Free Post Trial Brief - District Court of Federal Claims - federal

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UNITED STATES COURT OF FEDERAL CLAIMS

INNOVAIR AVIATION, LTD.,

Plaintiff,
Vo

UNITED STATES, Defendant.

) ) ) ) ) ) ) ) )

Docket No.:

96-408C

Pages: Place: Date:

400 through 701 Washington, D.C. October 19, 2007

HERITAGE REPORTING CORPORATION Official Reporters 1220 L Street, N.W., Suite 600 Washington, D.C. 20005-4018 (202) 628-4888 [email protected]

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some with Mr. Clark. We read a number of depositions, transcripts, other writings, to identify the information available to confirm the discussions that we had had with Mr. Carmichael, Mr. Wilson, Mr. Clark, and the like. And that allowed us to develop a mode! of damages, and then to make some estimates of damages. Q Thank you, Mr. Cobb. Were there other

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approaches to valuation that you contemplated, but decided not to use? A Q At least in a very general fashion, yes. Can you tel! the Court what those other

approaches were, and why you went instead with the approach you did take? A A fair amount of the work that we're

involved in has to do with lost profits; a fair amount has to do with fair market value of businesses, underlying assets at times. And we made considerations of those. And we focused first, knowing that there's some overlap and some parallel in what we've done to lost profits, but we didn't look at the lost profits. We focused on the expectancy value losses that pertain to the TLA. So beyond what the TLA would generate, Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT 1 2 3 4 Innovair had an opportunity to sell, for example,

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spares and parts, and to ultimately explore, at least, if not undertake, other conversions. So we excluded those, and thereby excluded a more specific analysis of lost profits. We also made considerations, discussions of fair market value. Willing buyer, willing seller, neither under compulsion, each with reasonable knowledge of the relevant facts. And we found that there was not a willingness to sell the entire business. There was not an intention to sell the entire business. So we had that concern. We also had the concern that there really would not be an active market for all of Innovairspecific TLA. So we moved away from market measures because of the difficulties and the encumbrances of looking at a fair market value. We also were concerned that the fair market value often is an element of loss; but what Innovair believed, what we saw in the writings, was that Innovair lost the right to continue ownership. And we wanted to look at the values that were foregone by losing that continued ownership. MR. BARTOLOMUCCI: Did the Court have a question? I'm sorry. Heritage Reporting Corporation (202) 628-4888

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the economic return that was foregone. The expectancy tells me that it's the amount that the then-holders expected to generate over some time period. Q Is it fair to assume that you believe that

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your analysis of lost expectancy interest value was, under the circumstances, the best way to approach the valuation of the technology license agreement, as of the time of the taking? A Q Yes. Did you derive the term "lost expectancy

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interest value" or a similar term from any particular source? A No, although I've certainly seen the concept

in other matters; taking of real property, for example. Q Well, has that term or a similar term been

used by any Courts in this case or related cases? A I saw it initially in, I think, it's the

finding, facts and conclusion of the Arizona trial, and it also reflects in one of the writings of this Court; but I think its in context of this Court's understanding of the Arizona writing. Q Mr. Cobb, is lost expectancy interest value

the same thing as lost profits? A No, although there are certainly parallels Heritage Reporting Corporation (202) 628-4888

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and perhaps some overlap, but I believe that they're different. Q A Can you tell us how they are different? Lost expectancy value I've tied into the

TLA. If we look at !ost profits, we'd have to look at consequential amounts in addition. So one of the contemplations of Innovair was that they would enjoy substantial sales of parts and spares, as a consequence of having the TLA as a consequence of being involved in the sale. That would be an element of lost profits. There was also the contemplation of a !onger business life, to maintain business activities into the future and past 1998. To me, that again, would be an element of lost profits, and a consequential amount not as specific to the TLA, at least for its initial term. I know that Mr. Carmichael and Mr. Wilson also had identified -- and I think Mr. Clark had, as well -- the opportunity to take conversions of other aircraft at some point in time in the future, as that may have made economic and business sense for them. So those are the kinds of things, the consequential damages that I think would be in a lost profits claim; but don't show up in the !ost Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT ( CONT'D ) 1 2 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 expectancy interest claims. In addition to those consequential amounts, a lost profits claims, I

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believe, would also include the loss expectancy value. So there's some overlap parallel, if you will. Q Am I correct then that you did not set out

to determine Innovair's lost profits; but rather the value of the technology license agreement as of the date of the taking? A Q A Q Measured as lost expectancy value, yes. Thank you. That is fair market value or lost profits. Now Mr. Cobb, in your report, did you

present your analysis of lost expectancy interest value according to different scenarios? A Q I did, at least in summary. Does your report present those scenarios in

summary, in chart form? A Yes, it does. MR. BARTOLOMUCCI: Okay, why don't we look at those charts. If you could turn to -THE COURT: Can I just ask a question here? At this point, I was a little confused on, how does loss expectancy interest value differ from fair market value? THE WITNESS: There's three primary ways of Heritage Reporting Corporation (202) 628-4888

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determining fair market value, and asset approach -what it had cost me to develop the assist or what can I re-build it for? A market approach -- what's the value of a similar, if we were selling our house, with my house two blocks away. The last, which is theoretically most preferred and most often used, although sometimes inappropriate, is a discounted cash flow or an income restriction. THE COURT: Yes, as this Court used in Whitney Benefits. THE WITNESS: I don't know. So what's typically done in that setting is to develop a projection for five years, actually similar to what's here, and then to determine a residual or a terminal value. That can be as a multiple of the fifth year. Some people use a Gordon growth model, which effectively carries the projection to infinity; so estimating a cash flow similar to what's here, and then taking a discount rate that would be applicable to this kind of investment. In this kind of investment, I would expect investors to look, and the Government identifies this range as well, for returns of 25 to 40 percent. There would be a discounting back to present value of that flow. Heritage Reporting Corporation (202) 628-4888

