Free Appendix - District Court of Delaware - Delaware

, !:, A

Case 1:04-cv-01565-SLR

Document 140-4

Filed 05/04/2007

Page 1 of 43

.m U C H SHE LIS T

ATTORNEYS AT LA~
191 N. WACKER DRIVE_

SUITE 1800 CHICAGO. IL 60606.1615

April

19, 2005-

T 312.521.200
IF 312.5212200

ww.much$hehst.çom
DIRECT DtAl:

_ 312521.2485

- -VIA FEDÈRAL EXPRESS

sschreiberlêmuchshelist.com

Cerberus Capital Management, LP
4-50- Park Avenue
20th Floor.

N~w York, NY 10022-2605 ..Attention: Steven Ä-. Feinberg and Mark A. Neporent

Rß: - Daniel D. Crowley v~ Cerberus! et al.

- Dear Gentlemen:
-- - - We represent Mr. Crowley_inqthe above-captioned matter. Reference-is made to an -i:mployment Agreement dated as of August 1, 1999 rAgreement") between Mr.

-Crowley and Cerberus Capital Management, Lp ("Cerberus"). Further reference ismade to Section3.1 (b) of the Agreement.pursoant to which-Mr. Crowley is entitled to participate in such "benefi plans olthe Employer that may be in effect from time to
time..."Referenca is also made to Seçtion 4 olthe Agreement which provides-that

Cerberus wil reimburse Mr. Crowley -for expenses incurreq by Mr. Crowley "in
Agreement". Finatly, reference i:s - drawn to S~ction 9.5 of the Agreement pursuanl-o which Cerberus agreed that Mr. - Crowley wHl be- "covered by and entitied to the benefits of (Cerberus'J insurance
performance of (Mr. Crowley'sJ duties pursuant to the

- coverage -(in effect trom time to time) for its -offcers and/or executive employees,
-inClUding its offcers- and directors liabilty policies".
,--~ ---- o_~_..___ '-"__~O-"=_-.,,_ --- ~'-,---_.- .._----------_. .. "'-~-~~-~~---~~~"c""-'"--,,-,-_-=,==~__--,_~--~,,__~,____ __________ _____ 0__"____ __ ___'_,,_~~,~--~.._~"~~=-"_

, As you know, Mr. Crowley has been sued by Arlin M. Adams, Chí.Pter 1-1

Trustee 6f the post-confirmation bankruptcy estate of Cora-m Healthcare Corporation
and Coram, Inc. ("Coram"). That lawsuit

Crowley's performance of his duties under the Agreement, and other conduct i-ndertaken by Mr. Crowley with respect to Coram. A copy of that lawsuit Îs enclosed for
your reference. Mr. Crowley has also bèen~named as a defßndant in an_ action pending _ in the United States District Court for the District o( Colorado entitled Genesis Insurance

. . . l .
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pertains directly to matters relatìng to Mr.

Company v. Daniel D. Crowley, et al. A copy of that lawsuit is also enclosed for your

reference.

Much Shelist Freed Denenberg Ament & Rubenstein, r.c.

CXR 02980

~. . .;.',¡

Case 1:04-cv-01565-SLR

Document 140-4

Filed 05/04/2007

Page 2 of 43

IVU-CH SHELI5T

April-19, 2005
_ Page 2

In accordance with the promises and representations made_ in the Agreemerit,

- - Mr. Crowley hereby demands that Cerberus provideto Mr. Cr~wley the a-enefis

Crowley. _
he has describedagainst Cerberus

Gescribed in the AgreeJTent including, but not limited to insLJrançé cov_erage, _
reimbLlrsement of all legal_ expenses, and indemnity of ~" claims asserted against Mr.

.. Mr; Crowley reserves all rights against other individuals in addition tò tl)e claims
in -this Crowley asserts this letter should be _ construed as a waiver of any rights that Mr. letter. Nothing inagainst any- individuals for conduct they Dave personally undertaken in connection to the activities that form the - -basis of the claims asserted against Mr. Crowley.
Since_rely,

--- Cd.Cd . - - Scott N. Sch~ber
SNS/cmc
Eliclosu res
cc: Stuart D. Friedman (w/enclosures)

.~._--_..

Daniel Crowley (w/o enclosures)
Anthony Va iiu lis

.-.- ..- .-. .... - -0 ...... .". --.. ." ." .-. -.. .'.
'.';.. . .':_. ....-..._- '-... .....
.. . ~- _.: ...: ":... _..

. -.. - . .

- -

(w/o enclosures)

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A P PEA RAN C E S,
SCHNADER HARRISON SEGAL & LEWIS LLP Attorneys for Plaintiffs 1600 Market Street, Suite 3600 Philadelphia, Pennsylvania 19103

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELWARE

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- - - - - - - - - - - - - - - - - - - - - - - - - - - --x
ARLIN M. ADAMS, Chapter 11 Trustee of the

BY, BARRY E. BRESSLER, ESQ.
bbressler~schnader _ com

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6

Post-Confirmation

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Bankruptcy Estates of CORA HEALTHCAR CORPORATION,

a Delaware Corporation,
and of CORA INC _ ,

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a Delaware Corporation,

Plaintiff,
vs_
DANIEL D. CROWLEY,
NO. 04-1565 (SLR)

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DONALD J _ AM,
SANDRA L. SMOLEY,

WILLIAM J. CAEY, L. PETER SMITH, and
Defendats _

- - - - - - - - - - - - - - - - - - - - - - - - - - - --x

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RICHARD A. BARKASY, ESQ. 220 Lake Drive East, Suite 200 Cherry Hill, New Jersey 08002-1165 rbarkasy~schnader. com KEKER & VAN NEST, LLP Attorneys for Defendant 710 Sansome Street San Francisco, California 94111

BY: R. JAMES SLAUGHTER, ESQ.
rslaughter~kvn _ com

KASOWITZ, BENSON, TORRES & FRIEDMAN Attorneys for the Deponent 1633 Broadway New York, New York 10019

BY, ROBERT M. NOVICK, ESQ.
rnovick~kasowi tz. com

ALSO PRESENT: JOSE RIJO, Videographer

15 VIDEOTAPED DEPOSITION OF DAVID M_ FRIEDMA

16 New York, New York
17 Friday, March 16, 2007
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20 Reported by,
Jennifer Ocampo-Guzman, RPR, eRR

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March 16, 2007
9,31 a.m.

Deposition of DAVID M. FRIEDMA,
held at the offices of KasQwitz, Benson,

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Torres & Friedm, LLP, 1633 Broadway,
New York, New York, pursuant to subpoena,

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before Jennifer Ocampo-Guzma, a

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Registered Professional Reporter i
Certified Real-Time Shorthand Reporter

13 and a Notary Pulic of the State of New

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THE VIDEOGRAPHER: Here begins the videotaped deposition of David Friedman, tape 1, volume I, in the matter of Adams versus Crowley in the United States District Court of the District of Delaware, case number 04-1565. Today is March 16, 2007 and the time on the video monitor is 9,31 a.m. The video operator today is Jose Rijo representing LiveNote World Services located at 221 Main Street, suite 1250, San Francisco, California

94105, phone number (415) 321-2300.
The court reporter is Jennifer Ocampo of David Feldman Worldwide reporting on behalf of LiveNote World

Services.

Today's deposition is being taken on behalf of defendant and is taking place at 1633 Broadway, New York, New

York.
will counsel please introduce

themsel ves and whom they represent_
MR. NOVICK: This is James

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these pages with respect to Mr _ Crowley. Do you see that? A. Yes.
bottom of 44 and the top of 45 provides, "Mr _ Crowley also serves as a consultant to Cerberus Partners LP, 'Cerberus,' which is a member of the Noteholder Group, with respect to its investments in various health care

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FRIEDMA which Mr. Marabito or Mr. Danitz or anybody else didn't - - refused to provide you information in response to a request?
disclosure statement had you had an adequate opportunity to gather the information you needed for the disclosure statement?

