Free Response in Opposition to Motion - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

BEUS GILBERT PLLC
ATTORNEYS AT LAW

4800 NORTH SCOTTSDALE ROAD SUITE 6000 SCOTTSDALE, ARIZONA 85251 TELEPHONE (480) 429-3000

Leo R. Beus/002687 ­ [email protected] Scot C. Stirling/005757 ­ [email protected] Steven E. Weinberger/015349 ­ [email protected] Attorneys for Individual Plaintiffs and Trustee

STEVE BROWN & ASSOCIATES, LLC
1414 E. INDIAN SCHOOL ROAD, SUITE 200 PHOENIX, ARIZONA 85014-2412 TELEPHONE (602) 264-9224

Steven J. Brown/010792 ­ [email protected] Co-Counsel for Trustee UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA DIANE MANN, as Trustee for the Estate of LeapSource, Inc., CHRISTINE V. KIRK, et al., Plaintiffs, vs. GTCR GOLDER RAUNER, L.L.C.; et al., Defendants. MICHAEL MAKINGS, Counterclaimant, vs. LEAPSOURCE, INC., et al., Counterdefendants.

Case No.: CIV-02-2099-PHX-RCB

PLAINTIFF'S RESPONSE TO MAKINGS STATEMENT OF FACTS REGARDING (1) CONTRACT CLAIMS, (2) BREACH OF FIDUCIARY DUTY CLAIMS AND ALL OTHER CLAIMS AGAINST DEFENDANT MAKINGS, AND PLAINTIFFS' STATEMENT OF ADDITIONAL FACTS PRECLUDING SUMMARY JUDGMENT (Oral Argument Requested)

H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

Document 419

Filed 06/07/2006

Page 1 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Pursuant to Local Rule 56.1, and Federal Rule of Civil Procedure Rule 56, the Plaintiffs submit the following (1) Response to Makings' Statement of Additional Facts Regarding Fiduciary Duty and all other claims against Defendant Makings (beginning, as Makings did with paragraph 19 and continuing through paragraph 118), and (2) Plaintiffs' Statement of Additional Facts Precluding Summary Judgment, beginning with paragraph 119. The Plaintiffs testified as follows regarding the Senior Management Contracts and the Employment Contracts: Kelly Ann Weekes 19. When asked how Makings interfered with her employment agreement, Ms.

Weekes testified: Q. You have also alleged in the complaint that Mr. Makings intentionally and improperly advised LeapSource to breach your employment agreement. What's your factual basis for that statement? Well, he did not respond to my e mail. Now, when he didn't respond to your e mail, that was after you already received your termination letter, is that correct? Correct.

A. Q.

A.

(See Exhibit 4, Deposition of Kelly Ann Weekes, Page 241, line 19 to Page 242, line 5). RESPONSE TO 19 It is not disputed that Ms. Weekes testified as shown on pages 241-242 of her deposition transcript, but it is disputed to the extent that implies that her personal knowledge

H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

Document 419

1 Filed 06/07/2006

Page 2 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

or testimony are the only basis of the claim that Makings interfered with Ms. Weekes employment agreement. See Response to 20, below. Ms. Weekes also testified: Q. A. Q. A. Q. How did you learn that your employment at Leap Source was being terminated? I received a termination notice. Did you receive that in the mail? Yes. Did anyone contact you by phone or in person to tell you you were being terminated before you received that termination notice? No. The -- I had one conversation with Mike Makings before leaving, and we had discussed ­ I had asked him if he wanted me to stay and work on the follow-up meetings with Perot -- I think it was Perot -- and I was pretty specific in my request, saying do you want me to stay and work on this, and he said yes. Q. A. Q. A. Did you have that conversation with Mr. Makings after you received your termination notice? Before. If you hadn't yet received your termination notice, why were you asking him if he wanted you to stay? He had asked me -- he had -- he had tried -- he had basically told me that he was going to be running the company going forward. I asked him questions about the company, and he said, you know, we'd -- we'd like you to stay, but then he was not very committal, so I said, well, I'm currently working on this, would you like me to stay and work on this, and he said yes. The follow -- a few days later, when I was still in those efforts, I received a termination letter in the mail. Q. Were you surprised when you received the termination letter?
Document 419

A.

H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

2 Filed 06/07/2006

Page 3 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A.

Yes.

Deposition of Kelley Weekes-Pwers at 202:22-204:10. Patrice Walker 20. Ms. Walker also believed that the mysterious "conversations" that Makings

allegedly had with GTCR have contributed to his interference with GTCR duties or caused her damages as set forth in the Fourth Amended Complaint. However, when asked about the conversations, she testified "I am not sure which of these Mike Makings would have been contributing to, because I was not privy to the conversations he had with GTCR." (See Exhibit 5, Deposition of Patrice Walker, Page 218, lines 11 to 13). RESPONSE TO 20 It is not disputed that Ms. Walker testified as shown on page 218 of her deposition transcript, but this is disputed to the extent it fails to state any cognizable "fact." For example, Ms. Walker also testified: A. Based on his conversations to me that he had ongoing conversations with GTCR and was very uncomfortable with the content of those discussions, I have an assumption that some of those conversations led to some of these GTCR activities.

Deposition of Patrice Walker at 217:18-22. In addition, Ms. Walker testified as follows about her own conversation with Mr. Makings in early January 2001: 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
H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

Document 419

3 Filed 06/07/2006

Page 4 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A.

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? 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? A. Either that or he was trying to walk away with ICG. 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? 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?
Case 2:02-cv-02099-RCB Document 419

H:\Leapsource\Pleadings\Resp to SOF v2.doc

4 Filed 06/07/2006

Page 5 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. All he wanted to do was walk away with ICG. Q. Did he specifically say that? A. He specifically said that. Patti Walker deposition at 39:11-41:8 (emphasis added). 21. The only alleged Makings' interference Ms. Walker could identify was

possibly her termination, but the only reason she gave for that was that his signature was on the termination letter, however, even she agreed she could be terminated with or without cause. (See Exhibit 5, Deposition of Patrice Walker, Page 218, line 14 to Page 219, line 6). RESPONSE TO 21 Disputed, and see Response to 20. Ms. Walker also testified: A. I am contending that per my statement earlier Mike Makings may have entered into discussions with GTCR that aided or helped these A through N activities occur.

Deposition of Patrice Walker at 219:21-23. Bobby Scott 22. Ms. [sic ­ Mr.] Scott testified as follows: Q. A. Do you know if Mr. Makings participated in any fraudulent conduct that harmed you? I don't know.

