Free Response - District Court of Arizona - Arizona

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John J. Bouma (#001358) James R. Condo (#005867) Patricia Lee Refo (#017032) Joseph G. Adams (#018210) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 E-Mail: [email protected] Attorneys for Defendant Kirkland & Ellis IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Diane Mann, as Trustee for the Estate of LeapSource, Inc. et al., Plaintiffs, No. CIV 02-2099 PHX RCB KIRKLAND & ELLIS' RESPONSE TO PLAINTIFFS' STATEMENT OF ADDITIONAL FACTS PRECLUDING SUMMARY JUDGMENT (Assigned to Hon. Robert C. Broomfield)

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

12 13 14 Defendants. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 GTCR Golder Rauner, L.L.C.; a Delaware limited liability company, et al.,

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Pursuant to Local Rule 56.1, and Federal Rule of Civil Procedure Rule 56, Kirkland & Ellis submits the following response to Plaintiffs' Statement of Additional Facts Precluding Summary Judgment. 57. 1) at 12:3-5. RESPONSE: Not disputed for purposes of this motion, but not material. 58. David Eaton practiced law in the field of financial reorganizations and David Eaton has been licensed to practice law since 1978. Eaton Dep. (Ex.

bankruptcies at Schulman, Silverman & Kreiter between 1978 and 1986. David Eaton was a partner at Schulman, Silverman & Kreiter. Eaton Dep. (Ex. 1) at 27:17-28:12. RESPONSE: Disputed on the ground that it is incomplete. In his deposition, Eaton testified that his practice during that time period included financial reorganizations, bankruptcies,

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general corporate work and antitrust-related matters. Eaton Dep. (Ex. 1 to PSOF) at 28:915.) Eaton also testified that the firm was eventually known as Schulman, Silverman & Eaton. (Ex. 1 to PSOF at 27:7-23.) 59. David Eaton was then a law partner at the law firm of Katten, Muchin &

Zavis between 1986 and 1990 practicing in the fields of finance, financial reorganizations and bankruptcies. His work at Katten, Muchin & Zavis was similar to the work he subsequently performed for Kirkland & Ellis. Eaton Depo. (Ex. 1 to PSOF) at 26:8-23. RESPONSE: Not disputed for purposes of this motion. 60. David Eaton became the head workout and bankruptcy counsel at

Continental Bank of Illinois in 1990 and remained in that position until 1991. Eaton Dep. (Ex.1) at 12:3-5. RESPONSE: Not disputed for purposes of this motion. This fact is included in K&E's SOF ¶ 1. 61. David Eaton was a partner at Kirkland & Ellis between 1991 and 1997

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working in the field of financial restructuring, corporate reorganization and bankruptcy in the firm's corporate reorganization and bankruptcy department. Eaton Dep. (Ex. 1) at 13:16-18 and 25:2-8. RESPONSE: Not disputed for purposes of this motion. 62. While David Eaton worked as an attorney at K & E he did do work for a

GTCR portfolio company. Eaton Dep. (Ex. 1) at 34:1-8. RESPONSE: Disputed. Eaton testified that he "consulted on one matter relating to a GTCR portfolio company," and that he was "involved in the financial restructuring of that company." (Eaton Dep. at 34:5-6, 35:7-8, attached as Ex. 6 to Adams Decl.1) K&E submits certain exhibits attached to the supplemental Declaration of Joseph G. Adams ("Adams Decl.") with this reply to respond to new factual matters raised by plaintiffs in their response brief and their supporting statement of additional facts.
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63.

While David Eaton worked as an attorney at K & E he was involved in the

financial restructuring of one of GTCR's portfolio clients. Eaton Dep. (Ex. 1) at 34:1-37:3 and 58:15-21. RESPONSE: Disputed. Eaton's testimony referred to "GTCR portfolio company," not a "portfolio client." (Eaton Dep. at 34:5-6, attached as Ex. 6 to Adams Decl.) The time period at issue was somewhere between 1991 to 1997, when he worked as a partner at K&E, not the time frame at issue in this case during which he was "of counsel" to K&E. 64. David Eaton practices law in Kirkland & Ellis' corporate reorganization and

bankruptcy department. (Ex. 1 to PSOF at 13:16-18.) RESPONSE: Not disputed for purposes of this motion to the extent that it refers to Eaton's practice since May 1, 2003. 65. David Eaton's practice of law began to focus exclusively on financial

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reorganizations and bankruptcy in 1985. Eaton Dep. (Ex. 1) at 28:21-29:6. RESPONSE: Not disputed. 66. David Eaton's practice of law has focused almost entirely in the area of

corporate reorganizations and bankruptcy since he became head workout and bankruptcy counsel at Continental Bank of Illinois. Eaton Dep. (Ex. 1) at 28:21-29:6. RESPONSE: Not disputed for purposes of this motion. 67. David Eaton's relationship as an "of counsel" attorney with Kirkland & Ellis

began in the summer of 1999. Eaton Dep. (Ex. 1) at 23:3-6; Letter from Kirkland & Ellis to David Eaton dated June 11, 1999 with Bates range numbers KE000293 to 295 (Ex. 2). RESPONSE: Not disputed for purposes of this motion.

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68.

David Eaton's relationship as an "of counsel" attorney with Kirkland & Ellis

ended on June 30, 2001. Eaton Dep. (Ex. 1) at 112:7-9; Letter from Kirkland & Ellis to David Eaton dated June 11, 1999 with Bates range numbers KE000293 to 295 (Ex. 2). RESPONSE: Disputed. Eaton's testimony and Exhibit 2 state only that the "of counsel" relationship would last "through" June 30, 2001. 69. While acting in an "of counsel" capacity as an attorney for K&E between

1999 and 2001 David Eaton was handling financial reorganization and bankruptcy matters for Kirkland clients. Eaton Dep. (Ex. 1) at 48:21-49:2. RESPONSE: Disputed. For the time period relevant to this motion (January 2001 through August 2001), Eaton's work as an "of counsel" attorney at K&E was limited to one matter for a single client unrelated to LeapSource. (SOF ¶ 12.) Further, Eaton limited his "of counsel" work to a part-time basis because he "did not want to practice law full-time" and he wanted to "be involved in other businesses." (SOF ¶¶ 4, 5.) 70. While acting as an "of counsel" lawyer for K&E David Eaton maintained an

