Mr. Bozulich has gone off on a trip to Aomori Prefecture, in Northern Japan, where he has dug up the bones of Jesus Christ, which will be the subject of our next book. Meanwhile, his friendly office staff has forwarded your letter to me for reply.

Your letter falls into the general category of "fraud and misconduct of an adverse party." You start off by stating that you are writing on behalf of Mr. David Sirignano and Mr. Gregg Corso of the S.E.C. However, the fact is that you are a private attorney employed by the former Holden-Day and Frederick H. Murphy. Mr. Sirignano and Mr. Corso of the S.E.C. know how to read and write. They know our address and our telephone number. If they want to communicate with us, they are perfectly capable of writing their own letter.

The fact is that you keep trying to threaten Mr. Bozulich in an effort to gain an unfair advantage. You are well aware that Mr. Bozulich knows absolutely zero about federal securities laws. I am supposedly the expert in that field. Every time you write a threatening letter to Mr. Bozulich, he starts talking about going back to Crotia and fighting the Serbs.

Mr. Bozulich made what may or may not have been a serious error. After Fred Murphy had given several days of false testimony before the S.E.C. in Washington, D.C. in an effort to stop this tender offer, Mr. Erik Schwartz of the S.E.C. enforcement staff in January made several threatening telephone calls to Mr. Bozulich. These calls had two effects. First, Mr. Bozulich sent the two fax messages to which you allude in your letter. Second, Mr. Bozulich became extremely fearful and apprehensive about transmitting any of his hard earned money to the United States. That has contributed to the present deadlocked situation.

However, I do not disagree with the fax messages sent by Mr. Bozulich. All he said is that he would agree to have the shares returned to the stockholders, provided only that you also agree to the return of the shares to the stockholders and further that this be done "immediately and with utmost priority".

I already knew before Mr. Bozulich sent the fax that Fred Murphy and Tom Palmer would never agree to the return of the shares to the stockholders. Their plan from the beginning was to steal the shares from the stockholders, at our expense. I told both Mr. Corso and Mr. Schwartz this, but they did not believe me.

The end result is that more than five months have now passed, and not one share has been returned to the shareholders.

Mr. Murphy is notorious throughout the publishing industry for doing things exactly like this. Every deal made by Mr. Murphy over the last thirty years goes something like this: "First you do X, and then I will do Y." The other party does X. Mr. Murphy never does Y. His counter-party is then left in the lurch.

I was at the American Booksellers Convention in Anaheim, California on May 23-26, and there I met several persons who had had personal dealings with Mr. Murphy, known in the industry as "Fred", over many years. All of them said the same thing. Fred is a person who is extremely well known in the publishing industry, and who is also a person with whom nobody wants to do business any more. This confirmed my information about Fred from many other sources, including especially his own stockholders.

Your letter states that the faxes sent by Mr. Bozulich in January had the result of "effectively terminating the tender offer". This was not true. We never withdrew the tender offer and indeed had no intention of doing so. The situation was that Mr. Murphy had hijacked the shares. We wanted to get them out of the clutches of Mr. Murphy, who was retaining control over them illegally. We still wanted to buy the shares. This is the reason that we "agreed" to the return of the shares. However, Mr. Murphy refused to agree to allow the stockholders to have their own shares back. Therefore, the faxes sent by Mr. Bozulich were of no effect. Next, you state that "two California courts have summarily dismissed" my claims. Apparently, you have joined the long list of those taken in by the lies of Tom Palmer. My suit filed in the California Superior Court, County of Alameda, entitled Sloan v. Murphy et al, No. 691810-1, has never been dismissed. The case is still pending. Mr. Palmer has never filed an answer or responsive pleading. I keep getting notices about this case from the clerk of the court, scheduling conferences.

What actually happened is that Mr. Palmer went down to the courthouse and spoke to a legal researcher there. I was present at the time. The lady in question simply nodded her head in response to various accusations made by Mr. Palmer. However, he filed no papers and nothing was done about the case. As a result, Mr. Palmer and the other defendants are in default.

This is a typical Tom Palmer maneuver. We filed a tender offer and complied with every S.E.C. rule. In response, Mr. Palmer stonewalled and pretended that our tender offer did not exist. We then filed a lawsuit in state court. Again, Mr. Palmer stonewalled and did not respond.

Finally, I filed a case in federal court in San Francisco. I have heard that a judgment was entered against me, but I have never yet received a copy of that judgment. As far as I understand the law, a judgment has no legal effect unless it is served on the adverse party. When and if I do get a copy of the court's decision, I will decide how to respond. I am personally hoping that the S.E.C. brings an enforcement action over this. I can assure you that I will do nothing to help Mr. Murphy get his money. As far as I am concerned, Mr. Murphy has swindled both us and the other stockholders of Holden-Day. We were going to pay 40 cents per share and indeed we would still now pay 40 cents per share, provided only that Fred be removed from management control over this company so that he cannot further loot the assets. In short, all you have to do is put Humpty Dumpty back together again, and we will gladly pay 40 cents per share.

Incidentally, you might be interested to know the reason for Mr. Murphy's tenacious refusal to allow his company to be taken over. In his balance sheet, there is an item labeled "inventory" worth $9000. However, we have found out that this represents 22,300 books in his warehouse, with an average retail price of $40 per book. Under his plan of liquidation, Mr. Murphy personally gets to keep these books and the rights to their titles, on payment of a nominal sum. In short, he has a potential asset worth in excess of a half million dollars, which his shareholders are not fully aware of.

The reason for your complaining letter is that 285,000 shares of Holden-Day were tendered to us through DTC. Of these, Mr. Murphy tendered 205,000. Another 21,000 were tendered through DTC by Professor Phoebus Drymes, a friend of Mr. Murphy. A majority of the balance were tendered by Bill Funke, Professor Haldi, Wally Shows and other associates of Mr. Murphy.

In short, an ironic situation has arisen. All of the small stockholders, who have no connection with Fred Murphy, tendered their shares by mailing them directly to me, and all of them have now received their check for 20 cents per share. Almost the only ones who did not get the 20 cents per share were Fred Murphy and the others closely connected with him.

In short, we have no intention of terminating this tender offer. I am looking forward to getting sued by you. I have no intention of agreeing to have one cent paid to Mr. Murphy, who acquired his shares illegally in the first place, according to my research. If you do decide to file a lawsuit, I will make myself available for service of process, as will Mr. Bozulich, in Zadar.

Very Truly Yours,

Samuel H. Sloan

P. S. If you want to learn something about federal securities law, you might consider picking up a copy of my recent book, "How to Take Over an American Public Company", which has nothing good to say about Fred Murphy and Tom Palmer, except to give them full credit for teaching me every dirty trick in this field.