Free Response - District Court of Arizona - Arizona

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Don P. Martin (AZ Bar No. 004232) [email protected] Edward A. Salanga (AZ Bar No. 020654) [email protected] QUARLES & BRADY STREICH LANG LLP One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004-2391 (602) 229-5200 Kevin A. Russell (admitted pro hac vice) David S. Foster (admitted pro hac vice) Michael J. Faris (admitted pro hac vice) Nicholas B. Gorga (admitted pro hac vice) LATHAM & WATKINS LLP Sears Tower, Suite 5800 Chicago, Illinois 60606 (312) 876-7700 Attorneys for Defendants GTCR Golder Rauner, LLC, GTCR Fund VI, LP, GTCR VI Executive Fund, LP, GTCR Associates VI, Joseph P. Nolan, Bruce V. Rauner, Daniel Yih, David A. Donnini and Philip A. Canfield UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Diane Mann, as Trustee for the Estate of LeapSource, Inc., et al., Plaintiffs, vs. GTCR Golder Rauner, L.L.C., a Delaware limited liability company, et al., Defendants. Pursuant to Local Rule 56.1, and Federal Rule of Civil Procedure Rule 56, the undersigned defendants hereby submit the following Response to Plaintiffs' Statement of Additional Facts. Case No.: CIV-02-2099-PHX-RCB GTCR DEFENDANTS' RESPONSE TO PLAINTIFFS' STATEMENT OF ADDITIONAL FACTS (Assigned to the Honorable Robert C. Broomfield)

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105. Prior to September 14, 1999 Joe Nolan and GTCR introduced Jeff Gilbert to Christine Kirk. Jeff Gilbert testified: Q. Sure. Were you introduced to Ms. Kirk by anyone?

A. I believe that Chris Kirk got my name from Joe Nolan or someone else at GTCR and that that's how we happened -we then communicated further. Q. A. And she contacted you? That's my best recollection.

Deposition of Jeff Gilbert at 16:10-18
RESPONSE:

Not disputed for purposes of the current motion, but not material to the current motion. 106. Prior to September 14, 1999 GTCR told Christine Kirk that she would use Jeff Gilbert and Sachnoff & Weaver as her attorneys in connection from her departure from Arthur Anderson. Ms. Kirk testified: Q. When did Mr. Nolan tell you that he had selected Mr. Schumacher to be your lawyer? A. He said that I would need to use somebody and that I should use someone from Jeff Gilbert's firm. Deposition of Christine Kirk at 167:3-6
RESPONSE:

Not material to the current motion, but disputed because not supported by record evidence. The quoted testimony does not support the asserted fact that GTCR "told" Kirk to use Jeff Gilbert and Sachnoff & Weaver. Indeed, that assertion is contradicted by the very next lines: "Did [Mr. Nolan] tell you that you had to use someone from Mr. Gilbert's firm?" Ms. Kirk responded "no." Kirk Dep. (Ex. 106) at 167: 7-9. 1 References to "GTCR SOF ¶ __" are to paragraphs 1-104 in GTCR's Statement of Uncontested Facts, submitted with GTCR's opening brief. References to exhibits take the form "Ex. __" and refer to Exhibits 1-101 to the Declaration of Nicholas B. Gorga submitted with GTCR's opening brief, or to Exhibits 102-111 to the Declaration of

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107. Prior to September 14, 1999 Jeff Gilbert and Sachnoff & Weaver had previously represented GTCR and Bruce Rauner. Letter from Sachnoff & Weaver to Christine Kirk, deposition exhibit 504, (EX.12)
RESPONSE:

Not disputed for purposes of the current motion that GTCR sent the referenced letter, but not material to the current motion. 108. Jeff Gilbert and Sachnoff & Weaver disclosed to Christine Kirk their potential conflict of interest vis-a-vis their prior representation of GTCR and Bruce Rauner. (EX.12)
RESPONSE:

Not disputed for purposes of the current motion that Gilbert sent the referenced letter of September 8, 1999 to Kirk, but not material to the current motion. 109. Prior to September 14, 1999 Joe Nolan and GTCR required Christine Kirk to use Sachnoff & Weaver attorneys in her negotiations of the legal documents pertaining to her business relationship with GTCR. Ms. Kirk testified: Q. When did Mr. Nolan tell you that he had selected Mr. Schumacher to be your lawyer? A. He said that I would need to use somebody and that I should use someone from Jeff Gilbert's firm. Deposition of Christine Kirk at 167:3-6
RESPONSE:

GTCR incorporates and reasserts its response to SOAF ¶ 106 above. 110. Between September 1999 and July 2001, Kirkland & Ellis were also acting as the attorneys for Kirkco, Inc. and LeapSource. Among other things, Kirkland & Ellis formed the company, maintained the stock ledger for LeapSource, issued common and preferred stock on behalf of LeapSource, and prepared Board consents and resolutions for the company. K&E was chosen to provide those services for LeapSource by GTCR: Q. Is it your testimony that you retained Kirkland & Ellis to represent the company between September 16 and September 27 [1999]? A. I was told by GTCR that I would use Kirkland & Ellis.

Michael J. Faris submitted herewith. References to plaintiffs' additional statement of facts take the form "Pltfs. SOAF ¶ __" and references to plaintiffs' exhibits take the form "Pltfs. SOAF Ex. __" or "Pltfs. Ex. __" as appropriate.
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Q. Is it your testimony that you, as the sole director, retained Kirkland & Ellis to represent the company between September 16 and September 27? A. Yes, I believe so. **** Q. How did you retain Kirkland & Ellis on September 16 to represent the company? A. I had a number of conversations with Kirkland & Ellis. They formed the company. They did the tax filings. **** Q. Do you remember any conversation with anyone from Kirkland & Ellis between September 16 and September 27 in which you, as the sole director, said in substance, "I would like to retain Kirkland & Ellis to represent LeapSource"? A. I recall a conversation with Richard Clyne where he said, "We will be doing all of the work for LeapSource. I am going to be faxing you things. You need to sign them and fax them back to me." **** Q. Was Mr. Schumacher aware that Kirkland & Ellis would be preparing the incorporation documents? A. Well, there was a point at which Mr. Schumacher wanted to do that. He and Jeff Gilbert had said that it would be cheaper, that they were - their rates were significantly less. I asked Joe Nolan about that, and Joe said, no, that Kirkland & Ellis handled all of the companies that GTCR invested in, that they would be LeapSource's counsel. Kirk Deposition 613:5-620:4.
RESPONSE:

Not material to the current motion, but disputed because not supported by record evidence. GTCR disputes that at any point in time Kirkland & Ellis acted as the attorneys for Kirkco, Inc. and/or LeapSource, and none of the cited acts by Kirkland & Ellis support the conclusion that Kirkland & Ellis represented anyone other than GTCR. In any event this statement is not material to the current motion. 111. In the years 1999 to 2001, GTCR was a substantial client of Kirkland & Ellis, and had been a client since 1979:
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Q. How long has GTCR been a client of Kirkland & Ellis? A. Their first fund was formed in 1979. They've been a client since. Evanich Deposition 9; 17-20. Q. In terms of the size of client GTCR is to Kirkland & Ellis, going back in the 1999-2001 timeframe, can you give me an estimate of Kirkland & Ellis' annual billings to GTCR? MS. REFO: During that time period?