(See Exhibit 6,Deposition of Bobby Scott, Page 186, lines 16 to 18). RESPONSE TO 22 It is not disputed that Mr. Scott testified as shown on page 186 of his deposition transcript, but this is disputed to the extent it implies that whether or not Makings participated in any fraudulent conduct is solely based upon the personal knowledge of Mr. Scott. Mr. Scott also testified:
H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

Document 419

5 Filed 06/07/2006

Page 6 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. BY MR. FIRESTONE: Let's now be specific. Is there anything you are contending that Mr. Makings did after February 27, 2001, that hurt you in your individual capacity? A. Q. A. Transferring of assets. That I thought was only hurting you as a shareholder; is that correct? Point taken.

Deposition of Bobby D. Scott at 250:17-24 23. She [sic ­ he] continued: Q. So you can't articulate a single separate act or omission of Mr. Makings that caused harm to you?

Mr. Breger: Objection. Form. A. Not specifically, no.

(Deposition of Bobby Scott, Page 187, lines 17 to 21). RESPONSE 23 It is not disputed that Mr. Scott testified as shown on page 187 of his deposition transcript, but this is also disputed to the extent it implies that evidence of Mr. Makings' wrongful conduct causing injury to the plaintiffs depends upon the personal knowledge of Mr. Scott. Kimberly Hartman 24. Ms. Hartman testified as follows: Q. Well, when Mr. Makings terminated you, if it happened in March like you say it did, I will tell you that the board had already approved him as CEO. Using that as a basis, if he terminated you, then that is within the CEO's responsibilities, correct?

Mr. Berger: Objection. Form.
H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

Document 419

6 Filed 06/07/2006

Page 7 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q. A. A. A. Q. A.

Yeah. He has the right to do that? I believe so. The authority? Yes. Are you suing him because he violated responsibility of CEO in terminating you? some

It was with respect to terminated without cause, and I was -- per my management agreement, was due a severance.

(See Exhibit 9,Deposition of Kimberly C. Hartmann, Volume 1, Page 209 line 17 to Page 210, Line 7). RESPONSE TO 24 It is not disputed that Ms. Hartmann testified as shown on page 209:17 to 210:7, but it is disputed to the extent that it implies that whether Mr. Makings has done wrong depends upon the personal knowledge of Ms. Hartmann or any other Individual Plaintiff. Hartmann also testified: Q. BY MR. FIRESTONE: So if he terminated you in accordance with your senior management agreement, then he hasn't done anything wrong? But he didn't terminate me in accordance with my senior management agreement. Fair enough. Ms.

A. Q.

Deposition of Kimberly Hartmann at 211:3-8 (emphasis added). Julie McCollum 25. Ms. McCollum testified as follows: Q. So in your complaint in this matter -7 Filed 06/07/2006

H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

Document 419

Page 8 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q.

Uh huh. the fourth amended complaint, you're contending that he interfered with your senior management agreement after he became CEO? Mr. Stirling: Objection to the form.

A.

That is what I have contended, yes.

(See Exhibit 7,Deposition of Julie McCollum, Volume II, Page 304 lines 1 to 9). RESPONSE TO 25 This fact is undisputed. 26. Regarding Makings' interference with the Senior Management Agreement, Ms.

McCollum complained that her pay was reduced (See Exhibit 7, Deposition of Julie McCollum, Volume 11, Page 317 lines 13 to 17). RESPONSE TO 26 It is not disputed that Ms. McCollum complained that her pay was reduced, and that Makings contributed to that. In that regard Ms. McCollum testified: Q. Okay. How much in terms of numbers were you harmed by these activities? A. In January 2001 my contract was unilaterally cut 20 percent. Q. And you're blaming Mr. Makings for that; is that correct? A. I am saying he contributed to that. Q. Tell me how he contributed to getting your contract reduced. A. I believe he was acting as -- I believe he was acting in connection with GTCR.

Deposition of Julie McCollum at 317:11-21 27. Ms. McCollum, however, when asked exactly where those reductions came from

testified:
H:\Leapsource\Pleadings\Resp to SOF v2.doc

Case 2:02-cv-02099-RCB

Document 419

8 Filed 06/07/2006

Page 9 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. Q A.

Well, didn't Ms. Kirk make the decision to reduce your pay? I don't know who made the decision to reduce my pay. Then how do you tie Mr. Makings to the reduction? It was a LeapSource reduction. I don't know where it came from.

(See Exhibit 7, Deposition of Julie McCollum, Volume 11, Page 322 lines 11 to 18). RESPONSE TO 27 It is undisputed that Ms. McCollum so testified. It is disputed to the extent that it is implied that whether or not Makings contributed to GTCR's interference with LeapSource management, including through the executive salary reduction decision, is based solely on the personal knowledge or testimony of Ms. McCollum. 28. Ms. McCollum complained that the acts Makings took to interfere with her

Senior Management Agreement were some separate meetings that she was not involved with and did not know the content of and Ms. McCollum "stumbling" into a meeting of people in February 2001, including Makings, reviewing spread sheets, the content of which Ms. McCollum was not aware but she assumed was interfering based on the peoples' body language. (See Exhibit 7, Deposition of Julie McCollum, Volume 11, Page 306, line 8 to Page 317, line 5 and Page 334 lines 5 to page 336 line 12). When asked directly about the separate meetings with GTCR, she testified: Q. A. Q. Okay. Other than during the due diligence when ICG was purchased by LeapSource -Yeah. -- do you have any information that Mr. Makings had any communications with anybody at GTCR during the calendar year of 2000?
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

9 Filed 06/07/2006

Page 10 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q. A.

Other than the ICG? Correct. Okay. No, I have no knowledge of that.

(See Exhibit 7, Deposition of Julie McCollum, Volume II, Page 309, lines 1 to 9). RESPONSE TO 28 It is not disputed that Ms. McCollum testified as shown on page 309:1-9, but it is disputed to the extent that it implies that whether Mr. Makings communicated with GTCR in 2000 depends upon the personal knowledge or testimony of Ms. McCollum. She also testified: Q. So in November of 2001 Mr. Makings conducted some form of activity that led you to conclude he was CEO; is that correct? In November of 2000.

A.

MR. STIRLING: Object. BY MR. FIRESTONE: 2000. What was that activity? A. He started having meetings with other direct reports of himself with regards to transitions, which was an area that I was responsible for, but clearly was, in November, being excluded from. There started to be separate agendas, separate meetings with clients, separate meetings generating -- I'm not sure what, some activity, some numbers. That was the behavior when I connected it back to the question that he asked me in September. I wondered if it was related. I wondered if there was a connection with GTCR, and there wasn't some other venture going on. Deposition of Julie McCollum at 307:19-308:11. She also testified: Q. -- you concluded he was acting as CEO; is that correct?

MR. STIRLING: Object to the form. 10 Filed 06/07/2006

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

Page 11 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A.

