Document 262-9
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Case 1:04-cv-01494-JJF
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SECURITIES AND EXCHANGE COMMI SSION·
WASHINGTON, D.C. 20549
FORM lO-Q/A
(Amendment No.2) (Mark One)
(jg
QUARTERLY REP ORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXC HANGE ACT OF 1934 .
For the quarterly period ended September 30,2002 OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the transition period trorn Commission FUe No. 0692 to _
NORTHWESTERN CORPORATION
(Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 125 S. Dakota Avenue, Sioux Falls, South Dakota (Address of principal executive offices) Registrant's telephone number, including area code:
60S-978-2~08
46-0172280 (I.R.S. Employer Identification No.) 57104 (Zip Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes IBJ No 0 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule12b2 of the Act).
Yes!EJ
No 0
Indicate the number of shares outstanding of each of the registranrs classes of common stock, as of the latest practicable date: As of April 7, 2003, 37,396,762 shares of the registrant's common stock, par value $1.75 per shares were outstanding.
Source: NORTHWESTERN CORP, 10-Q/A, April 15, 2003
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This indebtedness could have important consequences to you. For example, it could:
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increase our vulnerability to general adven;e economic and indusby conditions; require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash flow to fund working capital, capilal expenditures and other general corporate purposes; limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; result in vendors requiring additional credit support, such as leiters of credit, in order for us to utilize trade credit; place us at a competitive disadvantage compared to our competitors that have less debt; IlIld limit our ability to borrow additional funds.
In addition, our failure to comply with any of the covenants contained in lhe instruments governing our indebtedness could result in an event of default
which, ifoot cured or waived, could result in the acceleration of other outstanding indebtedness. We may not have sufficient working capital to satisfy our debt
obligations in the event of an acceleration of all or a significant portion of our outstanding indebtedness.
Our ability to implement our turnaround plan Is subject to many impediments and uncertainties. A failure to completely implement our turnaround plan could have a material advene affect on our results of operations and liqUidity. Management is implementing a turnaround plan that includes these principal elements: focus on our core utility business; . reduce our indebtedness; and sale or disposition of our non-core assets. Absent proceeds from the sale of noncore assets or significant improvements in the operating results of our nonenergy businesses, we will not have the ability to materially reduce our debt. Therefore, our ability to implement this plan is subject to many impediments and uncertainties inclUding: even if we receive offers from buyers, whether we will be able to sell these assets at a price that would enable us to pay down our debt after accounting for related liabilities; and whether we will be able (0 generate sufficient interest among buyers for our non-core assets undel' current market conditions. The success of our turnaround plan is dependent upon reducing our debt. Absent the receipt of significant proceeds from the sale of noncore assets, the raising of additional capital or a restructuring of our debt, we will not have the ability to reduce our debt or meet our significant maturing debt obligations beginning in 2005. Our senior secured term loan contains restrictions on the sale or disposition of assets, including non-core assets, and on Ihe prepayment of the senior secured term loan and other indebtness. Therefore, even if we are able to generate funds through the sale of non-core assets or equity, or cash flow from operations, we may not be able to prepay any of the debt in a timely manner.
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Source: NORTHWESTERN CORP, 10-Q/A, April 15. 2003
Case 1:04-cv-01494-JJF
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We will need signifiCant additional capital to rermance our indebtedness as it matures. If we cannot sell sufficient assets or borrow new Indebtedness sufficient to repay our indebtedness as it matures in future periods, our ability to fund our operations and service our substantial indebtedness will be adversely affected, and we will default OD such maturing indebtedness as weU as all other indebtedness that is cross-defaulted to such indebtedness thereby materially and adversely affecting our financial condition and results of operations. We will be required to obtain significant additional capiralto meet debt obligations maturing in 2005 and beyond. Absent proceeds from the sale of non-core assets or significant improvements in the operating results of our non-energy businesses, which historically have not been Cllsh flow conlribulors, we will have limited ability to reduce our debt To the extent we do not sell sufficient assets to pay down debt as it matures, we wiU need to borrow money. The market for indebtedness is volatile and our ability to raise capital is dependent on a number of factors including our creditworthiness, legal proceedings we are and may be involved in, the ratings of our indebtedness, the cash flow we bave available to service the interest expense relating to any new borrowings, and our ability to implement our turnaround. If we are unable to refinance our indebtedness as it matures we will default on such indebtedness and all other indebtedness that is cross-defaulted to such indebtedness. Blue Dot is in default under its credit agreement. If such defaults continue or new defaults by any of our subsidiaries occur under applicable debt instruments, then such entity could seek protection under the bankruptcy law, or its creditors could institute involuntary proceedings against such entities, and we could lose OUI remaining investment in such entity. Any default by us on our indebtedness will have a material and adverse affect on our financial condition and results of operations.
In addition, we may not be able to generate enough cash flow 10 fund our operations and meet our debt service obligations. If we can not obtain additional capital 10 meet such obligations, we will default on such indebtedness and all other indebtedness that is cross-defaulted to such indebtedness.
Our internal conlcols and procedures need to be improved. We have advised our Audit Committee that, in tbe course of preparing our financial statements for the year ended December 31, 2002 and in connection with the corresponding audit, we noted deficiencies in internal controls relating to:
internal accounting controls relating to the EXPERT system, including the evaluation of appropriate reserves for accounts receivable and billing adjustments at Expanets;
supervision, staffing and training of accounting personnel;
timely evaluation and substantiation of material account balances;
inconsistent application of and adherence to our policies and procedures by certain personnel:
r~view
absence of a functioning internal aUditing department and integraled information systems limiting our ability to adequately subsidiary financial infonoation; and
the inadequacy of systems integration and data reconciliation. These weaknesses led to the restatement of our financial statements for the first three quarters of 2002. In addition, we have experienced weaknesses in procedures and documentation relating to intercompany transactions, including lapses in documenting loans or advances to our subsidiaries, which courd adversely affect our ability to collect sucb amounts and could force us to subordinate the collection of such amounts in certain circums(ances. If we are unable to substantially improve our internal controls our ability to report our financial results on a timely and accurate basis will continue to be adversely affected which . could have a substantial adverse affect on our ability to operate Our business.