8 MR. WEINBERGER: Yes. 9 A. 10 BY MR. WEINBERGER: 11 Q. 12 A. 13 Q. 14 A. 15 16 17 18 19 20 21 22 23 24 25 A. 26 27 28
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I really don't know the answer to that.

Is it more or less than $1 million? More. More or less than $5 million? Some years less; some years more.

Evanich Deposition 10:24-11:12.
RESPONSE:

Not disputed for purposes of the current motion that GTCR is a longstanding client of Kirkland & Ellis or that the testimony of Kevin Evanich is accurate, but there is no record testimony cited for the use of the term "substantial." In any event, this fact is not material to the current motion. 112. Mr. Nolan testified that GTCR "frequently" used K&E to "do work for our companies," referring to the companies in which GTCR funds made equity investments: Q. Do you remember having any conversation with Chris Kirk about what law firm would be used to form the company that became LeapSource? I don't remember that specifically, no.

Q. You don't remember a discussion with her about 60 reasons that Kirkland & Ellis should be used to form the company because of its familiarity with GTCR's business?

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A. I don't remember that specifically but that's quite possible. Q. Do you remember having a discussion with Chris Kirk about K&E being retained to provide services to LeapSource, including maintaining the minutes, the stock ledger for the company? MR. FOSTER: Object to the form. MS. REFO: Object to the form. A. I don't remember that specifically, no.

BY MR. STIRLING: Q. Is that something that you have required for other companies funded by LeapSource -- by GTCR? MR. FOSTER: Objection -- I object to the form. [-] in there.

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 113. Michelle Matiski, another of LeapSource's outside counsel with the Phoenix law firm of Osborn & Maledon, testified that she was told that LeapSource had retained Kirkland & Ellis when it hired David Eaton for the restructuring of the company. She said: Q. Did anyone from LeapSource ever tell you during that
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A. We use K&E a lot. They're familiar with our documents, and a lot of times it's -- they do work for our companies. That makes it easier to get the equity documents done. MR. STIRLING: Q. When you say "they do work for our companies," do you mean the companies in which GTCR equity funds make investments? A. Yes.

Nolan Deposition 153:17-154:23. RESPONSE: Not disputed for purposes of the current motion that Nolan's testimony is quoted accurately, but not material to the current motion. Furthermore, there is no competent evidence that Kirkland & Ellis represented LeapSource; indeed, the quoted testimony states that Nolan does not remember any discussion with Kirk about Kirkland & Ellis being retained to provide services to LeapSource.

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time that they believed they had retained Kirkland & Ellis rather than AEG in connection with their retention of Mr. Eaton? A. Q. A. Yes. Who said that? I don't remember.

Q. What do you remember about someone from LeapSource saying that? A. I remember being told that Dave Eaton was of counsel to Kirkland & Ellis and that GTCR required LeapSource to hire him and therefore Kirkland & Ellis to work on the restructuring ­ or the work out, to work on the work out work with the company. Q. Do you remember who said that? No.

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Matiski Deposition, 49:21-50:11 RESPONSE: Not disputed that Michelle Matiski's testimony is quoted accurately, but not material to the current motion. Furthermore, the quoted testimony lacks foundation and is inadmissible hearsay. There is no record evidence that any identifiable person at LeapSource concluded that LeapSource hired Kirkland & Ellis by retaining Eaton. Kirk testified that she did not believe that the board vote to retain AEG was a vote to retain Kirkland & Ellis. (Kirk Dep. (Ex. 106) at 667:13-18. 114. The GTCR Fund VI entities were the majority shareholders in LeapSource. See Plaintiffs Response to K&E Statement of Facts Re Motion for Summary Judgment on Professional Malpractice Claim and Statement of Additional Facts Precluding Summary Judgment, hereafter SOAF Exhibit 23 (action by majority shareholders to remove Mr. Gilman from the LeapSource board of directors).

Not disputed, but GTCR denies that this fact, which is already stated in GTCR SOF ¶ 30, is "additional" or that it precludes summary judgment.

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115. GTCR principals Bruce Rauner and Joseph Nolan were directors of LeapSource no later than the beginning of December 1999. Board Minutes, December 2, 1999, (EX.13).
RESPONSE:

Not disputed, but GTCR denies that this fact, which is already stated in GTCR's SOF ¶ 14, is "additional" or that it precludes summary judgment. 116. GTCR Portfolio Principal Daniel Yih was made a member of the LeapSource board of directors on February 16, 2001. Board Minutes, February 16, 2001, (EX.14).
RESPONSE:

Not disputed, but GTCR denies that this fact, which is already stated in GTCR SOF ¶ 15, is "additional" or that it precludes summary judgment. 117. Rauner, Nolan, and Yih remained directors of LeapSource in 2001, during the time that AEG Partners was retained and when David Eaton was made Chief Restructuring Officer of LeapSource. Board Minutes, March 29 and May 10, 2001, (EX.15).
RESPONSE:

Not disputed, but GTCR denies that this fact, which is already reflected in GTCR SOF ¶¶ 14-15, is "additional" or that it precludes summary judgment. 118. The interests of GTCR and LeapSource were adverse when Mr. Yih first became involved in the business of LeapSource in December 2000: Q. You don't recall any discussion about whether GTCR had honored its agreements with LeapSource? A. I remember from the very beginning of my involvement in the company, there was a question of whether or not we had GTCR had fulfilled a commitment. Yih Deposition 326:18-23. Q. At any time in 2001 do you remember there being a discussion about whether GTCR had met its obligations to LeapSource under the professional services agreement? A. There were a number of concerns raised, I believe, in a letter from Tom Gilman at some point in the first quarter. I don't remember specifically if it raised questions about the professional services agreement. Q. Do you recall there being any discussion among the principals of GTCR about the letter written by Tom Gilman
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concerning whether GTCR had performed its obligations to LeapSource? A. Yes. There was conversations around Tom Gilman's letter and the allegations that were made. Yih Deposition, 328:17-329:8.
RESPONSE:

Disputed because plaintiffs have failed to cite record evidence supporting the asserted fact. Yih's testimony does not support the assertion that the interests of GTCR and LeapSource were adverse, but only that there were discussions and disagreements between the GTCR designees on LeapSource's board on the one hand and Kirk and Gilman on the other hand. 119. LeapSource purchased the ICG business from Mike Makings and John Dilenshneider for $10 million as of January 1, 2000 (the actual closing date was February 8, 2000). Unanimous Written Consent of the Directors of LeapSource Inc., February 8, 2000, Bates LS-13-2221 to 2222, signed by Christine Kirk, Joseph Nolan, and Bruce Rauner, (EX.16)
RESPONSE:

Not disputed, but GTCR denies that this fact, which is already reflected in GTCR SOF ¶ 32, is "additional" or that it precludes summary judgment. 120. The purchase price for the ICG business included $5 million in cash distributed equally between Dilenshneider and Makings, and notes in the amount of $2.5 million each. Asset Purchase Agreement dated as of January 1, 2000, Article II, Section 2.2 ("Purchase Price"), Bates R&F 00006 to 00035, (EX.17). RESPONSE: Not disputed, but GTCR denies that this fact, which is already reflected in GTCR SOF ¶ 32, is "additional" or that it precludes summary judgment. 121. GTCR reduced the amount of funds available to LeapSource, Inc. under the Purchase Agreement by the $10M line of credit guaranteed by GTCR. See Ex. 41 to GTCR MSJ.
RESPONSE:

Not material to the current motion, but disputed because not supported by record evidence. GTCR denies that the document, which was drafted by LeapSource's
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controller Tina Rhodes, shows that GTCR reduced anything. The funds available under the Purchase Agreement remained the same, but the amounts advanced by GTCR increased by the value of the loan. In any event, plaintiffs have not cited any record evidence suggesting that the manner in which the $10 million guarantee was accounted for had any bearing on whether GTCR would provide additional funding to LeapSource. 122. The Purchase Agreement did not provide for a reduction in the funds available to LeapSource, Inc. by credit guarantees extended by GTCR on behalf of LeapSource, Inc. (EX.18)
RESPONSE:

Not material to the current motion, but disputed because not supported by record evidence. The funds available under the Purchase Agreement remained the same, but the amounts advanced by GTCR increased by the value of the loan. In any event, plaintiffs have not cited any record evidence suggesting that the manner in which the $10 million guarantee was accounted for had any bearing on whether GTCR would provide additional funding to LeapSource. 123. The Stockholders Agreement did not provide for a reduction in the funds available to LeapSource, Inc. by credit guarantees extended by GTCR on behalf of LeapSource, Inc. (EX. 19).
RESPONSE:

See Response to SOAF ¶ 122. 124. The Professional Services Agreement did not provide for a reduction in the funds available to LeapSource, Inc. by credit guarantees extended by GTCR on behalf of LeapSource, Inc. (EX. 20).
RESPONSE:

See Response to SOAF ¶ 122. 125. Christine Kirk's Senior Management Agreement did not provide for a reduction in the funds available to LeapSource, Inc. by credit guarantees extended by GTCR on behalf of LeapSource, Inc. (EX.21)
RESPONSE:

See Response to SOAF ¶ 122. 126. The Registration Agreement did not provide for a reduction in the funds available to LeapSource, Inc. by credit guarantees extended by GTCR on behalf of LeapSource, Inc. (EX. 22).
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RESPONSE: See Response to SOAF ¶ 122. 127. Prior to the first reduction-in-force directed by GTCR, LeapSource, Inc. was in the process of signing Computer Horizons Corporation as a client. (EX.23).
RESPONSE:

Not material to the currently motion, but disputed because plaintiffs have failed to cite record evidence supporting the asserted fact. The sole source for this alleged "fact" is plaintiff Thomas Gilman's February 24, 2001 memorandum, which is inadmissible hearsay and, as an obvious attempt to set out his position prior to this litigation, neither reliable nor subject to any exception to the hearsay rule. The statements in the memo regarding CHC are further inadmissible as double hearsay, incompetent to prove CHC's intentions. The only competent evidence on why CHC declined to hire LeapSource comes from contemporaneous board minutes from the Computer Horizons Corporation board of directors, which state that "[a]fter discussing the associated risk of outsourcing to a relatively new entity, it was decided that the Company would not accept the outsourcing proposal from Leap Source." Ex. 102 at CHC000038. 128. As of February 27, 1999 LeapSource, Inc. and Cargill, Inc. were still negotiating the final terms of their Professional Services Agreement and other legal documents. George Kemp testified: Q. A. Q. Have you seen this document before? Yes. Can you identify it for the record, please.

A. It's the -- it says, "LeapSource Letter of Intent," I guess. It's a Letter of Intent. Q. Okay. And was it, to the best of your recollection, the intent of this document that Cargill and LeapSource would work towards entering into further later binding agreements regarding the sale of the Fargo Service Center and the entering into a Service Level Agreement with regard to outsourcing. A. Yes.
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1 Deposition of George Kemp at 16:2-14 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Deposition of David Kerr at 70:4-10 18 RESPONSE: 19 20 21 22 23 24 25 26 27 28
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Not material to the current motion, but disputed because not supported by record evidence. Disputed that LeapSource, Inc. and Cargill were in negotiations at any point in 1999 prior to the formation of LeapSource. In any event, the referenced "Letter of Intent" is dated October 30, 2000 and says only that the parties agree to negotiate in good faith to attempt to enter into a definitive agreement on or before December 15, 2000. 129. As of February 7, 2001 LeapSource, Inc. and Comsys were still negotiating a long term Professional Services Agreement. Mr. Kerr testified: A. I recognize this document. It's, again, another extension of the interim services agreement from November 30th, 2000 to March 31st, 2001. Q. A. Q. A. The document is dated January 31, 2001, correct? Correct. And you signed it February 7,'01? Correct.

Not material to the current motion, but disputed because not supported by record evidence. The fact that Comsys and LeapSource entered into a sixth extension of the Interim Services Agreement dated January 31, 2001 does not support the assertion they were negotiating a long term Professional Services Agreement. 130. As of February 7, 2001 Xpedior was satisfied with the services that LeapSource was providing to them. See paragraph 127.
RESPONSE:

Disputed because plaintiffs have failed to cite record evidence supporting the asserted fact. "Paragraph 127" is not a meaningful citation. In any event, GTCR

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SOF ¶¶ 49-52 identifies record support for the undisputed fact that Xpedior was dissatisfied with LeapSource's services. 131. In January 2001, Dan Yih told Chris Kirk that GTCR had effectively "cut off her arms and legs to operate the business" and was prepared to liquidate LeapSource: Q. Okay. Do you remember any -- anytime in January of 2001 having a conversation with Christine Kirk where you told her that you had cut off her arms and legs to operate the business of LeapSource? A. There was a conversation on January 30th where we had met with ADP, and we were scheduled to meet with Chris and Tom Gilman after that meeting. January 30th followed our having tried to work with the company to effect cost reductions and having been disappointed what -- with what she presented to us. And then there was a fairly, I think, contentious relationship with respect to me at that point in time because I had told her that we were disappointed with the cost-reduction effort that she had put forth. She had kept us waiting for a long time after the ADP meeting, and I remember being very upset because I think the tenor of the conversation with us was -- I think someone mentioned bobbing and weaving and delaying and trying to avoid direct conversations with respect to some of the issues that I was raising, so I was very upset. And I remember that in that conversation in particular, I said that we were not afraid -- GTCR was not afraid of trying to figure out whether or not we should liquidate the company, stop funding and liquidate the company, not that -- that we would but that we weren't afraid to address that issue if she wasn't prepared to respond to us with our questions and work with us. I don't remember if the discussion about the, quote, "cutting off the arms and legs" was part of that conversation or a previous conversation. She alleged that my interviewing members of her management team below her was undermining her authority, and I said, "Yes, it is effectively cutting off your arms and legs within the organization." I certainly never, ever threatened her physically to cut off her arms and legs. I did agree with her that interviewing management members below her was effectively cutting off her arms and legs.
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Yih Deposition, 158:7- 160:5. Q. You're reading -- I'm sorry. This is from GTCR 002315; correct? A. Yes.

