Preview
FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022
EXHIBIT 1
Excerpts of the Transcript of the January 30, 2020
Deposition of Charles Bachtell
Index No. 652343/2018
FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022
Page 1
·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · · · SUPREME COURT OF THE STATE OF NEW YORK
· · · · · · · · · · · COUNTY OF NEW YORK
·3
· · CRESCO LABS, NEW YORK, LLC a· ·)
·4· New York limited company, and· )
· · CRESCO LABS, LLC, an Illinois· )
·5· limited liability company,· · ·)
· · · · · · · · · · · · · · · · · ·)
·6· · · · · Plaintiff,· · · · · · ·)Index No.
· · · · · · · · · · · · · · · · · ·)
·7· · · ·- against -· · · · · · · ·)652343/2018
· · · · · · · · · · · · · · · · · ·)
·8· · · · · · · · · · · · · · · · ·)
· · FIORELLO PHARMACEUTICALS, INC.,)
·9· a New York corporation, ERIC· ·)
· · SIROTA, an individual, SUSAN· ·)
10· YOSS, an individual, and· · · ·)
· · JOHN DOES 1-10,· · · · · · · · )
11· · · · · · · · · · · · · · · · ·)
· · · · · · Defendants.· · · · · · )
12
· · --------------------------------
13
14· · · · · · · · · · · ·CONFIDENTIAL
15· · · · · · · · · ·ATTORNEYS' EYES ONLY
16· · · · ·VIDEOTAPED DEPOSITION OF CHARLES BACHTELL
17· · · · · · · · Thursday, January 30, 2020
18· · · · · · · · · · Chicago, Illinois
19
20
21
22
23· Reported By:
24· TRICIA J. LATHOURIS, CSR, RPR
25· JOB NO. 174109
FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · MR. VAIL:· Objection.· Form.
·3· · · A· ·Myself, John Figone; you know, to a certain
·4· extent, Ken Amann and Joe Caltabiano.
·5· BY MS. IZOWER-FADDE:
·6· · · Q· ·What was your role in the negotiations with
·7· Fiorello?
·8· · · A· ·I was -- I was heavily involved.· I was the
·9· lead, I would say.
10· · · Q· ·You were the lead negotiator; is that
11· right?
12· · · A· ·Yes.
13· · · Q· ·Did you also take the lead in doing
14· revisions to the LOI from Cresco's side?
15· · · A· ·The lead in revisions?
16· · · Q· ·Yeah.· Did you -- yes.
17· · · MR. VAIL:· Objection to form.
18· · · A· ·I participated in revisions.· I don't know
19· if I was -- I -- struggling to understand what it
20· means to be the lead in revisions.
21· BY MS. IZOWER-FADDE:
22· · · Q· ·Were you the one that actually affected the
23· revisions into the draft into the LOI?
24· · · MR. VAIL:· Same objection.· Like typing it in?
25· · · A· ·I would ask the same question.· Like typing
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · A· ·I don't recall.· The -- the one thing I do
·3· know is Fiorello was aware of our efforts to raise
·4· capital at all times.
·5· · · Q· ·When did -- what does that mean?· I don't
·6· -- when did Fiorello become aware that Cresco was
·7· making an effort to raise capital?
·8· · · A· ·I couldn't specifically pinpoint, but to
·9· the best of my recollection, it would have been
10· probably from the time that we were -- we first
11· started talking with them.
12· · · Q· ·Can you think -- are there any documents
13· that reflect that Susan and Eric were aware that
14· Cresco would be raising capital in connection with
15· the Fiorello purchase -- that they knew before the
16· signing of the LOI?
17· · · MR. VAIL:· Objection to form and foundation.
18· · · A· ·I -- I don't know.
19· BY MS. IZOWER-FADDE:
20· · · Q· ·When the LOI was executed, did Cresco have
21· adequate funding to be able to close the Fiorello
22· deal?
23· · · A· ·I don't recall.
24· · · Q· ·What -- if that -- if you needed to find
25· that out, what documents within Cresco might you
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · Q· ·-- says, "Now that the LOI is signed" --
·3· · · A· ·Uh-huh.