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Then there's some considerations to be made, Your Honor, about that number kind of in the environment, that I touched on a little earlier. So now I have a discounted cash flow number that in a great, great number of instances is the preferred measure. But I have to look now to fair market value to understand the market: who are the likely purchasers, how would the likely purchasers look at this; how would they assess the risks of this? That may cause some one to say that discounting cash flow indicates a value of $30 million for some asset. But investors simply won't pay that. They have alternative investments that they're interested in. They're looking at high tech, and so you start to looks the market factors and think about what's there. Sometimes in your discount rate, you may consider the existence of a key customer arrangement; in this instance akin to UTC, a key supplier, akin to Basler, and the ability to work through it. Sometimes we build that into the discount rate. But sometimes when it's not in the discount rate, you're looking for $30 million. Say, that value of $30 million is highly dependent on, in this instance, UTC. So an investor would make Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT ( CONT'D ) 1 2 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 considerations.

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So it's kind of like what I was just saying, loss profits and expectancy value; there's some overlap and some parallel. There's also substantial overlap and parallel to looking at a discounted cash flow amount. THE COURT: Okay, as I understand it, in a comparable sales model or fair market value, you'd look to see what would the typical purchaser -- which, in this case, would presumably be an investor, and it's a consumer product -- would be an investor who would be willing to buy this license to develop it themselves, which would be presumably something like UTC or, as you said, like Basler. Now how does that differ from the loss expectancy value? Because one of the things that obviously I have to do as the Judge in the case is come up wiih a basis for saying Plaintiffs lost this much, but loss as relative to what? THE WITNESS: Right. THE COURT: I mean, if my car is stolen and I didn't have insurance, the loss is the value of the car on the market. It isn't a theoretical value. Is loss expectancy value the real value? How can you measure it as a real value? Heritage Reporting Corporation (202) 628-4888

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THE WITNESS: The answer is yes and no, and I'll give you the no first. You touched on it vert artfully. I have to look at the investors. You said I need to find the financial investors. There's usually contemplation of two groups of investors:

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financial investors and synergistic investors. A financial investor would be a bunch of prosperous lawyers and accountants, and people that would make that investment but would not contemplate running the business. THE COURT: Yes. THE WITNESS: I would not expect that financial investors would have purchased all of this company at that time. They may have made some investment of 20 percent or what have you. But I don't believe that a market would have been established for the TLA, save Innovair, in late1991, early-1992. I don't expect that financial investors would have bought this. So then I moved to the synergistic investors, and who are they? It's Basler and UTC and Beach Pacific Air, which I don't remember if it was actually existing, which was already a convertor, Cologna Air, which is a converter in Canada. So I need to find that. Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT ( CONT'D ) 1 2 3 4 5 6 7 Then I've long experienced an odd dynamic

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having to do with airplanes. There are people, for reasons I don't quite understand, like Mr. Wilson, that utterly fall in love with airplanes and flying. I need to find someone that has that spark and that interest. So one of the things that I found in my early consideration was a great difficulty defining that there was a market for this. UTC has to have some fears of being an aircraft company, because they don't want to be a pure -- kind of, but not a pure competitor to their customer, Beech and Bombardier. Beech and Bombardier are busy selling new planes in a different design. And as I thought through the process and sat down and argued back and forth with Ms. Morrell and Ms. Beukelman, I couldn't really come up with a strong marketplace, a family of hypothetical buyers. So the first problem is on market. Let's assume now that there is a market, or that there is a market phenomena created in this action, similar to a shareholder's actions in state courts. What's the overlap? Every evaluation I've done, I have paid careful attention to all three methods. Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT ( CONT'D ) 1 2 3 4 5 6 7 8 9 In a number of the evaluations, I end up

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relying only on one, because one or two of them just don't really work. Let's assume, in this instance, and as we thought through it, our expectation was, if we had value in the business, we would end up with some sort of discounted cash flow. I believe that a reasonable investor would have looked at the kinds of analysis and the kinds of projections that I've looked at and that we assembled, and then would start to discount those back to present value. The 24 to 40 percent rates that Ms. Floyd has, and I assume she got in consultation with her experts, are the kinds of rates that I, too, would expect in valuing that kind of business. Those kind of rates often are achieved in a riskier investment; say, a technology-sort of investment or not quite a venture capital, but near some venture capital in the 35 to 40 percent range. Those don't necessarily include all of the considerations that someone might make about the reliance on key management: Mr. Carmichael, Mr. Wilson, and Mr. Clark. The corporate upheavals between Innovair and Basler -- they don't necessarily fully consider the nature of the UTC. Heritage Reporting Corporation (202) 628-4888

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So if I took that project, and I might take five years, and then calculate a residual value and multiply it by five or seven and -- I'm not a fan of the Gordon Growth Model -- but I could use the Gordon Growth Model, which theoretically at least goes to infinity, to get a residual value. You'd take those values and discount back by the 25 to 40 percent. If I'm at 25, I made wrestle very hard and very long with kinds of additional discounts I may have because of the unique circumstances with TLA. If I'm at the 40 percent, I may have considered some of those risks. So I think there's a strong base here to start to think about fair market value. I didn't complete fair market value, because as I looked at this -- and I read the findings and just compensation, and in the takings I see, which are all at the state level; and I think all of them had been real property land, bricks, mortar, including the alleged takings. There is a developer's cost approach for a site that's developable. There's a build-out approach. There's all but lost profits in really looking at what would have occurred in the future. When I look at that, if I own something, and I use fair market value, you're forcing me to give up. Heritage Reporting Corporation (202) 628-4888