BY THE WITNESS: To me, a CEO is an executive that is trying to execute a vision or a plan for the company. What I'm saying is I witnessed separate meetings and outcomes of those meetings that were different than what I understood the vision and direction of LeapSource to be, which caused me to believe we had multiple agendas.

Deposition transcript of Julie McCollum at 310:8-17 (emphasis added). In that regard, Ms. Kirk also testified: Q. What is the basis of that statement that Mr. Makings knew they were going into bankruptcy or that he helped them go into bankruptcy? He told me that he was running the numbers and that he was meeting with them daily on the projections, and they were making decisions together.

A.

Deposition of Christine Kirk, Volume IV at 833:17-22 (emphasis added). 29. As to the "secret meeting" she allegedly stepped into, Ms. McCollum admitted

that she couldn't see what was on the spreadsheets that the people were working on. She testified: Q. A. What was in them? I don't -- I couldn't tell you exactly what was in them, but they looked like P&L type projections, only from, you know, the distance I could see them. People that were in the room were not al people that were on COMSYS so ... So as you sit here today, you can't even articulate what information was in the spreadsheets? No.

A.

(See Exhibit 7, Deposition of Julie McCollum, Volume II, Page 335, lines 13 to 21). RESPONSE TO 29 This fact is disputed. Ms. McCollum also testified: A. I think one of the ones that comes to mind is somewhere in February of 2001, I can't remember why or for what
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

11 Filed 06/07/2006

Page 12 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. A. Q. A. Q.

purpose, but I was at the ICG offices. I stumbled across a group of individuals cranking through spreadsheets -- I'm sure accidentally, because I caught them off guard and very uncomfortable with my being there. And based on what I saw in the room, it looked like they were crunching numbers. They were creating spreadsheets. They had scenarios. This was in the middle of February 2001 sometime. So I called Chris Kirk, and I said, "I believe this subset of people that have been meeting routinely since November, I think they're creating plan B and it must be going somewhere." Deposition of Julie McCollum, Volume II at 334:5-18 Christine Kirk 30. Ms. Kirk testified: Q. A. Q. Well, he was COO, right? Yes. He was the person that was supposed to be looking after the operations, correct? Correct. One of those responsibilities would be the employees and how many you had and how much they paid, correct? Correct. So there is nothing improper that he would say, "I need to cut employees to reduce salaries," is there?

Mr. Berger: Objection. Form. No. And that's what COOs do, right? Correct.

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

12 Filed 06/07/2006

Page 13 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

(See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 823, line 14 to page 824, line 4). RESPONSE TO 30 It is not disputed that Ms. Kirk testified as shown on page 823:14 to 824:4, but it is disputed to the extent that is implied that Ms. Kirk's personal observation is the only basis for knowing whether Mr. Makings was actually participating in decision-making outside of the channels for proper corporate governance at LeapSource. Ms Kirk also testified: Q. What is the basis of that statement that Mr. Makings knew they were going into bankruptcy or that he helped them go into bankruptcy? He told me that he was running the numbers and that he was meeting with [GTCR] them daily on the projections, and they were making decisions together.

A.

Deposition of Christine Kirk, Volume IV at 833:17-22 31. Although Ms. Kirk alleged Makings violated the employees' Employment

Contracts, she didn't even know if he saw them. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 824, lines 13 to 15). RESPONSE TO 31 Although it is not disputed that Ms. Kirk didn't know whether Mr. Makings actually saw other employees' Employment Contracts, it isn't clear what this proves with respect to this Motion. Makings knew that the affected people were employees of LeapSource. Ms Kirk also testified: Q. A. So even if he put together a list and ultimately GTCR terminated them, Mr. Makings isn't at fault for that, is he? Depending on how they were terminated

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

13 Filed 06/07/2006

Page 14 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

Well, are you saying some of these were terminated improperly or not in accordance with their employment contracts? I believe so.

A.

Deposition transcript of Christine Kirk, Volume IV at 824:5-12 32. Ms. Kirk alleged that Makings acted improperly in terminating the employees

without giving them their severance, even though she admitted that it was the Board of Directors decision to take that action, not Makings', and that the decision wouldn't be his responsibility and she was even unaware whether he participated in that decision. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 825, lines 5 to 24). RESPONSE TO 32 Disputed to the extent that there is some apparent confusion in the statement, because Makings was both the CEO and a member of the Board of Directors at the time he terminated the remaining Plaintiffs on March 2, 2001, along with scores of other employees of LeapSource. See GTCR Statement of Facts in Support of Motion for Summary Judgment re Fiduciary Duty and Remaining Claims ¶¶ 17 and 18 (Docket No. 344). Kelly Ann Weekes 33. Ms. Weekes alleges that Makings interfered with the Purchase Agreement, but

was not a signatory to that agreement, was unaware whether she was listed in the agreement as a third party beneficiary, was unaware whether Makings was aware that she allegedly was an intended third party beneficiary, did not tell Makings she was an allegedly intended third party beneficiary of the agreement, couldn't recall anything Makings did to induce the GTCR defendants to breach the agreement, and could not say how she was damaged by

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

14 Filed 06/07/2006

Page 15 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Makings alleged inducement of the GTCR defendants. (See Exhibit 4, Deposition of Kelly Ann Weekes, Page 243, line 6 to Page 244, line 12). RESPONSE TO 33 Disputed because it is a poor paraphrase and mischaracterizes Ms. Weekes' testimony. Ms Weekes also testified: Q. A. Q. A. Q. A. What facts are you aware of that tend to show that Mr. Makings breached his fiduciary duties to the company? For me it was the transfer of his company back to him. Was there anything else? And also the conversations and dis -- disparaging remarks on Chris Kirk. Anything else? Those are probably the main ones.

Deposition of Kelly Weekes at 245:9-18 34. Ms. Weekes also alleged that Makings interfered with the Shareholder

Agreement, but she could neither recall how he allegedly interfered with it or how that alleged interference damaged her. (See Exhibit 4, Deposition of Kelly Ann Weekes, Page 244, line 17 to Page 245, line 2). RESPONSE TO 34 It is not disputed that Ms. Weekes testified as shown on page 244:17 to 245:2, but this is disputed to the extent that it implies that whether Mr. Makings interfered with the Shareholder Agreement or how it damaged plaintiffs depends upon the personal knowledge or testimony of Ms. Weekes. Ms. Weekes also testified: Q. Any other ways in which you personally were injured as a result of the sale of the ICG assets to Mr. Makings?
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

15 Filed 06/07/2006

Page 16 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q.

I was also in my mind owed amounts for the additional work that I did that Mike Makings agreed to. And this was based on the conversation you had with Mr. Makings before you received your termination letter?