·4· · · Q· ·-- "please let us know how you want to move
·5· forward with diligence and the management oversight
·6· and Definitive Agreements."
·7· · · · · Do you see that?
·8· · · A· ·I do.
·9· · · Q· ·Did you respond to him on those points?
10· · · A· ·I -- to the best of my knowledge -- again,
11· we were in pretty constant communication, so whether
12· or not it's in this email chain in front of me, I'm
13· assuming that we connected on those points.
14· · · Q· ·Do you have a specific recollection of when
15· you first started making progress on due diligence?
16· · · MR. VAIL:· Objection to form.
17· · · A· ·I -- I seem to remember there being a delay
18· on Fiorello's part in getting us the diligence
19· materials.
20· BY MS. IZOWER-FADDE:
21· · · Q· ·Do you recall providing -- when you
22· provided Fiorello with a diligence list?
23· · · A· ·I -- I don't recall the exact dates, but
24· I'm -- I don't recall the exact dates.
25· · · Q· ·What about with regard to the management
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · MR. VAIL:· Objection.· Asked and answered.
·3· · · A· ·I would -- you know, again, I don't think
·4· this is a big assumption.· This was created
·5· post-signing of the LOI, so I would imagine it was
·6· the signing of this agreement -- I -- I would -- I
·7· would say it wasn't the signing of the LOI when
·8· they're saying "signing" here.
·9· BY MS. IZOWER-FADDE:
10· · · Q· ·So what's -- what this footnote references,
11· is it fair to say that this -- even if a management
12· oversight agreement were provided pursuant to this
13· footnote 6, that that would not provide funding for
14· Fiorello during the period between execution of the
15· LOI and the execution of Definitive Agreement?
16· · · MR. VAIL:· Objection.· Form.· Foundation.
17· Hypothetical.
18· · · A· ·I agree, I -- that would make me speculate
19· on this.· But just saying Fiorello wasn't that
20· excited by doing a managed service agreement.· They
21· wanted a Definitive Agreement signed before they
22· allowed us to do a lot of things, like even talk to
23· the Department of Health.· That was at their
24· request.· They didn't want to do many things that
25· were an action of moving forward until a Definitive
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· Agreement was executed.
·3· BY MS. IZOWER-FADDE:
·4· · · Q· ·Is that documented anywhere?
·5· · · A· ·I don't know.· I -- again, you have the
·6· emails, I would assume.· I -- I'd be very surprised
·7· if there wasn't an email discussing when are we
·8· reaching out to the Department of Health after the
·9· signing of a Definitive Agreement.
10· · · · · Same with us taking operational control of
11· their operations.· They wanted a Definitive
12· Agreement signed.
13· · · Q· ·Do you know whether you actually -- when
14· you -- sorry.
15· · · · · After the execution of the LOI, did there
16· come a time when you went to New York to do some due
17· diligence?
18· · · A· ·Yes.
19· · · MR. VAIL:· Objection to the form.
20· · · THE WITNESS:· Sorry.
21· · · A· ·Yes.
22· BY MS. IZOWER-FADDE:
23· · · Q· ·When was that?
24· · · A· ·I don't recall.
25· · · Q· ·Is that something that would be reflected
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · Q· ·The subject of the email is, "Fiorello base
·3· agenda."
·4· · · · · Do you see that?
·5· · · A· ·Yes.
·6· · · Q· ·Was that the agenda that you were proposing
·7· for the meeting you were just testifying about?
·8· · · A· ·Yes.
·9· · · Q· ·So the first bullet point says, "Due
10· diligence request."
11· · · · · Do you see that?
12· · · A· ·Yes.
13· · · Q· ·And is that a reference to the due
14· diligence list that had been provided the prior day
15· by your counsel?
16· · · A· ·Yes.
17· · · Q· ·The second bullet point is, "Definitive
18· document."
19· · · · · Do you see that?
20· · · A· ·Yes.