Q_ there's some information here on

FRIEDMA

A_ No. Q. At the time you filed the

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Q. And the disclosure statement at the

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A_ We thought we had, yes.

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Q_ Who decided what would be put into

the disclosure statement?

A. Probably, probably various lawyers
within the office, to the extent that there was a decision, but I don' t recall us ever deciding not to include anything. We were just gathering information that we thought was relevant and throwing it all in as we got

it.

Q_ Now, at the time that you filed the
A.

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companies other than the debtor" - - Debtors.

Mr. Crowley generally receives a fee from Cerberus for such services, but receives no fee from Cerberus for any services he provides respecting the Debtors." Do you see that?

A. Yes.
Q. Do you know who collected that

correct?

statement, you believed it to be accurate;

Yes_ MR. SLAUGHTER, Now, I would like

to talk to you about a specific portion

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statement?

information and put it into the disclosure

A. Yes. Q. Who?
A. It was provided to us by

Mr. Marabi to.

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FRIEDMAN

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of the disclosure statement, because 'know that this has been previously marked at least at ~r. Feinberg's deposition and Mr. Weinstein's .deposition. It seems silly to mark it again, but i will if you prefer to have it today.

FRIEDMA Q. Did you ever ask Mr. Crowley about
it at the time that you filed the disclosure

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statement?

A. I believe I did have conversations
with Mr _ Crowley about this.

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MR. BRESSLER: Whichever your.
pleasure. We not need repeatedly mark the same document. MR. SLAUGHTER, I am just going to refer to this as Feinberg's Exhibit 31. which has been marked as Exhibit 31 at Mr. Feinberg's deposition_ Q. Mr. Friedman, I'm obviously not going to ask you to read the entire thing, but does this appear to be the disclosure statement filed by your firm on August 8, 2000, in connection with the filing of the Coram bankruptcy petition?

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disclosure statement?

Q. Prior to the time you filed the
Q. Okay. And what -- and how many

A. Yes.
times did you have that conversation, conversations with Mr. Crowley about this?

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A. Yes_

pages 44 and 45

Q. Now, directing your attention to

A. Yes_

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times.

A. I really don't recall the number of

Q. More than once? A. I don't know. Q. And what were the substance of
those conversations with Mr. Crowley?

A. I think Mr. Crowley volunteered to
me that he had a relationship with Cerberus with respect to other matters, and he made a particular point of telling me that his relationship with Cerberus was completely divorced from his role at Coram. And I think I asked him to please make sure that we had

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accurate language that would describe that
relationship _

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wi th Cerberus?

Q. Did you ask to see his agreement

A. I wasn't -foundation.

MR. NOVICK: Object to the form,

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A. I was never informed that there was a written agreement. And I did not understand that there was a written agreement at the time.
your firm didn't have a copy of that agreement prior to the time the disclosure statement was filed?

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Walrath

the December 21st hearing in front of Judge

A. Yes_

confirmation of the plan.

Q. _. in connection with the

Q. Do you have a recollection that

A. I don't know whether or not our firm had a copy of it or not. I don't recall, at least sitting here today I don't recall being aware of the agreement at the

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time_

much

Did you ever ask Mr. Crowley how he was being paid by Cerberus? A. I don't know. I'm sorry. Was that trr don't knowll Q.
Q.

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MR. SLAUGHTER: And in fact, I apologize, I have only one of these, but I'LL read it, and if we need to take some time, take a break, make a copy of it, I can do that. But let me read it and then if you could share it around, I have one highlighted and one there, but the portions that I am going to be looking at are on pages 36, 37, and 38_ And there is - - and this is a -let me _.. should we go off the record make a quick copy of that, so everyone has a copy of that? MR. NOVICK: Why don't we do that. MR. SLAUGHTER, I apologize for not

A. Which plan, the first plan? Q. The first plan.

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having enough copies.
Off the record.

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FRIEDMA
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or, "no, I don't think I did"?

A. I don't know.

about his relationship, about Cerberus' relationship with Mr. Crowley prior to the time the disclosure statement was filed?

Q. Did you ever talk to Mr. Feinberg

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conversation.

A. I don't recall having that
Q. Did you ever speak with anybody

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FRIEDMA THE VIDEOGRAPHER: Off the record. The time is 10:40 a.m.
(A brief recess was taken.) THE VIDEOGRAPHER: Going back on the record. The time is 10:47 a.m.

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from Cerberus about Mr. Crowley's relationship with Cerberus prior to the time the disclosure statement was filed?

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conversation.

A. I don't recall having such a
Q. Did you ever ask Mr. Crowley to see

might have had with Cerberus prior to the time the disclosure statement was filed?
any written agreement he

A. I didn't understand such an
agreement to exist, and I didn't ask him to

see it.

Q. I am going to show you a -- I'm not
going mark it since it's a transcript, but I am going to show you here a transcript from

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of you a portion of the transcript from the December 21, 2000 confirmation hearing, and think you've got pages 36, 37, 38 and 39 in front of you. -And I want to talk to you -and before we went off the record, you had testified that, I think, either in words or effect that you didn't know of a written contract with - - between Mr. Crowley and Cerberus prior to the time that a plan was

Q. Mr. Friedman, I've placed in front

filed. A. That's correct.

Q. And starting on 36, "THE COURT:" -36, line 5 -- "Well, are you suggesting, however, that Mr. Crowley's relationship is

adequately disclosed?"

certainly.

Line 8, "MR. FRIEDMA: Yes,
"THE COURT: Well, does the

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disclosure statement mention that the consulting agreement is subject to a written contract where he is receiving a million dollars a year?

filing.

FRIEDMA

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"MR. FRIEDMA, Well, no, it

with respect to that.'

doesn't say that but there are two points

My recollection, sir, is that there was some point after the bankruptcy began that I became aware of a document that was called an employment agreement, rather than a consulting agreement, and read it and

understood that rather than - - what I

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And then there's colloquy back and forth with the court, and I'm sure if counsel wants me to include it, he can ask some questions about it, but I'm going to focus on page 37 there where you give an answer in the middle of the page, Mr. Friedman says, 'But, Your Honor, I think that when you tell someone public that your chairman has a business relationship with Cerberus, I think anybody who is interested in the terms is free to ask. Frankly, Your Honor, we would have put it in without hesitation had anyone asked. We just didn't asked" -- 'anybody think of it. But, Your Honor, certainly there was no attempt to hide from it.'

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And then again on page 38,

Mr. Friedman, near the top, your first

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understood to be an ad hock relationship of providing fees for services on occasion, that it was actually an employment agreement with a salary, with affirmative commitments that Mr. crowley made to Cerberus, none of which I was aware of when the bankruptcy was filed.

Q. You knew, however, that Mr. crowley
was receiving a fee from Cerberus prior to the time the bankruptcy was filed?

Cerberus - - by Cerberus for consulting
services, but I did not understand that him to be an employee of Cerberus on a fixed salary, or that there were other traditional types of employee commitments that he had made to Cerberus. MR. SLAUGHTER, I am going to move

A. I knew that he was paid by

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FRIEDMA
response, the court says, 'You don't think it was relevant to advise the court about that?

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FRIEDMA

to strike that answer, and I will ask it

again.

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"MR. FRIEDMA: Your Honor,

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Q. You knew, however, that Mr. Crowley
was receiving a fee from Cerberus prior to the time the bankruptcy was filed; isn't that

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candidly we certainly knew that Mr. Crowley's relationship would come out. I mean the day after the disclosure statement was approved, everything we had in our files to the we gave equity committee. I mean there was no secret about the relationship.' Does that refresh your recollection, Mr. Friedman, that you had the consulting agreement between Crowley and Cerberus at the time the disclosure statement was filed? MR. NOVICK: I will just note for the record that those quotations were taken out of a larger colloquy, and that it goes on for a number of pages, not all of which are even in front of the witness, and with that qualification, you can answer.

correct?