A. Yes. Deposition testimony of Kelly Weekes at 210:7-12. She also testified: Q. How was the company damaged by those alleged actions? A. I think those disparaging remarks led to Chris's termination and I think that it caused a lot of distraction in the company. And with the transfer of his company to him, there may have been funds that weren't available to creditors and claims, other claims.

Deposition of Kelly Weekes at 245:21to 246:4 Patrice Ellen Walker 35. Ms. Walker testified that she could not identify what Makings may have done

to violate the agreements. (See Exhibit 5) RESPONSE TO 35 This fact is disputed, because it mischaracterizes her testimony. See, for example, Response to 20 above. Julie McCollum: 36. Ms. McCollum testified: Q. A. Q. A. Did you ever show Mr. Makings your stockholders agreement? I'm not aware that I did, no. Are you aware that he ever acquired a copy of your stockholders agreement? I don't know.
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

16 Filed 06/07/2006

Page 17 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

(See Exhibit 7, Deposition of Julie McCollum, Volume 11, Page 338 lines 17 to 22). RESPONSE TO 36 It is not disputed that Ms. McCollum testified as shown on page 338:17 ­22. 37. Ms. McCollum was asked how Makings breached her Stockholders

Agreement. Ms. McCollum testified: Q. What activities did Mr. Makings do to breach or help breach your stockholders agreement?

Mr. Stirling: Object to form. A. He was an officer of LeapSource, and it's the actions we've already described.

(See Exhibit 7, Deposition of Julie McCollum, Volume 11, Page 339 lines 4 to 8). RESPONSE TO 37 It is not disputed that Ms. McCollum testified as shown on page 339:4-8, although this answer leaves out all of the earlier testimony she referred to in the quoted answer. Ms. McCollum also testified: A. Well, as CEO he had fiduciary responsibilities to the shareholders and employees of LeapSource, and I believe that he was looking out for his own interests over the interests of LeapSource by the way they negotiated him getting ICG back.

Deposition of Julie McCollum at 342:6-10. 38. Those actions were the same actions complained of that allegedly violated the

Senior Management Agreement. The acts were the same separate meetings that she was not involved with and did not know the content of and Ms. McCollum "stumbling" into a meeting of people, including Makings, reviewing spread sheets, the content of which Ms.

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

17 Filed 06/07/2006

Page 18 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

McCollum was not aware but she assumed was interfering based on the peoples' body language. (See Exhibit 7) RESPONSE TO 38 This is disputed because it is a poor paraphrase and mischaracterizes her testimony. Ms. McCollum also testified: A Okay? As an example of many, and I'm not sure I can give you a list --

Q. Give me as many -A. -- that's exhaustive. Q. -- as you can. A. I think one of the ones that comes to mind is somewhere in February of 2001, I can't remember why or for what purpose, but I was at the ICG offices. I stumbled across a group of individuals cranking through spreadsheets -I'm sure accidentally, because I caught them off guard and very uncomfortable with my being there.

And based on what I saw in the room, it looked like they were crunching numbers. They were creating spreadsheets. They had scenarios. This was in the middle of February 2001 sometime. So I called Chris Kirk, and I said, "I believe this subset of people that have been meeting routinely since November, I think they're creating plan B and it must be going somewhere." Deposition of Julie McCollum at 333:25 to 334:18 39. Ms. McCollum was also unable to testify as to whether Mr. Makings even

knew of the Purchase Agreement. (See Exhibit 7, Deposition of Julie McCollum, Volume II, Page 347, lines 11 to 13).

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

18 Filed 06/07/2006

Page 19 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 39 Disputed because it mischaracterizes her testimony. The question asked was whether anyone "showed him" the agreement. In that regard Ms. McCollum testified. Q. A. Q. A. Okay. Mr. Makings is not a party to this purchase agreement, is he? He was not employed at that time. Are you saying at some point he became a party to this purchase agreement? I don't -- I wouldn't think legally he became part of this agreement, but as an officer of LeapSource I believe he's got responsibility in association with this agreement. Do you know if anybody ever showed him a copy of the purchase agreement? I'm not aware if they did or did not.

Q. A.

Deposition of Julie McCollum at 347:2-13 (emphasis added). 40. She admitted not having any knowledge that Makings did anything to violate

the Purchase Agreement in 2000. (See Exhibit 7, Deposition of Julie McCollum, Volume II, Page 348, lines 19 to 23). RESPONSE TO 40 It is undisputed that Ms. McCollum testified as shown on page 348:19-23 of her deposition, but it is disputed to the extent it implies that whether Makings did anything to violate the Purchase Agreement in 2000 depends upon her personal knowledge. 41. Ms. McCollum alleged a violation of the Purchase Agreement based only on (See Exhibit 7,

meetings of which she knew neither the agenda, nor the outcome. Deposition of Julie McCollum, Volume 11, Page 350, lines 5 to 7).

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

19 Filed 06/07/2006

Page 20 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 41 Disputed because it is a poor paraphrase and mischaracterizes her testimony. Christine Kirk 42. Ms. Kirk alleges that Makings "impacted" the Stockholders Agreement by

helping GTCR and AEG take LeapSource into bankruptcy. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 833, lines 14 to 16). RESPONSE TO 42 Undisputed that Kirk testified that Makings "impacted" the Stockholders Agreement by helping GTCR and AEG take LeapSource into bankruptcy. 43. When questioned about that allegation, Ms. Kirk testified: Q. What is the basis of that statement that Mr. Makings knew they were going into bankruptcy or that he helped them go into bankruptcy? He told me that he was running the numbers and that he was meeting with them daily on the projections, and they were making decisions together. But that is what COOs do, right? Yes. So he was just doing what a COO does? He was CEO at the time. Well, did the COO ever get replaced when Mr. Makings became CEO? I don't know. Well, even as CEO, that would be within his responsibilities, to determine the financial wherewithal of the company, correct? Correct.
Document 419

A.

Q. A. Q. A. Q. A. Q.

A.

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

20 Filed 06/07/2006

Page 21 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A.

So the mere fact that he went through that process, that didn't cause you harm, correct? No.

(See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 833, line 17 to page 834, line 11). RESPONSE TO 43 Undisputed that Kirk so testified. 44. Although Ms. Kirk also alleges that Makings interfered with the Purchase

Agreement by influencing GTCR to stop funding, she testified that she did not have a basis to dispute whether GTCR had made its own decision to stop funding. (See Exhibit 8, Deposition of Christine Kirk, Volume V, Page 859, lines 8 to 18). RESPONSE TO 44 Disputed to the extent that it is implied that because Kirk did not have the answer to the question that Makings could not have interfered with the Purchase Agreement by influencing GTCR's funding decision. Undisputed that Kirk testified that she did not have a basis to dispute it or not to dispute it. 45. Ms. Kirk admitted that GTCR had spoken with many individuals in making a

determination whether to stop funding and admitted that she didn't know what they based their decision on. (See Exhibit 8, Deposition of Christine Kirk, Volume V, Page 861, line 9 to Page 862, line 4). RESPONSE TO 45 Undisputed that Kirk testified that she did not know upon what GTCR based their decision to stop funding LeapSource. 21 Filed 06/07/2006

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

Page 22 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

46.