21· · · Q· ·And is that a reference -- what is that a
22· reference to?
23· · · A· ·Presumably the SPA.
24· · · Q· ·Were there other documents that were needed
25· as part of the deal?
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · A· ·There were.· But at -- at some point -- and
·3· I believe it was early on -- the -- the parties
·4· and/or the attorneys agreed the most important
·5· document is the SPA.· So they were focusing
·6· attention on that definitive document being
·7· prioritized.
·8· · · Q· ·Is that agreement documented anywhere?
·9· · · A· ·I'm not sure if it is or not.
10· · · Q· ·The next bullet point says, "Review" --
11· · · MR. LEFTON:· -- details about discussion --
12· BY MS. IZOWER-FADDE:
13· · · Q· ·Do you recall a specific discussion --
14· · · MR. VAIL:· I think --
15· BY MS. IZOWER-FADDE:
16· · · Q· ·-- involving the agreement to focus first
17· on the SPA?
18· · · A· ·I -- I believe there were several
19· discussions where that course of action, that --
20· that process was discussed, of prioritizing the most
21· important document before getting sidetracked with
22· less critical documents.
23· · · Q· ·Do you have any specific recollection of
24· who participated in such -- in that discussion?
25· · · A· ·I would recommend asking the attorneys that
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· were involved in drafting of the definitive
·3· document.
·4· · · Q· ·Is it possible that that was just the most
·5· important document from Cresco's perspective, but
·6· not necessarily from Fiorello's perspective?
·7· · · A· ·Highly unlikely.
·8· · · Q· ·Why is that?
·9· · · A· ·What would be more important than the
10· actual Purchase Agreement?
11· · · Q· ·Fair to say that the Purchase Agreement is
12· the document by which Cresco was gaining the shares,
13· but that the notes were the documents by which
14· Fiorello was ensuring that it would be paid -- that
15· its shareholders would be paid?
16· · · MR. VAIL:· Object to the extent it calls for a
17· legal conclusion.· And foundation.
18· · · A· ·No.· I -- I think the -- again, I think
19· it's very reasonable -- and, again, you brought up
20· the fact that I'm an attorney earlier -- but it
21· would be very reasonable to understand that the
22· document that lays out all of the terms and
23· conditions associated with the transaction gets
24· ironed out before the note that would memorialize
25· the -- the financial terms of it, or any other
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· documents associated with closing.
·3· BY MS. IZOWER-FADDE:
·4· · · Q· ·So from your perspective, the SPA outlined
·5· all the terms and conditions of the proposed
·6· transaction?
·7· · · A· ·You know, I could fairly comfortably say
·8· that I think that was the perspective of the parties
·9· involved in the transaction.
10· · · Q· ·Your test- -- you're here to testify as to
11· your personal knowledge.
12· · · A· ·Okay.
13· · · Q· ·So from your perspective, that was the
14· case?
15· · · A· ·Correct.
16· · · MR. VAIL:· Objection.· Asked and answered.
17· BY MS. IZOWER-FADDE:
18· · · Q· ·Okay.· And you --
19· · · A· ·Come to think, you've -- you've asked me a
20· lot of questions about the way that other people
21· felt or the timing associated with it, so --
22· · · Q· ·If I ask what your understanding was of
23· somebody else's behavior, that's one thing.· But if
24· I focus on your personal knowledge, that's another
25· thing.
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· to how to interpret the regulations?
·3· · · A· ·Correct.
·4· · · Q· ·Were there any other regulatory issues?
·5· · · A· ·I don't recall.
·6· · · Q· ·Ultimately, though, you wouldn't rely on
·7· Fiorello's interpretation of New York reg --
·8· regulatory structure, would you?· I mean, wouldn't
·9· Cresco seek its own counsel on -- on those points?
10· · · MR. VAIL:· Objection to form and argumentative.