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office at K&E. Eaton Dep. (Ex. 1) at 47:13-48:1. RESPONSE: Not disputed for purposes of this motion, but only for use in connection with the part-time work that Eaton performed as an "of counsel" attorney billing time through K&E to one or more of its clients. In addition, Eaton maintained a regular office at AEG's offices in Highland Park, Illinois from which he performed AEG work. (SOF ¶ 16.) 71. While acting as an "of counsel" lawyer for K&E David Eaton had two

floating secretaries. Eaton Dep. (Ex. 1) at 48:2-5. RESPONSE: Not disputed for purposes of this motion, but only for use in connection with the part-time work that Eaton performed as an "of counsel" attorney billing time through
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K&E to one or more of its clients. 72. While acting as an "of counsel" lawyer for K&E David Eaton maintained a

direct-dial phone number at K&E. Eaton Dep. (Ex. 1) at 48:6-8. RESPONSE: Not disputed for purposes of this motion that K&E maintained a direct-dial number at K&E for Eaton for use in connection with the part-time work that Eaton performed as an "of counsel" attorney billing time through K&E to one or more of its clients. 73. While acting as an "of counsel" lawyer for K&E David Eaton had access to

the K&E voice mail system. Eaton Dep. (Ex. 1) at 48:6-8. RESPONSE: Not disputed for purposes of this motion, but only for use in connection with the part-time work that Eaton performed as an "of counsel" attorney billing time through K&E to one or more of its clients. 74. While acting as an "of counsel" lawyer for K&E, David Eaton was covered

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on the K&E errors and omissions insurance policy. Eaton Dep. (Ex. 1) at 48:9-20. RESPONSE: Not disputed for purposes of this motion that, for conduct in connection with his duties as an "of counsel" lawyer for K&E, Eaton had the same insurance coverage as other lawyers covered by the K&E insurance policy. 75. While acting as an "of counsel" lawyer for K&E David Eaton had

contractually estimated at least 1,000 to 1,200 hours as the minimum amount of time he would bill on K&E matters. Letter from Kirkland & Ellis to David Eaton dated June 11, 1999 with Bates range numbers KE000293 to 295 (Ex. 2). RESPONSE: Disputed. There is no record support for the assertion that Eaton had contracted to work any particular amount of time. The document states that "there is no minimum hours that you must work," and only that Eaton and K&E "targeted approximately 1,000 to 1,200 hours per annum" as the amount of work Eaton would perform. (Ex. 2 to PSOF.)
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76.

While acting as an "of counsel" lawyer for K&E David Eaton spent the great

majority of his time working on K&E business. Eaton Dep. (Ex. 1) at 50:3-9. RESPONSE: Disputed. There is no record support for this statement. In his deposition, Eaton testified that he spent the majority of his time as an "of counsel" lawyer working on K&E business until early 2001, when he spent more time working on matters outside his K&E relationship. Moreover, Eaton was not "acting as an `of counsel' lawyer for K&E" while working on other matters. (SOF ¶ 5, 9, 13.) 77. Kevin Evanich, a partner with Kirkland & Ellis, contacted David Eaton

concerning LeapSource sometime in February of 2001. Eaton Dep. (Ex. 1) at 35:12-21 and 55:1-22. RESPONSE: Not disputed for purposes of this motion. 78. 21:11-14. RESPONSE: Disputed to the extent that this statement insinuates that the referral was for Eaton to work for GTCR. Evanich testified that he referred Eaton "to talk to GTCR about working for LeapSource." (Ex. 3 to PSOF at 21:11-14.) 79. At the same time that David Eaton was an "of counsel" attorney at K&E Kevin Evanich referred David Eaton to GTCR. Evanich Dep. (Ex. 3) at

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GTCR was the controlling shareholder of LeapSource. Letter from Kirkland & Ellis to David Eaton dated June 11, 1999 with Bates range numbers KE000293 to 295 (Ex. 2); Eaton Dep. (Ex. 1) at 67:13-68:7. RESPONSE: Disputed. There is no record support for this broad assertion. Eaton served as an "of counsel" attorney before LeapSource was formed. The cited deposition testimony provides only that Eaton was aware that GTCR had "a controlling interest" in LeapSource when he first met with GTCR.
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80.

GTCR is Kevin Evanich' s client. Eaton Dep. (Ex. 1) at 35:12-21.

RESPONSE: Disputed. There is no record support for this statement. Eaton testified only that Evanich was the partner at K&E responsible for the "GTCR relationship." (Ex. 1 to PSOF at 35:12-18.) 81. GTCR was, and is, a financially invaluable client to Kirkland whose annual

billings are in the millions of dollars. Evanich Dep. (Ex. 3) at 9:17- 11:12. RESPONSE: Disputed. There is no record support for the statement that GTCR is a "financially invaluable client." 82. Kirkland & Ellis has acted as GTCR' s outside counsel for 25 years. Rauner

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Dep. (Ex. 4) at 234:3-7. RESPONSE: Not disputed for the purposes of this motion that K&E has represented GTCR for 25 years. Disputed to the extent that the term "GTCR's outside counsel" means anything other than a law firm retained to represent GTCR. 83. Kevin Evanich was the K&E partner who assigned David Eaton to work on

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the GTCR portfolio client between 1991 and 1997. Eaton Dep. (Ex. 1) at 34: 1-36:22. RESPONSE: Disputed. There is no record support for this statement. Eaton testified only that he "consulted on one matter relating to a GTCR portfolio client" and that he could not remember how the matter came to him. (Ex. 1 to PSOF at 34:1-6; 35:9-11.) 84. David Eaton did work relating to the restructuring of the senior secured debt

of the GTCR portfolio client that he did work for between 1991 and 1997. Eaton Dep. (Ex. 1) at 38:8-12. RESPONSE: Disputed. Eaton testified only that he "consulted on one matter relating to a GTCR portfolio company," that he thought that the "main work" involved restructuring of the
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senior debt, and that GTCR no longer had a controlling interest in the company when his work concluded. (Ex. 1 to PSOF at 34:1-6; 38:10-24.) 85. In early to mid February 2001 Kevin Evanich, a K&E partner, referred

David Eaton to GTCR because he was an expert in the financial advisory business. Evanich Dep. (Ex. 3) at 21:21-22:4; Eaton Dep. (Ex. 1) at 62:4-16; Joe Nolan's Outlook Calendar with Bates range numbers GTCR 013556 to 013559 (Ex. 5); Eaton Dep. (Ex. 1) at 66:8-22. RESPONSE: Not disputed for the purposes of this motion that Evanich referred Eaton to GTCR to speak about working for LeapSource. There is no record evidence cited by plaintiffs regarding the date that Evanich referred Eaton. 86. The first time that David Eaton had contact with GTCR concerning their

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interests in LeapSource was on or around February 15, 2005. Eaton Dep. (Ex. 1) at 62:416; Joe Nolan's Outlook Calendar with Bates range numbers GTCR 013556 to 013559 (Ex. 5); Eaton Dep. (Ex. 1) at 66:8-22. RESPONSE: Disputed. There is no record evidence regarding the date of the first contact. In his deposition, Eaton testified that he is "not exactly sure when" GTCR first contacted him regarding LeapSource. (Ex. 1 to PSOF at 62:7-24.) 87. David Eaton met with Joe Nolan, Dan Yih and other members of GTCR on

February 22, 2001 regarding LeapSource. Joe Nolan's Outlook Calendar with Bates range numbers GTCR 013556 to 013559 (Ex. 5); Eaton Dep. (Ex. 1) at 66:8-22. RESPONSE: Disputed. There is no record evidence cited for this statement. Eaton testified that he recalled a meeting at GTCR's office and that he believed Joe Nolan was present, but did not recall other participants. (Ex. 1 to PSOF at 62:7-16; 66:8-12.) Joe Nolan's calendar includes the entry "David Eaton - here" for a brief meeting on February 22, 2001, but it does not establish that the meeting actually took place or who attended. (Ex.
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5 to PSOF at GTCR 013558.) 88. GTCR retained David Eaton on or prior to February 23, 2001. Kirk Dep.