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Source: NORTHWESTERN CORP, 10-Q/A. April 15, 2003
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We are one of severa! defendants in a class action lawsuit brought in connection with dispositions of energy assets by The Montana Power Company, Including the acquisition of our Montana utility. Ir we do not successfully resolve this lawsuit, or enforce our Indemnlfication claims against The Montana Power Company, our operations and financial condition may be materially barmed. We are one of several defendants in a class action lawsuit entitled McGreevey, et aI. v. The Montana Power Company. et aI. The lawsui~ which was filed by shareholdeIS ofTouchArnerica Holdings,Inc., lbe successor to The Montana Power Company, in connection wilb the disposition of energy assets by The Montana Power Company, contends, among other lhiogs, that lbe shareholders of The Montana Power Company have dissentelS' rights nnder applicable state law and are entitled to damages. We believe our substantive and procedural defenses are meritorious, but we cannot predict the outcome of any such litigation. If we are held liability for any damages in this lawsui~ our operations and financial condition may be severely and materially harmed. The impact of ongoing class aellon litigation may be material. We are also subject to the risk of addilionalliligalion and regulatory action In connection with the restatement of our 2002 quarterly rrnancial statements and the potenUailiabillty from any such litigation or regulatory acllon could barm our business. On April 1.2003, we announced that we would restale our consolidated financial statements for the fiscal quarters eu.ded March 31, 2002,1une 30, 2002, and September 30, 2002. We have recorded significant charges in our full year 2002 results. We, and certain of our present and former offiCClli and directors, are defendants in a purponed class action litigation pending in lbe United States District Court for the Central District of South Daleota. Southern Division, entitled Dana Ross, et aL v. Merle D. Lewis, et al.; Case No. OV034049, brought on behalf of shareholders of NorthWelitern. The plaintiffs are seeking unspecified compensatoIy damages, rescission, and attorneys fees 811<1 costs as well as accountants and experts fees based on allegations that the defendants misrepresented NorthWestern's business operations and financial performance. overstated NorthWestern's revenue and earnings by, among other things, maintaining insufficient reserves for accounts receivables at Expanets, failing to disclose billing problems and lapses and data conversion problems, and failing to make full disclosures of problems (including the billing and data conversion issues) arising from the implementalion of Expaneu' EXPERT system. Tbe lawsuit was recently filed and has not yet been served. We cannot currently predict the impact or resolution of this litigation. which could be material, and the initiation of this lawsuit may hwm our business and financial condition. As a result of the restatement of our quarterly results for the firstlhree quarters of 2002 we could become SUbject to additional class action or other securities litigation. In addition, regulatory agencies, such as the SEC, lbe FERC, the MPSc, andlor the New York Stock Exchange could commence a formal investigation relating to the restatement of ourquanerly results. As of the date hereof, we are not aware of any additional litigation or investigation having been commenced agalust us n:lared to these matters, but we cannot predict Whether Or not ally such litigation or regulatory investigation will be commenced or. if it is, the outcome of ally such litigation or investigation. If any such investigation were to result in a regulatory proceeding or action against us, our business and financial condition· could be harmed. The initiation of any additional securities litigation, together with the lawsuit described above, may also harm our business and financial condition. Until such investigation, proceeding or litigation is resolved, it may be more difficult to raise additional capital or favorably refinance or restruclUre our debt or other obligations. If an unfavorable result occurred in any such action, our business and financial condition could be further harmed. In addition, we are likely to incur substantial expenses in connection with any such litigation or investigation, including substantial fees for attorneys and other professional advisors. We may also be obligated to indemnify officelS and directors
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Source: NORTHWESTERN CORP, 10-QfA, April 15, 2003
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Case 1:04-cv-01494-JJF
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
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Civil Action No. C.A. No.
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04-1494
(JJF)
MAGTEN ASSET MANAGEMENT CORPORATION and
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LAW DEBENTURE TRUST COMPANY OF NEW YORK, Plaintiffs,
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NORTHWESTERN CORPORATION,
Defendant.
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Civil Action No. C.A. No. Plaintiff, 05-499 (JJF)
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MAGTEN ASSET MANAGEMENT CORP.,
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MICHAEL J. HANSON and ERNIE J. KINDT, Defendants.
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DEPOSITION OF MICHAEL J. HANSON
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TAKEN ON: 6/27/2007 BY: DANA ANDERSON
Elisa Dreier Reporting Corp. (212) 557-5558
780 Third Avenue, New York, NY 10017
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INDEX
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APPEARANCES;
FRIED, FRANK, HARRlS, SHRIVER & JACOBSON LLP
One New York Plaza
New York, New York 10004-1980
By: Bonnie Steing..l, Esq.
Sabita L. Krishnan, Esq.
Forthe Plaintiffs
Exomination by Ms. Sleing.1I, page 8 fNDI3X or I:XHlBITS
Exhibil Number II TIle Mon(.i1na Power Comp.1ny 10 TI\e
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Bank of New York Indenture d.ted NOl'cmb
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10 CURTIS, MALLET-PREVOST, COLT & MOSLE LLP
101 Park Avenue New York, New York 10178-0061 By. Nancy E. Delancy, Esq. For NorthWeslem COIl'oration
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Montlna Power Company and Nonl,Westcm Corporation, p.ge 16 Exhibit Number 3, S,",crure of NorthWcslCm; Post
Montana Po.\vet ACqUlSilion, Prior 10 Going Flat.
page 20 Exhibit Nun,ber 3·", Structure ofNorthWcslCr11: PoS1
Montana Power Acquisition, Prior 10 Goins Flill"
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""ge 24
Exhibit Number 4, Minutcs of lnili3[ Meeling of
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Bo.rd of Director< of NorthWestern Energy Held April 22. 2002, page 29
Exhibit Nwnbcr SI Managcmenl Financial and lnfonu:tlion R~IX)rt Mec1ing 2002 Calendar, page 42
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BROWNING, KALECZYC, BERRY & HOVEN, PC 139 North Last Chance Gulch Helena, MT 5960 I By: Scanley T. Kaleczyc, Esq. IUmbcl'ly A. Beatty, Esq. For Michael J. Hanson and Ernie 1. IUndt
Exhibit Nwnbcr 6. NorthWcslem Corporalion Sl8ff 18
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MeetinglExl."Cutive Conuuittee Meeling Janu:lry, 28,
2002 Minut"', pagc45 20 21 Exhibit Number 8, Department of Public Service
22 Before the Monbna Public ScrviceConunission of lhc Slate of MOnlilna Joint AppliC
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E.'hibil Number 7, February 25, 2002 E-m.il from Barboro Forinash to K.B"", Smook res.rding Tuesd.y NOR SlllfflExec Committee M31.ri.ls~page 47
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Page 5 INDr,X OF EXHII3ITS (continu
Numb~ 13, NOl1hWeslcm Corpor-liion P~enlOlli.on 10 (he Invcstmcnl Banking Commillee
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APPEARANCES (continued):
NIXON PEABODY, LLP
100 SUllllllcr Street
Boston, MA 02110·2131
By: JolUl V. Snellings, Esq.