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I've been there. In the case of Carmichael and Wilson, I've been there from the inception. I believe in this, an I'm impassioned. I've already assumed whatever risk is there. THE COURT: Yes. THE WITNESS: So I get the cash flow reward, and I've already put in my investment to get that. Now I'm being asked to value it on the basis of some third party, that has a completely different risk reward scenario and has already bought into that. The other consideration I made is, I'm not being paid at the end of 1991 or the beginning of 1992, so that I can re-invest and, therefore, in effect, mitigate my loss by having that money then. I'm not sure I could reinvest even then, because we didn't find another TLA or another comparable. So as I thought through this, and I'm sure imperfectly, the measure of what was lost here, I kind of admired the Arizona judge for saying, lost expectancy value. They lost value, and it's what they expected in their hand; what they expected in owning it. So that's what I set Qut to calculate. THE COURT: Okay, that was a very good description. It clears up that in my mind. Okay, Mr. Bartolomucci? Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT ( CONT'D ) 1 2 3 4 THE COURT: That was a humorous thing.
MR. BARTOLOMUCCI: that call, Your Honor. (Laughter.) THE COURT: I'll turn that off. I apologize. Mr. Cobb, I think you were saying that I think you should take

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this is the scenario based upon the 35 sales contemplated in the distributor agreement with UTC. Is that correct? THE WITNESS: That's right. Their firm asked me to prepare that. The pricing changes, because in the other scenarios there were sales not only to UTC but to other customers, and, in that instance, we measured the fact that UTC gets favored nation status, and no one gets priced better, and here we don't have to worry about any other customers because there are no other customers. It's just UTC. THE COURT: So that's why, even with 35, it's 17 million, whereas previously, with 50, it was $13 million. THE WITNESS: That's part of it, yes. The rest of it is, if you look at sales and marketing in this scenario is one line, it's I0 percent, and sales and market in the others has other components. Let me give you some examples. For Heritage Reporting Corporation (202) 628-4888

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example, it has demonstration aircraft and a marketing manager and an assistant and advertising. Because all of that now has been dropped, there are no attempts, in this scenario, to sell anywhere else, just UTC -you're out there on your own -- the sales and marketing go away because the business is now much more streamlined. No other sales. The genera! and administrative costs change as wel!. So the business generated by the TLA doesn't require the same structure or business practices or business systems to support, and those costs go away as well. THE COURT: So, in other words, if you were the owners, and you thought you could only sell 50 units, including the 35, through UTC, you would be much better off in not selling those extra 15 units and just taking your 35 units and collecting your money. THE WITNESS: Yes. One of the problems with that is a number of businesses, the first two years they don't do so well, maybe we should just do UTC, next year will be better. They get one more year out, and they still haven't done well, but next year will be better. So it's the atypical business that actually does make that decision, although many probably should. Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT ( CONT'D ) 1 2 3's, regarding conversions of other planes, other

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conversion facilities, international economy. That allowed us to understand and make considerations about the contemporaneous projections that were available and to make our analysis. Q As of the time of the taking, which we

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believe to be November 1991, would you characterize Innovair as having been a new business or a startup as of that time? A As of that time? They certainly had

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elements of a startup, but I think they had accomplishments that put them ahead of a startup. Q So, therefore, you would not call them a

startup at the time of the taking. A I wouldn't, but they certainly had elements

of being a startup. Q Would you call them a new business at the

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time of the taking? A Q A Q A relatively new business. But not -Not a new business. Thank you, sir. We've touched on this

before, but you did not apply a present-value discount to your assessment of lost expectancy interest value. Is that correct? Heritage Reporting Corporation (202) 628-4888

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A value. A

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That's right. Why did you not do that? Let's think about the concept of present I'm looking at the time value of money, and I

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want to come to a date current, and if I'm coming to the date of today, there simply is not point served by discounting this now completely historical analysis back to some point in time. There is no one in a position to walk up to Mr. Carmichael, Mr. Wilson, or whoever and say, "Here is your money in 1991 or 1992." That opportunity is gone. So you can discount back in time and then just. turn around and discount back coming forward. If you think about present-value calculations that are typically made, they are !ooking into the future, so we would be looking at 2008, 2009, and 2010. We don't have any such numbers. Present-value calculations is both a plus and a minus. Instead, we have, in this instance, and I understand it's the discretion of the Court, the opportunity for prejudgment interest. I don't believe that financially there is any purpose served by discounting at this juncture. THE COURT: Let me ask for calculation, under the Uniform Relocation Act, which covers our Heritage Reporting Corporation (202) 628-4888

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COBB - DIRECT ( CONT'D ) 1 2 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q taking even the nonrelocation cases, the Court can award interest from the date of the taking, which would, in this case, be 1991. Does this mean that

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this includes that? There would be not interest if the Court awarded the '90, which is about $36.4 million. If it awarded that, then there should be no interest added to that. THE WITNESS: No. There should be, but the interest wouldn't be from 1991. For the individual year -- let's say it ends in 1992 -- you would bring that forward from '92 to today, and, for '93, you would bring that forward, so it's a series that would occur. The date of the taking is one thing, but the date of the loss, and these are over a seven-year period, each one of those would come forward individually. THE COURT: Okay. Thank you. BY MR. BARTOLOMUCCI: Just one more question, Mr. Cobb, getting

back to the new business point. In your origina! report, as distinguished from the supplemental report, on page 3 of the report, which is PX-9/6, you write next to your third bullet point, "Innovair had established its business and was poised to successfully enter the market." Are those your words? Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 please state your full name for the record? A Q A Q A Q A Fred B. Johnson, Jr. And where do you live, Mr. Johnson? Old Hickory, Tennessee. And what is your current occupation? Consultant. What kind of consulting do you do? International business, specializing in

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something called "offsets" or "industria! participation." Q A What are "offsets"? When a foreign seller sells something to

Spain, Spain asks that seller to do other things besides sell them the airplane. It could be buy other products, set up a joint venture, any number of things, and that's called "offset" because it's offsetting the money leaving Spain with something else going back into Spain. Q A years. Q A What is your educational background? I graduated from Perdue in '71. I have a And for how long have you been a consultant? I retired from Pratt & Whitney in '97, so i0

master's in aviation management from Embry Riddle. Q And when was that? Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 Q Yes, you, yourself.