Q. This is the second bullet point in the -- in the middle of that page? A. Q. Yes. All right.

A. I think that -- I don't recall that statement. I do recall, at the end of January, that we said that we would not -- we would certainly consider liquidation, we would be prepared to liquidate if necessary, in the context of the management team not cooperating with us in trying to determine the various different funding requests, and -- I'm sorry -- the different cost-reduction efforts. And so I do recall that at the end of January. Yih Deposition, 357:3-20.

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RESPONSE:

Not disputed that this accurately quotes Dan Yih's testimony that he told Kirk that his interviewing members of her management team tended to undermine her authority ("cutting off her arms and legs within the organization") and that GTCR would be prepared to liquidate, if necessary, in the context of Kirk's failure to cooperate with GTCR in implementing cost-cutting efforts. GTCR denies that this fact is "additional" or that it precludes summary judgment, because Yih and Cunningham conducted such interviews pursuant to GTCR's rights under the Purchase Agreement (see SOF ¶¶ 59). 132. Sean Cunningham's notes of a meeting in late January 2001 identified GTCR's objectives with respect to LeapSource as follows: "1. Limit downside, 2. Avoid embarrassment, 3. Protect COMSYS, other investment(s)." Notes of Sean Cunningham at Bates GTCR012260-012261, Deposition Exhibit 196, SOAF Exhibit 12: Q. Okay. The following page bears a date, "January 22, Monday," at the top of the page and, in parentheses, the names begin of Tom, Dan, Joe, Chris, and your initials; correct? A. That's correct.
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Q. Do you know whether these are notes of a meeting between those people on January 22? A. Yes, I believe that it was a meeting in person in Phoenix on January the 22nd. Q. If you could read out loud the ... the sentence -- or, well, the words and then the three bullet points that follow -or the three numbered points, I should say -- that follow on that page and the top of the following page. A. Yes. I -- I appear to be taking notes at a meeting about a -- a sale or merger of the business. And I write, "GTCR has one objective," colon, and then, off to the right, I appear to have three points, numbered 1 through 3, and No. 1 circled is "Limit downside." No. 2 circled is "Avoid embarrassment." And No. 3 circled on the next page says, "Protect COMSYS, comma, other investment, parentheses, S," closed parentheses. Cunningham Deposition 64:17-66:8.
RESPONSE:

Not disputed for purposes of the current motion that this accurately quotes Mr. Cunningham's testimony, but Cunningham's notes of a meeting with LeapSource management regarding a sale or merger of the business five weeks before GTCR decided to cease funding LeapSource are not material to the current motion. 133. At the time those notes were taken, Mr. Cunningham was recently employed by GTCR and was taking his direction primarily from Joe Nolan and Dan Yih: Q. Who would have told Sean Cunningham that these were GTCR's objectives? MR. FOSTER: Objection.

21 BY MR. STIRLING: 22 Q. 23 24 25 26 27 28
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And -

MR. FOSTER: Object to the form; Calls for speculation, no foundation. A. I don't know who would have said that to Sean.

BY MR. STIRLING: Q. Okay. Sean Cunningham, at the time, had just become employed by GTCR; is that correct?

1 2 3

A.

Yes.

Q. He -- he was not in a position to be deciding what GTCR's objectives were; correct? A. Absolutely. Absolutely you're agreeing with me? Absolutely Okay. -- you're correct. I just wanted -

4 Q. 5 A. 6 Q. 7 A. 8 Q. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
RESPONSE:

A. He would not determine what GTCR's object -objectives are. Q. To your knowledge, at the time, January 22, 2001, Mr. Cunningham was taking direction from either you or Joe Nolan; correct? A. Correct. Yih Deposition 324:21-325:22.
RESPONSE:

Not disputed for purposes of the current motion that this accurately quotes Mr. Yih's testimony, but not material to the current motion. 134. Sean Cunningham's notes have various pages that have been redacted on the grounds of attorney-client privilege. The redactions begin at around the same time period that GTCR was consulting with K&E about Tom Gilman's letter to the board dated February 24, 2001. Sean Cunningham does not know what was redacted or why redactions were made. Notes of Sean Cunningham, GTCR012321-012322, GTCR012330-012332, GTCR012337, GTCR012351, GTCR012355-012360, GTCR012364-012366, GTCR012368, SOAF Exhibit 12; Cunningham Deposition at 115:10-116:1, 122:20-123:4, 128:20-129:3, and 147:19-148:18, SOAF Exhibit 53, Yih Deposition at 439:8-18, SOAF Exhibit 10.

Not disputed that Mr. Cunningham's notes contain redacted attorney-client privileged or work product material, but the fact of such redactions and Mr. Cunningham's knowledge of their particulars is not material to this motion. Plaintiffs have cited no record evidence establishing the time period in which the "redactions begin."
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135. In January 2001 Dan Yih told Christine Kirk and Thomas Gilman that they had to reduce employment levels. Q. So at this point in time, then, who is it that first mentions a reduction in force? A. Q. A. Q. Dan Yih and Joe Nolan. And where are they at when they tell you that? In Phoenix. Who is present?

A. Tom Gilman, myself, Dan Yih, I believe Sean Cunningham, Joe Nolan. Q. What do they tell you? They told me that we have to lay off some people.

10 A. 11 12 13 14 15 16 17 18 19 20 Q. 21 A. 22 Q. 23 A. 24 25 26 27 28
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Deposition of Christine Kirk at 482:21 to 483:6
RESPONSE:

Not disputed that this quotes accurately from this portion of Kirk's testimony, but GTCR denies that this fact, which is already reflected in GTCR SOF ¶ 61, is "additional" or that it precludes summary judgment. For sake of completeness, GTCR notes that Kirk testifies immediately after the quoted section that GTCR told her reductions were necessary to "reduce the cash burn rate" (Kirk Dep. (Ex. 106) at 483:7-9. 136. In January 2001 LeapSource reduced executive salaries by 20% at the direction of GTCR. See response to 133, and in that regard Christine Kirk testified: Did you take a 20 percent pay cut in February of 2001? Yes. So did Mr. Makings, correct? I believe so.

