd like a copy of those sheets on the record.
MR. MAR: What sheets?
MR. MIYAKE: The five yellow sheets in front of you.
MR. MAR: No, no. Work product.
MR. NEAL: We are also requesting all of Mr. Sloan's notes be attached as an exhibit to the deposition.
MR. MAR: I don't know, I -- we're going to stay here if you want to answer any more questions.
MR. MIYAKE: Now that you've put them away, do you have any more questions?
MR. MAR: I still have these questions.
MR. MIYAKE: If you put them away.
MR. NEAL: He's referring to the yellow sheets we have discussed.
MR. MIYAKE: If he has any questions not from those sheets, then we are obligated to give them. That's what I worry -- this is off the record. I'm sorry.
MR. MAR: Off the record. (Off the record).
MR. NEAL: During the off-the-record discussion, we notified Mr. Mar and Mr. Sloan that we will subpoena Mr. Sloan's notes and that we ask they be preserved and not destroyed. And insofar as any of the rest of the notes authored by Mr. Sloan, they will also be subject to subpoena. There's no attorney-client privilege or work product privilege that protects Mr. Sloan's documents. I think we're at an end.
(The deposition of Elwyn Berlekam was adjourned at 4:15 p.m.
______________________________ Elwyn Berlekamp
STATE OF CALIFORNIA ) ) ss.
COUNTY OF ALAMEDA )
I, Jillanne Stephenson, Certified Shorthand Reporter, #8563 in and for the State of California, hereby certify that the deposition, Was, by me, duly sworn to tell the truth, the whole truth, and nothing but the truth in the within-entitled cause; that the foregoing is a full, true and correct transcript of the proceedings had at the taking of said deposition, to the best of my ability.
Jillanne Stephenson, 8563
January 15, 1997
C/O STEVEN S. MIYAKE
NEAL & ASSOCIATES
6200 ANTIOCH STREET, STE. 202
OAKLAND, CA 94611
Dear Deponent, Pursuant to the California Code of Civil Procedure, please be advised that the original transcript of your deposition taken on 1-8-97 is ready for your review and corrections, if necessary. The original will be held in our office for a period of 30 days, at which time it will be forwarded to the noticing attorney. If your attorney has ordered a copy, please review the transcript. Reading, correcting and signing of depositions is an option and is NOT MANDATORY. IF CHANGES ARE NECESSARY, please do so on the correction sheet provided. DO NOT CORRECT PUNCTUATION unless it changes the actual meaning of an answer. If your attorney has not ordered a copy of the transcript, you may call to make an appointment to review the original in our office. Thank you, Clark Reporting A COPY OF THIS LETTER WAS INCLUDED WITH ATTORNEY'S COPY OF TRANSCRIPT, OR WAS MAILED TO THE ABOVE ADDRESS ON THIS DATE
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