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Just me? I was active in Spain and Taiwan and, later on, in the UAE. Q And what about Pratt & Whitney itself? What

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kind of offset work was Pratt & Whitney concerned

with? A Q A
What other countries? Yes. They were heavily in Europe, Norway,

Denmark, Belgium, Netherlands, Israel, Spain, Taiwan, Malaysia. Q And this offset work; what product were you

doing offset work in connection with? A Q engines? A Pratt only sold engines, so it would have to It could be either military or commercial. And any particular products; that is,

be related to an engine sale on the military or commercial side. Q A Q And these were all airplane engines. Uh-huh. Yes. What's the relationship between Pratt &

Whitney and United Technologies? A United Technologies is the parent. It's

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JOHNSON, JR. - DIRECT 1 2 3 4 Hamilton Sunstrand; Otis, and Carrier, at the time. So it was an operating division under United Technologies. Q Who was your supervisor, immediate

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supervisor, when you worked at Pratt & Whitney? A Q A Q Doing offsets? Yes. Lyman Marshall. Let me get some clarification. The work

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that you did in Florida; was that also for the Pratt & Whitney Division? A Q A offsets. Yes. Okay. What was Lyman Marshall's job? He was, I guess I would say, director of He worked for Don Lang within the group

business strategy, business development area. So he was responsible for both military and commercial offset programs. Q title? A I think, director of industrial Okay. What was his title, Mr. Marshall's

participation, I suspect. Q title? A He was V.P. of Group Planning. Heritage Reporting Corporation (202) 628-4888 What about Mr. Don Lang? What was his

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JOHNSON, JR. - DIRECT 1 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q

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Did you use this chart to make a sales pitch

to management to invest Pratt & Whitney's time and energy in the DC-3 conversion program? A I'm sure this is one of many things we used.

Probably some other things in this exhibit was used also. Q Now, what was your interest, in terms of

offset credits with respect to the DC-3 conversion program? What were you hoping to achieve? A At some point, I would say, in the first or

second quarter of 1990, I went to the government of Taiwan and asked for and received preapproval for a conversion center project in Taiwan. Q A Can you describe that? What does that mean? Basically, while we asked for a lot more,

what they gave us was preapproval. If we did what we said we would do, they would give us $35 million of offset credits, and that's not real money; that's just green stamps. Q What is the value of the $35 million offset

credit to Pratt & Whitney? A Typically, if I'm a buyer or seller of

offset credits, it's three percent. It has a three percent cash value. Q So if Taiwan had given you a $35 million Heritage Reporting Corporation (202) 628-4888

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offset credit, what would that translate to Pratt & Whitney in terms of cash? A If I were going to go out and buy those

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credits from somebody else rather than do this project, I would be willing to spend a million, a million point one, to buy those credits. THE COURT: What were the credits used for other than selling them? THE WITNESS: I'll be very specific. When Pratt sold engines on 747's to China Airlines, they incurred a $189 million offset obligation. Again, it's complicated how you calculate a credit, but it's almost like a green stamp book. Taiwan gave Pratt an empty green stamp book, and you have to earn stamps to put in the book. So each stamp has a value. Each stamp is worth a dollar or a million dollars, whatever you want to divided it into. Those stamps have a value, and the value is about three percent. BY MS. FLOYD: Q So, in this case, it would have been valued

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at a million dollars. Is that correct? A More than that probably, but roughly a

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JOHNSON, JR. - DIRECT 1 2 you couldn't sell that thing otherwise. Correct?

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THE WITNESS: Well, typically, and I'm not saying Pratt did this, but typically you would build the cost of doing the offset into the price of the engine. So if the engine cost $20 million, the price of the offset would be built into that engine, so it's a cost of doing business. THE COURT: MS. FLOYD: THE COURT: Okay. Anything further, Your Honor? No, no.

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4

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9 I0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q

BY MS. FLOYD: Again, you were getting a $35 million offset

credit that translated, you said already, that it was about a million dollars. How much was Pratt & Whitney willing to put into the project? A Typically, we would like to have projects be

rather neutral in terms of having earning credits that don't cost us anything. There are a lot of ways to rationalize that, in terms of if Pratt bought an airplane for $3 million, but we had planned to sell that airplane as part of the transaction, so we would get that money back. So the idea would be to try to stay within the three percent value that we could buy the credits from somebody else. Q So Pratt was willing to put about a million Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A dollars into the project. A Q A Well, net. Net. At the end of the day, if we got the $35

583

million of credit, and it cost us a million, plus or minus $I00,000, we would be happy. The cash flow of that was more than that during the period of buying the airplane, but at the end of the project, the net cost, we would like to see a million dollars or less. MS. FLOYD: I would like to have you turn to another document that's Plaintiff's Exhibit 247. I'll have my colleague pass you the book. THE WITNESS: It's not in this boo,k? MS. FLOYD: things complicated. THE COURT: MS. FLOYD: It's good exercise. I would like to have you take a No, it isn't. We like to make

look at that document. THE WITNESS: Okay. BY MS. FLOYD: Do you know who prepared this document? I'm sure I did. And why do you say that? I can recogniz~ the writing and the

misspelled words. Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 would like to have you take a look at. A Q Okay.. Okay. This is a letter, dated April 8,

591

2 3
4

1990. Do you recall receiving this letter on or about April 8, 1990? A Q I don't recall, but I'm sure I did. Okay. And there was a discussion in this

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letter about an airplane that was about to be completed. Did Pratt & Whitney express an interest in purchasing an airplane from Basler Turbo Conversions/Innovair? A Yeah. At the time, I think the request from

