1669 1 UNITED STATES OF AMERICA Before the 2 OFFICE OF THRIFT SUPERVISION DEPARTMENT OF THE TREASURY 3 In the Matter of: ) 4 ) UNITED SAVING ASSOCIATION OF ) 5 TEXAS, Houston, Texas, and ) ) 6 UNITED FINANCIAL GROUP, INC., ) Houston, Texas, a Savings ) 7 and Loan Holding Company ) ) OTS Order 8 MAXXAM, INC., Houston, Texas, ) No. AP 95-40 a Diversified Savings and ) Date: 9 Loan Holding Company ) Dec. 26, 1995 ) 10 FEDERATED DEVELOPMENT CO., ) a New York Business Trust, ) 11 ) CHARLES E. HURWITZ, ) 12 Institution-Affiliated Party ) and Present and Former Director ) 13 of United Savings Association ) of Texas, United Financial Group,) 14 and/or MAXXAM, Inc.; and ) ) 15 BARRY A. MUNITZ, JENARD M. GROSS,) ARTHUR S. BERNER, RONALD HUEBSCH,) 16 and MICHAEL CROW, Present and ) Former Directors and/or Officers ) 17 of United Savings Association of ) Texas, United Financial Group, ) 18 and/or MAXXAM, Inc., ) ) 19 Respondents. ) 20 TRIAL PROCEEDINGS FOR 10-1-97 21 22 1670 1 A-P-P-E-A-R-A-N-C-E-S 2 ON BEHALF OF THE AGENCY: 3 KENNETH J. GUIDO, Esquire Special Enforcement Counsel 4 and BRYAN VEIS, Esquire of: Office of Thrift Supervision 5 Department of the Treasury 1700 G Street, N.W. 6 Washington, D.C. 20552 (202) 906-7395 7 ON BEHALF OF RESPONDENT MAXXAM, INC.: 8 FRANK J. EISENHART, Esquire 9 of: Dechert, Price & Rhoads 1500 K Street, N.W. 10 Washington, D.C. 20005-1208 (202) 626-3306 16 11 DALE A. HEAD (in-house) 12 Managing Counsel MAXXAM, Inc. 13 5847 San Felipe, Suite 2600 Houston, Texas 77057 14 (713) 267-3668 15 ON BEHALF OF RESPONDENT FEDERATED DEVELOPMENT CO. AND CHARLES HURWITZ: 16 RICHARD P. KEETON, Esquire 17 of: Mayor, Day, Caldwell & Keeton 1900 NationsBank Center, 700 Louisiana 18 Houston, Texas 77002 (713) 225-7013 3 19 20 21 22 1671 1 ON BEHALF OF RESPONDENT FEDERATED DEVELOPMENT CO., CHARLES HURWITZ, AND MAXXAM, INC.: 2 JACKS C. NICKENS, Esquire 3 of: Clements, O'Neill, Pierce & Nickens 1000 Louisiana Street, Suite 1800 4 Houston, Texas 77002 (713) 654-7608 5 ON BEHALF OF JENARD M. GROSS: 6 PAUL BLANKENSTEIN, Esquire (not present) 7 MARK A. PERRY, Esquire (not present) of: Gibson, Dunn & Crutcher 8 1050 Connecticut Avenue, N.W. Washington, D.C. 20036-5303 9 (202) 955-8500 10 ON BEHALF OF BERNER, CROW, MUNITZ AND HUEBSCH: 11 MARY CLARK, Esquire of: Williams & Connolly 12 725 Twelfth Street, N.W. Washington, D.C. 20005 13 (202) 434-5000 14 OTS COURT: 15 HONORABLE ARTHUR L. SHIPE Administrative Law Judge 16 Office of Financial Institutions Adjudication 1700 G Street, N.W., 6th Floor 17 Washington, D.C. 20552 Jerry Langdon, Judge Shipe's Clerk 18 REPORTED BY: 19 Ms. Marcy Clark, CSR 20 Ms. Shauna Foreman, CSR 21 22 1672 1 2 EXAMINATION INDEX 3 4 5 C.E. BENTLEY 6 Examination (Continued) by Mr. Guido.....1673 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 1673 1 P-R-O-C-E-E-D-I-N-G-S 2 (9:00 a.m.) 3 THE COURT: We'll be back on the 4 record. 5 Mr. Guido, you may continue your 6 examination of Mr. Bentley. 7 MR. GUIDO: Thank you, Your Honor. 8 9 EXAMINATION 10 11 12 Q. (BY MR. GUIDO) When we adjourned 13 yesterday, Mr. Bentley, we were talking about the 14 Penn Corporation preferred stock, and I'd like to 15 hand you now Exhibit No. A1065 which is a document 16 dated 11, 23, 85 which is the minutes of the 17 meeting of the board of directors of 18 United Financial Group. 19 On the first page of the minutes, it 20 says that Mr. Coles -- if you look at the fourth 21 paragraph down, it says Mr. Coles distributed his 22 letter dated November 23rd, '82, to Mr. Burton 1674 1 Borman, president of PennCorp describing their 2 agreement as to the amendment of the definitive 3 agreements. 4 Do you see that paragraph? 5 A. Yes. 6 Q. And it goes on to say "These amendments 7 involve a change of rights to convert the PennCorp 8 debt and UFG preferred stock into UFG common 9 stock." And then it describes the terms, and the 10 first one is relinquish -- PennCorp would 11 relinquish its right to convert the preferred 12 stock into common stock. 13 On Page 2, if you look down, the third 14 paragraph starts on motion by Dr. Munitz and 15 second by Mr. Keltner, the board unanimously 16 approved the terms of the amendments described in 17 the letter of November 23, 1982. 18 Do you recall the discussions with 19 regard to the amendment to the PennCorp merger 20 agreement to delete PennCorp's right to convert 21 UFG stock, UFG debt into common stock of UFG? 22 A. I recall it in a vague sort of way. I 1675 1 do not remember the specifics of it. 2 Q. Do you recall how it came about that 3 UFG sought a change in the definitive agreement 4 with PennCorp to delete its conversion rights? 5 A. I do not. 6 Q. Was a request made by Dr. Munitz that 7 the conversion rights be deleted? 8 A. I do not recall. 9 Q. Did Dr. Munitz speak in favor of the 10 deletion of the conversion rights? 11 A. I do not remember specifically. 12 Q. But as the minutes reflect, he did make 13 the motion to adopt the letter? 14 A. That is correct. 15 Q. Now, attached to Exhibit 1065 are also 16 the minutes of the board of directors of United 17 Savings Association of Texas of the same date, 18 November 23, 1982. 19 Were those meetings held at the same 20 time? 21 A. Yes, that would be correct. 22 Q. Was it a practice in 1982 to hold joint 1676 1 board meetings of USAT and its holding company, 2 UFG's boards? 3 A. That is correct. They were held 4 simultaneously. 5 Q. They were held simultaneously? 6 A. Although the board composition was not 7 identical. 8 Q. They were held simultaneously? 9 A. Correct. 10 Q. Now, on the second page of the 11 November 23, '82, minutes of United Savings 12 Association, which is Page 2 of those minutes, it 13 says the board -- four paragraphs down, it says 14 "The board discussed the new powers granted under 15 the Garn-St. Germain bill and Mr. Coles said that 16 after the merger, he hoped to recommend consumer 17 leasing and commercial banking programs for the 18 association." 19 Do you recall that discussion? 20 A. In a vague manner. I don't recall it 21 with any specificity. 22 Q. It was about this time that Garn-St. 1677 1 Germain had been passed? 2 A. That is correct. 3 Q. And Garn-St. Germain, what did that do 4 with regard to the investment powers of savings 5 and loans, to your understanding? 6 A. It generally broadened them. Direct 7 investment a multitude of new areas in which the 8 institutions could engage. I do not remember now 9 specifically how it affected United. United had 10 most of the powers granted by St. Germain under 11 state law prior to the passage of Garn-St. 12 Germain. 13 Q. Now, you testified yesterday under 14 state law that there were certain limitations on 15 the percentages that could be invested in direct 16 investments. 17 Do you recall that? 18 A. Yes, that is correct. 19 Q. And did Garn-St. Germain effectively 20 lift those limits? 21 A. The effect of it was to lift them, yes. 22 Q. So, it did have an effect of broadening 1678 1 the powers of United Savings Association? 2 A. Yes, it did. 3 Q. Now, Mr. Coles in this, he recommended 4 consumer leasing and consumer banking programs for 5 the association. 6 Did he recommend anything else? Do you 7 know? 8 A. Not that I can recall specifically. 9 Q. You testified yesterday that there were 10 two types of direct investments under state law 11 that had been made and were contemplated being 12 expanded by USAT in 1982 time frame. 13 Can you tell us again what those were? 14 Was one of them direct investments in real estate? 15 A. That would have been one that would 16 have been expanded, and I expect commercial loans 17 would have been another that would be expanded. 18 Q. Now, I'd like to hand you a document. 19 I think it's A10525. 20 MR. NICKENS: Your Honor, I offer 21 A1065. 22 MR. GUIDO: Excuse me, Your Honor. I 1679 1 offer A1065, also. 2 THE COURT: Received. 3 MR. GUIDO: Your Honor, I'd like to 4 offer into evidence Exhibit A10525. 5 MR. NICKENS: No objection, Your Honor. 6 THE COURT: Received. 7 Q. (BY MR. GUIDO) Now, in December of 8 1982, if you look at the board minutes in the next 9 to the last page which is Bates stamp K2621, 10 Mr. Bentley. The last two paragraphs. 11 A. Okay. I'm there. 12 Q. There is a discussion at the bottom. 13 It says "Dr. Munitz discussed the recent 14 negotiations between MCO Holdings, Inc. and 15 American Financial Corp. to purchase the 16 20 percent of First American stock held by Bank of 17 America in trust." 18 Do you see that -- 19 A. Yes. 20 Q. -- paragraph? Did MCO acquire that 21 stock that's referred to in that paragraph? 22 A. This would indicate that it did. I 1680 1 don't specifically recall. I know there were some 2 negotiations between MCO and American Financial, 3 but I was not specifically privy to those. 4 Q. But is it your understanding that the 5 stock that was acquired by MCO or a portion of the 6 stock that was acquired by MCO and UFG came about 7 as a result of the merger with First American 8 Financial? 9 A. In connection therewith. I don't 10 remember the dates well enough to say it was as a 11 result of, but it was in conjunction with the 12 merger. 13 Q. And was it about that time that MCO 14 Holdings' interest increased to 24.9 percent? 15 A. I expect that is correct. 16 Q. I'd like to show you Exhibit A1069. 17 MR. GUIDO: I'd like to move Exhibit 18 A1069 into evidence, Your Honor. 19 MR. NICKENS: No objection, Your Honor. 20 THE COURT: Received. 21 Q. (BY MR. GUIDO) Exhibit 1069 is the 22 minutes of the board of directors of February 12th 1681 1 and if you look at the second resolution at the 2 bottom of the page or second to the last 3 resolution, it talks about the approval -- 4 recommendation of the approval -- recommendation 5 to the shareholders of the approval of the merger 6 agreement between UFG and First American 7 Financial. 8 Did the board approve the merger of 9 First American Financial and UFG? 10 A. It would appear so. 11 Q. Okay. And did the board also recommend 12 that there would be certain people appointed to 13 the board of directors pursuant to that merger 14 agreement? 15 A. That's correct. 16 Q. And the list that starts at the bottom 17 of the page, the first page, it says C.E. Bentley, 18 James A. Coles, and carries over to the second 19 page where it refers to L.L. Duckett, Edward 20 Keltner, Charles LeMaistre, Barry Munitz, Barry 21 Putegnat? 22 A. Putegnat. 1682 1 Q. James Whatley, T.C. Campbell, and B.D. 2 Holt. 3 Do you see that? 4 A. Yes. 5 Q. Were those the existing directors at 6 the time? 7 A. As I recall, we added Holt, Campbell, 8 and Putegnat from what the board had been 9 immediately prior to this time. That's my 10 recollection. 11 Q. And why were they added? 12 A. They were added because they had -- 13 they had previously been on the board. They 14 had -- they were representing areas where we had 15 had an association prior to the merger in '77. 16 And as I recall, Mr. Coles and I discussed 17 expanding the board to maintain a -- what we felt 18 to be a control group that would continue to be a 19 control group when the additional directors were 20 added following the merger. You'll note that 21 there are five to be added effective with the 22 merger. 1683 1 Q. So that the purpose was to ensure that 2 the original group of people that were on the 3 board of UFG prior to the merger were still the 4 control group of the board? 5 A. That is correct. 6 Q. Now, the people that were added, it 7 mentions those names on the second resolution with 8 regard to the appointments. It says Burton 9 Borman, Charles Hurwitz, George Kozmetsky, Steven 10 Silverman, and Wayne Winters. 11 Do you see those? 12 A. That is correct. 13 Q. Now, was Wayne Winters the CEO of First 14 American Financial? 15 A. That's right. That is correct. 16 Q. And is that why he was recommended? 17 A. That is why. 18 Q. And was he put on the board as part of 19 those negotiations of the merger? 20 A. I believe that's correct. 21 Q. Were the rest of the individuals also 22 put on as part of the negotiations of that merger? 1684 1 A. Yes. Borman and Silverman represented 2 the PennCorp group and Hurwitz and Kozmetsky 3 represented the Hurwitz interests. 4 Q. And Borman and Silverman represented 5 the PennCorp group that was going to have the 6 non-convertible preferred stock? 7 A. That's correct. 8 Q. And who were Hurwitz and Mr. Kozmetsky 9 there to represent? 10 A. I presume the ownership of the Hurwitz 11 interests, which would have been Federated and I 12 suppose MCO. I don't recall how that stock was 13 handled. 14 Q. Who asked that they be added to the 15 board? 16 A. I don't specifically recall. I think 17 that the facts sort of speak to themselves and I 18 could draw conclusions, but I do not specifically 19 recall somebody saying "we want this and this." 20 It was a part of the negotiations. 21 Q. You testified earlier that you had 22 negotiations or discussions with Mr. Hurwitz when 1685 1 he purchased the initial stock of UFG and he asked 2 that Mr. Munitz be put on the board. 