11· · · A· ·I would expect Cresco to do both.· There
12· would be no -- there should be no faster source of
13· information than Fiorello.· And -- and, again, I
14· think you'll see -- I'm assuming it was turned over
15· in documentation -- they -- they regularly had
16· communications with the regulator, getting
17· clarifications as it related to these types of
18· things that aren't articulated in the regulations,
19· but they were additional guidances received directly
20· from -- I forget her name, and I remember it being a
21· her -- but directly from the woman at the regulatory
22· body giving them clarification on certain questions.
23· BY MS. IZOWER-FADDE:
24· · · Q· ·When you met with Susan and Eric in New
25· York, who else was present?
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· · · MR. VAIL:· Objection.· Form.
·3· · · A· ·I believe it was myself, Joe Caltabiano and
·4· them two, Eric and Susan.
·5· BY MS. IZOWER-FADDE:
·6· · · Q· ·Where did the meeting take place?
·7· · · A· ·At their WeWork office.
·8· · · Q· ·Do you recall how long it lasted
·9· approximately?
10· · · A· ·I don't.
11· · · Q· ·Forever?
12· · · A· ·I don't remember.
13· · · Q· ·Do you recall having discussions at that
14· meeting about the draft SPA that had been circulated
15· by -- on March 1st?
16· · · A· ·I do.
17· · · Q· ·Okay.· What do you recall about those
18· discussions?
19· · · A· ·I -- I remember them being very dismissive
20· of it.· They -- I -- I forget exactly what they
21· said, but it was along the lines of that was a poor
22· effort, which I found surprising, but, nonetheless
23· -- and they expressed a very dismissive perspective
24· on the first draft.· Had some questions.
25· · · Q· ·After that meeting, do you recall whether
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· there was a determination as to who would do the
·3· next turn of the SPA?
·4· · · MR. VAIL:· Objection to form.
·5· · · A· ·I -- I believe it was us because it was --
·6· it was a long time before we ever got a draft back
·7· from Fiorello on the SPA.· So I believe we took
·8· another bite at the apple, incorporating their
·9· concerns that they expressed, sent them another
10· draft.
11· BY MS. IZOWER-FADDE:
12· · · Q· ·Do you recall the -- there being an issue
13· relating to the original SPA including provisions
14· related to working capital?
15· · · A· ·Again, there were -- there were -- there
16· were concerns expressed.· I think working capital
17· was one of them.· Yeah, to the best of my
18· recollection, I think that was one of the issues.
19· · · Q· ·Was there also an issue related to the
20· sellers' representative provisions in the draft SPA?
21· · · MR. VAIL:· Objection.· Form.· Foundation.
22· · · A· ·I -- Could I ask for clarification?
23· BY MS. IZOWER-FADDE:
24· · · Q· ·Sure.· I mean --
25· · · A· ·Was that related to the -- who would act on
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·1· · · · · · · · · · ·CHARLES BACHTELL
·2· BY MS. IZOWER-FADDE:
·3· · · Q· ·Yes, the date that the LOI was executed.
·4· As of the -- does this email from Mr. Amann refresh
·5· your recollection as to whether Cresco had
·6· sufficient funding available for the acquisition of
·7· Fiorello when it executed the LOI?
·8· · · A· ·The -- again, no, because when it comes to
·9· financing, financing is a fluid situation.· Cresco
10· Labs has been able to fund commitments historically.
11· · · Q· ·You didn't have sufficient funding
12· earmarked for Fiorello, did you?
13· · · MR. VAIL:· Objection to the form.
14· · · A· ·Yeah.· I think the -- the document speaks
15· for itself of the current cash position in the -- in
16· the accounts of Cresco on that day.
17· BY MS. IZOWER-FADDE:
18· · · Q· ·Which was that you didn't have -- as of
19· March 12th, 2018, there was no cash available to
20· consummate the Fiorello transaction?
21· · · A· ·On March 12th, 2018, there was $21 million.
22· · · Q· ·All of which was currently committed to
23· other projects?
24· · · A· ·But there was $21 million in the account.