Basler/Innovair was cash payment-at-equity-role or some financial assistance. We countered, saying we would buy the airplane, in terms of giving them the cash they needed to keep moving forward, but at least Pratt would have an asset as opposed to equity in something that they didn't want equity in. So the answer is yes. Q At what point were you in the program? Had

you actually developed a plan to proceed in terms of the DC conversion project? A At this point, either we had, or we expected

to have, the preapproval for the offset, and, again, that's paramount in why we did it. So if the offset Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25

595

whether Joint Exhibit 13 was joined with Joint Exhibit 19 at some point because it does refer to information? It says: "This information is provided as background and in no way should be taken as a commitment." A I have no idea. I have no recollection of

which pieces were attached to what thing, what combination. Q I would like to have you turn to Joint

Exhibit 20, please. Do you recognize that document? A Q I do. And did you have any role in negotiating

this agreement? A Q A Yes, I did. What role did you play? Being the functional, working-level program

manager for the project and for the country, I interfaced with RayStone, the Pratt attorney, who wrote the document. So he did the legal part of it, and I was involved in the things that the functionals were concerned with or the things that related to offsets that we wanted to make sure that was covered in the agreement. Q And from your perspective, what were the

important terms of this particular -- it's called a "purchase agreement," dated July 13, 1990. What were Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4

596

the important terms of this agreement, as far as you were concerned? A Well, again, from an offset perspective, it

granted marketing rights and other concessions in terms of buying the airplane. It allowed us to create the marketing package in order to get the conversions. So it was a lot more than just buying the airplane. It was trying to lay out the relationship between Pratt, Basler, and Innovair. Q Exhibit 93. I would like to have you turn to Defendant's That's in a separate binder, I'm afraid. (The document referred to was marked for identification as Defendant's Exhibit No. 93.) BY MS. FLOYD: Q Defendant's Exhibit 93 consists of, it looks

5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25

like, a cover page and a letter attached to that. Can you identify this for the record? Did you write the first page? A Q It's my handwritten note, yes. Okay. So this first page is yours. The

attached three pages; is this a letter written to you? A Q Yes. On the first page of Defendant's Exhibit No.

93, it indicates the attached letter describes Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 5 6 7 yes. THE WITNESS: 1990, I would think. BY MS. FLOYD: Q Yes. The first page says 11/26 with no discussions in Taiwan. Can you relate to us the discussions in Taiwan that are referenced in these letters? MR. COBB:

597

Actually, if I might request -- I

know it's got a date. Do we know what year it is? MS. FLOYD: I'm going to try to set that,

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9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25

year, but the attached document says November 20, 1990. Are you comfortable with the attachment of DX93, pages 2 through 4, with the first page of DX-93? Do these documents relate to one another? A Q They appear to, sure, yes. And going back to the first page of

Defendant's Exhibit 93, can you describe the discussions that are referenced here? A Pratt was trying to set up a joint venture

in Taiwan to convert the airplanes, and, as part of that, Pratt was looking for local investors to invest in that joint venture, and the facility we were looking at was called Air Asia. The discussions with First Taiwan Group, Pacific Wire and Cable; those companies were companies that I met with in Taiwan, Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4

598

pitching the conversion center and the airplane to try to get them to invest. Q What other investors did you meet with

besides Pacific Wire & Cable? A The First Taiwan Group was another -- they

5 6
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were an investment house or an investment company. They were thinking about being one of the investors. We met with -- I think it's called CDC, China Development Corporation. There were a couple of other companies, mostly government-owned companies, that were banks to invest in. Q Returning back to the first page of

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Defendant's Exhibit 93, in the second paragraph, the first sentence states: "I don't anticipate UTC procuring any kits on speculation." What do you mean by that? A The kits they are talking about are mod kits

in terms of making all of the parts and sending those to Air Asia, in this case, so that a carcass would come, and then those parts would be used to convert the old carcass to a turbo DC-3. Q Can you describe the conception that you had

of what would go on at the Air Asia facility? Would there be any overhauling of the carcass of the airplane? Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4

605

box. By that time, there were some marketing leads in various countries that we were looking at that had added credibility in terms of listing countries and Avmark having a third party do it as opposed to Pratt & Whitney or Don Douglas do it. Q A And who was Herbert Hayes? He was a retired ad executive that we hired

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back, a!ong with two other Pratt executives, as consultants to do offset work. Q And when you said you hired as consultants

to offset work, was this in connection with the DC-3 conversion program? A I think there were several projects they

were doing. Herb was focused primarily only on the DC-3.

Q
A

And from whom did Mr. Hayes take direction? Me. From you? Did he make business decisions

Q
A Q

for Pratt & Whitney? No. Let's turn to Joint Exhibit 42. It should

be in the binder in front of you. A Q Forty-two? Yes. Joint Exhibit 42 is a memorandum from

Herb Hayes to yourself, dated June 27, 1991. Was this Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 5 6 7

606

document typical of the documents you received from Mr. Hayes in this timeframe? A Q Yes. And what did he normally report in his

memoranda? A He was asked to look at marketing aspects,

trying to find joint venture partners for the conversion site, generally taking trips to Taiwan in that area looking for either potential buyers of airplanes or partners in the conversion facility. Q Okay. In Item l(c), it says: "Asia capital

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9 I0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25

partner needs clarification of UPA/BTC/Innovair relationship and a business proposal defining a proposed joint venture and capital requirements." Did potential investors have a problem with the multiparty relationship involving UPA, BTC and Innovair? A I don't think so. I think it was more al!

of the initials that were confusing. No, I don't think that was the issue. I think it was just understanding who the players were and who was backing who, and I think, in cases like this, they are always looking to see who the big brother is, how much UTC is backing this versus Innovair backing it. Q A I see. I think it was more of a relational-type Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4

615 "

"What is your understanding?" and has been permitted to ask and get the question answered. I don't see why I'm not permitted under these circumstances. MR. COBB:
clause.