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A. When you say "a fee," the answer is no. I understood that- he was being paid for services, but when you say "a fee,' I did not know that there was a fixed fee involved.

Q. You knew that he was being paid by
Cerberus for services?
being paid?

A. Yes, that's correct.
Q. You never asked him how much he was

A. Yeah, I mean actually it just it
makes me further certain that I did not have

the agreement before the - - before the

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A. At the time I don't believe I did. Q. Why not? A. I don't know. think I probably should have. Q. Was it a failing on your part not to ask that question? A. Well, in hindsight it certainly

was. I mean at the time we were trying to get a disclosure statement on file, and we

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FRIEDMA court. And from our perspective, to the extent that his compensation were considered relevant by any party, including shareholders, we had no doubt that the -that the final disclosure statement would contain whatever incremental information people thought was necessary. Q. Well, if you were so sure that the terms were going to come out, why didn't you figure out what they were before the disclosure statement was filed? A. I think this was probably put
together on August 7th at, you know, midnight, and we were trying to geLsomething on file the next day. We were under a lot of pressure to get it on file the next day, and we left it to Mr. Marabito to provide us with this language, and this was a draft disclosure statement _ We were going to file it, and then we were going to make whatever changes to it, needed to be made to comply with the Court's directions and the informational requests of any stakeholder. Q, i think you just told me that you

presented.

that the employment agreement ultimately

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So I understood that it is always important to disclose every affiliation between management and stakeholders. But there are orders of magnitude, and I did not understand the order of magnitude with respect to Mr. Crowley and Cerberus to be what it was at the time this was filed. MR. SLAUGHTER: I am going to -Q. I want to direct your attention now for a moment, Mr. Friedman, to Richard Levy. Prior -- do you know who Richard Levy is?

A. Yes.
Q. Who is Richard Levy? A. He is a lawyer currently employed
by Jenner & Block, who was the lawyer for the equity committee in the Coram case.

Q. Have you had experience with
Mr. Levy prior to his representation of the equity committee on the Coram case?

A. No.
Q. When did you first become aware
that Mr. Levy was representing individuals

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FRIEDMA thought it was an important issue, you knew it was an important issue before the time of the filing, in fact you knew it not only just days before, but a certain good amount of
time before?

FRIEDMA
with an interest in the Coram matter?

A. I think that sometime shortly
before or after in the bankruptcy filing we received a letter from Mr. Levy. MR. SLAUGHTER: Let me give you two exhibits. What number are we on?

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A. Yes.
Q. But if it was that important, why
didn't you try to find out more about -the terms of that relationship prior to the time the disclosure statement was filed, rather than just wait for people to object to it

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THE WITNESS, 6 and 7.

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later?

A. Well, because we relied upon
Mr. Marabito to give us the language, and this is what we got, and it was August 8th and it had to be filed, and it was a draft. And drafts are typically amended, and we considered this issue to be one would be amended if there was more information that

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MR. SLAUGHTER, The first letter, which I am going to label Exhibit 6, and a June 7th letter which I will label

date.) .
number 7.
date. )

(Exhibit Friedman-6, Letter dated 6/1/00, marked for identification, this

(Exhibit Friedman-7, Letter dated 6/7/00, marked for identification, this

was needed.

Now I just have to tell you, I did not have any sense that the relationship between Mr. Crowley and Cerberus was of a seven-figure nature and of the dimensions

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Mr. Levy, and the June 7th letter - - excuse
me. Exhibit 7 is a June 7th letter from you to Mr. Levy in response. Is this the correspondence that you

excuse me -- Exhibit 6 is a June 1st letter addressed to Mr. crowley signed by

Q. Mr. Friedman, the June 6th letter

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the board at the time that Mr. Crowley was hired by Coram; isn't that right?

understood it to be a full, you know, essentially a full-time employment agreement.

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didn' the?

A. Q. A. Q.

I think he was, yes. And he knew the terms? Pres~mably. Mr. Amaral knew the terms too,

Q. You knew that he was receiving a
fee from Cerberus?

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A. Yes.
fee was?

Q. Okay. Did you ever ask what that

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A. I don't think so. Put it this way,
Q. Okay. And. you said that all of

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A. Not at the time, no.
Q. Did you ever -- did you ever speak

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if he did, that' s not what he told me.

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the -- whether they knew the specific terms of the contract relationship between Mr. Crowley and Cerberus, the directors knew that there was such a relationship?

A. Yes.
Q. Was there anything in your view
that prevented any of those directors from requesting more specific information from

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to Mr. Feinberg about the relationship between Cerberus and Mr. Crowley at the time of the, prior to the time the first disclosure plan was filed?

MR. NOVICK: Disclosure statement?

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Crowley? A. No..
Q. Do you know if Mr. Crowley ever
refused at any time to provide information about the substance of his agreement with

Cerberus upon being asked to?

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A. I'm quite sure I did not speak to
Mr. Feinberg about it.

MR. SLAUGHTER, Disclosure statement. Thank you.

Q. Why not?
A. I tried not to speak with Mr.
Feinberg about this at all. I thought Mr. Feinberg was going to be, as I understood it, he was going to be exiting the board with the company going into bankruptcy. He was

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A. I'm not aware of that, no.
Q. Moving now on to the second time
period, again the time period in which you are preparing, you or your firm is preparing the disclosure statement.

FRIEDMAN

FRIEDMA
clearly in the creditor camp and I didn't think it was appropriate for me to spending a lot of time talking to him about what Coram

A. Right.
Q. You viewed at that time the
relationship between Cerberus and Mr. Crowley as an important one in connection with the disclosure statement?

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should be doing.

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Q. But you didn't ask to see - - you didn' t ask for the specific terms of that
agreement?
A. Again, you are presuming that I was aware of an agreement. I really, again whether I should have divined this or not is
debatable but in my mind at the time this was being become prepared, I did not understand the relationship to be one that was formalized in an agreement. I thought he just doing sort of ad hock consulting work, which did not -- which was not on my radar screen at the level it would have been had I

A. Yes.

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was going to be an important issue, you testified today that you knew that the relationship between the CEO of the debtor and one of the debtors' note holders would be an important issue, what actions did you take to learn the full extent of that

Q. Okay. You - - but knowing that this

relationship?

A. When?

statement was filed.

Q. Prior to the time the disclosure

A. I talked to Allen Marabito, who I
considered to be a sophisticated person with a law degree and one who -- who presented himself as being extremely close to Crowley and one who was quite familiar with his -his relationships and background, and I asked Mr. Marabito to give me what he considered to be appropriate disclosure with respect to Mr. Crowley's relationship, and I really

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was filed.

A. The answer is, no.

MR. SLAUGHTER: Move to strike everything after the "no"

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9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

But I want to put this in context, just so we have a clear record here. It is a common practice for lenders to have working relationships with crisis managers and to recommend that those crisis managers be engaged by their borrowers. It is quite common in the restructuring world for a lender to agree with the borrower that it will only lend money to the borrower if the borrower hires the crisis manager selected by the lender. Lenders have significant influence in how borrowers operate, especially when theY're in default, and that is something that's common. What is not common is there being an employment -agreement between the crisis manager and the lender. That is highly

4
5 6 7 8

MR. NOVICK, Denied.

nonrespons i ve.

MR. SLAUGHTER, - - as
MR. NOVICK: That the point. There

Actually you're not the judge.

9

isn i t one here.

uncommon. What is even more uncommon is an
employment agreement had.

employment agreement that contains the types of covenants and commitments that this
Had I known about the existence of

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

MR. BRESSLER, And it's your witness, so I'm not moving to strike it. MR. SLAUGHTER: It's actually a third-party witness, Mr. Bressler, as I'm sure you're perfectly aware. Q. Are you aware of any harm that was caused by Mr. Crowley'S relationship with Cerberus as it pertains to Coram?