Ms. Kirk goes on to admit that although she believed Makings had influence

over GTCR's decisions, she had no "first hand knowledge" to support those allegations. (See Exhibit 8, Deposition of Christine Kirk, Volume V, Page 881, line 17 to Page 882, line 1). RESPONSE TO 46 Disputed to the extent it is implied that because Kirk did not have first hand knowledge of Makings influence over GTCR's decisions, such influence could not exist. 47. She admitted that she didn't know whether Makings influenced GTCR on a

legal obligation and that she didn't recall even showing Makings the Purchase Agreement. (See Exhibit 8, Deposition of Christine Kirk, Volume V, Page 890, lines 14 to 25). RESPONSE TO 47 Undisputed. 48. On February 27, 2001, GTCR faxed a letter to LeapSource's CEO, Plaintiff

Christine Kirk, notifying her that GTCR would no longer provide funding to LeapSource. (See Exhibit 12, letter to Christine Kirk from GTCR, dated February 27, 2001). RESPONSE TO 48 Undisputed that the letter attached as Exhibit 12 was sent; the letter said that GTCR would no longer provide funding pursuant to the Purchase Agreement. It did not say that it would no longer provide any funding to LeapSource. 49. At no time in LeapSource's existence did it have revenues sufficient to meet its

payroll obligations. (See Exhibit 8, Deposition of Christine Kirk, Volume III, Page 400, lines 3 to 6). RESPONSE TO 49
Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc Document 419

22 Filed 06/07/2006

Page 23 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

This is disputed because it is a paraphrase and mischaracterizes the actual facts and the meaning of the quoted testimony. With the promised funding from GTCR, LeapSource had sufficient revenues to meet its payroll obligations and did so; this testimony is not to the contrary. 50. As of February 27, 2001, and all times thereafter, LeapSource was insolvent.

(See Exhibit 13, Plaintiffs Responses to AEG's and Eaton's First Set of Requests for Admissions to Plaintiffs Gilman, Gupta, Hartmann, Kirk, McCollum, Powers, Scott and Walker's, Admission No. 3). RESPONSE TO 50 Undisputed. 51. Regarding the breach of fiduciary duties, Plaintiffs testified as follows:

Tom Gilman Q. Let's break it down right there now. Did Michael Makings have any authority as you know -if you know, as you sit here today, in November of 2000 to make a decision about the funding of LeapSource by GTCR? A. Q. No. Now, how about for the whole calendar year 2000, do you have any firsthand knowledge that Mr. Makings had any input over GTCR to get funding under the purchase contract?

Mr. Breger: Objection: Form. The Witness: I believe that Mike had conversations with GTCR in December of `00. Q. A. By Mr. Firestone: I am not sure that answers my question. I'm sorry.
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

23 Filed 06/07/2006

Page 24 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

Do you believe Mr. Makings had some kind of ability, authority, discretion, approval, to get money from GTCR to fund LeapSource under the purchase contract.

Mr. Breger: Objection. Form. The Witness: Not that I am aware of. (See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 346, line 15 to Page 347, line 10). RESPONSE TO 51 Undisputed that Gilman so testified. 52. Tom Gilman was allegedly present during a lunch with Makings and several

members of the board in December 2000 to January 2001 where the subject of Makings heading LeapSource, him possible buying back ICG, and future funding for LeapSource was discussed. (See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 347, line 11 to Page 351, line 15). RESPONSE TO 52 Undisputed that Mr. Gilman testified as transcribed in the testimony referred to. 53. However, when asked specifically about the conversation, Gilman testified: But did it [the conversation] violate some kind of corporate governance rule you are aware of? A. No, because it was just a conversation at that point.

(See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 351, lines 18 to 21). RESPONSE TO 53 Disputed to the extent that it implies that the Gilman believed the conversation was appropriate. Gilman testified:

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

24 Filed 06/07/2006

Page 25 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

Did it fall into that category? Did you think Mr. Makings' discussions were in the area of improper such that you needed to raise a concern under your fiduciary duties as a board member or officer of the company?

MR. BREGER: Objection. Form. THE WITNESS: I felt that ethically it was an inappropriate conversation to have. Gilman Dep., at p. 351:9-15. 54. Gilman admits that no decisions were made at that meeting, and that he did not

know if any other follow up meetings occurred. (See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 354, lines 1 to 6). RESPONSE TO 54 Disputed to the extent that Gilman actually testified that he didn't recall if any decisions were made at the meeting and didn't know if any follow-up meetings occurred. 55. Gilman also admits that Makings had no ability to force funding under the

Purchase Agreement prior to February 28, 2001. (See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 354, lines 19 to 23). RESPONSE TO 55 Undisputed that Gilman testified that prior to February 28, 2001 Makings did not have the ability to force GTCR to fund LeapSource under the Purchase Agreement. 56. When asked about firsthand knowledge of Makings negotiating with GTCR,

Gilman testified: Q. So you don't have any firsthand knowledge other than this luncheon you had with Mr. Nolan, Mr. Yih, yourself and Mr. Makings? Other than conversations, I don't know firsthand.
Document 419

A.

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

25 Filed 06/07/2006

Page 26 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. Q. A. Q. A. Q. A. Q. A.

I am not worried about conversations. I want your firsthand knowledge. No. Mr. Makings never told you that? Told me what? That he had a conversation in November of 2000 with GTCR. No. And nobody from GTCR told you that? I can't recall if they did or not. You didn't see any pieces of paper or electronic information to support that statement? Not that I recall.

(See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 404, lines 4 to 21). RESPONSE TO 56 Undisputed that Gilman so testified. 57. Although Gilman believed Makings sold assets of the company without board

approval, he only had that opinion because of conversations with his lawyers. (See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 411, lines 1 to 24). RESPONSE TO 57 Undisputed that Gilman testified as transcribed in the cited testimony. 58. Gilman admits that he had no personal knowledge that Makings knew of his

CEO Solutions contracts with LeapSource, the Senior Management Agreements, or the Purchase Agreement. (See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 419, lines 7 to 25 and Page 420, lines 1 to 2). 26 Filed 06/07/2006

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

Page 27 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A Q. A. RESPONSE TO 58 Disputed to the extent that it mischaracterizes Gilman's testimony regarding the CEO Solutions contract. Gilman testified Tina told him Makings knew of this contract. He said: Q. And have you ever seen anything in writing from GTCR saying they wouldn't pay the CEO Solutions bill? Not that I can recall. Do you even know if Mr. Makings knew about the existence of the CEO Solutions contract? It is my understanding that he did. Who told you that? Tina.