3 Do you recall that? 4 A. Yes. 5 Q. But you don't recall any conversations 6 about these two individuals? 7 A. Subsequent to that date, there would 8 have been a request for two additional seats, but 9 I do not remember who specifically asked for that 10 or whether they asked me or asked Coles. I don't 11 remember those facts. 12 Q. But you do recall that Mr. Hurwitz 13 asked for two additional seats? 14 A. Yes. 15 MR. KEETON: Your Honor, I object. He 16 didn't testify to that. This man is clearly 17 speculating and trying to logic what happened. He 18 did not say Mr. Hurwitz asked for two additional 19 seats. Mr. Guido continually tries to lead this 20 witness into words this witness has not said. 21 THE COURT: All right. I'll sustain 22 the objection. 1686 1 Q. (BY MR. GUIDO) Did Mr. Hurwitz ask 2 that two additional representatives of MCO or 3 Federated be put on the board? 4 A. I do not recall specifically that. The 5 request could have come from Munitz. I just don't 6 remember that particular detail. 7 Q. I'd like to -- did you have any 8 discussions with Mr. Winters about individuals to 9 be added to the UFG board pursuant to the merger 10 agreement? 11 A. Not with Mr. Winters that I can recall, 12 although I'm aware that subsequently additional 13 people representing the PennCorp interest, one or 14 two additional ones were added to the board. But 15 I don't remember the details of that matter. 16 Q. At the point in time that this board 17 composition was proposed by the board, who was the 18 largest shareholder of UFG? 19 A. Prior to the time -- at the time of the 20 merger or -- 21 Q. After the merger. 22 A. After the merger? It would have still 1687 1 been the combined interest of MCO/Federated. 2 Q. Who was the next largest holder of 3 common stock? 4 A. I'm guessing. I don't recall any large 5 institutional holdings. There could conceivably 6 have been. There were few mutual fund interests 7 in the company, and I suspect that I was the 8 second -- 9 Q. You were the second largest 10 shareholder? 11 A. -- largest shareholder, although I'm a 12 little vague about that. 13 Q. Okay. 14 A. I presume I was personally. 15 Q. Based on your best recollection, you 16 were the second largest shareholder? 17 A. That would be a correct statement. 18 Q. What percentage of the stock did you 19 hold? 20 A. Something in excess of -- as I recall, 21 in excess of 2 percent. 22 Q. Somewhere between 2 and 3 percent? 1688 1 A. I would guess that's correct. 2 Q. Now, were the individuals proposed to 3 the shareholders elected at the shareholders -- 4 subsequent shareholders' meeting? 5 A. To the best of my recollection, that's 6 correct. 7 Q. I'd like to hand you Exhibit A1083 8 which is minutes of the board of directors of 9 5-26-83. 10 MR. GUIDO: I'd like to move the 11 admission of Exhibit A1063. 12 THE COURT: What's the number again? 13 MR. NICKENS: I think it's 1083, Your 14 Honor. 15 MR. GUIDO: 1083, Your Honor. 16 THE COURT: Received. 17 MR. NICKENS: No objection, Your Honor. 18 I do note, Your Honor, that in several instances, 19 these minutes are not signed which raises the 20 possibility that this is a draft and that we'll 21 represent to the Court that we will make an effort 22 to get signed minutes because I believe they are 1689 1 being discussed as if they are the official 2 minutes. And, you know, I don't have any 3 objection to that other than the fact that I think 4 we should, given the nature of the discussion, try 5 and find the signed minutes. 6 MR. GUIDO: Your Honor, we've had -- 7 all parties have had trouble finding the formal 8 set of minutes, a signed minute book. And we are 9 still working to do that and we will, with your 10 permission, substitute the signed documents if 11 they can be found. 12 THE COURT: All right. 13 Q. (BY MR. GUIDO) The third paragraph of 14 the minutes on Page 2 says that you welcome the 15 following new directors to the board. 16 Was this, this May 26th, 1983, meeting 17 the first meeting that occurred after the 18 stockholders had approved the -- 19 A. That would appear to be the case. 20 Q. Now, then in the middle of the page, it 21 says that certain individuals were unanimously 22 designated to serve on the committees of the board 1690 1 adjacent to their names and it mentions T.C. 2 Campbell to the audit committee, Charles Hurwitz 3 to the executive committee, and Barry Munitz to 4 the executive committee. 5 Do you see that? 6 A. Yes, sir. 7 Q. What was the composition of the 8 executive committee after their appointment? 9 A. I presume it would have been Mr. Coles, 10 myself, Hurwitz, Munitz. There would have been an 11 odd number, but I do not recall who the other one 12 might have been at that time. 13 Q. Was the other one Mr. Whatley? 14 A. Probably so, yes. 15 Q. Mr. Whatley had been on the -- 16 A. It would have probably been either Mr. 17 Whatley or Mr. Shoup, one of the two. Maybe Shoup 18 had retired by this time, but it probably was Mr. 19 Whatley. But I don't specifically recall. 20 Q. But you and Mr. Coles were two others 21 on the executive committee? 22 A. That's correct. And my recollection is 1691 1 that originally, Mr. Shoup had been on the 2 committee and that Mr. Whatley replaced him when 3 Mr. Shoup retired because of a conflict of being 4 asked on a bank board downtown. 5 Q. Now, did you have any discussions with 6 Mr. Hurwitz with regard to his appointment to the 7 executive committee? 8 A. I'm sure I did, but I have no -- I do 9 not recall with any specificity the details of 10 that discussion. Possibly other than the 11 understanding that there -- that there would be 12 two representatives of those interests on that 13 committee. 14 Q. MCO/Federated interest? 15 A. Yes. But that conversation could have 16 been held with me or with Mr. Coles. I don't 17 recall. 18 Q. But it's your understanding that that's 19 the reason they appeared on the executive 20 committee? 21 A. It's logical that that's what took 22 place. 1692 1 MR. KEETON: Your Honor, I want to move 2 to strike the witness's last two answers. He's 3 again just logicking something that he does not 4 remember. He's been forthright in saying he 5 doesn't remember. He doesn't remember who, if 6 anybody, that conversation was with. We'd get 7 along a lot faster if we'll just answer questions 8 as to what he knows and what he doesn't know. 9 THE COURT: All right. I'll deny the 10 objection. I think he gives some basis for it so 11 we can go on. 12 Q. (BY MR. GUIDO) Now, on Page 6, do you 13 see the third paragraph from the bottom that says 14 "Mr. Hurwitz asked if planning had taken place in 15 the area of corporate direction and strategy"? 16 Do you see that paragraph? 17 A. Yes. 18 Q. Do you recall what it was that 19 Mr. Hurwitz was referring to when he was talking 20 about corporate direction and strategy? 21 A. I recall that it led to the development 22 of a strategic plan. I don't remember any of the 1693 1 specifics, but I know that as a result of this 2 meeting. 3 MR. KEETON: I object as nonresponsive, 4 Your Honor. The witness was asked what did 5 Mr. Hurwitz say and he's now getting ready to tell 6 us something that happened in the future. 7 MR. GUIDO: I think I asked the witness 8 what Mr. Hurwitz was referring to when he was 9 referring to the corporate direction and strategy, 10 and I think the witness is trying to explain that, 11 Your Honor. 12 THE COURT: All right. Objection is 13 denied. 14 A. Other than what I have commented, I 15 would have to rely on what the minutes say except 16 that I do know that following this meeting, there 17 was a strategic plan developed under the direction 18 of Jim Coles. 19 Q. (BY MR. GUIDO) Now, prior to this 20 meeting, had there been sort of a formal strategic 21 plan developed by the board of UFG? 22 A. Not specifically designated a strategic 1694 1 plan with all of the preambles of the mission and 2 that sort of thing. We had no formal strategic 3 plan. It was a strategic plan that had not been 4 reduced into concise language and followed to the 5 letter of the law. 6 Q. Now, the -- was someone subsequently 7 hired to pull together the information to develop 8 a strategic plan? 9 A. I believe there was, but I don't 10 specifically recall unless it was engaging -- and 11 I forget the gentleman's name that was a relative 12 of Mr. Whatley's -- 13 Q. Okay. 14 A. -- that was at some point in time hired 15 to assist in the development of that plan. But I 16 don't remember the time frame. It might relate to 17 these minutes. 18 Q. Now, the last paragraph says 19 "Dr. Munitz asked about corporate acquisition 20 strategy at the holding company level and 21 suggested that the company may need some 22 assistance in merger or strategic planning at the 1695 1 holding company and perhaps should consider an 2 employee for that function." 3 Is that referring to the area of 4 corporate direction and strategy that Mr. Hurwitz 5 had initially referred to? 6 A. I do not -- I do not recall. I do not 7 recall with any specificity. 8 Q. Now, the last page of those minutes 9 says that "Mr. Bentley stated that he was informed 10 by Mr. Hurwitz of the intention of MCO Holdings, 11 Inc. and Federated Development company to increase 12 their ownership of UFG beyond the presently 13 authorized 24.9 percent and for MCO and Federated 14 to become savings and loan holding companies." 15 Do you recall that discussion? 16 A. Yes. 17 Q. At the board? And do you recall who 18 spoke to that issue? 19 A. I would concede to the minutes as being 20 accurate in it, although I have -- I'm sorry to 21 say that time takes its toll on -- I don't 22 remember the specifics. I would concur with what 1696 1 is reported in the board meeting which would imply 2 that probably both Mr. Hurwitz and Mr. Munitz 3 commented on it. 4 Q. Do you recall that Mr. Munitz explained 5 that Federated and MCO will file as soon as 6 possible for status as a diversified savings and 7 loan holding company? 8 A. Yes, I recall that. 9 Q. Okay. Do you recall that you pointed 10 out that the board's prior understanding of MCO 11 and Federated's interest was limited strictly to 12 an investment interest but this increase raises 13 the issue of control? 14 A. That is correct. I remember it 15 specifically. 16 Q. And do you recall that Mr. Keltner 17 asked what other types of investments MCO and 18 Federated had? 19 A. Generally. I don't remember 20 specifically his questions. 21 Q. And then the last sentence says 22 "Mr. Hurwitz discussed other plans of the company 1697 1 in response to questions from the board and 2 expressed an interest in becoming more actively 3 involved with UFG and United." 4 Do you see that? 5 A. Yes, I do. 6 Q. Do you recall him -- 7 A. Yes, I do. 8 Q. -- making that statement? 9 A. Yes, I do. 10 Q. Did he explain what he meant by 11 becoming more actively involved with UFG and 12 United? 13 A. In all likelihood, he did. I don't 14 remember specifically what he might have said. 15 Q. Did Mr. Hurwitz become more actively 16 involved subsequent to this meeting? 17 A. Yes, he did. 18 Q. Did Mr. Munitz become more actively 19 involved subsequent to this meeting? 20 A. Yes, he did. 21 Q. Did they attend executive committee 22 meetings? 1698 1 A. Yes. 2 Q. Did they attempt to influence the 3 activities of United Financial Group or USAT? 4 A. I would have to say yes. 5 Q. Now, by this time -- 6 MR. NICKENS: Your Honor, for the 7 record, I will note the continuing objection that 8 I have to this line of questions just to make that 9 note that we discussed yesterday. 10 THE COURT: All right. 11 Q. (BY MR. GUIDO) When the bank board 12 approved the merger of First American Financial 13 and United Financial Group, did it impose a 14 net-worth condition on the combined entity, 15 United Financial Group? 16 A. Logically, it did. I don't 17 specifically recall. 18 MR. GUIDO: I'd like to offer Exhibit 19 A2005, Your Honor. 20 MR. NICKENS: No objection, Your Honor. 21 Q. (BY MR. GUIDO) Mr. Bentley, is that a 22 stipulation with your signature on it? 1699 1 MR. NICKENS: A2005? 2 Q. (BY MR. GUIDO) May I see the exhibit? 3 I'm sorry. T2005. 4 MR. NICKENS: Your Honor, we might take 5 a second. We, I think, pulled the wrong document. 6 MR. GUIDO: I misspoke. I'm sorry. 7 MR. NICKENS: We're checking to see if 8 we have a copy of this exhibit under another 9 number. Mr. Guido, is this the net-worth -- 10 MR. GUIDO: This is the net-worth 11 stipulation. I'd like to offer T2005 as an 12 exhibit, Your Honor. 13 THE COURT: Received. 14 MR. NICKENS: Your Honor, my 15 understanding of Mr. Bentley's testimony in the 16 past is that he does not recall having signed this 17 document, and I would like at least to have that 18 foundational question asked and answered before I 19 state whether I have an objection. 20 MR. GUIDO: I have no problem with 21 that. 22 Q. (BY MR. GUIDO) Would you look at the 1700 1 very last page of the document that's been marked 2 as T2005, Mr. Bentley? 3 A. Yes. 4 Q. And is that your signature? 