A. Other than the harm relating to
Q. Yes. A. No.

denial of confirmation twice?

denials, even with full knowledge of Mr. Crowley's relationship with Cerberus, you were nevertheless surprised that each of

Q. And did not - - each of those

PAGE i 74
174
1 2 3

PAGE i 76
176
1 2 3 4 5

FRIEDMA
that agreement prior to the filing for bankruptcy, I am quite sure I would have given advice to the board relating to whether or not that was appropriate and what steps should be considered to mitigate the

FRIEDMA
those plans were denied?

A. As I've so testified.

4 5
6

Q. And you told the -- you endorsed, I

7 8
9

potential conflict.

6
7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

So just so you understand and the record is clear, there is a significant difference between a lender employing a crisis manager and a lender selecting a

think is what you testified earlier, you endorsed the plan developed by you and others to bring in Goldin as an independent restructuring advisor as a means to get a second plan approved; correct?

crisis. manager to work for a borrower. The
latter happens frequently, and typically a crisis manager business under those circumstances, even though it's getting business from the lender in the future, the crisis manager is in a position to act

appropriately.

It's where - - it's where that employment agreement existed that I felt, as I said earlier, unique facts here. And those facts, had they been known to me back in July of 2000 or August of 2000, I would in all likelihood have caused a whole host of different advice to have been given.

10 11 12 13 14 15 16 17 18 19 20

A. Yes.
Q. And you understood that the board
was going to be relying on your

recommenda t ion?

A. In part, yes.
Q. Do you recall ever telling anybody

that you thought that Mr. Crowley was the smartest guy you've ever met?

A. As of that -- as of what date?

years.

I've met a lot of smart people over the

21 22 23 24 25

Q. Well, as of 2001, was Mr. Crowley
one of the smartest guys you've ever met?

A. He's a very smart guy.

Exhibit 3, notes of your interview with

Q. Directing your attention to

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SHEET i PAGE i
1

Page 10 of 43
3

PAGE 3

2 IT is HEREBY STIPULATED AND
1

2 IN THE UNITED STATES DISTRICT COURT, FOR, THE DISTRICT OF DELAWARE
3

10 SMOLEY, )
12 13
14 Wednesday, March 21, 2007

7 vs. ) 8 )
Plaintiff, )
10:20 a.m.

ARLIN M. ADAMS, Chapter II )

Trustee of the Post- ) Case No.
Confirmation Bankruptcy of ) 04-1565

3 4 5 6 7

AGREED, by and among counsel for the respective parties hereto, that the filing, sealing and certification of the within deposition shall be and the same are hereby waived.

5 Estates of Coram Hea1thcare ) CORPORATION, and of CORA, ) 6 INC., a Delaware corporation,)

8 IT is FURTHER STIPULATED AND
9 AGREED that all objections, except as 10 to the form of the question, shall be

11 reserved to the time of the trial.
12 IT is FURTHER STIPULATED AND
13 AGREED that the within deposition may

DANIEL D. CROWLEY, DONALD J. )

9 AM; WILLIAM J. CASEY; L. )

PETER SMITH; and SANDRA L. )
)

14 be signed before any Notary Public
17 18

11-------------- ----- --- -------) Defendants. )
15

15 with the same force and effect as if
16 signed and sworn to before the Court.
19 20 21 22 23 24 25

16
17

18 Deposition of HARISON GOLDIN held at
19 the offices of Cerberus Capital Management, L. P.,

20 1177 Avenue of the Americas, New York, New York

21 pursuant to Notice, before Danielle Grant, a
22 Notary Public of the State of New York.
23
24

25

_ PAGE 2
2

~ PAGE 4
1

2 1

H A R R iso N J. G 0 L DIN, called as a
witness, having been first duly sworn by Danielle Grant, a Notary Public within and for the State of New York, was examined and testified as follows: BY MR. KIPNES:

A P PEA RAN C E S:
SCHNADER HARISON SEGAL & LEWIS. LLP
Counsel for Plaintiff Arlin Adams, Trustee
1600 Market Street, Suite 3600

3
4

2 3

5
6

7 8 9

Q Good morning, Mr. Goldin. My name
is Will Kipnes. I represent Arlin M. Adams as

5
6
7 8 9

Philadelphia, PA 19103-7286

BY: WILBUR L. KIPNES, ESQ.
MICHAL J. BARRIE, ESQ.
wkipnes~schnader. com mbarrieGschnader. com

10
11
KEKER & VAN NEST, LLP

10 11 12 13 14 15 16
17 18

Chapter 11 Trustee of the Bankruptcy Estates .of
Coram in the lawsuit pending in the United States District Court, District of Delaware against

Daniel D. Crowley and others.
Would you tell me a little bit about the business of Goldin Associates?

A Yes, sir. Goldin Associates is a
financial advisory firm that specializes in distressed situations. We act either as financial advisors to debtor companies or in other instances to their institutional creditors. We also perform interim management services. We provide litigation support services in distressed situations and we act extensively as a fiduciary, as a trustee, as an

12
13 14

Counsel for Daniel Crowley
710 Sansome Street
San Francisco, California 94111

15 16
17

BY: R. JAMS SLAUGHTER, ESQ.
rslaughterØkvn. com

19 20 21 22 23 24 25

examiner, as a special master to the courts,

18 KRR LEVIN NAFTALIS & FRAKEL, LLP
19 Counsel for Witness
20 1177 Avenue of the Americas

21 New York, New York 10036

22 BY: KENNETH H. ECKSTEIN, ESQ.

23 PHILIP BENTLEY, ESQ.

24 keckstein0krarnerlevin. com
25 pbentleyØkramerlevin. com

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~ PAGE 111

1 H. Goldin 2 A I reached the conclusion, as I told
3 4 5 6 7 8 you, and you know that Mr. Crowley did not conduct himself in a manner designed or calculated to diminish the interests of Coram to favor the opinions of any other party and interest, the converse of that is he conducted himself in a manner to maximize the interest of

1 H. Goldin 2 services that resulted from the failure of the
3 case to be confirmed in December 2000.

4 Q So, are those fees then associated
5 not with the efforts to get the first plan
. 7 plan?
-6 adopted, but fees associated after the first

8 A That's my recollection.

10 Q Did you come to a conclusion about

9 Coram.

9 Q Did you have an understanding about

10 whether the Equity Committee challenged the

11 whether or not_ the second plan of reorganization 12 was proposed in good faith?

11 second proposed plan of the debtor on issues
12 other than Mr. Crowley's conflict?
15 assertion that the finding that the company

13 A I did. 14 Q What was your conclusion?
15 A That it was.

13 A Yes, I seem to remember that the -14 among the Equity Committee objections was an

was

16 Q You testified earlier and it's
18 attributed some damage from Mr. Crowley's 19 conflict, do you recall that testimony?

16 insolvent was incorrect.

17 referenced here in your Paragraph 98 that you

17 Q Did you have an understanding about
18 whether or not the Equity Committee and the

20QA Yes, I you mentioned, or it i s do. 21 And I think
22 in this report, that there's two categories of

19 debtors, for that matter or other interested
20 parties, undertook efforts to value the company

21 to figure out if that was true or not true?
24 Touche undertook some related efforts in 25 connection with. its services to the Equity

22 . A I .don't recall specifically and in
23 detail, but I seem to recall that Deloitte &

23 damages you attributed to Mr. Crowley's conduct?

24QA Correct. the categories? 25 Can you describe

i- PAGE 110 ~ PAGE 112
1A H. the first related to the Goldin 2 Yes,
3 4 5 6 professional and related expenses that arose as the -result of -the Court having concluded that Mr. Crowley had a conflict of. interest when she ruled in December of 2000, therefore prolonging

110~N~112 1 H.
.