Gilman Dep., at p. 419:4-11. This is further disputed to the extent that it implies that Gilman's personal knowledge is required to establish whether Makings was aware of the contract. 59. Gilman didn't know of any conversations Mr. Makings had about intellectual

property that caused him harm. (See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 420, lines 22 to 25 and Page 421, lines 1 to 2). RESPONSE TO 59 Disputed to the extent that it mischaracterizes the testimony of Gilman. He testified: Q. Do you have any firsthand knowledge that Mr. Makings spoke to a third party about the intellectual property of LeapSource that has caused you harm so that you should get punitive damages?

MR. BREGER: Objection. Form.
Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc Document 419

27 Filed 06/07/2006

Page 28 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

THE WITNESS: Not that I can recall. Gilman Dep., at p. 420:22-421:2. 60. Gilman also had no firsthand knowledge that Mr. Makings participated in the (See Exhibit 14, Deposition of Thomas

decision to put LeapSource into bankruptcy. Gilman, Volume 2, Page 422, lines 10 to 15). RESPONSE TO 60 Undisputed. 61.

Although Gilman alleges in the abstract that Mr. Makings gave a funding plan

to GTCR that affected its discussions when asked of the plan he testified: Q. A. Q. A. Q. A. This funding plan, I want to make sure it is the same one we talked about earlier that you have never seen, correct? That is correct. It is something that you heard from Ms. Rhodes or someone else that he theoretically gave to GTCR, correct? That's right. You never asked Mr. Nolan or Mr. Rauner or anybody else at GTCR for Mr. Makings' plan, did you? Not that I recall.

(See Exhibit 14, Deposition of Thomas Gilman, Volume 2, Page 424, lines 1 to 11). RESPONSE TO 61 Undisputed that Gilman so testified, but disputed if it is meant to imply that that Makings did not give a funding plan of his own to GTCR. Makings testified: Q. Okay. At anytime between January 1, 2001 and the time you were appointed CEO, and with the exception of that ICG revitalized activities and budget that we looked at earlier today, did you ever present GTCR with an alternative funding plan of any sort?
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

28 Filed 06/07/2006

Page 29 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 62.

A.

I believe it was just the -- that 2-7 document and the March 3rd document.

Makings Dep., at p. 310:10-16. Christine Kirk Kirk had no knowledge that Makings was being anything but candid with her (See Exhibit 8, Deposition of

during 2000 about what he was doing at LeapSource. Christine Kirk, Volume IV, Page 764, line 11 to 14). RESPONSE TO 62 Ms. Kirk actually testified as follows: Q.

Did you ever find out that he had been less than candid with you during the calendar year of 2000 about what he was doing and not doing? Not that I recall.

A.

Kirk Dep., at p. 764:11-14. 63. Although Ms. Kirk, alleges Makings assisted GTCR in breaching their fiduciary duties by talking to GTCR, she admitted it was within his rights by her direction and his employment agreement to talk to GTCR about anything they asked. Specifically she testified: Q. Did you give Mr. Makings a directive, "Do not talk to GTCR"? A. Q. A. Q. A. Q. No. They had already reached out and contacted him. Well, as COO of a company, shouldn't he talk to the board members if they ask him questions? Potentially, yes. What is "potentially" about it? It depends on whether -- what the discussion is about, what the goal of the meeting is. Do you have a list of topics that you prohibited Mr. Makings from talking to the GTCR representatives in January 2001?
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

29 Filed 06/07/2006

Page 30 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Mr. Breger: Objection. Form. A. Q. A. Q. I don't believe so. By Mr. Firestone: Did you ever tell Mr. Makings, "There are certain areas I do not want to you talk to with GTCR"? No. So wasn't it within his rights, under the employment agreement and your directions, to talk to GTCR about anything they might ask questions about?

Mr. Breger: Objection. Form. A. I believe so.

(See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 771, line 22 to Page 772, line 20). RESPONSE TO 63 Disputed to the extent the introductory statement misrepresents the actual testimony. Mr. Makings was free to speak to GTCR, but that does not mean or imply that the speech could not be wrongful or that Mr. Makings would have no liability for the consequences of his speech. For example, Makings discussed with GTCR getting his ICG company back, as well as the terminations of Christine Kirk and Thomas Gilman. See, for example, Sean Cunningham's notes at p. GTCR 012268. 64. Kirk also alleged that Makings undermined her authority by telling two

employees that they needed to take sides and that she was on her way out. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 773, lines 3 to 25 and Page 774, lines 1 to 4). RESPONSE TO 64 Undisputed.

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

30 Filed 06/07/2006

Page 31 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

65.

However, Kirk admitted that neither employee stopped listening to her, neither

was insubordinate, and after she asked Makings to stop making those statements, she could not recall any other incidents. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 774, lines 5 to 25 and Page 775, lines 1 to 23). RESPONSE TO 65 Undisputed. 66. Kirk did not believe that LeapSource's financial troubles were caused by

Makings. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 790, lines 17 to 20). RESPONSE TO 66 Disputed because this mischaracterizes the deposition testimony of Christine Kirk. She testified: Q. And you are not saying that Mike Makings put LeapSource in financial straits, are you?

MR. BREGER: Objection. Form. A. I don't believe so.

Kirk Dep., at p. 790:17-20. 67. Although Kirk alleges Makings discussions with GTCR assisted in their

decision to cut off funding, when asked about those communications, she testified: Q. A. Q. So you have no firsthand knowledge of any of the conversations between Mr. Makings, Mr. Yih, correct? Correct. You have no firsthand knowledge between any conversations between Mr. Nolan and Mr. Makings that support your allegations he participated in cutting off funding?
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

31 Filed 06/07/2006

Page 32 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 800, line 1).

A. Q.

That is correct. Same question with Mr. Cunningham you don't have any firsthand knowledge that Mr. Makings and Mr. Cunningham talked about the decision to cease funding by GTCR? No. I was not present at those conversations. And you haven't seen any reports of those conversations, have you? I have seen Sean Cunningham's notes. That's what you saw in this litigation, correct? Correct. But when you looked at this complaint and said it was accurate, you didn't have that information? No. I just had what Dan and Joe and Sean told me. And let's break that down. What did Mr. Yih say, "Mr. Makings is in agreement with us that GTCR shouldn't pay any more"? No.

A. Q. A. Q. A. Q. A. Q.

A.

(See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 799, lines 1 to 25 and Page

RESPONSE TO 67 Undisputed that Kirk so testified, but deny it is conclusive as to whether or not Makings encouraged or influenced GTCR in the decision to stop funding LeapSource. 68. In fact, Kirk admitted that Makings couldn't have done anything to impact

GTCR's alleged control over LeapSource. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 809, lines 15 to 24).