5 A. Yes, it appears to be. 6 Q. Okay. Look at the page just prior to 7 that that also has a signature on it. Is that 8 your signature? 9 A. That appears to be. 10 MR. NICKENS: No objection, Your Honor. 11 MR. GUIDO: I would move for the 12 admission of T2005. 13 MR. NICKENS: No objection, Your Honor. 14 THE COURT: Received. 15 Q. (BY MR. GUIDO) Now, look at the next 16 to the last page, Mr. Bentley. Let met back up a 17 little bit, Mr. Bentley. 18 You previously have testified or stated 19 that you didn't recall signing these two 20 stipulations; is that correct? 21 A. That is correct. I do not recall. 22 Q. And now that you have seen the 1701 1 stipulations, does that refresh your recollection? 2 A. Yes, it does. It does not refresh my 3 recollection. I will acknowledge that I did sign 4 it. 5 Q. Okay. Now, the second to the last page 6 says that you as chairman of United Financial 7 Group do hereby stipulate and then it goes on and 8 basically says that "in no event will dividends be 9 paid that will reduce the net-worth of United 10 Savings below the level required by Section 11 563.13B of the rules and regulations for insurance 12 of accounts for institutions insured 20 years or 13 longer." 14 Is it your understanding that that is 15 basically a stipulation not to pay dividends that 16 would bring the association below its capital 17 level? 18 A. That would be my understanding. 19 Q. And look at the last page of the 20 resolution. It says that you as chairman of 21 United Financial Group do hereby stipulate that as 22 long as United Financial Group controls United 1702 1 Savings Association of Texas, it would cause the 2 net-worth of United savings to be maintained at a 3 level consistent with that required by 563.13B of 4 the rules and regulations for insurance accounts 5 and then it's a little unclear what that says but 6 it will infuse sufficient additional equity 7 capital in a form satisfactory to the supervisory 8 agent to effect compliance with such requirement. 9 Do you see that? 10 A. Yes. 11 MR. NICKENS: Your Honor, I have this 12 objection. My copy, I cannot read and in 13 particular, I cannot read the word "controls 14 United Savings Association of Texas." 15 MR. GUIDO: The copy that I've handed 16 to the witness, I think, does. Although it's 17 vague, it says "controls." 18 MR. NICKENS: I just -- 19 MR. GUIDO: Can I ask the witness some 20 questions to clarify? Thank you. 21 Q. (BY MR. GUIDO) Is it your 22 understanding that this is essentially a net-worth 1703 1 maintenance condition or stipulation, Mr. Bentley? 2 A. That was the vernacular in which such 3 an instrument was referred, yes. 4 Q. Now, were you authorized by the board 5 of directors of United Financial Group to sign 6 such a stipulation? 7 A. I presume I was. I cannot say. I 8 don't have evidence in front of me that that was 9 the case. But then again, as I've testified, I 10 don't recall signing the instruments; but I don't 11 deny that I did. 12 Q. Did anyone ever say to you that you 13 were not authorized to sign that? 14 A. I have no evidence to that effect, no. 15 Q. Now, I would like to hand you 16 exhibit -- 17 MR. NICKENS: Before we leave this 18 document, Your Honor, for the record, this 19 document exists as Exhibit B310 or as an exhibit 20 to B310 so that we can make the corresponding 21 reference in our documents. 22 MR. GUIDO: No objection, Your Honor. 1704 1 MR. KEETON: Your Honor, I don't have 2 the exhibit. Could I borrow the witness'? 3 MR. NICKENS: Here's one right here. 4 MR. KEETON: Thank you, Your Honor. 5 MR. GUIDO: I'm sorry, Your Honor. I 6 move the admission of Exhibit A1084. 7 MR. NICKENS: No objection, Your Honor. 8 Q. (BY MR. GUIDO) Now, Exhibit 1084 is 9 the minutes of the board of directors of United 10 Savings Association of Texas for August 25th, 11 1983. And if you look at the middle of the page, 12 it says "On motion of Mr. Coles and seconded by 13 Dr. Munitz, the following resolution was 14 unanimously approved: Resolved that Gerald R. 15 Williams is hereby elected president and chief 16 operating officer of United Savings Association of 17 Texas and is further elected as director of the 18 association to serve until the successor is 19 elected and qualified." 20 Do you see that? 21 A. Yes, I do. 22 Q. Do you -- did you interview 1705 1 Mr. Williams for that position? 2 A. Yes, along with Mr. Coles. The two of 3 us. 4 Q. You jointly interviewed him? 5 A. Jointly interviewed him. 6 Q. How did he come to your attention? 7 A. I frankly do not know. I know his 8 background and I was familiar with his resume, but 9 I cannot recall how we ended up interviewing him. 10 Q. Did you know him before you had 11 interviewed him? 12 A. No, I did not. 13 Q. Did Mr. Coles introduce him to you? 14 A. I don't recall. I recall that we met 15 for the interview at lunch and I went as a 16 request -- at the request of Mr. Coles. 17 Q. Now -- but do you know how he came to 18 Mr. Coles' attention? 19 A. I do not of my own personal knowledge. 20 I don't know. 21 Q. Have you ever heard how he came to 22 Mr. Coles' attention? 1706 1 A. I heard from various sources that 2 Mr. Hurwitz had put him in touch with him, but I 3 don't know that to be a fact. 4 Q. Now -- but you wouldn't dispute 5 Mr. Williams' testimony of how he came to your 6 attention? 7 MR. NICKENS: Your Honor, I object to 8 that. We don't have Mr. Williams' testimony and 9 to ask him to -- whether he would dispute some 10 unknown testimony is an improper question. 11 THE COURT: All right. Sustained. 12 MR. GUIDO: I'd like to offer into 13 evidence Exhibits A1086 and A1087, Your Honor. 14 MR. NICKENS: No objection, Your Honor. 15 MR. GUIDO: Your Honor, I have been 16 informed that one of the sets may include 17 Exhibit 1089. 18 A. That could be. These are -- 19 Q. Let me take a look at them. 20 A. These are all of -- three of them. And 21 then I passed on some others, 86 and 87. 22 THE COURT: Do you move both of those 1707 1 in? 2 MR. GUIDO: Yes. I move these two 3 exhibits to be admitted, Your Honor. 4 MR. NICKENS: No objection, Your Honor. 5 THE COURT: Received. 6 Q. (BY MR. GUIDO) Now, on Exhibit 1086, 7 it has in the third paragraph the sentence "The 8 board reviewed the minutes of the executive 9 committee and discussed the resignation of James 10 A. Coles and the board accepts Mr. Coles' 11 resignation," and then upon motion of Mr. Duckett 12 and Mr. Putegnat makes the following proposed 13 resolution which was unanimously adopted. 14 How did it come about that Mr. Coles 15 resigned? 16 A. Mr. Coles was due to assume the mantle 17 of chairman of the national council of insureds 18 savings, whatever that national council, savings 19 associations in the late fall of 1983 and a 20 position that I had previously held a number of 21 years ago. 22 Mr. Coles called me -- and I cannot be 1708 1 specific on date, probably without reference to 2 something, but Mr. Coles called and told me 3 that -- 4 MR. KEETON: Your Honor, now we're 5 getting ready to have hearsay. It's clear that 6 he's going to relate what a third party said. 7 THE COURT: Your objection is denied. 8 MR. KEETON: I object, yes, sir. 9 THE COURT: Denied. 10 Q. (BY MR. GUIDO) You may proceed, 11 Mr. Bentley. 12 A. Mr. Coles called and said he had had a 13 very disturbing meeting, that he had met with 14 Dr. Munitz and Mr. Hurwitz and that they were 15 proposing to, because of the time that would be 16 involved in his serving in the capacity as 17 chairman of the national council, that they were 18 suggesting that there be established an office of 19 the president and that that office of the 20 president would have, as I recall, a four-man -- 21 would consist of four members, one of which would 22 be Mr. Coles, one of which would be Mr. Munitz, 1709 1 one of which would be Mr. Hurwitz, and then a 2 fourth party to be named. And I never heard the 3 identity of who the fourth party might be. 4 Mr. Coles was incensed at the idea and 5 because of the previous experience he had had in 6 the job before he came to United, he viewed this 7 as deja vu, that he was experiencing the same 8 thing that he had experienced back at the Imperial 9 Corporation. 10 I asked him if he had made up his mind 11 and he said, no, he hadn't made up his mind but 12 that they had offered him the full severance 13 program that was due him under his employment 14 agreement. 15 Subsequently, he did advise me that he 16 was going to opt to leave and to take his 17 settlement that was due him under his employment 18 agreement. I asked him if he wanted me to pole 19 the board and that I felt that the proposal to 20 create this office of the president would not be 21 agreeable to the board and that I would be glad to 22 pole them to determine this. He said, "No, no. 1710 1 Don't do that. I want to resign. And please 2 advise the board but do not pole them specifically 3 or to ask them to oppose this proposal." That's 4 my recollection of the circumstances. 5 Q. And did you notify the board members of 6 his decision and the discussion that you had had 7 with him? 8 A. Yes, I did. I notified all the board 9 members, but I specifically called the board 10 members that -- and also determined in my own mind 11 that I had accurately sketched the matter to him. 12 I personally called all of those board members and 13 in each instance, the facts were accepted as 14 stated. No one questioned it. If that's what Jim 15 wanted to do, that was fine. 16 Q. Now, he was on the executive committee 17 of UFG at the time, was he not? 18 A. Mr. Coles? 19 Q. Yes. 20 A. Yes, he was. 21 Q. Did anyone replace him on the executive 22 committee? 1711 1 A. Yes. I believe Mr. Williams replaced 2 him. 3 Q. And did Mr. Williams then become 4 executive vice president of UFG? 5 A. I believe that's correct, although I 6 don't specifically recall it. 7 Q. If you look at Page 2 of the minutes 8 marked as Exhibit A1086, there is a resolution in 9 the middle of the page that says that "Gerald 10 Williams is hereby elected a director of 11 United Financial Group and shall serve until such 12 time as his successor is qualified and elected." 13 Do you recall that he became a member 14 of the board? 15 A. Yes, this would verify that. 16 Q. And that the next resolution says 17 "Gerald R. Williams is hereby elected executive 18 vice president of United Financial Group." 19 Do you see that? 20 A. Yes, I do. 21 Q. And then -- and look at the next to the 22 last paragraph. It says "Mr. Bentley suggested 1712 1 that the proposed discussion of the strategic plan 2 for the company be postponed. Mr. Bentley said 3 that the present plans include a geographic focus 4 of operations in Dallas, Fort Worth, San Antonio, 5 Austin, and Houston and a more aggressive approach 6 to real estate activities." 7 Do you see that? 8 A. That's correct. 9 Q. And why did you propose that the 10 discussion of the strategic plan be postponed? 11 A. As I recall, I had a little different 12 concept as to what the insured institution should 13 be doing possibly since Mr. Coles had become 14 graphic in my mind that we should entertain some 15 alternate strategy. That might have been 16 reflected in the then ongoing strategic plan, 17 difference of a personal opinion. 18 Q. So, when you discussed the present 19 plans, those were the plans that were being 20 proposed by Mr. Coles? Is that -- 21 A. It differentiated from the then current 22 strategic plan and wherever it was. I guess it 1713 1 had been presented to the board. I don't know 2 that to be a fact. But whatever the position of 3 that strategic plan was, I was questioning that we 4 needed to reexamine and to consider other things. 5 Q. Did anyone ask you to postpone the 6 discussion of the strategic plan? 7 A. No. As I recall, that was my idea, my 8 expression to the board. 9 Q. Now, do you recall having any 10 discussions subsequent to this board meeting 11 regarding the acquisition of stock as direct 12 investments by United Financial Group or any of 13 its subsidiaries? 14 A. I recall discussions, but not with 15 great specificity. 16 Q. Do you recall discussions with 17 Mr. Williams, Gerald Williams, and Mr. Hurwitz 18 regarding a list of companies for potential 19 investment purposes by subsidiaries of UFG? 20 A. Yes. I recall there being assembled a 21 list for the purpose of submitting an application 22 to the state commissioner's office to increase our 1714 1 limits that were permitted by subsidiary 2 corporations for such purposes. 3 MR. GUIDO: Your Honor, we've marked as 4 Exhibit T4620 Exhibit 4 from Mr. Bentley's 5 deposition from another litigation called the 6 Castle & Cooke litigation and I'd like to offer 7 that into evidence. 8 MR. NICKENS: No objection, Your Honor. 9 THE COURT: Received. 10 Q. (BY MR. GUIDO) Exhibit T4620 is an 11 exhibit from your deposition in the Castle & Cooke 12 litigation. 13 Do you recall seeing this document 14 before? 15 A. Vaguely, yes. 16 Q. It says at the top "issues to be 17 discussed with Lin Bowman." 18 Who was Lin Bowman? 19 A. Lin Bowman was the commissioner -- the 20 Texas Savings and Loan Commissioner. 