For Law Debenture Tlust Company of New York
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NORTHWESTERN ENERGY
125 S. Dakota A venue Sioux Falls, SO 57104-6403 By: TIlomas Knapp, Esq.
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dJted February 2&. 2002, i»ge 1.012
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bhibil Number 1-1, Ma)' 18, 1002 Memurandum from Kipp Onne 10 Merle Le\\·is. Die\: Hy\land and Ene Jacobsen rcC1rding FillAncin~ PI:4ns. 3nd Considcr-liions,
p.sc 148
Exhibit Number I S. June 17.2002 Memonndum rrOl'D Kipp Onne to NOI1h\\'~lem Boa,d ofDireelors
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regarding Fin.ncins 'nd III PI.ns, poge 160
i!."ltibil NUlnber 16, April 16,.2002 E.-mail from faul W)the 10 mullipJe recipients regilrdins First QU3l"IC'l' £:tmings Releasc, p3gC 166 Exbibil Number 17. NOl'lh\Vest~m energy Monlhly OpcralionJl Updatc d:ued Juno:! I, 2002. p3ge 169 Exhibit NUlnber 18. Nor1hWcS1cm Enersy Monlhly Opcraliol)al Upd~lC' dated July 22, 2002. p;.1ge 169 E:ochibil Number 19, NOr1hWeSlcm Energy Monlhly Operaliol\Jl Upd:uc da~ed ,\uGu" 19, ~OO2, pago 169
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2 (Pages 2 to 5) Elisa Dreier Reporting Corp. (212) 557-5558 780 Third Avenue, New York, NY 100 17
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there were titles or references to me, official or unofficial, that weren't reflected in my employment agreement, that's possible. Q. And during tbe course of2001 and 2002 you attended meetings and you reported to various executives at NorthWestern Corp, correct? A. Of course I went to various meetings, reported to various executives. Q. You reported to Mr. Hylland? A. Not individually I didn't report to Dick Hylland. NorthWestern had what it referred to as the office of CEO which was described as the -- Merle Lewis, the CEO and Dick Hylland, the president and chief operating officer I believe his title was, to which we all reported to. But as you just discussed with me they would at times create internal management boards as a teclmique to overseeing operations, so in that sense I reported to this intemal board. Q. But in essence, the entities that had the internal boards were wholly
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MS. DELANEY: Objection. THE WITNESS: I don't think it's accurate to characterize it that way. BY MS. STElNGART: Q. How would you characterize Mr. Hylland's and Mr. Lewis' role in cOlUlection with your compensation? A. They would -. as far as base compensation, for all of the officers of the corporation would do compensation studies that would develop a market'range of what the pay, the salary should be and the elements of the pay package, if you will, and they would make recolJunendations to the board of directors of the corporation who would approve those elements. And in terms of incentive compensation or what you call bonuses, those were a pre-established fonnula based on results or pelforrnance that then would be calculat!(d after the period in question to detennine what amounts were earned. They didn't just sit down with a blank sheet of paper and decide what they thought people should get. Q. And is it your view that with
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owned by NorthWestem Corp, directly or indirectlY, cOlTect'? MR. KALECZYC: Objection. BY MS. STEINGART: Q. The entities that you were involved with in c01U1ection with your employment at NorthWestern were wholly owned, directly or indirectlY, by NorthWestem Corp, correct? MR. KALECZYC: Objection. THE WITNESS: Wholly owned directly or indirectly by NorthWestern Corporation? BY MS. STEINGART: Q. Vh-huh. A. Yes. Q. And Merle Lewis was the CEO of N0l1h Weste111 Corporation, correct? A. Yes. Q. And Mr. Lewis and Mr. Hylland were people who set your compensation or at least the bonus aspects of it, correct? MR. KALECZYC: Objection. BY MS. STEINGART: Q. In conjunction with the board?
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respect to bonuses or long·term compensation there was no element of discretion? A. I don't believe I said there is no element ofjudgment, but for the most part, ~hey were formulaic based On perfOlmance results and they didn't just choose a number between a range. Q. Was it your understanding that to the extent that judgment was involved, that Mr. Hylland and Mr. Lewis would make recommendations to the board with respect to your compensation? MS. DELANEY: Objection. THE WITNESS: Without going back and looking at the formula, I don't recal1 What, if any, discretionary or judgment-type application, subjective versus objective, to the best of my reco)[ection, they were predominantly objective measures and the results then drove what the compensation would be.
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2002, were those reguests made of Mr. Hylland and Mr. Lewis?
A. I don't want to get tripped up on temlinology. I can recall jointly with Mr. Jacobsen asking them to consider a -- an alternative compensation approach Or program, if you will. But I don't recall any time what I would consider just discretional)' compensation where based upon their position or authority they could just award a sum to someone, that just was not a practice (hat we had at NorthWestern. Q. Would it surprise you to learn that it was Mr. Drook's understanding as far as your compensation was concerned the comp committee of the board looked to Mr. Lewis and Mr. Hylland with respect to their views? MS. DELANEY; Objection. THE WITNESS: I can't speak to -- first of all, I don't know if Mr. Drook was on what they call comp committee. I remember him at one time being the chaiffilan of the govemance commil1ee, but -- assuming that hc was. I can't speak to who or what they
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Yes. Ii Who attended the monthly operation meetings of the NorthWestern Energy businesses? A. IfI'm following the label that , you are giving to those, it would be this ~ (indicating) internal management board i referenced in Exhibit Hanson 4 and most of I the officers of NorthWestern Energy, although they may not have attended each one . g if they didn't have some item on the agenda related to their scope of authority. ~ Q. SO those persons that you ~ referenced would be Merle Lewis? A. Again, generally I don't know ~ I that Merle attended every one, but Merle Lewis, Dick Hylland, myself, Dan Newell, Eric Jacobsen, Kipp Orme as the internal board, and then the officers listed ~ here or some combination of them. ~ Q. And "listed here" refers to Exhibit 4. ~ And in addition to you received periodic reports called management .~ financial infomlation reports, correct,
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relied on in their judgment, I wouldn't know. BY MS. STErNGART: Q. Getting back to the activities that you engaged in with respect to Nor{hWestem Corporation, during the year you attended meetings with Mr. Lewis and Mr. Hylland? A. Yes. MS. DELANEY: Do we have a timeframe? MS. STEINGART: During 2001 and
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BY MS. STEINGART: Q. In addition to having meetings with Mr. Lewis and Mr. Hyllaud, from time to time you attended board meetings of the NorthWestem board? A. Generally speaking, from time to time I would attend parts of board meetings. Q. In addition to that there were meetings -- there were operations meetings that occurred on a periodic basis with respect to the NorthWestem Energy businesses?