2 Committee.

3 Q Do you know if the Equity .Committee
4 hired- any other experts with respect to

5 valuation?

7 the bankruptcy.

7 Q Does your analysis regarding those

6 A I don't recall.

8 And the second category was the

9 inability of the business to capitalize earlier

10 on the advantages .of emerging from bankruptcy

11 with the multiplier effect that that has, and
12 that process having had to be delayed because

10 A I don't understand the question. 11 Q Does your analysis regarding the
12 damages regarding the professional fees, for
14 respect to the conflict of interest?

8 professional fees depend upon the nature of how 9 those fees were spent?

13 of Mr. Crowley's conflict of interest and the
14 prolongation of the period in which Coram was

13 instance, only spent investigating issues with

15 in Chapter 11.

16 Q I'm going to take the out-of-pocket
17 damages, I think if you look at page one of your 18 report, your updated report, there is a reference 19 here, you estimated those damages at five to

15 Does your analysis regarding the
16 out-of-pocket damages depend at all on the
18 whether they were spent investigating the

17 nature of how those fees are spent? That is,
19 alleged conflict issue or whether they were 20 some other matters?

20 $6 million?

21QA Yes, sir. 22 How did you determine that figure?
25 tag on all of the incremental professional

21 MR. KIPNES: Objection to the form.

23 A I don't remember specifically, but I
24 do know that we undertook to try to put a price

22 A 1'm unable to answer the question
24 would not be able to answer it.

23 because I'm unable to understand, but if I did, I

25 Q Did you have an understanding

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11

1 H. Goldin 2 whether or not -- strike that.
3 Did you have an understanding
4 about whether Mr. Crowley at some point in time

11

1 H. ~M~
2 period of years and that's what we calculated.

PAGE 115

3 Q i want to direct your attention to
4 the $6.3 million payment. Do you recall we 5 discussed that some today?

5 left Coram?

6 A I heard this morning from Mr. Kipnes 8 after the trustees.
7 that he left Coram a year after the appointment

7 Q And you concluded that while the

6 A Yes.

10 March 2003 and I further represent to you that
11 the trustee subsequently

9 Q i represent to you that he left in

proposed a new plan of 12 reorganization and that the Equity Committee

10Q Can you tell why it's your view it A Correct. 11
13 A Because of an answer I have given
14 more than once today, is ,that the company was 15 deeply insolvent. As a 'consequence, any value

8 payment was troublesome in your view, ultimately 9 it caused no damage to Coram?

12 caused no damage?

13 proposed a plan of reorganization and the Equity
14 Committee opposed the plan. Does that change - 15 your view about the likelihood of the costs

16 associated with the conflict in light of the fact
17 that the Equity Committee has opposed the plan of

16 available would accrue to the benefit of the
payment to 18 the Noteholders that might have not been made to
17 constructive Noteholders. Therefore a 19 the Noteholders would -- to the extent

18 Mr. Eckstein. 19 MR. BENTLEY: Objection to the form. 20 MR. KIPNES: Objection to the form

of its

21 of the question.

20 availability, would have gone to the Noteholders 21 and that is the reason. It didn't cause any harm

22 A You lost me. Had you not lost me,
23 it's a question that I do not believe I could

22 to the company.

23 Q I want to direct your attention to
24 pages 107 and 108 of your report addressing
25 additional reasons that there was no harm

24 answer without reflection and covering the facts

25 more closely than I could do answering in-a

PAGE 114

PAGE 116
114

1 H. Goldin
2 deposition.

1 H. Goldin
2 3 4 5 6

116

3 Q Let i s move to the second set of
4 damages that you concluded were related to in 5 Mr. Crowley's conflict. You say delay in 6 emerging from bankruptcy?

8 Q How did you calculate the 7 to 9 9 million figure in your report? 10 A .Our evaluation analysis presupposed
11 based on a careful review of a whole variety of

7 A Yes.

7 A Yes, I have a general recollection,
10 endorse and confirm what it was at the time I

associated with the $6.3 million payment. Do .you recall concluding that Coram's cash position improved shortly after the payment was made and that was an additional reason the payment hadn't caused -- improved as a result of the sale?

8 not a specific recollection. But I know that the 9 report refers to that and I have no reason not to

11 wrote the report.

12 financial inputs what the financial status of
13 Coram would be at various points in time and
16 aftermath of its emergence from bankruptcy,

12 Q' Did you' come to a conclusion
14 had been made to make the $6.3

13 regarding the reasonableness of the judgment that
million payment in

14 included an assumption, as I suggested a view 15 minutes ago to you, that imediately in the
17 Coram, for reasons I can get into if you like me
18 to,

15 cash rather than in kind?

16 A I think we speak to that in the
17 report, but the overriding conclusion was the 18 payment was troublesome.

would enjoy a bounce, a post Chapter 11

19 bounce. That bounce would then have a leverage 20 effect on the value of the company going forward.

19 Q I'm going to direct your attention
22 to that transcript.
23 The bottom of Page 42, you were 24 asked a question, "Did you consider whether or
25 not it was appropriate for Coram to pay

21 The delay in the achievement, in
22 the realization of the economic advantage as 23 driving from a company's exit from chapter 11

20 to Exhibit 19, the 2005 hearing transcript. I'll
21 further direct your attention to pages 43 and 44

24 causes not only the imediate delay in those

25 advantages, but has a multiplier effect over a

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Case 1:04-cv-01565-SLR

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Page 13 of 43
3/26/2007

Morrison, Christina
CONFIDENTIAL
Page 1
CONFIDENTIAL IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

Page 2

1 A P PEA RAN C E S:
2 SCHNADER HARRISON SEGAL & LEWIS LLP

3 Trustee
4 5
6

counsel for plaintiff Arlin Adams,
1600 Market Street
Sui te 3600

ARLIN M. ADAMS, chapter 11 :

Trustee of the :
Estates of CORA HEAL THCARE :

Post-confi rmation Bankruptcy :

philadelphia, PA 19103
(215) 751-2336

CORPORATION, a Delaware :

BY: WILBUR L. KIPNES, ESQ.
wki pnes~schnader. com

Corporation and of CORAM, : INC., a Delaware corporation, :

7
8 9

vs. : 04-1565
DANI EL D. CROWLEY; DONALD J. :

plaintiff : CASE NO.

AMARAL; WI LLIAM J. CASEY; :

SMOLEY, :: Defendants

L. PETER SMITH; AND SANDRA L. :

10 11
12 13 14

KEKER & VAN NEST LLP Counsel for Defendant Daniel crowley 710 Sansome Street San Francisco, CA 94111-1704 (415) 391-5400

BY: WARREN A. BRAUNIG, ESQ.
wb rauni g~kvn. com

AND: ELLIOT R. PETERS, ESQ.
epeters~kvn. com

.

Monday, March 26, 2007 9:46 a.m.

15

16
videotaped deposition of CHRISTINA MORRISON, held at the 1 aw offices of Ballard Spahr Andrews & ingersoll, LLP, 1735 Market Street, 51st Floor, philadelphia, pennsylvania, 19103,
pursuant to noti ce before Cynthi a A.

17
1_8

DEUTSCHE BANK Counsel for witness christina Morrison Deutsche Bank AG New York Legal Department 60 wall Street New York, NY 10005-2858 (212) 250-7332

whyte, Registered professional Reporter

and Notary public.