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

32 Filed 06/07/2006

Page 33 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 68 Disputed to the extent that the cited portion of Kirk's testimony deals specifically with GTCR's control of the LeapSource Board of Directors. She testified: Q. So let's break this down. Let's talk about the Board. Did the control of the board ever change from the day you believe GTCR had control in 1999 through 2001? No. So if they controlled the board, "they" being GTCR, isn't it true, then, that they could have controlled the company? Technically, yes. Is it your testimony they were controlling the company for the calendar year 2000? Ultimately, yes. So again, then anything Mr. Makings did or didn't do couldn't impact GTCR's control, correct?

A. Q. A. Q. A. Q.

MR. BREGER: Objection. Form. A. That is correct.

Kirk Dep., at p. 809:3-18. 69. Kirk does not allege that Makings assisted in GTCR's control over

LeapSource. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 820, lines 12 to 14). RESPONSE TO 69 Disputed to the extent that the deposition excerpt misstates the testimony of Christine Kirk. Ms. Kirk testified: Q. And you are not contending that Mr. Makings is responsible for any of those decisions that you put into Category F, correct?
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

33 Filed 06/07/2006

Page 34 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A.

I don't believe so.

Kirk Dep., at p. 820:15-18. 70. Kirk also does not have a basis to contend that he participated in GTCR's

refusal to sell LeapSource. (See Exhibit 8, Deposition of Christine Kirk, Volume IV, Page 820, lines 19 to Page 821, line 1). RESPONSE TO 70 Disputed to the extent that the deposition excerpt mischaracterizes the testimony of Christine Kirk. Ms. Kirk testified: Q. Paragraph G, you are not contending Mr. Makings participated in GTCR's refusal to sell LeapSource, are you? I don't know what impact he had with their refusal. And you don't have any basis to say that he participated, correct? Not that I can recall.

A. Q. A.

Kirk Dep., at p. 820:19-821:1. 71. Kirk, admits that she doesn't have a basis to dispute that GTCR made its own

decision to stop funding. (See Exhibit 8, Deposition of Christine Kirk, Volume V, Page 859, lines 14 to 18). RESPONSE TO 71 Disputed to the extent it misrepresents Kirk's testimony in this regard. She actually stated that "I don't have a basis to dispute it or not dispute it." 72. Kirk doesn't even know what they based their decision on. (See Exhibit 8,

Deposition of Christine Kirk, Volume V, Page 862, line 4).

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

34 Filed 06/07/2006

Page 35 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 72 Undisputed that Kirk testified that she personally did not know upon what GTCR based the decision to stop funding LeapSource. 73. Kirk also testified that Makings didn't have anything to do with GTCR

allegedly usurping her duties. (See Exhibit 8, Deposition of Christine Kirk, Volume V, Page 862, lines 13 to Page 863, lines 1 to 2). RESPONSE TO 73 Disputed that Makings did not have anything to do with GTCR usurping her duties. Kirk testified: Q. Now, you are not contending that Mr. Makings participated in those decisions as referenced ­ those decisions and conduct as referenced in Exhibit 271, are you? I believe that in December of 2000 he influenced GTCR to bring Dan Yih in. You think Mike Makings convinced GTCR to bring Dan Yih into the company? He influenced that decision. How did Mr. Makings influence that decision? By having meetings with GTCR without my knowledge.

A. Q. A. Q A.

Kirk Dep., at p. 863:8-19. Julie McCollum 74. Ms. McCollum essentially had nothing new to add to her allegation that

Makings breached his fiduciary duties stating only: A. Once again, it goes back to the conversation I had with Mr. Makings with him wanting to reach out to some of these individuals, and then subsequent to that, a group of
Document 419

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

35 Filed 06/07/2006

Page 36 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

individuals kind of following another agenda led me to believe that he was in connection with either one or all of these people, which assisted them in the breach of their fiduciary duties. (See Exhibit 7, Deposition of Julie McCollum, Volume 11, Page 345, lines 15 to 21.) RESPONSE TO 74 Disputed to the extent that the McCollum deposition excerpt is taken out of context and omits the earlier testimony referred to. McCollum testified: Q. A. Q. A. Q. A. What did Mr. Makings do that you conclude he aided and abetted someone else in breaching their fiduciary duties? And which someone else are you referring to? All the people you're suing in this case. Do you know? Can I look at the paragraph? Absolutely. I think it's on Page 97, Paragraph 450. Just want to make sure. MR. STIRLING: Object to the form. BY THE WITNESS: Once again, it goes back to the conversation I had with Mr. Makings with him wanting to reach out to some of these individuals, and then subsequent to that, a group of individuals kind of following another agenda led me to believe that he was in connection with either one or all of these people, which assisted them in the breach of their fiduciary duties. McCollum Dep., at p. 345:4-21. Kimberly Hartman 75. Ms. Hartman felt the sale of ICG's assets to ICG Group was improper, but only

because of her perception of the value given for the transfer. (See Exhibit 9, Deposition of Kimberly Hartman, Page 156, line 13 to Page 157, line 15).

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

36 Filed 06/07/2006

Page 37 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 75 Disputed to the extent that is misrepresents the testimony of Hartmann. Hartmann testified that LeapSource bought the ICG assets for $10M in January/February 2000, and sold it back to Makings in March 2001 for the forgiveness of a $2.5M note. These values are not based on Hartmann's perception, but rather, are undisputed facts. Moreover, at the time of the March 2001 transfer of ICG Assets to Makings, the $2.5M note was worthless because LeapSource was insolvent and defendants were shutting it down. Q. Ms. Hartmann, I don't need you to do that. I am asking your opinion. What factual basis do you have, as you sit here today under oath, to tell me that the sale from LeapSource in March of 2001 to ICG Group, Inc., was improper? A. I know that based on Note 2 in this LeapPak that we are looking at, the paragraph reads: The company completed -- company being LeapSource -- completed the acquisition of ICG Consulting, Inc., ICG, on February 8, 2000, effective as of January 1, 2000, for approximately $10 million in cash and debt. I believe that we paid -- LeapSource paid $10 million for a company, because they believed it was worth $10 million. So anything less than that would make me wonder why it - there would be that much of a decrease. Hartmann Dep. at 156:11-25 76. However, Ms. Hartman couldn't put a value on the assets at the time of the

original purchase or upon the sale to ICG Group. (See Exhibit 9, Deposition of Kimberly Hartman, Page 157, line 19 to Page 161, line 3).