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during 2002'1 ~ 1 A. Yes. Q. Also the end of 200 I, correct? A. I don't know when those reports began, but subject to verifying that it was j in 2001, most likely, yes, MS. STEINGART: For the ~ I convcnience of counsel we've created another binder. Do they have their binders? MR.. KIMBALL: Yes. MS. STEINGART: I'm going to show you another binder called the rilanagement financial infoffilation report binder so this way you have -- and we've put in there -- and just - there is one for the witness here so -- just for reference during the deposition, we've put in the MFIRs that are dated December 2001 through November 2002. BY MS. STEINGART: Q. SO would you agree with me, sir, looking at the binder that we've ~ placed before you that at least for the period December 2001 though November 2002 there was periodic management fmancial infomlation reports that were distributed
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to the partner entity CEOs among others? MR. KALECZYC: Could you read back the question for me, please? (Whereupon, the court reporter read back the previous question.) THE WITNESS: I'm not sure I know the full distribution list But if your question is did I receive Ulese reports at least for this peliod of time, the answer is . yes, I did. BY MS. STEINGART: Q. Thank you. In addition to those reports, there were monthly meetings of a group called the executive/staff of NorthWestern, correct? A. Yes. (Deposition Exhibit Number 5 marked for identification.) BY MS. STEINGART: Q. Sir, I've placed before you what we've marked as Hanson Exhibit 5. Do you recognize that to be a calendar for 2002 with respect to management financial and information report meeting? A. (Reviews document.) That's
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believe I attended those, Kipp Omle would host them, Dick Hylland I Ulin!< attended many, if not most, but Dave Monaghan who was the controller ofUle utility. And the purpose of that was to work on the financial information that was eventually included in these reports which were circulated to the partner entity CEOs. Again, as I said, I don't know the fuJI distribution list.
BY MS. STEINGART:
Q. And the financial information
and other business issues that were current
at the businesses were discussed at the NOR
staff executive meeting? A. I think you may .be -- there is a third set of meetings -- whether you are confusing or just confusing me with the references that - the NOR staff meeting, Merle's staff focused on1'4'orthWestem business. And again, for the most part, there was not a lot of discussion about the --in fact, I don't think Ule other partner entity CEOs routinely attended
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what it purports to be. I don't recall seeing such a calendar, but that's what it purports to be. Q. Do you see the first buIlct point where it says "11 th floor NOR boardroom immediately following the NOR staffJexecutive meeting"? A. Yes. Q. SO did -- when these meetings occurred, were there staffi'executive meetings Ulen followed by meetings where the, jfyou'll excuse my reference to MFIRs, were discussed? MS. DELANEY: Objection. THE WITNESS: As best I recall there was a staff meeting or executive meeting that I would attend that was Merle Lewis, Dick Hylland, the corporate officers and we would have periodic staff meetings. FolJowing that, the financial reporting persolUlel would attend a meeting to discuss the preparation of these fmancial infonnation reports that you are calling MFIRs. For the most pa11, subject to going back and looking at that, I don't
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those.
So there wasn't a lot of
discussion about business issues or developments or whatever that was going on in their businesses. TIley, like NorthWestern Energy, had their own version of an operations meeting where we would go Ull'ough those details with our internal board, but I was not on those and didn't attend them. We had a _. some frequency,
I'm not certain exactly how much, but I
believe qua11erly there was what was called
a partner entity CEO meeting where Merle,
Dick, myself and the other partner entity
CEOs, couple of the other corporate 0 fficers
would get together and just discuss
generally fue businesses.
Q. The quarterly meetings that you
referenced, were there minutes kept at
those meetings?
A. I don't recall if there was.
(Deposition Exhibit Number 6
marked for identification.)
BY MS. STEINGART:
Q. I'd like to show you what we've
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12 (Pages 42 to 45) Elisa Dreier Reporting Corp. (212) 557-5558 780 Third Avenue, New York, NY 10017
Case 1:04-cv-01494-JJF
Document 262-9
Filed 01/04/2008
Page 12 of 50
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marked as Hanson 6. A. (Reviews document.) Q. Do you recognize Hanson 6 to be minutes of a NorthWestern staff meeting/executive conunittee meeting? A. It appears to be, yes. Q. Do you see that in addition to yourselfand Mr. Hylland and Mr. Lewis that Mr. Walker attended that meeting? A. Indicates that he was on telephonically. Q. And he was, at that point, the partner CEO of what entity? A. Expanets. Q. And Mr. Newell, what was his role at that time? A. Without going back and looking it up, I don't know when Mr. Newell went from the president of what was called NorthWestern Growth Corporation, NOC, to become the CEO of Blue Dot. So I don't know if this is before or after that change, Q. Was it your recollection that these minutes were prepared in cOlU1ectiol1 with the staff executive meeting and then
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Q. Now, in addition to these monthly staff/executive meetings and the quarterly meetings that you referenced, the board meetings that you are listed as attending and your monthly operation meetings, were there any other regularized meetings that you had with the executives of NorthWestern Corp? A. The only other one that I recall ;"'l'm sorry, when you say "the ".~ executives of NorthWestern Corp," can you teU me who you include in that definition? Q. Mr. Lewis, Mr. Onne and Mr. Hylland. . A. The only other one that I recall would be an annual planning meeting. Q. Now, physically during 2002 where were you located, your offices located in the organization? A. Go back and verify a move date, but the office I worked here on for a couple of years, so probably by 2000 we had -- the corporate offices were in the Qwest building, downtown Sioux Falls and NorthWestern Energy was in an office
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distributed to the attendees? A. I believe that's correct. Q. Okay. (Deposition Exhibit Number 7 marked for identification,) BY MS. STEINGART: Q. I'd like to show you what we've marked as Hanson 7, A. (Reviews document.) Q. Hanson 7 is an e-mail dated February 5th from Barbara Forinash to a number of persons including yourself. Do you see that that attaches the minutes of the January 28th meeting? A. The document obviously speaks for itself. To be precise, this is an e-mail being forwarded from Barbara Forinash to Karen Smook that has a previous e-mail attached that is a distribution of materials including the minutes of the January 28th meeting. Q. And it references the meeting that was to occur in February ofthe staff/executive, correct? A. It does.