19 20 21
22 23 24 25

BY: CHARLIE GAMBINO, ESQ. charl i e. gambi no~db. com
ALSO PRESENT:

VINCENZO PETULLA,

vi deog raphe r

Page 3
1 2 3 4 5 6 7 8 9

Page 4
1

IT is HEREBY STIPULATED AND

AGREED by and among counsel for the

2
3 4

WITNESS: PAGE
CHRISTINA MORRISON

INDEX

respecti ve parti es hereto that the
filing, sealing and certification of the

5
6

wi thi n deposi ti on shall be and the same
are hereby wai ved.
IT is FURTHER STIPULATED
AND AGREED that all objections,

7
8

By Mr. Ki pnes 136 MORRISON EXHIBITS NO. tDESCRIPTION PAGE Exhi bi 1 Memo, 6/5/01, to List
from MS. Gould 25
Letter, 1/16/99, to
Exhibit 2

By Mr. Brauni 9 7, 181

10
11

except as to the form of the

10 11
12 13 14

questi on, shall be reserved to the
time of the trial.

Exhibit 3
12 13 14 15

Morrison 29 Excerpt of Transcri pt, 10/26/01 39
Mr. smi th from Ms.

Exhibit 4
Exhibit 5

IT is FURTHER STIPULATED AND
AGREED that the wi thi n deposi ti on may be

signed before any Notary public with the
same force and effect as if signed and
sworn to before the Court.
16 17

15
16 17

Crowley 43 MS. Morri son and Mr. Guthner 54
Memo, 9/20/99, to Mr. Meffe and MS. Kopta from
offeri ng Memorandum

Lette r, 7/12/99, to Mr. Kahn from Mr.

Exhibit 6
18

62

18 19
19

Exhibit 7

confidentiality
Ag reements proposal

"project caddy,

20 21 22
23 24

20 21 22 23 24
Exhibit 8 Exhibit 9

December 1999" 71
second round bid letters 74

packets Di stri buted

Questions 1-31-00.doc 82
Mi nutes, 2/10/00
84

"Buyer Due Di 1 i gence

25

Exhi bi t 10
25

Pages 1 to 4
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Page 46

Morrison, Christina
CONFIDENTIAL

Page 45
1

MR. GAMBINO:
MR. KIPNE5:
the questi on.

obj ecti on.

situations in which a business is using a lot
2
3

2
3

-- to the form of

of cash be a basis for a company's decision to
sell a unit?

4
5 6 7 8 9

warren, can we have an
understandi ng if Mr. Gambi no or I object

4
S
6

A. Di d not see that very often. Di dn' t
typically sell a lot of divisions, so...

to the form, that it's a joint objection
so the othe r doesn't have to jump in.

Q. Was there ever mention to you during
the process of the sale of CP5 that CPS was

7 8 9

MR. BRAUNIG: i'll agree to

not a core business for Coram, that it was not
aligned with its infusion business?

that.
Q. Do you need to have the question

10 11 12
13

10 11 12

A. I don't recall any real specific
di scussions about that. They wanted to focus

repeated?
A. Yes.
MR. BRAUNIG: could we read it
back, please?

on the home infusion business at the time. but
I don't recall anything of a more strategic

13 14 15

14 15 16 17 18 19

(The court reporter read the

nature than that. Q. when we talked earlier about the
engagement 1 etter and the paragraph rel ated to
the fees, you menti oned -- am I stati ng it

reco rd as requested.)
MR. GAMBINO: only if you can

16 17
18

answer the questi on.
A. i'm not sure how to answer that
questi on.

correctly that you mentioned that Deutsche Bank had incentives to help CPS -- to help
Coram sell CPS for as high a value as

19 20 21 22 23 24
2S

20
21 22
23

Q. okay. i'm going to rephrase.
In your experience does the fact
that a busi ness uni tis requi ri ng a lot of

possible?
A. The engagement letter was structured
such that the more that CP5 was sold for, the
higher our fee would be.

24 25

cash -- stri ke that.
In your experience have you seen

Q. At all times did Deutsche Bank do

Page 47
1

Page 48
alternatives to determine if there was
something there that would be concrete or not.

everything it could to get the highest 1
possible price for Coram's shareholders? 2
A. Yeah. OU r obj ecti ve was to present 3
all the options to the board. Price isn't 4

2
3

Q. Did you ever form an opinion about
whether Coram should sell the CPS unit?

4 5
6 7 8

always the only consideration. There's also 5

MR. GAMBINO: obj ecti on.

other things in the agreement that might play 6 into it. 50 you coul d have a hi gh pri ce but 7

A. I was hired to sell the business. I
didn't have any other opinions beyond that.

have a very stringent agreement that could 8
sometimes change that. Our job was to bring 9
all of those options forward to the board and 10

9

Q. Did you ever come to know a person named Dan Crowl ey?

10 11 12 13
14

1 et them make that choi ce. 11

A. Just by phone. I never met him.

strike that. 13
goi ng to get in the sal e of CP5? 16
A. Yes. We went through -- the fact 17

Q. when were you fi rst introduced to
Dan Crowley?
A. I don't recall. It was at some
point during the process that we were working

Q . At any ti me di d Deutsche Bank -- 12
Did Deutsche Bank do everything it 14

15 16 17 18 19

could to get Coram as good a deal as Coram was 15

on it, and I don't remember if he called me or
if I was told to call him, but our initial -in fact, our only conversations were

that the sale had been publicly announced by 18
coram, that they we re seeki ng to sell the 19

te 1 ephoni c.
Q. How often di d you talk to Dan
crowley over the seven months between --

20 21
22 23 24 25

business, really brought a lot of people out 20

to take a look at the business. And we 21
followed up with everything and investigated 22

strike that.
From the time - you were fi rst
introduced to Dan crowley, was he your primary
interface at Coram regarding the sale of CP5?

everything. 50 went through -- whether we 23

contacted them or they contacted us, went 24 through and revi ewed each of those 25

A. In terms of the deal negotiations
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Morrison, Christina

CONFIDENTIAL
Page 49
1

Page 50
transacti on. So I don't remember who call ed

and the deal te rms, yes. 1
Q. But you conti nued to i nte ract wi th 2

2
3 4
5

whom, but it was just calls.

Dom Meffe and other employees at Coram? 3
A. We spent most of our time at the 4

Q. Was it your understanding when you
first spoke to Dan crowley that he was the new
CEO of Coram?

company at that poi nt. We had buyers comi ng 5
through and were probably in Orl an

6 7
8

do fai rly 6

A. initially i didn't really know who
he was, what his official role was. Rick
was -- had gone and Dan was there and nobody
officially told us that one was out and one
was in. i fi gured that out eventua 11 y, but...

frequently through that process, so spent most 7 of the ti me wi th Dom and then Dan by phone. 8

9

Q. About how often would you say you 9
spoke to Dan during

10 11
12 13

A. I don't recall. 11

that period? 10

Q. About how long is it -approximately how long had you been working on
thi s deal before you fi rst spoke to Dan

Q. what was the natu re of the call s 12
that you had with him? Did he typically call 13

14 15
16

you. Did you call him? Were they -- I'll 14

leavewould -- most of our 16 it at that. 15 A. We

Crowley?
A. i don't recall when i first talked
to him.

17 18 19

conversations initially were just around the 17
deal, getting him updated on where we were in 18

Q. The process of -- was the process of
due di 1 i gence ongoi ng when you fi rst spoke to
Dan Crowl ey?

the process, who was in, who was out, who we 19
were talking to, and where we were in the 20

20 21
22

A. Yes.

diligence process. 50 periodically it was 21 just updates on the deal. That was most of 22

23 24

our conversations. 23
Page 51
of the process it was, but we had already
undergone part of the process because i do
recall bringing him up to speed as to where we

Q. Was the process of the auction -strike that.
Was the aucti on process ongoi ng when
you fi rst spoke to Dan Crowl ey?

And then towards the end it was much 24

25

more speci fi c and focused on that one fi na 1 25

A. It was. i don't remember what point

Page 52
some questions. i would give him the answers
2
3

1

2 3

and the phone call would be over.

Q. Did you have an understanding of
whether Dan crowley was trying to maximize the
value of the sale to Coram?

4
5

were, but I don't recall where we were at that
point in

the process.

