SHRA GALLOP CLIMENEO & GOULD

Section 15 provides that a person who controls a corporation which sells its securities shall be liable under the Act, jointly and severally with and to the same extent as the corporation, to any person to whom the corporation is liable, unless the controlling person had no knowledge of or reasonable grounds to believe in the existence of the facts by reason of which the liability of the corporation is alleged to exist. The existence of control is a question of fact, and you denied that you controlled the Company.

The action was instituted after the Company had gone into receivership and it is apparent from the record that the plaintiff was aware that you were a financially responsible individual.

The Securities and Exchange Commission was not involved in the action.

We understand that after extended pretrial proceedings the action was settled by the payment of $1,500 in cash to the `plaintiff and the issuance of notes to the plaintiff aggregating $6,500 payable annually over a period of seven years. The payment of the $1,500 was made, and the notes were issued, by a new corporation organized by the President of the Company. You guaranteed payment by the new corporation of the notes. You agreed to the settlement in order to avoid the expense, loss of time and annoyance of continuing the litigation, particularly in view of the small amount involved. The new corporation and the President of the Company each made some payments on account of the notes and you, pursuant to your guarantee, paid the remaining notes. You believe that in time the new corporation will be in a position to repay you the amounts which you paid.

Our examination of the record in the action discloses that the offering by the Company consisted of 100 shares of its stock to be sold at an offering price of $1,000 per share; that the offering was made to not more than 12 offerees; that the offering memorandum expressly stated that the stock was to be acquired for investment only and not for resale; and that the offerees consisted of existing shareholders of the Company, friends and acquaintances of the President of the Company, and certain selected customers of a brokerage firm which assisted in the offering.

(1) In connection with the offering by the Company of

its stock as described above, we would have given our opinion to the Company that the offering and sale of the stock were exempted

SHEA GALLOP CLIMENKO & GOULD

transactions under Section 4 of the Act, being transactions by an issuer not involving any public offering, and therefore no registration of the stock under the Act was required.

(2) Even though in our opinion you had meritorious defenses of a substantial nature to the claims asserted by the plaintiff in the Boggs case, we would have recommended that you agree to the settlement in order to avoid the expense, loss of time and annoyance of continuing litigation.

Plaintiff, pursuant to Stipulations dated February 6, 1963.

MESSRS. HALL, CASEY, DICKLER, HOWLEY & BRADY,
Attorneys for Defendant,

500 Fifth Avenue

New York, N. Y.

BY: GREGORY H. DOHERTY, ESQ., of Counsel.

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IT IS HEREBY STIPULATED AND AGREED by and between the parties hereto, through their respective counsel, that sealing, certification and filing shall be and the same are hereby waived;

IT IS FURTHER STIPULATED AND AGREED that the within examination may be signed before any Notary Public with the same force and effect as if signed and sworn to before the Court;

IT IS FURTHER STIPULATED AND AGREED that all objections, except as to the form of the question, shall be reserved to the time of the trial;

IT IS FURTHER STIPULATED AND AGREED that a copy

of the within examination shall be furnished to the attorneys

for the Defendant, without charge.

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CASEY,

having been first duly sworn

by a Notary Public of the State of New York, was examined

and testified as follows:

Q Please state your full name and address.

A William J. Casey, Glenwood Road, Roslyn Harbor, New

Q Mr. Casey, are you familiar with a company known as

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Would you please tell us how this company first came

to your attention?

Well, I was a stockholder in a company called Cold Cathode and the principal officer of that company was a man

པ.

named Abner Beyer, and he brought to my attention that he had been discussing the possibility of merging the Cold Cathode business with a company known as Advancement Devices.

Q Did you hold any office in Cold Cathode?

I don't remember. I can find out. I don't remember.

That would include director or officer.

am not sure. I wasn't actively engaged in the

I might have been a director.

Approximately what time are we talking about? Was

this 1960 or 1961?

This was 1960. It was the middle of 1960.

What did happen in regard to that proposed merger? Mr. Beyer worked out this merger with Mr. George Doundoulakis and the two companies were combined.

Q Was that by way of merger, or had it become a sub

sidiary?

A I believe that additional shares of Cold Cathode

were issued for all the stock of Advancement Devices and the

name of Cold Cathode was changed to Advancement Devices. I

think that was the form that the transaction took.

Q How many stockholders were there in Cold Cathode