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building on the soulh side of Sioux Falls at 57th and Western Avenue.. At some point we vacated that office and consolidated into the Qwest building, but I don't recall when that was. Q. And once that occurred, did you -- were you on the same floor as the executives of NorthWestem as Mr. -- strike that. When that consolidation
occurred, where were you located vis-a-vis Mr. Lewis?
A. We were both on the 11 th floor
of the Qwest building, on opposite comers but on the same floor. Q. And Mr. Hylland? A. Same answer. Q. Mr. Jacobsen? A. Eric Jacobsen and I, our offices were next door to each other. Q. Mr.Onne? A. He and I were ~)I1 the same side as Mr. Jacobsen, he was in another comer. Q. What was the day-to...
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13 (Pages 46 to 49) Elisa Dreier Reporting Corp. (212) 557-5558 780 Third Avenue, New York, NY 10017
Case 1:04-cv-01494-JJF
Document 262-9
Filed 01/04/2008
Page 13 of 50
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the II th floor? MR. KALECZYC: Objection. BY MS. STEINGART: Q. Ifany. MR. KALECZYC: Objection. BY MS. STEINGART: Q. Or if you can characterize it. If you can't charactedze it, tell me. A. TIle question is fairly vague. There's not substantive contact beyond the meetings or the regularly scheduled or special meetings that obviously if you office with somebody you occasionally run into each other coming in and out and say good morning or good afternoon or whatever. Q. Other than that they weren't regular lunch companions of yours? A. No. Q. Mr. Jacobsen? A. No. Q. In terms of carrying out your day-to-day tasks other than the meetings that we've discussed, those tasks would not bring you into contact with them? MR. KALECZYC: Objection.
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application to acquire the Montana Power Company -- I'm sorry, the Montana Power, LLC was filed, there was also prepared testimony that was filed on your behalf, correct? MS. DELANEY: Objection. BY MS. STEINGART: ~ Q. There was -- strike that. I" In connection with the application, the joint application '. concerning the Montana Power Company, LLC, ~ your prepared testimony was filed, correct? ~ MS. DELANEY: Objection. THE WITNESS: Yes, there was ~ ~ I pre-filed direct testimony. BY MS. STEINGART: i Q. Then later in January 2002 ~' . during a hearing that was held in connection with that acquisition, you gave ~ !,l live testimony. Do you recall that? j MS. DELANEY: Objection. i THE WITNESS: Yes, I do. BY MS. STEINGART: ~ Q. Do you recall that in 1
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MS. DELANEY: Objection. THE WITNESS: Generally not, I would be interacting with the other officers of NorthWestem Energy. BY MS. STEINGART: Q. In connection with the Montana Power Company acquisition and the movement toward going flat, did you have more regularized contact with Mr. Jacobsen? A. Yes. Q. That was a project that you were working on together, correct? A. I'm sony, which was the project that you were referring to? Q. The acquisition and the movement of that acquisition from the structure that it had on FebrualY 2nd to the going-flat in November of2002? A. Mr. Jacobsen and I worked closely together on the acquisition of the Montana Power, LLC. Witll respect to going flat, we were advised by legal counsel, Mr. Jacobsen and outside counsel on that matter. Q. Now, at the time that the joint
1 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24
connection with that live testimony there was the statement·that whatever you had submitted in cOlUlection with your prepared testimony was still true? A. I'm sure there is a transcript of tbat testimony, $0 I don't recall the exact thing. But as a general practice when you have pre-filed direct and/or rebuttal testimony, you must affiml from the stand and adopt that as your sworn testimony in that hearing prior to being tendered for cross-examination, so that is likely the case. (Deposition Exbibit Number 8 marked for identification.) BY MS. STEINGART: Q. I'd like to show you what we've marked as Hanson Exhibit 8 and ask you whether you recognize that as a supplemental filing in connection with the joint application by Montana Po\ver Company and NorthWestern Corp to acquire the Montana Power, LLC? 1>:. (Reviews ~ocumenl.) I don't
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14 (Pages 50 to 53) Elisa Dreier Reporting Corp. (212) 557-5558 780 Third Avenue, New York, NY 10017
Case 1:04-cv-01494-JJF
Document 262-9
Filed 01/04/2008
Page 14 of 50
Page 106
Page 108
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to substantially increase its cash commitment to Expanets," correct? A. That is what it says. Q. And you knew that, right? A. I knew as all of us, the senior management knew that Expanets, Blue Dot, CornerStone were not meeting their projections and the reports will show that. They also came and said: Here is what we are doing about it and the performance improving. I can't -- having not authored that statement, I don't frankly think I had any infonnation about their .· the cash commitments from NOR to Expanets. Q. This memo is from you, Mr. Lewis and Mr. Hylland, correct? A. It is from Mr. Jacobsen and I to them. Q. Is there any note in here that says: There are things here that I know nothing about but they are in this memo? MS. DELANEY: Objection. MR. KALECZYC: Objection. THE WITNESS: Of course not. BY MS. STEINGART:
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MR. KALECZYC: We've already gone through this line of testimony. MS. STErNGART: NorthWestern MR.. KALECZYC: Bonnie, if! may. We've already gone through the line of testimony related to the PFC and what he testified to and what he did not. If you want to ask him about his PFC testimony again, go ahead. . MS. STErNGART: Again, speaking
objections are improper.