5
6

6 7 8 9

Q. Did Dan Crowley change your marching
orders or the nature of the scope of your
engagement when he -- when you fi rst spoke to

A. i'm not sure how to answer that.
Did i have an understanding?

7

Q. Did you understand that Dan crowley
9

him?

wanted to sell the CPS uni t fo r as much as he

10 11
12 13 14

A. No.

10

could sell it for?

Q. At any point did Dan crowley alter 11
what you understood to be your job, your role? 12

A. We -- towards the end of the process
we brought forth a handful of specific offers

amended or changed. 14

A. The engagement letter was never 13

at the very end. i don't remember how many
there were. And he didn't like any of them.
And so he said, "Stop the process."

15
16

17 18 19

with him? 17
crowl ey from the i nteracti ons that you had 16
MR. KIPNE5: object to the form 18

Q. what were your percepti ons of Dan 15

Q. why didn't he like them in your
understandi ng?

20
21 22 23
24

A. Didn't have a lot of conversation 20
Beyond that i didn't have a

of the question. 19

A. He sai d they weren't enough, and so
he stopped the process. And we were basically suspended for some period of time. i think it
was up to a month, i don't recall

with him other than he was just asking about 21

the busi ness and the process, where we were. 22

lot of 23

specifically, where we just didn't do anything

and went back to those parties and told them
that the process was completed, you know, was

conversations with him. It was just really 24
very focused. He would get on the phone, ask 25

25

done at that poi nt.

Pages 49 to 52
Live

Note World Service
B468

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PAGE 3
IT is HEREBY STIPULATED AND

VOLUME I

2

AGREED by and among counsel for the

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

3
4

respecti ve parties hereto that the
filing, sealing and certification of the

5 6

within deposition shall be and the same
are hereby waived.

5 ARLIN M. ADAMS, Chapter 11
Trustee of the Post-Confirmation Bankruptcy Estates of CORA HEALTHCARE CORPORATION, a Delaware Corporation and of CORA,

7

IT is FURTHER STIPULATED
AND AGREED that all objections,

except as to the form of the
7

INC. i a Delaware Corporation,

Plaintiff CASE NO. Vs. 04-1565

question, shall be reserved to the time of the trial.

12
13
14

IT is FURTHER STIPULATED AND

10 DANIEL D. CROWLEY; DONALD J.

AMRA; WILLIAM J. CASEY;

AGREED that the within deposition may be
signed before any Notary Public with the

11 L.PETER SMITH; AND SANDRA L.

12 SMOLEY, Defendants
13
14

15 16
17 18

same force and effect as if signed and
sworn to before the Court.

15 9:34 a.m.
16
17

Tuesday, March 27, 2007

18 Videotaped deposition of ARLIN
M. ADAMS, held at the law offices of

19 Schnader Harrison Segal & Lewis, LLP,

19 20 21 22 23
24

20 Philadelphiai Pennsylvania, 19103,
pursuant to notice before Cynthia A.

1600 Market Street, Suite 3600,

21 Whyte, Registered Professional Reporter
22

and Notary Public.

25 22 23
24

23
24

25

25

PAGE 2
1

PAGE 4

INDEX
WITNESS:
ARLIN M. ADAMS, ESQ.
PAGE

A P PEA RAN C E S:
3 Trustee
SCHNADER HARRISON SEGAL & LEWIS LLP Counsel for Plaintiff Arlin M. Adams,
1600 Market Street Suite 3600. Philadelphia, PA 19103

2

3
4 5 6
7

By Mr. Peters

ADAMS EXHIBITS
NO.
Exhibi t 1 Exhib it 2

5 (215) 751-2050
7

DESCRIPTION

PAGE
7

8

BY: BARRY E. BRESSLER, ESQ.
bbressler~schnader. com

Chronology
Transcript, 2/25/03 Transcript, 3/3/03 Letter, 12/24/02, to

9

52
52

AND: RICHARD A. BARKASY, ESQ.
rbarkasy~schnader. com

10 11 12

Exhibit 3
Exhibit 4

Mr. Schreiber from

KEKER & VAN NEST LLP

10 Counsel for Defendant Daniel Crowley

Mr. Bressler
Exhibit 5

80

11 San Francisco, CA 94111-1704
(415) 391-5400

710 Sansome Street

13
14

Letter, 1/7/03, to

Mr. Schreiber from

12
BY:

ELLIOT R. PETERS, ESQ.
epeters~kvn. com

Mr. Bressler
Exhibit 6
Exhibit 7 Exhibit 8

81

13
14
AND:

15

Disclosure Statement

11
120
122

WARREN A. BRAUNIG, ESQ. wbraunig~kvn. com

16
17
18

E-mail string Employment Agreement Letter, 10/28/03, to

15 16

Exhibit 9

Mr. Schepacarter from

17 ALSO PRESENT, VINCENZO PETULLA,
18

19

Mr. Barkasy
Exhibit 10

130

Videographer

20 21 22 23

Letter, 10/3/06, to
Mr. Bressler from Mr.

19

20
21 22

Ternn
Exhibit 11

142 163

Motion of Chapter 11

Trustee
Exhib it 12

23
24 24 25

Updated Report of

Goldin Associates

170

25

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PAGE 83
83

1 appears to bear your signature.

1 Q. Do you recall what the terms and
2 conditions were?

2 (Adams Exhibit 5 was marked for

3 identification.)

4 Q. SO the first question with respect
5 to Adams 4 -- and if you want to take some
6 time to review it, you go right ahead.

3 A. I do not recall.
4 Q. Do you recall that one of the terms
5 and conditions was that Dan Crowley would
6 continue to render essentially the same

7 A. Go ahead. Ask me the question. 8 Q. Does Adams 4 bear your signature?

7 services to Coram as he had before for a term

8 of up to six months?

9 A. Is that my signature on the last
10 page? Yes. 11 Q. And was this an agreement that you
12 as trustee entered into with Dan Crowley?

9 A. Correct.
10 Q. And would he receive during that

11 period a salary, a base salary, of $80,000 a
12 month?

13 A. When you say "is this," the letter?

14 Q. Correct.

13 A. Correct.

14 Q. Was that a raise for him?
15 A. I think it was an adjustment upward, 16 yeah.

15 A. It was an agreement that was entered
16 into by Barry Bressler with Crowley's 17 attorney, Mr. Schreiber, which I saw and

17 Q. Pursuant to this agreement, he was
18 going to be receiving more base monthly salary

18 approved as to terms and conditions. That's

19 what it says.
20 Q. On whose behalf was Mr. Bressler
21 acting when he entered into that agreement?

20 A. Correct.

19 than he had been receiving before that?

22 A. Say that again.
23 Q. On whose behalf was Barry Bressler
24 acting when he entered into that agreement?

21 Q. Was he also, pursuant to this
22 agreement, eligible for a stay in performance

23 payment, a stay bonus?

25 A. The trustee,

24 A. That's what it says.
25 Q. And how much was that stay bonus?

PAGE 82
82

PAGE 84

1 Q. Who is that?

1 A. I forget, but I think it was a
2 million dollars. I may be wrong. That's my

84

2 A. Myself.

3 Q. SO is it a fair statement that this
4 is an agreement that you

3 recollection.
4 Q. SO under this agreement Crowley was
5 going to receive $80,000 a month for up to six
6 months and a million dollars' stay bonus,

entered into with Dan

5 Crowley? 6 A. The terms and conditions, yes. See
7 that? "Agreed as to terms and conditions." 8 Do you see that on Page 4?

7 correct?

9 Q. Okay.

8 A. If he stayed.
9 Q. If he stayed, he was going to

10 And that means that you agreed to
11 the terms and conditions --

10 receive about a million and a half dollars,

12 A. To the terms and conditions.

11 correct?