25· · · Q· ·None of it was earmarked for New York
Preview
FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 EXHIBIT 1 Excerpts of the Transcript of the January 30, 2020 Deposition of Charles Bachtell Index No. 652343/2018 FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 1 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · · · SUPREME COURT OF THE STATE OF NEW YORK · · · · · · · · · · · COUNTY OF NEW YORK ·3 · · CRESCO LABS, NEW YORK, LLC a· ·) ·4· New York limited company, and· ) · · CRESCO LABS, LLC, an Illinois· ) ·5· limited liability company,· · ·) · · · · · · · · · · · · · · · · · ·) ·6· · · · · Plaintiff,· · · · · · ·)Index No. · · · · · · · · · · · · · · · · · ·) ·7· · · ·- against -· · · · · · · ·)652343/2018 · · · · · · · · · · · · · · · · · ·) ·8· · · · · · · · · · · · · · · · ·) · · FIORELLO PHARMACEUTICALS, INC.,) ·9· a New York corporation, ERIC· ·) · · SIROTA, an individual, SUSAN· ·) 10· YOSS, an individual, and· · · ·) · · JOHN DOES 1-10,· · · · · · · · ) 11· · · · · · · · · · · · · · · · ·) · · · · · · Defendants.· · · · · · ) 12 · · -------------------------------- 13 14· · · · · · · · · · · ·CONFIDENTIAL 15· · · · · · · · · ·ATTORNEYS' EYES ONLY 16· · · · ·VIDEOTAPED DEPOSITION OF CHARLES BACHTELL 17· · · · · · · · Thursday, January 30, 2020 18· · · · · · · · · · Chicago, Illinois 19 20 21 22 23· Reported By: 24· TRICIA J. LATHOURIS, CSR, RPR 25· JOB NO. 174109 FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 83 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · MR. VAIL:· Objection.· Form. ·3· · · A· ·Myself, John Figone; you know, to a certain ·4· extent, Ken Amann and Joe Caltabiano. ·5· BY MS. IZOWER-FADDE: ·6· · · Q· ·What was your role in the negotiations with ·7· Fiorello? ·8· · · A· ·I was -- I was heavily involved.· I was the ·9· lead, I would say. 10· · · Q· ·You were the lead negotiator; is that 11· right? 12· · · A· ·Yes. 13· · · Q· ·Did you also take the lead in doing 14· revisions to the LOI from Cresco's side? 15· · · A· ·The lead in revisions? 16· · · Q· ·Yeah.· Did you -- yes. 17· · · MR. VAIL:· Objection to form. 18· · · A· ·I participated in revisions.· I don't know 19· if I was -- I -- struggling to understand what it 20· means to be the lead in revisions. 21· BY MS. IZOWER-FADDE: 22· · · Q· ·Were you the one that actually affected the 23· revisions into the draft into the LOI? 24· · · MR. VAIL:· Same objection.· Like typing it in? 25· · · A· ·I would ask the same question.· Like typing FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 133 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · A· ·I don't recall.· The -- the one thing I do ·3· know is Fiorello was aware of our efforts to raise ·4· capital at all times. ·5· · · Q· ·When did -- what does that mean?· I don't ·6· -- when did Fiorello become aware that Cresco was ·7· making an effort to raise capital? ·8· · · A· ·I couldn't specifically pinpoint, but to ·9· the best of my recollection, it would have been 10· probably from the time that we were -- we first 11· started talking with them. 12· · · Q· ·Can you think -- are there any documents 13· that reflect that Susan and Eric were aware that 14· Cresco would be raising capital in connection with 15· the Fiorello purchase -- that they knew before the 16· signing of the LOI? 17· · · MR. VAIL:· Objection to form and foundation. 18· · · A· ·I -- I don't know. 19· BY MS. IZOWER-FADDE: 20· · · Q· ·When the LOI was executed, did Cresco have 21· adequate funding to be able to close the Fiorello 22· deal? 23· · · A· ·I don't recall. 24· · · Q· ·What -- if that -- if you needed to find 25· that out, what documents within Cresco might you FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 205 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · Q· ·-- says, "Now that the LOI is signed" -- ·3· · · A· ·Uh-huh. ·4· · · Q· ·-- "please let us know how you want to move ·5· forward with diligence and the management oversight ·6· and Definitive Agreements." ·7· · · · · Do you see that? ·8· · · A· ·I do. ·9· · · Q· ·Did you respond to him on those points? 