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BY MS. STEINGART: Q. "NorthWestern was overleveraged and running out of liquidity." Do you see that? A. I do. Q. Did you tell the Montana Public Service Commission at the end of2001 NorthWestern was overleveraged and running out of liquidity? MR. KALECZYC: Objection. THE WITNESS: We have the transcripts and the discovery. BY MS. STEINGART: Q. "Beginning in October, NOR
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Q. Let's see what else it says. Let's go on to the next paragraph, '!These events placed tremendous pressure on NOR's liquidity during the last halfof2001." Do you see that? A. 1 do. Q. Did you tell that to the Montana Public Service Conunission? MR. KALECZYC: Objection. THE WITNESS: I don't understand .. did we say there was pressure on liquidity? BY MS. STEINGART: Q. Right. A. I don't recall saying that. But pressure on the liquidity and failure of meeting projections does not indicate that there is a pend ing disaster, especially when the businesses are reporting that they expect perfonnance to improve based on a series of actions that they represent. Q. SO the answer is: No, you didn't tell them? MR. KALECZYC: Objection. MS. DELANEY: Objection.
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addressed its liquidity issues through a series of capital market transactions that had a common thread." Do you see that'! A. I do. Q. Goes on to say "The $78 million conU110n equity offer and two tlUst preferred offerings that raised $217 million, the recent completed $720 million bond offering and new $280 million revolving credit facility were all positioned on the strength of NOR's stable and recuning cash flows from its combined utility operations giving pro fonna effect to the acquisition of Montana Power." Do you see that? A. Yes, I see the statement. Q. And did you understand that the $217 million tlUst prefelTed offerings were used to support the operations of the non-regulated businesses? MR. KALECZYC: Objection. THE WITNESS: I did not, and I don't believe it's accurate to say they were used solely for that purpose. But there is no
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28 (Pages 106 to 109)
Elisa Dreier Reporting Corp. (212) 557-5558
780 Third Avenue, New York, NY 10017
Case 1:04-cv-01494-JJF
Document 262-9
Filed 01/04/2008
Page 15 of 50
PagellO
Page 112
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question the transaction was accretive to earnings and cash flow and therefore strengthened the fmancial profile of the company. BY MS. STEINGART: Q. Do you understand now as you look at this that that transaction, that the COllunon thread that you referred to in those offerings were giving pro forma effect to the acquisition of Montana Power? MR. KALECZYC: Objcction. MS. DELANEY: Objection. THE WITNESS: I think that's a truism. BY MS. STEINGART: Q. The paragraph goes on to say that NOR's retention of an investment grade rating during this period, dash, absolutely crucial to future liquidity, dash, was entirely dependent on the pro [onlla utility operations. Do you see that? A. I see the reference. Q. Did you tell the Montana Public Service Commission that the credit ratings
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Q. It goes on to say that without the Montana Power Company transaction, it is doubtflll that these capital transactions could have been completed. Do you see that? A. I see it. Q. Now, that's what you were telling your supeliors in or about March of 2002, correct? ....... A. It's part of·what we were telling them in this memo. Q. Okay. Ifwe could go back to the January 28th executive conunittee minutes. Sir, could you look at Exhibit 6 again? Now, even in January you were aware of the problems that Expanets was having, correct. A. I was aware that they were having problems, have any knowledge of the details, but they reported a number of times including this that they were having problems and they were working to fix them. Q. At the meeting that you attended on the 28th, there was an update
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that NorthWestern had at the time it made its application and that you gave its testimony -- strike that. Did yOll tell the Montana Public Sen/ice Commission that NorthWestern's credit ratings that existed at the time you gave your testimony in Janual)' was dependent on the pro fonna utility operations? MR. KALECZYC: Objection. THE WITNESS: Candidly, this statement is -- this is overstating it. Do the credit ratings depend on the financial strength cash flow interest rate coverage ratios? Of course. Is it important to strengthen the company to have an accretive transaction, earnings and cash flow? Of course. Are they entirely dependent on that? No, I don't believe that to be the case and obviously there is some advocacy going on. TI1C point we are tl)'ing to convey was this was very important, took a lot of hard work from people and deserves recognition, very beneficial to our company. BY MS. STEINGART:
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given with respect to the Expert system at Expanets, correct? A. This would indicate that, yes. Q. And you gave a presentation at that meeting conceming the Montana Power Company acquisition, correct? A. I did, yes. Q. And !vir. anne gave a presentation with a financial update, right? A. Yes, it appears that. Q. Now, if we look at - and these are the kinds of updates that occun'ed throughout the year at these meetings, right? A. There were updates like that, you know, each of the minutes, you know, I describe the specific ones. Q. In addition to a finance update by Mr. Orme, right? A. I'm sorry? Q. In addition to this finance update -- I'm sorry, I'm looking at the page after your presentation. A. Mr. Omle gave a finance update,
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29 (Pages 110 to 113) Elisa Dreier Rep0l1ing Corp. (212) 557-5558 780 Third Avenne, New York, NY 10017
Case 1:04-cv-01494-JJF
Document 262-9
Filed 01/04/2008
Page 16 of 50
Page 114
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yes.
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Q. Ifwe could look at that
together. Here Mr. Om1e talks about the
money that was raised in the offerings,
doesn't he?
MR.. KALECZYC: Objection.
THE WITNESS:
Indicates that -- he's talking about an
offering.
BY MS. STEINGART: Q. He's talking about a 100 million retail trust preferred that occurred in January? A. Yes, that's what it says. Q. That was just two days after your testimony to the Montana Power Commission, correct? A. I don't remember the dates, but I think it was January, yes. Q. And it goes on to say "He noted that these preferred offerings are helpful, however, there are still significant cash flow issues affecting NOR." Do you see that? A. Yes.
Pagc 115
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doesn't talk about inunediacy of the issue or
what to do. And you haven't gotten into the
rest of2002, but we, you !mow, spent a lot
of time working to improve the cost
1& structure and therefore cash flow.
Q. He indicates that there are
significant cash flow issues affecting NOR.
· Do you see that?
A. I see the reference, yes.
Q; At or about that time, what did you understand those cash fTow issues to ~ § be? ~ A. I understood that these ~ businesses were 110t meeting their projections. They were using more cash than anticipated. They were providing less than anticipated missing earnings targets and that the management of those businesses said they had the issues in hand, they were ! working to improve th~m and this is nothing ~ ~ more than the CFO saying we all need to ~ continue our efforts to improve the cash I flow of the company going forward. That was my understanding. Q. And you understood that they
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,. ,
Q. At the end, if you look at the
last sentence with me, he reminded evelyone
that NOR has gone through $175 million of
cash duJing the last quarter.
Do you see that?