(Ex. 6) 429:14-430:4; Yih Dep. (Ex. 7) at 425:3-21. RESPONSE: Disputed. There is no record evidence for this statement. Kirk testified only that she recalled a conversation with Bruce Rauner "sometime between the 20th and 23rd" that "a K&E kind of guy was going to be working on behalf of GTCR." (Ex. 6 at 429:16-23.) There is no evidence that Eaton was actually retained by GTCR at all or as of that date. Likewise, Yih testified only that the proposal to retain Eaton had "been discussed before February 27." (Ex. 7 to PSOF at 425:15-21.) 89. When GTCR hired David Eaton they were aware that he had been a

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bankruptcy lawyer at Kirkland & Ellis for a number of years. Yih Dep. (Ex. 7) at 428:5429:6. RESPONSE: Disputed. There is no record evidence for the statement that "GTCR hired David Eaton." The LeapSource board of directors voted to retain AEG on February 27, 2001. (SOF ¶ 24.) LeapSource formally retained AEG in a letter agreement dated March 2, 2001. (SOF ¶ 35.) Further, plaintiffs have expressly denied that "GTCR could have hired AEG or Eaton without formal board of Directors approval." (Pls.' Resp. to SOF ¶23.) In addition, the question in the cited deposition testimony lacks foundation. There was no motion to hire Eaton in his personal capacity. 90. Dan Yih and GTCR had extensive conversations with Kirkland & Ellis

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regarding the hiring of a crisis manager prior to February 27, 2001. Yih Dep. (Ex. 7) at 426:3-427:2. RESPONSE: Disputed. Yih testified that GTCR had extensive conversations "with Ernst & Young and Kirkland & Ellis" regarding recommendations for different crisis managers, and that GTCR interviewed different crisis managers before selecting AEG Partners. (Ex.
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7 to PSOF at 426:3-14.) 91. AEG and David Eaton were hired by GTCR to look out for GTCR's

interests. Kirk Dep. (Ex. 6) at 464:9-465:7 and 429:14-430:4; Yih Dep. (Ex. 7) at 426:3427:17. RESPONSE: Disputed. There is no record evidence to support this statement. The LeapSource board of directors voted to retain AEG on February 27, 2001. (SOF ¶ 24.) LeapSource formally retained AEG in a letter agreement dated March 2, 2001. (SOF ¶ 35.) Further, plaintiffs have expressly denied that "GTCR could have hired AEG or Eaton without formal board of Directors approval." (Pls.' Resp. to SOF ¶ 23.) In addition, the board minutes reflect that Ms. Kirk voted in favor of the motion authorizing LeapSource to retain AEG. (Ex. 8.) 92. AEG and David Eaton were hired by GTCR without any participation from

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anyone from LeapSource. Yih Dep. (Ex. 7) at 426:3-427:17. RESPONSE: Disputed. The LeapSource board of directors voted to retain AEG on February 27, 2001. (SOF ¶ 24.) LeapSource formally retained AEG in a letter agreement dated March 2, 2001. (SOF ¶ 35.) Further, plaintiffs have expressly denied that "GTCR could have hired AEG or Eaton without formal board of Directors approval." (Pls.' Resp. to SOF ¶23.) In addition, the board minutes reflect that Ms. Kirk voted in favor of the motion authorizing LeapSource to retain AEG. (Ex. 8.) 93. On a motion by Bruce Rauner of GTCR and seconded by Dan Yih of GTCR

(both of whom were also LeapSource board members) the LeapSource board approved the hiring of AEG partners as a crisis manager for the company. Minutes of February 27, 2001 Board Meeting with Bates range numbers LS-91-0289 to 0290 (Ex. 8). RESPONSE: Not disputed for the purposes of this motion that the motion to retain AEG was approved, though the minutes reflect that board approved the hiring of AEG "to work with
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the Company on financial matters." (Ex. 8 to PSOF.) As the minutes also reflect, Ms. Kirk and Mr. Nolan also voted in favor of the motion. 94. Although the GTCR members of the board knew of David Eaton's

affiliation with Kirkland & Ellis they did not disclose it to the LeapSource board. Minutes of February 27, 2001 Board Meeting with Bates range numbers LS-91-0289 to 0290 (Ex. 8); Yih Dep. (Ex. 7) at 428:5-429:6; Transcript of Board Call with Bates range numbers BOD/CALL-0002 to 0016 at BOD/CALL 0014 (Ex. 9). RESPONSE: Disputed solely on the ground that the statement is not supported by the factual record. 95. Although the "LeapSource" board approved the hiring of AEG/David Eaton

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it was in fact only the GTCR members of the board that voted in favor of hiring AEG. (Although the board minutes indicate Ms. Kirk was among those who voted in favor of hiring AEG, she testified at her deposition that she believed she abstained from that vote.) Minutes of February 27 2001 Board Meeting with Bates range numbers LS-91-0289 to 0290 (Ex. 8); Kirk Dep. (Ex. 6) at 667:5-10. RESPONSE: Disputed. The board minutes clearly reflect that Kirk voted in favor of retaining AEG. (Ex. 8 to PSOF.) 96. Some people were told that by hiring David Eaton, Kirkland & Ellis had

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been hired to work on the restructuring of LeapSource: Q: Did anyone from LeapSource ever tell you during that time that they

believed they had retained Kirkland & Ellis rather than AEG in connection with their retention of Mr. Eaton? A: Q: A: Q: Yes. Who said that? I don't remember. What do you remember about someone from LeapSource saying that?
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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 workout - - work with the company. Q: A: Do you remember who said that? No.