21 Q. Okay. Is that the person you were 22 referring to about having discussions with about 1715 1 direct investments? 2 A. That's correct. 3 Q. Now, the second page of that exhibit 4 says "Companies that United Savings of Texas would 5 be interested in reviewing for possible investment 6 opportunities." 7 Do you see that? 8 A. Yes, I do. 9 Q. Now, how did that -- have you seen that 10 list before? 11 A. Yes, I have. 12 Q. Did you help prepare that list? 13 A. I don't recall specifically. I rather 14 think I did, but I don't recall with any 15 specific -- those were purported to be examples to 16 be -- without being specific to the commissioner 17 to give him an idea of what type of acquisition we 18 might consider or investment that we might 19 consider. 20 Q. Did you participate in the discussions 21 with Lin Bowman regarding the types of investments 22 that -- 1716 1 A. Yes, I believe I did. 2 Q. Who else participated in those 3 discussions? 4 A. Typically, I handled all applications 5 personally with the commissioner or the deputy 6 commissioner. Not in every instance did I take 7 someone with me to discuss it with them. And in 8 this particular instance, I don't recall whether 9 anyone went with me or not. 10 Q. Why was it that you were the person 11 from USAT who dealt with the commissioner or the 12 deputy commissioner? 13 A. I had just concluded a 12-year term as 14 a member of the finance commission which oversees 15 or hires the commissioner, promulgates the rules, 16 and I was well and if I might say favorably 17 acquainted with all of the people at the 18 department and having had a part in writing most 19 of the rules under which the S&Ls operated in 20 Texas. 21 Q. Now, was this list of potential 22 acquisitions a list that you yourself developed? 1717 1 A. I can't tell you where that list comes 2 from because I do not recall. I certainly would 3 have had some hand in it because if -- if my 4 memory serves me correctly, those would have been 5 the items that would have been sketched as 6 examples in the application to the commissioner's 7 office. 8 Q. Did you discuss that list with 9 Mr. Williams? 10 A. I'm confident I did, although I don't 11 specifically recall it. 12 Q. Did you discuss any of the companies on 13 that list with Mr. Hurwitz? 14 A. I'd have to give you about the same 15 answer. My guess would be that it was brought up 16 in the executive committee, although I don't 17 remember that. 18 Q. Now, the last one says "First Federal 19 of Austin" and then it has the word "not" next to 20 it. 21 Could UFG or any of its subsidiaries 22 under the applicable law at that time invested in 1718 1 stock of First Federal of Austin? 2 A. No, not in the manner in which we were 3 proposing. I don't know where First Federal came 4 from, but it was eliminated as -- from the list 5 possibly even prior to the application to the 6 commissioner. I don't remember. 7 Q. Did you have any earlier conversations 8 with Mr. Hurwitz about investments in other 9 insured depository institutions? 10 A. I don't know whether it was prior or 11 not. We did discuss one possible -- yes, that 12 would have been prior. The only one that I can 13 recall that we discussed was Sooner Savings of 14 Oklahoma which Mr. Hurwitz recommended we take a 15 look at. Jim Coles and I did subsequently look at 16 it and, as a matter of fact, met with Bud -- 17 whatever the guy's name was that was running 18 Sooner Federal. Met with him in Mr. Hurwitz's 19 office. Bud was not interested in pursuing it 20 further, and Mr. Coles and I were not in favor of 21 pursuing it further. Mr. Hurwitz finally said, 22 "Well, let's forget it." 1719 1 So, we -- nothing occurred. I believe 2 that's the only additional S&L type investment 3 that we considered. 4 Q. Did Mr. Hurwitz suggest that you 5 purchase stock and not merge the institution? 6 A. I think at one point he may have and 7 because of his intention, that that would not be 8 permitted. 9 Q. Do you know how First Federal of Austin 10 came to be on this list of potential acquisitions? 11 A. I do not. 12 Q. Now, one of the entities mentioned is 13 Lomas & Nettleton? 14 A. I think that should be Lomas. 15 Q. Lomas? 16 A. Lomas & Nettleton. 17 Q. What was that? 18 A. They were a mortgage banker concern, 19 mortgage banking concern. 20 Q. Now -- and Castle & Cooke is mentioned 21 there. 22 Do you see that? 1720 1 A. Yes. They were a real estate company 2 in Honolulu. 3 Q. Did you have discussions with 4 Mr. Hurwitz about this time regarding the 5 acquisition of stock in Castle & Cooke? 6 A. I had conversations with him about 7 Castle & Cooke. I don't recall what date this was 8 submitted to the commissioner. If you have that 9 date, it might spread more light on it. 10 Q. Did you yourself purchase stock in 11 Castle & Cooke? 12 A. Yes. I purchased 700 shares, as I 13 remember, of Castle & Cooke stock. 14 Q. And did you learn that about the same 15 time you purchased stock in Castle & Cooke, that 16 MCO Holdings had purchased stock in Castle & 17 Cooke? 18 A. Yes. I believe I heard that or 19 something about it, yes. I heard something about 20 it. 21 Q. You learned that from Mr. Hurwitz, 22 didn't you? 1721 1 A. I presume so. 2 Q. Did you have discussions with anyone in 3 Hawaii about the desirability of purchasing stock 4 in Castle & Cooke? 5 A. My first interest in Castle & Cooke 6 was -- I suppose was generated in Hawaii as a 7 result of some comments made by a golfing friend. 8 Q. So, someone that you knew or met in 9 Hawaii had discussed the desirability of 10 investments in Castle & Cooke? 11 A. Yes. He had -- quite coincidentally 12 had just called to my attention the island in our 13 horizon and the ownership of it and the potential 14 of it and then told me who owned it and what the 15 status was. That was my first familiarity with 16 Castle & Cooke and its real estate holdings. 17 Q. Now, did the executive committees of 18 USAT and UFG meet to approve investments that -- 19 similar to those that you had discussed with 20 Mr. Bowman as reflected in Exhibit T4620? 21 A. Yes. There were probably -- there were 22 probably two meetings, at least one of which would 1722 1 have reflected the discussion and one of which 2 would have authorized the purchase. I was not at 3 the meeting where the authorization specifically 4 took place. 5 Q. Did you participate in a meeting on or 6 about December 5th of 1983 in which the joint 7 executive committees approved the investments in 8 stock of companies similar to those that were on 9 the list that is marked as Page 2 of 10 Exhibit T4620? 11 A. I don't remember the date specifically. 12 Is that the date of the meeting that I did not 13 attend? 14 Q. That's correct. 15 A. I do not recall attending that meeting. 16 Q. Now -- you have a very good memory. 17 The -- do you recall subsequent to that meeting 18 returning to Houston and being informed that USAT 19 had purchased stock in Castle & Cooke? 20 A. Yes. However, I did not return to 21 Houston. I returned to Dallas and was going to 22 attend an annual stockholders' meeting, as I 1723 1 recall, of the Federal Home Loan Bank of Dallas 2 and Jerry Williams picked me up at the airport and 3 he took me to the meeting and reported to me that 4 the action -- 5 MR. NICKENS: Your Honor, I'm not sure 6 what the question is at this point. He asked -- 7 MR. GUIDO: Excuse me. 8 MR. NICKENS: Sorry. I object that 9 he's gone beyond the question and we're now at a 10 point where he's giving a narrative. So, I don't 11 know what he's going to get into. 12 THE COURT: The answer seems to be 13 broader than the question. I think you ought to 14 ask him another question. 15 A. I was attempting to correct a statement 16 that I returned to Houston. I'm sorry. 17 Q. (BY MR. GUIDO) So, you returned to 18 Dallas. And when you returned to Dallas, did you 19 learn that USAT had purchased stock in Castle & 20 Cooke? 21 A. Correct. 22 Q. Who told you that? 1724 1 A. Jerry Williams. 2 Q. Did he tell you the circumstances in 3 which the stock had been purchased? 4 A. In general terms. 5 Q. What did he tell you? 6 A. I don't recall what he told me except 7 that the purchases had started and that they were 8 being acquired through Bear Sterns, as I recall, 9 and that they were being acquired in the name of 10 USAT. 11 Q. Did he tell who you had placed the 12 orders for those trades? 13 A. Maybe not at that time. Subsequently, 14 he did because I -- yes, he did. 15 Q. Okay. And who did he tell you made 16 those purchases? 17 A. He told me that Charles Hurwitz had 18 purchased them. 19 Q. And what did you do when you learned of 20 that information? 21 A. Outside of becoming somewhat incensed 22 that this had been done in the manner in which it 1725 1 had been done, I was wanting to straighten up the 2 records first to correct the issue that the stock 3 was purchased by United Savings Association. 4 The previous discussions were that they 5 would be purchased in a subsidiary of United 6 Financial Corporation. And, second, I was 7 somewhat incensed that the purchase records at 8 Bear Sterns reflected that the account was in 9 USAT's name and that the person who had authorized 10 the purchase was Charles Hurwitz and Charles 11 wasn't even an officer or director of United 12 Savings Association at that time. And I asked 13 that those records be immediately corrected, that 14 the stock be transferred to United Financial 15 Corporation and that the records be properly 16 changed to reflect that purchases would be 17 confirmed by an officer of USAT, Dave Barrett, who 18 was the then current chief financial officer. 19 That was the manner in which the 20 purchase should have been made at the outset. And 21 how it occurred that it was done in the manner in 22 which it was done, I don't know. But it was 1726 1 incorrectly done and my effort was to straighten 2 the records out and to put it in -- to conform to 3 regulations. 4 Q. Who at that time was it your 5 understanding had authorization to make 6 investments such as the purchase of the Castle & 7 Cooke stock on behalf of USAT? 8 A. The executive committee was asserting 9 that authority. I was not questioning that. I 10 was questioning from USAT's standpoint a concise, 11 clear authority which I accomplished by 12 supplanting the name of Dave Barrett as being the 13 person who would verify any subsequent orders and 14 his name replaced Charles' name on the records of 15 Bear Sterns and the ownership of the stock was 16 corrected to reflect the proper owner. 17 Q. Had the executive committee at that 18 time when the purchases had been made authorized 19 the specific investment in Castle & Cooke stock? 20 A. Yes, I presume that was done on the 21 December 5th meeting. I don't have those minutes 22 before me. 1727 1 Q. But you weren't in attendance -- 2 A. I was not in attendance. We had -- we 3 had previously discussed the acquisition of stock 4 of Castle & Cooke, but I don't know what the 5 records would reflect. It probably wasn't 6 specific. 7 MR. GUIDO: I'd like to offer 8 Exhibit 1188 if I may, Your Honor. 9 MR. NICKENS: No objection, Your Honor. 10 THE COURT: Received. 11 MR. GUIDO: Your Honor, that does not 12 have the number on it because I couldn't find it 13 in the A category of documents. I knew it existed 14 in the A category, but it's A1188. 15 MR. NICKENS: Yes, sir. 16 Q. (BY MR. GUIDO) The third paragraph of 17 Exhibit No. A1188, Mr. Bentley, says "The 18 committee continued discussion of possible 19 investments in marketable securities." And then 20 it says "Mr. Pledger discussed the recent meeting 21 that he Mr. Bentley had with the Texas Savings and 22 Loan Commissioner and the requirements for 1728 1 approval of such investments." 2 Does that refresh your recollection of 3 who met -- went with you when you met with 4 Mr. Bowman to discuss potential investments? 5 A. Yes, it would. 6 Q. And was it Mr. Pledger who -- 7 A. Yes. 8 Q. -- attended that meeting? 9 A. That appears to be the case. 10 Q. Then two sentences down, it says "Based 11 on this information and the unanimous approval of 12 the entire committee after discussion of the issue 13 with all committee members, the committee agreed 14 to set aside $50 million for investment in 15 marketable securities of non-affiliated companies 16 by the service corporation United financial 17 corporation subject to the approval of these 18 securities by the Texas Savings and Loan 19 Commissioner." 20 Do you see that? 21 A. That's correct. 22 Q. Is it your understanding that that was 1729 1 what had transpired at the December 5th meeting? 2 A. That would appear to be the case. 3 Q. So, there was authorization to set 4 aside $50 million for investment in stock of 5 corporations if they were purchased by United 6 Financial Corporation, a subsidiary of United -- 7 A. Yes. 8 Q. -- Savings Association of Texas? What 9 was United Financial Corporation? 