A. Yes.
Q. 55 to Blue Dot, right?
A. That's what it says, yes.
Q. 70 to Expanets?
A. Yes. Q. 13 to CornerStone? A. Yes. Q. 20 to NOR, right? A. Yes. Q. And then he says "In essence we are no better off regarding working capital than we were before the $200 million offering." Do you see that? A. I see it, that's what it says. It doesn't -- look, talking about an offering that was made, monies received, it talks about how they were used in working capital. And, you know, clearly they are looking at having to approve it. But it
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were not only missing their projections but they were not generating enough cash to cover their operating cash flow, correct? MS. DELANEY: Objection. THE WITNESS: I don't recall ever having that1.U1derstanding. But what you are talking about is, again, a time-specific, not all businesses are positive cash flow every day or every month. The utility is negative cash flow today. Usually two out of four quarters of the year, seasonal businesses. So did I have the tinderstanding? r do not recall that understanding. Would that necessarily alarm me? No. BY MS. STEINGART: Q. In fact, that Expanets had negative cash flow for an entire year did not alann you? MS. DELANEY: Objection. THE WITNESS: In and of itself that does not describe what Expa.nets was saying it's doing about the problem or how it's going to improve the operations. BY MS. STEINGART: Q. When Expanets continued to have
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30 (Pages 114 to 117) Elisa Dreier Reporting Corp. (212) 557-5558 780 Third Avenue, New York, NY 10017
Case 1:04-cv-01494-JJF
Document 262-9
Filed 01/04/2008
Page 17 of 50
Page 222
Pag~
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THE WITNESS: We'd have to check the minutes to see what they say. I do recall a discussion of that with the board where counsel updated the board. But whether that was an executive session that didn't get detail in the minutes, again, I don't know without going through all of these. MS. STEINGART: To the extent such a document exists, such a reference in the board minutes exists, I would ask that it be produced. BY MS. STEINGART: Q. Let's talk about what you did in furtherance of this directive. I'd like to show you what we've marked as 22 and 23. A. (Reviews document.) MS. STEINGART: Actually, as part of 23 there are two copies of the officer's certificate. You can take off that last one. It's not signed. MS. DELANEY: Do you want it removed from the exhibit? MS. STEINGART: Yeah, could you remove it. MS. DELANEY: Blue page and all?
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but
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Q. Well, evidently you stood in for Mr. Monaghan. A. Maybe. But yes, officer's certificate signed by me. That is my signature. Q. Do you understand what an officer's certificate is? A. Yes. Q. If you look at paragraph 3 with me. A. Dh-huh. Q. And in paragraph 3 you certify that all conditions precedent, provided for in the indenture relating to the execution and delivery of the second supplemental indenture dated as of the date hereof among NorthWestern Energy, LLC and the trustee including any covenants compliance which constitute a condition precedent have been complied with." Do you see that? A. Yes, I do. Q. What did you do to satisfy yourself that that was correct?
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MS. STEINGART; Yes. 1l1ank you. THE WITNESS: (Reviews document.) BY MS. STEINGART: Q. My only question with respect to 22 is whether you recognize it to be the second supplemental indenture that you executed on behalf of NorthWest Energy on or about August 13, 2002? A. I believe that it is. Q. And with respect to 23 - A. Was J supposed to remove something? Q. Yeah, just the blue page and beyond. A. (Complies.) Q. And with respect to 23, that is the officer's certificate that you executed in August 2002 in cOlUlection with that second supplemental indenture. A. (Reviews document.) Well, it's an officer's certificate and that is my signature. I'm not sure why it says liThe undersigned, David A. Monaghan, in his capacity as CEO does hereby certify on behalf of NorthWestcm Energy that..."
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A. I reviewed the documents that are referellced in that case, it's the second supplement and the foulth, it's the indenture, llnd required of other management, particularly Mr. Monaghan, and of counsel, basically whether the conditions stated were in compliance. Q. Well, doesn't paragraph 6 say that counsel was relying on you? A. It indicates that Paul Hastings will rely on the accuracy and truth of the foregoing for purposes of rendering il~ opinion to the trustee. But the conversations I had were with - Euclid Irving was one of the attomeys advising on the - advising me and NorthWestern Energy, LLC on the transaction. Q. SO you certified paragraph 3 based on what Mr. Monaghan told you? MS. DELANEY: Objection. THE WITNESS: Tdon't think I said that. Based, number 3, on personal inquiry and infonnation provided to me by management including Mr. Monaghan and advice of counsel. BY MS. STEINGART:
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57 (Pages 222 to 225) Elisa Dreier Reporting Corp. (212) 557-5558 780 Third Avenue, New York, NY 10017
Case 1:04-cv-01494-JJF
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Q. And describe the substance of the personal inquiry. A. Reading the documents to figure out what conditions precedent existed. And then inquiring whether or not we were in compliance with those conditions. Q. As you sit here today, do you recall what conditions precedent that you inquired into? A. I don't recall. But I think they are in the document. Q. And in preparation for this deposition, did you look at any of those things? A. I did not, no. Q. Paragraph 4 says that you've read the applicable provisions of the indenture. Do you see that? A. Yes. Q. What provisions did you read? A. I don't recall specifically. [ had available the entire indenture document, it was a I don't remember the date of it, it's an older document, and went though its
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Q. And it indicates here "As well as the indenture and such corporate records and other instruments and documents." What corporate records did you look at? A. I don't remember looking at other corporate records. I recall making inquiries of some number of people including Mr. Monaghan and counsel, Euclid Irving. Q. As you sit here today, do you recall either what Mr. Monaghan or what counsel told you in that regard? A. Generally. Not the specific words. Q. What did they tell you? A. That, in general, the substance was th at we are -- we meet the requirements of the covenants and the conditions. Q. And did you lJ,sk them what they were they basing -- what infonnation they based those conclusions on? A. I don't recall asking him that. Q. Did they prepare memos or summaries for you conceming what they
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provisions. Q. It's a document that we marked just by happenstance as the first exhibit to this deposition. Is this the document (indicating)? A. (Reviews document.) Yes. Q. It says you've also examined oliginals or copies celtified to his satisfaction of the various certificates and instruments prepared in connection with the execution and delivery of the second supplemental indenture. What certificates and instruments did you review? A. I don't remember other than the -- the supplement indenture itself. I don't remember if there are celtificates and instruments in cOlmection with it. If there are, I think I was provided witb a complete packet. Q. Do you have a recollection of that? A. I don't know if there are such -- I don't recall if there are other certificates and instruments related to that
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looked at and what they found in the things they looked at? A. I don't recall if there was memos or other written material proVided. Q. Then it goes on to say "And made such examination and investigation as, in his opinion, is necessary to unable him to express an infonned opinion as to whether or not such covenants and conditions have been complied with." A. Yes. Q. What examination and investigation dId you make? A. Just what I told you. Q. SO that just refers to what you received from Mr. Monaghan and counsel? A. As I said, there may have been some number oUler than just Mr. Monaghan. But my specific recollection today is that I discussed with Mr. Monaghan and with Mr. Irving. Q. Did you take any steps to assure yourself that there was the capacity to pay principal and interest on the part of NorthWestem Corporation when you
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executed this indenture? MS. DELANEY: Objection. (Whereupon, the court reporter read back the previous question.) THE WITNESS: I don't recall taking any specific steps relative to that question. But based on my view at the time, I certainly -- I believe that there was such capacity. In fact, I think such payments were made. BY MS. STEINGART: Q. And was your view at the time based on the company's SEC filings and other public financial statements? A. In part as well as the other management reports, fmancial reports we talked about. (Deposition Exhibit Number 26 marked for identification.) BY MS. STEINGART: Q. I'd like to show you what we've marked as Hanson 26. It's a memo dated October 16th to the board from Mr. Lewis and Mr. Hylland. A. (Reviews document.)