Not in connection with this

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THE COURT:

The foundational difference, and

maybe there isn't a difference, but I think you need to lay a foundation on how he was operating under this clause. The objections I've sustained before or overruled before were when someone is on a plan deciding if they knew that the plan was, where they are the operational person. If Mr. Johnson was the operationa! person, and he can establish some foundation, I'll allow it to be asked as a nonlegal conclusion. The way it's phrased, it's just a pure -- he is opining on what that clause meant, without any operational component or even foundation that he was the one who had arranged the sales, to be in charge of the sales, to deliver the money to -BY MS. FLOYD: Q You were the program manager for this

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program involving the DC-3 conversion. Is that correct? A Yes. Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 Q And the legal agreement was prepared with

616

your involvement. Is that correct? A Yes. I -- on functional issues to the

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attorney who added the legalese to the functional concerns and functional desires. Q Were you the responsible person to ensure

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that the program would work? A Q Yes. What was your understanding, in terms of

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this agreement? Was it your understanding that UTC would be obligated to pay Innovair if UTC did not purchase five kits? MR. COBB: For the record, I object, Your Honor. THE COURT: Well, I'll allow the question in terms not of a legal obligation, but did you understand he had to purchase five planes or at least pay for the profits? THE WITNESS: I'm struggling because what I want to say, probably nobody wants to hear it. I knew for sure that Pratt & Whitney was not going to pay for one or five or I0 or any number of kits if we didn't sell them. I knew that. I know that as a certainty. We would walk away before we did that, and that was built in from Ray Stone and the functional me making Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 sure that that was possible.

617

We looked at it as we were the white knight. We were trying, and everything -- Innovair, Basler, Herb Hayes, everybody did everything they could to make this work, and if penalties were going to come back, we would have said, "We give up." We would renegotiate out of the penalties. THE COURT: Okay. THE WITNESS: I know that as a certainty. THE COURT: Okay. Ms. Floyd? MS. FLOYD: Thank you. BY MS. FLOYD: Q Before this agreement was signed by the

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parties, did Innovair tell you that the technology license agreement had been seized by the United States? A I don't recall that happening before we

signed the agreement. Q Do you recall when you received the

information that the technology license agreement had been seized? A I don't recall an exact date. I think it

was sometime after that, and I'm not sure that I ever saw formal -- there were conversations back and forth saying that there was an issue. My guess -- that Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 5 6 7 8 9 I0 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q

618

happened after signing the agreement. The agreement was, I think, signed in July, and this was August or September that it finally came to the surface. It came to me, anyway, to the surface. Q Did the seizing of the technology license

agreement by the United States prevent UTC from complying with the terms of the distributor agreement? A Q No. Was the program tainted by virtue of -MR. COBB: I object, to the extent that it partly involves a legal conclusion. It's partly factual and partly legal. To the extent that it's a legal conclusion, I object. THE COURT: The Court doesn't understand it to be a legal conclusion and will, therefore, allow the objection to that extent. It's partly sustained. I'll allow the question. Ms. Floyd? MS. FLOYD: Thank you, Your Honor. BY MS. FLOYD: In spite of the seizing of the technology

license agreement by the United States, did UTC proceed, in terms of the distributor agreement, working with the parties? A Q Yes. Was this DC-3 conversion program tainted by Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 virtue of the seizure of the technology license agreement, in your opinion? A

619

Not from my perspective. We felt l±ke any

number of things would happen. It would be resolved, and it would-go on. There was some sort of documentation that Innovair was saying that if there is a problem, Pratt could go to Basler in the interim, and I always felt like we would get what we needed, if we needed it. If we had a sale, if we had a conversion, somebody, between Basler and Innovair, would provide what we needed. Q How significant was it, from your point of

view, that the technology license agreement was seized? A Q It was transparent to me. And what does that mean? What do you mean,

"transparent"? A We continued to look for customers, and not

being successful, I felt like if we had a customer, we would move on. So, at some point, I realized that there was a turbulence back there of something to do with the license, but it didn't impact the Pratt objective, didn't impact Pratt actions. We continued to try to do the conversion facility and find customers for the airplane. Heritage Reporting Corporatio~ (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 Q airplane? A Q A Q
NO.

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Did you ever find any customers for the

And did you build a conversion facility? No. For how long did you pursue the efforts to

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try to obtain customers? Do you recall? A At least, a year or two after the signing of

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the distributorship agreement. I don't recall exactly when we pulled Herb Hayes back, and he was not doing what he was doing, but we kept on doing that at least three or six months after the distributorship agreement was signed. I recall kind of resurrecting with Greece -- there was a potential Pratt & Whitney sale in Greece, and we dusted this off and were ready to try it again in Greece. Q Were you looking into building a conversion

facility in Greece? A Q A Q A Sure. Yes. For offset credits? Yes. And what happened with that effort? Pratt lost the campaign, so there was no

need to do a conversion facility. Q When you say you "lost the campaign," what Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 does that mean? A Lost the sale of engines; therefore, we

621

didn't get an obligation; therefore, offset wasn't a driver to do that. Q Did you get any offset credits for this DC-3

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conversion project? A No. In Taiwan, no, or anyplace else. The

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preapproved thing in Taiwan; nothing got approved. Q Did you have a problem obtaining technical

data from Innovair and Basler in connection with the DC-3 conversion project? A No. THE COURT: What was the question? I didn't fully get that question. MS. FLOYD: Did UTC have any difficulty with obtaining technica! data from Innovair and Basler Turbo Conversions? THE COURT: And the answer was no. THE WITNESS: No. THE COURT: Thank you. BY MS. FLOYD: Q Was there ever a termination of the

distributor agreement? A To my knowledge, I've never seen a letter go

in either direction terminating it. Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 Q agreement? A Q was? A Yes. And can you explain what that settlement Was there a settlement of the purchase