Matiski Dep. (Ex. 10) at 49:21-50:11. RESPONSE: Disputed. The cited testimony is not competent evidence because it lacks foundation and is inadmissible hearsay. There is no evidence that any identifiable person at LeapSource concluded that LeapSource hired K&E by retaining Eaton. Even Chris Kirk testified that she did not believe that the board vote to retain AEG was a vote to retain K&E. (SOF ¶ 28.) 97. The same GTCR members of the board who hired David Eaton fired

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Christine Kirk, LeapSource's CEO and one of its founding members, without cause. Minutes of February 27, 2001 Board Meeting with Bates range numbers LS-91-0289 to 0290 (Ex. 8). RESPONSE: Disputed. The minutes of the board meeting reflect that Kirk was terminated by the LeapSource board of directors pursuant to a proper motion and vote. (Ex. 8 to PSOF.) 98. The remaining LeapSource founders were fired without cause on March 2,

2001. Hartmann Dep. (Ex. 11) at 393:17-20; McCullum Dep. (Ex.12) at 239:9-10; Gupta Dep. (Ex. 13) at 149:5-7; Scott Dep. (Ex.14) at 126:2-6; Walker Dep. (Ex.15) at 52:3-7; and Powers-Weekes Dep. (Ex. l6) at 172:21-24. RESPONSE: Not disputed for purposes of this motion that these individuals were terminated from LeapSource on or about March 2, 2001.

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99.

On March 2, 2001, after he had been retained by GTCR and after the board

officially "hired" him, David Eaton entered into a formal agreement with LeapSource. Financial Advisory Engagement dated March 2, 2001 with Bates range numbers AEG 000040 to 000045 (Ex. 17); Yih Dep. (Ex. 7) at 426:3-427:17; Minutes of February 27, 2001 Board Meeting with Bates range numbers LS-91-0289 to 0290 (Ex. 8). RESPONSE: Disputed. The LeapSource board of directors voted to retain AEG on February 27, 2001. (SOF ¶ 24.) LeapSource formally retained AEG in a letter agreement dated March 2, 2001. (SOF ¶ 35.) Further, plaintiffs have expressly denied that "GTCR could have hired AEG or Eaton without formal board of Directors approval." (Pls.' Resp. to SOF ¶23.) 100. At the time David Eaton began working for LeapSource he knew that the

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company was insolvent. Eaton Dep. (Ex. 1) at 71:18-72:19 and 81:12-15. RESPONSE: Not disputed for purposes of this motion, but not material. 101. David Eaton reported what was going on at LeapSource to Kirkland & Ellis.

Richard Clyne, Stephen Ritchie and Jim Munson were among the K&E attorneys who participated in conversations with David Eaton. Eaton Dep. (Ex. 1) at 101:3-12; Ritchie Dep. (Ex. 18) at 42:23-43:4; Clyne Dep. (Ex. l9) at 47:22-51:18. RESPONSE: Disputed. Eaton testified only that he sometimes gave "periodic status updates" to K&E because they worked for GTCR, the company's majority shareholder. (Ex. 1 to PSOF at 101:3-16.) 102. Eaton reported what was going on at LeapSource to Kirkland & Ellis even

though he knew that GTCR was LeapSource biggest shareholder. Eaton Dep. (Ex. 1) at 101:3-12; and 67:13-68:7; Ritchie Dep. (Ex. 18) at 42:23-43:4. RESPONSE: Disputed. Eaton gave "periodic status reports" to K&E because they represented
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GTCR, the company's controlling stockholder and the guarantor of its leases and debt. (Ex. 1 to PSOF at 101:10-16; Ex. 18 at 42:20 - 43:4.) 103. Eaton reported what was going on at LeapSource to Kirkland & Ellis even

though there was a conflict between GTCR and LeapSource management. Eaton Dep. (Ex. 1) at 101:3-12; Yih Dep. (Ex. 7) at 326:18-23; Confidential Memorandum from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range numbers GTCR 002310 to 2319 (Ex. 20); Yih Dep. (Ex. 7) at 329:19-330:8; Ritchie Dep. (Ex. 18) at 42:23-43:4. RESPONSE: Disputed. The record evidence cited in this statement does not detail any conflict between GTCR and LeapSource management after AEG was retained. 104. Eaton reported what was going on at LeapSource to Kirkland & Ellis even

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though he knew that Kirkland & Ellis represented GTCR. Eaton Dep. (Ex. 1) at 34:1-37:3; 58:15-21 and 101:3-12; Ritchie Dep. (Ex. 18) at 42:23-43:4. RESPONSE: Disputed. Eaton gave "periodic status reports" to K&E because they represented GTCR, the company's controlling stockholder and the guarantor of its leases and debt. (Ex. 1 to PSOF at 101:10-16; Ex. 18 at 42:20 - 43:4.) 105. In fact, Kirkland & Ellis even provided legal services to LeapSource and

were LeapSource's attorneys as well. Nolan Dep. (Ex. 21) at 156:14-157:22; Rhodes Dep. (Ex. 22) at 10:18-11:8;13:19-14:1; and 16:16-17:6; Yih Dep. (Ex. 7) at 332:20-333:3. RESPONSE: Disputed. There is no record evidence that K&E served as attorneys for LeapSource. Rhodes testified that she "never went to Kirkland & Ellis for any type of substantive legal advice." (Rhodes Dep. at 233:14-19, Ex. 3 to Adams Decl.) She also understood that K&E lawyers were representing GTCR, not LeapSource. (Rhodes Dep. at 239:15 - 240:2, Ex. 3 to Adams Decl.) Nolan testified that he could not remember what work that K&E would have performed with respect to LeapSource. (Ex. 21 to PSOF at
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156:18 - 157:6.) Similarly, Yih testified that no one from LeapSource ever told him that K&E was representing LeapSource and he admitted that he had no personal knowledge that K&E ever represented LeapSource. (Yih Dep. at 493:24 - 494:12, Ex. 7 to Adams Decl.) 106. At the time that David Eaton undertook to represent LeapSource the

interests of GTCR and LeapSource were adverse. Yih Dep. (Ex. 7) at 326:18-23; Confidential Memorandum from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range numbers GTCR 002310-2319 (Ex. 20), Yih Dep. (Ex. 7) at 329:19-330:8. RESPONSE: Disputed. There is no record evidence that Eaton "undertook to represent LeapSource" or that the interests of GTCR and LeapSource were "adverse." LeapSource retained Eaton's company AEG to provide non-legal services through a letter agreement dated March 2, 2001. (SOF ¶ 35.) 107. GTCR told Tom Gilman and Christine Kirk, referencing David Eaton, that a

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K&E kind of advisor would be coming to LeapSource to talk though things with them: Dan: We have a K&E kind of advisor on us that we need for GTCR's perspective and he's gonna plan on being there on Monday to talk through things with you. Tom: OK Bruce: Yeah, GTCR is gonna hire a crisis manager/expert, you know, on troubled financings, etc. He is gonna come in on Monday. Tom: Down here? Bruce: Yeah. It's hard to get educated on what's going on and that can help because depending on what we as a Board recommend to GTCR tomorrow night this guy's information can help GTCR make a decision on what it ought to do from a funding point of view. Transcript of Board Call with Bates range numbers BOD/CALL 0002 to 0016 at BOD/CALL 0014 (Ex. 9).
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RESPONSE: Disputed. There is no foundation for the admission of this alleged transcript. Plaintiffs have provided no information regarding the identity of the transcriber, the manner in which they identified the identity of the persons speaking, or the time and date of the conversation. Indeed, though plaintiffs no claim that the transcript relates to a February 27, 2001 meeting, plaintiffs' counsel told witnesses during their depositions that it was a transcript from a February 20, 2001 meeting. (Yih Dep. at 295:3 - 296:9, Ex. 7 to Adams Decl.; Nolan Dep. at 318:18-24, Ex. 14 to Adams Decl.) Further, the underlying recording is of poor quality and difficult to understand. 108. GTCR told Tom Gilman and Christine Kirk, referencing David Eaton, that

