BY MS. POST:
Q. Ms. Richardson, I'm handing you what's been
marked for identification as Exhibit 35. Please take a
minute to look through that.
For the record, this exhibit is entitled
"Linus Technology Corporation, Percentage of Float Held or
Controlled by Reiter Securities and Others, June 24, 1996
through June 28, 1996."
Ms. Richardson, is this one of the summaries
that you prepared at the direction of counsel in this
case?
A. Yes.
Q. Could you please describe for the Court how
you prepared Exhibit 35?
A. I prepared Exhibit 35 using data contained in
the Depository Trust Company security position listing for
Linus Technology Corporation from June 27, through July 3,
1996 and the Daymark & Company position update report from
June 24th through June 28, 1996.
MR. COOPER: I'm sorry, the second document
was what?
A. The Daymark & Company position update report
from June 24 to June 28, 1996.
Q. I'm sorry, please continue.
A. On the exhibit there are various percentages
under the columns Reiter Securities, Chase, Chemical and
other firms. I computed those percentages by taking the
firm's shares that are held at the Depository Trust
Company in the stock of Linus, plus the green shoe, over
the shares outstanding, less restricted stock plus the
green shoe in Linus.
Q. That was the first column, the Reiter
Securities column?
A. For each of the columns, that's how I
computed. I took the individual firms, Reiter Securities,
Chase, Chemical and then totalled the other firm's shares
at the Depository Trust Company, plus the green shoe, over
the shares outstanding, less the restricted stock, plus
the green shoe.
THE COURT: Excuse me, what is this term,
"green shoe?"
THE WITNESS: Green shoe is where the
underwriter can purchase additional shares from the issuer
to cover an over allotment. If more shares are sold than
what is offered in the IPO, in the initial IPO.
THE COURT: Proceed.
BY MS. POST:
Q. You just answered a question a minute ago
about the green shoe. Is the green shoe also often called
the overallotment option?
A. Yes.
Q. Just a couple of explanatory questions. The
Depository Trust Company security position listing, please
describe what that is?
A. That is a listing that shows for a stock the
number of shares held for a DTC participant, such as a
broker dealer or a bank.
Q. And the Daymark & Company position update,
what is that?
A. That is a report that shows a firm's share
position in a stock. It shows the firm's opening share
position for the day, it shows all the purchases and sales
of shares in the stock, and it shows the firm's ending
position or share position in the stock.
Q. What was Daymark & Company?
A. Daymark & Company cleared the transactions
for Reiter Securities. They were their clearing firm.
Q. They were Reiter Securities' clearing firm?
A. Yes.
Q. One last question, DVP accounts that are
listed under the footnote in the numerical tables, what
are DVP accounts?
A. A DVP account is a delivery versus payment
account. A customer who has this type of account would
instruct a firm when it purchases shares to have that
stock delivered to a certain account for payment.
Q. The graphs that follow the first page of
Exhibit 35, did you prepare those graphs also?
A. Yes.
Q. And where did the data reflected on those
drafts come from?
A. It comes from the first page of the exhibit.
MS. POST: Your Honor, I move the admission
into evidence of Exhibit 35.
MR. COOPER: I'd like to voir dire the
witness, your Honor.
THE COURT: Go ahead.
BY MR. COOPER:
Q. Ms. Richardson, the information on the green
shoe, there would be nothing on the green shoe in the
Daymark position update, would there?
A. The green shoe, you'll find it on the Daymark
& Company position update at a different date.
Q. Right, that's what I don't understand. The
securities in the green shoe were not actually sold until
July of 1996, is that your understanding?
A. No.
Q. And again, ma'am, I'm not trying to be
argumentative with you. One of the exhibits in evidence
is the Linus 1996 annual report, which states that the
green shoe was sold in July of 1996.
A. I don't understand.
Q. Ms. Richardson, here's what I'm - here's where I'm coming up
short.
THE COURT: Is there a question in there?
MR. COOPER: Yes, your Honor, I'm actually
trying to expedite this, because if she and I are not
having a legitimate communication gap, then I'll probably
be through with the witness.
BY MR. COOPER:
Q. Were you attempting to do this summary in an
accurate and impartial a fashion as possible?
A. Yes.
Q. Okay, and then can you just explain for me in
layman's language, just explain, I'm confused. If the
green shoe securities were not sold until July of '96, why
are they included in your computation of the float?
A. I don't know that they were sold in July. I
know from the position update report as of June 24th, June
25th and June 26th, that additional shares were sold to
customers in addition to the 2 million shares offered in
the offering.
Q. So that's what you're saying, is that the
Daymark position update, which is done on a trade date
basis, as opposed to the DTC, which is done on a
settlement basis, the Daymark position update actually
shows securities in the green shoe?
A. It shows additional shares being sold to
customers in addition to the 2 million offered in the IPO.
Q. And then as we get to, for example, the 27th
or 28th on the DTC security position listing, does the
green shoe also begin to show up there?
A. I don't believe so.
Q. Would you explain that for me?
A. I know the green shoe was delivered into
Reiter Securities' position update report in July. The
number of shares in July is shown as coming in. However,
additional shares were sold to customers between June 24th
and June 26th. The broker went to the issuer and bought
shares to cover those shares.
MR. COOPER: Judge, that's as much voir dire
as I think I'm entitled to at this point. If they're
offering the exhibit, I have no objection to it.
THE COURT: Admitted.