622

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My recollection is that Basler paid $250,000

back to UTC, and UTC gave up the marketing rights that were granted under the purchase agreement. Q So what did that mean for Basler Turbo

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II 12 13 14

Conversions, in terms of their ability to market in the Pacific Rim? A That's unclear to me because I don't know

the relationship between Basler and Innovair at the time. What we did was we gave up our rights, or we sold our rights, to them. So what that meant is UTC had no claim to the marketing rights of the DC-3 around the world anymore. Q A And what timeframe was that? I don't recall. I would think, nine months

15
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or so, a year after the distributorship agreement. I don't recall. MS. FLOYD: I would to have you turn to Joint Exhibit 53. THE WITNESS: It's in one of these books. MS. FLOYD: Yes. It's in one of black ones, Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 Q BY MS. FLOYD: Defendant's Exhibit 218 is a memorandum,

624

dated October 8, 1991, and it's addressed from Mr. Lorin Young to a Mr. Herbert Hayes. Note that you are copied on this memorandum. Did you receive this memorandum? A Q Yes, I did. And did you keep a copy of this memorandum

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in the UTC files after you received it? MR. COBB: If you're trying to lay a foundation, I have no objection.

MS. FLOYD:

No objection to this document?

THE COURT: MS. FLOYD:

Did he spell the name wrong? Your name?

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Defendant's Exhibit 218; the government would like to move that into evidence, please. THE COURT: Okay. Any objection? MR. COBB: None, Your Honor. THE COURT: Admitted. (The document referred to, previously identified as Defendant's Exhibit No. 218, was received in evidence.) MR. COBB: I would stand up every time, but Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 I'm bound down by binders. THE COURT: Okay. So we'll admit it,

625

subject to the fact that it's the wrong spelling of the name. BY MS. FLOYD: Q A Who were the Young Brothers? They were Pratt & Whitney marketing

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consultants for the Far East. They were the agents for the commercial airline business for Pratt & Whitney. Q & Whitney? A I met both Lorin Young, who is the son of Who did you deal with in your role for Pratt

Ambrose Young. Ambrose worked out of Hong Kong, and Lorin kind of stayed in Taipei. Q What did they do for Pratt & Whitney? Did

they do the marketing? A Q A For the commercial airline engines, yes. For what period of time? As far as I can remember, I would think 20

years, 1975 to 1995, at least. Q What's the import of this memorandum to you,

dated October 8, 1991? A Herb Hayes and I had both talked to the

Young Brothers to be an investor in the Air Asia Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT

626

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facility but also their help in trying to market the airplane. At the time, we felt like we needed his influence, his contacts, his motivation that would be helpful to sell the airplane. This is coming back saying that they decided not to participate in that. Q Was that, in your mind, the end of the DC-3

conversion program in Taiwan? A Certainly, it was a large b!ow, not only to

Taiwan but for the concept. My feeling was that if he is not going to be supportive, he is going to be nonsupportive, which would be a roadblock as opposed to being neutral. So, yes, this, coupled with the lack of success the previous six or nine months, this, coupled with the license; al! of those things were kind of making us realize that maybe this isn't going to be what we thought it would be. Q I would like to have you turn to Joint

Exhibit 57, please. Do you have that in front of you? A Q Yes, I do. Okay. While everybody continues to look,

this is a letter, dated October I0, 1991. It's from Bryan Carmichael to yourself. You received this letter. A Q Correct?
Yes. How did this letter impact UTC's efforts in Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 terms of attempting to continue to market the DC-3 conversion effort? A

627

The letter itself, not much impact at all,

in terms of if we had a customer, we would find a solution. There were some solutions offered here to

6

get around whatever the issues were of the TA. Again, it comes back to we never had a customer to exercise any of those options. So, in reality, there was no impact. Q Did you have any personal contacts with

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Basler Turbo Conversions? A Q Personal? Dealing with Mr. Basler or any of the

individuals with the company: Mr. White? Mr. Basler? A Sure. There were conversations all during

this time about how to market it, the technical data, flying the airplane. They provided the pi!ots for the airplane, so there was all kinds of dialogue back and forth between Basler and Pratt & Whitney and me. Q You indicated that UTC purchased an

18
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airplane. Was that the airplane that Innovair and Basler Turbo Conversions flew around the world in an effort to attract interest in the DC-3 conversion effort? A Yes. We bought it, and we jointly funded. Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 They provided the pilots. That was N96BF. That was our airplane. Q

628

And what did you do with the plane after you

bought it? Did you keep it at UTC? Did you continue to try to sell it? Did you use it for marketing? What did you do with it? A Basler maintained it. They had possession

5 6 7 8 9 I0 II 12 13 14 15 16 17 18 19 2O 21 22 23 24 25

of it. They were free to use it to market any way they saw fit. We supported our around-the-world trip. It went to Turkey. It went to several places in the Far East. It went to Taiwan. At the point where we started losing momentum, we ended up leasing the airplane. Basler's people flew it. It was leased two different times in Africa. Q A Cross. lease? To whom was it leased? One or both times to the International Red Zemex was one of the people that had the let

Q
that is? A

What's a "let lease"? Can you explain what

We provided the airplane, the pilots, and

the fuel, and they paid a certain charge for the airplane. We owned it and maintained it, and we just gave them the airplane with pilots and fuel. Q And you indicated that you also leased the Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 plane to another entity. Do you recall what that other entity is? A

629

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4

I can't think of the name off the top of my

head. Zemex was one, and I think there was another Swiss company, but I don't remember. Q Okay. I would like to have you turn to

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Plaintiff's Exhibit 212, please. A Okay. MS. FLOYD: Okay. For the record, Plaintiff's Exhibit 212 is a letter, dated October 18, 1991, with what appear to be related attachments. It's from Stuart Warren to yourself. I would like to move this document into evidence, please. MR. COBB: I have no objection. THE COURT: without objection. (The document referred to, previously identified as Plaintiff's Exhibit No. 212, was received in evidence.) MS. FLOYD: Thank you. BY MS. FLOYD: Q Tell me about Global Air Finance Group. Okay. That's admitted, then,