Q. And you thought that was in the best interest of the company, correct? A. That's what we were told to do.

Deposition of Christine Kirk at 877:10-17

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RESPONSE:

Not disputed that GTCR asked LeapSource to reduce costs by, among other things, reducing executive salaries, and that LeapSource complied. GTCR denies that this fact, which is reflected in GTCR SOF ¶ 61, is "additional" or precludes summary judgment. Moreover, the only cited record evidence (GTCR cannot determine what "response to 133" refers to) disingenuously omits the next lines of Kirk's testimony: "Q: Could you answer my question? Wasn't that in the best interests of the company? A: Yes." Kirk Dep. (Ex. 90) at 877:18-20. Thus, there is no dispute that the salary reductions were in the best interest of the company and necessary to reduce costs. 137. The reduction in executive salaries mandated by GTCR was in violation of said executive's Senior Management Agreements and Employment Agreements. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

13 Not material to the present motion because the issue raised with respect to 14 Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not 15 whether LeapSource breached those agreements, but whether plaintiffs have identified 16 evidence of "improper" interference by GTCR. Disputed because (1) the statement is not 17 a "fact" but a legal conclusion, and (2) plaintiffs have failed to cite record evidence 18 supporting the statement. The only cited evidence is the agreements themselves, which 19 provide for at-will termination by LeapSource with or without cause, and nowhere 20 guarantee that salaries may not be reduced. 21 22 23
RESPONSE:

138. Thomas Gilman spent 27 years of his career rising through the ranks of Chrysler. Gilman Deposition, 16:6-18:21, SOAF Exhibit 18.

24 Not disputed for purposes of the current motion that plaintiff Gilman was 25 formerly employed by Chrysler or affiliated companies, but not material to the current 26 motion. 27 28 139. Thomas Gilman served in various positions at Chrysler. He served: as Head of Financial Planning; in various executive level financial management roles
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until he became Controller of Chrysler Financial; he then became CFO of Chrysler Financial and finally served on the Daimler Benz Chrysler Merger Team until he retired from Chrysler in 2000. Gilman Deposition, 16:6-21, SOAF Exhibit 18.
RESPONSE:

Not disputed for purposes of the current motion that plaintiff Gilman was formerly employed by Chrysler or affiliated companies, but not material to the current motion. The record citations do not, however, support all of the facts asserted. 140. Thomas Gilman, prior to retiring from Chrysler served as Controller of Chrysler for 3 years, as CFO of Chrysler Financial for 1 year and on the Daimler Benz Chrysler Merger Team for 2 years. Gilman Deposition, 16:6-18:15, SOAF Exhibit 18.
RESPONSE:

Not disputed for purposes of the current motion that plaintiff Gilman was formerly employed by Chrysler or affiliated companies, but not material to the current motion. According to the cited deposition testimony, however, Mr. Gilman was Controller of Chrysler Financial, not Chrysler. Gilman 8/1/05 Dep. (Ex. 111) at 17:17. 141. Thomas Gilman was a Vice President of Chrysler Corporation and Chief Integration Officer for the Daimler Benz Chrysler Merger Team. Gilman Deposition, 16:6-18:21, SOAF Exhibit 18.
RESPONSE:

Not disputed for purposes of the current motion that plaintiff Gilman was formerly employed by Chrysler or affiliated companies, but not material to the current motion. 142. On February 24, 2001, Tom Gilman sent a memorandum to the members of LeapSource board reciting a history of questionable and wrongful acts by the representatives of GTCR. Confidential Memorandum from Tom Gilman to the LeapSource board dated February 24, 2001 (the "Gilman Memorandum"). SOAF Exhibit 6.
RESPONSE:

Not disputed that Mr. Gilman sent a memorandum to his fellow LeapSource board members on February 24, 2001, but disputed that the memorandum is admissible evidence competent to support any of the statements contained therein. GTCR disputes that the memorandum, which is an obvious attempt to make a record for
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litigation, is reliable or an accurate representation of events involving GTCR and LeapSource, and therefore is inadmissible hearsay not subject to any hearsay exception to the extent offered by plaintiffs to prove the truth of the matter asserted. 143. The Gilman Memorandum was addressed to all LeapSource Board of Directors members because it concerned a number of issues relating to the status of LeapSource and several alternatives for consideration by the board. This document was faxed to the board members, including the principals of GTCR who were on the LeapSource board, Bruce Rauner, Joe Nolan, and Dan Yih. SOAF Exhibit 6.
RESPONSE:

Disputed for the same reasons set forth in response to SOAF ¶ 142 above. 144. The Gilman Memorandum described the history of several disputes with GTCR and the GTCR members of the board of directors, and itemized numerous acts by GTCR and by principals of GTCR that were harmful to LeapSource and have been alleged as breaches of fiduciary duties in this action. SOAF Exhibit 6.
RESPONSE:

12 Disputed for the same reasons set forth in response to SOAF ¶ 142 above. 13 14 15 16 17 18 19 20 21 22 23 24
RESPONSE:

145. The Gilman Memorandum complained that "GTCR representatives contributed to the creation of an abnormal operating environment, the breakdown of authority, the compromising of the chain of command, the subversive undermining of the CEO." Gilman Memorandum at page 4, SOAF Exhibit 6.
RESPONSE:

Disputed for the same reasons set forth in response to SOAF ¶ 142 above. 146. The Gilman Memorandum complained that GTCR began negotiating directly with Mike Makings on his $2.5 million Note that was then in default. Gilman Memorandum at pages 4-5, SOAF Exhibit 6.
RESPONSE:

Disputed for the same reasons set forth in response to SOAF ¶ 142 above. 147. The Gilman Memorandum complained that GTCR exposed LeapSource to significant financial and legal risk by demanding that LeapSource negotiate down its contractual severance obligations. Gilman Memorandum at page 5, SOAF Exhibit 6.

25 Disputed for the same reasons set forth in response to SOAF ¶ 142 above. 26 27 28
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148. The Gilman Memorandum complained that GTCR had told LeapSource representatives that they would fund the Cargill contract if LeapSource executed its first reduction in force and then, after the reduction in force, GTCR refused

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to fund the Cargill transition. Gilman Memorandum at pages 5-6, SOAF Exhibit 6; Kirk Deposition 310:21-311:3, SOAF Exhibit 7.
RESPONSE:

Disputed for the same reasons set forth in response to SOAF ¶ 142 above. 149. The reduction in force demanded by GTCR caused the loss of the Computer Horizons business, and damaged the company. Gilman Memorandum at page 7, SOAF Exhibit 6; Gilman Summary of Opinions SOAF Exhibit 8.
RESPONSE:

Not material to the current motion, but disputed because plaintiffs have not cited any record evidence for this statement. The sole sources for this alleged "fact" are plaintiff Gilman's February 24, 2001 memorandum and Gilman's "Summary of Opinions." Gilman's memorandum is inadmissible hearsay and, as an obvious attempt to set out his position prior to this litigation, neither reliable nor subject to any exception to the hearsay rule. The statements in the memo regarding CHC are further inadmissible as double hearsay, incompetent to prove CHC's intentions. The only competent evidence on why CHC declined to hire LeapSource comes from contemporaneous board minutes from the Computer Horizons Corporation board of directors, which state that "[a]fter discussing the associated risk of outsourcing to a relatively new entity, it was decided that the Company would not accept the outsourcing proposal from Leap Source." Ex. 102 at CHC000038. Gilman's "Summary of Opinions" merely states his conclusion, without any factual support, and does not contain any admissible evidence supporting this statement. As further demonstrated in Defendants' Motion In Limine To Exclude The Business Valuation Opinions of Thomas Gilman (Docket No. 388), the facts do not support this conclusion. 150. Tom Gilman's efforts to work with GTCR in the interests of LeapSource led to the conflict described in the Gilman Memorandum in late February 2001. Letter from Tom Gilman to Dan Yih, Sean Cunningham and Joe Nolan dated January 26, 2001, SOAF Exhibit 9; Gilman Memorandum at page 7, SOAF Exhibit 6.
RESPONSE:

Disputed for the same reasons set forth in response to SOAF ¶ 142 above.
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The facts and allegations in the Gilman memorandum lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matter asserted. Mr. Gilman's January 26, 2001 letter in which he states, among other things, that Ms. Kirk is "committed and ready to take the appropriate cuts," does not support this asserted "fact" and also lacks foundation and constitutes inadmissible hearsay to the extent that it is offered by plaintiffs to prove the truth of the matter asserted. 151. The GTCR members of the board reacted very strongly to Mr. Gilman's suggestion that GTCR and the GTCR members of the LeapSource board were not acting in the best interests of LeapSource. Q. Thank you. What was your reaction to that memorandum from Mr. Gilman? A. That I was charitable when I said that he was misguided. Q. A. You're referring to your testimony yesterday? Yes.

Yih Deposition, 355:12-17.
RESPONSE:

17 Not material to the current motion, but disputed because not supported by 18 record evidence. The cited testimony says nothing about how the GTCR board members 19 reacted at the relevant time, or that the GTCR board members reacted strongly at any 20 point. 21 22 23 24 25 26 27 28 Deposition of Dan Yih at 357:10-14
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152. When asked what was incorrect about the Gilman Memorandum, the first point that Mr. Yih identified as "incorrect" - that he had ever said that GTCR was prepared to liquidate LeapSource today - was revealed to be a minor quibble, as he actually admitted making the statement in the same answer: A. I think that --I don't recall that statement. I do recall, at the end of January, that we said that we would not -- we would certainly consider liquidation, we would be prepared to liquidate if necessary.

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Not material to the current motion, but disputed because not supported by record evidence. Not disputed that this accurately quotes this portion of Mr. Yih's testimony, but the citation does not support the asserted "fact," that Mr. Yih "admitted" anything, or that anything he said was a "minor quibble." In any event, this fact is not material to the current motion. 153. When GTCR received the Gilman Memorandum to the LeapSource board dated February 24, 2001 GTCR immediately consulted with Kirkland & Ellis, and discussed the issues raised in the Gilman Memorandum with K&E. Yih Deposition at 329:3-331:8 and 439:8-18, SOAF Exhibit 10: Q. You don't remember there being any discussion among the principals of GTCR, in the absence of counsel, about what Mr. Gilman has alleged? A. I don't know what to say. It was all discussions with counsel. Q. Your answer, then, is, to your knowledge, there were no discussions about the allegations made by Mr. Gilman except in the presence of counsel? A. There was - initially we received the information. We were very concerned. We wanted to make sure that collectively, everyone wanted to make sure that we ... understood the issues and addressed the issues, and we immediately contacted counsel. Yih Deposition, 329:19-330:8. Q. At the time that you were consulting with Kirkland & Ellis about the allegations made by Mr. Gilman, was it your understanding that Kirkland & Ellis was also counsel for LeapSource? A. I don't think I particularly thought about it. I thought that Kirkland was counsel for the company at some point in time. When I was consulting them on this particular issue, I was assuming they were representing GTCR. Yih Deposition, 335:7-15.
RESPONSE:

Not disputed for purposes of the current motion that Dan Yih testified that GTCR was "shocked by some of the allegations that were made" by Gilman and that GTCR immediately contacted counsel after receiving the information. However, Yih's
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privileged conversations with counsel are not relevant to this motion. 154. GTCR Portfolio Principal and LeapSource board member Dan Yih forwarded Mr. Gilman's memorandum to litigation partner James Munson at Kirkland & Ellis by email on February 25, 2001. See Gilman Memorandum with attached email, SOAF Exhibit 6, at KE010472.
RESPONSE:

5 Not disputed for purposes of the current motion, but not material to the 6 current motion. 7 8 9
RESPONSE:

155. David Eaton also received a copy of the Gilman Memorandum dated February 24, 2001. Gilman Memorandum produced by AEG, Bates AEG000651 to 000661, SOAF Exhibit 11.

10 Not disputed for purposes of the current motion, but not material to the 11 current motion. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 156. On February 27, 2001 Joe Nolan and GTCR faxed a letter to Christine Kirk while she was at EDS trying to sell the company, which stated that GTCR is no longer going to fund LeapSource. (EX. 30)
RESPONSE:

Not disputed that on February 27, 2001, GTCR advised LeapSource via letter that it would cease purchasing additional shares of its preferred stock. GTCR denies that this fact, which is already stated in GTCR SOF ¶ 84, is "additional" or that it precludes summary judgment. 157. Kirk was terminated without cause in violation of her SMA. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

Not material to the present motion because the issue raised with respect to Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not whether LeapSource breached those agreements, but whether plaintiffs have identified evidence of "improper" interference by GTCR. This is also disputed because the statement (1) is not a "fact" but a legal conclusion and (2) is not supported by record evidence. The cited evidence references unrelated agreements, but Kirk's SMA states
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that LeapSource may terminate Kirk at-will, with or without cause. It is undisputed that Kirk's termination was designated "for cause" by letter dated May 10, 2001. See Pltfs. SOAF Ex. 1. Plaintiffs have cited no evidence to show how Kirk's termination violated her at-will agreement. 158. Hartmann and McCollum were terminated without cause in violation of their SMAs. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

Not material to the present motion because the issue raised with respect to Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not whether LeapSource breached those agreements, but whether plaintiffs have identified evidence of "improper" interference by GTCR. This is also disputed because the statement (1) is not a "fact" but a legal conclusion, (2) is not material, and (3) is not supported by record evidence. The cited evidence references unrelated agreements, but the SMAs of Hartmann and McCollum state that LeapSource may terminate them at-will, with or without cause. Plaintiffs have cited no evidence to show how their termination violated their at-will agreement. 159. Hartmann and McCollum were denied severance in violation of their SMAs. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