10 A. It was what federal vernacular would 11 call a service corporation. It happened to be the 12 very first corporate subsidiary of an institution 13 that I know of in the State of Texas. It formerly 14 was called Abilene Investment Company and because 15 of the grandfathering of that corporation, it 16 could do things that others couldn't do even newly 17 chartered. So, it became United Financial 18 Corporation. The name was changed. 19 Q. And at the time of this December 5th, 20 1983, meeting, was that the vehicle that United 21 Savings Association of Texas was using for direct 22 investments in corporations? 1730 1 A. That is correct. 2 Q. And United Savings Association -- did 3 United Savings Association of Texas itself have 4 authority to make direct investments under the 5 board or executive committee direction at that 6 time? 7 A. I do not recall the regs that would 8 apply to the association itself. I just don't 9 recall those. 10 Q. But had the board or the executive 11 committee authorized USAT to make such direct 12 investments itself? 13 A. Judging from this -- these minutes, it 14 was authorizing -- which was my understanding and 15 had been my understanding all along -- that such 16 investments would be made by the service 17 corporation and not by the corporation -- not by 18 the association. 19 Q. Then it says that "The investment will 20 be made subject to the approval of these 21 securities by the Texas Savings and Loan 22 Commissioner." 1731 1 Had you in that meeting with Mr. Bowman 2 received authorization for investment in Castle & 3 Cooke? 4 A. I presume that his approval would have 5 been broad enough to have encompassed that. 6 Q. Now -- then it says "Such investments 7 will be made on the advice and direction of the 8 executive committee and may begin as soon as the 9 committee deems appropriate." And it says you and 10 Mr. Whatley were polled by telephone. 11 Do you see those two sentences? 12 A. Yes. 13 Q. Did the executive committee direct that 14 the investment in Castle & Cooke be made? 15 A. I don't know. I would let the minutes 16 speak for itself. 17 Q. Subsequent to this meeting, 18 December 5th, and prior to the purchase of the 19 stock by USAT, did the executive committee direct 20 the investment be made in Castle & Cooke? 21 A. I don't know. 22 Q. Have you ever seen any minutes that 1732 1 indicated that it had? 2 MR. NICKENS: Your Honor, I object to 3 the form of that question, "other than these" -- 4 that is, exhibit -- 5 MR. GUIDO: Assuming that these minutes 6 authorized that which we contend they do not, Your 7 Honor. 8 MR. NICKENS: There will be subsequent 9 documentation that references this very meeting as 10 the one which -- in which the Castle & Cooke 11 investment was authorized and approved and I 12 believe Mr. Guido is aware of those documents. 13 MR. GUIDO: Your Honor, we'll get to 14 those documents in a minute. 15 THE COURT: All right. Next question. 16 Madam Reporter, would you read the question back? 17 18 (The reporter read back the last 19 question.) 20 21 A. I said no. 22 MR. GUIDO: Now, I'd like to offer into 1733 1 evidence Exhibit A10538. 2 MR. NICKENS: No objection, Your Honor. 3 Q. (BY MR. GUIDO) Exhibit 10538, the 4 minutes of the executive committee of the board of 5 directors of United Financial Group, 6 December 19th, 1983. 7 Do you recall whether or not you were 8 in attendance at that meeting, Mr. Bentley? 9 A. The records reflect that I was there. 10 Q. Now, look at Item No. 5. It says "The 11 committee discussed a number of current issues 12 including the filing of a Schedule 13D for the 13 investment by United Financial Corporation in 14 Castle & Cooke and the filing of a required 15 Hart-Scott pre-merger notification when the 16 company's investment exceeds 10 percent of the 17 outstanding shares of Castle & Cooke." 18 Do you see that? 19 A. Yes. 20 Q. The minutes indicate you chaired that 21 meeting? 22 A. Yes. 1734 1 Q. Did the committee authorize the filing 2 of the Schedule 13D as reflected in these minutes 3 as it having been discussed? 4 A. Yes. 5 Q. So that it not only was discussed but 6 it was authorized? 7 A. That's correct. 8 Q. Were there any minutes that you have 9 seen prior to December 19 subsequent to 10 December 5th that authorized or directed by the 11 executive committee the specific purchase of the 12 Castle & Cooke stock by USAT? 13 MR. NICKENS: Your Honor, am I to 14 understand by the question that he's being asked 15 to exclude the December 5th minutes up until 16 the -- that's the question. Is he being asked to 17 consider or to exclude the December 5th minutes? 18 Q. (BY MR. GUIDO) Exclude the 19 December 5th minutes. I said subsequent to 20 December 5th and prior to December 19th, had the 21 executive committee directed that USAT make the 22 investment in United Financial Group -- I mean in 1735 1 Castle & Cooke? 2 A. Not to my knowledge. 3 Q. Did you, when you returned and learned 4 that Mr. Hurwitz had made or had requested the 5 purchase of the stock by Bear Sterns and was on 6 the account at Bear Sterns, have a discussion with 7 them about that? 8 A. I don't recall that. As a matter of 9 fact, I think it was when I called Bear Sterns to 10 discuss the matter. It was then. I don't believe 11 I had been told that Mr. Hurwitz's name was on it. 12 I'm not even sure he knew it was on it. But I was 13 inquiring of Bear Sterns as to what their records 14 showed and that's what their records showed, that 15 it was in his name. It was in United Savings 16 Association of Texas, and that was when I asked 17 him or instructed him to change the ownership to 18 United Financial Corporation and to remove 19 Mr. Hurwitz's name and to supplant the name of 20 Dave Barrett whose requirement -- with the 21 requirement that he confirm any purchases. 22 Q. At the time Mr. Hurwitz had made the 1736 1 order to purchase the stock through Bear Sterns -- 2 A. I don't really know that. I only know 3 that Bear Sterns' records reflected his name and 4 the only name in connection therewith that I was 5 attempting to correct to bring matters into 6 compliance to correct the ownership and to correct 7 who was authorized to authorize purchases. 8 Q. Okay. But at the time that those 9 records reflected that the purchase had been made, 10 did Mr. Hurwitz have the authority to place the 11 trade? 12 A. Not in my opinion. He was neither a 13 member of the board nor an officer of United 14 Savings Association of Texas. 15 Q. Now, look at Item No. 1. It says "The 16 committee discussed the number of current issues 17 including the election of Mr. Hurwitz to the board 18 of United Savings Association of Texas." 19 Do you see that? 20 MR. NICKENS: Sir, which document are 21 you referring to? 22 MR. GUIDO: I'm looking at A10538. 1737 1 A. Where is that? 2 Q. (BY MR. GUIDO) It's the first bullet 3 point in the third paragraph. 4 A. Oh, yes. I see. 5 Q. See where it says "the committee 6 discussed a number of current issues"? 7 A. Yes. 8 Q. At the time of this meeting on 9 December 19th, was Mr. Hurwitz on the board of 10 United Savings Association of Texas? 11 A. No, he was not. 12 Q. And he wasn't an officer of United 13 Savings Association of Texas? 14 A. That's correct. 15 Q. Was he an employee of the United 16 Savings Association of Texas? 17 A. No. 18 Q. Was he on the board of United Financial 19 Corporation? 20 A. No. 21 Q. Was he an officer of United Financial 22 Corporation? 1738 1 A. No. 2 Q. Was he an employee of United Financial 3 Corporation? 4 A. No. 5 THE COURT: Did you offer 10538? 6 MR. GUIDO: Oh, excuse me. I offer 7 10538 into evidence. 8 MR. NICKENS: No objection. 9 THE COURT: Received. We'll take a 10 short recess. 11 12 (A break was taken.) 13 14 THE COURT: We'll be back on the 15 record. 16 MR. GUIDO: Your Honor, I'd like to 17 offer into evidence Exhibit A1089, which is the 18 minutes of the meeting of the board of directors 19 of United Savings Association of Texas dated 20 December 21, 1983. 21 MR. NICKENS: No objection, Your Honor. 22 THE COURT: Received. 1739 1 Q. (BY MR. GUIDO) Mr. Bentley, I direct 2 your attention to Page 2 of Exhibit No. A1089 3 which is a discussion of the minutes of the 4 December 5th, 1983, executive committee meeting 5 and the investment in Castle & Cooke by United 6 Financial Corporation. 7 Do you see that paragraph? 8 A. Yes. 9 Q. And did the board at this meeting adopt 10 a resolution approving the purchase of the of the 11 Castle & Cooke stock? 12 A. I don't see specific reference. 13 Normally, it would have been more of a 14 ratification of action taken by the executive 15 committee but in my cursory examination, I don't 16 see it. 17 Q. It's not reflected in the minutes, and 18 that's why I asked you the question. 19 A. I see. That would have -- it may have 20 been inadvertently omitted because normally, that 21 type of thing was followed by a ratification of 22 the action. 1740 1 Q. Now, to take you back a bit to when you 2 came back from Hawaii and you met with 3 Mr. Williams and he informed you that the Castle & 4 Cooke stock had been purchased, did he tell you 5 that the Castle & Cooke stock purchase had been 6 authorized by the executive committee at the 7 December 5th, 1983, meeting? 8 A. That's my recollection. Only I was 9 returning, as I recall, from Washington. 10 Q. From Washington. Did he tell you that 11 Charles Hurwitz had been authorized to place the 12 trades on behalf of the association? 13 A. I don't believe that he specified 14 anything. I think that was a discovery that was 15 made when I called Bear Sterns. 16 MR. GUIDO: I'd like to offer into 17 evidence, Your Honor, Exhibit A1090, which are the 18 minutes dated January 25th, nineteen -- excuse me. 19 January 3rd, 1984. 20 MR. NICKENS: Your Honor, I believe 21 that's A1190. 1090 is -- 22 MR. GUIDO: I'm sorry, Your Honor. It 1741 1 is A1190. Excuse me. 2 MR. NICKENS: And no objection. 3 Q. (BY MR. GUIDO) A1190 are minutes of 4 the executive committee of the board of directors 5 of United Savings Association of Texas. And it 6 was a telephonic meeting. It says here you, 7 Mr. Williams, and Mr. Munitz participated in that. 8 Do you recall that meeting? 9 A. No, I don't. But I accept the copy of 10 the minutes as having happened. I don't remember 11 specifically that. 12 Q. Now -- 13 THE COURT: Has that been offered? 14 MR. GUIDO: I offer A1190 into 15 evidence, Your Honor. 16 MR. NICKENS: No objection, Your Honor. 17 THE COURT: Received. 18 Q. (BY MR. GUIDO) Now, this resolution 19 authorized United Financial Corporation to 20 increase its investment in Castle & Cooke, did it 21 not? 22 A. That's correct. 1742 1 Q. Do you know why it was necessary to 2 pass the January 3rd, 1984, resolution? 3 A. I do not. I do not recall. 4 Q. Did the December 5th, 1983, joint 5 executive committee meeting authorize the 6 purchases in Castle & Cooke? 7 A. I can't interpret that. I would let 8 the minutes stand as they are reported. My 9 recollection is that we did authorize it. I have 10 not actually seen evidence that says that, but I'm 11 of the opinion that it was done. 12 Q. Then why was it necessary to have this 13 resolution January 3rd, 1984, if the December 5th 14 resolution had already authorized purchases of 15 Castle & Cooke stock? 16 A. If you're asking me an opinion, I would 17 say that this would indicate that we were 18 purchasing more than had been contemplated before 19 and that, second, that it authorized the 20 Hart-Scott pre-merger modification report. That's 21 all I can conclude. 22 MR. GUIDO: I'd like to offer into 1743 1 evidence, Your Honor, Exhibit A1090 which are the 2 minutes of the board of directors of United 3 Savings Association of Texas. 4 MR. NICKENS: No objection, Your Honor. 5 THE COURT: Received. 6 MR. GUIDO: Mr. Guido, I have some 7 questions in my notes of whether I received a 8 previous exhibit which is the issue we discussed 9 with Lin Bowman at Exhibit T4620 and I'm not sure 10 it was offered and received. 11 MR. NICKENS: I believe it was, Your 12 Honor. We have no objection to 4620. 13 THE COURT: All right. If I didn't 14 previously receive it, I would do so now. 15 Received. 16 MR. GUIDO: Thank you, Your Honor. 17 Q. (BY MR. GUIDO) Now, the minutes of 18 A1090, January 25th, 1984, also address the 19 question of Castle & Cooke. And in the fifth 20 paragraph, it says "Mr. Williams mentioned that an 21 advance to subsidiaries equal $59,536,000 which 22 related to the investment in Castle & Cooke by 1744 1 UFC." 2 Do you see that? 3 A. Yes. 4 Q. And those are advances that had been 5 approved by the board of directors of United 6 Savings Association of Texas? 7 A. That's correct. 8 Q. Now, did you subsequent to the 9 purchases of the stock have conversations with 10 Mr. Hurwitz regarding discussions that he had had 11 with representatives of Castle & Cooke? 12 A. Yes. I believe I had maybe two 13 conversations with Charles who had maybe received 14 a call from the president of Castle & Cooke. At 15 least in my memory, I recall a gentleman by the 16 name of Wilson. And I -- I cannot recall with 17 specificity the information except that I believe 18 on two occasions that Charles reported to me some 19 kind of an offer that Mr. Wilson had indicated 20 might be agreeable to repurchase all of the stock 21 that had been acquired. I don't remember any of 22 the dates, but that's the only two times that I 1745 1 recall. 