10· · · A· ·I -- to the best of my knowledge -- again, 11· we were in pretty constant communication, so whether 12· or not it's in this email chain in front of me, I'm 13· assuming that we connected on those points. 14· · · Q· ·Do you have a specific recollection of when 15· you first started making progress on due diligence? 16· · · MR. VAIL:· Objection to form. 17· · · A· ·I -- I seem to remember there being a delay 18· on Fiorello's part in getting us the diligence 19· materials. 20· BY MS. IZOWER-FADDE: 21· · · Q· ·Do you recall providing -- when you 22· provided Fiorello with a diligence list? 23· · · A· ·I -- I don't recall the exact dates, but 24· I'm -- I don't recall the exact dates. 25· · · Q· ·What about with regard to the management FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 214 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · MR. VAIL:· Objection.· Asked and answered. ·3· · · A· ·I would -- you know, again, I don't think ·4· this is a big assumption.· This was created ·5· post-signing of the LOI, so I would imagine it was ·6· the signing of this agreement -- I -- I would -- I ·7· would say it wasn't the signing of the LOI when ·8· they're saying "signing" here. ·9· BY MS. IZOWER-FADDE: 10· · · Q· ·So what's -- what this footnote references, 11· is it fair to say that this -- even if a management 12· oversight agreement were provided pursuant to this 13· footnote 6, that that would not provide funding for 14· Fiorello during the period between execution of the 15· LOI and the execution of Definitive Agreement? 16· · · MR. VAIL:· Objection.· Form.· Foundation. 17· Hypothetical. 18· · · A· ·I agree, I -- that would make me speculate 19· on this.· But just saying Fiorello wasn't that 20· excited by doing a managed service agreement.· They 21· wanted a Definitive Agreement signed before they 22· allowed us to do a lot of things, like even talk to 23· the Department of Health.· That was at their 24· request.· They didn't want to do many things that 25· were an action of moving forward until a Definitive FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 215 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· Agreement was executed. ·3· BY MS. IZOWER-FADDE: ·4· · · Q· ·Is that documented anywhere? ·5· · · A· ·I don't know.· I -- again, you have the ·6· emails, I would assume.· I -- I'd be very surprised ·7· if there wasn't an email discussing when are we ·8· reaching out to the Department of Health after the ·9· signing of a Definitive Agreement. 10· · · · · Same with us taking operational control of 11· their operations.· They wanted a Definitive 12· Agreement signed. 13· · · Q· ·Do you know whether you actually -- when 14· you -- sorry. 15· · · · · After the execution of the LOI, did there 16· come a time when you went to New York to do some due 17· diligence? 18· · · A· ·Yes. 19· · · MR. VAIL:· Objection to the form. 20· · · THE WITNESS:· Sorry. 21· · · A· ·Yes. 22· BY MS. IZOWER-FADDE: 23· · · Q· ·When was that? 24· · · A· ·I don't recall. 25· · · Q· ·Is that something that would be reflected FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 217 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · Q· ·The subject of the email is, "Fiorello base ·3· agenda." ·4· · · · · Do you see that? ·5· · · A· ·Yes. ·6· · · Q· ·Was that the agenda that you were proposing ·7· for the meeting you were just testifying about? ·8· · · A· ·Yes. ·9· · · Q· ·So the first bullet point says, "Due 10· diligence request." 11· · · · · Do you see that? 12· · · A· ·Yes. 13· · · Q· ·And is that a reference to the due 14· diligence list that had been provided the prior day 15· by your counsel? 16· · · A· ·Yes. 17· · · Q· ·The second bullet point is, "Definitive 18· document." 19· · · · · Do you see that? 20· · · A· ·Yes. 21· · · Q· ·And is that a reference -- what is that a 22· reference to? 23· · · A· ·Presumably the SPA. 24· · · Q· ·Were there other documents that were needed 25· as part of the deal? FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 218 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · A· ·There were.