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What arrangements was UTC talking to Global Air Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT

630

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Finance Group about in connection with the DC-3 conversion program? A At this point, we were unsuccessful finding

a buyer for our airplane. We started looking at the alternative of finding a leasing company, Global Air Finance Group, to buy the airplanes, and then they would lease the airplanes to operators. Basically, we felt like one of the problems of getting a sale was that the operators who use these planes don't have the cash to buy the airplane, but maybe they could do monthly lease payments. Q When you say the potential customers don't

have the money to buy the planes, can you describe what you mean by "potential customers"? A The customer was always envisioned for this

not China Airlines or Singapore Airlines or some large airline that has capital and financial structure. It was more to the smaller operator, the one- or twoairplane guy that's flying cargo in and out of jungles, those things. So that kind of an operator isn't as solvent and may not be able to come up with $3 million or be able to get a loan for $3 million, but he might be able to make lease payments if he had a contract that he was servicing that came out to be able to afford to Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT

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5 6 7 8 9 I0 II 12

buy the airplane, to lease the airplane. Q And what kind of prices were you looking at

in terms of the leasing arrangement? A G!obal Air Finance was suggesting sixty to

$70,000 a month for a three to three-and-a-halfmillion-dollar airplane, so I assumed that they worked those numbers, and that would work for them, if it would work for the end user. Q And did you enter into any agreements with

customers to lease a converted DC-3 airplane? A Q No. I would like to have you turn to Joint

Exhibit 60. 14 15 16 17 18 19 20 21 22 23 24 25 A Q Okay. Joint Exhibit 60 is a memorandum from Lyman

Marshall to Marlene Hayes, dated April I0, 1992. Did you prepare this memorandum? A Q Yes. And it indicates that money is going to be

expended in connection with marketing brochures. Had UTC previously financed various marketing efforts for Basler Turbo Conversions and Innovair? A Q A Yes. And what had you done, actually? Again, it was more than just for them; it Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT 1 2 3 4 was for us and the joint venture. It was for all of the parties. videos done.

632

We did a video. There were a couple of I'm sure UTC paid for one. There was a

brochure done. There were some pictures, handouts. My recollection is that this is the completion of a brochure. It was a gray-covered brochure. I don't know if any of those are around. Q Yes. I think the Court actually received

5
6 7

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one. We had one introduced in the record. A This was additional money, I think, to do

that and finish the video, interna! authorization to be able to pay C-3 to do that. Q So, in this timeframe, were you also

expecting to commit additional funds for promotional efforts? A I think not. This was wrapping up the

brochure and the video. This was getting close to mid-year '92, where reality is setting in that we may not be successful. So my recollection is that there was no other additional marketing money spent after this other than using Dusty Miller, Herb Hayes, and those people out marketing. Q A Q So they continued marketing after this time. Yes. I would like to have you turn to Joint Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - DIRECT

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Exhibit 61. Have you found that? A Q Yes. Okay. This is a letter from Tom Weigt to

Donald Miller. Can you identify who Donald Miller was or is? A Donald or Dusty Miller was a retired Pratt

Canada executive that we hired at the same time or brought back at the same time we brought Herb Hayes back because of the Pratt Canada engines on the airplane, his marketing background, more specifically in the Far East. He was like Herb Hayes. Q I'd like to have you turn to the second page

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i0 II 12 13 14 15 16 17

of the exhibit. Looking at the second to the last paragraph there, at this time in April of 1992 was Basler Turbo Conversions still committed with working with UTC in connection with its efforts to obtain customers in the Pacific Rim and deve!op a DC-3 conversion facility? A Yes. MS. FLOYD: I'm just checking to see if I have any other documents. Your Honor, I think I'm finished. Thank you very much. THE COURT: Ms. Floyd, you're pretty on target. It's been two hours. Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - CROSS 1 2 to work with Basler? A Q Yes. Okay. Is it your testimony that UTC was

641

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4

never told about the seizure? A Q a while. A No, that was not my testimony. It's that it didn't make its way to you for Is that correct? I think the question was when it got to me,

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and I don't have a certain date. I don't believe it happened before the distributorship agreement was signed. Q So it would surprise you if the United

States Marshal Service and the United States Attorney's Office contacted UTC on the 17th of July? A If they did it wasn't me, and no one from

UTC told me that. Q And was Mr. Carmichael also having

conversations directly with Mr. Marshall? A Certainly he was free to call Herb directly,

me directly. Sure. Q Thank you. Let me ask you to take a look,

if you would, at the next tab, Tab 3. This is PX-260. MR. T. COBB: Did we move this in, Sherry? MS. FLOYD: Yes. MR. T. COBB: So it has a new number. I Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - CROSS I 2 3 4 5 6
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645

I'll lay a foundation. BY MR. T. COBB: Q correct? A
Yes. MS. FLOYD:

It's to you from Mr. Weigt. Is that

No objection, Your Honor. (The document referred to, previously identified as Plaintiff's Exhibit No. 274, was received in evidence.)

8 9 I0
ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q correct? A Q
Yes.

BY MR. T. COBB: And this is in September of 1992. Is that

And this is about the time that you

concluded this isn't going to work. Is that correct? A this point. Q Marshall? A I'm sure this is Lyman's handwriting down at And you promptly forwarded this on to Lyman Yes. I think the enthusiasm was waning at

the bottom, so yes. Q Is it easier to tell by the handwriting or

the stamp? There's a stamp in the upper left-hand corner. Is that his custom? Heritage Reporting Corporation (202) 628-4888

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JOHNSON, JR. - CROSS

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Why don't we get that. BY MR. T. COBB: Q This reflects that as late as January 13,

1993, this confirms your testimony that there were discussions un