GTCR needs a K&E kind of advisor for GTCR's perspective: Dan: We have a K&E kind of advisor on us that we need for GTCR's perspective and he's gonna plan on being there on Monday to talk through things with you. Tom: OK Bruce: Yeah, GTCR is gonna hire a crisis manager/expert, you know, on troubled financings, etc. He's gonna come in on Monday. Tom: Down here? Bruce: Yeah. It's hard to get educated on what's going on and that can help because depending on what we as a Board recommend to GTCR tomorrow night that this guy's information can help GTCR make a decision on what it ought to do from a funding point of view. Transcript of Board Call on February 27, 2001 with Bates range numbers BOD/CALL 0002 to 0016 at BOD/CALL 0014 (Ex. 9). RESPONSE: Disputed. There is no foundation for the admission of this alleged transcript. Plaintiffs have provided no information regarding the identity of the transcriber, the manner in which they identified the identity of the persons speaking, or the time and date of the conversation. Indeed, though plaintiffs no claim that the transcript relates to a
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February 27, 2001 meeting, plaintiffs' counsel told witnesses during their depositions that it was a transcript from a February 20, 2001 meeting. (Yih Dep. at 295:3 - 296:9, Ex. 7 to Adams Decl.; Nolan Dep. at 318:18-24, Ex. 14 to Adams Decl.) Further, the underlying recording is of poor quality and difficult to understand. 109. GTCR told Tom Gilman and Christine Kirk, referencing David Eaton, that

David Eaton was to help GTCR make a decision on what it ought to do from a funding point of view: Dan: We have a K&E kind of advisor on us that we need for GTCR's perspective and he's gonna plan on being there on Monday to talk through things with you. Tom: OK Bruce: Yeah, GTCR is gonna hire a crisis manager/expert you know, on troubled financings, etc. He s gonna come in on Monday. Tom: Down here? Bruce: Yeah. It's hard to get educated on what's going on and that can help because depending on what we as a Board recommend to GTCR tomorrow night that this guy's information can help GTCR make a decision on what it ought to do from a funding point of view. Transcript of Board Call on February 27, 2001 with Bates range numbers BOD/CALL 0002 to 0016 at BOD/CALL 0014 (Ex. 9). RESPONSE: Disputed. There is no foundation for the admission of this alleged transcript. Plaintiffs have provided no information regarding the identity of the transcriber, the manner in which they identified the identity of the persons speaking, or the time and date of the conversation. Indeed, though plaintiffs no claim that the transcript relates to a February 27, 2001 meeting, plaintiffs' counsel told witnesses during their depositions that it was a transcript from a February 20, 2001 meeting. (Yih Dep. at 295:3 - 296:9, Ex. 7 to Adams Decl.; Nolan Dep. at 318:18-24, Ex. 14 to Adams Decl.) Further, the underlying recording is of poor quality and difficult to understand.
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110.

David Eaton advised LeapSource about why bankruptcy was an important

alternative to consider. GTCR Voicemail dated 3/15/01 (Ex. 23). RESPONSE: Disputed. The cited voicemail transcript merely states the speaker's view that Eaton helped the new LeapSource management team (none of whom are plaintiffs in this case) understand "the importance of moving quickly with the different scenarios and understanding why bankruptcy, for example, is an important alternative to consider." There is no basis for concluding that Eaton gave anyone specific advice, and there is no indication that the person leaving the telephone message has any personal knowledge of any specific statements made by Eaton. 111. 2001: 2/27 D. Eaton We should file in Phoenix ____ Delaware is Trouble (All lawyers David has talked w/ agree) Notes of Sean Cunningham at Bates range number GTCR 012336 (Ex. 24); Cunningham Dep. (Ex. 25) at 124:9-125:15. RESPONSE: Disputed. In his deposition, Cunningham testified only that he believes that the notes were something that Eaton told him but that he could not recall any details of the conversation. (Ex. 25 to PSOF at 125:4-8). In addition, the notes plainly state that Eaton was relaying information that he received from attorneys. 112. David Eaton advised about the priorities of various claims in bankruptcy: David Eaton advised about where to file for bankruptcy as of February 27,

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Landlord Vendors Employee Claims . . .
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D.I.P. Financiers' have 1st rights to proceeds from Asset Sales Notes of Sean Cunningham at Bates range number GTCR 012336 (Ex. 24). RESPONSE: Disputed. There is no record evidence that these notes reflect any advice of Eaton. Cunningham described the notes in the following manner: "I don't know whether all of the substance was from David Eaton or not. It appears to have been discussed with him. I don't know whether others were involved or not, but I don't know that all the content was from him." (Cunningham Dep. at 126:11-20, attached as Ex. 4 to Adams Decl..) Significantly, plaintiffs omit this exchange from the excerpts of the Cunningham deposition attached as Exhibit 25. 113. David Eaton advised about the board and management avoiding litigation:

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"2/27 D. Eaton. . . If DIP exceeds value of assets, bankruptcy & DIP financing may yet be of value in helping to avoid litigation against board/management." Notes of Sean Cunningham at Bates range number GTCR 012336 (Ex. 24); Clyne Dep. (Ex. l9) at 51:411. RESPONSE: Disputed. There is no record evidence that these notes reflect any advice of Eaton. Cunningham described the notes in the following manner: "I don't know whether all of the substance was from David Eaton or not. It appears to have been discussed with him. I don't know whether others were involved or not, but I don't know that all the content was from him." (Cunningham Dep. at 126:11-20, attached as Ex. 4 to Adams Decl.) Significantly, plaintiffs omit this exchange from the excerpts of the Cunningham deposition attached as Exhibit 25. 114. David Eaton gave GTCR advice about "helping [GTCR] look at a lot of

these payments, bonuses and things and whether [GTCR] should be paying them to people
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or not or whether [GTCR] should be just stiffing them and taking the risk of litigation." GTCR Voicemail from Joe Nolan to Dan Yih and Sean Cunningham dated March 2, 2001 (Ex. 26). RESPONSE: Disputed. This transcription fails to establish that the person who left this voicemail message had any personal knowledge about any advice, if any, that Eaton was giving to anyone. Plaintiffs omit the following statement from the quote: ". . . then I assume hopefully one of the things that Eaton is doing for us . . .", which makes it clear that he is not relaying any specific advice. There is also no indication that this assistance is for the benefit of GTCR as opposed to LeapSource. 115. David Eaton gave GTCR advice regarding assignment agreements GTCR