2 Q. Was that sometime in the spring of 3 1984? 4 A. I just don't know. 5 Q. Did Mr. Hurwitz indicate to you that 6 the price that Mr. Wilson had indicated Castle & 7 Cooke was willing to pay for the stock that had 8 been purchased by USAT? 9 A. It seems to me and I am refreshed -- my 10 memory is refreshed only by recent review of my 11 deposition given back in '84 or whatever the time 12 might have been that one of those occasions, the 13 man may have indicated a 20-dollar figure. That 14 comes to mind. And outside of that, I don't 15 remember a whole lot about the discussion. 16 Q. What did Mr. Hurwitz say his reaction 17 to the 20-dollar figure was? 18 A. My opinion was -- my recollection was 19 that he thought it was a little low. 20 Q. Now, did there come a time when the 21 Castle & Cooke stock held by USAT was sold to 22 Castle & Cooke? 1746 1 A. I believe that's correct, although I 2 certainly have no real recollection of the details 3 of it. 4 Q. Did you participate in any of the 5 decisions to sell that stock? 6 A. I'm sure I did not until the time that 7 an agreement was made or a tentative price was 8 agreed upon that would have been brought to my 9 attention and it would have been acceptable to me, 10 although I have no specific recollection of -- I 11 have no idea what the price was. I don't 12 remember. 13 Q. Did you learn that the stock had been 14 sold to Castle & Cooke before -- by USAT before or 15 after USAT had sold the stock back to Castle & 16 Cooke? 17 A. Rephrase that, please. 18 Q. Did you learn that the Castle & Cooke 19 stock held by USAT had been sold to Castle & Cooke 20 before or after the sale to Castle & Cooke? 21 A. I don't recall specifically. I'm 22 inclined to believe I knew of a proposal to sell. 1747 1 I was aware that there was a proposal to sell the 2 stock. 3 Q. Who negotiated that transaction? 4 A. I really don't know. I presume 5 Mr. Hurwitz. 6 Q. Is he the one that you had discussions 7 with about those proposals? 8 A. The reports that I received came from 9 Charles. 10 Q. Now, did you ever attend any meetings 11 in Washington with the staff or officers of the 12 Federal Home Loan Bank Board regarding the 13 acquisition of Castle & Cooke stock by United 14 Savings Association of Texas? 15 A. Not that I recall. 16 Q. Did you ever learn of any meetings? 17 A. I beg your pardon? 18 Q. Did you ever learn of any such 19 meetings? 20 A. Again, refreshed by my review of the 21 deposition which I had totally forgotten, I 22 believe that Dr. Munitz went to Washington to 1748 1 visit with somebody. I have no idea what he went 2 to visit with them about, why he went. I have no 3 idea. 4 Q. Okay. But sometime in the -- was this 5 the spring of 1984? 6 A. It's my recollection that I went to 7 Washington possibly on some other business but 8 more specifically at the invitation of Eddie 9 Dyche, who was on old friend of mine here in 10 Houston and the former boss of Mary Grigsby who 11 had been with American -- First American and was 12 being confirmed or had been confirmed and there 13 was a reception held in her honor and a dinner 14 later for a small group held by Eddie Dyche and 15 that I was attending that function. 16 Q. And Dr. Munitz was there at the same 17 time? 18 A. He showed up at the meeting. He showed 19 up at that reception. 20 Q. And did he tell you that he was meeting 21 with the officials of the Federal Home Loan Bank 22 Board? 1749 1 A. I don't recall that. Later, somebody 2 told me he had; but I don't really know. I have 3 no idea what he discussed or who he discussed it 4 with. 5 Q. But he did tell you at the time that he 6 was meeting with somebody at the Federal Home Loan 7 Bank Board? 8 A. I'm not sure. 9 Q. All right. Now, look at Page 2 of 10 Exhibit 1090 and it has a resolution establishing 11 the executive committee of United Savings 12 Association of Texas. You see that -- 13 A. That's correct. 14 Q. -- resolution? And it says "Now, 15 therefore, be it resolved that an executive 16 committee of three directors is appointed to serve 17 until their successors are named, that the 18 committee appointed is C.E. Bentley, chairman, 19 Gerald Williams, James Whatley, and Barry Munitz," 20 which add up to four. 21 Are those four individuals the 22 individuals that were the members of the executive 1750 1 committee as of or subsequent to January 25th, 2 1984? 3 A. To the best of my knowledge. However, 4 it doesn't seem to be consistent with the last 5 review of an executive committee, of the minutes. 6 Q. Well, we just looked at the January 3rd 7 meetings of the executive committee and that was 8 prior to January 25th. This is talking about an 9 appointment subsequent to January 25th. 10 A. That would indicate three. 11 Q. Right. On January 3rd, 1984. Okay. 12 On January 25th, 1985, were you, Mr. Williams, Mr. 13 Whatley, and Mr. Munitz appointed to the USAT 14 executive committee? 15 A. That's what the -- that's what the 16 minutes say. 17 Q. Do you have any reason to dispute their 18 accuracy? 19 A. No. 20 Q. Now, at that point in time, were the 21 individuals that were on the executive committee 22 of USAT the same individuals that were on the 1751 1 executive committee of United Financial Group? 2 A. I don't know. 3 Q. Was the only difference between the 4 composition of the executive committee of United 5 Savings Association of Texas in January of 1985 6 and the executive committee of USAT that 7 Mr. Bentley, yourself, Mr. Williams, Mr. Whatley, 8 and Mr. Munitz were on the executive committee of 9 USAT and Mr. Hurwitz was an additional member of 10 that group as a member of the executive committee 11 of UFG? 12 A. That would appear to be the case. 13 Q. And that's your understanding at that 14 time? 15 A. Yes, at this point. I would not 16 question the minutes. 17 Q. Now, I'd like to hand you Exhibit 1097. 18 MR. GUIDO: I'd like to move the 19 admission of Exhibit A1097 dated August 29th, 20 1984, Your Honor. 21 MR. NICKENS: No objection, Your Honor. 22 THE COURT: Received. 1752 1 MR. GUIDO: And I'd also like to move 2 the admission of Exhibit No. 1092, Your Honor, 3 which are the minutes of the board of 4 United Financial Group dated February 28th, 1984. 5 MR. NICKENS: No objection. 6 Q. (BY MR. GUIDO) Look at the -- in 7 Exhibit A1092, Mr. Bentley, the fifth paragraph 8 down says that you discussed revisions to the 9 company's strategic plan including the possible 10 sale of branches, sale of servicing, and planned 11 concentration of operations in the geographic 12 triangle of Houston, Dallas, Fort Worth and 13 Austin, San Antonio. 14 "Mr. Bentley explained that the sale of 15 servicing was not intended as a profit-oriented 16 activity but designed to reduce the demands on the 17 loan servicing department and provide an 18 opportunity to organize that department's 19 operations." 20 Do you see that? 21 A. Yes, I do. 22 Q. Now, you testified earlier about 1753 1 postponing a discussion of the strategic plan. 2 Do you recall that testimony? 3 A. Yes. 4 Q. And is this the revisions of the 5 strategic plan that came about after 6 reconsideration when you asked it not to be 7 discussed at the earlier meeting? 8 A. That is correct. These were the -- 9 this was the thrust of the change in the previous 10 strategic plan. 11 Q. And did the board approve the sale of 12 branches and of servicing? 13 A. I assume they did because we proceeded 14 with that. I suppose in here somewhere -- without 15 reading the minutes, I hesitate to say, but the 16 board was agreeable to the amendments that I had 17 made in the strategic plan and to proceed with the 18 sale of branches, servicing, et cetera. 19 Q. So that the sale of the branches and 20 the servicing were recommendations that you made 21 to the board? 22 A. That's correct. 1754 1 Q. Had you discussed them with anyone 2 prior to making those recommendations? 3 A. I'm sure I did. I cannot recall with 4 whom I may have discussed them. 5 Q. Did you discuss them with the staff? 6 A. Yes, I did. 7 Q. Did you discuss them with any of the 8 board members? 9 A. In all likelihood, yes. 10 Q. Did you discuss them with Mr. Munitz? 11 A. I expect I did. 12 Q. Did you discuss them with 13 Mr. Kozmetsky? 14 A. I do not recall. 15 Q. Did you discuss them with Mr. Hurwitz? 16 A. I expect that I did. 17 Q. Now, look at Exhibit 1097. Look at the 18 last paragraph on the first page. It says that 19 you reviewed the history of the relationship of 20 Federated Development Company and MCO Holdings 21 with the company and outlined their activities 22 with the company, including their pending 1755 1 application to become a savings and loan holding 2 company. 3 And then you say "He explained that 4 based on this significant role and the fact that 5 Mr. Bentley now plans to devote more time to 6 investor relations and concentration in the 7 company's regulatory relations, the executive 8 committee unanimously recommended that Mr. Hurwitz 9 be elected president of the company." 10 Do you see that? 11 A. Yes, I do. 12 Q. Does that accurately reflect what the 13 executive committee recommended? 14 A. I would say it does, yes. 15 Q. Pardon? 16 A. Yes. 17 Q. Then it says "The bylaws of the company 18 state that the president will be the chief 19 executive officer of the company unless otherwise 20 designated." 21 Then it says "The board discussed the 22 proposal. Mr. Campbell expressed concern over the 1756 1 timing of such a change and said it was important 2 not to leave the perception that this was a change 3 in the company's direction." 4 Do you recall Mr. Campbell saying that 5 to the committee? 6 A. Yes, I do. 7 Q. Then it says "Mr. Hurwitz said the fact 8 that Mr. Bentley is not leaving and will continue 9 to serve in a key capacity was very important and 10 would contribute to the company's continuity." 11 Do you see that? 12 A. Yes, I do. 13 Q. Now -- then it says "Dr. LeMaistre said 14 he viewed this as an expansion of management at no 15 cost to the company." 16 Do you see that? 17 A. Yes. 18 Q. And do you recall him saying that? 19 A. Vaguely. 20 Q. Okay. Do you recall any discussions 21 prior to this board of directors meeting with 22 regard to Mr. Hurwitz becoming president of the 1757 1 company? 2 A. Insofar as I know, the only discussion 3 that took place took place between Mr. Hurwitz and 4 myself wherein I told him that it was my intention 5 to -- I had been invited to go visit with several 6 places, brokerage houses that were encouraging the 7 purchase of our stock. I had been invited to go 8 up to Iowa and out to Portland, Oregon, three or 9 four places. And I advised that I would be 10 spending some time in those areas. I suspect 11 that's the meaning of the statement that -- about 12 investor relations. And Mr. Hurwitz then 13 suggested -- he said, "Well, in view of that, 14 would you be agreeable to my becoming president of 15 the association?" 16 And I said I would be happy to discuss 17 that to see if there would be any problem with it 18 and I will let you know. And I subsequently 19 called him and told him that I had no objection to 20 it. 21 Q. Did you have any discussions with 22 anyone regarding your discussion with Mr. Hurwitz? 1758 1 A. I probably mentioned it to Jerry 2 Williams. There had been one other occasion when 3 I believe that Mr. Hurwitz had suggested that 4 Mr. Munitz be made president of the holding 5 company, and I said, "I will not agree to that. 6 First place, I don't think that it would be fair 7 to Jerry Williams." And ultimately, the 8 discussion about that ceased. This was the second 9 occasion on which a discussion had been held with 10 me about someone from the MCO/Federated group 11 becoming an actual officer of the company. This 12 was the second occasion. 13 Q. Did you tell Mr. Hurwitz why you didn't 14 think that Mr. Munitz becoming the president would 15 be fair to Jerry Williams? 16 A. I didn't think Jerry would like it. I 17 think Jerry aspired to that job. And after 18 Mr. Hurwitz discussed it with Williams, that 19 matter was forgotten. 20 Q. And look at Page 2 of this Exhibit No. 21 1097. Do you see the resolution? It says "The 22 resolution is Charles E. Hurwitz is hereby elected 1759 1 president of United Financial Group, Inc. and 2 shall hold that position until the successor is 3 qualified." 4 Do you see that? 5 A. Yes. 6 Q. And did Mr. Hurwitz when he assumed the 7 position of president of United Financial Group 8 pursuant to this resolution also become the chief 9 executive officer of United Financial Group? 