entity CEOs went tlu'ough our pOliion of a presentation as well as the overall discussion by Mr. Hylland. Q. And do you have an understanding that a packet concerning NOR liquidity and fmancing opportunities and strategic plan sensitivities was also 8 provided to the board in preparation for 9 the November meeting? l O A . I see the reference and their .,~ II typically were board packets, but I don't 12 know that I knew at that time the cOntents 13 of the board packet. 14 Q. We'll get to the meeting and 15 talk about 27 in connection with the 16 meeting. 17 (Deposition Exhibit Number 28 18 marked for identification.) 19 BY MS. STEINGART: 20 Q. What we've marked as Hanson 28 21 which is a memo dated October 30th from 22 Mr. Onne to the board of directors. 23 A. (Reviews document.) 24 Q. And the only thing I'm going to 25 ask you about is the first paragraph under
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(Deposition Exhibit Number 27 marked for identification.) BY MS. STEINGART: Q. And also Hanson 27, which is a part of one of the attachments referenced in that October 16th memo. A. (Reviews document.) Q. My only question now is whether you recall seeing this cover, this e-mail dated October 16th and the operating plan and board summary that was .- that's noted in the first bullet? MR. KALECZYC: Object to fonn. THE WITNESS: I don't recall -- you say "this e-mail," are you refening to this memo. BY MS. STEINGART: Q. Yes. A. I don't recall seeing that and don't 1mow whether or not this was circulated to people other than to board members. The reference plan sununaries, I don't recall seeing them in advance but did attend that portion of the board meeting where myself and each of the other p81iner
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2002 Forecast. A. (Reviews document.) Okay. Q. Do you recall having seen the October 30th memo? A. I don't, no. Q. Did you learn in or around that time, and that is at some point between October 30th and November 5th or 6th board meeting, that the current EPS forecast is now 1.99 as compared with 2.30 reflected in the prior submission? A. I recall at the meeting that we've not yet discussed that a plan, both operating and financial plan was presented and that segment of sessions, which we talked about, then myself and other p'1I1ner member CEOs were asked to leave. But following that, Mr. Lewis and Mr. Hylland reported back that the board did not accept and approve a plan and directed the company management to go back and revise the plan because they felt there was too much risk contained in it. And we had a revised plan. 1 wouldn't recall specifically what that said, but this memo would indicate that the
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revised plan and budget had an earnings forecast associated with it of$1.99. Q. There was the 2002 forecast and the plan that the board was looking at was really the 2003 plan, sir, wasn't it, not the 2002 plan? A. That's COrrect. Q. SO the board looked at the plan, but my question for you is: Aside from the plan, did you learn between October 30th and the board meeting that the earnings for the cuo'ent year, that is 2002, that the earnings forecast was being lowered to $1.99 from $2.30? A. I don't recall ifI learned that beh"een that time period or not. Q. But in any case, that was something that was discussed at the board meeting? A. The "board meeting" now referring to the November 5th? Q. Yes, sir. A. Well, the minutes will cover that, but I believe that would be the case. Q. Okay. Why don't we look at the
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of participating or attending. So was I
aware of those? I don't recall that I was
aware of that specific discussion.
Q. Were you aware that during that
period of time the board had retained Bear
Steams to assist the company in looking at
various alternatives for raising funds?
A. I recall Bear Stearns coming
and participating in some discussion with
their representatives. I guess I either
didn't lmow or don't recall thescope of
what their involvement was.
Q. And Bear Steams was certainly
present at this November 6th meeting,
correct?
A. Yes, it appears they were, yes.
Q. And before the non-employee members of tile board met in an executive session, Bear Stearns made a presentation, right?
A. That's what's indicated by the minutes, yes. Q. That presentation was made by Mr. l1JOmpson and Mr. Morganbesser of Bear Steams, correct?
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minutes for November 6th. A. (Reviews document.) Okay. Q. Now, just so that I can get a timeline sense, before November 6th the company had sold 10 million shares of common stock in a public issuance, cOO'eet? A. 11Iere was an equity issuance. I'd have to verify the number of shares. Q. And that was in October of 2002, right? A. I don't recal1 exact date, but the fa 11, September, October. Q. Right. We looked at the underwriting agreement a little earlier? A. We did, yes. Is that the date? Q. And that was in October. A. All right. Q. And were you aware of the fact there were a series of board meetings in September where the board was considering various means for raising funds? A. Are you refening to special board meetings? Q. Yes, sir. A. I don't have any recollection
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yes. Q. And you were present for that, light? A. I don't know. Q. Well, it doesn't say that you left, does il? A. It doesn't. But I don't think, if you go through these, at that time we had a habit of saying when people joined and left. Q. Well, it certainly indicates that after that discussion -- that after the discussion that followed, the Bear Steams presentation, the non-employee members of the board met in executive session, correct? A. That is what it says, yes. Q. In the paragraph before that, do you see "At this time Thomas Falatko, Paul Hastings and Cary Thompson and Neil Morganbesser joined the meeting"? Do you see that? A. I see that, yes. Q. And italso indicates that
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