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signed relating to LeapSource: "David Eaton said we have absolutely no hand in kind of claiming we didn't sign the assignment. But, maybe it's good enough to bluff them with a little." GTCR Voicemail from Joe Nolan to Dan Yih dated March 27, 2001 (Ex. 27). RESPONSE: Disputed. The statement "we have absolutely no hand in kind of claiming" is unclear and vague. On this record, it is entirely unclear what advice, if any, was alleged to have been given or whether the message was directed to GTCR or LeapSource. The second sentence of the quote also appears to be the speaker's own opinion rather than anything attributed to Eaton. 116. David Eaton gave GTCR advice with regards to their exposure on the

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guarantees for various leases LeapSource had entered into: "2/27 D. Eaton. . . Landlords cannot call on guarantor to make payment on guarantee if lessee is in bankruptcy and continues to pay lease. Notes of Sean Cunningham at Bates range number GTCR 012336012337 (Ex. 24). RESPONSE: Disputed. There is no record evidence that these notes reflect any advice of Eaton. Cunningham described the notes in the following manner: "I don't know whether all of
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the substance was from David Eaton or not. It appears to have been discussed with him. I don't know whether others were involved or not, but I don't know that all the content was from him." (Cunningham Dep. at 126:11-20, attached as Ex. 4 to Adams Decl.) Significantly, plaintiffs omit this exchange from the excerpts of the Cunningham deposition attached as Exhibit 25. 117. GTCR was going to use David Eaton to advise them about their funding

obligation to LeapSource. Yih Dep. (Ex. 7) at 298:9-23. RESPONSE: Disputed. The cited portion of the Yih deposition transcript does not support this statement. It consists almost entirely of plaintiffs' counsel questioning the witness and reading from the alleged transcript of a LeapSource board meeting. 118. Timothy Stephenson of Kirkland & Ellis gave David Eaton of Kirkland &

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Ellis, advice concerning the WARN Act on February 26, 2001. Email from Timothy Stephenson to David Eaton dated 2/26/01 with Bates range numbers AEG 001567 (Ex. 28); Eaton Dep. (Ex. 1) at 23:3-6. RESPONSE: Disputed. Stephenson sent Eaton a five-sentence e-mail attaching three WARN notices unrelated to LeapSource. 119. Kirkland & Ellis consulted with GTCR and LeapSource about the WARN

Act. Kirkland & Ellis billing statement with Bates range number KE000365 (Ex.29); Clyne Dep. (Ex. 19) at 50:16-24. RESPONSE: Disputed. There is no evidence that K&E "consulted" with anyone at LeapSource regarding the WARN Act. 120. David Eaton's "of counsel" agreement with Kirkland & Ellis prohibited him

from undertaking any representation that was adverse to any K&E client. Letter from Kirkland & Ellis to David Eaton dated June 11, 1999 with Bates range numbers KE000293 to 295 (Ex. 2).
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RESPONSE: Not disputed for purposes of this motion, but not material. 121. In an addendum to David Eaton's "of counsel" agreement it was agreed that

"retention letters between AEG and each of its clients will include express language provisions confirming that :. . . c) with respect to Kirkland & Ellis' representation of clients adverse to the AEG client, the AEG client waives any conflicts of interests based upon [David Eaton's] Of Counsel relationship with Kirkland & Ellis. . ." No such waiver of conflicts was obtained by David Eaton or Kirkland & Ellis with respect to David Eaton's representation of LeapSource. Kevin Evanich, a K&E partner, testified that he was disappointed that no waiver was included in David Eaton's representation letter with LeapSource. Letter from Kirkland & Ellis to David Eaton dated July 6, 2000 with Bates range number KE 000292 (Ex. 30); Eaton Dep. (Ex. 1) at 117:19-118:4; Evanich Dep. (Ex. 3) 28:9-21. RESPONSE: Not disputed that the "of counsel" addendum includes the cited language and that there was no formal, written waiver of conflicts obtained regarding Eaton's work for LeapSource through AEG. Disputed that Eaton ever engaged in any "representation" of LeapSource or that Evanich specifically testified about "no waiver" language. 122. David Eaton had a conflict of interest in undertaking management authority

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and responsibilities in LeapSource while also being loyal to the interests of Kirkland & Ellis and GTCR. Report of Geoffrey C. Hazard, Jr. dated July 15, 2005 (Ex. 31). RESPONSE: Disputed. The expert report provides no factual basis for concluding that any conflict of interest existed. Further, Eaton worked for LeapSource "in a manner and capacity sufficiently distinct from his provision of legal services to K&E clients to relieve him of an obligation to comply wit the conflict-of-interest standards that govern a lawyer's conduct qua lawyer." (Report of Prof. T. Schneyer at 19, attached as Ex. 5 to Adams Decl.).
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123.

David Eaton worked on behalf of GTCR to try and get releases executed in

favor of GTCR at the expense of Christine Kirk, Tom Gilman and LeapSource. Gilman Dep. (Ex.32) at 307:7-9; Kirk Dep. (Ex. 6) at 356:2-11 and 543:19-22; Voice Mail from David Eaton to Stephen Savage dated April 26, 2001 with Bates range number LS-CK22515 to 2516 (Ex. 33). RESPONSE: Disputed. There is no record evidence that Eaton was working "on behalf of GTCR" in attempting to obtain broad releases in favor of LeapSource and GTCR, or that any releases would come "at the expense of LeapSource." The cited evidence merely reflects that Eaton contacted various individuals in an attempt to negotiate severance packages that included releases of LeapSource and GTCR. 124. David Eaton considered Michael Makings, who replaced Christine Kirk as

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CEO after she was fired by GTCR, as his client. Eaton Dep. (Ex. 1) at 144:10-17; Minutes of February 27, 2001 Board Meeting with Bates range numbers LS-91-0289 to 0290 (Ex. 8) (showing Michael Makings being made CEO on February 27, 2001). RESPONSE: Disputed. Eaton characterized Makings and others as "the management team that I was reporting to" during AEG's engagement by LeapSource, which was "essentially my client." (Ex. 1 to PSOF at 144:15-17.) The agreement under which Eaton provided his services was between LeapSource and AEG. (SOF ¶ 35.) The letter agreement between LeapSource and AEG was signed by Eaton and Makings. (SOF ¶ 36.) 125. David Eaton was actively involved in the negotiations for the ICG deal with

Michael Makings. Eaton Dep. (Ex. 1) at 160:14-17. RESPONSE: Not disputed, but not material to this motion. 126. David Eaton testified that he got his information about ICG from Matt

Appel, Tina Rhodes, Joe Nolan, and Michael Makings. Eaton Dep. (Ex. 1) at 161:11-21 and 164:3-5.
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RESPONSE: Disputed. Eaton testified that his information regarding ICG generally came from Matt Appel and Tina Rhodes. He also discussed the matter with Joe Nolan. (Ex. 1 to PSOF at 161:11-19.) 127. David Eaton was appointed Chief Restructuring Officer of LeapSource on