· But at -- at some point -- and ·3· I believe it was early on -- the -- the parties ·4· and/or the attorneys agreed the most important ·5· document is the SPA.· So they were focusing ·6· attention on that definitive document being ·7· prioritized. ·8· · · Q· ·Is that agreement documented anywhere? ·9· · · A· ·I'm not sure if it is or not. 10· · · Q· ·The next bullet point says, "Review" -- 11· · · MR. LEFTON:· -- details about discussion -- 12· BY MS. IZOWER-FADDE: 13· · · Q· ·Do you recall a specific discussion -- 14· · · MR. VAIL:· I think -- 15· BY MS. IZOWER-FADDE: 16· · · Q· ·-- involving the agreement to focus first 17· on the SPA? 18· · · A· ·I -- I believe there were several 19· discussions where that course of action, that -- 20· that process was discussed, of prioritizing the most 21· important document before getting sidetracked with 22· less critical documents. 23· · · Q· ·Do you have any specific recollection of 24· who participated in such -- in that discussion? 25· · · A· ·I would recommend asking the attorneys that FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 219 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· were involved in drafting of the definitive ·3· document. ·4· · · Q· ·Is it possible that that was just the most ·5· important document from Cresco's perspective, but ·6· not necessarily from Fiorello's perspective? ·7· · · A· ·Highly unlikely. ·8· · · Q· ·Why is that? ·9· · · A· ·What would be more important than the 10· actual Purchase Agreement? 11· · · Q· ·Fair to say that the Purchase Agreement is 12· the document by which Cresco was gaining the shares, 13· but that the notes were the documents by which 14· Fiorello was ensuring that it would be paid -- that 15· its shareholders would be paid? 16· · · MR. VAIL:· Object to the extent it calls for a 17· legal conclusion.· And foundation. 18· · · A· ·No.· I -- I think the -- again, I think 19· it's very reasonable -- and, again, you brought up 20· the fact that I'm an attorney earlier -- but it 21· would be very reasonable to understand that the 22· document that lays out all of the terms and 23· conditions associated with the transaction gets 24· ironed out before the note that would memorialize 25· the -- the financial terms of it, or any other FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 220 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· documents associated with closing. ·3· BY MS. IZOWER-FADDE: ·4· · · Q· ·So from your perspective, the SPA outlined ·5· all the terms and conditions of the proposed ·6· transaction? ·7· · · A· ·You know, I could fairly comfortably say ·8· that I think that was the perspective of the parties ·9· involved in the transaction. 10· · · Q· ·Your test- -- you're here to testify as to 11· your personal knowledge. 12· · · A· ·Okay. 13· · · Q· ·So from your perspective, that was the 14· case? 15· · · A· ·Correct. 16· · · MR. VAIL:· Objection.· Asked and answered. 17· BY MS. IZOWER-FADDE: 18· · · Q· ·Okay.· And you -- 19· · · A· ·Come to think, you've -- you've asked me a 20· lot of questions about the way that other people 21· felt or the timing associated with it, so -- 22· · · Q· ·If I ask what your understanding was of 23· somebody else's behavior, that's one thing.· But if 24· I focus on your personal knowledge, that's another 25· thing. FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 229 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· to how to interpret the regulations? ·3· · · A· ·Correct. ·4· · · Q· ·Were there any other regulatory issues? ·5· · · A· ·I don't recall. ·6· · · Q· ·Ultimately, though, you wouldn't rely on ·7· Fiorello's interpretation of New York reg -- ·8· regulatory structure, would you?· I mean, wouldn't ·9· Cresco seek its own counsel on -- on those points? 10· · · MR. VAIL:· Objection to form and argumentative. 11· · · A· ·I would expect Cresco to do both.· There 12· would be no -- there should be no faster source of 13· information than Fiorello.