10 A. That's what the minutes reflect, yes. 11 Q. Then at the top of the page, there is a 12 discussion of additional changes in the management 13 reporting within the association. And does the 14 reference to "association" mean United Savings 15 Association here? 16 A. Yes, it would be. 17 Q. Okay. Now, it says that "Mr. Bentley 18 will remain as the association chairman and chief 19 executive officer through 1985 and will take more 20 of a policy role." 21 Do you see that? 22 A. That's correct. 1760 1 Q. And it says "Mr. Williams will take 2 over additional direct reporting obligations of 3 the managers who now report to Mr. Bentley." 4 Do you see that? 5 A. Yes. 6 Q. So, as of the end of August, subsequent 7 to this meeting, you were still the chairman of 8 United Financial Group, were you not? 9 A. That's correct. 10 Q. And Mr. Hurwitz was the president of 11 United Financial Group? 12 A. That's correct. 13 Q. And you were the chairman and chief 14 executive officer of USAT; is that correct? 15 A. That's correct. 16 Q. And Mr. Williams had taken on more 17 responsibility as executive vice president of the 18 association reporting to you; is that correct? 19 A. As president. He was president. 20 Q. And there was an executive committee of 21 both entities which had the same members on them 22 except that the United Financial Group executive 1761 1 committee also included Mr. Hurwitz; is that 2 correct? 3 A. I believe that's correct. 4 Q. And Dr. Munitz was the chairman of both 5 executive committees? 6 A. He became -- I don't know if he was at 7 this particular moment, but he became the chairman 8 of the executive committee. 9 Q. Now -- 10 A. There is a -- there is sort of a real 11 hiatus in this in that the bylaws of the 12 association provided that the chairman was a 13 member and served as chairman of any committee 14 even though there was a committee chairman. So, 15 in some instances, the term chairman of something 16 was meaningless. 17 Q. Okay. Now, at the end of 1984, had the 18 branch sales that you discussed as part of the 19 strategic plan earlier in the year been 20 consummated? 21 A. That's correct. 22 Q. And did that generate a profit of 1762 1 approximately $81 million to the association? 2 A. My recollection is it was in excess of 3 a hundred million, but I would accept the 83. 4 Q. Now, how would you characterize the 5 financial condition of United Savings Association 6 at the end of 1984 after the sale of the branches? 7 A. Well from a regulatory accounting stand 8 point, it was in excellent shape. From an actual 9 standpoint, it acquired -- it had an awful lot of 10 net-worth. To the extent that it probably -- true 11 net-worth was negative. 12 Q. Okay. So, would you still characterize 13 its financial condition as tentative? 14 A. Yes. Tentative but that it had 15 positioned itself to survive with a slight 16 decrease in interest rates, adjustment in income. 17 Q. And was the sale of the branches what 18 you would call sort of a hunkering down kind of 19 strategy? 20 A. Yes, it was. 21 Q. Now, I'd like to hand you Exhibit A1102 22 and Exhibit T4053. 1763 1 MR. GUIDO: I offer A1102 and T4053 as 2 exhibits, Your Honor. 3 MR. NICKENS: I have no objection, Your 4 Honor, to 1102. I do have an objection to 4053 in 5 that 4053 is a partial document, incomplete 6 document, and it also contains certain 7 highlighting. I have obtained a copy of the 8 complete document. 9 Well, Your Honor, perhaps it is the 10 case that just my copy is incomplete. Mr. Guido 11 appears to have the complete copy and, if so, I 12 have no objection. No objection, Your Honor. We 13 apparently have substituted a copy. 14 THE COURT: Received. 1102 has no 15 objection? 16 MR. NICKENS: No objection, Your Honor. 17 THE COURT: Received. 18 Q. (BY MR. GUIDO) Now, the minutes in 19 A1102, Mr. Bentley, indicate that the executive 20 committee of USAT was yourself, Mr. Gross, 21 Mr. Williams, Mr. Whatley, and Mr. Munitz. 22 Do you see that? 1764 1 A. What paragraph are you referring to? 2 Q. I'm trying to find the paragraph 3 myself. It's on Page 2 at the bottom of the page, 4 the second to the last paragraph. 5 A. Oh, okay. 6 Q. Now, that was the executive committee 7 of United Savings Association of Texas at the 8 time? 9 A. Yes, that's correct. 10 Q. And that group of individuals plus 11 Mr. Hurwitz were the executive committee of 12 United Financial Group at the time? 13 A. I don't recall. I don't recall 14 Jenard Gross as well as Hurwitz, Charles Hurwitz, 15 being on that committee. 16 Q. Who was Mr. Gross? 17 A. He was a real estate operator in 18 Dallas. He was also a good friend of Charles 19 Hurwitz. 20 Q. Okay. And when did he join 21 United Financial Group or USAT? 22 A. I can't tell you specifically the time. 1765 1 He showed up as sort of a consultant for a period 2 of time, maybe six months. 3 Q. Was that in 1984? 4 A. In all probability, it was in -- 5 Q. It was before he went on the board? 6 A. Yes. It was before he went on the 7 board. 8 Q. Did he subsequently become an officer 9 of either UFG or USAT? 10 A. He subsequently replaced me as chairman 11 of the savings association and as chief executive 12 officer. 13 Q. And was that in the middle of 1985? 14 A. That's correct. Sometime in 1985. 15 Q. Did he come to own any stock in 16 United Financial Group? 17 A. I'm familiar only with some options 18 that he was given, stock options, and of the 19 purchase of some stock that was offered -- to 20 which I was not a party -- offered to the holding 21 company by a substantial shareholder whose name I 22 do not recall. And, as I recall, the holding 1766 1 company, absent my presence, offered those shares 2 to certain key members of the staff and offered to 3 finance for those key members the purchase of that 4 stock. That's the extent of which I'm familiar 5 with Mr. Gross' holding stock. 6 Q. How did that substantial shareholder 7 come about owning his shares? 8 A. He bought them as an investment. And 9 when I called him knowing his acquisition of a 10 large number of shares, I called him to thank him 11 for his support of the stock and he said, "I'd 12 like to come and see you." 13 MR. NICKENS: Your Honor, this is 14 clearly hearsay testimony to which I object, but 15 at least identify who this unknown person is that 16 he is speaking to. 17 THE WITNESS: I don't recall his name. 18 MR. NICKENS: I would object. This is 19 a conversation that is clearly hearsay. We can't 20 even identify the person that he claims to have 21 talked to so that we are then unable to speak to 22 that person. 1767 1 MR. GUIDO: Your Honor, I'm not 2 offering this to prove anything related to what 3 this person did or didn't do. I'm offering this 4 testimony to show what this person told 5 Mr. Bentley, not for the truth of the matters that 6 that person asserted to Mr. Bentley. 7 MR. NICKENS: Then for what purpose 8 could it possibly be offered, Your Honor? And 9 it's highly speculative and unreliable when you 10 can't identify the person. 11 THE COURT: I don't think so. 12 Objection is denied. 13 A. He simply said he acquired it thinking 14 it would help influence the institution into doing 15 some financing for him. 16 Q. (BY MR. GUIDO) What did you tell him? 17 A. I told him that would not happen, 18 that -- and then he subsequently decided to 19 dispose of his stock. That's the long and short 20 of it. 21 Q. And who did he talk to, do you know, to 22 sell the stock? 1768 1 A. I have no idea. 2 Q. Did he offer it to Mr. Gross? 3 A. I have no idea. 4 Q. Did he offer it to you? 5 A. No. 6 Q. In that conversation, did he offer to 7 sell it back? 8 A. I don't know. As a matter of fact, 9 when he offered the stock, I doubt that I was 10 here. 11 Q. Okay. So, you were not party to the 12 transaction where he sold the stock back and 13 Mr. Gross purchased the stock? 14 A. No. And I have no recollection of ever 15 hearing about it until later. 16 Q. Okay. Now, Mr. Gross did purchase 17 stock, did he not? 18 A. My knowledge is only through -- after I 19 left, my knowledge became only from what people 20 told me and what I read in the 10Ks and 10Qs 21 because I ceased to be a member of the board or an 22 officer of any of the institutions and remained as 1769 1 a consultant solely for the purpose of concluding 2 a number of branch sales that were pending. 3 MR. GUIDO: Your Honor, I think Exhibit 4 A3013 has already been admitted into evidence 5 yesterday. It's the March 31, 1986, 6 United Financial Group financial statements and 7 the proxy materials -- excuse me. It's the proxy 8 materials that were sent to shareholders. I have 9 another copy for the witness and for the Court. 10 If it hasn't been admitted, I move its admission. 11 MR. NICKENS: It has been admitted, 12 Your Honor. 13 Q. (BY MR. GUIDO) If you look at Page 15 14 through 16 of the document, Mr. Bentley, it makes 15 mention of the purchase of stock in 16 United Financial Group by certain members of the 17 board or employees. And it describes the 18 transaction in which they were offered stock and 19 that they acquired that stock financed by the 20 association. 21 Do you see that, Mr. Bentley? 22 A. Yes, I do. 1770 1 Q. Does that refresh your recollection 2 that the transaction -- 3 A. Yes. This may have been the source of 4 my information. 5 Q. Okay. And the -- certain individuals 6 that are mentioned there are Mr. Childress. Who 7 was he? 8 A. Jim Childress was co-manager of real 9 estate. 10 Q. When did he join UFG or USAT? 11 A. Oh, he had been an employee of -- since 12 the early -- since the mid-Seventies I would say, 13 since about 1975. 14 Q. Was he the head of the real estate 15 department? 16 A. He was a co-head. The real estate 17 operation was divided in two areas, and he was the 18 co-head. 19 Q. Who was the other one? 20 A. David Graham is the other gentleman 21 that's shown below Mike Crow. 22 Q. And what was Mike Crow's position? Did 1771 1 he head a department? 2 A. Mike Crow was -- at this time was a 3 chief financial officer and executive vice 4 president, as I recall. 5 Q. And was Mr. Patterson the head of a 6 department? 7 A. Mr. Patterson was the head of 8 residential lending. 9 Q. And Mr. Walker? 10 A. I don't recall Mr. Walker. 11 Q. What about Gerald Williams? He was -- 12 A. He was the president of the 13 association. 14 MR. GUIDO: Okay. Now, I'd like to 15 offer into evidence, Your Honor, Exhibit A1104. 16 It is the minutes of the board of directors of 17 United Savings Association of Texas dated 18 May 16th, 1985. 19 MR. NICKENS: No objection, Your Honor. 20 THE COURT: Received. 21 Q. (BY MR. GUIDO) I direct your 22 attention to Page 6 of Exhibit A1104, Mr. Bentley 1772 1 where it says "Mr. Hurwitz briefed the board in 2 the recent planning meeting with Bane & Company 3 regarding the profitability of the association. 4 The meeting was held in Austin and focused on the 5 need to become operationally profitable." Then it 6 goes on to describe some of what was discussed at 7 that meeting. 8 Did you attend that planning meeting 9 with Bane & Company? 10 A. I did not. 11 Q. Were you invited to attend that 12 meeting? 13 A. No, I was not. 14 Q. Did you know such a meeting had 15 occurred prior to the board meeting? 16 A. Yes, I did. 17 Q. And how did you learn that such a 18 meeting had occurred? 19 A. A number of the people who attended 20 told me about it. 21 Q. Okay. Who were some of those people? 22 A. Well, specifically, it would have been 1773 1 Williams, Crow. I don't know about Pledger, but 2 Williams and Crow for sure. Probably Childress 3 and Graham. And then there were some new people 4 that had come on that I had not even met at that 5 particular time. 6 Q. Was one of those people Mr. Gross? 7 A. Yes. He would have been one of them. 8 I'm sorry. He would have been one of them. 9 Q. And was there somebody named Doug 10 Hanson? 11 A. The name's familiar. I don't recall 12 what Doug Hanson did. 13 Q. Was Doug Hanson a person that was hired 14 to assist Mr. Gross? 15 A. That's probably it. He had a young 16 Harvard MBA type that worked for him, but I didn't 17 know him. 18 Q. But you were not invited to that 19 meeting? 20 A. No, I was not. 21 Q. Were any other board members invited to 22 that meeting? 1774 1 A. Not that I know of, other than probably 2 I'm sure Mr. Hurwitz and Mr. Munitz were there. 3 Q. Now, did the Federal Home Loan Bank 4 Board at the time have requirements regarding what 5 percentage of the association's assets had to be 6 held in mortgages or mortgage-backed securities? 7 A. Yes, they did. I don't recall that 8 specific amount, but the tax law also had a 9 provision that required certain residential 10 lending holdings. 11 Q. Now, do you recall the discussion at 12 this May, 1985, board meeting of the Bane & 13 Company planning meeting? 14 A. I really don't. I did not recall that 15 having ever been presented to the board. I just 16 don't remember. 17 Q. Okay. 18 A. This indicates I was there, and this 19 appears to be my signature. But I don't recall 20 that. 21 MR. GUIDO: I'd like to move the 22 admission of Exhibit 10583 which are the minutes 1775 1 of the board of directors of United Financial 2 Group dated November 14th, 1985. 3 MR. NICKENS: November? I don't seem 4 to have a copy, Your Honor. But if they are as 5 Mr. Guido purports, I have no objection. 