March 20, 2001. Minutes of March 20, 2001 Special Meeting of Board of Directors with Bates range numbers LS- 13- 1356 to LS- 13-1358 (Ex. 34). RESPONSE: Not disputed for purposes of this motion. 128. David Eaton told GTCR that AEG was "more interested in the overall

relationship with [GTCR] than . . . trying to strike some deal on the fees through April." GTCR Voicemail from Joe Nolan to Dan Yih dated March 29, 2001 (Ex. 35). RESPONSE: Disputed. The actual portion of the transcript reads: ". . . they say they are more interested in the overall relationship with us than, um, trying to strike some deal on the fees through April. . . ." In context, it is unclear whether "they" is a reference to AEG or LeapSource and whether "us" is a reference to LeapSource or GTCR. 129. David Eaton told the board at the March 20, 2001 board meeting that the

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only major risks associated with shutting down LeapSource was to get the employees hired and to get the contracts assigned and to empty the company of the assets. It was not a priority to actually file Chapter 7 immediately. Minutes of March 20, 2001 Special Meeting of Board of Directors with Bates range numbers LS-95-0001.668 to 669 (Ex. 36). RESPONSE: Disputed. The minutes of this board meeting appear to be a draft document. Plaintiffs have provided no foundation regarding the author of these minutes, the source of this information, or the preparation of this document. 130. David Eaton's representation agreement lists that one of the "resources"

available to LeapSource as a result of hiring David Eaton was the fact that he was
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formerly the co-managing partner of Kirkland & Ellis' workout and bankruptcy practice. Financial Advisory Engagement dated March 2, 2001 with Bates range numbers AEG 000040 to 45 (Ex. 17). RESPONSE: Disputed. The agreement lists Eaton as a resource and provides background biographical information about his experience. 131. GTCR was concerned with their exposure with respect to the rent at

LeapSource's Tempe locations. Notes of Sean Cunningham at Bates range number GTCR 012266 (Ex. 24). RESPONSE: Disputed. The cited portion of these notes does not support such a conclusion. In addition, plaintiffs provide no foundation as to whether these notes reflect Cunningham's thoughts or the statements of others. 132. Kirkland & Ellis, GTCR and David Eaton were working together to limit

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GTCR's exposure with respect to LeapSource leases. Email form Bradley Ritter to Christian Lane dated 7/26/2001 with Bates range numbers KE009831-9832 (Ex. 37); Lease Guarantee with Bates range numbers LS-76-0303 (Ex. 38); Kirk Dep. (Ex. 6) at 434:19-24. RESPONSE: Disputed. The cited evidence does not reflect that K&E, GTCR, and Eaton were "working together to limit GTCR's exposure." The e-mail attached as Exhibit 37 merely asks Eaton if LeapSource has rejected particular leases. 133. Kirkland & Ellis, GTCR and David Eaton were sharing information

concerning the WARN Act. US Department of Labor fact Sheet with Bates range numbers AEG 001359 to 1363 (Ex. 39); Email from Sean Cunningham dated 1/26/01 with Bates range number AEG 001358 (Ex. 40); Clyne Dep. (Ex. 19) 49:22-51:18. RESPONSE: Disputed. Exhibits 39 and 40 contain no information about Eaton. In his
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deposition, Clyne testified only that he could recall "one or two" conversations regarding the WARN Act in which Eaton was "a participant or listener." (Ex. 19 to PSOF at 50:1624.) 134. David Eaton only resigned as LeapSource Chief Restructuring Officer on

March 13, 2002. Email from David Eaton to Steve Brown dated 3/13/2002 with Bates range number AEG 001595 (Ex. 41). RESPONSE: Disputed. The e-mail attached as Exhibit 41 suggests that Eaton may have resigned as Chief Restructuring Officer as early as January 14, 2002. 135. In March 2001, Sean Cunningham of GTCR told Dan Yih and Joe Nolan of

GTCR that David Eaton was "going to be very valuable to both the company as well as [GTCR]." GTCR Voicemail dated 3/15/01 (Ex. 23). RESPONSE: Not disputed for purposes of this motion. The transcript actually reads that Eaton would be "very valuable both to the company, as well as the [sic] GTCR." 136. Kirkland & Ellis shared information with David Eaton concerning

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LeapSource employment agreements. Memorandum with Bates range number AEG 000019 to 20 (Ex. 42). RESPONSE: Disputed. The only evidence cited by plaintiffs is a memo from Chris Kirk to Joe Nolan that was apparently faxed from K&E. The recipient of the fax is unclear. Plaintiffs apparently conclude that K&E faxed this memo directly to Eaton, but there is no foundation or support for this conclusion. K&E is not mentioned in the memo. 137. Kirkland & Ellis, David Eaton and GTCR worked together with respect to

Tom Gilman's request to inspect certain LeapSource documents. Fax from Richard Clyne of K&E to David Eaton dated April 30, 2001 with Bates range numbers KE003275-3278 (Ex. 43).

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RESPONSE: Disputed. Exhibit 43 is merely a copy of a letter from Tom Gilman's attorney to LeapSource that Clyne received from LeapSource and then forwarded to Eaton. The forwarding of a single letter does not show that K&E, Eaton, and GTCR "worked together." Eaton testified that he did not recall ever discussing the letter with Clyne. (Eaton Dep. at 213:15 - 214:4, attached as Ex. 6 to Adams Decl.) 138. David Eaton shared privileged information, provided to LeapSource by

Osborn Maledon, with Richard Clyne of K&E concerning the Wage Act Statues. Email from David Eaton to Richard Clyne dated 3/14/2001 with Bates range number KE003546 to 003548 (Ex. 44). RESPONSE: Disputed to the extent that it suggests that Eaton did not have authority to forward the e-mail. The portion of the cited e-mail from Osborn Maledon reproduced the relevant portion of an Arizona statute and included no legal advice. It reads: "Please find below relevant portions of the Arizona Wage Act." 139. David Eaton advised GTCR to set a deadline for the last day of GTCR's

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funding of LeapSource. Notes of Sean Cunningham at Bates range number GTCR 012371 (Ex. 24). RESPONSE: Disputed. The cited Cunningham notes contain the following statement: "set deadline for last day of funding -- tell Comsys/Xpedior/Epoch/Heritage they need to pay people starting Mar 31?" There is no indication that this statement was advice or simply a status report, and there is no indication that the statement was directed at GTCR. 140. Kevin Evanich, a K&E partner, testified that David Eaton, while performing

work for LeapSource, could not have taken a position adverse to GTCR absent a conflict waiver. Evanich Dep. (Ex. 3) at 29:17-30:6. RESPONSE: Disputed. The question directed to Evanich asked whether Eaton could have taken
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a position "as an of-counsel attorney for Kirkland & Ellis." (emphasis added.) Eaton was not working in the capacity of an "of counsel" attorney while he performed work, through AEG, for LeapSource. Instead, he was performing non-legal business services. (SOF ¶¶ 20, 37.) 141. In an addendum to David Eaton's "of counsel" agreement it was agreed that