13 Q. -- contained in this letter?

12 A. Correct.
13 Q. And that was agreeable to you on
14 December 24, 2002, correct?

14 A. Correct.
17 for Coram?

15 Q. And, in doing so, did you understand
16 that you were acting as the Chapter 11 trustee

15 A. I was willing to go along with it in
16 order to get rid of the claim that he had in
17 the amount of $17 million. You don't always

18 A. That's the second time you have

18 sign contracts that are agreeable to you, as
19 you know.

19 asked that question in three minutes. The 20 answer is yes.
21 Q. What were the terms and conditions
22 that you were agreeing to as you understand

20 Q. Well, but in signing that contract,
21 you were agreeing to pay him that amount of 22 money if he stayed, correct?

23 them when you affixed your signature to this
24 document, Adams 4?

23 A. I was agreeing as the trustee in
24 consideration of what I was going to get as a

25 A. The agreement speaks for itself.

25 resul t as the trustee.

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SHEET 22 PAGE 85
1 Q. And one of the purposes of the
2 hearing on March 3! 2003! the transcript that 3 we have been looking at! was for the court to

1 nature of that relationship.
2 Q. And how does a contract which
3 rewarded Mr. Crowley financially for the
4 company i s success demonstrate the sinister

4 consider your motion to approve this

5 agreement! Adams 4! correct?

5 nature of that relationship?

6 A. That i s true.
7 Q. SO on March 3 of 2003 you were a

6 A. Because the exaggerated compensation
7 could only have flowed from that sort of

8 proponent of the court i s approval of this
9 agreement! correct?

8 relationship.
9 Q. Do you know whether the board of -10 the board of directors of Coram approved
11 Mr. Crowley i s employment agreement with Coram?

10 A. That's correct.
11 Q. You said that Mr. Crowley had a

12 claim for $17 million?

12 A. They may have under the influence of
13 MI. Feinberg.

13 A. He said, yeah; he said that.
14 Q. And did you ever consider whether or

14 Q. Did you ever speak to an individual
15 named Don Amaral?

15 not such a claim existed?

16 A. I did consider it.
17 Q. Did you have an understanding of his
18 position as to why he was owed $17 million?

16 A. Did I speak to him? I did not.
17 Q. Do you know who he was at Coram?

18 A. I do.

19 MR. BRESSLER: Object to the 20 form! but he can answer if he knows.
21 22 23 24 A. Yeah, I knew what he was advocating. Q. And what was your understanding in that regard? A. That there was a bonus arrangement

19 Q. Was he the chairman of the board of 20 Coram?

21 A. At one time! yes.
22 Q. Was he the chairman of the board of
23 Coram when Mr. Crowley entered into his

24 employment agreement with Coram?

25 that he had entered into that would have

25 A. Could have been. I'm not positive

PAGE 86
86
1 enabled him to support such a claim.

PAGE 88
88

1 about that. He could have been.

2 Q. He had a written contract with
3 Coram, correct?

2 Q. In any event! Mr. Crowley had a
3 claim for $17 million in compensation from
4 Coram and, as a result of all of these events, 5 that money has never been paid to Mr. Crowley,

4 A. I think that i s correct.
5 Q. And pursuant to that written
6 contract there were certain bonus provisions

7 in the contract?

6 correct? 7 A. Has not been. He has renounced it.
8 He has withdrawn the request for it.

8 A. That's my recollection. 9 Q. And do you also recall that the
10 bonus provisions were triggered by the company

9 Q. And did you ever communicate with
10 him! or, to your knowledge! did any of your

11 hitting certain EBITDA targets?

11 attorneys ever communicate with him or his

12 A. That i s my recollection.
13 Q. And that! in fact, the company had
14 hit certain EBITDA targets, correct?

12 representative about that claim?

13 A. Well! through his attorney we did.
14 Q. And what knowledge do you have of
15 the communication was his attorney about that

15 A. That's my recollection.
16 Q. And so based on your unders tanding
17 of the agreement Mr. Crowley had a claim or

16 claim?

17 A. We had a lot of questions about it.
18 Q. What were those questions?

18 communicated to you that he had a claim for
19 bonus compensation from Coram of approximately

19 A. That it was an exaggerated claim;
20 there was no justification for it. 21 Q. Do you mean that the contract didn't
22 call for those payments? Is that what you

20 $17 million?
21 A. Yes. And you were asking me about

22 an hour ago of the various negatives that
23 flowed from his relationship with
24 Mr. Feinberg. This is one that I should have

23 mean by no justification?

24 A. Didn't call for a payment of that
25 amount.

25 mentioned because this shows the sinister

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PAGE 3
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2

VOLUME II

3 4

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

5
6

7
8

IT is HEREBY STIPULATED AND AGREED by and among counsel for the respective parties hereto that the filing, sealing and certification of the within deposition shall be and the same are hereby waived. IT is FURTHER STIPULATED AND AGREED that all objections,

5 6 7

ARLIN M. ADAMS, Chapter 11 Trustee of the Post-Confirmation Bankruptcy

9

except as to the form of- the
question, shall be reserved to the time of the trial. IT is FURTHER STIPULATED AND AGREED that the within deposition may be signed before any Notary Public with the same force and effect as if signed and sworn to before the Court.

Estates of CORA HEATHCARE
CORPORATION i a Delaware

Corporation and of CORA, INC., a Delaware Corporation,

10 11 12 13
CASE NO.
14

vs.
10
11 12

Plaintiff

04-1565

AML: WILLIAM J. CASEY:
SMOLEY i

DANIEL D. CROWLEY: DONALD J. L. PETER SMITH: AND SANDRA L.

Defendants

13
14

15 16
17

Wednesday, March 28, 2007 9:33 a.m.

15 16 17 18 19 20 21 22 23 24

25

18 Continued videotape deposition
of ARLIN M. ADAMS, held at the law

i 9 offices of Schnader Harrison Segal &

pursuant to notice before Cynthia A. . 21 Whyte, Registered Professional Reporter and Notary Public.
22 23
24

20 3600, Philadelphia, Pennsylvania, 19103,

Lewis, LLP, 1600 Market Street, Suite

25

PAGE 2
178
1

PAGE 4

INDEX
WITNESS: ARLIN M. ADAMS - VOLUME II By Mr. Peters 184, By Mr. Bressler ADAMS EXHIBITS DESCRIPTION NO. Exhibit 13 Transcript, 11/14/03 Letter, 5/16/02, to Exhibit 14
PAGE

180

A P PEA RAN C E S:
SCHNADER HARISON SEGAL & LEWIS LLP Counsel for Plaintiff Arlin M. Adams,

2 3
4

5
6 7
8

391 390
PAGE

Trustee

1600 Market Street Suite 3600

219

Philadelphia, PA 19103
5

9

(215) 751-2050
BY:
AND,

BARRY E. BRESSLER, ESQ. bbressler~schnader. com
RICHARD A. BARKASY, ESQ. rbarkasy~schnader. com

10 11 12 13
14

Judge Adams from Mr. Crowley
Exhibi t

Exhibit Exhibit

15 16
17

Form 10-Q Form 10-K

234 240 250

Letter, 3/14/02, to
Mr. Adams from Mr.

Liebentritt
Exhibit 18

257

KEKER & VAN NEST LLP

15
16 17
18 19

10 Counsel for Defendant Daniel Crowley

Letter, 8/22/02, to
Mr. Beskrone from Mr.

11 San Francisco, CA 94111-1704
(415) 391-5400

710 Sansome street

Exhibit 19

Adams Letter, 4/11/02, to
Mr. Levy from Mr.

258

12
BY:

ELLIOT R. PETERS, ESQ.

13
14
AND:

epeters~kvn.com

Bressler
Exhibit 20

261

Letter, 5/1/02 to

WARREN A. BRAUNIG, ESQ.

wbraunig~kvn. corn

15 16
1