6 THE COURT: Received. 7 MR. GUIDO: We'll share the copy that I 8 have, Your Honor. 9 Q. (BY MR. GUIDO) If you look at Page 4 10 of the exhibit, Mr. Bentley, it says that 11 "Mr. Bentley advised the board that effective this 12 date is resigned as an officer of and director of 13 the company and as an officer and director of 14 United Savings and its subsidiaries. He also 15 advised the board that he will remain an employee 16 and would retain an office in the Harwin 17 Building." 18 Did you discuss your resignation with 19 anyone prior to that point in time? 20 A. As I recall -- is this a board meeting? 21 Q. This is a board meeting of United 22 Financial. 1776 1 A. I announced my intentions to resign 2 from all boards and as an officer of all the 3 companies at an executive committee meeting. I 4 don't see the minutes of that, but my announcement 5 was made at an executive committee meeting. 6 Q. Now, it goes on. It says "Resolved 7 that the following persons are hereby elected 8 officers to serve in the positions below until 9 their successors have been duly elected and 10 qualified. Charles E. Hurwitz, chairman of the 11 board, and Jenard M. Gross, president and CEO." 12 Do you see that? 13 A. Yes, I do. 14 Q. Now, prior to that, Mr. Hurwitz had 15 been president of UFG; is that right? 16 A. That's correct. 17 Q. And then he assumed the position of 18 chairman of the board and Jenard Gross became 19 president and CEO? 20 A. That is correct. 21 MR. GUIDO: Your Honor, I move the 22 admission of Exhibit 1108. 1777 1 MR. NICKENS: No objection. 2 THE COURT: That's eleven or A1108? 3 MR. GUIDO: Your Honor, Exhibit 1108 a 4 large bore packet, but the first nine pages of 5 that -- oh, A1108. Excuse me, Your Honor. That 6 is a large bore packet, the first nine pages of 7 which are minutes and the only ones that I'm going 8 to use. So, to save people having to haul around 9 large packets of documents, I'll only introduce at 10 this time the first nine pages which are the 11 minutes of the board of directors meeting. 12 MR. NICKENS: And, Your Honor, which 13 bear Bates numbers U.S. 3003106 through U.S. 14 3003114, and I have no objection. 15 THE COURT: Received. 16 Q. (BY MR. GUIDO) I direct your 17 attention to Page 8 which is Bate-stamped U.S. 18 3003113, Mr. Bentley. And if you look down, the 19 fourth full paragraph, it says "following the 20 adoption of this" -- excuse me. "On motion by 21 Mr. Gross and seconded by Mr. Duckett, the minutes 22 of the executive committee of the association for 1778 1 September 11th, 1985, October 15th, 1985, 2 October 21, 1985, were unanimously approved and 3 ratified." 4 Do you see that? 5 A. Yes, I do. 6 Q. As of November, 1985, was it the 7 practice at United Savings Association for 8 decisions to be made on behalf of the 9 association's board by the executive committee? 10 A. It had either reached that point by a 11 previous resolution, as I recall. It was going in 12 that direction. That's what I remember. 13 Q. Let's start back with January, 1982. 14 In January, 1982, which entity -- the board of 15 United Financial Group or the board of United 16 Savings Association of Texas or the executive 17 committee of United Financial Group or the 18 executive committee of United Savings Association 19 of Texas -- made the decisions on behalf of both 20 entities to enter into certain transactions? 21 A. The boards of directors were the 22 primary -- that was the primary source of 1779 1 authority. Executive committees were used 2 primarily for interim transactions that might 3 occur between board meetings if more or less an 4 emergency arose where there was action required 5 was the executive committee called in to session. 6 With the passage of time, the executive committees 7 became the dominant approving group and, more or 8 less, management group. 9 MR. GUIDO: I'd like to offer into 10 evidence, Your Honor, Exhibits 1109 and 1110 which 11 are minutes of the board of directors of 12 February 13th, 1986, for United Financial Group 13 and United Savings Association of Texas. 14 MR. NICKENS: No objection. That's 15 A1109 and -- 16 MR. GUIDO: A1109 and A1110. 17 THE COURT: Received. 18 Q. (BY MR. GUIDO) I'll first direct your 19 attention to A1110, Mr. Bentley. It sets out the 20 executive committee of United Savings Association 21 of Texas. 22 Do you see that on Page 2? 1780 1 A. Yes. 2 Q. Was Jenard Gross, Gerald Williams, 3 James Whatley, and Barry Munitz the executive 4 committee of United Savings Association of Texas? 5 A. I presume so. 6 Q. You were still an employee at the time, 7 were you not? 8 A. That's correct. I was a consultant for 9 the purpose of consummating branch sales and 10 headquartered in Dallas. 11 Q. Okay. And you were still familiar with 12 the entity, were you not? 13 A. Yes. I'm still familiar with the 14 entity, but I'm unfamiliar with any minutes. 15 Q. Okay. You don't have any reason to 16 dispute that this was the committee? 17 A. No, I have no reason. 18 Q. Then would you take a look at 19 Exhibit A1109 which is the minutes of 20 United Financial Group on Page 6 of those minutes. 21 It sets out that Barry Munitz was the chairman, 22 Jenard Gross, Charles Hurwitz, James Whatley, and 1781 1 Gerald Williams were the members of the executive 2 committee of United Financial Group -- 3 A. Correct. 4 Q. -- does it not? 5 A. Yes. 6 Q. Did United Financial Group or USAT make 7 any charitable contributions between 1982 and when 8 you left in November of 1985? 9 A. Yes. I'm confident we did. I do not 10 recall. 11 Q. Do you know whether or not any specific 12 persons affiliated with United Savings Association 13 of Texas directed those contributions to be made? 14 A. I recall one contribution in '83, '84 15 to some large project in Houston, it seems like 16 for $50,000, that the papers carried a story that 17 the contribution was made by Charles Hurwitz but 18 the bill was sent to United Savings. 19 Q. Did you -- 20 A. I can't tell you the time. That was 21 about the time I was leaving. That could have 22 been in '85. 1782 1 Q. Did you authorize that -- 2 A. I did not, no. 3 Q. -- contribution? Now, did -- during 4 the time period that you were at UFG and USAT 5 between January 1982 and November of 1985, did it 6 purchase any high-yield or junk bonds? 7 A. It had purchased a few. We had just 8 established a department headed by Joe Phillips. 9 THE COURT: Mr. Guido, are you -- 10 MR. GUIDO: I'm almost finished, Your 11 Honor. I have about three questions. 12 THE COURT: All right. 13 A. And there had been some transactions. 14 I can't tell you how much. 15 Q. (BY MR. GUIDO) Did any investments in 16 high-yield bonds or junk bonds get made in 1984 17 without the approval of the executive committee of 18 the board or the board of directors of either UFG 19 or USAT? 20 A. I don't recall. 21 Q. Do you recall having any conversations 22 with Mr. Heubsch about some of those earlier 1783 1 purchases of junk bonds? 2 A. Yes. The first group of junk bonds or 3 mortgage-backed securities, whatever the 4 instruments were, Mr. Phillips was relying on some 5 counsel with a Mr. Heubsch. And my recollection 6 is -- I don't remember the transactions, but I do 7 remember my requirement or my saying that this 8 will be required -- there will be hard copy of any 9 recommendation coming from Heubsch to Phillips and 10 that any executions there will be hard copy. I 11 didn't want it to be a telephonic thing. That's 12 my only recollection of it. 13 Q. Was Mr. Heubsch an employee of UFG or 14 USAT at the time? 15 A. Mr. Heubsch was at that time an 16 employee of MCO. I don't know. 17 Q. But he was not an employee of UFG? 18 A. He was not an employee of the 19 association. He later became -- he later held 20 office at USAT resulting from a last-minute notice 21 given me by Dr. Munitz prior to a meeting saying 22 "We would like to have him elected as executive 1784 1 vice president," I believe. 2 Q. But your -- 3 A. That was the same day that Mr. Gross 4 became a director in the association. That was 5 that same day. 6 Q. Okay. But those -- 7 A. Those were last-minute agenda items. 8 Q. But those first purchases you testified 9 were made by Mr. Phillips after consultation with 10 Mr. Heubsch? 11 MR. NICKENS: Objection. Leading, Your 12 Honor. Repetitive. 13 MR. GUIDO: I'm sorry. I'm just trying 14 to summarize the witness' testimony. 15 MR. NICKENS: That's my objection, Your 16 Honor. 17 MR. KEETON: I object because that's 18 not a summary. That's not what the witness said. 19 THE COURT: Sustained. 20 Q. (BY MR. GUIDO) Were those first 21 purchases made by Mr. Phillips after consultation 22 with someone else? 1785 1 A. I really don't know. There was a 2 relationship -- 3 MR. NICKENS: Your Honor, the witness 4 has answered -- he answered the question. He said 5 he didn't know. 6 THE COURT: He can explain his answer. 7 A. There was some kind of a relationship 8 between Heubsch and Phillips, and whatever was the 9 result of that negotiation is what I asked be 10 reduced to hard copy. 11 Q. (BY MR. GUIDO) And why did you do 12 that? 13 A. Compliance with regulations. 14 Q. And what was it about the regulations 15 that you thought required that that relationship 16 be documented in writing? 17 A. In the event that Mr. Heubsch actually 18 ever placed an order in behalf of Mr. Phillips, I 19 wanted there to be a hard copy of it rather than a 20 telephone conversation or something of that 21 nature. It was to protect everybody involved by 22 doing it in accordance with good business 1786 1 practices. 2 MR. GUIDO: Thank you, Mr. Bentley. I 3 am finished with my direct, Your Honor. 4 THE COURT: All right. Well, are there 5 any matters we should consider before we adjourn. 6 MR. GUIDO: I think we've considered 7 the one matter and that is a request that we start 8 next Monday at 10:00 a.m., Your Honor. There may 9 be -- we still don't have a resolution of the 10 protective order issue which we will try and 11 resolve during the break with regard to the 12 stockholder list of MCO or MAXXAM. But 13 apparently, there is some difficulty in getting 14 that resolved. I would hope that we could get 15 that resolved before we have to come back but if 16 we don't, we would like to bring that to Your 17 Honor to get resolution so we can move that piece 18 of the case along. 19 MR. NICKENS: The only other thing, 20 Your Honor, is that as far as I know, we have not 21 yet received notice of what witnesses we are going 22 to start on Monday. Our agreement is that that 1787 1 would be done by the close of business on 2 Thursday, and I would ask if that information is 3 available at an earlier time as I would think it 4 would be that we could be provided with that 5 information. 6 MR. GUIDO: Your Honor, I can comply 7 with that. I was just handed a list of witnesses 8 for next week. The witnesses -- would the Court 9 like a copy of this so you have an idea. 10 THE COURT: That's not necessary. 11 That's all right. 12 MR. NICKENS: Thank you very much. I 13 appreciate it. 14 MR. GUIDO: You're welcome. 15 THE COURT: All right. If there is 16 nothing further, we will adjourn until Monday at 17 10:00 o'clock. 18 19 (Whereupon at 11:58 a.m. 20 the proceedings were recessed.) 21 22 1788 1 STATE OF TEXAS COUNTY OF HARRIS 2 REPORTER'S CERTIFICATION 3 TO THE TRIAL PROCEEDINGS 4 I, Marcy Clark, the undersigned Certified 5 Shorthand Reporter in and for the State of Texas, 6 certify that the facts stated in the foregoing 7 pages are true and correct to the best of my ability. 8 I further certify that I am neither 9 attorney nor counsel for, related to nor employed 10 by, any of the parties to the action in which this 11 testimony was taken and, further, I am not a 12 relative or employee of any counsel employed by 13 the parties hereto, or financially interested in 14 the action. 15 SUBSCRIBED AND SWORN TO under my hand 16 and seal of office on this the 1st day of October, 17 1997. 18 ____________________________ MARCY CLARK, CSR 19 Certified Shorthand Reporter In and for the State of Texas 20 Certification No. 4935 Expiration Date: 12-31-97 21 22 1789 1 STATE OF TEXAS COUNTY OF HARRIS 2 REPORTER'S CERTIFICATION 3 TO THE TRIAL PROCEEDINGS 4 I, Shauna Foreman, the undersigned Certified 5 Shorthand Reporter in and for the State of Texas, 6 certify that the facts stated in the foregoing 7 pages are true and correct to the best of my ability. 8 I further certify that I am neither 9 attorney nor counsel for, related to nor employed 10 by, any of the parties to the action in which this 11 testimony was taken and, further, I am not a 12 relative or employee of any counsel employed by 13 the parties hereto, or financially interested in 14 the action. 15 SUBSCRIBED AND SWORN TO under my hand 16 and seal of office on this the 1st day of October, 17 1997. 18 _____________________________ SHAUNA FOREMAN, CSR 19 Certified Shorthand Reporter In and for the State of Texas 20 Certification No. 3786 Expiration Date: 12-31-98 21 22