· And -- and, again, I 14· think you'll see -- I'm assuming it was turned over 15· in documentation -- they -- they regularly had 16· communications with the regulator, getting 17· clarifications as it related to these types of 18· things that aren't articulated in the regulations, 19· but they were additional guidances received directly 20· from -- I forget her name, and I remember it being a 21· her -- but directly from the woman at the regulatory 22· body giving them clarification on certain questions. 23· BY MS. IZOWER-FADDE: 24· · · Q· ·When you met with Susan and Eric in New 25· York, who else was present? FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 230 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· · · MR. VAIL:· Objection.· Form. ·3· · · A· ·I believe it was myself, Joe Caltabiano and ·4· them two, Eric and Susan. ·5· BY MS. IZOWER-FADDE: ·6· · · Q· ·Where did the meeting take place? ·7· · · A· ·At their WeWork office. ·8· · · Q· ·Do you recall how long it lasted ·9· approximately? 10· · · A· ·I don't. 11· · · Q· ·Forever? 12· · · A· ·I don't remember. 13· · · Q· ·Do you recall having discussions at that 14· meeting about the draft SPA that had been circulated 15· by -- on March 1st? 16· · · A· ·I do. 17· · · Q· ·Okay.· What do you recall about those 18· discussions? 19· · · A· ·I -- I remember them being very dismissive 20· of it.· They -- I -- I forget exactly what they 21· said, but it was along the lines of that was a poor 22· effort, which I found surprising, but, nonetheless 23· -- and they expressed a very dismissive perspective 24· on the first draft.· Had some questions. 25· · · Q· ·After that meeting, do you recall whether FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 231 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· there was a determination as to who would do the ·3· next turn of the SPA? ·4· · · MR. VAIL:· Objection to form. ·5· · · A· ·I -- I believe it was us because it was -- ·6· it was a long time before we ever got a draft back ·7· from Fiorello on the SPA.· So I believe we took ·8· another bite at the apple, incorporating their ·9· concerns that they expressed, sent them another 10· draft. 11· BY MS. IZOWER-FADDE: 12· · · Q· ·Do you recall the -- there being an issue 13· relating to the original SPA including provisions 14· related to working capital? 15· · · A· ·Again, there were -- there were -- there 16· were concerns expressed.· I think working capital 17· was one of them.· Yeah, to the best of my 18· recollection, I think that was one of the issues. 19· · · Q· ·Was there also an issue related to the 20· sellers' representative provisions in the draft SPA? 21· · · MR. VAIL:· Objection.· Form.· Foundation. 22· · · A· ·I -- Could I ask for clarification? 23· BY MS. IZOWER-FADDE: 24· · · Q· ·Sure.· I mean -- 25· · · A· ·Was that related to the -- who would act on FILED: NEW YORK COUNTY CLERK 01/11/2022 02:12 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 483 RECEIVED NYSCEF: 01/11/2022 Page 299 ·1· · · · · · · · · · ·CHARLES BACHTELL ·2· BY MS. IZOWER-FADDE: ·3· · · Q· ·Yes, the date that the LOI was executed. ·4· As of the -- does this email from Mr. Amann refresh ·5· your recollection as to whether Cresco had ·6· sufficient funding available for the acquisition of ·7· Fiorello when it executed the LOI? ·8· · · A· ·The -- again, no, because when it comes to ·9· financing, financing is a fluid situation.· Cresco 10· Labs has been able to fund commitments historically. 11· · · Q· ·You didn't have sufficient funding 12· earmarked for Fiorello, did you? 13· · · MR. VAIL:· Objection to the form. 14· · · A· ·Yeah.· I think the -- the document speaks 15· for itself of the current cash position in the -- in 16· the accounts of Cresco on that day. 17· BY MS. IZOWER-FADDE: 18· · · Q· ·Which was that you didn't have -- as of 19· March 12th, 2018, there was no cash available to 20· consummate the Fiorello transaction? 21· · · A· ·On March 12th, 2018, there was $21 million. 22· · · Q· ·All of which was currently committed to 23· other projects? 24· · · A· ·But there was $21 million in the account. 25· · · Q· ·None of it was earmarked for New York