Not material to the present motion because the issue raised with respect to Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not whether LeapSource breached those agreements, but whether plaintiffs have identified evidence of "improper" interference by GTCR. This is also disputed because the statement (1) is not a "fact" but a legal conclusion and (2) is not supported by record evidence. Plaintiffs have not cited to McCollum's SMA or any document related to their termination. Furthermore, Hartmann's and McCollum's SMAs state that LeapSource may terminate them at-will, with or without cause, and they are entitled to severance only if they execute releases, which they refused to do. See Exs. 25, 26. Plaintiffs have cited
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no evidence to show why LeapSource was required to pay them severance absent signing a release, or that LeapSource had funds to pay them all severance in any amount. 160. Hartmann and McCollum were offered a reduced severance in exchange for a release of GTCR in violation of their SMAs. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

Not material to the present motion because the issue raised with respect to Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not whether LeapSource breached those agreements, but whether plaintiffs have identified evidence of "improper" interference by GTCR. This is also disputed because (1) the statement is not a "fact" but a legal conclusion and (2) plaintiffs have failed to cite record evidence supporting the asserted fact. Plaintiffs have not cited to McCollum's SMA or any document related to their termination or offer of reduced severance. Furthermore, Hartmann's and McCollum's SMAs state that LeapSource may terminate them at-will, with or without cause, and they are entitled to severance only if they execute releases, which they refused to do. See Exs. 25, 26. Plaintiffs have cited no evidence to show how LeapSource's attempt to negotiate reduced severance violated their agreements, or that LeapSource had funds to pay them all severance in any amount. 161. Gupta, Powers, Scott and Walker were all terminated in violation of their employment agreements. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

Not material to the present motion because the issue raised with respect to Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not whether LeapSource breached those agreements, but whether plaintiffs have identified evidence of "improper" interference by GTCR. This is also disputed because the statement (1) is not a "fact" but a legal conclusion and (2) is not supported by record evidence. The cited evidence references unrelated agreements, but these employees' Employment Agreements state that LeapSource may terminate them at-will, with or without cause. Plaintiffs have cited no evidence to show how their termination violated
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their at-will agreements. 162. Gupta, Powers, Scott and Walker were all denied severance in violation of their employment agreement. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

Not material to the present motion because the issue raised with respect to Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not whether LeapSource breached those agreements, but whether plaintiffs have identified evidence of "improper" interference by GTCR. This is also disputed because the statement (1) is not a "fact" but a legal conclusion and (2) is not supported by record evidence. These employees' Employment Agreements state that LeapSource may terminate them at-will, with or without cause, and they are entitled to severance only if they execute releases, which they refused to do. See Exs, 27, 28, 29, and 30. Plaintiffs have cited no evidence to show why LeapSource was required to pay them severance absent signing a release, or that LeapSource had funds to pay them all severance in any event. 163. Gupta, Powers, Scott and Walker were all offered a reduced severance in exchange for a release of GTCR in violation of their employment agreements. See Agreements attached as Exhibit 11 and 13 to GTCR SOF in support of MSJ re Joint Venture claims. Docket 240.
RESPONSE:

19 Not material to the present motion because the issue raised with respect to 20 Count 21 ­ tortious interference with the SMAs and Employment Agreements ­ is not 21 whether LeapSource breached those agreements, but whether plaintiffs have identified 22 evidence of "improper" interference by GTCR. This is also disputed because (1) the 23 statement is not a "fact" but a legal conclusion and (2) plaintiffs have failed to cite record 24 evidence supporting the asserted fact. These employees' Employment Agreements state 25 that LeapSource may terminate them at-will, with or without cause, and they are entitled 26 to severance only if they execute releases, which they refused to do. See Exs. 27, 28, 29, 27 and 30. Plaintiffs have cited no evidence to show how LeapSource's attempt to negotiate 28
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reduced severance violated their agreements, or that LeapSource had funds to pay them all severance in any amount. 164. Thomas Gilman did not resign from the LeapSource, Inc. Board of Directors. Meeting Minutes of 2/27/01 SOAF Exhibit 21.
RESPONSE:

5 Disputed because plaintiffs have failed to cite record evidence supporting 6 the asserted fact. The cited exhibit does not support plaintiffs' "fact" that Gilman did not 7 resign from the board, only that he did not resign on that day. The LeapSource board 8 accepted Gilman's resignation from the board on March 20, 2001. See GTCR SOF ¶ 8. 9 10 11
RESPONSE:

165. Michael Makings was made CEO of LeapSource after Chris Kirk was removed as CEO on February 27, 2001. Minutes of February 27, 2001 Board Meeting, Bates LS-910289 to 0290, SOAF Exhibit 21.

12 Not disputed that on February 27, 2001, the LeapSource board voted in 13 favor of terminating Kirk's employment as President and CEO, and voted unanimously in 14 favor of appointing Mr. Makings as President and CEO. GTCR denies that this fact, 15 which is reflected in GTCR's SOF ¶¶ 3, 17, is "additional" or that it precludes summary 16 judgment. 17 18 19
RESPONSE:

166. David Eaton testified that he considered Michael Makings, who replaced Christine Kirk as CEO after she was fired by the GTCR-dominated board of directors, as his client. Eaton Deposition at 144:10-17, SOAF Exhibit 13.

20 Not material to the current motion, but disputed because not supported by 21 record evidence. Plaintiffs' summary mischaracterizes Eaton's testimony. Eaton 22 characterized Makings and others as the "management team that I was reporting to" 23 during AEG's engagement by LeapSource, which was "essentially my client." See Pltfs. 24 SOAF Ex. 13. 25 26 27 28 167. At the time Michael Makings was appointed CEO of LeapSource, Inc. he was the largest single creditor of LeapSource, Inc.
RESPONSE:

Disputed because plaintiffs have failed to cite record evidence supporting
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the asserted fact. Plaintiffs have failed to provide any record citation in violation of Local Rule 56.1. Moreover, it is uncontested that LeapSource owed Bank of Montreal $10 million in February 2001. See Pltfs. Ex. 29 (Doc. No. 417). 168. At the time Michael Makings was appointed CEO of LeapSource, Inc. his attorneys had accelerated the payment terms of his $2.5 million note such that it was all immediately due and payable. (EX.24).
RESPONSE:

Not disputed for purposes of the current motion that Makings' attorneys sent the referenced letter to LeapSource's attorneys on January 24, 2001 stating that "the Note is in default, has been accelerated, and the entire amount of $2,500,000 plus interest is due and payable at this time." 169. At the time Michael Makings was appointed CEO of LeapSource, Inc., LeapSource, Inc. was in default on the $2.5M note held by Michael Makings. (EX.24).
RESPONSE:

Not disputed for purposes of the current motion that Makings' attorneys sent the referenced letter to LeapSource's attorneys on January 24, 2001 stating that "the Note is in default, has been accelerated, and the entire amount of $2,500,000 plus interest is due and payable at this time." 170. At the time Michael Makings was appointed CEO of LeapSource, Inc. on February 27, 2001 LeapSource, Inc. was insolvent. In that regard David Eaton testified: Q Okay. Based on your background, education, and experience -- okay? -- at the time you were working on your LeapSource engagement, did LeapSource's obligations to its creditors change because it was insolvent? MR. HALLORAN: Same objection I've been making. THE WITNESS: Okay. A First of all, as I said, when I got there, funding had been suspended. Without additional funding, LeapSource was insolvent. Deposition of David Eaton at 84:12-22.
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Not disputed that Eaton testified that in his opinion, on February 27, 2001, without additional funding, LeapSource was insolvent, but Eaton's opinion on LeapSource's solvency is not material to the current motion. 171. Michael Makings discussed the return of the ICG Division of LeapSource, Inc. to him with Sean Cunningham of GTCR in February 2001. Sean Cunningham notes, at page GTCR 012264, 012268, 012285 (EX. 10)
RESPONSE:

Not material to the current motion, but disputed because not supported by record evidence. GTCR denies that the cited portions of Mr. Cunningham's notes support this factual assertion. Furthermore, Mr. Cunningham was specifically asked about these referenced pages and did not recall any conversations regarding anything touching on "the return of the ICG Division" to Mr. Makings. In any event, this fact is not material to the current motion. 172. Michael Makings contacted his personal attorneys prior to March 16, 2001 to form a corporation solely for the purpose of purchasing the ICG Division assets from LeapSource, Inc. Q. Okay. Second page, third full paragraph, first sentence. Makings informed the board he's preparing an agreement to purchase certain ICG assets. A. Q. A. Q. A. Yes. Was that underway as of the time of this meeting? Yes. And who was preparing the asset purchase agreement? Tim Ronan.

Deposition of Mike Makings at 273:14-23
RESPONSE:

Not disputed for purposes of the current motion that this accurately quotes Makings' testimony regarding the March 20, 2001 board meeting, but not material to the current motion. Further, GTCR denies that the cited deposition testimony supports the asserted "facts" regarding when Makings contacted his attorneys or whether he did so "solely" to purchase ICG.
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173.

ICG Group, Inc. was incorporated on March 16, 2001. (EX.25).

RESPONSE:

Not disputed for purposes of the current motion, but not material to the current motion. 174. At the time ICG Group, Inc. was incorporated on March 16, 2001 Michael Makings was the CEO of LeapSource, Inc. See GTCR SOF paragraph 17.
RESPONSE:

Not disputed for purposes of the current motion, but not material to the current motion. 175. At the time ICG Group, Inc. was incorporated on March 16, 2001 Michael Makings was a director of LeapSource, Inc. See GTCR SOF paragraph 17.
RESPONSE:

Not disputed for purposes of the current motion, but not material to the current motion. 176. ICG Group, Inc. On March 16, 2001 Michael Makings was the sole incorporator of

Q. But isn't it true, though, that as an officer and a director of LeapSource, that you had a duty and -- a fiduciary duty and an obligation to do everything in your power, and to devote your loyalty to that corporation? A. I believe I did that.

Q. But on March 16th, you were incorporating ICG Group, Inc.; correct? A. Yes.

21 22 23 24 25 26 27 28
RESPONSE:

Q. Whose sole purpose of incorporating was to either start another company or to take back ICG division? A. Yes.

Deposition of Mike Makings at 187:11:23

Not disputed for purposes of the current motion, but not material to the current motion.
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1 with ICG." 2 3 4 5 6 7 8 9 10

177.

As of January 2001 Michael Makings future plan was to "walk away

Q. Can you tell me about every conversation you had with Mr. Makings on this issue? A. Well, in early January, the first week of January, Mike Makings asked to see me and me only for breakfast. We made a breakfast meeting. It was the first few days of January that I recall. And in that breakfast meeting, Mike Makings suggested that there was significant pressure that LeapSource was feeling from GTCR. He felt that there would be some major changes, and all he wanted was ICG back. He proceeded to tell me have I ever considered ICG, what would I do personally if these changes occurred at LeapSource, and could I take his cell phone if I wanted to discuss this in the future. Q. Discuss what in the future?

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. He said there were significant changes going on at LeapSource because of the increased pressure from GTCR. Q. Did he say anything else on that issue?
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A. I got the impression what he was trying to say was -my understanding that he was trying to tell me the company was going down, that he had some knowledge of this, and that he was going to attempt to take ICG back, and that it could have been that there was somewhat of a job offer in that discussion. Q. Did Mr. Makings ever specifically say any of that to you or was it just your impression of the conversation? A. It was my impression and my experience that when somebody asks you would I -- have I ever considered ICG, that it was a way of telling me that the door was open, and since he gave me his cell phone, I assumed what he was telling me was I could rely on him in the future potentially. Q. Did Mr. Makings -- you said it was your impression that Mr. Makings was trying to -- I am just paraphrasing what you said here, so tell me if I am being inaccurate, but it was your impression that Mr. Makings was trying to tell you that the company was going under? Is that what you were saying? Either that or he was trying to walk away with ICG. A. And I was trying to figure out how you would do that. ICG was a component of LeapSource. And it was confusing at best. Q. Did Mr. Makings ever specifically say anything about the company, quote, unquote, going under?

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A. Q. A.

All he wanted to do was walk away with ICG. Did he specifically say that? He specifically said that.

Patti Walker deposition at 39:11-41:8 (emphasis added).
RESPONSE:

Not material to the current motion, but the above excerpt from Walker's testimony is incomplete and misleading. Ms. Walker later testified that she made a contemporaneous "timeline" of events which included this January 2001 meeting with Mr. Makings. Her description of that meeting did not include anything suggesting that Mr. Makings intended to "walk away with ICG." See Ex. 76. When asked why that was missing from her contemporaneous description, Ms. Walker had no answer. Walker Dep. (Ex. 109) at 192:9 ­ 193:21. In any event, Mr. Makings' purported conversation with Ms. Walker in early January 2001 is not relevant to this motion. 178. Inc. See (EX.25). On March 16, 2001 Michael Makings was the CEO of ICG Group,

RESPONSE:

Not material to the current motion, but the referenced record citation (the Asset Purchase Agreement that Mr. Makings testified was signed on March 30, 2001) does not support that Mr. Makings was the CEO of ICG Group, Inc. on March 16, 2001. 179. As of March 16, 2001 Michael Makings planned to purchase the ICG Division assets from LeapSource, Inc. See paragraph 174.
RESPONSE:

Not material to the current motion, but disputed because not supported by record evidence. GTCR cannot respond to this fact because it cannot determine what "paragraph 174" refers to. If it is referring to SOAF ¶ 174, that paragraph does not support this assertion. Thus, plaintiffs have failed to provide any record citation in violation of Local Rule 56.1. In any event, this asserted fact is not material to the current motion.
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Case 2:02-cv-02099-RCB

Document 450

Filed 08/11/2006

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