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

37 Filed 06/07/2006

Page 38 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 76 Disputed to the extent that is misrepresents the testimony of Hartmann. Hartmann testified that LeapSource bought the ICG assets for $10M, which was her belief of the value of the ICG asset at the time of the LeapSource purchase of ICG. Further disputed to the extent that Hartmann merely made it clear that she is not testifying in this case as a valuation expert. 77. Ms. Hartman testified she believed Makings acted improperly as follows: Q. A. Q. A. Q. A. Q. Just give me the laundry list first, and then we will get into them. Okay. He made decisions that allowed clients to defer payments to LeapSource. Anything else? He made decisions as to who was going to be terminated at LeapSource. Anything else? He provided a budget -- an alternative budget to GTCR that was unknown to Chris Kirk and others. Under his authority, assets of LeapSource were transferred to existing clients that were disadvantageous to the minority shareholders of LeapSource. He participated in that he was the recipient of ICG, an asset of LeapSource, in that ultimate -- in that transaction. He terminated me without cause. He terminated others without cause. That's what I can think of right now. (See Exhibit 9, Deposition of Kimberly Hartman, Page 175, line 24 to Page 176, line 17). RESPONSE TO 77 Undisputed Hartmann so testified.
Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc Document 419

38 Filed 06/07/2006

Page 39 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

78.

Ms. Hartman testified, however, that she learned of the plans to defer payment

from someone else. (See Exhibit 9, Deposition of Kimberly Hartman, Page 177, lines 2123). RESPONSE TO 78 Undisputed that Hartmann testified she heard of Makings agreements to defer receivables payments from Comsys and Xpedior from someone other than Makings. 79. Further, that action could be part of his responsibilities as COO. (See Exhibit

9, Deposition of Kimberly Hartman, Page 179, lines 5 to 10). RESPONSE TO 79 Undisputed that Hartmann so testified, but deny that Makings actually had any authority to defer the payment of LeapSource receivables. 80. Ms. Hartman again admits that she had no firsthand knowledge that Makings She said her knowledge was from

transferred assets to other companies improperly.

conversations with others. (See Exhibit 9, Deposition of Kimberly Hartman, Page 195, lines 1 to 10). RESPONSE TO 80 Disputed to the extent it is implied that Makings assets transfers were done properly and legally when, in fact, the cited portion of the deposition testimony of Hartmann merely references the Comsys assets transfer. It is further disputed to the extent it implies that only first hand knowledge of an illegal asset transfer is admissible. 81. Ms. Hartman admits Makings could not make the decision for GTCR to fund

LeapSource, and that if he was asked his opinion, and he gave it, that would be fine. (See Exhibit 9, Deposition of Kimberly Hartman, Page 206, lines 3 to 21).
Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc Document 419

39 Filed 06/07/2006

Page 40 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 81 Disputed to the extent that the excerpt of Hartmann's testimony is misleading. She testified: Q. In fact, Mr. Makings didn't have any control over whether or not GTCR funded LeapSource, did he -MR. BREGER: Objection. Form. Q. BY MR. FIRESTONE: -- in the calendar year 2000?

MR. BREGER: Objection. Form. A. Q. A. Q. A. Q. A. Q. A. I am not -- he may have had influence, but not control. BY MR. FIRESTONE: He couldn't make the decision, could he? Decision to? To whether GTCR should fund LeapSource. No. I think that was GTCR's decision. And when you say he had influence, what do you mean by that? He talked to them about it and gave his opinion? I think they asked him his opinion, yes. Was it improper for him to give his opinion? If someone asked an opinion, to share it probably is fine.

Hartmann Dep., at p. 206:3-21. 82. Ms. Hartman, like the other plaintiffs, says Makings had improper discussions (See Exhibit 9,

with GTCR, but she doesn't know what those conversations were. Deposition of Kimberly Hartman, Page 207, lines 2 to 4).

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

40 Filed 06/07/2006

Page 41 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

RESPONSE TO 82 Disputed because it attempts to characterize a single excerpt from the testimony of Ms. Hartmann and somehow attribute it to all of the plaintiffs. supported by the testimony cited. 83. Ms. Hartman admits that Mr. Makings didn't participate in the alleged fraud The statement is not

with GTCR and didn't have knowledge of it. (See Exhibit 9, Deposition of Kimberly Hartman, Page 225, lines 5-23). RESPONSE TO 83 Undisputed that Hartmann so testified only with respect to specific allegations of fraud described in three paragraphs of the pleadings. She did not testify and was not asked about GTCR's fraudulent conduct generally, or any other allegations or evidence of fraud. 84. When referring to Mr. Makings' influence at GTCR, Hartman goes on to admit

that "I don't know what he said, and I don't know if they were honest statements or not." (See Exhibit 9, Deposition of Kimberly Hartman, Page 255, lines 22 to 23). RESPONSE TO 84 Disputed to the extent that the excerpt of Hartmann's testimony is misleading and out of context. She testified: A Well, I -- I do understand that Mr. Makings did make remarks about the viability of LeapSource and its management team that ultimately influenced ­ How do you know it had any influence? How do you know that GTCR didn't just listen to it and it went in through one ear and out the other? It is possible that could have happened.

Q.

A.

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

41 Filed 06/07/2006

Page 42 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

You don't know what event actually occurred, meaning, they listened and brushed him off, or they listened and followed his vision, do you? I don't know what Mr. Makings' conversations were, specifically between him and GTCR. And, therefore, you don't know whether Mr. Makings' statements caused you any damages, do you? I do know that he was operating with self-interest, which by -- by definition is not representing other shareholders, of which I was one of them, of LeapSource.

A. Q. A.

Hartmann Dep., at p. 256:2-19. Patrice Ellen Walker 85. Although Ms. Walker alleges Makings was having conversations with GTCR,

she too didn't know what they were about. (See Exhibit 5, Deposition of Patrice Ellen Walker, Page 188, lines 12 to 13). RESPONSE TO 85 Disputed to the extent that because Walker was not aware of the content of conversations between Makings and GTCR, such conversations did not take place, or that she does not have any knowledge about such conversations. Walker testified that Makings told her GTCR had been calling him, but that she did not recall what was discussed. She also testified: Q. A. Q. A. What did Mr. Makings say that led you to conclude he had a relationship with GTCR? He suggested that they called him often. Did he say that specifically, "GTCR is calling me"? Yes, he said he had multiple conversations with GTCR.

Case 2:02-cv-02099-RCB H:\Leapsource\Pleadings\Resp to SOF v2.doc

Document 419

42 Filed 06/07/2006

Page 43 of 92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. Q. A.

And he told you that in October, November of 10 2000, correct? Yes. Did he tell you what was discussed? Not specifically, not that I can recall.

Walker Dep., at p. 188:2-13. 86. Ms. Walker also testified that she never heard from Kirk, or anyone else at

LeapSource, that Mr. Makings wasn't performing under his employment agreement. (See