"retention letters between AEG and each of its clients will include express language provisions confirming that: . . . c) with respect to Kirkland & Ellis' representation of clients adverse to the AEG client, the AEG client waives any conflicts of interest based upon [David Eaton's] Of Counsel relationship with Kirkland & Ellis . . ." David Eaton only included that language in AEG's retention agreements "depending on whether or not we remembered to include it." Letter from Kirkland & Ellis to David Eaton dated July 6, 2000 KE 000292 (Ex. 30); Eaton Dep. (Ex. 1) at 117:19-118:4 and 52:23-53:16. RESPONSE: Disputed. The quoted language from the addendum to the "of counsel" agreement is incomplete; it does not focus solely on the waiver of conflicts of interest. 142. Mike Makings told Christine Kirk that "David Eaton was the chief

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restructuring officer, and he was the person there at LeapSource that was advising GTCR about funding the company, about their litigation risks, about the advantages of Chapter 11 versus Chapter 7 and how those risks related to GTCR etc." Kirk Dep. (Ex. 6) 434:1924. RESPONSE: Disputed. This testimony lacks foundation and contains multiple levels of hearsay. There is no indication that Kirk or Makings had any personal knowledge regarding Eaton's communications with GTCR. 143. David Eaton told Tom Gilman that if Mr. Gilman did not sign a release

releasing GTCR and LeapSource he would terminate Christine Kirk "for cause." Gilman Dep. (Ex. 32) at 307:7-13; Letter from David Eaton to Thomas Gilman dated March 22, 2001 with Bates range numbers LS-TGl-l152-1153 (Ex. 47).
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RESPONSE: Disputed. Eaton testified that Kirk's termination was classified as "for cause" because of her failure to repay money owed to LeapSource and improper forgiveness of company loans to her friends, not the refusal of Tom Gilman to sign a release. (Eaton Dep. at 229:7 - 230:5, attached as Ex. 6 to Adams Decl.) 144. David Eaton told Stephen Savage that if Tom Gilman would not sign a

release of his claims as against GTCR he would issue the letter terminating Chris Kirk "for cause": "So as of right now, the deal is off unless you can deliver Tom Gilman's release, and if we are not able to get that in the next couple of days then we'll issue the for cause letter and just proceed down that path." Voice Mail from David Eaton to Stephen Savage dated April 26, 2001 with Bates range number LS-CK2-2515 to 2516 (Ex. 33). RESPONSE: Disputed to the extent that the statement suggests that Tom Gilman's refusal to enter into releases was the sole reason for the issuance of a "for cause" termination letter to Chris Kirk. Kirk's termination was classified as "for cause" because of her failure to repay money owed to LeapSource and improper forgiveness of company loans to her friends, not the refusal of Tom Gilman to sign a release. (Eaton Dep. at 229:7 - 230:5, attached as Ex. 6 to Adams Decl.) Further disputed on the ground that the voicemail message lacks foundation and is not authenticated. 145. Tom Gilman wrote a letter to the LeapSource Board of Directors setting

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forth the adversity of the GTCR-LeapSource relationship, and itemizing numerous breaches of fiduciary duties. Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20). RESPONSE: Not disputed for purposes of this motion that Gilman wrote the memo attached as Exhibit 20. K&E disputes that the letter is an accurate representation of events involving GTCR and LeapSource and, offered by plaintiffs, it is hearsay.

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146.

The differences of opinion as to how the "two pools of funding" had been

accounted for by LeapSource and GTCR had been an "ongoing discussion since the early days of the Company." Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Page 1. RESPONSE: Disputed. The specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted. Tom Gilman has no personal knowledge of the "early days" of LeapSource because he did not join the company's board until April 2000 and did not become interim CFO until October 2000. (Gilman Dep. at 19:4 - 20:4, attached as Ex. 8 to Adams Decl.) 147. Changes in business conditions, market and economic conditions had

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changed in comparison to the original business plan. Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Page 2. RESPONSE: Disputed. The specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted. Tom Gilman has no personal knowledge of the "original business plan" of LeapSource because he did not join the company's board until April 2000 and did not become interim CFO until October 2000. (Gilman Dep. at 19:4 - 20:4, attached as Ex. 8 to Adams Decl.) 148. Changes in business conditions, market and economic conditions were

known as early as mid-2000 yet it was not until November 2000 that GTCR began communicating about their risk tolerance. Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Page 2.

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RESPONSE: Disputed. The specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted. 149. "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." Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Page 4. RESPONSE: Disputed. The specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted. 150. GTCR began negotiating directly with Mike Makings on his $2.5 million

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Note that was in default. Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Pages 4-5. RESPONSE: Disputed. The specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted. 151. GTCR exposed LeapSource to significant financial and legal risk by

demanding that LeapSource negotiate down its contractual severance obligations. Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Page 5. RESPONSE: Disputed. The specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted.
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152.

GTCR had told company representatives that they would fund the Cargill

contract if LeapSource executed its first reduction in force. After the reduction in force, GTCR decided not to fund the Cargill transition. Kirk Dep. (Ex. 6) at 310:21-311:3; Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Pages 5-6. RESPONSE: Disputed. The cited portion of the Kirk deposition does not reflect any conversations or agreement with anyone from GTCR. With respect to the Gilman letter, the specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted. 153. The reduction in force demanded by GTCR caused the loss of the Computer

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Horizon's deal. Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Page 7. RESPONSE: Disputed. The specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted. 154. In January 2001 GTCR began working with Tom Gilman to select

approximately 70 LeapSource employees for termination. Letter from Tom Gilman to Dan Yih, Sean Cunningham and Joe Nolan dated January 26, 2001 (Ex. 45); Letter from Tom Gilman to the LeapSource board dated February 24, 2001 with Bates range number GTCR 002310 to 2319 (Ex. 20) at Page 7. RESPONSE: Disputed. The document attached as Exhibit 45 does not identify a specific plan to terminate 70 employees. With respect to the letter attached as Exhibit 20, the specific facts and allegations in the letter lack foundation and constitute inadmissible hearsay to the extent that they are offered by plaintiffs to prove the truth of the matters asserted.
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155.

When GTCR received the letter sent by Tom Gilman to the LeapSource

board dated February 24, 2001 GTCR immediately consulted with Kirkland & Ellis to discuss the issues raised therein. Yih Dep. (Ex. 7) at 439:8-18 and 329:3-331:8. RESPONSE: Not disputed for purposes of this motion. 156. David Eaton received a copy of the letter that Tom Gilman sent to the

LeapSource board dated February 24, 2001. Le